Internationalization & HRM Strategies of Multinational Companies from Emerging Economies

Executive Summery
The rapid rise of multinational Corporations (MNCs) from emerging economies has led to greater interest and urgency in developing a better understanding of the deployment and diffusion of managerial strategies from their perspective and without assuming the prevailing Western ethnocentric orthodoxy. This report develops a conceptual framewor of global !" strategies and practices in MNCs from emerging economies across their subsidiaries in both developed and developing mar ets. #t provides insights and guidance into the motives$ strategic opportunities and constraints in cross national transfer of !" policies and practices in a multi%polar world.

Chapter- 1- Intro uction

In the coming decades, China and India will disrupt workforces, industries, companies, and markets in ways that we can barely begin to imagine (Engardio, India, 200 ! 2"# "esearch on MNCs has tended to be focused on those from developed countries establishing subsidiaries either in other developed economies (e.g. &.'. to the &() or into developing economies (e.g. the &.'.) into *atin )merica). &.'. firms invested in +urope from before ,-.- but the ma/or push came after World War Two (0erner$ )lmond$ Clar $ Colling$ +dwards$ !olden$ 1 Muller%Camen$ 2334). 5apanese MNCs began to locate in advanced economies$ particularly in the ,-63s. While$ there has been a rich stream of MNC research in this area$ there has been relatively less research on newer industriali7ed (e.g. Taiwan$ #ndia and 'outh (orea) to the more industriali7ed economies (8lover 1 Wil inson$ 2339$ p.,4.6). This is a new era which is often referred to as a :new geography of investments; (&NCT)<$ 2334). Whilst most MNCs come from the world;s top five economies$ a growing number are from developing and newer industriali7ed economies. &NCT)< categori7es developing economies into two groups % 'outh (orea$ Taiwan and 'ingapore who are newer industriali7ed and have an established trac record as outward investors and those such as #ndia and China that are rapidly developing. #n this paper$ # widen the hori7on of #nternational !"M to include !"M strategies and practices from emerging economies. The purpose of the paper is to explore how !"M strategy of the MNCs in emerging economies is formed and how it operates in practice. 0irst$ # have outlined the issues relating to emerging MNCs. 'econd$ # have developed a conceptual framewor of global !" strategies and practices in MNC' from emerging economies. This provides managerial insights and guidance into the motives$ strategic opportunities and constraints in cross national transfer of !" policies and practices. #t uses the data from the pilot study of an #ndian multinational company to test the conceptual framewor and propositions. The paper concludes with a discussion of how our findings relate to existing research and identify directions for future research.

This paper helps identify and analy7e :the travel of ideas; (<elbridge$ ,--6= 8arrahan 1 'tewart$ ,--2) between the +ast and West$ in terms of the motive and opportunity behind cross%national transfer of !" policies and practices. 'uch an understanding of corporate management thin ing and practice in )sian MNCs helps practitioners understand their own strengths and wea nesses in the new scheme of things and assists them in strategi7ing accordingly as to how best to influence the top management layers and players. This would in turn assist them to facilitate a smooth :travel; of policies and practices across subsidiaries (0erner$ 233-).

Chapter- !" #he $e% Multinationals

The world investment report from &NCT)< (23,3) indicates that although developed%country transnational corporations (TNCs) account for the bul of global foreign direct investment (0<#)$ developing and transition economies have emerged as significant outward investors accounting for one >uarter of global 0<# outflows in 23,3$ the bul of which came from )sia. 'imilarly$ the growth rate of the number of TNCs from developing countries and transition economies over the past ,? years has exceeded that of TNCs from developed countries. )sia dominates the list of ,33 largest developing country TNCs. 0urther$ the emerging economies are investing heavily in low%income host countries$ generating considerable 'outh%'outh investment flows (&NCT)<$ 2339). #t is anticipated that in the new world economy$ the balance of power will shift to the +ast as China and #ndia continue to evolve as two of the most attractive inward as well as outward 0<# destination countries.

