The influence of environmental, organizational, and HRM factors on employee behaviors in subsidiaries: a Mexican case study of organizational learning

doi:10.1016/j.jwb.2003.08.006

Journal of World Business

Volume 39, Issue 1, February 2004, Pages 1-11

https://doi.org/10.1016/j.jwb.2003.08.006 Get rights and content

Abstract

This article presents a case study of a Mexican subsidiary of a U.S. multinational corporation (MNC) that has successfully adopted characteristics of a learning organization. The case is of particular interest because much 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 implementation of management strategies in subsidiaries. Interestingly, while some of the HR practices 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.

Section snippets

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

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

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 technology-driven 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 wholly-owned

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

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

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

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

Acknowledgements

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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