ABSTRACT
With global expansion, multi national enterprises (MNEs) are under pressure to find the appropriate balance between global and local practices. The standardization of global practices across the MNE help to smooth the transfer of MNE competencies across the organization while local conditions may require that the affiliate in a host country adopt different practices, for example, to comply with local regulations or accommodate a culture diverse from that of the MNEs original country (Aycan, 2005). The primary issue in the co-ordination of an MNE’s global operations is the co-ordination of management practices to enable the transfer of firm-specific advantages (FSAs) between the parent and affiliates, whether they are location based or not (Rugman and Verbeke, 2003). Key in this regard is the degree of influence that the parent exercises over its affiliates, and many studies have used similarity between the HRM practices of parent and affiliate as an indicator of this relationship (Hannon et al., 1995; Martinez and Ricks, 1989; Rosenzweig and Nohria, 1994), and leads to a search for HRM practices that are flexible enough to co-ordinate and integrate multiple affiliates but still enable the transfer of FSAs (Braun and Warner, 2002). This is particularly pertinent to MNEs from emerging markets in general and Africa in particular. African MNEs differ from Asian MNEs in that their competencies are developed in countries that have distinct disadvantages due to the erosion of natural resources and a lack of investment in infrastructure, both physical and human capital (Wells, 2003). Despite these location problems, the four South African MNEs managed to develop the necessary strategic capabilities to compete in the global arena, viz. national responsiveness, global integration (efficiency) and worldwide learning (Bartlett and Ghoshal, 1987; Malnight, 2001). Additionally the South African social and regulatory environment would have played a role in the development of these capabilities. According to Gomez and Sanchez (2005), a country’s institutional environment and, in particular, its regulatory framework has a very powerful influence on the way a firm is managed. In the case of South Africa, the four firms have had to contend with the management and advancement of diversity as driven by regulations such as The Employment Equity Act (55 of 1998; Republic of South Africa, 1998) and an emergent black middle class with diverse demands and tastes and rapidly expanding economic power. These developments have meant that for South African firms to be successful, they would have to have developed the competencies to manage high degrees of complexity and ambiguity, capabilities that would provide an advantage when operating in different national cultures. Additionally Hannon et al. (1995) found that when a subsidiary (or affiliate) is highly dependent on the parent to provide crucial resources that the parent was likely to exert influence through formal coordination mechanisms. The exercise of influence is done mainly through the use of integrated international human resource (IHR) strategies, which are intended primarily to balance the tensions between local responsiveness and global integration (e.g. Taylor and Beechler, 1996).
