Posted by: nsrupidara | July 10, 2010

Similarities and differences in configurations of HR system: Evidence from case studies of foreign multinationals in Indonesia

Abstract

HR systems of multinational companies are complex entities. They contain of a mix of policies, practices, and processes to manage human resources and jobs that are unified by the strategy, objectives and philosophy of the firm (cf. Kepes & Delery, 2006). According to the configurational approach in HRM studies, HR system of a firm has a unique pattern of configuration of integrated and strongly constrained components (Tsui and Hinings, 1993). It is becoming more complex when the influence of contingent factors such as the strategic orientation and organizing principles of the multinational and elements of local environment in the shaping of HR system is taken into account.

Previous research in HR system has revealed a number of patterns, models, or labels of HR system, for example, high performance work system and term high commitment work system (Huselid & Becker, 1996; Arthur, 1994. These labels have become prescriptive models that make up the collections of HR best practices and travel across organisational and national boundaries. They have turned into fashions that make up the faces of HR practices within firms especially in developing countries such as Indonesia, where both HR scholars and practitioners act more as the adopters of well-established ideas or models constructed in developed countries.

The transference of HR ideas across firm and national boundaries provide more references or sources for HR actors in various countries. That phenomenon would provide another perspective into the traditional dyadic model of multinational companies, such as of Bartlett and Ghoshal’s (2000). The headquarters, other subsidiaries within the multinational boundaries, and local competitive and institutional environment as source of ideas have been viewed as the sources of ideas according to the old model. Other research (e.g. Pudelko and Harzing, 2007) opens up the possibilities of third parties in influencing the configuration of HR system at subsidiary level. The latter would be overlapping with local environment but it may connect the adopting firms to institutionalised global ideas through various channels of transfer, rather than merely to local ideas.

This paper attempts to analyse patterns of configuration of HR systems within subsidiaries of multinational companies operating in Indonesia. It argues that if the contingency factors, especially from host countries, are taken into account in influencing the construction of HR system, then previous research lacks the perspective of developing countries such as Indonesia in the body of theorising the construction of HR system. Countries like Indonesia that is eager to adopt well established management models, including those in HR. This characteristic may open alternative links to other sources than merely the parent company and its global organisational chain.

The paper is based upon a research project that deals with how the complex configuration of HR system is developed by HR actors within subsidiaries of multinational companies. Of the facts of either similarity or difference of HR systems, how can we explain happens in the context of the study conducted within three different multinational companies in Indonesia and an Indonesian national institution? Further, in analysing the similarities and differences that exist across the companies, the paper asks about the dominant sources of ideas behind the configuration of HR systems within the subsidiaries.

Case studies were conducted at a mix of three multinational companies from different home countries and operate in different sectors in Indonesia and also at an Indonesian national institution. Such research setting is argued as useful in analysing how and why similarities and/or differences existing among the organizations.

Data were collected through in-depth, narrative interviews, in company observations, and the study of corporate documents, either in printed or online formats. The data analysis is now being conducted through the lens of interpretive paradigm by using NVivo v.8.

Preliminary result shows that there are many similarities across the firms. The findings of similarities begin from the “new” coverage areas of HR in most of the organisations where companies now have included organisational development into the main jobs of HR. Some of the firms also share further similarities in the organisation of HR department that is centred in the idea of new HR roles of Ulrich. Performance has increasingly been a common theme to drive other HR activities across the four organisations, although differences in details of the system of performance management and how it connects to other elements of HR system are also apparent. Thus, despite the fact of differences in countries of origin and sectors of operation among the firms, the findings indicate cross-boundaries similarities that need further explanations.

Despite the evidences of similarities, those organisations also show significant differences in details of the components of HR systems. The differences are related to the source of ideas that has assisted each firm in developing its system and also the translation process and ability of the HR actors within the firms. The major sources of ideas were consulting firms and the headquarters. Previous personal professional education, training, career seem to contribute to the accumulation of HR knowledge and understanding of the HR actors in the field. Their professional and personal network, although not all confirmed has also provide benefits in gaining relevant knowledge.

These are a few major findings of the research. A full-length information (incl. literature) and analysis will be developed in the full paper, abstracting the field-level findings into theoretical discourse with relevant existing body of knowledge.

Neil Semuel Rupidara
PhD Student, Dept. of Business, Macquarie University, Sydney, Australia

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