Miah 2014

South Asian Journal of Human
Resources Management
http://hrm.sagepub.com/
A Comparative Study of HRM Practices between Foreign and Local Garment

Companies in Bangladesh
Md. Khasro Miah and Muhammed Siddique Hossain
South Asian Journal of Human Resources Management 2014 1: 67
DOI: 10.1177/2322093714526660
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Article
A Comparative South Asian Journal of Human

Resources Management
Study of HRM Practices 1(1) 67–89
2014 SAGE Publications India
between Foreign Private Limited
SAGE Publications
and Local Garment Los Angeles, London,
New Delhi, Singapore,
Companies in Bangladesh Washington DC
DOI: 10.1177/2322093714526660
http://hrm.sagepub.com
Md. Khasro Miah

Muhammed Siddique Hossain
Abstract
The purpose of this research is to explore and compare human resource man-
agement (HRM) practices between foreign and local garment companies operat-
ing in Bangladesh. This study surveyed 30 human resource, administrative and
factory managers of different levels of three garment companies: one US subsidi-
ary, one UK subsidiary and one Bangladesh company. Results show that a blend
of HRM practices has been adopted by the foreign companies, ranging between
imitating home country practices and host country practices. Results also found
that foreign garment companies focus more on home country HRM practices,
especially in the area of selection and recruitment, training and development,
performance appraisal process and top management appointments. Foreign
garment companies are widely adopting host country HRM practices in indus-
trial relations and compensational benefit. However, Bangladeshi local garment
company is following traditional HRM practices and showing interest in learning
from the foreign company HRM practices. Since this study is based on a limited
number of companies, generalization of findings of this study for cross-cultural
adaptation/adjustment in other developing countries should be made with cau-
tion. Combination of home and host country HRM practices can have a positive
influence on transfer of HRM practices in developing nations. It could open a
new avenue for further potential research on HRM practices in the South Asian
business context, especially in the garment industry.
Keywords
HRM practices, Bangladesh, US, UK, garment industry
Md. Khasro Miah, Professor, School of Business, North South University, Dhaka,
Bangladesh. E-mails: khasro@northsouth.edu; ksmnsu@gmail.com
Muhammed Siddique Hossain, Senior Lecturer, School of Business, North South
University, Dhaka, Bangladesh. E-mails: s.hossain@northsouth.edu; s.hossain355@gmail.com

68 Md. Khasro Miah and Muhammed Siddique Hossain
Introduction
In recent years, many research studies have been conducted on human resource
management (HRM) practices in host countries through the subsidiaries of multi-
national companies (MNCs) (Farley, Hoenig & Yang, 2004; Ferner, 1997; Gamble,
2003). The main drawback of the existing research is the restricted focus on
Western MNCs (Almond, Edwards & Clark, 2003; Edwards & Ferner, 2004;
Farley, Hoenig & Yang, 2004; Ferner & Quintanilla, 1998; Ferner & Varul, 1999;
Guest & Hoque, 1996; Innes & Morris, 1995; Muller, 1998; Tayeb, 1998). A lim-
ited number of studies have been conducted on this issue in the context of devel-
oping countries (Miah & Bird, 2007; Miah & Wali, 2012).
The spread of MNCs in developing countries and their ability to break through
cross-border constraints in exercising home country HRM practices has been an
issue in research. The rapid progress of the South Asian countries, especially
Bangladesh, has attracted foreign investment, which demands efficient HRM prac-
tices. Previous studies revealed that cross-cultural research is continuing to be writ-
ten from either an American or European point of view, rather than from an
international perspective (Adler & Ghadar, 1991; Brewster & Scullion, 1997).
A number of scholars have identified a need for more research on HRM practices
in South Asia due to the limited number of comparative HRM studies between
developing and developed countries (Budhwar & Sparrow, 2001; Miah & Kitamura,
2005; Miah, Wakabayashi & Takeuchi, 2003). One primary issue in the literature is
to what extent MNCs and their subsidiaries’ practices resemble the parent company
and host country practices. Several authors have acknowledged that HRM repre-
sents a major restriction when MNCs are trying to implement global strategies in
the different cultural and institutional framework of each affiliate where the MNCs
operate (Edwards, 2004; Myloni, Harzing & Mirza, 2003).
When adopting HRM strategies and practices, MNCs have identified dual pres-
sures of home and host country institutional atmosphere—both push and pull force
(Farley et al., 2004; Hillman & Wan, 2005; Rosenzweig & Nohria, 1994; Taylor,
Beechler & Napier, 1996). These dual pressures have an effect on HRM practices of
MNCs at subsidiary level in the South Asian countries. Earlier comparative researches
on HRM in South Asia have identified the significance of firm’s national origin and
culture (Awasthi, Chow & Wu, 2001; Bae, Shyh-jer & Lawler, 1998; Chow, Harrison,
McKinnon & Wu, 2000; Chow, Shields & Wu, 1999; Hofstede, 1993; Huang, 2000;
Miah & Bird, 2007). These studies also addressed how cultural and institutional dif-
ferences affect the sharing of HRM strategies and practices by MNCs.
There is a close association between organizational structures and decentraliza-
tion of employment relations. A considerable variation of MNCs involvement on
different dimensions of HRM practices is observed (Hamill, 1992). Japanese MNCs
have greater control over HRM practices in their subsidiaries (Beechler & Yang,
1994; Dedousis, 1994; Pudelko & Harzing, 2008). Some MNCs are controlling their
HRM structures globally taking into account the host countries’ policies and prac-
tices, as some researchers found a blend of HRM practices in MNCs’ subsidiaries
South Asian Journal of Human Resources Management, 1, 1 (2014): 67–89

