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The influence of environmental, organizational, and HRM factors on employee behaviors in subsidiaries:a Mexicancase study of organizational learning
Carolina Go´mez*
Department of Management and International Business, College of Business Administration,
Florida International University, University Park, Miami, FL 33199, USA
Abstract
This article presents a case study of aMexican subsidiary of a U.S. multinational corporation (MNC) that has successfully
adopted characteristics of a learning organization. The case is of particular interest becausemuch of the cross-cultural evidence
would indicate that employee involvement, work teams, and other management practices associated with a learning strategy,
might be incompatible with the Mexican culture. Therefore, the case is used to unravel diverse factors—within the
environment and organization—that affect the implementation of different management strategies in foreign subsidiaries.
In addition, the case points to the importance of the human resource management practices as a mechanism that facilitates the
指导留学生论文implementation ofmanagement strategies in subsidiaries. Interestingly, while some of the HRpractices adopted were standard
practices that would be implemented regardless of the country, others were culture-specific and yet other practices were
translations of U.S. HR practices to be sensitive to the values of the country. A model is presented and the role of HR within a
global context is discussed.
# 2003 Elsevier Inc. All rights reserved.
In an effort to remain competitive, many organizations
are increasingly moving towards management
approaches that promote organizational learning.
Studies show that an organizational learning approach
has resulted in improved customer satisfaction and
increased performance (Hult, 1998). Moreover,
research on multinational corporations (MNCs)
increasingly points to the importance of a global learning
focus that offers more competitiveness and flexibility
in organizational capabilities to deal with the
increasing complexity of the international environment
(Bartlett & Ghoshal, 1989). As MNCs implement
learning strategies in specific subsidiaries, it will
become critical for managers to understand the factors
that affect the implementation of differentmanagement
practices that facilitate learning.
One factor that affects the implementation of management
practices that has received significant attention
is culture. Culture can be defined at different levels
that range from the group to the organization to the
national level (Erez&Earley, 1994). Culture comprises#p#分页标题#e#
values and norms that guide individuals’ behavior.
Many view organizational practices and theories as
culturally bound (Adler, 1997; Hofstede, 1980) which
would mean that the values of a country should be
compatible with a management practice for it to result
in employee motivation. For example, in assessing the
compatibility between the Polish culture and the underlying
values of total quality management (TQM),
Journal of World Business 39 (2004) 1–11
* Tel.: þ1-305-348-3269; fax: þ1-305-348-6146.
E-mail address: gomezc@fiu.edu (C. Go´mez).
1090-9516/$ – see front matter # 2003 Elsevier Inc. All rights reserved.
doi:10.1016/j.jwb.2003.08.006
Roney (1997) found some major incompatibilities. One
such major incongruence exists between the deterministic
TQMphilosophy and the fatalistic Polish culture
that may hinder the empowerment of employees.
Erez and Earley (1994) have noted the innate congruence
between participatorymanagement techniques
such as quality circles and the collectivistic orientation
of the Japanese culture by which the company’s goals
are given priority. In contrast, Lawrence and Yeh
(1994) found major differences between the Mexican
and Japanese cultures that would appear to make
implementation of Japanese manufacturing techniques
more difficult in Mexico. At first glance, the Mexican
and Japanese cultures appear similar on several cultural
dimensions such as collectivistism (i.e., both cultures
are more focused on the group rather than the individual)
and power distance (i.e., both cultures are hierarchical).
Nevertheless, while Japanese employees are
collectivists in their work relations, in Mexico an
individual’s loyalty is directed toward the family and
extended family (relatives and close friends). The work
group may be seen as a competing collective that may
take away from the loyalty towards the family. Similarly,
within their hierarchy, the Japanese are rigid
about status and communication but not about authority
and responsibility. The ringi systemof group consensus
decision-making, by which a decision is signed off by
each individual involved in the decision-making process,
distributes authority and allows opinions to be
voiced. In contrast, decisions in Mexico aremade at the
top and truly reflect individual decision-making.
Hence, management practices that are innately congruent
with the Japanese culture may not be congruent
with the Mexican culture.
Several comparative management researchers
(Farmer & Richman, 1965; Negandhi & Prasad,
1971) have discussed other factors and their influence
on management practices. For example, Negandhi and
Prasad note that management practices are affected by#p#分页标题#e#
environmental factors such as socioeconomic, educational,
political, and legal factors. Recent models have
similarly proposed that institutional differences (i.e.,
the regulatory, cognitive, and normative institutions)
between countries should have an effect on the implementation
of organizational practices in foreign affiliates
(Kostova, 1999).