The growing importance of emerging economies has lead to an upsurge of strategy research on the topic (Wright$ 0ilatotchev$ !os isson$ 1 @eng$ 233?). "esearch on global !"M has not paid enough attention to MNCs from emerging economies despite of all the management domains$ !"M is most sensitive to local context ("osen7weig 1 Nohria$ ,--4). +merging country MNCs tend to be smaller in si7e with considerably less resources and international experience than their counterparts from developed mar ets. This limits their ability to transfer management practices across their subsidiaries (!ussain 1 5ian$ ,---= *all$ ,-6.= Wells$ ,-6.)8uillen and 8arcia%Canal$ 233-). While there is growing recognition of and research on this contextual aspect with respect to some relatively advanced )sian economies$ such as 5apan$ (orea$ Taiwan and 'ingapore (Chang 1 Taylor$ ,---= Chang$ Mellahi$ 1 Wil inson$ 233-b= Chang$ Wil inson$ 1 Mellahi$ 2339= 8lover 1 Wil inson$ 2339)$ the two emerging global giants$ China and #ndia$ have been much less explored (0erner$ 233-). @revious research on MNCs had identified dual pressures for the need to conform to home country (push force) and host country (pull force) institutional environments when adopting !"M strategies and practices (e.g.0arley$ !oenig$ 1 Aang$ 2334= !illman 1 Wan$ 233?= "osen7weig 1 Nohria$ ,--4). We now very little on how these pressures influence !"M strategies and practices at subsidiary level of MNCs from emerging economies. While previous comparative research on !"M in the )sia @acific region ()wasthi$ Chow$ 1 Wu$ 233,= Bae 1 *awler$ ,--6= Chow$ 'hields$ 1 Wu$ ,---= !ofstede$ ,--.$ ,--9= !ofstede 1 Bond$ ,-66= &lgado$ Au$ 1 Negandhi$ ,--4)) has identified the national origin of firms including its national institutions and culture as the ey shapers of !"M practices in the region$ these studies do not address how cultural and institutional differences affect the dissemination of !"M strategies and practices by MNCs from emerging economies operating in a developed economy. ) ey research >uestion relates to exploring the issues associated with the transfer !" practices across borders within MNCs. )s Martin and Beaumont (,--6) comment$ diffusion has to ta e into account the local cultural and institutional context and the ability and incentive of local managers to implement best practice.

Chapter- &- Country of 'rigin Effect on Strategy

Cne of the ey challenges facing the MNCs is how to balance between the need for global integration and local adaptation. National origin of MNCs is seen as a ma/or influence in determining this balance. Contrary to Chmae;s (,--3) view of a borderless world and nationless corporations$ cultural and institutional determinants in the country in which firms were located are seen to be salient determinants arising from a firm;s context. "esearchers$ such as 0erner (,--9) and 8amble (233.) examined the issues dealing with how MNCs manage their foreign subsidiaries and concluded that the main influence on the MNCs effort to have a degree of control over their subsidiaries was their country of origin. 'upporting this view$ !ar7ing and 'orge (233.) state that although multinationals are highly internationali7ed$ their organi7ational coordination and control practices at the international level tend to be explained by their country of origin.

There is empirical evidence that suggests that almost all MNCs have a trace of their country of origin within them. #t could be subconscious choices which are influenced by the cultural and institutional characteristics of the country of origin of the MNC or it could be transferred through the people who wor in the organi7ation. &.'. multinationals have been typically contrasted with 5apanese multinationals in respect of their styles of !"M employed in their subsidiaries. 5apanese multinationals have the characteristic of being strong but with informal centrali7ation and are highly reliant on establishing international networ s. &.'. multinationals appear to have elaborate systems of control and standardi7ed worldwide systems in place. Moreover$ whether the country is high or low on cultural context will also determine the impact of their country of origin on the #!"M practices. This wor draws on the wor of !all (,-9D) and his distinction between situations where things are less explicit where the context exerts more influence (high context) and those that are much more explicit where the context is less of an influence (low context). Western countries are seen as generally low on cultural context whereas +astern countries are mainly seen as high on cultural context. The interplay between

