Dilemma Theory and Path to Cross-Cultural HRM Synergy within Multinational Firms

Abstract

Multinational companies (MNCs) have become the most significant players in world trade, with the world’s 100 largest MNCs now controlling approximately 20 per cent of global foreign assets. However, MNCs as they grow out of their national borders into foreign countries face a problem managing people because they often find themselves in a dilemma as to how to find equilibrium with regard to parent company’s HRM policies and practices and local environmental factors in the location of the subsidiary. In the face of the complexities and the problems associated with the dilemma, MNCs attempt to build synergy between the two extremes for an option beneficial to both subsidiary and parent company. The purpose of this paper is to assess how the central HRM problem is managed along the path to synergy building. The paper uses the dilemma theory as the main tool and predominantly popular and academic literature on MNCs HRM transfers for the assessment. Manor contributions are the development of cycle of cross-border HRM dilemma; cross-border HRM transfer framework; and path to cross-border HRM synergy building. A key finding is that parent company has greater influence in the trade-off thereby advancing, to a greater extent, the global integration option of the dilemma.

Key Words: Cross-border HRM; Dilemma theory; Host country; HRM synergy; Multinational company