=Paper=
{{Paper
|id=None
|storemode=property
|title=Global Integration versus Local Adaption of an e-HRM System in a US MNC
|pdfUrl=https://ceur-ws.org/Vol-570/paper017.pdf
|volume=Vol-570
}}
==Global Integration versus Local Adaption of an e-HRM System in a US MNC==
https://ceur-ws.org/Vol-570/paper017.pdf
Global Integration versus Local Adaption of an e-HRM System in a
US MNC
Ralf Burbach, Institute of Technology Carlow, Ireland
ralf.burbach@itcarlow.ie
Tony Royle, National University of Ireland Galway, Ireland
tony.royle@nuigalway.ie
Abstract. Research in e-HRM appears to purport that e-HRM practices are
diffused and adopted uniformly in the subsidiaries of multinational
corporations (MNC). This paper argues that the transmission e-HRM
practices, like the diffusion of other HRM practices, is subject to a multitude
of institutional factors. This paper also proposes institutional theory as a
macro theoretical research paradigm for e-HRM research. Based upon an
analysis of interview data garnered in the German and Irish subsidiaries of
a single US MNC, a palpable divergence in e-HRM practices could be
discerned. Moreover, this research identifies a number of forces for
standardisation and isomorphic pressures in the institutional environment
of the MNC.
Keywords: e-HRM, Institutionalist Theory, Institutional Factors, Germany,
Ireland, International HRM
1 Introduction
Despite a growing body of research underpinning the field of electronic Human
Resource Management (e-HRM), a distinct paucity of studies founded on macro
theories emerges when this body of research is examined [89]. This paper argues that e-
HRM diffusion in the subsidiaries of a Multinational Corporation (MNC) is, similar to
other HRM practices, subject to a broad range of institutional factors, even though the
nature of an e-HRM would necessitate a high level of integration and standardisation
across the MNC to attain expected effectiveness and efficiency gains. It has frequently
been argued that particularly US MNCs‟ are characterised by standardised, centralised
and formalised HR policy-making processes and the introduction of US style HRM
practices in their host countries [e.g. 1, 25, 50]. The level of diffusion of HRM practices
in general across MNCs appears to diverge considerably and various attempts have been
made to understand these differences. For a number of years, the international HRM
(IHRM) literature has provided a forum for an ongoing debate, which has given rise to a
host of institutional factors that may arbitrate the transfer of employment practices
among multinational corporations‟ subsidiaries. These factors comprise home and host
country effects [1, 34, 70], sector effects [13, 78, 79], the institutional context and
national business system [e.g. 10, 13, 13, 14, 24, 25, 26], dominance effects [35, 62,
Strohmeier, S.; Diederichsen, A. (Eds.), Evidence-Based e-HRM? On the way to rigorous and relevant
research, Proceedings of the Third European Academic Workshop on electronic Human Resource
Management, Bamberg, Germany, May 20-21, 2010, CEUR-WS.org, ISSN 1613-0073, Vol. 570, online:
CEUR-WS.org/Vol-570/ , pp. 289-306.
© 2010 for the individual papers by the papers´ authors. Copying permitted only for private and academic
purposes. This volume is published and copyrighted by its editors
74], organisational culture [2, 7, 48, 86], or the impact of micro-political relationships
between the subsidiaries and the head quarter [32, 47]. A detailed discussion of these
factors extends beyond the scope of this paper. Much of the debate surrounding these
factors is founded on institutional theory. This paper will draw on both the business
systems approach (or European institutionalism) and new or neo institutionalism.
Indeed, Tempel and Walgenbach [90] opine that both theoretical stances can learn from
each other. European institutionalism places greater emphasis on the regulative context
[51, 93, 95] than does the US-based new institutionalism, which focuses more on the
socio-political background [17, 83].