national and organi7ational culture is a significant factor in the success of global mergers$ ac>uisitions and alliances. )s stated before$ Ethere is relatively little research on the internationali7ation of emerging economy firms either into other emerging economies or into developed economiesF (Wright$ 0ilatotchev$ !os isson$ 1 @eng$ 233?$ p.2?). The strategy literature on emerging economies predominantly use institutional theory followed by resource%based theory$ transaction cost theory and agency theory as conceptual perspectives. MNCs from emerging economies enter developed economies for :exploration; and other emerging economies for :exploitation;. While in the past 5apan and (orea internationali7ed through greenfield expansion$ founding their own subsidiaries that mitigated cultural clashes$ China and #ndia are expanding mainly through ac>uisitions in Western countries. Moreover$ their internationali7ation is very rapid and different from that of the conventional Western MNCs and erstwhile developing country MNCs. They also tend to use exporting and 0<# as combined and simultaneous strategy$ rather than being distant alternatives.

)lthough in absolute terms the MNCs from emerging economies are not very large$ they are gaining importance and many companies are now globally diversified. The ey advantages for these MNCs are access to the most dynamic growth mar ets in the world with a vast pool of low cost resources li e production wor ers$ engineers and natural resources. Besides being small$ most of the emerging mar et MNCs are in their early stage of internationali7ation with limited international experience. Correspondingly within the MNCs from the emerging economies$ organi7ational culture$ decision ma ing and control on subsidiaries can be noticeably different as compared to their counterparts in developed mar ets due to national culture and economic differences.

Chapter- (-Conceptual )rame%or*

This paper deals with strategic international human resource management ('#!"M) that explicitly lin s !"M with the strategic management processes of the MNCs in emerging economies and emphasi7es coordination or congruence among the various 7

!"M practices. #t focuses on '#!"M orientation$ i.e.$ the Egeneral philosophy or approach ta en by top management of the MNC in the design of its overall #!"M system$ particularly the !"M systems to be used in its overseas affiliatesF. )ccording to Taylor et al. (,--D)$ :there is a growing consensus that a ey differentiator between the corporate winners and losers in the 2,st century will be the effectiveness of the human organi7ation; and it is particularly critical in the emerging mar ets. #n the context of #!"M$ Ngo$ Turban$ *au and *iu (,--6) found strong support for the hypothesis that country of origin influences the firm;s !"M practices. Taylor et al.;s (,--D) model of #!"M considers that the transfer of !"M policies and practices :can go in any direction;$ not /ust from home to host countries. 'imilarly$ )merican and +uropean !"M systems influence and are influenced by +ast )sian !"M systems. +mpirical studies on the diffusion of !"M practices by MNCs across their subsidiaries indicate that they predominantly adopt hybrid methods$ combining both push force for control from head>uarters and pull factors for conformity to host country$ to suit the mar ets they are serving. 8lobal$ national and internal pressures play a role in influencing !" strategic recipes and delivery mechanisms. +dwards 1 "othbard (2333) contrast different approaches to the transfer of employment practices in MNCs and argue for an integrated approach that focuses on interrelationships between mar ets and institutions on the one hand and the material interests of actors on the other.

$%&% Influencing factors! "esearch shows that control and coordination mechanisms and diffusion of management practices in an MNC are sub/ect to several external and internal influencing factors. #f the degree of integration between the head>uarters and the subsidiary is high it re>uires higher levels of control and coordination. With regard to external influencing factors$ the MNCs from emerging economies face a Edouble hurdleF of liability of foreignness and liability of country of origin with perceived poor global image of their home country. These constraints are further accentuated by liabilities of smallness and newness. They also need to deal with the liability and competitive disadvantage that stems from being latecomers lac ing the resources and capabilities of established MNCs from the most advanced countries. 0urthermore$ the

degree and level of integration between head>uarters and subsidiaries will also influence the multinationals. 'imilarly$ with regard to internal influencing factors$ the strategic framewor of the MNC$ organi7ational culture$ leadership$ decision ma ing and delegation of authority can be considerably different in MNCs from emerging economies than their counterparts in developed mar ets due to national cultural$ economic and political differences. @roposition,G MNCs from emerging economies adopt control and coordination mechanisms because of the double hurdle they face of :liability of foreignness; and :liability of country of origin;.