HRM Practices between Foreign and Local Garment Companies 69
(Hannon, Huang & Jaw, 1995; Taylor & Bechler, 1993). Rarely an MNC is found to
completely follow home country HRM practices. The headquarters’ influences
depend on the employment regulation in the host country and the role of individual
subsidiaries (Harzing, 2004; Myloni, 2002; Rosenzweig & Nohira, 1994).
Home and Host Country Effect on HRM Practices

Western MNCs often tend to transfer their parent company’s HRM practices in
order to control their local subsidiaries through parent country expatriates. The
parent company influences and the standardization of different HRM activities
depends on the headquarters’ approach to the subsidiary’s HRM practices as well
as on the scope of the employees’ mobility across different subsidiaries (Mahmood,
2004). The country of origin effect on an MNC’s HRM practices has begun to
receive renewed attention by several researchers and has given birth to an interest-
ing debate between home country versus host country effect (Glover & Wilkinson,
2007; Guest & Hoque, 1996; Innes & Morris, 1995; Roche & Geary, 1996;
Rosenzweig & Nohria, 1994). A central question is whether the HRM of foreign
subsidiaries is determined by the “foreignness” of the invested capital (country of
origin) or by locally prevalent customs and practices (Roche & Geary, 1996). The
foreign expatriates tend to adopt culturally distinctive HRM practices to obtain
employee loyalty and commitment to their company. The home country strategy
is to reward performance instead of seniority as the pay structure is often totally
aligned with performance (Nazir, Shah & Zaman, 2012).
MNCs have three strategic choices: ethnocentric, polycentric and geocentric
(Heenan & Perlmutter, 1979; Koh, Gammoh & Okoroafo, 2014; Perlmutter, 1969).
However, when it comes to transferring HRM practices abroad, other factors, such
as the host country environment, may limit the MNC’s freedom to choose among
the above strategies, etc., and therefore require careful consideration. MNCs are
opting for the strategy that fits best with each subsidiary’s local conditions (Tayeb,
1998). Thus, a company having subsidiaries in foreign countries may adopt an
ethnocentric strategy for some and a polycentric or even a global one for others.
Furthermore, as many authors have argued, such a typology treats management
practices in terms of an overall orientation, which may overlook MNCs’ internal
differences (Rosenzweig & Nohria, 1994). Some companies are more responsive
to pressures of local adaptation, and some are more prone to internal consistency.
Likewise, some management practices of the parent company are closely followed,
while others are similar to those of the host country in the same subsidiary.
Rationale of the Study