Organizational factors have also been proposed
to affect management practices. In Negandhi and
Prasad’s model, management’s philosophy is noted
to influence management practices. Empirically,
Rosenzweig and Nohria (1994) found that organizational
factors influence the human resource (HR)
practices of subsidiaries. Specifically they found that
the method of founding of the subsidiary, the presence
of expatriates, and the extent of communication with
the parent significantly affected the degree of similarity
to local HR practices. Kostova’s (1999) recent work
also includes the organizational context (a subsidiary’s
favorability for learning and compatibility with practice),
and the relational context (a subsidiary’s commitment,
identity, and trust as well as dependence on the
parent company) as important factors that affect the
implementation of organizational practices in foreign
subsidiaries.
Finally, managers can work with certain variables to
facilitate the transferability of management practices
across cultural boundaries. International human
resource management (IHRM) seeks to develop practices
that provide fit between the management style
and the overall business strategy while effectively
dealing with cultural differences (Butler & Teagarden,
1993). For example, strong reward systems have been
noted to illicit behaviors that are desired by the
organization (Kerr & Slocum, 1987). More generally
speaking, the organizational culture literature notes
that the recruitment, socialization and turnover of an
organization (Harrison & Carroll, 1991) affect the
transmission and subsequent stability of the organizational
culture. Thus HR practices and strategies have
the ability to affect employee behavior and instill
certain values that build an internal culture and can
therefore be used as a control mechanism in the MNC
(Jaeger, 1983).
As a MNC transfers learning processes to their
subsidiaries, managers will need to understand the
degree to which diverse factors including but not
limited to national cultural values affect the transferability
of different management practices. Managers
must understand what factors might facilitate the
implementation of management practices that are at
first glance incompatible with a culture. One method
to gaining insight into the different factors that may#p#分页标题#e#
affect management in different countries is by studying
specific cases that defy the common wisdom. This
article studies one such case: a subsidiary of a U.S.
MNC in Mexico that has adopted a learning approach
2 C. Go´mez / Journal of World Business 39 (2004) 1–11
which as noted below is increasingly being adopted by
MNCs but appears to be incongruent with the Mexican
culture.
1. The MNC, organizational learning and
appropriate management practices
MNCs have traditionally focused on achieving
economies of scale through location economies and
cost reduction in multiple countries (Bartlett &
Ghoshal, 1989). Such goals when investing in countries
such as Mexico with low labor costs were typically
achieved by pursuing a cost-leadership strategy
(Hout, Porter, & Rudden, 1982). In today’s environment
of complexity, change, and uncertainty, learning
often needs to occur in subsidiaries that may have been
previously only considered as low cost manufacturing
alternatives. Therefore, a MNC may have subsidiaries
that fulfill different roles. Some subsidiaries may still
provide a low cost manufacturing alternative, while
others may become involved in the creation and
diffusion of innovation so as to ensure ongoing organizational
learning for the MNC. Global learning
must occur to and from subsidiaries and headquarters
(Bartlett & Ghoshal, 1989). These ideas build a bridge
across the concepts of organizational learning and the
transnational MNC that responds to cost pressures and
local responsiveness while ensuring ongoing global
learning. As learning organizations, MNCs with a
transnational strategymust ensure that ongoing innovation
is diffused. Hence, some subsidiaries under this
newlearning focus will becomeimportant collaborators
in building the organization’s competitive advantage.
At the broadest level, a learning organization is able
to move lessons across time, organizational structure,
and geography, such that ultimately ongoing learning
increases an organization’s ability to take effective
action (Kim, 1993). The learning can result in incremental
improvements as well as the development of
new capabilities (Senge, 1990). The use of teams,
vision, mental models, and holistic systems thinking
has all been associated with learning (Senge, 1990).
Though organizational learning is not dependent on
any specific member, organizations learn through their
individual members (Kim, 1993). Thus organizational
learning at some point has to be tied to individual level
behaviors (Nonaka, 1994) such as experimenting with
new approaches and processes (Garvin, 1993). In
addition to experimentation and continuous improvement,
others have associated learning with knowledge#p#分页标题#e#
acquisition and benchmarking (Yeung, Nason, Ulrich,
& Von Glinow, 1999). Some have proposed models of
organizational learning that include stages such as
knowledge accumulation, dissemination, interpretation,
and institutionalization (Huber, 1991).