$%2% Control of subsidiaries in de'eloped markets! MNCs exercise a degree of control over their subsidiaries to ensure their resources and efforts are directed towards attaining the main ob/ectives of the MNC (Chang 1 Taylor$ ,---). Control refers to the processes by which an MNC ensures that their subsidiaries operate in a particular way as determined by the head>uarters in order to achieve organi7ational goals (Chang 1 Taylor$ ,---). )ccording to !ar7ing and 'orge (233.)$ corporate control Ecomprises of all the mechanisms instituted to tie the operations and decisions within and across components into a larger whole and establish coherence of meaning and purpose within the larger enterpriseF (p.,-3). We adopt the !ar7ing;s (,---) typology that suggests two dimensional classification between direct (personal 1 impersonal) and indirect (personal 1 impersonal) control. Complementary to the above typology is Taylor et al.;s (,--D) classification of adaptive or polycentric approach vs. exportive or ethnocentric approach to management control of subsidiaries.

&nli e developed country MNCs engaging in :forward diffusion; of superior home country practices into developing country subsidiaries$ emerging economy MNCs utili7e the nowledge gained in operating in developed mar ets to transfer best practices across the entire organi7ation (Hhang$ Tsui$ 'ong$ *i$ 1 5ia$ 2336). They are expected to adopt an EadaptiveF or EpolycentricF approach to management in developed country subsidiaries (+dwards 1 "othbard$ 2333= (aye 1 Taylor$

,--9). #n terms of !" strategy$ this could mean low internal consistency with the rest of the firm and high external consistency with the external environment. )ccordingly$ !" practices may include hiring host country managers with local nowledge and transfer of practices EbothF ways$ depending on which is seen as wor ing better. @roposition 2G MNCs from emerging economies adopt a predominantly :adaptive; or :polycentric; approach to manage their subsidiaries in developed mar ets. $%"% Control of subsidiaries in emerging markets! <ue to the paucity of empirical literature in this area$ we hypothesi7e that MNCs from emerging economies entering other emerging mar ets may follow their counterparts in developed mar ets by adopting an ethnocentric approach. They attempt wholesale transfer of the parent firm;s !"M systems to their subsidiaries$ especially with regard to their core competencies (@udel o 1 !ar7ing$ 2339)$ to achieve high internal consistency. The other reason identified is the limited availability of management and technical s ills in some countries (<elios 1 B/or man$ 2333= 'cullion$ ,--4). 'ome authors have noted that MNCs are more li ely to adopt an adaptive or polycentric approach in developed countries than lesser%developed countries due to the greater availability of managerial s ills in developed countries (Ba7eley 1 "ichards$ 2333= "ichards$ 233,= 'hen$ 233D). @roposition .G MNCs from emerging economies adopt predominantly an :exportive; or :ethnocentric; approach to managing their subsidiaries in other emerging mar ets. #n order to provide an initial test of the conceptual framewor $ the authors have begun collecting data from a number of MNCs by interviewing senior managers in their head>uarters and subsidiaries in both developed and developing mar ets. )s the data collection is still underway$ we report the findings from a pilot study conducted at one #ndian MNC. Before reporting these findings$ we provide a brief overview of #ndian MNCs as representatives of emerging economy MNCs so as to provide some context for our wor .

