The Types of Human Resource Practices and Cultural Effects

Prior studies support that culture as well as institution influences the way a multinational corporation (MNC) subsidiary implements human resource (HR) practices. However, they tend to ignore variations in HR practices. Through an extensive review of the literature, the current paper asserts that the cultural effect on the implementation of HR practices varies depending on the type of HR practices. To support this view, the paper discusses how MNC subsidiaries implement distinct types of HR practices transferred from the MNC parent. The HR practices discussed are: (1) recruitment, (2) employee training and development, (3) performance appraisal, (4) compensation, benefits, and pensions, (5) teamwork, and (6) quality control (QC) circles. The differences in the implementation of HR practices caused by culture seem to be salient in HR practices where personal relationships are essential. Namely, (3) performance appraisal seems to be the most culturally sensitive. (1) Recruitment is also culturally sensitive as culture determines how and whom subsidiaries recruit. However, it is also subject to institutional effects because an MNC parent controls it by setting internal regulations. Cultural effects on (4) compensation, benefits, and pensions cannot be ignored either. Yet, institutional effects seem to be stronger than culture because minimum wages and pensions are regulated by companies and governments. Although culture can influence the time and the types of (2) employee training and development, its impact on this practice seems smaller than that on the previous three practices. Finally, it is hard to grasp the real cultural effects on (5) teamwork and (6) QC circles. When these ‘popular’ HR practices are explicitly codified, they become highly transferable. Thanks to the codification, subsidiaries can ceremoniously implement them by simply copying forms, avoiding cultural effects.