The Influence Of Indian Cultural And Institutional Factors On MNC Transfer Of HR Practices: An Essay.

To what extent do Indian institutional and cultural factors influence MNC transfer of HR practices? Justify your answer with relevant literature and examples.
The question invites you to assess the nature of Indian institutions and subsequently identify and discuss some cultural factors that could have an impact on MNCs in trying to implement HR practices in that country. Using examples from one or more HR practices, the assignment is expected to examine the concept of international transfer of practices within MNCs, and assess the nature and extent of transfer in the Indian host context.

The question is set in the broader debate on how MNCs balance the pressure to develop globally standardised policies while being locally responsive. It is anticipated that your analysis will also encompass the national culture, a range of issues such as labour reforms, the role of informal economy and what it entails for nature of work, organisation and social security for labour.

The assignment requires a clear identification of characteristic elements of the Indian cultural and institutional context and an indication of the way in which these specific features limit or shape the transfer of HR/employment practices by MNCs. Does the cultural and institutional distance between MNCs from developed countries and India mean that the transfer of HR practices is limited? Are some practices more or less likely than others to be transferred to the Indian context? Do transferred practices operate in the same way as in their parent company, or do they have to be adapted to the Indian context? You need to consider these questions using empirical evidence from studies of MNCs in India. 

The nature of Indian institutions in HR practices of MNCs

This essay emphasis on the cultural and Indian institutional factors that influence the MNCs’ transfer for HR practice. Human resource management focuses on the issues faced by the managers regarding global integration and faithfulness reaping. The work of HRM is to motivate their employees to work, no matter what will be situation. It also identifies characteristics elements of the Indian cultural and institutional context. It is important for the MNCs’ to understand the culture of the country where they are going to start business because sometimes failure in managing culture may damage the reputation of the company this also lead to the downfall of business performance. It is necessary for the HRM department to analyze all the factors before start practices in the other country. HRM is responsible for the recruitment and selection process. It will be better to understand the culture and the behavior of the people because ultimately company needs people to work. 

Human resource management plays an important role for the company because this department works for the welfare and skill development of the employees. An HR practice includes the responsiveness, personnel function, and promising flexibility and increase the marked in the significance of the employee. It is totally depend on the organization structure that what kind of employees will be hire by the by HR and what are their training structure to compete with the organization’s competitor.

The regulatory bodies and the government also influence the practices of HR in MNCs. Every country has its own labour law by that every organization has to follow while working there. It is the responsibility of HR department to follow all the instructions of the labour law of that particular country. MNC means the organization which operates their business in two or more than two countries. Every country has its own rules and regulations. Organization has to follow it; if they do not then any action can be taken against them by the government. Government pass the bills in the parliament of the labour law or regarding the working criteria of MNCs’ and these rules has to be followed by the companies. It is the duty of HR to make sure that the rules of the organization are according to the place (Budhwar, et. al., 2013).

Although it is difficult to measure and observe the cultural differences, it has to be done by the company because failure in this can lead to the company in awkward blunders, move down the performance of the business and damage relationships. Culture can be understand in a way that it is a set of shared values, supposition and values that are experienced by membership in a group and that will manipulate the behavior of the members and the attitude of the group members. The main purpose of the study is to examine the influence of culture on human resource management practices. Like all the other management practices HRM practice is totally depend on the values that imitate the general hypothesis and beliefs of the nationwide culture in which companies are rooted. This arise a query, what happened when MNCs’ needs to relocate. This can be risk for the company because if HRM Practices failed in a host country, than the consequences has to bear by the company and that restrain a subsidiary’s performance.  It can be properly understand by the Greet Hofstede Cultural dimension model.  It is a structure for cross – cultural communication and it describes the effect on the values of the society’s members and how these beliefs relate to behavior. Hofstede made his fresh model as an effect of using factor study to inspect the results of global survey of workers values by IBM between 1967 and 1973. The original theory projected four proportions by that the values of culture could be analyzed. These are Individualism collectivism, uncertainty avoidance, power distance and masculinity femininity. In Hong Kong the independent research wants Hofstede to add the fifth dimension as a long term orientation. A fifth dimension is added to cover the feature of values which was not discussed in the original concept.  Later in 2010 Hofstede added the sixth dimension that is indulgence versus self restraint. The research of the Hofstede helps the MNCs to understand the culture of the countries where they are working and also help the HR to implement their practices and properly and increase the subsidiaries performance. It is very important for the company and HR as well to understand the culture of overseas country before starting the business. Even companies should properly analyze the legal system of that country (Budhwar, et. al., 2013).