Within the organizational learning literature, certain
themes are repeated consistently lending credence to
their importance in the process of learning. Such
themes include knowledge accumulation and knowledge
diffusion. Undoubtedly, different subsidiaries can
accumulate knowledge in different ways. Some subsidiaries
may choose to acquire or borrow knowledge
through processes such as benchmarking, mergers, and
or joint ventures. In contrast, other subsidiaries may
focus on internal creation of new knowledge. In such
subsidiaries, employee involvement will be of paramount
importance since employees become a primary
source of both knowledge creation and diffusion
throughout the organization. Thus these learning strategies
rely heavily on employee involvement in everyday
decisions and experimentation. The use of teams,
often self-managed work teams, and other forms of
employee involvement are typical means of emphasizing
a learning orientation.
2. Learning and national cultural values
Traditionally, practices such as employee involvement
has been thought of as congruent with participative
cultures such as the United States, and are
believed to be less congruent with more authoritarian
cultures such as the Mexican culture. For example,
Hofstede’s (1980) rankings of power distance show
that Mexico is a culture that accepts large power
differences. Qualitative accounts also provide evidence
of a control or authoritarian culture at work
(Kras, 1995). In addition, empirical research conducted
in Mexico on management styles also has
shown that compared to an identical U.S. plant, the
management style in the sister Mexican plant was
more authoritative, a style considered more congruent
with high power distance (Morris & Pavett, 1992).
Moreover, Mexico ranks high on uncertainty avoidance
(Hofstede, 1980) meaning that Mexicans feel
C. Go´mez / Journal of World Business 39 (2004) 1–11 3
uncomfortable with ambiguous and uncertain situations.
Ongoing learning and experimentation, behaviors
that can facilitate learning within an
organization, would result in ambiguity on the job,
which would not be congruent with Mexican preferences.
Mexico’s values of high power distance and high
uncertainty avoidance would appear to make it a less
than ideal culture to implement a learning strategy
focused on employee involvement and empowerment.
This lack of congruence may make learning strategies
that require employee involvement more difficult or#p#分页标题#e#
impossible to successfully implement in a country such
as Mexico. Still, Drost and Von Glinow (1998) find
support for both autocratic, paternalistic management,
as well as participative management in Mexico.
The case study presented in this article may shed
light on factors that facilitate the implementation of
management practices that are considered incongruent
with national values. This plant is considered such a
success as a learning organization that customers and
managers from other subsidiaries from around the
world are often flown in to visit and learn about
how the management practices have led this organization
to achieve such ongoing learning. Given the
organization of the plant into self-managed work
teams and the behaviors of these teams and individuals,
this plant undoubtedly reflects the practices and
processes of a successful learning organization. The
plant was observed and interviews were conducted
with managers, facilitators, and employees to determine
what factors have facilitated the implementation
of a strategy that is believed to be incompatible with
the values of the national culture. From these observations
and interviews, I have grouped the factors into
categories and developed a model that shows the
apparent relationships between the factors and points
to the increasingly important role of HRM in the
global environment of business.
3. A learning organization in Mexico
Equipos1 is a plant in an industrial city of 600,000
on the Gulf of Mexico. The plant is a technologydriven
manufacturing plant that produces plastics.
There are approximately 170 employees working at
the plant. The plant was opened in 1991 as a joint
venture between a Mexican and an American partner.
Subsequently, the plant was fully bought out by the
American partner in 1995, thus becoming a whollyowned
subsidiary. During the first four years, the
Mexican partner was in charge of management, and
hence, local Mexican managers headed this plant. The
top management remained the same even after the
subsidiary became wholly-owned. In 1992 the plant
began the process of employee empowerment, which
resulted in the implementation of self-managed work
teams in 1994. The teams divided the functional roles
(human resources, safety, manufacturing, etc.) within
the team and the role of team leader was rotated every
three months. The plant was down to three official
managers. Individuals who used to be managers had
transitioned to a role of facilitators with the implementation
of self-managed work teams. The facilitators
took upon special projects as well as serving as
implicit leaders that team members went to for help
and guidance.
