Role Of Multinational Enterprises In Development

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Human resource management is one of the most important aspects in the smooth and successful working of any organisation in on the domestic or international parameter. It is believed and unanimously accepted that the success of an organisation mainly depends on the quality of its human resources, irrespective of its span on operation, where it is local, domestic or international. It is believed that when business decide to go international or global the role of HR managers becomes all the more important and dynamic because, as they need the HR management team to represent and form the bridge or play the role of middleman between the set of two cultures one of the originating organisation and the other of the foreign market. It is very important that MNEs strategically plan the Human Resource management practices and principles what is in line with the global objectives and strategies of the business, and it is significantly that this fact is accepted, understood and is worked on together at all levels and geographical locations over the spread of the business.

One important and essential aspect in the management of Multinational organisations is the transfer of knowledge; it should be uniform and continual across the entire organisation. It has increasingly become important to examine and analyse the relationship between Human Resource management practices in MNEs and the knowledge transfer and other practices of HRM, as it is strongly believed that knowledge transfer should be at its maximum, this has further led to reflecting the importance of the role of HRM systems, to drive and capitalize on competitive advantage and thus has emerged as one of the key area of research in strategic HRM discipline.

As reflected in the work done by Prahalad and Doz, 1987, HRM in subsidiaries of multinational companies within the integration- responsiveness framework, which has implied a focus on standardization and local adoption of practices from a global perspective. As employees create an important source of competitive advantage for firms (Barney, 1991; Pfeffer 1994), it becomes even more important for businesses to adopt HRM practices and systems that ensure the best and maximum utilization of its employees. These changing trends in HRM practices has led to increased interest in the impact of HRM on organizational performance, and a number of studies have found a positive relationship between so called 'high performance work practices' (Huselid, 1995) and different measures of company performance. Furthermore, there is some empirical support for the hypothesis that firms which align their HRM practices with their business strategy will achieve superior outcomes (for recent reviews, see Becker and Gerhart, 1996; Becker and Huselid, 1998; Dyer and Reeves, 1995; and Guest, 1997).

The implications of these findings for multinational corporations, however, remain to be investigated. Most studies of the relationship between HRM and organizational performance have been conducted on the domestic operations of US firms, with a smaller number of studies carried out in Europe (e.g., Guest and Hoque, 1994) and Asia (Ngo et al., 1998). Scholars of international business have so far focused on the extent to which HRM practices within multinational corporations are globally standardized and/or locally adapted (Rosenzweig and Nohria, 1994; Taylor et al., 1996) and largely ignored the relationship between HRM and firm performance.

Literature review:

Moving from internationalisation to globalisation:

Last few decades have seen a prominent change, that has taken place in global economies, which have eventually lead to an increased integration across various geographical borders primarily on the bases of political, economical, social and technological exchange. Even though most of the researchers and authors have indicated their views that is an outcome of globalisation, Dicken does not really completely bank on it and mentions through his work that global economies still are reflective of internationalisation rather than globalisation further to this argument he comments that "although there is an accepted presence of globalising forces that have a strong influence, we still continue to exist in economies that not completely globalised.

Adding further to this literature Kobrin (1997) mentions that globalisation may be considered to have a very substantive meaning and strongly supports the fact that we at the present moment of time are in the middle of a state of international economies that could be considered to be qualitatively transforming. In support of his comments he highlights the following three findings:

Dramatic increases in technological advancements today have rendered national markets that are substantially small to be considered as meaningful and significant economical units.

The second is that the growth of transnational strategic alliances represents a change in the organization of international economic transactions from markets and hierarchies to postmodern global networks.

Lastly he mentions that the large scale emergence of global economies over the last few decades have primarily been driven by the development and integration of information technology across borders rather than the traditional organisational structures.

Kerr et al (1960) is in complete support of the above discussed comments and adds by mentioning that "over time the logics of the industrialisation process, and commonly shared technology, would determine the management processes used by firms in all parts of the world", which is reflective of the fact that there is an acceptance of global convergence. Researchers largely believe that industrialisation is driven primarily by diffusion of both technology and science and is very much independent of variables like national culture and political systems.