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Chapter- +- In ian Multinationals

Between 2334 and 2339$ #ndia;s outward flow of 0<# rose sharply from I2 billion to I,4 billion (&NCT)<$ 2336). )s a result$ in 2336$ seven #ndian multinationals featured in 8lobal 0ortune ?33 and twenty in Boston Consulting 8roup;s BC8 ,33 new 8lobal Challengers. The services sector constituted .6J of #ndian 0<# stoc in 233D mainly in #T$ communications and software. #ndian multinationals are largely private owned and cover a wide range of sectors in energy%related areas (mainly oil and gas)$ #T services$ pharmaceuticals$ engineering goods and natural%resource%based manufacturing firms. The #ndian firms are showing a clear preference for overseas ac>uisition as an entry strategy largely in North )merica and +urope. Cver 93J of them prefer complete control over their overseas ventures$ mainly to protect their firm specific advantages and also due to the relaxation of government policy restriction on #ndian e>uity participation. The #ndian multinationals seem to Erepresent a new breed of multinationals that build their competitive advantage in novel ways= multinational corporations that derive their advantage from service rather than technological innovations and manufacturing MNCs that straddle a low%cost and medium technology positionF (5onsson$ 2336$ p.D).

@radhan (2339) believes that the motivators for #ndian firms to expand overseas$ particularly into the developed mar ets include the need to ac>uire new technologies$ raw materials$ s ills and expertise and also to leverage on their trade% supporting infrastructure overseas. This supports @roposition 2$ discussed before$ that MNCs from emerging economies choose an adaptive or polycentric approach to manage their subsidiaries in developed mar ets. With respect to their entry into other developing mar ets$ the approach has been mixed. This is more to do with shifting investment patterns and mar ets than managerial choice. @rior to the liberali7ation of the #ndian economy in ,--,$ a small group of large%si7ed family owned #ndian firms invested mostly in neighboring developing countries$ opting for greenfield investments in /oint ventures (Thite 1 <asgupta$ 23,,). #n line with @roposition .$ this was predominantly an exportive or 11

ethnocentric approach that involved wholesale transfer of parent firm;s systems$ policies and personnel. 'ince then$ the very nature of #ndian outward 0<# has undergone fundamental changes and is now characteri7ed by a large number of professionally run firms in the services sector investing mostly in developed countries. The implications of the same will be discussed in the pilot study described below.

Chapter-,- -ilot Stu y of an In ian Multinational

)s part of a larger research pro/ect that focuses on #ndian multinationals as representatives of emerging economy MNCs$ the authors conducted a pilot study of a large #ndian #T multinational company$ referred to here as )lpha 'ervices. )lpha 'ervices is one of the top five #ndian consulting and #T services companies with a turnover of about &'I 2.? billion from its operations in over 44 countries that employ around 4?$333 professionals. #t operates in three business segments$ namely$ #T services$ Business @rocess Cutsourcing (B@C)$ and software products. )lpha serves a wide range of industry segments$ including manufacturing$ ban ing and finance$ insurance$ telecommunications$ infrastructure$ healthcare$ retail and transportation. #t is publicly listed on the Mumbai and New Aor 'toc +xchange. #ts vision is to be one of the five most valuable global integrated #T services and B@C companies in the next few years. )lpha 'ervices has development centers in #ndia$ North )merica$ +urope$ the Middle +ast and the )sia @acific region and serves over ?93 global companies. #ts overseas revenue mainly comes from North )merica (?-J)$ +urope (2,J) and the )sia @acific region (23J). The company has been consciously trying to reduce its dependence on any one particular region and has been aggressively diversifying to other regions. #t has full%fledged development centers in #ndia$ &.'.)$ 8ermany$ China and Malaysia. #t has ,33J subsidiaries in China$ +gypt$ Mexico and Belgium. #ts recent overseas ac>uisitions include some niche #T services companies in the &.'.) and &(.

Between late 2339 and early 233-$ we conducted in%depth$ semi%structured interviews with ,- senior managers of the company at three locations K its head>uarters in #ndia$ subsidiary office in Melbourne$ )ustralia (representing a 12

developed mar et) and in 'hanghai$ China (representing a developing mar et). The interviewees included ? human resource (!") managers and . business heads at the head>uarters= ? business account managers managing ey clients in )ustralia and the !" !ead of the )sia @acific region based in 'ingapore and the country head$ !" head and . business managers in China. )ll the interviews were conducted face to face except for two telephone interviews. The choice of locations provided a three dimensional perspective of the company;s global operations from the stand point of head>uarters where strategy is formally formulated and reviewed and subsidiaries in both developed and developing mar ets where it is intended to be implemented.