Interviews were conducted with two of the three#p#分页标题#e#
remaining official managers (the general manager and
the HR manager), four facilitators, and three employees
for a total of nine interviews. The semi-structured
interviews with the managers/facilitators were taped
and transcribed. Specifically, managers/facilitators
were asked: what employee behaviors facilitated
learning, how cultural differences between the U.S.
and Mexico affected these behaviors, what a company
can do to promote learning, what their company had
done and was doing, as well as what barriers inhibited
learning. The interview with a group of three employees
was much less structured. Initially these employees
were observed working on a process improvement
project. When they finished their meeting, they were
asked to describe the company’s management practices
and their opinions about these. Employees and
managers were accustomed to visitors given the frequency
with which visits occurred. All those interviewed,
managers, facilitators, and employees were
Mexican; therefore, the interviews were conducted
in Spanish. In addition, timewas spent touring the plant
(to observe theway work was done) as well as attending
formal group meetings (all teams were observed while
presenting their quarterly results) and organized company
events for the teams.
1 The name of the plant has been changed for anonymity of the
plant and the MNC.
4 C. Go´mez / Journal of World Business 39 (2004) 1–11
Through the observations and interviews, there was
sufficient evidence that Equipos had many of the
components of a learning organization—teams, an
ongoing learning/continuous improvement orientation,
participative management, and open vertical and horizontal
communication. For example on a quarterly
basis the teams presented their results and accomplishments.
During these meetings, the team leader for that
quarter led the presentation of the team’s goals and
their achievements during that time period. The teams
also discussed plant-wide issues related to transportation
costs and inventory problems very openly and
frankly. Management had trusted employees with both
transportation expenses and supplies, and the teams
had encountered problems that needed to be discussed.
The general manager (GM) only became involved to
provide an organizational perspective on the companywide
issues that needed to be resolved.
The MNCs assessment of this subsidiary as a
learning organization appeared accurate. Therefore,
the purpose of this case analysis is to discuss those
factors that seemed to facilitate the implementation of
the management practices associated with the learning
orientation in this subsidiary. Specifically, the factors
discussed and observed are grouped in three categories.#p#分页标题#e#
The first category refers to factors in the
environment, the second to organizational factors,
and finally the third deals with the HRM practices
implemented by the management team.
4. Environmental factors
Several environmental factors surfaced during
interviews with Equipos’ members. For example,
managers/facilitators noted that one factor in their
favor when implementing management practices
was the stability of the workforce in the region were
they operated. They contrasted this to subsidiaries in
the northern part of Mexico that have to deal with
constant mobility of the workforce resulting in a high
turnover rate. Others have noted differences between
the north and south of Mexico. For example, it appears
that in the interior of Mexico there is more of a family
atmosphere that results in a more permanent workforce
compared to the Northern border region where
the constant workforce mobility results in high turnover
(Gowan, Ibarreche, & Lackey, 1996).
Another issue brought up by those interviewed was
the issue of education. Education was discussed as an
inhibitor to practices related to learning because
managers and facilitators stated that the average level
of education for the manufacturing sector in Mexico is
5–6 years.
Cultural values themselves are part of the external
environment that affects management practices. Interestingly,
while managers noted a number of values and
workforce characteristics and their potential influence
on employee behaviors, they did not indicate that these
cultural values prohibited the use of employee involvement.
Those interviewed acknowledged that the culture
of Mexico is one in which employee involvement is
atypical. The managers explained that Mexicans typically
are not as willing to speak up to a supervisor, ask
questions, or take risks. Different managers attributed
these behaviors to different reasons. For example, some
believed such differences were due to historically
hierarchical organizations inMexico (the typical smallto
medium-size family business) whereas other managers
attributed it to a younger workforce and/or their
level of education. Managers agreed that typically, in
Mexico, the preferred management style by both
employees and managers is a more authoritarian
one. Additionally, they noted that overall employees
in Mexico tend to not like to work in teams because of
the emphasis on the family rather than work teams. But
themanagers also noted that if the team was seen as part
of the individual’s extended family, the team camaraderie
could be a powerful motivator.
An unexpected important characteristic of the Mexican
workforce noted in the interviews was the young
age and the perceived openness to learn new things.#p#分页标题#e#
The younger workforce was believed to have more
ingenuity and creativity. Others have noted such creativity
as a cultural characteristic of Mexicans (Gowan
et al., 1996). Equipos has a relatively young workforce.
About 41% of the employees were 25 or under,
while an additional 28% of the employees were
between 26 and 30. Whether cultural or age-related,
managers noted that while this creativity could be a
favorable characteristic, such ingenuity could also be
potentially detrimental or dangerous to quality if
applied to their particular jobs since they dealt with
chemicals and complicated machinery.