A review of the extent e-HRM literature underscores a dearth of research and discussion
on the factors mediating the diffusion of e-HRM and e-HRM practices across the
subsidiaries of MNCs. Consequently, the aim of this paper will be to explore whether
the institutional factors that mediate the transfusion of standard HRM practices may
also effectuate the transmission of e-HRM practices within the subsidiaries of an MNC
or whether indeed other forces can be discerned. Data for this paper emanate from a
review of the international HRM (IHRM) literature as well as an analysis of primary
data derived from a series of in-depth interviews with key decision-makers and
stakeholders in the areas of IHRM and e-HRM in the German and Irish subsidiaries of a
US MNC. Findings from this research intimate a number of pertinent issues regarding
the transmission of e-HRM practices throughout this MNC. Subsidiary variations in e-
HRM utilisation may be explained by a multiplicity of factors including the strength of
national business systems, the strategic salience of subsidiaries and micro-political
power relationships between the subsidiaries and the head quarter. While the findings
affirm both home and host country effects in the diffusion of e-HRM practices, the
dominance effect of the MNC shapes employment practices in general [79, 80] and not
just e-HRM practices in the subsidiaries in distinctive ways. Due to the information
intensive and dependent nature of an e-HRM system, e-HRM practices are subject to
stronger forces for standardisation than standard HRM practices. This paper evinces that
variability in e-HRM practices in the subsidiaries of an MNC arises, to a large degree,
from the same type of factors governing the transfer of HRM practices across
subsidiaries, albeit e-HRM practices are impacted in different ways. These findings also
support evidence from the e-HRM literature, which illuminates other factors such as
user acceptance as auxiliary key determinants of e-HRM success [40, 82]. This paper is
structured as follows: the succeeding section will illuminate the pressures of
institutional duality on the transmission of organisational practices in general and e-
HRM practices in particular across the subsidiaries. Then, the lack of research into the
diffusion of e-HRM is highlighted. This is followed by an outline of the methodological
approach for this research. Next, the research evidence will be discussed before the
main conclusions are offered.
2 Institutional Duality and the Diffusion of e-HRM Practices
Internal integration and centralised decision making is of paramount importance in the
operation of global e-HRM system [81]. Any deviation from the standard system would
arguably compromise the quality of the data collected and ultimately impair the
informative value of any subsequent analyses of this data. However, organisations are
continuously faced with what has been described as „institutional duality‟, that is,
different layers of institutional contexts that simultaneously impact the configuration of
HRM (and thus also e-HRM) practices [60, 76]. In other words, MNCs strive to attain
internal consistency of policies and procedures to develop and sustain their corporate
identity, while, on the other hand, MNCs are forced to tailor their policies and practices
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to suit the cultural, societal, and legislative environment of their host nation in order to
achieve local efficiency [29, 50, 53]. Morgan and Kristensen [67] contend that the
countervailing nature of these institutional contexts will ultimately lead to micro-
political conflict between the head quarter (HQ) and the subsidiaries and the
subsidiaries themselves. A number of authors have argued this point [8, 18, 19, 31].
Institutional isomorphic pressures may be categorised as normative or cognitive [83],
high or low context-specific [11], or coercive, mimetic, and normative [29]. DiMaggio
and Powell define isomorphism as “a constraining process that forces one unit in a
population to resemble other units that face the same set of environmental conditions”
[16]. Coercive isomorphism is the product of both formal and informal pressures of the
host society in which the subsidiary resides, including government, employment
legislation, trade unions, works councils, etc. [16]. Mimetic isomorphism focuses on
organisational modelling (in benchmarking and imitating strategies and practices of key
competitors) in response to uncertainty in the firm‟s environment [16]. Normative
isomorphism relates to the adoption of accepted work practices, standards and modus
operandi of a specific institutional (sectoral) environment. Institutional isomorphism
may ultimately result in organisations that are “virtually indistinguishable” and
“interchangeable” [16, 29]. These pressures can arise in the global or national (even
regional), internal (the relational context) or external (the institutional context)
environment of the firm [60]. Child [11, 12] distinguishes between high context and low
context dimensions to assess the level of influence different institutional contexts have
on MNC practices. A high context dimension refers to factors that lead to a high level of
embeddedness in the national and social institutional context, whereas a low context
perspective is associated with factors such as the economy, market and technology,
which are less dominant in moulding a company‟s HR policies and practices. To a large
degree, the level of differentiation and adaptation of HRM (and e-HRM) practices
required by the MNC seem to hinge on the strength of the national business system
