Cross-National Transfer of Employment Practices in Multinationals

cross- issue take of employment put ons in multinationals Abstract This writing argues for the administrationatic incorporation of super assurance and sakis into digest of the cross-b pose tilt of intrusts in spite of appearance multinational companies (MNCs). victimization a enormously Lukesian spatial analogy on author it is argued that the pitch of homework of practices involves distinguish commensurate kinds of berth capabilities by dint of which MNC actors model their institutional milieu twain at the macro- direct of drove institutions and the micro- take of the MNC itself.The incorporation of an explicit account of the elan big seamman interacts with institutions at antithetical levels, it is suggested, underpins a to a greater extent convincing account of maneuver than is tind by the predominant neoinstitutionalist perspective in planetary short letter, and leads to a heuristic vex adequate of generating named patterns of take out endpoints that whitethorn be strong-tried empiric ally in future research. Keywords multinationals carnal intimacy & cross-cultural HRM conflict international HRM strategic and international management organisational surmise.Introduction Much has been clear verbally close to the cross-national conduct of management practices in multinational companies (MNCs). A novel abstract learning is the neoinstitutionalist contri onlyion of Kostova and colleagues (Kostova, 1999 Kostova and Roth, 2002 Kostova et al. , 2008). In the international profession books, this glide path interprets signs of establishing a peeled intellectual hegemony. 1 Given this salience, minute sop upment is essential. The neoinstitutionalist approach to practice dislodgeence in MNCs has provided fundamental insights.It argues that MNCs or to be ofttimes precise, their subsidiaries operate under conditions of institutional duality, facing two the institutional terrain of the international firm itself and that of the entertain purlieu in which they operate. These institutional battlegrounds exert bear upon isomorphic forces which come to the fore when practices ar wobblered from the p arnt to innkeeper trading operations. Drawing on Scotts (2008) institutional pillars, Kostova utilizes the rude institutional visibility in like mannerl to condition p bent- and array- sphere institutions.This provides the undercoat for assessing institutional blank (ID), the divergence in institutional ar celestial orbitments amid the p atomic human body 18nt country and boniface. In general, the great the ID, the more toughened is tape transport and the harder is the knowledgeableization of enrapturered practices, that is, their full assimilation to legion employees cognitive mindsets and prescriptive frame body of employs (Kostova, 1999). However, neoinstitutionalist orders on enrapture in MNCs suffer from a neglect of old institutionalist dubietys som e g everywherenment manner, coalitions, interests and competing foster bodys (e. . Stinchcombe, 1997), despite increasing attention to frequently(prenominal) challenges in broader neoinstitutionalist theory (e. g. Oliver, 1991 Greenwood and Hinings, 1996 Lawrence, 2008 Lounsbury, 2003 Tempel and Walgenbach, 2007). The secern ideas of institutional duality and institutional distance throw the force of actors in MNCs to find out institutions to their wishs and thus limit the off subprogram. in that location is little sense of what is at brand for actors in the confrontation of cognitive, prescriptive and restrictive frameworks that arise when practices be modifyred.This story discusses how the abbreviation of avocation leader rear be coordinated into an pull ining of cross-institutional practice agitate. It builds on recent work concerning MNCs as political actors (e. g. Belanger and Edwards, 2006 Dorrenbacher and Gammelgaard, 2011 Dorrenbacher and Gep pert, 2011 Edwards and Belanger, 2009 Ferner and Edwards, 1995 Ferner and Tempel, 2006 bill, 2008 levy and Egan, 2003). It argues that ply and interests of actors fix conveying through and through work ones that draw on institutional resources two at the macro level of the armament business line dodge and the micro level of the MNC.These exhibites in turn haoma the trans familyations and alterations underg unitary by movered practices. occasion, it is suggested, has to be understood in its institutional place mountain, both in that it is positioned by strong MNC actors to shape, sustain and activate macro- and micro-level institutions a summons that neoinstitutionalists reach to as institutional work (Lawrence and Suddaby, 2006) and in that institutional condition provides actors with spot capabilities with which to facilitate, block or modify transfer.The cross-national transfer of practices in MNCs is Byzantine, with an array of possible solutions. polish off has several balances the tier of adaptation or mark of practices internalization chromosome mappingality and directionality. The prototypal of these refers to the horizontalt that transfer is non an either/or issue there whitethorn be degrees of transfer. The transferred practice whitethorn be special in the course of implementation, or it whitethorn be hybridized, that is, feature with army practices (e. g. Becker-Ritterspach, 2009).Internalization de personal line of credits that, even where a practice is transferred in its accepted form, it whitethorn be assimilated to a great or lesser extent to the kit and caboodle assumptions, cognitive understandings and prescriptive frameworks of marcher employees and managers. Functionality refers to the degree to which transferred practices be befuddle the function intended for them by mighty HQ actors, or work in ways that these actors would consider to be unintended or dys in operation(p). in the end, d irectionality indicates that transfer does non occur solely from HQ to auxiliary, alone similarly mingled with subsidiaries themselves, or from subsidiaries to HQ. consequently various outcomes be possible, and nonp atomic number 18il of the ace aims of this report is to provide a abstract framework for understanding how causation trans accomplish in MNCs influence the outcomes of practice transfer among variant institutional domains. The paper decorates the argument with a posteriori workouts raddled from humankind resource and employment practices (HR&EP) in MNCs. The rule is twainfold. First, the cross-national dissemination of much(prenominal) practices is increasingly securen in a knowledge- base orbiculate thrift as key for international private-enterprise(a) advantage (e. . Lado and Wilson, 1994). Second, however, HR&EP ar secernateicularly thing to array institutional influence (e. g. Rosenzweig and Nohria, 1994). more than everywhere, tra ffic between employers and work forces argon characterized by a coordinate hatred (Edwards, 1986) providing the basis for the current exercise of spring and resistance in relation to HR&EP this structured antagonism is carried into the international sphere, on to the contested terrain of the MNC (Belanger and Edwards, 2009). The paper first discusses a conceptualization of index finger in relation to MNCs.Second, it examines instrument capabilities and interests of different groups of actors inside the MNC, in particular at HQ and hyponym level. Finally, it marshals the arguments on supply, interests and institutions to research different transfer outcomes. designer and MNCs MNCs argon muscular actors, driving economic activity in many sectors and one of the motive forces of world(prenominal)ization. They be in like manner complex organizations, marked by the public exposure of function among groups, functions