Influencing human resource management practices in subsidiaries by parent companies: evidences from India

Abstract

Effective management of trans frontier operations of Multinational Companies (MNCs) requires integration of subsidiaries for global competitiveness and autonomy of subsidiaries for local responsiveness. With the increased turbulence in the environment it is increasingly important to these subsidiaries to act fast to retain and build local competitive advantage in different countries of operations. These twin demands to manage global organizations are primarily centered on the following question that the managers at the parent company need to respond.

“How to ensure subsidiaries' managers to act in autonomous manner to respond effectively to local needs- yet, be able to influence the actions of these managers whenever the need arises?”

This can be effectively achieved through staffing and other HRM practices in such diversified companies. The study examined the HR practices of the subsidiaries in this context.

The study indicates that HR systems continue to remain autonomous with subsidiaries, though, there are differences across different HR activities. Subsidiary's turnover and age are the two variables that influence the subsidiary autonomy on different HR issues most. Increased turnover of the subsidiary is positively related to parents' influence on HR related matters at subsidiary.

India remains to be the host nation with less expatriation of managers from parent companies. Parent companies employ multiple influencing mechanisms in subsidiaries to achieve the task of global integration. The intensity of influence increases with increase of equity stakes of companies. Increased expatriation and cultural proximity are frequently used by MNCs to influence their subsidiaries in India.