Abstract
This research seeks to examine the role of institutional environments in distinctly determining
HRM practices of MNCs’ originating from one context i.e. developed/developing country but
operating in another. There has been little consideration given to gaining an understanding of
the characteristics of national institutional environments and their interrelation with Human
Resource Management (HRM) practices of Multinational Companies (MNCs). Such MNCs
originate from developed countries but operating in developing countries and they originate
from developing countries but operating in developed countries. To facilitate empirical enquiry,
the study adopts an interpretivist paradigm based on subjective ontology and epistemology.
In this regard, the research employs a mostly qualitative approach and conducts the six cases
(the UK as a proxy for developed country and Bangladesh as a proxy for developing country,
including their four different MNCs), in using semi structured interviews for the data collection.
The finding reveals that in the context of the developing country, informality seems to play
disproportionally a significant role in how political, market and enforcement mechanisms are
codified to determine the nature of the institutional environment. The reverse of the
aforementioned is evident in the developed country studied, where formal institutions play a
more dominated role in determining the nature of the institutional environment. This is evident
in how political, market and enforcement mechanisms of institutional environments are
established and become taken-for-granted. The distinct nature of the institutional environment
in both contexts seem to have a significant impact on MNCs’ HRM practices in the host
environment i.e. when firms originating from one contextual environment operate in the other.
MNCs from the developed country operating in a developing country context tended to impose
their existing HRM practices in their host context. However, MNCs from the developing country
operating in developed country context tended to be more accepting of and subsumed by the
conditions of the host’s institutional environment.
This research makes a valuable and timely knowledge contribution in HRM practices of MNCs’
organising from developing country contexts but operating in developed country context and
vice versa. From a theoretical perspective, the adoption of institutional lens serves to unearth
novel insights on the role of the environment in determining HRM practices of MNCs that
originate from similar characteristic countries but operate in distinct national contexts. In
particular, the study informs that how political, market and enforcement mechanisms defined
here as the building blocks of the institutional environment, serve to determine the nature of
developed/developing country contexts and by extension the nature of HRM practices of
MNCs