ABSTRACT
Localisation has emerged as a key issue in the management of multinational corporations. The concept is however often used in generic terms without specific definition. In this regard Hideo Sugiura, the former vice-chairman of Honda, distinguished between four types of localisation: localisation of products, profit, production and people (cited in Evans et al., 2002). Although the primary focus of this chapter will be on people, we will also touch on some of the other concepts in setting the context for our later discussions. In this regard a key debate centres on the extent to which MNCs’ ‘foreign affiliates (or subsidiaries) act and behave as local firms versus the extent to which their practices resemble those of the parent corporation or some other global standard’ (Rosenzweig and Nohria, 1994: 229). Indeed based on their work on patterns of strategic control in multinationals, Doz and Prahalad (1986) have argued that responding to a variety of national demands while maintaining a coherent strategy is a key strategic challenge facing MNCs. In a similar vein Bartlett and Ghoshal (1998) call for organisations to maintain a ‘dynamic balance’ between globalisation (implementing globally standard practices) and localisation (adapting practices to account for the host environment) if they are to become truly transnational. The staffing orientations pursued by MNCs in their foreign affiliates are generally a key indicator of the firm’s orientation in this regard (see Chapter 2 of this volume). Specifically firms which pursue an ethnocentric orientation are likely to fill key positions in subsidiary operations with parent country nationals or employees from the home country of the MNC. In contrast MNCs which pursue a polycentric approach are significantly more likely to fill key positions at subsidiary level with host country nationals or employees from the country in which the subsidiary is located. (The implications of pursuing these strategies are explored in detail in Chapter 2.)
Localisation of labour (sometimes called labour nationalisation, host country national development or indigenisation) is defined as: ‘the extent to which jobs originally filled by expatriates are filled by local employees who are competent to perform the job’ (Selmer,
2004: 1094) and it is often considered one of the crucial drivers of the employment policies of many nation-states. It also influences the state’s relationships with foreign organisations seeking to operate within their national boundaries. Evans et al. (2002) see localisation as systematic investment in the recruitment, development and retention of local employees, which is an important element in the globalisation strategy of multinationals. However, they also point to the differences between the rhetoric and the reality of many localisation strategies and the barriers to the implementation of localisation strategies will be considered below.