(NBS) of the host country [13] and the magnitude of differences between the NBS of
the home and host country [89]. MNCs pursuing a transnational or geocentric
globalisation strategy appear to favour what has been described as a „cherrypicking
approach‟, whereby the MNC selectively adopts HRM (and perhaps also e-HRM)
practices from the respective home and host country context of their subsidiaries [43,
49]. Furthermore, some employment practices that originated in host countries may be
adopted by subsidiaries in other countries and even in the country of origin of the MNC
– this process is termed „reverse diffusion‟ [1, 24]. The level of transfer of HR practices
has been theorised by a number of authors. Morgan and Kristensen [67], for instance,
argue that the larger the institutional distance was the greater the difficulty in
transferring practices successfully would be. Kostova [59] differentiates between
implementation and internalisation. She suggests that successful implementation and
internalisation hinge on three sets of factors under the headings social context
(regulatory, cognitive and normative), organisational context (culture) and relational
context (commitment, identity and trust relationship with parent organisation). Building
on this theme, Björkman and Lervik [6] put forward three dimensions of ascending
levels of transfer success – implementation, internalisation and integration of diffused
HR practices. Oliver [73] identifies a range of strategic responses to institutional
pressures, which will ultimately affect the success of any transmission. These responses
extend from manipulation, defiance, avoidance, and compromise to acquiescence. In
comparison, the ERP and IS bodies of literature generally appear to consider large
corporations in which these systems are rolled out as a homogenous mass rather than a
heterogeneous system of political subsystems, that is, the subsidiaries. Few articles of
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the ERP implementation literature allude to culture and the organisational environment
[75, 85]. However, established IS success models strike one as focusing predominantly
on user acceptance issues [15, 71]. While this section has illuminated a range of
institutional factors that may compel a MNC to adapt its (e-)HRM practices locally, the
next section reveals the dearth of literature and debate on the transmission and local
adaptation of e-HRM in subsidiaries of an MNC, which this paper is ultimately aiming
to address.
3 Scarcity of Research into Diffusion of e-HRM
Based upon the arguments presented above it seems reasonable to assume that e-HRM
practices in different subsidiaries of the same MNC ought to diverge in some way. To
date however, the e-HRM literature has accepted and has somehow assumed that
unilaterally imposed e-HRM practices will be adopted by subsidiaries in the same
manner in which they were intended by an MNCs HQ, even thought the above
discussion has highlighted that this is in fact not the case. The few quantitative studies
that examine the diffusion of e-HRM and / or Human Resource Information Systems
(HRIS) centre on the adoption of HR technology by a wider population of organisations
rather than the adoption and subsequent diffusion of e-HRM in a single company [42,
58, 63, 72, 92]. It seems that only Smale and Heikkilä‟s [84] study acknowledges that
the introduction of an e-HRM system may give rise to conflict and micro-political
behaviour, which necessitate negotiation and local adaptation of e-HRM practices to
resolve these issues. Evidently, additional research is required to address this imbalance.
4 Methodological Approach
This research employs a single case study but multiple units of analysis approach to
assess whether or not the diffusion of e-HRM practices in the subsidiaries of a US MNC
is mediated by the same institutional factors that govern the transmission of standard
HRM practices. This paper also aims to explore any differences and similarities that
may exist between the transfusion of traditional HRM and e-HRM practices.
Accordingly, this investigation is both instrumental [87] and exploratory [97] in nature.
Due to the multifaceted nature of institutional factors a single case was selected to focus
on the phenomenon under investigation and to avoid the moderation of results by
additional extraneous variables, which would have been introduced by a multiple case
analysis [4, 14]. German and Irish subsidiaries of this MNC were chosen for this
analysis due to the distinct cultural, economical, business and employment systems
backgrounds in these countries [57]. Primary data for this ongoing study derive from
fourteen in-depth face-to-face interviews with key decision-makers and stakeholders in
the areas of IHRM and e-HRM utilisation in this multinational. Interviews were
recorded and transcribed. Interviewees were chosen based on their level of involvement
and decision-making power regarding the use of e-HRM in the subsidiaries. The semi-
structured interviews lasted between one and four hours and were carried out in the Irish
manufacturing facility (with the HR director, HRIS specialist, and two line managers),
the European HRIS headquarter (Head of Shared Services Centre Project Team,
European HRIS Manager, Information Systems Analyst, Payroll Processing Manager)
in The Netherlands, the International (European) Headquarter (Senior Director for HR
Systems) in Switzerland, the Central European Sales Headquarter in Germany (HR
Director Central Region and HRIS specialist), and the German manufacturing plant
(Plant Director, Finance /HR Manager, Plant Manager / Head of the Works Council).