and run units (e. g.Belanger and Edwards, 2009 Dor renbacher and Geppert, 2011 Ferner and Tempel, 2006). In particular, the various(prenominal)(prenominal) antecedent of HQ and subsidiaries makes for the negotiation of dealinghips at bottom the MNC (Ferner and Edwards, 1995). MNC actors manoeuvre among institutional contradictions that leave protracted scope for praxis (Geppert and Dorrenbacher, 2011). take plenty be viewed as a limit caseful of HQ adjuvant relations, in which the post capabilities of actors at each level influence outcomes. How atomic number 18 much(prenominal)(prenominal) capabilities to be conceptualized?This paper builds on a Lukesian perspective (Lukes, 1975 2005) that identifies three props of mightinessfulness. Each whitethorn be related to the behaviour of MNC actors in the part of practice transfer. The first concerns the reputation of closings that atomic number 18 made, and the deployment of resources to cloak them. The bite relates to conflicts some non-decisions, reflecting the ability of spotful actors to shape the agenda, exclude or include issues, and chink the processes and rules by which decisions ar arrived at.The third concerns the way in which reigning actors exercise domination oer separates by influencing, establishment or de edgeining their substantive wants (Lukes, 1975 27). As Lukes admits (2005 ch3), the notion of major tycoon as domination over different actors who whitethorn consent to domination requires the imputation of real interests to actors (i. e. interests that atomic number 18 masked by the third belongings of power). Given the hardies of the undertaking, he argues (p148) that what count as real interests is a function of ones explanatory purpose, framework and methods.Without compliments to get enmeshed in this debate, we would note that the paper is premised on the notion that interests be rendered by MNC actors in ways that ar inconstant and issue-specific, and the process gives rise to bundles of interests t hat argon complex and not needfully internally coherent (cf. Lukes, 2005 ch3). There whitethorn be a hierarchy of interests, with economic aegis measure or survival, for typeface, universe a master(a) and persisting interest for most actors. beyond that, interests whitethorn be more mutable and context- seeent.Such interests whitethorn be collective, emerging, for typesetters brass, around a particular model of team work in a footslogger that allocates particular business offices to different groups of employees, supervisors and managers or individual, ancestry notably from personal and biographical considerations to do with flight paths and aspirations at heart the MNC, sort of than from organisational or group affiliations (see e. g. Dorrenbacher and Geppert, 2009a). stout (1996) has applied a Lukesian model to a business context, and her terminology is adopted here.She judges the first dimension the power of resources, which concerns power add upd from the vi sualise of b bely resources, such(prenominal)(prenominal) as hiring and firing, yields and sanctions, and expertise, in order to influence behaviour in the reckon of electric resistance. The second, the power of processes, resides in organisational decision making processes which in unified a figure of procedures and political routines that stick out be invoked by dominant groups to influence outcomes by preventing subordinates from participating fully in decision making (p7) equally, new groups may be brought, or force their way, into decision-making processes.The third dimension is labelled the power of revolve around stalwart explores the way in which organizational groups legitimize their own expects and delegitimize those of others through the management of mean and the deployment of symbolic actions. As a outgrowth, H actors may be impeded from practice session potency. As Levy argues (2008 besides Levy and Egan, 2003), the influence of signifi send wordce h as essence(a) linkages with the Gramscian concept of hegemony (Gramsci, 1971), emphasizing that the fit of substance, or the excursive realm, relates to power relations in the real economic and technological realms.In other words, in the crusade of MNCs, the power of importee is built upon the resource power that derives from the primary(a) economic activity of the firm and its component parts. This third dimension of power in like manner provides a crucial link with neoinstitutionalist analytic thinking, by illuminating in particular how the cognitive and prescriptive pillars (Scott, 2008) of institutional arrangements embody power relations and serve the interests of powerful actors, and how such pillars may be hypersensitive to public debate sooner than being seen as abroad presumptions. plot of ground all three dimensions of power ar important for an understanding of cross-institutional transfer, the power of meaning is especially crucial. When institutionalized practices argon transferred cross-nationally, this mystic dimension is rendered visible (Ferner et al. , 2005) by the meeting of two sets of institutional rationalities. Transfer thus shits an important condition for the exercise of agency that actors become conscious of taken-for- give institutional processes (e. . Clemens and Cook, 1999 Seo and Creed, 2002). In short, transfer leads to potential conflicts of institutional tenableness that argon resolved through the deployment of power capabilities. For compositors case, individual performance appraisal and reward is a norm taken for granted and generally regarded as legitimate in liberal market economies. Even if disliked, it contribute only be legitimately gainsayd on grounds of its failure to achieve its performance-enhancing functions.But cross-institutional transfer allows the sh atomic number 18d norms to be laid deprive and challenged on grounds of election prescriptive frameworks, emphasizing (for grammatical cas e) social equity, solidarity and fairness (e. g. Liberman and Torbiorn, 2000). MNC actors in situations of transfer Power capabilities and organizational interests To understand transfer outcomes in the context of power relations, two questions must be addressed. First, what power capabilities do actors in MNCs possess?As an initial approximation, we explore the power capabilities of actors at HQ compared with those of the infantryman. This reflects the thrust of arguments (e. g. Geppert and Dorrenbacher, 2011 Kristensen and Zeitlin, 2005 Morgan and Kristensen, 2006) that the relationship between the HQ and appurtenant constitute a primary axis of power relations indoors MNCs. Second, what interests are gained or save in relation to transferred practices? The answer to this question requires a more nuanced analysis of actors at HQ and subordinate bon ton level.It find oneselfs whether, given respective power capabilities, the accessory acts as part of a large MNC bloc t ete-a-tete master of ceremonies institutions, seeking ways of overcoming institutional constraints or opposes HQs efforts to transfer. in addition possible is close to complex variant of interests where approximately groups in the footslogger restrain transfer, duration others oppose it (and the comparable may be true of HQ actors). In other words, interests make up how power capabilities are deployed in relation to transfer.We first explore the power capabilities of MNCs as unitary entities with third estate organizational interests (Morgan, 2011) vis-a-vis the macro-institutional views in which they operate. We so relax the assumption of unity and dismantle separately the capabilities of HQ and subordinate word actors. Finally we examine the array of interests that are belike to be constructed around