Standardization vs Localization Debate in HR Practice

In the light of globalization HRM has evolve from a support function to a function of strategic
importance

HRM is now viewed as a crucial component and department of the firm’s overall strategy

Many MNC are transferring their HRM practice which they get from parent company (which also known
as standardization) to their overseas subsidiaries.

Many of the company practice home country HR policy more than country of origin HR process. It’s
clearly shows a transfer of standardization to localization in HR practice.

The dominance effects:

The concept of standardization mostly understood as MNCs’ management practices who employed by
headquarters and therefore frequently reflect the specific patterns of the headquarters’ home country
(country-of-origin effect).

However, all too often neglected in the MNC standardization vs. localization debate is that
standardization can also take place around another pole which sometime create confusion among the
subsidiaries.

In this case management practices of subsidiaries are shaped in accordance to neither the host country
nor the home country, but according to the country that sets the standards for what are perceived as
global best practices.