The liability of mimicry: Implementing “global human resource management standards” in United States and Indian subsidiaries of a South Korean multinational enterprise

• DOI: http://doi.org/10.1002/hrm.22011
• Author: Ödül Bozkurt,Chul Chung,Chris Brewster
• Published date: 01 November 2020
• Date: 01 November 2020

ORIGINAL ARTICLE

The liability of mimicry: Implementing “global human resource

management standards”in United States and Indian

subsidiaries of a South Korean multinational enterprise

Chul Chung

1

| Chris Brewster

1

| Ödül Bozkurt

2

1

Henley Business School, University of

Reading, Reading, UK

2

Department of Management, University of

Sussex Business School, Brighton, UK

Correspondence

Chul Chung, Henley Business School,

University of Reading, Whiteknights, Reading

RG6 6UD, UK.

Email: c.chung@henley.ac.uk

Abstract

There is increasing evidence that multinational enterprises (MNEs) from less domi-

nant economies tend to mimic and disseminate human resource management (HRM)

practices sourced from a dominant economy, usually the United States, to overcome

their “liabilities of origin.”However, our understanding of the specific challenges

involved in the implementation of such practices by firms across different national

and subsidiary contexts remains limited. Drawing on evidence from a case study of a

South Korean MNE, we examine the extent to which, and ways in which, global

HRM policies mimicking U.S. practices are implemented across its sales, manufactur-

ing, and research and development subsidiaries in the United States and India. We

find discernible differences in the implementation of the global policies both between

the two host country sites and across the three function-specific subsidiaries in each

country, identifying a range of national and subsidiary-specific factors that inform

these variable implementation outcomes. In addition to legitimacy challenges related

to the source, appropriateness, and process of transfer, we note a unique form of

legitimacy challenge—“the liability of mimicry”—whereby local actors can challenge

head office policies on the basis of a claim to superior expertise in the dominant prac-

tices, as a particular concern of MNEs from emerging economies.

KEYWORDS

global best practice, international HRM, legitimacy, multinational enterprise, SouthKorea

1|INTRODUCTION

The transfer of human resource management (HRM) policies within

multinational enterprises (MNEs) has been one of the most exten-

sively researched themes in the field of International HRM

(Björkman & Welch, 2015; Cooke, Wood, Wang, & Veen, 2019). Many

MNEs aim to transfer and implement what they perceive as legitimate

HRM policies in their foreign subsidiaries (Björkman, 2006), and gen-

erally, the source of the transferred practices tends to be parent firms'

practices. This tendency, widely known as the “country-of-origin

effect,”is well documented in the cases of MNEs from developed

economies (Almond et al., 2005; Ferner, Almond, & Colling, 2005;

Pudelko & Harzing, 2007). However, there is increasing evidence that

businesses from lately industrialized or less advanced economies

(emerging economy MNEs, or EMNEs) may be reluctant to transfer

parent company policies. Instead, they tend to “borrow”and transfer

HRM policies sourced from a dominant economy, most typically the

United States—often seen as the home of “global best practices”

DOI: 10.1002/hrm.22011

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reprodu ction in any medium,

provided the original work is properly cited.

© 2020 The Authors. Human Resource Management Published by Wiley Periodicals LLC.

Hum Resour Manage. 2020;59:537–553. wileyonlinelibrary.com/journal/hrm 537

(Aguzzoli & Geary, 2014; Andreeva, Festing, Minbaeva, &

Muratbekova-Touron, 2014; Demirba

g, Tato

glu, & Wilkinson, 2016;

Pudelko & Harzing, 2007; Zhu, 2019). The intention is that such mim-

icry brings the MNEs' HRM policies in line with modern practice and

makes transfer, even to subsidiaries in more developed countries, sim-

pler. In some cases, subsidiaries in advanced economies are set up in a

polycentric and adaptive approach precisely for the capture and diffu-

sion of such global best practices (Patel, Sinha, Bhanugopan, Boyle, &

Bray, 2018), but the mimicry also widely involves dominance effects

that are diffused globally through multiple channels (Edwards

et al., 2013).

While EMNEs' attempts to distribute “best practice”HRM policies

across their subsidiaries may contribute to the global convergence of

policies, it is still unclear whether and how HRM policies sourced from

a non-home-country origin are translated into practices in subsidi-

aries, given the mixed evidence on transfer outcomes (Aguzzoli &

Geary, 2014; Demirba

g et al., 2016). As the externally sourced policies

are not embedded in the home country, headquarter's (HQ) actors

potentially have limited experience of implementing and utilizing

them. This raises distinct challenges that may be different from the

case of parent-practice transfer in developed country's MNEs, where

HQ actors have the most expertise in the transferred practices. As

evidence on the transfer of externally sourced dominant practices

grows with the increasing number and influence of EMNEs (Thite,

Wilkinson, & Shah, 2012), the dynamics of such transfer demand more

attention.