The interview protocol consisted of a semi%structured >uestionnaire to probe various aspects of a company;s internationali7ation strategies$ control and coordination mechanisms and staffing practices including talent attraction and retention strategies and corporate culture. #n most cases$ the >uestionnaire was circulated prior to the interviews to enable the interviewees to prepare in advance. +ach interview typically lasted an hour and was taped and later transcribed. The results from the thematic analysis of the interview data from this study are described below. (%&% )rgani*ational +tructure , +ystems! )t the apex of this organi7ation lies the *eadership Council$ consisting of around 4? top leaders from business and support functions. #t is charged with the responsibility to formulate$ implement and review strategic policies and priorities on a regular basis. )t the heart of )lpha;s organi7ational structure lie the Customer 0acing &nits (C0&s)$ consisting of Lertical Business &nits (LB&s) and "egional Business &nits ("B&s). The C0&s are charged with the entire spectrum of customer relationship management and in the process are supported by !ori7ontal Competency &nits (!C&s) that provide the bac ing of appropriate resources.

The approach to leadership at )lpha is exemplified by the motto Eevery )lphaite (employee) is a leaderF. )lpha believes that it is in the :business of building and developing leaders faster than the competition;. #ts organi7ational structure and systems are supposed to be underpinned by its philosophy of enabling leadership with

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its core concepts of :full life cycle business; (0*CB) and :full life cycle leaders; (0*C*). )lpha is said to espouse a philosophy of encouraging employees to Ethin li e C+CsF whereby every employee is encouraged to consider himselfMherself as the chief executive officer (C+C) of the particular tas that they perform and the people whom it affects as their investors in the business. The same performance metrics are supposed to be applied to every employee and position at every location. The metrics assess the performance of each employee on specified built measures$ such as people$ process and product against specific outcome measures$ namely better$ larger$ faster$ cheaper and steadier (repeatable). These metrics mirror the ones followed at its ey &.'.%based client which is world renowned for its management systems. )ccording to the 8lobal !ead of !"$ :metrics are the most common communication tool at )lpha;. The company claims to ta e its metrics driven business approach beyond organi7ational boundaries by involving customers and suppliers as part of its Eeco%system.F )ccording to corporate managers$ )lpha is also een to ensure that every ey sta eholder in the company$ including managers$ employees$ customers and suppliers$ get the same ECne )lpha +xperienceF (organi7ational culture)$ codified in a manual$ throughout its global operations. #ts corporate leadership center is geared to groom present and future leaders in the organi7ation;s corporate values. The center;s mission is to spread the organi7ational culture to every unit. 'enior managers from all over the world are given wee long induction training at the company;s head>uarters in #ndia to attend a focused leadership immersion program spearheaded by the top management team.

#n the interviews with managers in its subsidiaries$ it was apparent that the organi7ation had a decentrali7ed approach. The heads of every business unit managed and too decisions regarding their business units with only ma/or decisions ta en at the head>uarters. When as ed about the influence of national culture or country of origin on the company;s growth and thin ing$ all the !" managers and business heads interviewed at the head>uarters asserted that it did not have any influence on the organi7ational culture or the way they operate$ but as pointedly noted by a senior