Cultural factors impacting MNCs in implementing HR practices

Several researches have shown that companies working in different country may vary with their HRM policies and practices. It has also been analyzed that transferring of HR policies and practices for the companies can be difficult. The most important barrier while transferring HR practices is somewhere related to the cultural and institutional environment of the host countries. Even though the American Management Theory has lead to the faith in universal management practices can be applied everywhere, their research has shown that the managerial values, attitudes and behaviour may vary across the nations. There is no decided path to manage the organizations. The primary focus of the research is that the values, beliefs and attitudes of the counties are different from each other.

The example of HR practices In MNCs can be a use of technology. It can be understand like that a company is working in their home country and using more technology and less manpower and they wanted to expand their business in India and here working culture is different from them like here more manpower, less use of technology. The work of HR is to find the ways from where he will recruit the employees and made them technology friendly. For this purpose HR should properly arranged the training session for the employees by that they can learn to operate the machine and make the best use of it

HR used word doc, excel and spread sheet to measure the performance of the employees. Now days, HR department will lead by the practitioners who are more dependent on the technology to get their work done (Solomon, et. al., 2012).

The role of human resource management is to identify the effective strategy that has been implementing by the organization according to the need of time. The prime work of HRM practices is to develop the skills in the employees, motivate them to work by planning new incentive schemes and various decision making responsibility that will help the organization in improving the business performance. At the phase of globalization organization faced some difficulties to balance between the worldwide and local markets in structuring and implementing the HR practices. It is difficult situation for both the domestic and multinational organizations.

The policies and practices are adopted by the organizations with different national culture in different countries are not equal to one another. Culture is the mass programming of the mind that differs from individual to another group of people. The definition of culture is varying from person to person. The theory of culture adds the institutions, mass representations and the behaviour of collective forms. It is difficult to change the culture it not only exists in the mind of the people but it has become crystallized in the institution of the people. (Work organizations, structure of education, family structure). Hofstede describe culture as a structure that means it can be understand by other behaviours and from verbal statements. The practices and features of the culture are different to each other. The skills of management are similar in terms of culture but the technique and philosophy that is suitable in one national culture is not necessary that is suitable for other country culture. To overcome this difficulty it is the basic need of the managers to understand the culture systems among countries (Naranjo et. al., 2010).   

Concept of international transfer of practices within MNCs, in the Indian host context

Labour laws are different in developed and developing countries; most developing countries have labour having lack of awareness towards the working hours, wage rate and other benefits that they can avail from the companies they are working. Governments of such countries face challenge to make balance between industrial growth and wages of labours. MNC's move towards informal economies for taking advantages of low infrastructure cost and cheap labour rates. There are laws and rules introduced by the government for the benefits of labour but due to lack of awareness among labour, results to misuse of labour power by MNC's, domestic companies and industries. but with the change of time several reforms take place which includes labour unions, government intervention and international labour laws results to benefiting the labours working at the MNC's they are now provided with facilities like lunch at the workplace, PF, overtime and good number of leaves and holidays on festivals (Naranjo et. al., 2010).

As a member of society everyone has their social security and it is a liberty to understand through the international cooperation and national endeavor. Companies have agreement with government to use their resources to develop the character of the employee with social and cultural rights. In simple words it can be understand that higher authorities or top management of the organizations decided to take care the employee without ignoring his social rights and helps the employee to develop and try to make the most of the benefits from him. (Social welfare, work, and culture. These all rights presented to the employee for the country they are working for.) Society that offers protection for their citizens and ensure them that the societies not only protect them from disease or from war but also they make sure that everyone gets the enough resources like food, shelter. It is the responsibility of society (government) that they provide or help the citizens to making a livelihood through work.  The workers of informal sector are the major contributor of labour forces for the developed countries. The problem with the worker of informal sector  that they have to himself buy the insurance policy and set up a health and other social needs that will help them in future at the time of an uncertainty (Reiche, et. al., 2011).