Bangladesh Manufacturing and Exports Association (BGMEA) is a government
sponsored trade organization for export-oriented and fashion-related products

manufactured in Bangladesh. With only 3 per cent contribution to the GDP of

Bangladesh in 1991, the industry is contributing 13 per cent to the GDP of
Bangladesh in 2012. Moreover, the industry accounts for 78 per cent of country’s
export earnings and 80 per cent of its workers are female. In the meantime,
Bangladesh has become the second largest apparel exporting country in the world
(Haque, 2013). During the fiscal year 2010–2011, the garment industry export
totalled $17.91 billion, a 43 per cent increase over the previous year (BGMEA,
2012). The growth potential of this industry is immense. Therefore, HRM becomes
a major concern for the industry and the nation as well. This study is taking a
snapshot of HRM practices of local and foreign garment companies and trying to
identify how the local and foreign companies are adopting to the different dimen-
sions of HRM practices in the environment of operating garment companies.
This study explored HRM practices between foreign and local garment compa-
nies operating in Bangladesh. This research is important for two reasons; (i) more
foreign companies from developed economies are entering into South Asia and
transferring their HRM practices and (ii) it is critical to expand the current find-
ings of what the researchers actually know about the impact of host country and
home country effect on HRM practices in Bangladesh.
Background Information of the Garment Companies

Selected for this Study
Case One (UK-based Garment Company)
This UK-based garment company manufactures high quality ready-made gar-
ments at competitive prices for some of the world famous retailers. Total asset
value of the company is around $5,099.4 million. The crucial factors behind its
success are its innovative services in product development, fabric sourcing, tech-
nical support and teamwork. This company offers quality products at reasonable
prices and meets high standards and it has indeed one of the highest compliance
ratings in comparison to many Bangladeshi companies. It was incorporated in
Dhaka Export Processing Zone (DEPZ) in 1997.
This company is renowned for a vibrant and dynamic management team. The
key strengths of this company are said to be constant monitoring of industry
standards, technical know-how and technology and standard quality control sys-
tem. The company operates within the international retail ethics policy. The com-
pany is now in a position to show versatility and to meet deadlines under rigid
conformity requirements.
Case Two (US-based Garment Company)

The innovative identification and decorative solutions for businesses and con-
sumers worldwide made this company a leader in the trade. Total asset value of

the company is around $3,056.7 million. It has manufacturing and distribution

facilities in more than 60 countries around the world. The office of this company
is located in DEPZ, Bangladesh. It is controlled by four components of busi-
nesses: pressure-sensitive materials, retail information services, office and con-
sumer products and other specialty converting businesses. For the past 23 years,
this company has implemented excellent employee awards programme and has
recognized more than 900 employees for exemplary fulfilment of the company’s
strategic priorities of growth, productivity, people, values and ethics. This com-
pany professes to be an equal opportunity employer.
Case Three (Bangladesh-based Garment Company)

This company was established in 2004. It has been successfully maintaining
standards and exporting ready-made garments since then. With 80,000 pieces per
month production capacity, fabrics used are numerous, including solid and yarn
dyed cotton, CVC (cotton based fabric), TC (ten torn and cotton fabric), poplin,
polyester, twill and dobby sourced from local and regional suppliers. Total asset
value of the company is around $350 million. The buyers are said to be satisfied
with the performed norms and practices of the company. Business and sales
growth are modest. This garment company has placed a great emphasis on satisfy-
ing the buyers’ requirements and has managed to build an award-winning busi-
ness on this philosophy.
Methodology
Sampling and Data Collection
For this research, one Bangladeshi garment company, one US-based and one
UK-based garment company operating in Bangladesh were selected. Table 1 pro-
vides background information of these three companies. The comparative
research on Ready Made Garment (RMG) industry in HRM area is very limited.
A judgement sampling was used in order to collect in-depth information to
achieve the objective of the study. A questionnaire, consisting of different dimen-
sions of HRM practices was developed to collect the data from the selected com-
panies. Some of the dimensions included in the questionnaire are: recruitment,
training and development, promotion policy, performance appraisal, compensa-
tion, etc. An official appointment with the HRM managers was scheduled; the
questionnaire was handed in to the interviewees ahead of time; and face to face
interviews with the interviewees were completed afterwards. From a selected
pool of (10 × 3) 30 managers—human resource, administrative and factory—
from the respective companies, data were collected with the structured question-
naire from all 30 respondents and then, face to face semi-structured interviews
were conducted.

