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Transnational Trajectories: Emergent Strategies of Globalization and a
New Context for Strategic HRM in MNEs
by
Allen D. Engle, Sr.
011 BTC
Eastern Kentucky University
521 Lancaster Avenue
Richmond, Kentucky 40475 USA
Peter J. Dowling
Victoria University of Wellington
Level 11
Rutherford House
Wellington, New Zealand
Mark E. Mendenhall
University of Tennessee, Chattanooga
615 McCallie Avenue
Chattanooga, Tennessee, 37405 USA
1
Word count: 4963
Transnational Trajectories: Emergent Strategies of Globalization and a
New Context for Strategic HRM in MNEs
Introduction
Strategic thought, as practiced by executives and conceptualized by a growing world-
wide network of management researchers, has been a central interest for forty years
(Bruton, Lohrke & Lu, 2004; Mintzberg, 1994; Ricart, et al., 2004). Increases in the
volume and criticality of global trade is widely reported in the international business
literature (Buckley & Ghauri, 2004; Govindarajan & Gupta, 2000; Sparrow, Brewster &
Harris, 2004: Chapter 2). The aim of this conceptual review is to investigate recent
developments in the wide-ranging domain of strategies as practiced by global firms and
the impact of these new strategies on research on strategic human resource management
in MNEs.
Our central thesis is that the latest generation of global strategies is characterized by: 1) a
more decentralized analysis process, 2) greater reliance on those unique resources and
perspectives – “asymmetries”- available to locally embedded individuals and business
units to scan, evaluate and package innovations for potential delivery across the global
firm (Miller, et al., 2002); and 3) a far more integrated and balanced relationship between
the authority and responsibilities of a corporate headquarters and an increasingly
differentiated array of geographically dispersed units. Further, this integrated, balanced
strategic approach has created a radically new context for strategic HRM in MNEs.
Global control based upon “differentiated coordination” will require the recruitment and
selection, training and development and compensation of more strategically aware
employees (Bartlett, Ghoshal & Beamish, 2008: 464).
2
A New Context: Strategic Movement in Global Firms
Few academic fields have undergone the dynamic and conflicting changes that
characterize strategies of globalization. Existing paradigms, be they the resource-based
view (Bowman, et al., 2002: Bruton, et al., 2004), competitive advantage models, (Porter,
2008), entrepreneurial models, or environmentally contingent “population ecology”
approaches (Rickart, et al., 2004), have been criticized as being overly simplistic. Some
authors have questioned the very idea of a global strategy (Rugman & Hodgetts, 2001;
Hafsi & Thomas, 2005) describing “a Tower of Babel populated by strategic researchers”
(Hafsi & Thomas, 2005: 511) while others have called for a return to a fundamental
review of topics, theories and models useful to develop the field (Bruton, et al., 2004) or
called for an even more basic reconceptualization of the complex and dynamic domain of
strategic management at the metaphor level (Lamberg & Parvinen, 2003; Morgan, 1986;
Weik, 1989).
More optimistic researchers have presented a new generation of models of globalization
to capture the dynamic complexity of international operations. Many of these new
approaches focus on a capacity for flexibility and change – innovation – in strategic
activities, processes and relationships mandated by steady state turbulence in technology,
institutions, industrial preferences and hypercompetitiveness. These new broader
conceptualizations of global strategy replace centralized, segmented, sequential, strategic
change or redirection – what we will call changes in “trajectory” – with a more complex,
balanced and decentralized description of strategic evolution (Bartlett, Ghoshal &
Beamish, 2008; Doz, Santos & Williamson, 2001; Evans, Pucik & Barsoux, 2002).
In this paper we envision strategic changes as a change in trajectory. Any alteration in
products, functional processes or entering competitively into new market segments that
impacts a significant number of units or processes is a strategic change in trajectory.
These changes in strategic direction of the global firm, the movement in or out of
geographic regions, major revisions in products or value chain processes, that are planned
3
and executed to enhance competitive position, are associated with the broad term
flexibility. It is flexibility, the ability to redirect and reconfigure firm resources, that is at
the heart of these new models of global competitive capability. Emergent strategies,
often initiated and championed by individuals, small informal groups or units cooperating
across functional, cultural and product boundaries, are critical processes to deliver
requisite flexibility and innovation (Liedtka, 2000).
Many models are available to choose from to explain the new, strategically critical role
for those regional or local units traditionally considered as operational implementers.