The US MNC under investigation (Meddevco in the following) employs approximately
38,000 people in 120 countries. This medical devices company operates in the region of
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270 manufacturing facilities, sales offices, research centres, education centres and
administration facilities across the globe. This sector is highly regulated [27] and may
thus be subject to strong institutional isomorphic pressures. Coercive pressures arise
from the highly unionised nature of this sector in Ireland and Germany and the highly
regulated nature of the employment regulation system in Germany [68, 36]. Normative
pressures emerge from the regulated nature of the sector itself, for instance quality and
regulatory standards. According to the Irish HR Director in this study, key competitors
in this industry frequently benchmark one another in terms of HR practices. This is not
surprising, as many of the 140 medical device companies located in Ireland are
clustered in the West of Ireland, which delivers additional mimetic pressures for
institutional isomorphism among these companies. The majority of medical devices
companies appear to be headquartered in the US [28].The e-HRM system in Meddevco
is part of an enterprise resource planning system (ERP) named PeopleSoft (owned by
Oracle). An ERP is a management information system that integrates information from
all functional areas such as finance, production, marketing and HRM into a central data
bank. The US HQ utilises practically every PeopleSoft module available to support the
HR function. Online HR activities supported by the system include talent management,
performance appraisals and e-recruitment, online training, and HR administration. The
US-part of the corporation also maintains a HR shared services centre (HRSSC), which
does not serve centres outside of the USA. The ERP and e-HRM systems were adopted
at different stages in the life cycle of the different subsidiaries. In the Irish
manufacturing site, PeopleSoft was adopted when the site was taken over by Meddevco.
The Sales HQ for the Central Region in Germany (set up in 1970) commenced the
introduction of PeopleSoft in 1999 (the same year the Irish site was acquired). It took
almost two years to implement, according to the German HRIS Super-User. The
German manufacturing site was acquired in 2000 and PeopleSoft introduced in 2004
and is, with reference to the German Plant Director and Finance Manager still not fully
implemented, even though the European HRIS Centre considers the rollout actualised.
This dichotomy accentuates the differences between three ascending levels of transfer
of HR practices identified by Bjorkman and Lervik [6] - implementation, internalisation
and integration. The evidence suggests that e-HRM transfer may only be at the initial
level. In other words, managers and staff in the German manufacturing plant have not
accepted the system nor do they see value in using the system. The next section will
focus more closely on the key factors of e-HRM diffusion in Meddevco.
5 Key Factors in e-HRM Diffusion
The introduction to this paper has already drawn attention to the premise that internal
consistency ought to be the key to maintaining a global e-HRM system. Thus, the data
and types of information collected throughout the MNC‟s subsidiaries ought to be
uniform. It therefore follows that MNCs ought to control and keep isomorphic pressures
to a minimum. However, this is not the case in this MNC. A number of examples exist
where the corporation had to make concessions to individual subsidiaries and countries
with regard to data entry. In the German manufacturing site for example, modules such
as e-recruitment or talent management are not utilised due to the lack of manpower. In
addition, this subsidiary is allowed to leave some employee information on the system
unpopulated, as the pay scales of the employees covered by collective bargaining
arrangement do not fit into the system. In some respects, the German Plant Director
stated, the corporation simply turns a blind eye when qualifications of (German)
employees are entered incorrectly, as the system of vocational training does not exist in
the US. Moreover, the system recognises all but few German universities. German
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payment systems and the entry of German qualifications into the system also present
barriers to utilisation in the German Sales HQ, according to the German Super-User.