Table 1. Background Information of Local and Foreign Companies
Firm’s country of origin Bangladesh UK US

Host country location Dhaka Dhaka Dhaka
Main product Yarn dyed cotton, CVC Ready-to-wear Apparel
(cotton based fabric), garments Solutions
TC (ten torn and
cotton fabric), poplin
and polyester
Country of origin Bangladesh UK US
Establishment year 2004 1997 1988
Number of employees 1,500 2,000 1,800
% Foreign capital – 82% 61%
No of foreign expertise Only local employees 10 8
Total asset (US $ in millions) 350 5,099.4 3,056.7
% Sale in domestic market 55% Nil Nil
% of overseas market US $ $100 $5,400 $6,500
in millions)
Interviewed manager 10 10 10
Average age 37 32 35
Average education Master degree Master degree Master degree
Average monthly salary 14,000 23,000 22,000
(in Bangladeshi Taka)
Number of strike days 4–5/year 1–2 days/year 1–2 days/year
Business growth Medium High High
Sales growth Moderate High High
Employee turnover rate Moderate Very low Low
Some researchers have contended that quantitative research methods may

hold merit with respect to deducting real-time information on different HRM
practices of foreign subsidiaries (Martin & Beaumont, 1999). However, for the
purpose of understanding and comprehending the development process and the
dynamic nature of HRM practices, retrospective historical and longitudinal infor-
mation have its characteristic of quantitative methods that will prove to be of
little help.
This may be attributed to the limited capacity of quantitative approaches to
take into account the overall context. Therefore, in regard to foreign garment
companies, especially for HRM practices in garment company environment,
which involves a variety of actors and consequently various contextual factors, a
more appropriate approach seems to be a qualitative one. In order to properly

contrast the findings, equivalence of research methods and research administra-

tion at the data collection stage was taken into consideration.
To take into an account the process dynamics of the gradual evolution with
distributed questionnaire, retrospective and real-time data in the interview meet-
ing were collected. With the proper permission and consent of the respondents, all
interviews were tape-recorded on-site and notes on the discussion were taken.
Then, recorded conversation was transcribed and translated, when needed, from
Bengali to English. Thereafter, all interview transcripts were shown to the inter-
viewees for verification. The data were categorized in different groups related to
HRM transferability issues.
After collecting information from all the interviews and structured question-
naire, the narratives were reviewed, compared and then contrasted with the facts
of these three cases. A general explanation of the cause and effect relationship was
developed for all HRM practices. The relevant information is then used to rear-
range the evidence into categories between foreign and local garment companies
and to explain the occurrence of HRM phenomena or causal relationships among
the transferability of HRM practices in Bangladesh (Piekkari, Nell & Ghauri,
2010; Mahmud, n.d.). A number of summary tables are prepared to demonstrate
the similarities and differences of HRM practices between foreign and local gar-
ment companies in Bangladesh.
Results
Recruitment and Selection
Table 2 shows the hiring and selection approaches of foreign and local garment
companies. Results indicate that the Bangladeshi garment company uses less
standardized selection methods. It prefers internal recruitment, makes more use of
references, base their selection on less objective criteria compared to foreign com-
panies. However, curriculum vitae and interviews play an important role in
employee selection in the local garment company. The interviews with local HR
manager revealed that recommendations and social networking are not as impor-
tant. Moreover, the local garment company places emphasis on internal recruit-
ment and less on qualifications, which is an indication of a slow shift of the local
company towards the use of more objective selection criteria.
US- and UK-based garment companies are using structured recruitment meth-
ods. When it comes to managerial and professional/technical recruitments, they
advertise externally, conduct competency-based interviews and use recruitment
agencies frequently.
For clerical employee recruitment, internal advertisement and word of mouth
recruitment are used by the foreign companies. The foreign companies put high
importance on designing and evaluating outcome of the training of employees and
coordinating less on local cultural norms and values in the selection process.