Evans, Pucik and Barsoux (2002: 52) describe IHRM’s role in global firms in terms of
“building,” “realigning” and “steering” and connect steering with building organizational
capability development for the future while performing in the present. This more
strategic, albeit complex, role for operational employees requires managers of IHRM
processes to take on the role of “change partner” and “navigator” (2002: 67). The goal is
to provide a balance of formal integration via the traditional centralized processes of
“rules, central procedures, and planning and hierarchy” in combination with the
decentralized “informal mechanisms for coordination: lateral relationships, best practice
transfer, project management, leadership development, shared frameworks, and the
socialization of recruits into shared values” (Evans, Pucik & Barsoux, 2002: 83). Such a
rebalancing requires that:
local leaders . . . while acting as local entrepreneurs also need to have a
clear understanding of global strategy. Strategic management becomes a
process that involves all key leaders around the world, and local managers
need to have a global mind-set (Evans, Pucik & Barsoux, 2002: 84).
Doz, Santos and Williamson (2001: 59) argue that increasingly significant innovations –
in products, systems and processes – and hence strategic adaptation can only be found
“deeply embedded within the customer and its people [local employees] in the form of
engineering and design principles, intelligence about end-user needs, industry norms, and
competitive practices”. These locally embedded units are responsible for “sensing
dispersed knowledge” and acting as “sensing units” and explorers (Doz, Santos &
4
Williamson, 2001: 60-61). Secondary units must also be developed to act as “magnets”
attracting this locally identified dispersed knowledge in an effort to convert knowledge
into a viable product or service (Doz, Santos & Williamson, 2001: 81). These purpose
built structures of global account units are designed to create a link between the specialist
knowledge within the particular customer sites and the people “that could use this
knowledge in the design of production processes used to create a [product]” (Doz, Santos
& Williamson, 2001: 62).
Finally, a third set of units are responsible for operationalizing “metanational
innovations”, charged to market and produce products for other major customers with
slightly different applications around the world. The aim of these units is to design and
produce products “as a set of application – specific standard products that could be
adapted and used by any customer for a wide variety of . . . applications” (Doz, Santos &
Williamson, 2001: 62-63).
Transference and the dissemination of knowledge across these three units is seen to be
critical. Systemically a “corporate ‘knowledge map’ is able to provide inventories of
different technologies, capabilities, and market knowledge within the MNE that may help
ideas for innovation based on dispersed knowledge to emerge more easily. Thus, a
‘knowledge yellow pages’ or a ‘who’s who’ of in-house experts may play a supporting
role” (Doz, Santos and Williamson, 2001: 172). On a more personal level, this
information is held by a “carrier”, and if this individual fails to transmit the bundle of
knowledge needed to grasp the essence of the innovation, the operating network will
misunderstand it. Thus, “sponsors from the magnet organization, therefore, must choose
appropriate carriers to convey the knowledge inherent in their innovation” (Doz, Santos
& Williamson, 2001: 211-212).
Meta-national strategies and processes are envisioned as:
a global tournament played at three different levels: It is a race to identify and
access new technologies and market trends ahead of the competition, a race to
turn this dispersed knowledge into innovative products and services, and a race to
5
scale and exploit these innovations in markets around the world (Doz, Santos &
Williamson, 2001: 247).
Nohria and Ghoshal emphasize the capacity of subsidiaries to apply “slack resources”
(described as pools of human, production or capital resources beyond those levels
required immediately for local purposes) to stimulate “local-for-local”, “local-for-global”
and “global-for-global innovation processes” (1997: 28-32). Significant changes in
products, functions, processes and activities – changes in the direction of strategic flows,
or trajectories – are increasingly seen to be triggered by local or regional units formally
or informally operating as a highly integrated network composed of these “slack
resource” pools. Sophisticated communication networks, interpersonal contacts, and
social and cross cultural linkages all combine to provide the “requisite complexity”
necessary to ensure a balance between local resource generation and the local creation
and global adoption and diffusion of these strategic changes (Nohria & Ghoshal, 1997:
Chapter 4, Chapter 9).
Bartlett, Ghoshal and Beamish present a transnational solution to the complex dynamics
of globalization, advocating a balance of global standardization, local customization and
the diffusion of innovation (2008: 340). By combining the capacity for guidance and
control inherent in structural “anatomy” with the “physiology” of integrative processes
and a shared cultural “psychology” the transnational firm can successfully balance
standardization, customization and the diffusion of innovation and coordinated the
strategic responsiveness of the firm (Bartlett, Ghoshal & Beamish, 2008: 340-349).