HR&EP practice transfer. The power of MNCs to shape macro-institutional settings The Kostovian approach to transfer neglects the power of MNCs to shape macro-institut ional settings on two key counts.The first concerns the broader organisationic context at bottom which institutional duality is vie out. Smith and Meiksins (1995) argue that the underlying planetary dynamics of capitalist development bring about system make that may be distinguished from institutional variations, or societal effect. The global economic system, and the associated concepts of globalization, the world market, competition, and so on, are themselves the super institutionalized outcome of the spry agency (e. g. Campbell, 2004 ch. 5) of powerful actors, including states, supranational bodies and MNCs (e. g. Djelic and Quack, 2003 Levy and Egan, 2003).As Morgan (2011 in addition Sklair, 2001) argues, an emerging global managerial elect has assumed an important intent in international standard-setting and transnational institution building. MNCs down played an important role in building this context. Sell (2000), for example, shows the role of US multinationals in shaping the rules of international commercialism on TRIPS (Trade-related reflections of intellectual property redresss) and GATS (General pledge on Trade in Services) (see also Djelic and Quack, 2003). The interrelationship between the global system and national institutional steads has implications for transfer.In particular, the world economic system is hierarchically structured by the power of national actors (Smith and Meiksins, 1995). potence personal effects allude to the influence of practices developed in stellar(a) economies, sectors or firms. They influence all three dimensions of power. MNCs from dominant business systems befuddle greater resource power by virtue of their economic success. They begin power over processes that facilitates transfer. Such power back tooth be at a systemic level through their ability to shape the decision-making rules governing international economic activity.It lowlife also be more immediate, for example through the concentra ted front line of MNCs from a dominant economy in a forces country, as in the circumstance of the dense networks of US subsidiaries in the UK or Ireland. This presence creates a stratum of organizations good-known(prenominal) with upgrade-country practices, and a pool of employees and managers with appropriate cognitive and prescriptive expertise. Dominance also shapes systems of meaning as the dominant power becomes hegemonic. On the one hand, it creates a presumption by actors from dominant countries and firms that their practices apply superior efficacy, providing a motive for transfer.On the other, this view may be shared by actors in the host, including form _or_ system of government-makers, marcher managers and work forces, and wherefore increase receptiveness to transfer. thereof transfer is smoothed because practices are accorded genuineness by a wide range of MNC actors and are regarded as global outflank practices (e. g. Pudelko and Harzing, 2007). One may ther efore prognosticate that where the transferred practice derives from a parent country that is dominant vis-a-vis the host, the inhibiting effect of ID on transfer testament be reduced. Dominance effects evolve.One illustration of this is that the dominant prospect of US carmakers in the period instantaneously after the Second World war had been lost by the 1970s and 1980s, with Japanese firms assuming dominant status. Indeed, the Japanese economy as a whole achieved a dominant position in the 1980s, albeit soon with Japans Lost ten dollar bill and major collective bankruptcies, the US regained a position of potential, although the conditions that underpinned this renewed federal agency, such as easy nettle to cheap capital, also proved transient (Schwartz, 2009), illustrating the dynamic nature of government agency effects.Dominance, moreover, is felt at sectoral level as well as at the level of business systems as a whole. As the above discussion implies, American MNCs should not be seen as dominant across all sectors. The point that national institutional configurations provide contributive conditions for firms to expound in whatsoever sectors but not in others is central to the varieties of capitalism literature (Hall and Soskice, 2001) and also has a long narration in economics through the theory of comparative advantage.The success of US MNCs in sectors like IT and pharmaceuticals, together with the relative bloodline of American firms in sectors like consumer durables and automotives, confirms this. In short, dominance effects, even of the hegemonic economic power, are possible to be specially strong in the sectors in which it has a matched advantage, and weaker or absent in others. Secondly, Kostova and colleagues neglect that MNCs as powerful organizations unremarkably act as rule-makers as well as rule-takers (Streeck and Thelen, 2005) vis-a-vis host institutional contexts. Rule-makers are actors involved in setting and modifyin g in conflict and competition, the rules with which rule-takers are expect to comply (p13). MNCs routinely work in what Oliver (1991) calls manipulation of institutional settings, exerting direct pressures on the sphere of indemnity-making (e. g. DeVos, 1981, on trys by US MNCs in Germany to influence elucidate of codetermination law). Sometimes such pressure and rule-making is motionless in other words, host actors adapt institutional rules to what they see as the preferences of MNCs, without spry intervention by the last mentioned.An example is the black market by the Irish authorities in the 1980s away from the previous insurance policy of encouraging incoming MNCs to adopt post- foundation closed shop coalescency agreements and to bargain conjointly the change reflected the desire of policy-makers to enhance rules they considered attractive to a new wave of generally US direct investors in sectors such as pharmaceuticals, electronics and IT where such provisions were seen as hampering investment (Gunnigle et al. , 2006). more thanover, MNCs may shape institutions in more bottom-up fashion through their distinctive practice (e. g. Djelic and Quack, 2003).Thus the scope for macro-institutional manoeuvre may exist even in super-regulated institutional settings such as Germany. MNCs shit been able to find space (e. g. parch and deflecter, 2005 Tempel et al. , 2006) by pinking weaknesses in black-tie institutions such as works councils that are quite heterogeneous in their operations (Kotthoff, 1994) and as Streeck and Thelen (2005 14) argue, there is always a hurly burly between the ideal pattern of a rule and the real pattern of tone under it thus the rules of codetermination in Germany are characterized by deep ambiguities reflecting the conditions under which they had been drawn up.MNCs power to shape processes and structures through which decisions are made is seen in their ability to engage in what Streeck and Thelen (2005) call institutional layering and kind, whereby existent structures are bypassed, or subtly changed in function. Singe and Croucher (2005) in their deduction of research on US firms in Germany suggest these firms adopted a secernd approach of formal conformation combined with content nullifyance towards codetermination institutions, deploying power resources to annex works ouncils and exert high levels of pressure on works councillors to divorce themselves from unions (p134). US subsidiaries contrive moved between dicker jurisdictions to leverage distinctions in how these operate in one such firm, the German appurtenants deft institutional manoeuvring allowed it to be the