Table 2. Comparison of Recruitment and Selection Practices between the Local

and Foreign Companies
Firm’s country
of origin Bangladesh UK US
Job description Unstructured Well structured, well Well structured in the
and specification defined, in each level mid and upper level,
moderate structure in
entry level
Promotion Not practised Observed in the mid Happened few times
of current level posts but mostly outsourced
employees
Method of Walk-in, referrals, Walk-in, referrals, Walk-in, referrals,
advertisement newspaper, posters newspaper, websites newspaper, websites
Recruitment Internal Internal, external Internal, external
sources
Use of Not practised Some times Not practised
recruitment
agencies
Apprentices Not practised Some times Some times
Selection process For entry level its For entry level its For entry level its
walk in interview, for walk in interview, walk in interview,
mid level, verbal and for mid level, verbal for mid level, verbal
interview and written test and and written test and
interview interview
Psychometric Not practised For mid and high For mid level
testing level
References Not always Yes Yes
check
Aptitude test No Yes Yes
Parent company Not applicable as it is Strong influence in Moderate influence in
influence a local company decision-making decision-making
Training and Development

Training and development strategy is critical to the organizational success of for-
eign companies. As shown in Table 3, the Bangladeshi garment company tends to
use on-the-job and off-the-job training programmes to maintain the level of skills
among the key employees. Both foreign companies are focused on on-the-job
training.
The local company considers coaching by the supervisors a highly effective
tool for training. A few selected top officials get home country or third country
trainings depending on the management needs in the foreign companies.

Table 3. Comparison of Training and Development Practices between the Local

Firm’s country
Design and Unstructured 36 hours training is Need based training
development mandatory per year,
Training Less priority Use both on-the-job More focused on on-
implementation given to on-the- and off-the-job training the-job training than
job training modality on off-the-job
Training evaluation No structured Training outcome Training outcome
and outcome method found considered with high considered
importance while with moderate
designing the next importance while
training programme designing the next
training programme
Support for training Depends on Both in-house and In-house resource
in-house and outsourced resource gets main focus
outsourced utilized.
sources
Influence of parent Not applicable Strong influence Moderate influence,
company training as it is a local observed local subsidiary
strategy company mainly decides the
training strategy
Training location Home country Home and host Home and host
country country
Coaching by Followed Considered a highly Considered a highly
supervisors sometimes effective tool effective tool
depends on
needs
Job rotation Not practised Practices at the entry Practices at the entry
level level
Overseas training Not practised Department heads Only for the top
are sent for overseas officials
training depending
upon the need
Techniques Coaching by Coaching, Coaching, informal
for employee supervisors or apprenticeship, learning, role playing
development department informal learning, job
seniors rotation, role playing
Skill training by Not practised Yes, for professional Sometimes
outside agency level, it is applicable

Table 4. Comparison of Performance Appraisal Process between the Local and Foreign
Companies
Firm’s country
Methods of Unstructured Rating scale method is Rating scale method is
performance followed followed
appraisal
Time interval Once a year Once a year, usually Once a year, usually
of performance December December/January
appraisal
Problems of Did not cover 360 degree feedback 360 degree feedback
performance all the required is not reflected is not reflected
appraisal factors
Feedback of Verbal feedback Written feedback given Written feedback
performance given to employee to employee given to employee
appraisal
Influence of parent Not applicable To a moderate extent, Followed in a limited
company as it is a local headquarter adoption extent headquarter
company is visible adoption is visible
Performance Appraisal
Performance appraisal system used by the responding companies is presented in
Table 4. The survey results showed that key employees, managers and professional/
technical staff are frequently appraised formally on an individual basis. The domi-
nant purpose of performance appraisal is to set personal objectives and review
progress over the past objectives and to assess suitability for promotion or trans-
fers. The methods of performance appraisal are unstructured in the local company.
Both the foreign companies are, however, following rating scale method.
The foreign companies provide written feedback to the employees and the local
companies choose verbal feedback. Table 4 shows that foreign garment companies
extensively integrate and utilize performance appraisal. In contrast, the local com-
pany tends to handle its performance appraisal system at a basic level. The local
company does not conduct formal performance appraisal system. The purpose of
performance appraisal in the local company is not linked with career planning. The
measurement criteria of all companies studied are performance oriented. The foreign
companies are relatively more comprehensive, standardized and job specific.
Compensation and Benefits

The result showed that individual performance based pay system is used by the
foreign companies (Table 5). Individual performance/output is the dominant
measurement of performance.