Finally, managers brought up the existence of a
powerful union in the industrial sector inwhich Equipos
C. Go´mez / Journal of World Business 39 (2004) 1–11 5
operated. Equipos chose to work closely with the union
and provide valuable benefits such as high wages in
exchange for a cooperative relationship. Given the
higher wages and the cooperative relationship, the
union had no objection to the use of teams and increased
participation. Research has indicated that the technology
or industry can also affect an organization’s culture
(Phillips, 1994). In the case of Equipos, the union was
one such industry-level factor.
5. Organizational factors
In the interviews, one of the most important organizational
factors that was believed to have facilitated
the implementation of management practices associated
with a learning strategy is the method in which
Equipos was founded, as a joint venture between a
Mexican and U.S. partner. The international strategy
literature indicates that one of the benefits of entering
a joint venture with a local partner is the knowledge
that such partner provides on how to conduct business
within a foreign country (Kogut & Singh, 1988). In the
case of Equipos, several reasons seem to explain the
advantage that such a joint venture provided. The joint
venture rendered a local management team to lead the
company initially. This Mexican top management
afforded a thorough understanding of the local culture.
Thus, the managers at Equipos had the ability to
change U.S. guided programs to be more congruent
with the culture of their employees.
In addition to the understanding of the culture and
the ability to deal with it effectively, the top management
of Equipos had a management philosophy
geared towards empowerment and learning. It was
the managers of the plant, who were originally a part
of the Mexican partner’s team that approached the
U.S. MNC headquarters for help on management
practices. When asked why they approached the
MNC, the managers explained that they were new
at managing and uncertain as to what management#p#分页标题#e#
practices would lead to high performance. Given that
the U.S. MNC was well respected, it seemed like a
natural avenue to pursue for help. It was this initial
approach and their subsequent welcoming of ideas
related to management that began the process of
transforming Equipos into a learning organization.
Hence, the philosophy held by top management was
logically a major guiding force behind the management
practices implemented.
The size of Equipos also appeared to be an organizational
level variable that facilitated the implementation
of the various involvement strategies. There is
no doubt that implementing such programs in a plant
of 170 employees is easier than doing so on a larger
scale. Many noted that because of the size of Equipos
even the GM knew most of the employees well.
6. Human resource practices
The managers/facilitators of Equipos were specifically
asked what a company could do to facilitate
organizational learning as well as what their organization
had done and was doing. The most cited
answers regarding what a company can do to facilitate
learning were HR practices such as: ongoing
training, constant communication, employee involvement,
clear and consistent goals, rewards and
recognition for desired behaviors, a team structure
and flat organization, as well as a culture or mindset
oriented toward learning. Other organizational factors
were noted such as the need for a vision, an
understanding of the big picture, and commitment
from top management.
When talking about what Equipos specifically had
done, three types of HR practices came up. The first set
of practices was standard HR practices such as those
mentioned above: training, goals, a reward structure
oriented towards learning, a team structure, etc. A
second set of HR practices mentioned seemed to be
culture-specific, or HR practices that Equipos implemented
to deal with the host-country specific
dynamics. For example, the cultural history of authoritarian
management that most employees were accustomed
to and the lower level of education are both
specific contexts particular to the environment being
faced by Equipos. Finally, a third set of HR practices
evolved that were the U.S. MNC’s practices that were
translated to fit the Mexican culture. Each of these
type of HR practices contributed to the success of
Equipos.
From the ‘‘standard’’ HR practices, Equipos implemented
many initiatives such as self-managed work
teams, clear goals, open communication (within and
between teams), ongoing training and an appropriate
6 C. Go´mez / Journal of World Business 39 (2004) 1–11
reward systems encouraging ongoing learning/experimentation.
The human resource policies were aligned#p#分页标题#e#
to create a culture that valued ongoing learning.
Beginning with the structure of the organization,
Equipos had a purposefully designed structure that
was truly indicative of the learning focus/strategy.
Management began introducing teams with a specific
purpose but gradually moved to self-managed work
teams. As part of the transition to this flat structure,
they also changed the role of managers. Managers
were aware that their jobs would be obsolete and
that they would have to take on a new role in the
company. Ultimately, the goal of the top management
was to reduce the number of managers to the
smallest possible to reiterate their belief in employee
involvement.
To attract and retain skilled employees, the management
chose to be a leader in the area of pay. As
already noted, management worked closely with the
union to ensure that their employees were paid above
average. The attitudes and technical skills of potential
employees’ were assessed during the selection
process.