Yes, the HR practices is limited because at the initial stage HR also needs time to understand the culture until the HR not understand the culture of the nation, how he will make the strategies and implement it. For that instance HR needs to understand the benefit of the culture, advantages and loss. For better understanding HR should research about the nation culture where he will do HR practices and also understand the behaviour of the people because behaviour of the people also helps you to understand the culture because culture is the shared emotions that can vary from person to person even specific group of people. It is important for HR to remove the limitation in transferring the HR practices because it will ultimately affect the business positively and enhance the skills of the employees and increase the performance of the organization (Chung, 2014).

Cultural context

Culture is an extensive term to understand but the accurate meaning can be unclear. Culture is the psychological programs that are shared by group of people and the conditions their responses to their surroundings. Developing the framework for HRM, culture includes attitudes, beliefs, values and hypothesis about suitable behaviour that are shared by people in a society.  In order to understand the culture that how it influence the practice of HR it is important to know the characteristic of culture which are as follows:

It is important to keep in mind the general characteristic of culture to understand the effect that the cultural circumstance of HRM.  The definition of culture says that it is something which can be shared by the group of peoples. Culture can be understands through the mental programming. Culture exists at the middle of the mental programming.

At the top level is the personality characteristic that is differ from person to person everyone has its own personality, at the bottom level all the persons share certain biological features. Culture at the middle level. It includes the elements of mental programming that persons shared in their specific group of people. Over the period of time societies has own developed the planned ways  to deal with the environment and this structure will pass from one generation to other generation.  Like parents thought their children to follow the culture and always obey your elders and the information will pass on generation to generation.

The important characteristic of culture is that it is not the collection of values and beliefs, it is the systematic and organized manner to follow the beliefs and values that is related to the people living in the society.

Yes, there are some practices which can be transferred to the Indian context more or less likely. Because while working in other country companies has to transfer their practices like their policies, rules and regulations, aim of the company. According to that company has to modify their structure to maintain the criteria of the business. Organizations will change the culture of working and adopt the nation’s environment of working. Companies work towards to fulfil the needs of the business that will lead to the company to its aim. Companies need to research about the culture of that country and analyze that which practices they can transfer as it is and which practices needs to changed or modify. The research will help the organizations to stable their business from starting and fewer difficulties will be faced by the organization in implementing the strategy by that company can focus on the performance of the business (Epstein, et. al., 2014). Major policy which transferred as it is ‘Corporate Social Responsibility’. This policy has to follow by the companies no matter where they are working; they have to contribute towards the development of society from their business. A very small amount of share companies has to contribute for the development and encourage the society.

No, transferred practices do not operate in the same way as in their parent company. They have to adopt according to the culture and practices in India. Transferred practices from their parent company to Indian context might be difficult to apply as they are. Company has to modify their rules and everything which help them to work in India properly and achieve their goals. Practices like working environment can be different from their parent company because here the culture is reserve; even the values and beliefs of the people of India are totally different from other countries. So company has to modify their structure of working to the Indian context. There are some certain things which can be similar like recruitment criteria, training process and bonus and incentive structure. Companies aim to expand their business and increase the profit ratio for that they enlarge their business all over the world. For that cause companies has to change their structure and adapt the culture of that country where they are working this will not only help the organization to grow but also develop the confidence in employee to work for the company because company is adapting their culture and working accordingly (Trompenaars, et. al., 2011).

Conclusion

It is conclude that it is not easy for MNCs to start their business in other country without understanding their culture. It is needed to study and understand the values, culture and customs of the country. It helps in understanding the culture and emotions of the people. Working environment in an organization, its working culture and skills required to perform the work are also affected with the place of working. Developed countries have professional working culture where as developing countries struggle in terms of professionals. To be a successful MNCs it is necessary, that employees of the company should connect to it and understand the working culture of the company. It will help employees in deliver their best performance, it is the responsibility of HR to develop the confidence and make employee understand the working culture of the company. HR is also responsible to ensure them that company will look after the employee’s problem, their family problems like financial, insurance etc. it also discusses Hofstede cultural dimensional model so that company uses some references to understand the culture; this model also helps in raising the business performance by understanding the employee’s behaviour towards culture (Trompenaars, et. al., 2011).

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