Central to this complex control system is the identification and development of global
talent (also see Boudreau, Ramstad & Dowling, 2003). Balance between global
coordination and local expertise can be fostered via a planned pattern of career
experiences across functions, regions and product lines, empowering local managers and
providing them with clearly delineated areas of self sufficiency, stretch assignments that
focus the managers’ attention on regional or global issues, forced interdependence in
operations, whereby subsidiaries must share and trade complementary resources in order
to achieve their local goals (Bartlett, Ghoshal & Beamish, 2008: 459-461).
6
Transnational control is accomplished via a blend of structural design, resource allocation
and, central to our discussion, career development of staff. Bartlett, Ghoshal and
Beamish describe transnational strategies in terms of structures of “asymmetrical
differentiation”, patterns of resource disposition forcing “interdependence” and complex
coordination across these differentiated yet interdependent units based upon knowledge
transfers and the need to “move knowledge by rotating people and by temporary co-
location” (2008: 462-465). The key to an effective mind matrix is:
to sensitized local managers to broader corporate objectives and
priorities. The goal is best reached by transferring personnel with the
relevant knowledge or creating organizational forums that allow for the
free exchange of information and foster interunit learning. In short, the
socialization process is the classic solution for the coordination of
information flows. (Bartlett, Ghoshal & Beamish, 2008: 465).
This critical need for coordination and divergent resources may explain the reported
increase in joint ventures and other cooperative forms of strategic action (Holtbrugge,
2004).
Strategic HRM in MNEs in this new strategic context
Note that all four of these theories highlight, in various ways, the critical role of local and
regional subsidiary personnel in identifying strategic opportunities, and designing
packages of local solutions. Even more critically, these locals must envision the potential
of these solutions at regional or even global levels and be motivated and technically and
politically capable of championing these strategic change processes across the dispersed
differentiated units of the global firm. The entrepreneurial identification and unimpeded
movement of the “intellectual capital” embedded across the global firm provides a new
critical contextual imperative for strategic IHRM (Peppard & Rylander, 2001). The rich,
complex contextual mosaic of details that makes up an understanding of local conditions
must be married in the minds of an increasing number of employees to a more
encompassing and panoramic understanding of the firm’s global strategy in its totality, if
7
the new strategic context is to be realized. Informal and human processes, the traditional
domain of HRM, are critical to these differentiated emergent, opportunistic transnational
trajectories. Quoting Bartlett, Ghoshal and Beamish: “Even more dramatic has been the
role of HR experts as MNE’s tapped into scarce knowledge outside the home country and
leveraged it for global competitive advantage” (2008: 349).
How have our models and theories of strategic HRM in MNEs reacted to this radically
different strategic context? De Cieri and Dowling (2006) explicitly present strategy
(operating at both the corporate and business levels) as an organizational factor directly
impacting HRM strategies and practices. Additional factors in their framework of
strategic HRM in MNEs explicitly speak to competitiveness, as well as flexibly balancing
global integration and local responsiveness. Rapid, discontinuous changes in many
geographic regions presently of a strategic interest to MNEs (e.g. central and eastern
Europe, China, Indonesia and India) and the emergent “knowledge economy” are posited
to be related to the creation of more intra-organizational networks and alliances in search
of knowledge resources and cooperative collaborative opportunities (De Cieri &
Dowling, 2006: 24).
In an integrative framework of strategic HRM in MNEs bordering on a meta-analysis of
recent research, Schuler and Tarique present model elements related to the significance of
“inter-unit linkages” and the “vertical alignment between corporate strategy and HRM”
(2007, in-press: 8-9); “balancing consistency and autonomy” in HRM processes and
policies across units (pp. 11-12); and, of particular interest to our discussion, a growing
recognition of the importance of “identifying and developing leaders who are capable of
functioning effectively on a global scale and with a global perspective”(p. 16) and the
potential for “global careers” to facilitate strategic interests (p. 17). In a similar vein,
Budhwar and Sparrow present an integrative model of cross-national HRM processes that
posits “organizational strategies and policies” as an “inner contextual variable” impacting
HRM practices. These strategies and policies act in combination with a series of
contingent variables (dominant technology, size, age, life cycle stage, ownership and
structure, union status, stakeholder interest, etc.) and “National Factors” (national culture,
8
national institutions, industrial sector, competitive dynamics) that provide the firm with a
“HRM meta-logic” (2002: 387).