Given the importance noted by managers on the
level of education of employees, the top management
of Equipos implemented a policy to hire individuals
with a high school education as a minimum acceptable
level. This was a culture-specific HR practice that
helped Equipos deal with a constraint provided by the
environment. In the hiring process managers, facilitators
and team members not only assessed technical
skills but the employee attitudes toward teams and
empowerment. In addition to the minimum education
requirement, training was a major HR practice that
helped align the Mexican employees with the learning
focus. Once employed by the plant, an estimated 30
days of training was provided to each employee on
courses such as Math, Statistics and even the Philosophy
of Science as well as in the technical areas of the
company. These practices could be considered standard
HR practices related to a learning orientation but
they become even more critical in Mexico given the
cultural norms of the country. Thus such practices can
also be seen as culture-specific in nature.
To deal with the potential incongruence between the
cultural history of Mexico and the employee empowerment
initiatives, the efforts of employee involvement
were dealt with very gradually. In 1992, a
program was introduced for workers to take ownership
of the maintenance of the equipment. Once the maintenance
program was taught, the workers were asked
to develop a plan of how they could implement what
they had learned. At this time, the workers began
working in teams that were responsible for certain
machines. The structure of the organization was similar
to that of a matrix organization at this point where
each employee reported to his or her work unit as well#p#分页标题#e#
as to a team that dealt with the maintenance of a
specific machine. In 1993, a quality program was
introduced. This program involved a 12-week training
course, eight weeks of theory and four of practical
application. Workers graduated from the program
upon completion of their lab work (i.e., an actual
quality improvement project). Human resources saw
the need to begin training on interpersonal skills such
as how to influence people, how to manage relationships,
how to work in teams, conflict resolution, etc. In
1994, the company began moving to socio-technical
work teams, and further training was offered on setting
goals, problem solving, etc. Teams were provided with
a sufficient amount of time in each stage of empowerment
to become accustomed to the level of decisionmaking.
Again, many of these practices can be seen as
both standard and culture-specific HR practices.
As mentioned earlier, the managers and facilitators
interviewed explained that whenever they attempted to
implement programs coming from headquarters, they
would ‘‘translate’’ it not only to Spanish but also to
procedures that were appropriate for the Mexican
culture. This represents the third type of critical HR
practice. For example, while the implementation procedures
related to self-managed work teams indicated
that employees would welcome the self-management
and so this component of the program should be
emphasized, the managers of Equipos decided to
emphasize the team concept first and only gradually
move towards the self-management component. In
addition, to deal with the potential conflict between
family and work teams (due to the nature of the
family-oriented collectivistic culture) when implementing
the self-managed work teams, the HR manager
decided to build team camaraderie in a manner
that incorporated the families of the workers. Events
such as soccer games and bowling championships
were organized in which the teams competed against
each other but, importantly, the families were invited
C. Go´mez / Journal of World Business 39 (2004) 1–11 7
and participated as well in the events. This allowed the
teams to begin to think of their work team members as
part of their in-group (e.g., family, workgroup, or
collective of importance), previously comprised of
just family and close friends. In addition, the importance
of the ‘‘team’’ seemed to allow individuals to
transfer their loyalty, typically reserved for the supervisor,
to the entire team.
Certain criteria were established to determine different
levels of self-management for the teams. As
teams reached the final level of self-management, they
had a ‘‘liberation ceremony’’ after which they no#p#分页标题#e#
longer had a manager. Above and beyond their daily
work, workers were expected to work on continuous
improvement projects. A ‘‘continuous improvement
fair’’ was developed that allowed workers to show the
results of these projects on a quarterly basis. Projects
submitted had to be fully implemented with information
available on costs savings and investment costs.
Bonuses were given to all who participated in the fairs
(with higher bonuses given to the top three contenders).
Managers created the liberation ceremony and
the continuous improvement fair with the Mexican
culture in mind since they believed that a strong
motivating factor for Mexican employees would be
to show their work and have it recognized by their
peers. Hence, this fair was added as an HR practice
that served to translate the typical focus on continuous
improvement to provide Mexican employees with
more motivation in their projects.
The combination of these three types of HR practices
resulted in what managers and facilitators
referred to as their own culture within the external
Mexican culture. They explained that their organizational
culture was a mixture of the U.S., due to the
location of the headquarters, and the Mexican culture.