Managers in the German manufacturing plant feel a great deal of disenchantment and
even disengagement with the system, especially since the corporation has now shifted
its main focus of attention on the introduction of a new ERP system (by SAP), even
though PeopleSoft will run in parallel for the foreseeable future, a decision which raised
palpable concern with the HR Director for the Central Region. Similar issues arose in
the international head office in Switzerland and limited adjustments had to be made to
the system for compliance reasons. Since the international HQ in Switzerland was
considered a show-piece for the organisation and an extension of the HQ in the US,
additional customisations or divergence from e-HRM policies were not an option
according to the Senior HR Systems Director located in the International HQ. At a
European level, the MNC has to date been unable to introduce a HRSSC, which
centralises all HR administration in a central location. According to some of the key
stakeholders interviewed (German Plant Manager, Irish HR Director), European
managers are fundamentally opposed to this idea and their combined resistance has
already led to the failure of the first attempt to introduce such a HRSSC. In response,
the MNC has set up a project team, which includes some European key stakeholders in
order to pre-empt possible resistance in the next introduction attempt. Other issues
arising from the implementation of HR self-service are of a logistic nature. Since HR
self-service is provided via an intranet, employees will need access to a PC. However,
not every employee can be guaranteed permanent access, particularly in the
manufacturing sites in Galway (Ireland) and Heerlen (The Netherlands), according to
the Irish HR Director and European HRIS Centre Manager, even if the organisation
provides a number of computer kiosks on the shop floor. In addition to access to a PC,
employees require the basic computer skills necessary to take advantage of the self-
service features of such a system. These skills cannot be taken for granted as the
composition of staff differs in the subsidiaries. For instance, the majority of staff in the
German manufacturing plant possesses a tertiary qualification, while most of the
workers in the Irish Plant do not. In addition, people may have privacy and security
concerns regarding online access to personal information [21, 55]. Mimetic pressure to
implement a HRSSC arises from the MNC‟s key competitor, which has already
introduced such a HRSSC.
Auxiliary key drivers for the global standardisation of HRM practices include
organisation structure and culture [20]. However, the standardisation of e-HRM
practices is just as subject to the „drivers for localisation‟ [20] as other HR practices
such as recruitment or training are. At any given time, these localisation drivers provide
a counter force to the drivers for standardisation and include, inter alia, national culture,
national institutions and national business systems as well as the subunits themselves
[39]. Meddevco consists of six distinct product divisions, each with its own support
functions. Complex reporting and organisational structures, centralised control and
decision-making in this MNC all act as strong drivers for standardisation. A so-called
Human Resources Council (HRC), consisting of Senior Vice Presidents (SVP) of
particular functions, for instance the SVP for Compensation and Benefits Systems, drive
the multinationals‟ HR strategy. Nine of the ten members of this council are permanent
constituents; only the European representative rotates on a yearly basis, which has some
marked repercussions for the (lack of) representation of European interests in the HR
decision-making process. While the HR Council develops corporate HR strategy, it does
not have Board of Director status. The actual Board of Directors of the MNC ratifies
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any proposals before these are disseminated to the divisions. Asked about her influence
on e- decision making processes the Senior Director HR Systems replied:
None. All decisions are made by the HRC. If for instance a decision would be made to
introduce SAP by the CIO [Chief Information Officer] and the HRC, I would not be
involved in the decision making.
Other key stakeholders in this research (Irish HR Director, German Plant Manager, HR
Director Central Region, Head of HRSSC Project Team), independently from one
another, emphasised that one of their key roles was to interpret company policies and
transpose these into the local business system. The data suggests that local managers
apply some discretion in adapting some of these policies locally, for instance the Irish
manufacturing plant refused to implement a salary modelling tool, which confirms
evidence from other research in MNC subsidiaries [18, 19, 26, 32].
