Mnc - Global Management

In the twentieth-century, a rapid increase in number of global management compositions and the merging of management skills around shared concept of "best practices" were resulted because the economies are becoming globally integrated. This is what globalisation theories believe in. However, there are a few constraints limiting the homogenisation of the human resource (HR) policies structure and practices over the countries by multinational companies (MNCs). To discover this, this essay aims to explore the limits on the international diffusion of HR policy in different countries. To achieve this, few theories will be discussed in detail. Firstly, two notions of national capitalism will be used to explain the obtaining of different HR practices in different countries due to the cross-border Mergers and acquisitions (M&As). Then it is followed by the convergence-autonomy HR policy diffusion using the explanation of structure and politic approach. Lastly, in this essay, we will use the essential context of culture and institutional perspective to determine how they are transforming and whether the HR policy is to be converged or diverged.

The notion of national capitalism is used significantly as a determinant of the MNC behaviour. Two types of systems, namely ‘Anglo-American model’ (outsider) and ‘Continental Europe’ (insider) have shown different adoption of HR policies in different countries (Ferner, 1997; Ferner and Quitanilla, 1998). Throughout the study, United States MNCs’ HR management are relatively more to centralisation, as in they are focusing on stock finance market, short-term returns and treating employees as a commodity, which are “outside concepts” or called economic-contractual. In contrast, the countries in Europe or Japan, which use the ‘insider’ concept, is a ‘human capital model’ (Ferner, 1997) which focus on the long-term performance and believe that employees are the key factors for development.

According to Edwards and Rees (2006) and Edwards (2012) , the main factor of the growth of MNCs is the scales the merging companies and possession at the international level which have risen to unprecedented height in recent years. According to Harzing and Pinnington (2011), due to the erosion of national boundaries and amplifier the global competition, it driven firms to have cross-border M&As activities. M&As allows to have greater scope of sharing in technologies, more opportunities for MNCs to deregulate and gain competitive advantages. This process of cross-border M&As will incur the Human Resource Management (HRM), as it is the extent and process of integration between of two firms (Edwards and Ress, 2006). Hence, international business and its policy diffusions are discussed.

In the national capitalism, there is a polarization of relationship between the centre and periphery in decision-making, which is either centralization or decentralization. According