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manager at the )ustralian subsidiary Econsidering that almost 6?J of the wor force is #ndian$ there will surely be the subtle influence of #ndian cultureF. (%2% International -usiness +trategies! )lpha has been seen as an ambitious and entrepreneurial organi7ation throughout its history. 0or example$ )lpha understood in the late ,--3s that it needed to move beyond the established developed mar ets in the &.'.) and +urope and enter other emerging mar ets$ such as the Middle +ast and China where it was an early entrant along with other #ndian #T firms. 'imilarly$ in mid%,--3s$ when enterprise resource planning (+"@) was identified as a potential high growth area in the #T industry$ )lpha decided to enter this emerging field to exploit the opportunities ahead of its competitors. This paved the way for the global leadership position that )lpha is said to en/oy today in +"@ implementation$ particularly$ in the telecommunications sector. )s the !ead of )lpha;s China operations proudly pronounced Eit is a perfect storm% entrepreneurship$ vision and excellent domain tradition that have made )lpha what it is todayF. (%"% .lobal +taffing , /0 +ystems! Most of the #ndian #T companies have operated in international mar ets$ particularly in the developed world from their inception. #n terms of strategic and operational policy ma ing$ they have remained largely local Kthat is as an #ndian company (as reflected in the composition of their top management pool and managerial staffing). )lpha is no exception to this trend but there has been a conscious effort to change this mindset over the years according to the managers interviewed. 0or example$ )lpha;s global !" !ead believes that with over 4?$333 employees spread over 43 countries$ the company has reached a critical mass to scale the next level in becoming a truly global company. The desire of )lpha to locali7e its wor force is reinforced by the statement from )lpha;s !ead of !" in China that E)lpha wants to be a Chinese company in China but provide the same global experience to clients$ no matter where the operations are carried outF. )s a policy$ )lpha strives to staff locally at least 23J of all positions in all of its overseas operations$ ?3J of entry level positions and -3J in its non%+nglish spea ing geographies$ such as China$ where possible. )ccordingly$ today nearly -6J of 15

)lpha;s wor force in China is staffed locally while in )ustralia it is nearly ?3J. But the senior management positions$ from country head to pro/ect managers$ at both these subsidiaries are still overwhelmingly staffed by expatriates from its #ndian head>uarters. 0rom the interviews it was recogni7ed that the recruitment and selection process$ career management and performance management were similar across the global operations with the flexibility to accommodate local laws and !" trends and practices. The Business !ead in the )ustralian subsidiary stated that Ewhen # started ? years ago$ )lpha being an #ndian company$ the policies and procedures were very strongly suited to the #ndian environment. Now the company has more adapted to )ustralia but not fully suited to the )ustralian environment as an )ustralian companyF. This sentiment was echoed by the 8lobal !ead of !" who agreed that subsidiaries in developed mar ets needed more flexibility in determining the remuneration structure of managerial staff to attract and retain talent. The main talent management issue or challenge identified was brand value or recognition of the company across the world$ which was one of the ma/or concerns identified by the !" managers. While the company was pleased with its employer brand in China where #ndian #T companies are held in high esteem for their >uality standards and offshoring business process efficiency$ the )ustralian managers generally believed that the global image of the company needed to be strengthened as a high >uality services provider. This highlights the constraints that the MNCs from emerging economies face of the :liability of foreignness; and :liability of country of origin;$ as pointed out before.

Chapter-.- Managerial Relevance

Cur pilot study of an #ndian MNC offers some interesting insights into the way MNCs from emerging economies strategi7e and manage their operations in different parts of the world. While Western MNCs have traditionally ta en their domestic strengths :outward; to the rest of the world$ the #ndian MNCs in the services sector have typically grown first in the developed mar ets by leveraging on their s ills and

