Strategic imperatives, power and subsidiary performance: the transfer of human resource management practices in multinational companies operating in Poland's post‐socialist banking industry

Date01 July 2019
Published date01 July 2019
AuthorIlona Hunek,John Geary
Strategic imperatives, power and subsidiary
performance: the transfer of human
resource management practices in
multinational companies operating in
Polands post-socialist banking industry
John Geary and Ilona Hunek
We examine the extent to which institutional inuences account for the transfer of
performance management systems in two foreign-owned banks, one German the
other Irish, in Poland. While we nd they were important, more important were the
joint effects arising from the subsidiariestimes-of-acquisition, their pre-acquisition
economic health, the international experience of the MNCsmanagement, headquar-
ters-generated strategic imperatives and the political dynamics that ensued between
corporate and local management.
In the international literature, a variety of interacting effects are identied as account-
ing for the transfer of MNCsemployment and HRM practices. These include parent-
country and host-country institutional inuences, the extent and nature of an MNCs
international expansion and integration, dominance effects arising from host econo-
miesdependence on inward investment and the shape and tenor of power relations
between actors within and beyond the MNC (Edwards, 2011; Ferner et al., 2012;
Becker-Ritterspach et al., 2016; Geary and Aguzzoli,2016). A great deal of this research
has been conducted in mature, relatively stable market economies, albeit there is a
growing literature on emerging economies (e.g. Sayım (2010), Gamble (2010), Ngoc
and Rowley (2011)).We examine whether such an explanatorymodel is sufcient to ex-
plain MNCspractices operating in a context of signicant institutional transition and
ux. Our study is of two foreign-owned retail banks from Germany and Ireland with
operations in Poland shortly after its transition from a socialist to a market economy.
Our choice of the banking sector is deliberate. Much of our understanding of the
practices of MNCs in Central Eastern Europe (CEE), and in Poland in particular,
is derived from studies of manufacturing rms (Meardi et al., 2009; Kahancova,
2010). We know little of service industries or of banking, with some notable excep-
tions (Meardi et al., 2013). Banking is a critically important sector in a transition
John Geary, University College Dublin, Dublin, Ireland and Ilona Hunek, Kozminski University,
Warsaw, Poland. Correspondence should be addressed to: Professor John Geary, University College
Dublin, Dublin, Ireland; email:
Industrial Relations Journal 50:4, 362378
ISSN 0019-8692
© 2019 Brian Towers (BRITOW) and John Wiley & Sons Ltd
economy. In Poland, banking underwent a radical overhaul driven primarily by a
large inow of foreign direct investment (Hryckiewicz and Kowalewski, 2008; Meardi
et al., 2013). By 2005, the share of all nancial companies and banks owned by
foreign-owned MNCs reached almost 80 per cent (Contrepois et al., 2011). The sector
was subject to considerable government oversight, which in turn inuenced MNCs
possible modes of entry and timing of entry (Hryckiewicz and Kowalewski, 2008).
The acquisition of a large state-owned bank, which was widely seen as the most at-
tractive option for MNCs, as it provided instant access to an existing branch network,
was only possible between 1998 and 1999.
We examine two retail banks rooted in different national business systems (NBSs),
one coordinated (Germany), the other liberal (Ireland), to analyse whether their par-
ent countriesinstitutional inuences led them to pursue different HRM policies. We
also look at the possible inuence of size, both of the case banks themselves and of
their home countries. The Irish bank is small and comes from a small open economy.
The German bank is a large, iconic company originating from a large dominant
neighbouring country. We anticipated that size matters in the sense that sectoral dom-
inance and economic hegemony have been identied as important factors in enabling
corporate management to lay claim to the superior efcacy of their home-country
practices (Smith and Meiksins, 1995).
We examine the MNCspay and performance management systems (PPMS). The
transfer of common PPMS can be viewed as a specic instance of HQ-subsidiary re-
lations (Ferner et al., 2012). Many MNCs, particularly in the nancial services sector,
regard PPMS as central to their employment systems and generally adopt a highly
centralised approach (Regini et al., 1999). Thus, they are central to how MNCs man-
age across national boundaries. The management of PPMS within MNCs is also con-
ducted at the intersection of home-country and host-country contexts and, as such,
provides a privileged setting for examining the collision and relative inuence of
parent-country effects and local isomorphic pressures. Finally, PPMS are often iden-
tied as a fulcrum within HRM in that they bear close links with other areas of HRM
practice notably employee voice, appraisal, training and development and union rep-
resentation (Geary and Aguzzoli, 2016).
We adopt an actor-centred perspective together with a context-sensitive mode of
explanation. That is, we seek to understand how circumstances of ux and uidity
are perceived by, and inuence the power resources and postures of, actors within
and beyond the MNC. Like Edwards and Belanger (2009), we conceive of the institu-
tional context as a contested terrain in which different actors seek to identify and
exploit the institutional space of the host context, deploying a variety of power
capabilities as they do so.
The motivation to transfer standardised management practices across the subsidiaries
of an MNC is signicantly shaped by its strategy and structure (Edwards, 2011).
Firms that pursue synergistic linkages and whose operations and services are repli-
cated across countriesas they are in retail bankingare more likely to develop a
globalHRM model. The transfer of such standardised best practicesis also driven
by strategic business imperatives (Taylor et al., 1996). Best practices are deemed best
by their association with leading companies originating in hegemonic NBSs (Smith
Strategic imperatives, power and subsidiary performance
© 2019 Brian Towers (BRITOW) and John Wiley & Sons Ltd

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