However, the impact of the contextual variable of strategy operating on the global level
remains elusive. Budhwar and Sparrow (2002) have raised the issue as to whether cross-
national differences in HRM occur because the “various meta-logics and contingency
factors” predispose organizations within one country to one type of domestic HR
strategy. In addition, they question whether each type of strategy is evidenced by the
same patterns of HR policies and practices or are there “culturally equivalent variations”
(Budhwar & Sparrow, 2002: 394). An empirical review using data from a web-based
survey informed by several case studies is presented by Brewster, Sparrow and Harris
(2005). Their analysis led them to conclude that informal “global networking” not only
facilitates knowledge transfer, but “these global networks . . . are used increasingly to cut
through bureaucracy and to act as important decision-making groups” (2005: 965). These
authors highlight three “key processes” linked to global HRM: 1) talent
management/employer branding; 2) international assignment management; and 3)
managing an international workforce. Commenting on their findings, Brewster, et al.
(2005: 966) note:
Once again we see the need for a far more strategic perspective to
the management of international assignments. Organizations are
actively considering ways of measuring the value of international
assignments and are investigating alternative to traditional ling term
assignments.
A number of reviews of international HRM have stressed the need to move beyond the
ethnocentric centralization of a global firm’s domestic point of origin and learn to discern
and incorporate the institutional, cultural and historical factors that vary across regions
and nations (Brewster, 2004: Martin-Alcazar, Romero-Fernandez & Sanchez-Gardey,
2005). Wright, Snell and Dyer (2005) review the results of a recent conference on
strategic HRM in a global context in terms of themes related to the validity of theories of
9
strategic HRM developed in the US for contexts outside the US, the generalizability of
US exported “best practices” of HRM, and the impact of local institutional factors as they
may act to restrict the strategic choices available to global managers in the area of
international HRM.
Scullion and Starkey (2000) present the results of a survey on centralization of IHRM
practices from thirty UK-based international firms. Ten companies were assessed as
following “centralized” HR roles and processes, 16 companies were described as
following “decentralized” HR roles and processes, and four firms were described as
“transitioning” from decentralized to more centralized HR roles and processes. It is
interesting to note that all three types of firms recognized the need to manage executive
career development and provide opportunities for expatriate mobility. Even the more
decentralized firms stated that:
corporate HR was increasingly effective in influencing operating
companies and divisions to support international transfers for
strategic management purposes in the decentralized companies even
though tensions between the short-term needs of the operating
companies and the long-term needs of the business were more
pronounced in these companies (Scullion & Starkey, 2000: 1070).
The strategic imperative for “learning, knowledge acquisition and adaptation [as]
important potential sources of competitive advantage” was cited as the reason for this
willingness to emphasize career development across boundaries. It was also noted that
the HRM function needed to demonstrate how it contributes to an environment in which
learning can flourish and demonstrate how “HRM policies and practices contribute to the
learning of new skills, behaviors and attitudes which support the strategic objectives of
the organization” (Scullion & Starkey, 2000: 1074). The role of strategic HRM in MNEs
is to partner with corporate strategists to share the “stewardship of core competence and
organizational learning” (Scullion & Starkey, 2000: 1076). Ordonez de Pablos (2003)
also provides empirical support for the connection between HRM’s efforts to identify and
map human capital and sustained competitive advantage in Spanish firms. Finally, Kelly
10
(2001) provides an assessment highlighting proactive strategic role of local units
effecting international HRM practices as well as the indirect, yet distinct voice that HR
has at the Board level amongst British-owned MNEs and foreign owned subsidiaries
operation in the UK.
Given the overwhelming expectations related to the new, decentralized, locally proactive
and interdependently linked transnational strategies, researchers in strategic HRM in
MNEs appear to have made at best rudimentary progress in aligning IHRM processes,
systems and models appropriate to this new strategic context. What personal qualities or
characteristics are required by a strategy characterized by a critical, strategic role for
employees and units concurrently operating in local assignments?
Transnational Contexts and Strategic HRM Consequences for MNEs
Table 1 presents a summary of elements from the new strategic context for transnational
firms. This new strategic context calls on local or regional units to regularly and
systematically contribute to the analysis and creation of innovations that will alter
existing strategic patterns. Of particular interest is an assessment of the perspectives,
skills, capabilities or competencies required of managers in this new context.