Table 5. Comparison of Compensation and Benefits between the Local and Foreign
Companies
Firm’s country
Compensation Moderate Structured Structured
structure
Designing of Follow market Market trends, competency Market trends,
compensation trends based payment, house rent competency based
strategy for mid level professionals payment
Non-monetary Not practised Team recognition, paid Success celebration,
benefits vacation, overseas tours paid vacation with
for mid and high level family
employees
Payment system Based on Based on company Based on company
company payroll payroll system added with payroll system
system performance bonus
Parent company Not applicable To a moderate extent, local Followed to a
influence as it is a local adoption is visible limited extent
company
Types of rewards Monetary Monetary and non- Monetary and non-
rewards monetary rewards monetary rewards
Types of benefits Provident fund Health insurance, gratuity, Gratuity, provident
provident fund fund
Monetary Festival bonus Festival and performance Festival and
rewards bonus performance bonus
Equal Yes. However, Yes. Both male and female Yes. Both male
employment mid and employees get equal and female
opportunity professional opportunity employees get equal
level posts are opportunity
dominated by
male
The formula for compensation seems to be comparable with the local com-
pany. In designing compensation strategy, the local company follows market
trends and the foreign companies use competency-based payment system. Non-
monetary benefits are also practised by the foreign companies such as team rec-
ognition, paid vacation, overseas tours and success celebration. The local company
tends to show its preference towards a seniority based pay system. In foreign
companies, home country practices do exist in the case of compensation. The
equal employment opportunity (EEO) law is practised in foreign companies.
However, this concept is partially practised by the local company. In the area of
compensation and benefits, parent company influence was not visible.

Table 6. Comparison of Promotion Policy between the Local and Foreign Companies
Firm’s country
Core criteria for Job tenure along Technical competency Technical
promotion with supervisor competency along
recommendation with supervisor
recommendation
Importance Highly important Supervisor Highly important
of supervisors recommendation
recommendation along with technical
competency count
Importance of loyalty Highly important loyalty along with Loyalty considered
the company competency counts irrelevant,
competency counts
Age as promotion To a moderate No No
criterion? extent
Gender as promotion No No No
criterion?
Importance of right Highly important Highly important Highly important
attitudes and values
Promotion test Not practised Not practised Not practised
Importance of Performance To a great extent To a moderate
performance appraisal appraisal is not extent
on promotion practised
Parent company Not applicable Strong influence No influence, local
influence as it is a local in decision-making subsidiary is the
company regarding head count sole authority for
promotion
Promotion Policy
Table 6 shows that job tenure and competence get priority in the foreign compa-
nies for promotion. Job tenure is, however, the sole promotion criterion in the case
of the local company.
Technical competency is the core criterion for promotion at foreign companies.
Importance of employee loyalty, attitudes and values get the highest priority in
both local and foreign companies. In regard to company influence, unlike US, the
UK-based company has showed influence in decision-making.
Industrial Relation
Table 7 demonstrates that all the companies have maintained a good relationship
between the management and employees. Company rules and regulations are to

Table 7. Comparison of Industrial Relation between the Local and Foreign Companies
Firm’s country of origin Bangladesh UK US

Employee relation status Moderate Good relationship Good relationship
employee relation between between
management management
and employees and employees
Rules and regulations Strictly Maintained but Maintained. Given
maintained human side is also high importance
taken care of
Administrating labour Controlled by Labour agreements Maintained with
agreements management are catered with proper care
proper care
Bargaining process Most informal Informal Informal
Existence of trade union No No No
Influence of parent Not applicable No influence is No influence is
company as it is a local observed observed
company
Visibility of political Not visible inside Not visible inside Not visible inside
engagement among office office office
employee within office
be strictly followed by the local as well as foreign companies. Similarly, adminis-

trative labour agreements are maintained with proper care at both the local and
foreign companies. In all companies, an informal bargaining culture is established
and employees are highly willing to solve the crisis if any arises. The political
engagement of employees is not visible on the factory premises. Nonetheless,
none of the companies, local or foreign, allows trade unions.
HRM Practices between the Local