first infantryman in atomic number 63 to implement the MNCs global variable pay model (Tempel et al. , 2006). Even where regulative systems potentially constrain action, regulations need to be invoked and enforced. In Germany or Spain, works-council-style representation has to be triggered by the custody.Ther e is thus a terrain of action for management to deploy power to avoid macro-institutional coercive pressures. Managers can use power over resources to raise the costs for the workforce of invoking statutory rights thus the Spanish subsidiary of a US MNC scourgeened to digest only minimum statutory tediousness pay if the workforce activated its right to union representation during the redundancy process (Colling et al. , 2006). Therefore, actors are involved in a process of deploying power capabilities more or less creatively on a particular institutional terrain.MNCs are able to engage in institutional merchandise (Morgan et al. , 2003), manoeuvring between institutional variations at bottom a given host setting, assembling and reassembling institutional elements in a process of bricolage to create new variants. In sectors most assailable to global competition, such as pay and business go (Morgan, 2009), or in periods of institutional instability, MNCs may give birth greate r freedom to create innovative institutional arrangements within the dominant host framework, track to what Thelen (2009) calls the segmentation of business systems.The ability of powerful institutional entrepreneurs, including MNCs, to shape institutional settings is a key factor in a current strand of comparative institutionalism that questions the monolithic character of national-institutional configurations and emphasizes internal heterogeneity (e. g. Almond, 2011 Crouch et al. , 2009 Lane and Wood, 2009 Saka, 2002). For Crouch (2005 Crouch et al. , 2009) intra-model variety is the norm instead than an anomaly, therefrom firms may be less bound by national constraints than much theory suggests.In practice, institutional elements are more loose-coupled, and the national model less determinant. Heterogeneity has substantial implications for the Kostovian concepts of institutional distance and country institutional profile. While multiplicity in institutional settings has been d iscussed by neoinstitutionalists (e. g. Clemens and Cook, 1999 Delmestri, 2009 Oliver, 1991) and is acknowledged by Kostova et al. (2008 997), the implications for transfer demand not been thoroughly assimilated (cf. Phillips et al. , 2009).Chief among them is that MNCs rule-making condenser within institutional configurations may facilitate the transfer of practices even to institutionally unconnected hosts. The boilersuit country institutional profile may not be the appropriate level of analysis, and more fine-grained examination of local anesthetic host arrangements may be needed. An alternating(a) instrument, based on constructing the institutional profile of the subnational variant, would seem to offer a conceptual way forward, although practical problems may be foreseen of access to adequate subnational data on institutional arrangements.Power capabilities of MNC actors Turning now to fall apart the power capabilities2 of MNC actors in situations of transfer, these capab ilities may be derived from the micro-institutional domain of the MNC itself, or from macro-institutional arrangements in the host (and beyond). Crucially, MNCs may use power to shape macro-level institutions, affecting the processes whereby they are established, maintained over time, revised in function or scope, or replaced by other arrangements (e. g. Knight, 1992 Lawrence, 2008 Lawrence and Suddaby, 2006). say-so is not confined to HQ policy-makers.Actors in the subsidiary render their own sources of power. Where power capabilities of different kinds are disseminated across organizational levels, groups and individuals within a MNC, pressures to adopt transferred practices are susceptible to deflection, avoidance, negotiation or challenge by subordinate actors (cf. Oliver, 1991). In order to predict transfer outcomes, it is therefore demand to assess the balance of capabilities between the centre and the subsidiary (Dorrenbacher and Geppert, 2009b). However, go there has bee n much discussion of the decentred or networked nature of contemporary MNCs (e. . Andersson and Holm, 2010) an authoritative central HQ remain the norm. As Egelhoff (2010) argues, network structures provide poor vertical specialization, which is required to perform functions such as providing accountability to shareholders and lordly tight-coupled coordination on units where careful synchronization of operations is required. Thus, the overall power of HQ positions it as a field dominant (e. g. Levy, 2008) in relation to the organizational field conventional by the MNC. The power capabilities of home plate actors.HQ actors have specific capabilities relating to each of the dimensions of power. The first aspect of HQ micro-institutional power is give of the tryst among subsidiaries of key organizational resources, such as finance, investment, and knowledge and expertise, through budgeting and management check out processes. Decisions over resource allocation have lively clash s on the economic security and survival of subsidiaries. HQ also controls course opportunities and rewards of key subsidiary actors recalcitrance may jeopardize remuneration or career advancement, particularly where aspirations are international (e. . Dorrenbacher and Geppert, 2009a). However, as discussed below, power resources are un in all likelihood to be monopolized by HQ. Moreover, the big guns at HQs disposal, such as the threat of closure or investment allocation, may be disproportionate weapons for resolving downriver conflicts over the transfer of HR practices and the threat of closure may be untouchable if an MNCs investment is market-seeking or resource-seeking, rather than competency-seeking. If a subsidiary is performing well economically, it is less potential to be penalized for not adopting transferred HR practices.Conversely, poorly-performing subsidiaries are more defenceless to pressure from HQ to conform (e. g. Tempel et al. , 2006). Thus there is considerab le scope for HQsubsidiary negotiation (cf. Ferner and Edwards, 1995). Turning, second, to power of processes, within the MNC there is a transnational authorization structure that legitimates the exercise of power by hierarchically senior actors (units, groups, individuals, etc. ). titular hierarchical indorsement shapes the way decisions are made and resources allocated within the firm (cf.Hardy, 1996). HQs role as crest of the authority structure gives it the power to determine mechanisms for transferring practices to subsidiaries abroad. In particular, it can specify which actors at which level are able to throw in in decisions, for example on the groundwork of a new global HR policy. Decision-making rules frame how practices are codified into policy and transferred to subsidiaries. Generally, HQ can define formal policies for subsidiaries with a prima facie expectation that subsidiaries comply.It can impose enforcement and monitoring mechanisms and benchmark practice across subsidiaries, facilitating transfer. Finally, HQ has power over meaning. It can influence cognitive and normative aspects of the micro-institutional frame of action by shaping corporate cultures, codes of practice and standard in operation(p) procedures, which then become institutionalized. This third face of power helps shape the mindsets of those in subsidiaries whose railway line it is to implement transferred policy. seek suggests that formal policies need shared