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Human Resource Management,Human Resource Management, January/February 2010, Vol. 49, No. 1, Pp. 45– 66 © 2010 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hrm.20333 CONTEXT-BOUND CONFIGURA- TIONS OF CORPORATE HR FUNCTIONS IN MULTINATIONAL CORPORATIONS E L A I N E F A R N D A L E , J A A P PA A U W E , S H A D S . M O R R I S , G Ü N T E R K . S TA H L , P H I L I P S T I L E S , J O N AT H A N T R E V O R , A N D PAT R I C K M . W R I G H T Considerable attention has focused on how multinational corporations (MNCs) deal with the simultaneous pressures of globalization and localiza- tion when it comes to human resource management (HRM). HR function activities in this process, however, have received less focus. The study pre- sented here identifi es confi gurations of the corporate HR function based on international HRM (IHRM) structures, exploring how issues of interdepend- ency shape corporate HR roles. The study is based on 248 interviews in 16 MNCs based in 19 countries. The fi ndings are applied to develop a contextu- ally based framework outlining the main corporate HR function confi gura- tions in MNCs, including new insights into methods of IHRM practice design. © 2010 Wiley Periodicals, Inc. Keywords: human resource function, interdependency, international human resource management, multinational corporations, organization context Introduction As corporations continue to globalize and their boundaries are no longer limited to the domestic setting, this raises new challenges for the HR function. The reach of the 2008 financial crisis on the global platform is a case in point: Organizations faced a crisis situation with many major world economies in recession. Given this context, in which international expansion is being tempered by financial pressures to regain stability, ques- tions arise about HRM in multinational set- tings and how the HR function can best structure itself to be most effective at various site, country, regional, and corporate (head- quarters) levels. Issues of interdependence, interaction, and standardization versus lee- way for adapting to the local context (cus- tomization) become critical in this context (Evans, Pucik, & Barsoux, 2002; Taylor, Beechler, & Napier, 1996). Given this international environment, new roles for corporate HR departments op- erating in multinational corporations (MNCs) are emerging. Corporate HR (also known in organizations as international or global HR) can be defined as the HR Correspondence to: Elaine Farndale, Department of Human Resource Studies, Tilburg University, PO Box 90153, 5000 LE Tilburg, the Netherlands, Phone: +1 814 8673320, E-mail: farndale@uvt.nl. 46 HUMAN RESOURCE MANAGEMENT, JANUARY/FEBRUARY 2010 Human Resource Management DOI: 10.1002/hrm function based in the corporate headquar- ters, which often houses specialists in HRM functions such as remuneration, manage- ment development, staffing, and employee relations. In this role, corporate HR focuses on global HR policies, especially for top management and expatriates (Kelly, 2001; Novicevic & Harvey, 2001; Scullion & Star- key, 2000; Sparrow, Harris, & Brewster, 2003). These activities require roles such as “effective political influencer” (Novicevic & Harvey, 2001, p. 1260), “champion of processes” (Evans et al., 2002, pp. 471–472), “guardian of cul- ture” (Sparrow et al., 2003, p. 27), and “knowledge manage- ment champion” (ibid., p. 24). These roles are emerging in addi- tion to the more well-known HR role typologies that focus on the strategic involvement of HR: managing change, the rela- tionship between employer and employee, and transactional per- sonnel administration (see, e.g., Guest, 1990; Legge, 1978; Monks, 1992; Storey, 1992; Tyson & Fell, 1986; Ulrich, 1997; Ulrich & Brockbank, 2005). Traditional roles have been based largely on corporate strategy and HR activi- ties without specifically referenc- ing international operations (Conner & Ulrich, 1996). The new roles listed here, on the other hand, emphasize the chal- lenges HR faces amidst cross- border operations spread across the globe. Although global HR roles are emerging alongside the more familiar typologies, a lack of theoretical fram- ing of the field remains; in particular, there has been little empirical work at the firm level to explore these new roles in greater depth. To understand further what globaliza- tion actually means for the HR function, this study investigates the roles corporate HR plays in designing and coordinating interna- tional HRM (IHRM) policies and practices in MNCs. We seek to uncover configurations based on different IHRM strategies and struc- tures. The paper starts by outlining extant ty- pologies of HR department roles, exploring their association with the context in which they were devised. The