When employees of Equipos were asked about the
culture of the plant, they too explained that it was
unique and different from the external Mexican culture
in which they lived in. One employee told the
story of having to explain to his wife and family that
even though he worked in the manufacturing sector, he
sometimes had to dress up when he was a team leader
and had to make presentations. Another employee
noted that he had received several offers from other
companies but could not imagine working for a company
that might have a more traditional management
style.
7. An integrating model
A model has been constructed based on the interviews
and observations. The model, shown in Fig. 1,
shows the environmental and organizational factors
that influence the choice of HR practices. These two
sets of variables are similar to those delineated by
Schuler, Budwar, and Florkowski (2002): exogenous
and endogenous variables. Although this model is
based on the case described in this article, it incorporates
the past models (Negandhi & Prasad, 1971;
Schuler et al., 2002) and the relevant recent research
(Kostova, 1999; Rosenzweig & Nohria, 1994). Schuler
et al. (2002) call for models that reflect the complex
set of environmental factors that affect human
resources. Hence, part of the value provided by this
model lies in the reflection of factors that have not
received much attention. For example, this case shows
the importance environmental factors such as regional#p#分页标题#e#
values, socioeconomic factors, the level of education,
and industry effects. In addition, the model reflects a
diverse set of organizational factors such as management’s
overall philosophy as well as their specific
attitude towards the culture that influence HR practices.
Finally, the model shows how certain organizational
factors can also be affected by environmental
factors such as national values.
Of critical importance, the model highlights the
mediating role played by human resource practices
and supports theories of IHRM that propose that HR
practices can be used to alignMNEgoals and objectives
with host-country affiliate dynamics (Butler & Teagarden,
1993; Teagarden, Butler, & Von Glinow, 1992).
IHRMhas the important task of implementing practices
that strategically deal with the challenges provided by
the foreign environment (culture-specific practices).
Yet, thismodel unveils the critical process of translating
high performance work practices to be congruent with
the values of the culture (e.g., the implementation of
self-managed work teams by focusing on the families
and the continuous improvement fair).
Despite the initial perceived incompatibility
between the Mexican cultural values and the values
underlying a learning orientation, Equipos successfully
implemented many practices associated with this
strategy using culturally adaptive HR practices to
achieve this translation. This process of translation
relates to Drost and Von Glinow’s research (1998) that
8 C. Go´mez / Journal of World Business 39 (2004) 1–11
indicates that certain philosophies within leadership
appear to be universalistic but the enactment of the
leadership functions may be different in Mexico. The
process of translation is similar to the ‘‘enactment’’ of
leadership practices. While the philosophy behind the
self-managed work teams in Mexico is the same as in
the U.S., the enactment needs to be adapted. It appears
from the case presented in this paper that implementing
management practices that are not perceived as
congruent with a culture is possible with the HR
practices as the critical intervening variable.
The culture-specific HR practices and the process of
‘‘translation’’ of practices allowMNCs to differentiate
their practices to match the environmental situation
and the subsidiary’s strategic focus while using HRM
as an integrating activity. This balancing act of differentiation
and integration is noted as a critical component
of IHRM (Schuler et al., 2002). The MNC sets an
overriding human resource philosophy and perhaps a
core set of practices allowing the subsidiaries the
autonomy to adapt these to fit the strategic and the#p#分页标题#e#
cultural imperative of the subsidiary.
Based on the model, the HR practices then result in
an organizational culture and a set of congruent
employee behaviors. The organizational culture and
employee behaviors are also influenced directly by
environmental factors. For example, a lower level of
education may impede an employee from being more
self-directed. Similarly, an employee that respects
high power differences may be more reluctant to take
initiative or speak up to a manager/supervisor. Nevertheless,
in Equipos, the HR practices (standard,
culture-specific, and translated practices) appeared
to be the link between the environmental and organizational
factors and the employee behaviors related to
successful organizational learning practices.
Less complex alternative explanations could be
derived from the data presented by this case study.
For example, Equipos paid higher wages and good
fringe benefits that might allow them to attract and
retain skilled workers and induce them to accept their
management methods. Even if this explanation is a
plausible one, the case is still valid since it contradicts
the cross-cultural research that indicates that such
management practices should be impossible to implement
in Mexico. In addition, in the interviews, the
employees noted that they had received external offers
from other companies, often far better financial offers
Organizational
Factors
Method of
founding
Management
Philosophy
Management
Attitude towards
Culture HR
Ability to deal PRACTICES:
with culture Organizational
Size Standard
Employee
Culture Behaviors
specific
Environmental Culture
Factors Translated
National Values
Regional Values
Education
Socioeconomic
Industry
Fig. 1. An integrated model of the relationship between organizational, environmental, and HR practices on employee behaviors.