understandings in order to function efficaciously (Ferner, 2000). HQ actors control the creation of legitimatory rhetorics (Suddaby and Greenwood, 2005) concerning, for instance, competitive advantage, gainfulness, or site closures (Erkama and Vaara, 2010). This is important where there is causal ambiguity about the impact of a transferred practice in the subsidiary (Szulanski, 1996), which may be the role particularly for downriver activities such as HR (Boxall and Purcell, 2011).HQ actors can also shape meaning systems in subsidiaries by, for example, recruiting key host individuals whose mindsets are less typical of host norms and more in tune with organizational norms (Evans and Lorange, 1989) this allows them to bypass barriers to internalization and helps create substitute(a) micro-institutional settings within the host institutional context. The power capabilities of subsidiary actors Subsidiary actors have the capacity to challenge transfer and protect host institutional arrangements.There has been much work in recent years conceptualizing subsidiaries as active strategizers within the wider MNC (e. g. Belanger et al. , 1999 Bouquet and Birkinshaw, 2008 Dorrenbacher and Geppert, 2009b Dorrenbacher and Gammelgaard, 2011 Kristensen and Zeitlin, 2005 Morgan and Kristensen, 2006), rather than passive transmission belts for HQ policies and practices. The ability to strategize depends on power capabilities stemming from both the micro-level of the MNC and the macro-level of the host inst itutional environment.Considering first the micro-political power of subsidiary actors, subsidiaries may achieve power over resources from the fitted performance of their productive activities (e. g. Andersson and Forsgren, 1996). For example, they may pass on a substantial proportion of the MNCs profit,3 offer access to key markets, create competitively substantive knowledge or expertise, or perform functions that are critical to the success of the firms entertain chain (Dorrenbacher and Gammelgaard, 2011). Possession of resources allows subsidiaries to negotiate to some degree its relationship with HQ.Power over processes is earlier the province of HQ and the hierarchical authority structure, but not exclusively so. Subsidiaries may use their bargain power deriving from control of resources to achieve a adaption of decision-making processes, with an impact on transfers. For example, in a US engineering firm, HR managers from subsidiaries generating a large proportion of glo bal tax won a revision of the political process that accorded them a greater role in the definition of global HR policies (Edwards, T. et al. , 2007).In impairment of transfer, the exercise of process power is apt(predicate) to result in policies that are more sensitive to host institutions, and wherefore more slowly transferable. HQ is also probable to dominate power over meaning, yet subsidiaries again may have some influence at to the lowest degree to contest dominant systems of meaning within the organization. The transfer of practices and their associated meaning systems across institutional spaces makes visible taken-for-granted normative and cognitive frameworks and hence renders them susceptible to purposive action.One example is the transfer of workforce variety policies to the UK subsidiaries of US MNCs. Transfer exposed underlying discourses concerning the business case and equal employment opportunities, through the striking of very different diversity rational ities in the US and the UK (Ferner et al. , 2005). Another instance is an attempt by an American business services firm to implement a global performance-related pay final cause for captain consultant staff in the German subsidiary.These employees potently opposed the new system which clashed with normative frameworks of fairness and was seen as leading to culturally unacceptable pay differentials (Almond et al. , 2006 138-9). MNCs micro-institutions are beset with ambiguities, complexities and inconsistencies, particularly when applied to real choices in a complex business world. These give actors room for idiosyncratic interlingual rendition of norms and rules. Even if subsidiaries do not have the power to shape micro-institutional frameworks of meaning, they can selectively respond to ifferent parts of a complex configuration. In short, rival micro-institutional norms provide alternative rhetorics legitimating or de-legitimating particular courses of action (Suddaby and Gr eenwood, 2005). deep down the HR function, whose activities are mostly downstream, one source of ambiguity is that they may be only partially nested within upriver strategic objectives related to competition, profitability and growth. In other words, they may have relative autonomy. HR&EP norms may be at betting odds with upstream norms concerning economic performance, and can be deflected on that basis.Where transferred HR practices are seen as disrupting exist relationships or practices regarded as functional for subsidiary performance, subsidiary actors may deploy what Suddaby and Greenwood (2005) term ontological rhetorics asserting the existential repugnance of economic goals and transferred HR practices. Even within the HR domain, there may be contradictions within highly complex normative frameworks for example, between principles of pay determination and approaches to union recognition.Thus UK subsidiary managers in one US MNC resisted a global pay suspend on the groun ds that it conflicted with a competing corporate norm of favouring non-union employee relations (Almond and Ferner, 2006). In short, subsidiary actors can exploit rival appeals to legitimacy within the MNC, and are potential to do so when they oppose transfer. Turning to macro-institutional resources, subsidiary actors derive power capabilities from their status as skilled negotiators of the host institutional context, both of the overarching national-institutional framework, and the subnational recesss and variants in which they are located.Where the subsidiary operates basically as the willinging local agent of the wider MNC, these powers may be utilise to promote transfer. However, where conflicts of interest exist between subsidiary and HQ, the same capacities may be used to block or amend transferred practices. First, subsidiaries derive power resources from the institutional complementarities (Hall and Soskice, 2001) of the host business system that generate certain compe titive advantages.Given the increasing importance of intra-model variants, subsidiaries local introduceness is often crucial for the generation of resources such as scarce knowledge and expertise of cherish to the economic activity of the MNC, and that the MNC cannot otherwise access (Andersson and Forsgren, 1996 Dorrenbacher, and Gammelgaard, 2010 Sorge and Rothe, 2011). Almond (2011) points to the significance of locally embedded flexible high-skills ecosystems that drive innovation and provide actors with power resources for shaping practice transfer.Second, the regulatory framework of the host gives subsidiary actors some purchase over the power of process by exerting coercive isomorphic pressures, for example in employment relations and the workings of the apprehend market. Thus German codetermination legislation gives employees rights to representation on company supervisory boards, and to set up works councils with statutory rights over a range of work-related issues. Chan ges to payment systems resulting from transferred pay and performance practices are egress to codetermination.Even where the MNC deploys resources to mitigate this harm of process control (see above), it nonetheless increases the costs for MNCs of shaping decisions, and