modern-day context of MNCs operating in a global market is then considered as well as the emerging roles of corporate HR departments. We then present the results of 16 in-depth case studies of high-performing MNCs. These case studies are designed to identify the extent to which IHRM strategy differs across divisions and countries, the interdependencies between corporate HR and HR departments in other areas of the business, and the most common roles the corporate HR function fulfills. The qualitative data findings are summarized to build a contextually based framework of how corporate HR departments in MNCs can be configured. HR Department Roles in Context There are multiple typologies of HR depart- ment roles developed largely either in the United Kingdom or the United States. The UK models consider the extent to which departments are either reactive or proactive (Legge, 1978), the level to which they are involved in corporate strategy (Tyson & Fell, 1986), or a combination of the two di- mensions (Guest, 1990; Storey, 1992). In the United States, we see similar themes. Schuler and Youngblood (1986) first identified five broad roles, which Carroll (1991) further developed, acknowledging that traditional HRM service roles are still required, but that more emphasis in the future would be placed on linking roles to organizational performance. Ulrich (1997) expanded this work when he focused on the people/ process and strategic/operational dimen- sions of HR, later developed further to focus on HR leadership (Ulrich & Brockbank, 2005). Although these typologies appear to imply universality and finality from their UK or U.S. base, this will not always be appropri- ate. For example, Monks (1992) suggested Reasons for global expansion vary among MNCs, but predominantly they seek to increase competitive advantage by realizing economies of scale or scope (Harzing, 2004a). This means stages in the process of internationalization exist, and choices are available in the strategies and related structures to be adopted. CONTEXT-BOUND CONFIGURATIONS OF CORPORATE HR FUNCTIONS IN MULTINATIONAL CORPORATIONS 47 Human Resource Management DOI: 10.1002/hrm that in stable environments, a simple model of HRM practice will suffice; it is only in complex organizations, particularly those undergoing substantial change, where a more sophisticated approach is required. Other commentators support this link between the nature of HRM practices and the needs of the national or organizational context (Carroll, 1991; Farndale & Paauwe, 2007a). In explor- ing international HR roles, it is therefore es- sential to understand more about the MNC context. We address this first by focusing on different IHRM strategies and structures, and then exploring the different corporate HR roles to build our theoretical framing of HR configurations. International HRM Strategies and Structures Reasons for global expansion vary among MNCs, but predominantly they seek to in- crease competitive advantage by realizing economies of scale or scope (Harzing, 2004a). This means stages in the process of internationalization exist, and choices are available in the strategies and related structures to be adopted. The range of inter- nationalization strategies are described in Bartlett and Ghoshal’s (1989) well- known classification: in international strat- egy headquarters (HQ) and subsidiaries work together primarily as a loose federation focusing on technology transfer, in multido- mestic strategy control is (largely) decentral- ized and subsidiaries conform to local practices, in global strategy control is cen- tralized and subsidiaries resemble the parent company, and in transnational strat- egy subsidiaries and HQ alike adhere to worldwide standards as part of the organiza- tional network. In general, as firms move from an international to multidomestic to global to transnational strategy, coordina- tion complexities increase—emphasizing the dependence of subsidiaries on HQ and interdependence among peer subunits and between subunits and HQ. In line with corporate strategy, IHRM strategies and their related structures evolve over time as the firm, top management, and the IHRM systems themselves change (Tay- lor et al., 1996). Taking a structural perspec- tive, a tendency for strong dependence of subsidiaries on HQ is likely to exist in a number of scenarios. First, for firms starting the internationalization process, the com- mon approach is for HQ to take a control- ling role (Evans et al., 2002). Second, it has been found that the country in which an MNC originates creates a distinctive approach to interna- tionalization. For example, U.S. country-of-origin firms most commonly take a global ap- proach, where the HQ controls the subsidiaries’ activities (Ed- wards, 2004, p. 396). Third, HQ dependence is expected where a high degree of