The HRM practices that were studied are selection, recruitment, training and
development, performance appraisal, compensation and benefit, managerial selec-
tion criteria, organizational communication and industrial relations (Table 8).
Local company spends minimum on selection process in comparison with the
foreign companies. All the companies practise on-the-job training for employee
training and development. The US-based company adopts individual performance
based pay system and offers success celebration and paid vacation.
Open-communication methods are less commonly used in the local com-
pany. In the UK-based garment company, it is commonly used such as system-
atic use of the management chain. The US-based company has not followed any

Table 8. Comparisons of HRM Practices between the Local and Foreign Companies
Firm’s country
Recruitment Spend minimum money Spend more money Spend more money
and selection in selection. ‘Panel in selecting the right in selecting the right
interview’, aptitude employee. Managerial employee. Panel
tests, competency- level: advertise interview, aptitude
based interviews and externally; Professional/ tests, competency-
application forms are technical level: based interviews and
not commonly used advertise externally; application forms
for all levels Clerical/manual levels: are commonly used.
advertise externally, Clerical/manual
word of mouth, levels: advertise
reference externally, word of
mouth, reference
Training and Low in conducting Use both on the job More focused on the
development training needs and off the job training job training than off
systematically, less modality. But on the the job training
priority on-the-job job gets priority
training is practised
Compensation High in pay differentials High in pay differentials Individual
and benefits between those at between those at performance based
the top and those at the top and those at pay system with
the bottom. Non- the bottom. Team work experience.
monetary benefits are recognition, paid Success celebration,
less practised vacation, overseas paid vacation with
tours for mid and high family for talented
level employees performers
Performance Frequency: less used. Frequency: once a year. Frequency: formal
appraisal Measure of Measure of and systematic used.
performance: individual performance: individual Measure of
performance/output performance/output. performance:
Purpose: reluctant to Purpose: set personal individual
provide feedback objectives and review performance.
progress again past Purpose: provide
objects, give feedback feedback
to employee on their
performance
Management Informal criteria Individual performance Hard criteria such
appointments such as ‘emphasis on as ‘bottom line
criteria informal participation delivery’, ‘more
and group or like- than one business
minded involvement’, area’, ‘experience in
‘a cooperative group another country’
action’, loyalty’

Organizational Top down Open-communication No formal methods

communication communication methods are commonly for all levels
methods is used used such as systematic
use of the management
chain’, regular
newsletter, regular
meeting, suggestion
schemes
Participatory Less employee Moderate employee Moderate employee
management participation in participation in decision participation in
and industrial monitoring quality related to execution decision related to
relations No trade union No trade union execution
No trade union
formal methods of communication for any level of management. The

Bangladeshi garment company follows informal criteria in management
appointment such as emphasis on generating unofficial connection. The
US-based company has hard criteria, such as bottom line delivery in more than
one business area. The UK-based company decides management appointments
by individual performance.
From Table 9, it is observed that the US and UK subsidiaries adopt a mixed
HRM strategy in Bangladesh. They are inclined to focus on home and host country
Table 9. HRM Adaptation between Home and Host Country Effect in Foreign Companies
Firm’s country of origin UK US

Recruitment and selection Home and host country Home and host country
effect effect
Performance appraisal Home and host country Home and host country
effect effect
Training and development Host country effect Host country effect
Industrial relation Host country effect Host country effect
Compensation and benefit Host country effect Host country effect
Organizational communication Home and host country Home and host country
effect effect
Top management appointments Home country effect Home country effect
criteria
Middle and lower level Host country effect Host country effect
management appointments
criteria
Participatory management Home country effect Home country effect

Table 10. The Effect of HRM Transfer between Home and Host Country in Foreign
Companies
Firm’s country of origin UK US