C. Go´mez / Journal of World Business 39 (2004) 1–11 9
but that they could not imagine leaving the ‘‘culture’’
of Equipos.
The model presented would prescribe that HR’s role
in a MNC take upon a more strategic focus. Increasingly
in both domestic and international companies,
HR is being called upon to play a more strategic role
(Ulrich, 1998). Much research, both empirical and
theoretical, has focused on the importance of strategic
human resource practices. Pfeffer, Hatano, and Santalainen
(1995) write about the human resource practices
that allow companies to achieve a unique
competitive advantage through their employees.
Huselid (1995) and others have shown empirically
how high performance work practices affect employee
outcomes and corporate financial performance. This#p#分页标题#e#
case demonstrates that the use of high performance
practices can also lead to a competitive advantage in
overseas subsidiaries, even when the national culture
may seem incongruent with the values underlying
these practices.
This model provides other implications for the new
role of HR within a company that is globalizing. For
example, HR managers can be involved in the FDI
decision and conduct research at the level of relevance,
which may be regional rather than national. In addition,
assessing cultural fit and other important organizational
variables is also critical. For example,
management’s philosophy surfaced as an important
organizational level variable that impacts HR practices.
This case shows how these organizational variables
have a strong impact on the HR practices of the
firm. Hence, for example, when a MNC is considering
a joint venture, the appropriate level of importance
must be given in a due diligence process to the
management philosophy and attitude towards the local
culture. One method of building a strong culture is for
MNCs to try to joint venture with companies that have
similar organizational cultures. Certainly, there are
numerous examples of ventures that have failed or
run into significant problems due to different corporate
cultures. Alternatively, a management philosophy
congruent with that of the MNC can be implemented
with expatriates.
Once investment has taken place, the HR management
function becomes important in helping implement
the HR practices that will engender the appropriate
employee behaviors. But corporate or subsidiary
HR managers must hire culturally savvy subsidiary
managers (whether expatriate or host-country managers)
and work closely with these managers to
translate practices in ways that make them congruent
with the local culture.
Osland and Bird (2000) recently wrote about the
danger of sophisticated stereotyping, where an individual
may take sophisticated cultural knowledge
based on theoretical concepts and ignore the nuances
of a culture or the specifics of the context under which
these cultural values occur. If a manager believes that a
culture with high power distance and uncertainty
avoidance may lead to acceptance of a more authoritarian
management, s/he may use this sophisticated
stereotype to assume that there is no way to implement
employee involvement strategies. On the other hand, if
no such assumption exists, which was the case in
Equipos and other cases such as the General Motors’
plant in Mexico (as noted by the executive interviewed
by Gowan et al., 1996), then the focus is on how to
implement the necessary practices. This is one of the
touted benefits of a polycentric staffing approach#p#分页标题#e#
whereby a host-country orientation leads to the use
of managers from the host countries in the top management
of the subsidiary (Perlmutter, 1969). Thus,
companies must be conscious of the need to have hostcountry
managers or expatriates that can understand
the intricacies of the culture and have the ability to
translate practices to be culturally congruent.
It is worth noting that Equipos was a relatively new
plant and, hence, implementing such practices came
with relative ease. This also allowed management to
focus early on hiring employees with a higher level of
education and perhaps even with values that were
aligned with those of the subsidiary. In contrast,
changing the culture of an older plant may be more
difficult as resistance to change may come naturally
from employees and managers. Hence, HR should be
involved early on the strategic planning of the subsidiary
in order to get a head start on the appropriate
decisions pertaining to hiring, socializing and training.
The model presented in this paper presents a more
complex picture of the variables that influence
employee behaviors in subsidiaries. Different subsidiaries
will have different roles and not all subsidiaries
may be expected to adopt a learning approach, but this
model shows a more extensive list of environmental
and organizational variables that affect both HR practices
and employee behaviors. Importantly, the model
10 C. Go´mez / Journal of World Business 39 (2004) 1–11
also points to HR as a key variable in managing the
culture of the subsidiary.
Acknowledgments
I would like to thank the CATO Center for Applied
Business Research at the University of North Carolina
for their financial support with this study.
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