similarity exists between the HQ and the subsid- iary’s environment because of the lack of a need to differentiate (Gooderham, Nordhaug, & Ring- dal, 1999). Finally, HQ is likely to maintain control over a subsid- iary that is a source of a critical resource (such as highly special- ized talent) within the company (Taylor et al., 1996). Subsidiaries are more likely to be indepen- dent of the HQ where a large gap exists between the parent and host country in terms of national characteristics because of the dif- ficulty of implementing practices across national borders (Farndale & Paauwe, 2007b; Gooderham et al., 1999). Dependence is a crucial term here because it shows the extent of mutual intraorganizational reliance be- tween remote subunits and the HQ (Boyaci- giller, 1990). In line with Harzing (2004b, p. 53), we define three levels: 1) independence of subsidiaries from other subsidiaries and HQ; 2) dependence, which signifies a one- way relationship by which the subsidiary depends on HQ; and 3) interdependence, which is defined as “the degree to which the performance of functional activities is coordi- nated or integrated among units located in Subsidiaries are more likely to be independent of the HQ where a large gap exists between the parent and host country in terms of national characteristics because of the difficulty of implementing practices across national borders (Farndale & Paauwe, 2007b; Gooderham et al., 1999). 48 HUMAN RESOURCE MANAGEMENT, JANUARY/FEBRUARY 2010 Human Resource Management DOI: 10.1002/hrm different countries” (Roth, 1995, p. 201) and looks at two-way dependence between HQ and subsidiaries and between peer subsidiar- ies. This definition largely overlaps with Taylor et al.’s (1996) typology of IHRM strate- gies: adaptive, with independent subsidiaries responsible for practice design; exportive, whereby practices developed at HQ are repli- cated across dependent subsidiaries; and inte- grative, in which interdependent HQ and subsidiaries work together to de- velop an integrated IHRM strategy across the organization. The degree to which a subsid- iary depends on HQ is largely de- termined by top-down intraorga- nizational power, which a subsidiary gains from the formal organizational hierarchy. It is also determined by a bottom-up pro- cess of relationship building that creates intraorganizational voice (Bouquet & Birkinshaw, 2008a). This relationship, and hence a subsidiary’s centrality within an organization network, differs for different subsidiaries within a sin- gle MNC (Birkinshaw & Hood, 1998). Social network theory helps explain this notion of centrality or lack of it: A lack of legitimacy (perhaps due to a peripheral posi- tion in the market, large geo- graphical distance from the HQ, or a lack of interaction with HQ) reduces a subsidiary’s centrality and hence its ability to control critical resources (Bouquet & Bir- kinshaw, 2008b). This level of centrality, how- ever, can evolve over time as operating conditions change (Bouquet & Birkinshaw, 2008b, p. 486). This indicates that as well as a static dimension, dependence is also dynamic and is a result of, among other things, the choices the firm makes regarding its international- ization strategy. Although such choices may be deliberate, evidence of emergent IHRM strategies is likely to be apparent. Deliberate strategies represent the intended plans for internationalizing the firm, whereas emer- gent strategies occur as the firm reacts to the environmental context in which it is operat- ing (Mintzberg & Waters, 1985). The global context may open up new opportunities (e.g., emerging labor markets not previously accessible) or restrict the options available to firms (e.g., through legislative or cultural forces) that affect the firm’s ability to con- tinue with its planned strategy. This demon- strates the dynamism of the global context in which these MNCs operate: change is common and a willingness to learn and re- spond to the firm’s context may be a feature on which the success of these global opera- tions depends. International Corporate HR Roles In general, limited attention has been paid to the role of corporate HR in managing MNCs within these dynamic relationships (Scullion & Starkey, 2000). In addition, discussion link- ing different types of roles to IHRM strategies and structures is lacking, a gap that this study is designed to address. Here we discuss some of the emergent corporate HR roles and con- sider potential overlaps with IHRM structures in order to develop a heuristic framework to guide further study. If we consider the different levels of (inter)dependence between HQ and subsid- iaries described, we might expect different HR roles and activities to emerge in different contexts. For example, corporate HR is in a position to monitor how global HRM policies are implemented across