National institutions and business systems in Germany and Ireland diverge
considerably. It has frequently been argued that the employment relations (ER) system
in Germany is highly regulated, whereas Irish ER appear to be a lot more deregulated
by comparison [1, 56]. The German system of co-determination is characterised by
indirect worker participation through elected worker representatives and a myriad of
formalised institutions [77]. It has also been argued that the key labour market
institutions, multi-employer bargaining, co-determination, and initial vocational
training, curtail managerial prerogative [69]. As one might suspect, legal compliance
issues represent the key reasons for adapting e-HRM practices. However, the evidence
also shows that these may be circumvented by using supplementary systems, as was the
case with payroll systems, which are unique in each subsidiary. The localisation drivers,
or high context specific drivers, in the unionised German manufacturing plant outweigh
the drivers for standardisation to some extent. For instance, the introduction and
subsequent changes or amendments of an e-HRM system would have had to go through
a formal consultation process with the works council. Any veto by a works council
effectively would have put a halt on the usage of the system [68]. However, the works
council in the German manufacturing plant did not seem to object to the introduction of
e-HRM, partially perhaps because the works council chairman and his deputy belonged
to the management team of the German manufacturing plant. In the also unionised Irish
manufacturing plant, the force of localisation drivers is low compared to the drivers for
standardisation. In other words, trade unions were neither consulted about nor do they
have any influence on the use of the system, as stated by the Irish stakeholders
interviewed. It comes therefore as no surprise that the Irish subsidiary is rather more
willing to adopt US e-HRM practices than the German plant, although the former has
blocked a number of e-HRM practices and was able to do so but for reasons other than
the drivers in question. The picture in the sales HQ for the central region mirrors that of
the Irish manufacturing plant. Evidence from this research suggests that this is largely
due to the absence of a union in the sales HQ. In the opinion of the HR Director for the
Central Region, customisation of the e-HRM system could have been a more
contentious issue had the central office in Germany been unionised or had there been a
works council. The absence of a works council affords some advantages in the daily HR
operations of the Sales Head Office.
Because we don‟t have a works council, the recruitment process is simplified
immensely for us. Because if you have a works council, then you have to first announce
all positions internally for two weeks before you can go external. This for instance
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would be an issue that we would have to incorporate [in the system] if we had a works
council, but since we have none … (German HRIS specialist)
The picture of e-HRM practices that manifests itself in the evidence provided is rather
fragmented. Is it possible, therefore, to consider the e-HRM practices employed across
these subsidiaries to be convergent (toward US model of e-HRM practices), divergent
or in a form of stasis [66]?
The MNC operates a strict „no customisation unless legally required‟ policy regarding
the rollout of e-HRM practices in its subsidiaries. The Finance Manager of the German
manufacturing plant explained the customisation strategy.
The global aspect is always checked and if [a customisation] can be implemented
globally and if it is advantageous not only for [us] then it is highly likely that it will be
implemented quickly. If it is specific to our location and if you don‟t have a sufficient
rationale as to how important it is, then nothing will happen.
This policy is an indicator of the high levels of control in the corporation, which is a
view that is echoed by the German and Irish HRIS Super-Users. For the most part, the
strategic subunits (SBUs) in this research lean towards the full adoption of e-HRM
practices. As far as the MNC is concerned, this makes business sense. For instance, the
above section on the role of e-HRM has stressed the significance of internal consistency
regarding the collection, management and analysis of employment related information.
Overall, the European HRIS centre and European subsidiaries appear to have little
leverage concerning decisions made by the US parent‟s HRC. The SBUs were neither
informed nor consulted during the implementation phase. This seems to endorse
Burbach and Dundon‟s [9] findings on HRIS and e-HRM utilisation in Ireland, which
stressed that nine out of ten organisations did neither consult with nor inform employees
of the e-HRM implementation. This is rather surprising, since it is well established that
employee involvement can be correlated with system acceptance and ultimately system
success [40, 87, 94]. The HQ drove system implementation in Europe and individual
subsidiaries had no choice but to implement the system under the aegis of the European
HRIS Centre. Despite HRIS Centre Manager‟s suggestion that the introduction process
went smoothly, interview data indicates that resistance to the initial implementation was
extensive, as, according to the Head of the European HRSSC Project Team, the
corporation appeared to assume a „sink or swim‟ approach to implementation. Evidence
intimates that some form of resistance to the e-HRM system in general appears to
persist in the subsidiaries in that some line and sales managers seem to maintain what
has been referred to by interviewees as „shadow administration‟, in the form of Excel or
paper-based files, by some of the interviewees to circumvent the use of the global
system. While officials know of their existence and their inappropriateness, they appear
to have resigned to the fact that they continue to be used.
