Diffusion of emerging market HR practices from subsidiaries across multinational enterprises

Abstract

The aim of this dissertation was to provide a better understanding of how multinational enterprises (MNEs) can learn human resource (HR) practices originating from its subsidiaries, particularly in emerging markets. This study considered the effects of the MNE s centralisation decision on the diffusion of HR practices from subsidiaries. A qualitative approach was undertaken, investigating two case studies of MNEs with a strong presence throughout Africa, one with a centralised structure and a developed market headquarters (HQ) and another with a decentralised structure and an emerging market HQ. The cases were compared in terms of absorptive and diffusion capacities for reverse diffusion (subsidiary to HQ) and horizontal diffusion (subsidiary to subsidiary). The key contribution of this study is that the diffusion of HR practices originating at the subsidiary depends on the continuous interplay between its absorptive capacity with HQ s diffusion capacity, for forward diffusion, and its diffusion capacity with HQ s absorptive capacity, for reverse diffusion. Furthermore, this continuum is determined by the degree of centralisation in the MNE structure. Decentralisation limits the subsidiary s diffusion capacity with HQ fulfilling a coordination