Understanding the current position of Human Resource Management:

Human resource management (HRM) is many aspects may be defined as the policies and procedures that are designed for maximum utilisation of their most valued intangible asset and resource the human resource, which is in line with organisational needs and objectives.

Central to their thinking was that human resources were a significant source of competitive success, with the implication that senior managers of organizations needed to take a more strategic view of people management than had been the case in the great majority of companies. What might be called the HRM movement, spread to other countries including the UK, where it became a dominant topic of academic and practitioner debate, the fundamental premise of human resource management is that people are the key to competitive advantage. As originally formulated, the proposition was that access to technology and finance was generally available to anyone, and it was only people who were a firm-specific resource that could enable companies to differentiate themselves from competitors.

Understanding the Best Fit and Best Practice approach:

It may therefore be clearer to distinguish between a 'best fit' and a 'best practice' approach to HRM (Becker and Gerhart 1996; Purcell 1996). 'Best fit', or 'strategic fit', takes the contingent view that human resource policies should be internally consistent and aligned with organizational strategy or purposes, with the obvious implication that HR policies ought to vary with organizational context. In multidivisional companies where business units follow different strategies, HR policies may vary within the organization in order to fit the needs of each business unit (Purcell 1995). In contrast, 'best practice' is more universal, and proposes that there is a particular set of FIR practices which if adopted together will improve productivity and performance in any context. As already indicated, these best practices are generally linked to workforce commitment, and they can be traced back to the conceptual out line of HRM contained in the Harvard map created by Beer et al (1984).

This postulated that the objectives of HR policies were commitment of employees to the organization, competence of the workforce, congruence between organizational and employee objectives and cost effectiveness of HR practices. The realisation of the four Cs would produce benefit to the organization, to individuals and to society. Walton (1985a), one of the Harvard writers, took this further by describing and contrasting a control strategy (essentially the scientific management paradigm that had dominated management thinking this century) with a newly emerging commitment strategy.

Research aim, objectives and central research question:

The primary objective of this research is to critically analyse and understand the management of people in multinational organisations, and the principle proposition of this proposed research is that multinationals have a very important role to play in the development of international norms of best practice in Human Resource Management. The aim of this research is to critically explore this proposition in greater details, with the help of secondary and primary research findings, which would establish the literature and the empirical study would address many issues related to the area of research.

Keeping the above literature and the objectives of the research into close consideration the researcher proposes to address and answer the following research questions with the help of this research:

Are Multinational promoting organisational knowledge developments as a shared resource?

Are there areas of similarity in HR policies and practices across subsidiaries of multinationals and what is the extent to which this is the result of international coordination or sharing of experience?

What is the international role of the corporate Personnel function in multinationals?

Are multinationals generally moving towards a more global orientation in their strategy and operations?

Answering these research questions would definitely answer any gaps in the literature already existing in this area of research.

With globalisation at its prime, business today made internationalisation as a key aspect of their overall business strategy, in such changing circumstances it is very important for business to view HRM from a strategic point of view and thus support the overall development of the business and pave the path to profit and reflective future gains.

Research Methodology:

Methodology forms one of the most significant aspect of any undertaken research, the methodology of the research determines the research philosophy, the employed data collection techniques that it secondary data, primary or collection of both. Depending on the research needs the methodology defines the qualitative or quantitative approach, and thus determines the expected outcome from the research. The research for the following proposed research aims to employ the following research methodology:

Research philosophy:

As mentioned in many literatures in context of research methodology and research philosophy, the most prominent research philosophies are those of positivism and interpretivism (Hughes and Sharrock 1997; Hussey and Hussey 1997; Gill and Johnson 2002; Easterby-Smith, et al. 2004; Weber 2004; Blumberg, et al. 2005) further to this Blumberg, et al. (2005) add by commenting that between these two philosophies there are numerous other applied philosophies which rely on the principles of either positivism or interpretivism, or even those which incorporate both called as the realism philosophy.