I am almost certain that there are still managers that still have these. One has to concede
that managers do not work daily with PeopleSoft. One can be almost sure that one or the
other personnel file still exists. Fine. You can‟t do anything about it. It also won‟t
change in the near future. (HR Director for the Central Region)
The more recent introduction of a talent management system that requires employees to
complete an extended online Curriculum Vitae, which is available to superiors, appears
to be the cause of continued resistance in this MNC, whereby employees look to be
reluctant to fill in these online profiles of themselves. With respect to the adoption
success models presented above, the evidence furnished here evinces that e-HRM, while
it may be implemented as far as the European HRIS Centre and US HQ are concerned,
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has not been internalised by the subsidiaries. That is, individual subsidiaries have not
displayed wholesale commitment, satisfaction or psychological ownership [59] of
various e-HRM practices. However, the MNC has introduced a simple but effective way
to ensure greater levels of compliance with the e-HRM system – without completing
their online talent profiles staff will not be promoted. A similar policy ensures that line
managers use the online appraisal mechanism – employees will not receive pay rises or
bonus payments if the appraisal has not been conducted via the online system. A
different usage pattern emerges when the e-recruitment facility is taken account of.
While the Irish manufacturing plant fully capitalises on the system‟s features, for
example, the system is even linked to an external job search website to increase
exposure, the German manufacturing plant does not post any vacancies on this system,
as stakeholders prefer to attract only local staff. This evidence suggests high levels of
corporate control and high levels of embeddedness of the MNC in its home context [1,
30]. For instance, the Irish Manufacturing plant was also able to prevent the
implementation of a new system module.
They wanted us to introduce a Salary Modelling tool, which we thought was too
complicated. The system we use is Excel based, simple, and very user friendly –
different salaries can be determined straight away. So here we have been able to resist
the introduction of new practices. (Irish HRIS Super User)
The Irish HR Director remarked on the issue of system implementation
We have now reached a critical mass of 2300 employees where we could say that no
new systems would be introduced in Europe without our ok – the economies of scale
just would work – there wouldn‟t be enough people in the rest of Europe to make it
work.
As the Irish manufacturing plant also operates a sizeable research and development unit,
their impact on system implementation may equally be attributable to sources of micro-
political power within the organisation as it may be related to institutional influences
[8]. It is apparent that the Irish subsidiary has gained considerable strategic importance
and resource power, which it is able to leverage in exchange relations with the HQ and
other SBUs [5, 18, 33, 61]. Unlike the Irish Plant, which has far reaching influence on
the introduction or non-introduction of some practices, e.g. self-service HR, the much
smaller German Plant has virtually no sway. The German manufacturing plant appeared
to be somewhat disillusioned after the implementation of the HR system, which the
following quote by the German Plant Director highlights.
You introduce such a system, because you want to benefit from its rationalising effects,
because you want to introduce a global system that can communicate with each other in
entire holding company. For us this means 75% more administration, because nothing is
like it used to be, because nothing works the way we would like it to work. And now
there is somebody who says, PeopleSoft, there you‟ve got it and he doesn‟t realise how
could they actually manage it? How should they handle it? How much personnel will
they need to derive any value from using the system? A [CEO] presses a button and
sees his 100 best employees. [...]. He has a staff of 100 people that present everything
that they generate out of the system on a silver platter– brilliant. But what use is it to
me. I am not [the CEO]. May main priority is that my employees receive their correct
wages at the right time. PeopleSoft can‟t do that. There, I don‟t care about PeopleSoft.
PeopleSoft is at the very back of my priorities. […]
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Not all HRIS practices used in Europe originated in the US. In some cases, „Europe‟ has
been able to successfully develop and implement unique e-HRM practices, which were
adopted ex post facto by the US in a process of backward integration [22, 23, 24, 37].