To extend our understanding of this emerging phenomenon, we

examine the extent to which, and the manner in which, HRM policies

sourced from a dominant economy are implemented by an MNE

across its subsidiaries in economies that are both more and less devel-

oped than its home country. Our findings offer important insights into

international HRM in two respects. First, they build on efforts to gain

a better understanding of how the transfer of HRM practices in

EMNEs, which are becoming increasingly “prominent”(Wilkinson,

Wood, & Demirba

g, 2014, p. 835), remain “distinctive and different

from”(ibid.: 841) what has hitherto been observed in developed coun-

try's MNEs. More specifically, they demonstrate how the formulation

and implementation of “global best practices”of EMNEs have com-

plex, multivariate, and even idiosyncratic dynamics which cannot be

uniformly linked to the tendency toward global convergence or

national divergence. Second, our findings also draw attention to some

distinct factors that affect the transfer of practices, but which have

previously received little attention.

Our study uses evidence from a relatively novel research

setting—an MNE in the global automotive industry, from South Korea,

and its sales, manufacturing, and research and development (R&D)

subsidiaries in the United States and India. While South Korean MNEs

are from an “advanced”emerging economy that has reached devel-

oped economy standards by certain criteria (Kim, Kim, &

Hoskisson, 2010), they are still impacted by rapid institutional changes

in employment practices in their home country with limited status in

the global economy, like many other EMNEs (Debroux et al., 2018).

We contend that cases of South Korean MNEs deserve particular

attention in theorizing the practices of EMNEs. Their experiences can

not only tell us how EMNE practices differ from those of advanced

economy MNEs, but also help us anticipate the changing nature of

MNE activity in general, as further EMNEs come of age (Khanna &

Palepu, 2006). In addition, our research setting allows for a compari-

son of global policy implementation in subsidiaries in two host coun-

tries with different positions in the hierarchy of national economies

(Smith & Meiksins, 1995) relative to the MNE's home country. While

comparative national contexts may involve differences in institutional

maturity (Khanna, Palepu, & Sinha, 2005; Thite et al., 2012) that may

affect the implementation of “best practice”HRM policies across the

subsidiaries, this has not been exhaustively studied empirically. Fur-

thermore, studying a sales, manufacturing, and R&D function subsidi-

ary in each host country enables us to highlight how local adaptation

of global HRM policies may vary across subsidiary functions even

within the same host country.

Our study makes several contributions to the theory of HRM

practice transfer in MNEs. First, the case of transferring best practice-

based global policies by the South Korean MNE contributes to our

understanding of the importance of legitimacy in the transfer of HRM

practices by illuminating the multiple legitimacy challenges that arise.

Despite the mimicking and adoption of “global best practices,”the

firm still faced considerable challenges in implementing these across

subsidiaries, partly due to a lack of professional legitimacy, as well as

the hierarchical management style deeply ingrained in its home coun-

try. In particular, we find a novel form of local resistance based on the

claimed asymmetry of expertise between HQ and subsidiary actors.

We propose that a framework of multiple legitimacy challenges based

around legitimacy of source, appropriateness, transfer process, and

expertise—could offer a theoretical lens to better understand the

transfer of HRM practices in wider populations of MNEs.

Second, we suggest that the home country effect in the context

of certain MNEs, particularly those from less advanced economies,

needs to be understood more broadly than the formal practice dimen-

sion. The liabilities of origin—the legitimacy challenges created by the

country of origin—manifest across multiple dimensions including for-

mal practices as well as informal processes of transfer.

Finally, the study sheds light on the multi-layered nature of local

contexts by highlighting the different extents of implementation of

the global policies, depending on the level of development of a host

country relative to the home country and the pervasive influence of

subsidiary-specific factors such as function.

2|TRANSFERRING HRM PRACTICES IN

MNEs: THE STRUGGLE FOR LEGITIMACY

Institutional theories have provided an important foundation for stud-

ies of the transfer of managerial practices, including HRM practices,

within MNEs (Björkman, 2006). A “universal”approach based on the

assumption that the same effective practices can be applied across

different national settings has been extensively challenged by institu-

tionalist arguments (Demirba

g et al., 2016). Earlier institutionalist

538 CHUNG ET AL.