The positivism philosophy can be addressed as below:

"The key idea of positivism is that the social world exists externally, and that its properties should be measured through objective measures, rather than being inferred subjectively through sensation, reflection or intuition." (Easterby-Smith, et al. 2004, p 28)


The Interpretivism philosophy can be addressed as below:

"This interpretivist view proposes that the world and reality are not objective but are socially constructed and given meaning by people, that the researcher is part of what is observed, and that research is driven by interests, assuming therefore that the social world is observed by seeing what meanings people give to it and interpreting these meanings from their own viewpoint, and social phenomena can only be understood by looking at the totality" (Hughes and Sharrock 1997; Easterby-Smith, et al. 2004; Blumberg, et al. 2005).

The Interpretivism philosophy attempts to understand the realities to the research in a very subjective approach, where the researcher tries to establish meaningful realities for the participants of the research (Blumberg et al, 2005).

These two philosophies can be best studied with the help of the illustration below:

Key features of Positivist and interpretivist Paradigms

Source: Easterby-Smith, et al. (2004)

The researcher for this specific research would be adopting the Positivist research philosophy or paradigm, considering the nature and the research approach of the research area under consideration. In line with the chosen philosophy the researcher would made a deductive approach to the research, where the researcher with the help of the existing theories and literature establish a theoretical framework and then with the help of the observations would enrich and re-establish the literature.

Research strategy:

The research strategy that the researcher proposes to employ for this research would be a case study strategy.

As mentioned by Denscombe, (2000) the case study strategy is the appropriate strategy to be employed for small scale researches, especially where there is a need a smaller area in a very narrow perspective, with the need of an in-depth study to be conducted. Denscombe further mentions that such an approach focuses on relations and process to get an understanding on how these establish a link together; such researcher are believed to be conducted in natural environment without control over situations and also provides the researcher with the chance to explore and utilize different sources and methods.

As the proposed research aims to conduct an in-depth understanding and analysis of a certain situation and the research question aims to answer the objective of how a case study approach would be most suitable for this research.

Data collection techniques:

The secondary research forms an important aspect of the research methodology adopted by this research, secondary is the data is the data would be collected from different secondary resources and then critically analysis the collected data with the aim to form theoretical framework for the entire research.

The significance of the secondary research are numerous as it helps the researcher pave the theoretical standing of the entire research, data from various sources that have academic standing are taken into consideration and all the previous work done in related area of research are complied and theoretically criticized developing the scope of the research and identifying the key area of further research.

In the course of this research the research conducted the secondary data from various academic journals, books and other electronic sources that are readily available on the student portal of London School of Business and Finance, the source employed is reliable as they originate form an academic standing.

Secondary data may be defined as "data that have already been collected for some other purpose, perhaps processed and subsequently stored" (Saunders, et al 2007). All these techniques are a reflection of the method of triangulation to gain extra validity and reliability with the data and results (Bryman & Bell 2007). "Secondary data analysis in general, involves the study of data that others have gathered either qualitatively or quantitatively" (Bryman & Bell 2007). It has an advantage of facilitating the comparative element to be included into the research design. It also adds quality to the data as it has undergone rigorous and strict procedures before publication (Bryman & Bell 2007).

Primary research is a source of information that has been collected from the primary sources of information, the primary data collection and the analysis of the data collected is believed to add validity to the research. Although the data collection process is very time and money consuming process but it brings various benefits associated with it to the research table.

The researcher for the purpose of this research has conducted primary research and in doing so he has collected data from both the primary sources in the form of survey and unstructured interviews. The primary data collected was then analysed and evaluated to form constructive results to associate with the reviewed literature.

Thus the primary research has played a very significant role in the course if this research, the data collected has added significant value and validity in the conclusion drawing process.

Primary Data is "data observed, experienced or recorded closest to the event" and it is important as primary data "are the nearest, one, can get to the truth, although distortions inevitably occur as the proximity of the event decreases (Walliman 2005, pg 197). The drawback with using primary research is the time and cost involved in the travel and interview periods. Nevertheless it is data collected first hand hence is more reliable than secondary data (Bryman & Bell 2007).