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domain expertise and have pioneered the art of global offshoring services delivery model using a combination of onshore$ offshore and near%shore locational strategies. Most of their overseas growth has occurred in the last decade and in a very short span of time$ they have spread their global networ $ mainly via setting up ,33J subsidiaries or ac>uisitions. <espite attempts to locali7e their wor force in different geographies$ their global management team is still predominantly #ndian but increasingly their systems and to some extent their management mindset are becoming global. With regard to @roposition ,$ our case study illustrates that #ndian MNCs do face multiple hurdles in furthering their internationali7ation strategies. 0or example$ despite their growing global reputation$ #ndian #T companies still have problems recruiting talent at higher levels due to poor perception of their employer brand. <espite its desire to locali7e its management team in )ustralia$ )lpha seems to be unable to attract the best local talent and therefore$ forced to send expats from #ndia. )ccordingly$ its corporate control and coordination mechanisms are influenced by the multiple hurdles that it faces as an MNC from an emerging economy. 'imilarly$ with regard to proposition 2$ alpha;s adoption of performance metrics from its ey &.'. client and ma ing it a central part of its performance management system is a clear sign of an :adaptive approach; in managing subsidiaries in developed mar ets. )t the same time$ )lpha$ along with other top #ndian #T companies$ has pioneered the art of global offshoring business process and the global services delivery model indicating a two way exchange of best practices. !owever$ )lpha;s management of its subsidiary in China does not reflect :exportive or ethnocentric; approach to managing subsidiaries in developing mar ets$ as stated in proposition .. )lpha;s managers seem to indicate that unli e the &.'. and &( mar ets$ they are unfamiliar with the cultural and business environment in China and therefore$ would prefer to leave it to the locals to manage the China operations with only broad corporate oversight.

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Chapter-/-Conclusion
<espite the increasing trend towards the globali7ation of trade and commerce and cross%national convergence arising from it$ significant differences remain in the way in which different countries organi7e business activities and more specifically$ the management of employees (Brewster$ 'parrow$ 1 !arris$ 233?= 0erner$ ,--9). The cultural values framewor pioneered by !ofstede (,-63) demonstrates the limitations of universalistic models of #!"M that emphasi7e one%best%way. +ven though some have contested the emphasis placed on national culture in international management at the cost of organi7ational differences (+ric sen 1 <yer$ 233?= 8erhart 1 0ang$ 233?)$ the importance of country of origin is a consistent theme in the research in this area (!ar7ing 1 'orge$ 233.). Cur conceptual framewor adopts a broad approach by examining the ey factors$ such as cultural differences$ institutional differences$ organi7ational differences and the interplay between them ('chuler$ Budhwar$ 1 0lor ows i$ 2332). )ny study on MNCs from emerging mar ets also needs to ta e into account sectoral variables (Colling 1 Clar $ 2332) in different industry segments$ such as #T services and manufacturing. 0or example$ #ndian MNCs in the service sector :tend to gain the positive benefits of internationali7ation sooner than manufacturing companies; (Contractor$ (umar$ 1 (undu$ 2339$ p.43,). Cur research framewor adds value to #!"M research by giving :e>ual weight to both the subsidiary level and to corporate head>uarters within a firm; (0erner$ 233-). #ncreasing investment by emerging economies in developed as well as emerging mar ets$ particularly via mergers and ac>uisitions means that there is a greater need for management practitioners to understand the ways in which MNCs from emerging economies strategi7e and act in diffusing and coordinating management practices. 0or too long$ international !" management literature and practice have been embedded in Western thin ing and concepts with little cross% pollination (Wright$ 'nell$ 1 <yer$ 233?$ p.69D) and an over emphasis on expatriate management$ reflecting the ethnocentric bias of North )merican scholars ('chuler$ Budhwar$ 1 0lor ows i$ 2332). #t is clear that the universal or &.'. model does not have applicability to the emerging MNCs. #f the +ast becomes$ in popular /argon$ the

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new West we need to develop newer models to aid the understanding of how )sian MNCs$ particularly from China and #ndia$ are going to exercise corporate control in an increasingly multi%polar world (@udel o 1 !ar7ing$ 2339$ p.??.). #n the 2,st century nowledge economy where services and creative industries dominate the economic landscape that is tilting more towards developing and transition economies$ the theories and practices applicable to Western MNCs that monopoli7ed the 23th century industrial economy are slowly but steadily giving way to new economic and management paradigms. )ccordingly$ reexamining the management approaches and practices of MNCs from newer industriali7ed and developing economies such as #ndia is li ely to remain a ey research issue for the next decade$ given the speed of economic development and the increasing influence and numbers employed by such companies.

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Bibliography 1. Internet 2. Text.

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