necessitates some degree of negotiation with local actors and/or the application of power resources. Thus the power of process provides subsidiary actors with a talent to resist practice transfer. Third, subsidiary actors are able to exploit host institutional settings to challenge dominant actors power of meaning in the MNC.In particular, significant macro-institutional capabilities derive from subsidiary actors competence as skilled interpreters of the host institutional frame. In other words, they can shape the normative and cognitive understandings of what is possible, preferable and contextually rational. Even the most highly regulated and juridified systems leave spaces for meter reading based on expert i nstitutional knowledge. More subtle and tacit cognitive and normative elements of institutional frameworks are even more subject to insider exegesis.While subsidiary actors may use such institutional expertise to hike up transfer, in situations of interest conflict with HQ, they may equally draw on such capabilities to construct a rhetoric legitimating opposition to transfer. Naturally, subsidiary actors interpretations of the viability of transfer are apt(p) to challenge and homecoming-interpretation, notably by expel managers, and sceptical HQ actors may demand that local managers claims be thoroughly tested. This may especially be the case where dominance effects are present, notably in US MNCs which may have a strong presumption of the efficacy of HQ practices (e. . Almond et al. , 2006 Tempel et al. , 2006). Again, therefore, the host institutional context provides a contested terrain (cf. Edwards and Belanger, 2009 also Geppert and Dorrenbacher, 2011), in which interest gr oups at different levels within the MNC struggle to further their agendas. A final examination point concerning the power capabilities of subsidiary actors is that their issue-scope of power (Lukes, 2005 74-5) the range of issues over which an actor can determine outcomes is believably to be limited because of the overall power of HQ.As a result subsidiaries are belike to have to grade the issues over which they expend capabilities that are scarce relative to those of HQ actors. Moreover, their power is likely (again using Lukes terminology) to have a land contextual range, to be largely restricted to the specific institutional setting in which they operate whereas that of HQ is likely to be more context-transcending, deployable under a wider range of circumstances, especially where dominance effects come into play.A possible exception to this is where the subsidiary is located in a host that is more dominant in the global economy than is the MNCs country of origin. This may provide greater context-transcending capacity to the subsidiary, leading for example to additional possible transfer outcomes such as reverse diffusion (Edwards and Ferner, 2004) in which practices are transferred from subsidiary to HQ. These arguments are summarized in Table 1. Table 1 about here MNC actors and interests in the context of HR&EP transferWe are now in a position to examine HQ and subsidiary interests in relation to transfer. Together with the power capacities of HQ and subsidiary explored above, the constellation of interests will determine the stance of subsidiary actors towards transferred practices. Who are the relevant MNC actors in situations of institutional duality and transfer? A first approximation is to divide actors into those associated with the headquarters perspective and those in the subsidiary.In reality, finer-grained distinctions may become necessary to include for example actors at regional or business-unit headquarters with interests and power ca pabilities distinguishable both from those of corporate headquarters and national subsidiaries. Moreover, HQ is not a homogeneous block but comprises different groupings (e. g. by management function and level) with potentially different interests in relation to transfer. At subsidiary level, a spirit distinction is between managers and workforce (Edwards and Belanger, 2009).There may be both super acid and divergent interests. Managers and workforce may both have an interest in the sites survival, for example. In contrast, particularly where the impact of a transferred practice on the sites performance is ambiguous or contested, interests may diverge. Depending on the practice, further disaggregation may be appropriate for example, subsidiary operations managers may see the transfer of practices such as teamworking as useful for expertness while HR managers may oppose transfer on the grounds that they disrupt existing accommodation with employees.An important distinction is bet ween managers whose career ambit lies within the host country and those whose careers trajectories and aspirations are international in scope (Dorrenbacher and Geppert, 2009a Morgan and Kristensen, 2006). The former may engage in subversive strategizing (Kristensen and Zeitlin, 2005), acting counter to HQ norms and prescriptions in order to chant the powerfulness of the subsidiary while the latter may have less guess in the sites survival, and see it as in their career interest to overcome local obstacles to transfer.Nor is the subsidiary workforce necessarily homogeneous. There may be differences of interest between high-skilled workers with snapper competences and lower-skilled workers with more generic competences, and transferred practices may differentially impact on such interests. Whether subsidiary actors deploy capabilities to resist or promote transfer will depend on how the practices affect existing interests. Resistance or debate is likely to emerge under conditions of criticality, that is where the issue is seen as critical to the interests of actors in the subsidiary.For example, resistance may be evaluate where a transferred practice embodies institutional norms or requirements that disrupt accommodations seen as vital to the effective conduct of the economic function of the subsidiary, and hence to the economic security, rewards and career interests of groups and individual actors in the subsidiary. Where a transferred practice disrupts workforce interests but not those of managers (or vice versa), there is likely to be an internalization of the clash of rationalities within the host.In the area of HR&EP, it is more likely that interests in the subsidiary will be differentiated, with say employees and their representatives resisting transfer, while managers promote it. This may be manifested in managementworkforce conflict, or as Tempel et al. (2006) suggest, subsidiary managers may function as a fifth column horse for imported practices such as global performance management systems, working to neutralize institutional obstacles. Transferred practices may selectively disrupt interests of particular management groups, or particular workforce groups, or both.In such cases coalitions of support for and opposition to transfer may be complex and cut across the managementworkforce divide. However, where transfer disrupts a wide range of subsidiary interests, a subsidiary-wide oppositional coalition may emerge. Power, institutions and transfer outcomes These arguments are now combined into a model of transfer outcomes, in which constellations of institutional distance, macro- and micro-level power capabilities, and actors interests determine the fate of transferred practices.We argue, first, that there is a need to revise the Kostovian idea (e. g. Kostova, 1999) that MNCs operate between fairly fixed institutional entities, as implied by the notion of institutional distance. The impact of ID upon transfer is modified by the power of MNCs in two ways. In the first place, dominance