Embracing localization: evidence from Western MNEs in Ghana

Despite the growing economic importance of Africa, the region has received scant attention in the international human resource management literature. The purpose of this paper is to address the gap in examining human resource management (HRM) practices in Western multinational enterprises’ (MNEs) subsidiary operations in Ghana, which is a significant foreign direct investment market in Africa. Focusing on recruitment and selection, training and development, performance management, and rewards management viewed through the ability, motivation and opportunity (AMO) framework, the research emphasizes that effectiveness of the MNEs’ cross-cultural operations has necessitated embracing localization across a range of practices in accordance with the Ghanaian cultural landscape and specificities.

The paper draws on 37 in-depth interviews with managers and employees in eight subsidiaries of British, European and US MNEs in Ghana. Interviews were conducted in 2015 in three locations – the capital city Accra, Tema (in the south) and Tamale (in the north).

The research reinforces earlier literature emphasizing the importance of paternalism and family and to a lesser extent patronage, but presents new findings in highlighting the erstwhile unexplored role of local chiefs in influencing HRM practices in Western MNEs in Ghana. Utilizing the AMO framework, this paper highlights practices within each HR area that influences performance through impact on employee AMO.

The research informs MNE managers about the strategic importance of observing local cultural practices and designing appropriate strategies for ensuring both operational effectiveness and successful cross-cultural collaboration with local managers and employees in Ghana. It is suggested that if managers implement practices that foster and enhance employee AMO, subsidiaries may benefit from employee potential and discretionary judgment.

This paper contributes to a dearth of literature on HRM practices of Western MNEs’ subsidiaries in Africa by examining the extent to which MNEs strategically localize their practices to accommodate specificities of the host country cultural context and operate successfully.