Sample design:

Deciding the appropriate sample size is the next most important decision in the research methodology of any research this stage consists of selecting an appropriate sample from which data that is significant is required to be collected (Churchill and Iacobucci, 2004)

According to Hair et al. (2006), the sampling procedure plays an important role in the process of identifying, developing, and understanding research objectives that need investigation. Without a sound sampling procedure, data collection will include neither the proper respondents nor the appropriate number of them. Indeed, the study outcome is likely to be useless (Tull and Hawkins, 1993). Churchill and Brown (2004) suggested a useful six-step process to follow when drawing a sample of a population this is as shown in the illustration below:

Source: Churchill and Brown (2004, p.401)

Considering the above the researcher has designed an appropriate sampling design which is below:

Defining target population: The target population should be precise (Malhotra, 2004) the target population would be HRM professionals and practitioners and also employees from MNEs.

Sampling frame: the sampling frame for this research would be HRM professionals and practitioners, from 10 different MNEs in the UK

Sampling methods: the sampling method decided for this research would be interviews and surveys.

Sample size would be more than 10 interviews and 250 surveys.

Selection of sample elements: the sample elements would be specific to the 10 organisations under consideration.

Collection of data: This would include the data collection method employed; the data collection method employed would interviews.

Research approach:

The research approach for this research is proposed to be qualitative in nature, as mentioned by Denscombe, (2000), a qualitative research approach is appropriate when human activities or behavioral pattern is under investigation. Furthermore Denscombe, (2000) adds to the literature by mentioning that this research approach is well distinguished as the it gives the researcher the opportunity to put forwards their own interpretations and analysis. Wilson (2003) mentions that qualitative research tends towards an unstructured small scale carefully selected individuals approach with the intention to collect non-quantifiable information that reflects to the insights of behavior, motivations and attitudes.

Taking this literature into keep consideration, the researcher proposes to adopt the qualitative research methodology, and the researcher would aim to gain an in-depth view of the situation, concerning HRM practices and policies by the ten MNCs under consideration.

Data Analysis:

The researcher proposes to analyse the data collected, using the three types of analytical strategies which are relying on theoretical propositions- this as per Yin (2003) is comparing the secondary data with the primary data, thinking about rival explanations and developing a case description.

The researcher as the Miles and Huberman (1994) would be conducting the data analysis for this research based on the following three components:

Data reduction

Data display

Conclusion drawing and verification






Overview of the theoretical framework of the research area, analysing key literature in the form of practices, models, concepts and practices


Structuring the critical analysis of the reviewed literature


Finalizing the appropriate methodology and sketching the data collection and analysis techniques and tools.

1 - 17

Presenting the findings in the first draft of the research, reflecting data analysis from both primary and secondary sources, and discussing with the tutor for feedback and improvement.

17 - 30

Final research compilation, presentation and conclusion and recommendation drawing process, with the identification of the scope of further research.

Note: This a proposed time line and plan and is subject to change as per the research advancements and objectives achievement.


The fact that human resource management plays a very important and vital role in the growth, development and the overall performance of the business, at local, domestic and international levels is inevitable. With the influx of changes brought about from globalisation, business today owing to economic and trade integration are venturing into new geographical locations across the globe. It is strongly believed that with the emergence of MNEs the practice of HRM has become more complex and important, as now skill, experience and global learning can be shared, transferred and can be adopted as a global practice within the organisation thus enhancing the role and reflecting the importance of the role played by MNEs in the overall development of Human resource practices and policies at an international spectrum.

The researcher with the proposed research, would aim to critically analyse the role played by MNEs in the enhance, development and introduction of new practices in the organisations from an international perspective, with the help of this research the research would not only be able to critically analyse the present position of international HRM practices and policies followed by business but would also be in a position to recommend further development and improvement in global HRM practices followed by MNEs, thus contributing significantly towards the research area.


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