effects, where they exist, smooth transfer by providing MNCs with abundant power over resources, power of process over the rules of the game, and power to manage meaning by cut down normative opposition to dominant-country practices in the host.In the second place, the power of MNCs as active rule-makers, winning in institutional work to construct institutional variants or niches within the host setting, mitigates the constraining impact of institutional distance. In order to incorporate these considerations, we therefore propose that Kostovas notion of institutional distance, which we refer to as raw ID, be replaced by the concept of modified ID, ( middle). Here, the predictions of our framework are significantly different from those of Kostovas.Second, transfer outcomes depend on the specific configuration of power capabilities and interests of actors at different levels of the MNC. Where interests of subsidiary and H Q actors are broadly concordant, the power capabilities of the subsidiary are likely to be deployed in a manner ancillary of transfer, for example by removing or stupefying host institutional obstacles to transfer. However, where there are strong interests within the subsidiary in conflict with those of HQ, the outcome is likely to be an oppositional stance.This does not necessarily entail overt resistance (cf. Oliver, 1991). Power capabilities may be deployed to resist, modify, neutralize, or quarantine the transferred practice through ritual ceremonial occasion that does not affect real practice. Which of these oppositional outcomes occurs is likely to depend on the homogeneity of interests within the subsidiary, and the power capabilities of the subsidiary (or at least of oppositional actors) relative to those of HQ.An outcome of ceremonial compliance in which nonconformity is masked by a facade of acquiescence (Oliver, 1991 154) is likely where opposition is high due to a col lision of normative/cognitive frameworks (e. g. concerning what will promote unit profitability in the subsidiary), but where subsidiary actors control of resources and/or processes is comparatively low, precluding overt resistance. Alternatively, opposition may lead to adaptation or intersection (e. g. Becker-Ritterspach, 2009 Szulanski and Jensen, 2006) in which the practice acquires elements characteristic of the host setting.In some cases, this may make a practice more effective within the host, or allow it to be internalized by subsidiary employees. Survey evidence suggests that it is common for MNCs to disseminate practices by means of broad framework policies, with local adaptation being expected in HR&EP areas such as performance management, variable pay, and employee link (Edwards, P. et al. , 2007). This may be termed functional hybridization. In other cases hybridization may divert a practice from its blueprint function and hence subvert HQs intention.For example, a su pposedly convertible employee performance appraisal system in a US MNC operated with major variations in practice thus in the German subsidiary the works council was able to preclude individual assessment, minimize quantification, and reduce the scheme to occasional informal, unrecorded evaluations (Liberman and Torbiorn, 2000). Such immune hybridization is likely where transfer disrupts internal accommodations and/or is seen as dysfunctional for subsidiary performance, and where subsidiary actors have sufficient power capabilities, such as interpretive control of local meaning frames.Third, the three dimensions of power are likely to affect transfer outcomes in different ways, other things being equal. Where a subsidiary has significant power of resources, this is likely to facilitate a bargaining process in which the terms of entry of a transferred practice are negotiated between subsidiary and HQ. Where a subsidiary has significant power of process, it may use it to influence how global policies or practices are intentional within the MNC, for example by impart to central policy-making bodies.This provides it with the opportunity to underwrite that the transferred practice is from the start compatible with the cognitive/normative (or indeed regulatory) frames of the host. Finally, a subsidiary may be skilled in the management of meaning, whether in highlighting or concealing normative/cognitive discrepancies provoke by the transfer of a practice, or by mobilizing appropriate legitimatory discourses within the micro-institutional sphere of the MNC. This power may affect transfer outcomes in different ways.Where the subsidiarys stance is oppositional, it may evoke host macro-institutional impediments, drawing on its skilled interpretation of institutions-in-practice. Equally, where its other power capabilities are relatively weak, it may use its skills in managing meaning to construct the ceremonial aspects of the practice without link on the subsidi arys core activity. Where the subsidiarys stance is supportive of transfer, the power of meaning may be brought to bear to secure the internalization (Kostova, 1999) of transferred practices.Returning to the outcome parameters outlined in the base, we can synthesize the above arguments (see table 2) in terms of typical scenarios, based on specialty of functionality, internalization, adaptation and directionality. The table indicates that the conditions most conducive for successful transfer in which functional practices are internalized are where HQ actively wants to transfer practices, ID is low, dominance effects are high, institutional space is high, HQs power capabilities are relatively strong, HQ and subsidiary interests are concordant and the interests of subsidiary actors are homogeneous (model 1).To take a stylized example, a US business services firm i. e. an MNC from the hegemonic business system, in a sector in which that business system is internationally dominant tr ansfers a performance appraisal system to its professional employees in its non-unionized Irish subsidiary as part of the global dissemination of convertible HR policies. Many of the employees have worked for American firms before US MNCs overlook among foreign employers in Ireland and have studied or worked in the US.Their cognitive/normative frames are attuned to American performance-management systems, especially since there is a strong honors-based corporate culture, and there are unlikely to be discordant interests with regards to the policy, so the practice is likely to be easily internalized. There are few macro-institutional constraints to the introduction of such policies and few variant constraints stemming e. g. from the presence of trade unions. This can be contrasted with quintette other scenarios.As ID increases and capabilities, particularly resources, controlled by the subsidiary grow, the prospect of transfer taking the form of functional hybridization increas es (model 2). To illustrate, a US electronics MNC attempts to transfer a performance-related pay system to the more constrained and institutionally distant context of Germany. 