Table 1
Strategic HRM in the New Strategic Context
Strategic Context Strategic HRM Consequences
1. Emergent Strategic Synthesis 1a. Competitive-mindedness at local,
regional and global levels
1b. Deeper, more flexible understanding
of own and others’ roles in the firm
2. Wide ranging assignments to 2a. Planning and coordinating a wide
identify, analyze and package range of forms of global assignments
innovations from any source
11
uncovered
2b. Significantly valuing assignments as
part of a more complete and systematic
career development system
3. Competitive advantage via 3a. In-depth understanding of firm-
identifying, disseminating and critical knowledge architecture, personal
packaging knowledge resources knowledge and competencies, and the
knowledge infrastructure of the firm
3b. Competency rather than job focus
3c. Building an awareness of local, regional
and global environments
3d. Fostering a “bell weather” sensitivity to
changes in competitive environments
First, the idea of strategic development through a more decentralized, emergent synthesis
of local, regional and corporate level mangers – be they conceptualized as local
entrepreneurs, regional mentors and global culture gurus (Bartlett, Ghoshal & Beamish,
2008: 775-793; Ghoshal & Bartlett, 1997: 212-242) or as local sensing units/”explorers”,
“magnets” to mobilize disperse knowledge, and operationalizing “farmers” as presented
in “meta-national” firms (Doz, Santos & Williamson, 2001) – will require a high degree
of “competitive-mindedness” at local, regional and corporate levels. Successful
employees must be able to balance in their minds the immediate and tactical roles with a
sensitivity to and alertness for global competitive processes. HRM practitioners must
recruit and select, develop and reward-encourage managers that have a deeper and more
flexible understanding of the roles of others in the firm. Local entrepreneurs must
understand and develop empathy for regional mentors and corporate level leaders if the
opportunistic synthesis of emergent strategies is to be realized. This same empathy will
be required in turn of the other role incumbents.
12
Second, building linkages and integrative capacities by way of a wider range of
assignments appears an emergent theme (in addition to the discussion above, see
Lengnick-Hall & Lengnick-Hall, 2006). Expanding upon a strong base of existing
expatriate literature, HRM practitioners and researchers must widen and coordinate
existing virtual and live international assignments and more systematically prepare
assignees for the outbound, in country and returning segments of a much more flexible
set of assignments – ranging from a few days on a technical assignment to years in-
country as a part of a joint venture or “greenfield” start-up (Black, et al., 1999; Caligiuri,
2006; Stroh, et al., 2005; Welch & Worm, 2006). Executives in MNEs must pursue and
more significantly value increasingly varied forms of international assignments as part of
a more robust and interlocked system of career development.
Finally, all the strategic models presented above share a focus on the principle that
competitive advantage can be found by nimbly identifying, disseminating and packaging
resources (variously referred to as “knowledge” and “innovation”). Four implications for
strategic HRM in MNEs stem from this contextual principle. First, to be strategically
relevant, HRM systems must contribute to fostering a widely held, in-depth
understanding of firm-critical knowledge architecture – that is a conscious understanding
of the individual employee’s own personal knowledge and competencies as well as an
awareness of the inventory of knowledge in the local, regional and global units of the
firm. This requirement means that HRM processes and systems in MNEs must be
redesigned to alter corporate culture (valuing and rewarding sharing knowledge as
opposed to the common existing norm of hoarding knowledge) and processes
(developing electronic and personal venues for mapping, indexing and disseminating
personal and explicit forms of knowledge) resulting in an MNE that is more sensitive to
competencies and knowledge flow and less reliant on differentiating jobs, structures and
policies as a source of competitive capacity (Bjorkman, Barner-Rasmussen & Li, 2004;
Buchel & Raub, 2002; Buckley & Carter, 2004; Cabrera & Cabrera, 2005; Heraty, 2004;
Nilsson & Olve, 2001; Peppard & Rylnder, 2001).
13
Second, competitive-mindedness, a conscious sensitivity to local, regional and global
competitive dynamics, must be added to existing inventories of personality traits,
qualities and competencies required of global managers (Caligiuri, 2006; Engle,
Mendenhall, Powers & Stedham, 2001; Stroh, et al., 2005). Third, HRM practitioners
must alter existing systems of recruitment and selection, training and development, and
compensation and rewards to attract, develop and maintain a core group of employees
have a sophisticated and timely awareness of industry, institutional, competitor, supplier,
customer and regulatory forces acting on the firm along with an equally sophisticated
grasp of the firm’s strategic capabilities and modes of action. Inherent in this quality is a
controlled aggressiveness and interest in winning. Finally, the strategic context of
competitive advantage through knowledge requires managers that are capable of “bell
weather” sensitivity to sudden, discontinuous and unexpected changes in
industry/competitive positions. Global hyper-competitiveness is characterized by
unexpected shifts in competitors’ actions, institutional and regulatory dynamics and the
fickleness of consumers. The capacity for all managers to act as “listening stations” to
scout for environmental changes and to disseminate these changes in a timely and
convincing manner is critical to maintaining competitive capabilities (Bartlett, Ghoshal &
Beamish, 2008: 722-723).
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