subsidiaries (Kelly, 2001, p. 543), acting as a “champion of pro- cesses” (Evans et al., 2002, p. 472), building commitment, and providing training. We propose here that this role most likely sup- ports HQ dependent structures. In more decentralized MNCs, where sub- sidiaries operate independently from the HQ and global process development is limited, HR is more focused on informal mechanisms of corporate control, such as ensuring future leaders are sensitive to and equipped to deal with global challenges. Where an interdepen- dent HQ-subsidiary structure is adopted, the complexity of the organization structure In general, limited attention has been paid to the role of corporate HR in managing MNCs within these dynamic relationships (Scullion & Starkey, 2000). In addition, discussion linking different types of roles to IHRM strategies and structures is lacking, a gap that this study is designed to address. CONTEXT-BOUND CONFIGURATIONS OF CORPORATE HR FUNCTIONS IN MULTINATIONAL CORPORATIONS 49 Human Resource Management DOI: 10.1002/hrm increases, and the usefulness of formal con- trol mechanisms becomes limited. Here again, informal mechanisms, such as culture man- agement, become more important (cf. Bartlett & Ghoshal, 1989; Doz & Prahalad, 1981). This creates a new role for HR as “guardian of culture” (Sparrow et al., 2003, p. 27), oversee- ing that global values are implemented. Independent IHRM structures also tend to have a smaller corporate HQ, hence a limited number of corporate HR executives with more limited responsibilities, but still a primary focus on an elite set of top management and expatriates (Scullion & Starkey, 2000). Particu- larly in this environment, HR needs to be an “effective political influencer” (Novicevic & Harvey, 2001, p. 1260) to manage the internal labor market for global managers. With interdependent approaches, the com- plexity of activities requires a new role in ad- dition to those already mentioned. A core MNC capability is the two-way transfer of knowledge and learning across networks. This transfer carries varying costs based on eco- nomic, social, and linguistic dissimilarities between regions; hence, an MNC’s effective- ness in transfer of knowledge and learning is a critical source of competitive advantage (Kogut & Zander, 1993). HR as a “knowledge management champion” is thus an essential feature of the interdependent, networked or- ganization (Sparrow et al., 2003). As a first step toward building a heuristic framework around corporate HR functions in MNCs, Figure 1 summarizes the proposed links between IHRM structures and corporate HR roles. There is, of course, a certain require- ment for all roles to be played in all organiza- tional contexts; however, Figure 1 highlights which roles we might expect to dominate in the configurations presented. The empirical study reported here uses this preliminary framework to explore how HR is involved in coordinating IHRM. Methodology This study is based on a series of in-depth case studies in well-known MNCs. It was designed to explore what executives in MNCs described as HR excellence. The study examined how MNCs seek to manage HR across the globe through a multidimensional approach: Multilevel: Involving respondents from HQ, region, division, country, and business unit/plant level, which enabled us to take a “slice” out of each company under observation. Multiactor: Selecting multiple informants (from HR, senior/line management, and employee representatives) to triangulate the data collection. In addition, the research was carried out by multiple research partners from around the globe. Multicountry/region: Gathering qualitative data from 19 countries on three conti- nents. • • • FIGURE 1. Linking International HRM and Corporate HR Roles IHRM structure Dependent Start-ups (Evans et al., 2002) Country-of-origin (Edwards, 2004) Similarity (Gooderham et al., 1999) Criticality (Taylor et al., 1996) Interdependent Coordination and integration (Roth, 1995) Independent Dissimilarity (Farndale & Paauwe, 2007b) Dominant corporate HR roles Champion of processes (Kelly, 2001; Sparrow et al., 2003) Guardian of culture (Sparrow et al., 2003) Knowledge management champion (Kogut & Zander, 1993; Sparrow et al., 2003) Guardian of culture (Sparrow et al., 2003) Effective political influencer (Novicevic & Harvey, 2001) 50 HUMAN RESOURCE MANAGEMENT, JANUARY/FEBRUARY 2010 Human Resource Management DOI: 10.1002/hrm This study relied on the value of the qualitative approach for this discovery phase of research. Only by adopting an in-depth interview method could the intimate rich- ness of the necessary data be gathered; this required establishing and building trusting relationships with respondents (cf. Dutton & Dukerich, 2006). Although not grounded theory in its pure form, this study follows the spirit of grounde