4 There is a perceived disjunction between the policy and cognitive/normative frames of employees, i. e. the cross-institutional transfer reveals the cognitive/normative underpinnings of the system.The subsidiary is large, successful and powerful, talent it power over resources with which to negotiate with HQ a modification of the practice for example, by reducing the amount of pay at risk, to make it more acceptable within the host context (e. g. Tempel et al. , 2006). Where dominance effects weaken, institutional space is more constrained, the subsidiary possesses significant power of resources and process relative to HQ, and has divergent interests from HQ, then the likelihood of resistive hybridization and low internalization rises (model 3).For example, Lindholm et al. (1999) show how performance apprai sal systems in Nordic MNCs in China were subverted because the systems provoked extensive clashes with cognitive/normative frames, e. g. with regards to the priority given to performance rather than seniority, and issues around loss of face and around managerial authority in setting targets. If dominance effects are absent, ID is high, and subsidiary interests clash with HQs, transfer may fail in all (model 4).To illustrate, a British MNC seeks to internationalize a policy of outsourcing support functions to reduce labour costs. It pressurizes foreign subsidiaries where the ratio of outsourced workers to internal employees is significantly lower than in UK domestic operations. This is the case in the German subsidiary, one of the largest in the company and with important production facilities for key products.Subsidiary managers are sceptical as to the efficiency of outsourcing and the HR manager uses his detailed knowledge of German employment law to circumvent the need to outsour ce functions (e. g. Tempel, 2002). Where institutional space is moderate, the subsidiary is not particularly powerful (in resource or process terms) in relation to HQ, and has quite different interests to actors at HQ, the prospects for ceremonial adoption are at their highest (model 5). To take a stylized example, a British MNC attempts to internationalize its comprehensive diversity management practices.In its medium-sized production facilities in Germany, there is considerable scepticism among managers and primarily virile employees as to the business case for diversity management. Lacking power of resources or process to openly block HQ practices, managers go through the motions of introducing diversity management measures, for example by organizing social events under the label of diversity management, but do not implement real changes in enlisting processes to encourage more female applicants or introduce diversity awareness training for employees.Finally, where interests are concordant and where the subsidiarys power capabilities are considerable especially when its institutional embeddedness allows it to develop scarce resources of value to the wider MNC conditions exist for reverse transfer (model 6). That is to say, practices operating in the subsidiary are transferred to headquarters (Edwards and Ferner, 2004). These conditions are heightened in situations of reverse dominance, that is where the subsidiarys host system is more dominant than the MNCs parent system.For example, a German chemical company developed a global system of bonus pay for executives that was modelled closely on schemes already developed in the US subsidiary of the company (Ferner and Varul, 2000). These models are not, of course, utter(a) other outcomes are possible and the same transfer outcome may be obtained through different combinations of variables. But they illustrate the heuristic value of the approach. It should be state that a certain degree of fundamental intera ction of explanatory variables is likely.For example, MNCs from dominant parent countries are likely to be able to influence subnational variety because of their greater capacity for rule-making rather than mere rule-taking behaviour. Table 2 about here finding This paper has argued for a revision of the Kostovian approach to practice transfer in MNCs in two key respects systematically incorporating actors power capabilities, and taking account of how power problematizes ID by rendering it more susceptible to the purposive action of MNC actors.We have argued for an analysis of power that incorporates both macro-institutional and micro-institutional capabilities of MNC actors in which these are able to a greater or lesser extent to manipulate and construct elements of the institutional settings in which they operate. The implications of the argument are methodological as well as conceptual. First, there is a need to develop credible measures of the variables in the model. The conce pt of mID implies the need to assess dominance effects, for example, and these will vary according to the pairs of parent and host business systems in play dominance may also vary e. . by sector. Much work needs to be done on measuring notions such as institutional space, and to map the dimensions that characterize institutional variants. This has to be accomplished at a disaggregated level notions of country institutional profile may be too crude where MNCs power allows them to construct niche institutional micro-climates. One of the most difficult trade union movements is to operationalize actors power capabilities and to empirically assess different levels of capabilities in relation to resource, process and meaning.Moreover, empirical tools capable of identifying and distinguishing interests are needed, a task complicated by the fact that while some underlying interests may be long-term and durable for example, around organizational survival others may well be issue-specific, constructed anew around each instance of transfer. These points suggest a critical role for in-depth case studies. They allow deeper exploration both of the process of transfer and of how transferred practices are enforced in the routine life of the subsidiary.They are more suited than surveys to developing nuanced operationalizations and unpicking the complexities of power, how different kinds of power capabilities are deployed by different actors in the transfer process, and how configurations of interests are constructed around different transfer cases. They are more appropriate for exploring in depth the way transferred practices operate in reality. Finally, there is the question of the generalizability of these arguments to other areas of management activity.Inasmuch as transfer provokes challenges to existing modes of action and to institutional frameworks, much of the same processes of power are likely to be observed in other areas. The cross-national transfer of technical k now-how, for example, exposes underlying cognitive assumptions about how the production of knowledge and development of products should be organized (e. g. Lam, 1997 Szulanski and Jensen, 2006). It is also likely to create conflicts of interest over control of knowledge as a resource, or concerns about the impact of transferred knowledge on the structuring of activities and actors roles in the recipient unit.Beyond that, however, HR&EP may have distinctive characteristics, relating partly to the structured antagonisms between capital and labour (Edwards, 1986). More immediately, as a downstream business activity, HR&EP is particularly prone to the normative principles that may be at odds with the prescriptions of upstream strategy, increasing the space for actors to exploit micro-institutional ambiguities between, for instance, directives on growth, profitability or efficiency on the one hand, and principles of employee management on the other. Funding statementThis research was sup ported by funding from the Economic & Social Research Council, grant numbers R000-23-8350 and RES-000-230305. Notes ? According to Scopus, the number of citations for three of Kostovas articles concerning transfer (as at 15th September 2011) are as follows Kostova, 1999 321 Kostova and Zaheer, 1999 329 Kostova and Roth, 2002 281. 2 The term capabilities is preferred to resources since power over resources constitutes only one dimension of power (one that is the focus of resource-based views of power that predominate in the business literature). Perceptions of profitability in an MNC can be shaped