For instance, internet recruitment and manager reports were two initiatives that were
developed in Europe and after successful implementation rolled out in the US. The
notion of a global uniform e-HRM system in this MNC is somewhat contradictory, as
above evidence emphasised. Considerable differences in e-HRM applications exist
among the subsidiaries even within the same country. Moreover, each subsidiary
appears to rely on a number of parallel systems. In Europe, every subsidiary uses its
own payroll and time and attendance system, which is possibly due to differences in
national legislation, which governs payroll administration. Other third party systems
include training administration, salary modelling tools or quality assurance systems. As
the MNC largely expanded through an acquisition strategy, many of these systems were
part of legacy systems still used in the corporation. According to some of the key
stakeholders interviewed (HRIS specialists and German Plant Manager), the
proliferation and incompatibility of these sub-systems with the global system presented
a major barrier to the operation of e-HRM in the corporation and as far as they were
concerned further evidence of the lack of commitment to the overall system by the HQ.
Above discussion has stressed the multifarious nature of institutional factors and
isomorphic pressures that impact on the diffusion of e-HRM across the subsidiaries of
an MNC. A number of conclusions can be drawn from this analysis.
6 Conclusions
The basis for this paper was the assumption that e-HRM practices in the subsidiaries of
an MNC were subject to the same or similar institutional factors as standard HRM
practices were. An analysis and discussion of the interview data revealed distinct
differences in the e-HRM practices employed in the subsidiaries. Moreover, a range of
institutional factors that may account for differences in diffusion of e-HRM practices
could be discerned. The evidence presented above highlights the complex nature of the
relationship between home and host country effects, pressures for standardisation and
resource capabilities of subsidiaries. This phenomenon is frequently referred to as
„institutional duality‟ [60, 67]. A number of authors have argued that the dynamic
nature of national business systems further complicates an accurate assessment of the
factors shaping the constellation of HR practices (and thus e-HRM practices) in the
MNC [45]. Björkman and Lervik [6] suggest that the transfer of employment practices
is first and foremost a social process that is influenced by corporate governance,
subsidiary and HQ relationships, the nature of existing HR systems and the strategy
used by the HQ to introduce practices. Moreover, the balance of decision making power
in the MNC is the result of negotiation and micro-political activities between
organisational actors and business units, which is mediated by contextual and structural
constraints that the organisation finds itself in [31, 65]. Smale and Heikkilä‟s [83] study
has evidenced that negotiation and micro-political activities are key factors in e-HRM
implementation. Evidence from Ireland in this research seems to intimate the impact of
micro-political influences in the form of strategic capabilities [38] in the manner in
which the subsidiary could influence the introduction of certain e-HRM practices.
Despite some evidence for convergence of e-HRM practices in the subsidiaries towards
the e-HRM practices promoted by the MNC‟s US HQ, discernible variations exist
between the e-HRM practices used by the multinational abroad and those employed in
its home country. This finding is reflective of other studies focusing on the convergence
/ divergence of HR practices in MNCs [3, 10, 54]. One of the key findings of this paper,
298
which underlines the applicability of institutionalist theories to e-HRM research, is the
dichotomy that exists between what the US and international HQ consider
implementation and the conflicting reality in the subsidiaries. Commensurate with
Kostova‟s [59] and Björkman and Lervik‟s [6] conceptual models of organisational
(HR) practice transfer, some e-HRM practices could be considered integrated, for
instance basic employee record administration has become part of the organisational
routine, while other e-HRM practices such as talent management are merely
implemented, that is, enacted. Differences in transfer of e-HRM exist owing to
dissimilarities in the institutional, organisational and relational contexts of the
subsidiaries in this research [59, 60]. Applying Oliver‟s [73] strategic response model,
the range of responses to the introduction of e-HRM practices in the subsidiaries ranged
from acquiescence, compromise, and avoidance to defiance. However, the level of
adoption and type of strategic response vary with each practice from one subsidiary to
the next. This paper poses that e-HRM research will benefit from the application of
these models to ascertain the adoption success of e-HRM practices. While this single
case study research is limited in focus, the evidence presented here moots that e-HRM
diffusion across the subsidiaries is contingent on an intricate mélange of a variety of
institutional factors. Furthermore, this paper has evinced the validity of institutionalist
theory as a new research paradigm and macro theoretical foundation for future e-HRM
research. This paper also advances the view that aspects of both neo-institutionalism
and European institutionalism may advance the field of e-HRM research. However, as
this paper is of an exploratory nature, additional research taking into account a broader
range and number of MNCs and their subsidiaries will be required to further test these
hypotheses.
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