HRM practices and system Hybrid with less Hybrid with moderate
adaptive adaptive
Level of HRM transfer from parent High Moderate
company to affiliate
Level of home country HRM adaptation Low Moderate
with host country culture
effects in the area of selection and recruitment, performance appraisal, organiza-

tional communication and host country effect in the area of training and develop-
ment, industrial relation, compensation and benefit and middle and lower level
management appointments criteria. The foreign companies are, however, follow-
ing their home country HRM practices in areas like top management appoint-
ments criteria and participatory management.
Table 10 gives a representation of the level of transfer of HRM practices of UK
and US subsidiaries operating in Bangladesh. Both the subsidiaries are observed
following a mixed hybrid system. Both of the companies transfer their home
country HRM practices and adopt less HRM practices from the host country.
Level of parent affiliate and level of home HRM adaptation is high in UK-based
firm. On the other hand, the US-based garment company’s HRM adaptation and
level of parent affiliate are moderate. Employee commitment and satisfaction are
quite high in both the foreign companies.
The findings indicated the importance of the strategic integration of balanced
HRM practices for achieving optimum results in foreign companies. These companies
demonstrated concerted efforts in their HRM practices. The foreign companies
planned and integrated HR activities innovatively to strengthen the relationship
between the organization and employees.
Discussion
The results reveal that the three companies of this study are addressing the pri-
mary challenge of nurturing a committed workforce that is competent in fulfilling
organizational goals and continually exploring new ways to improve performance.
It is observed that the two foreign companies in Bangladesh have adopted a com-
bination of home and host country HRM practices. Both push and pull force fac-
tors are at play in the operation of garment companies in Bangladesh. In
determining strategic issues, expansion and reduction of workforces, push force is
at work. The pull force is exercised for ensuring compliance to the host country’s
practices in the process of HRM implementation. Like Japanese MNCs in US, US

MNCs in China (e.g., Farley et al., 2004), German MNCs in the UK (Ferner &
Varul, 1999), US MNCs in the UK (Ferner, Almond & Colling, 2005), UK and US
MNCs in RMG sector tend to accept a mixture of both home and host country
practices. The effect of home country is significant both in strategic and func-
tional areas of HRM practices. In terms of the primary HRM issues, the main
strategic decision-making depends on headquarters in UK and US, especially, on
issues such as workforce expansion and reduction. When subsidiary is important,
head quarter wants to keep operations under control rendering decisions from
home country. Moreover, Bangladesh is lacking high level HR professionals and
standardization of HRM practices.
It appears that MNCs, having their headquarters in UK and US adopt a ‘hybrid’
approach in managing their relationship with the local subsidiaries. UK and US
subsidiaries tend to comply with the home country practices, especially in the area
of recruitment and selection, performance appraisal, organizational communica-
tion, top management appointment criteria and participative management. Due to
strong pressure from the host country to conform with the local environment, the
subsidiaries were more influential in relation to decisions on compensation and
benefit, training and development, industrial relations and middle and lower man-
agement appointments criteria.
Institutional influences from the host country, such as legal environment and
utilization of local resources, are the priority for UK and US garment companies
in Bangladesh. Local practices such as reference checking are commonly used by
UK and US garment companies in Bangladesh. This suggests that due to the tight
budget and cost control over the subsidiaries, HR managers are sensitive to mini-
mizing recruitment costs. Results suggest that individual performance is widely
used for rewarding and promoting employees. The behaviour of MNCs in host
countries may be a blend or hybrid in which host country norms reconcile the
influence of the home country “blueprint” (Innes & Morris, 1995; Schuler &
Jackson, 1987), where both home country and host country effects account for the
measure of individual performance. Study results suggest that both individual per-
formance output and adoption of headquarter performance measure were com-
monly adopted in the foreign companies. An implication of choice of a modified
style is the influence of host country national culture, and accordingly, “the middle
way” approach has been implemented by the foreign companies in Bangladesh.
A few key factors seem to influence the foreign garment companies in develop-
ing the HRM policies internationally. There is an agreement that the transfer of
knowledge internationally is a key requirement for successful MNCs (Bartlett &
Ghoshal, 2000; Evans, Pucik & Barsoux, 2002; Mariappanadar, 2005; Poedenphant,
2002). Differences of opinion occur about factors that influence the adaptation
of HRM policies and practices from MNCs to MNC subsidiaries. A range of other
factors does impact transfer success and adaptation. These factors include the
impact of social, political, economic and strategic context. The pressures for global
integration versus local responsiveness and the evolving mentality MNCs are
facing (Bartlett & Ghoshal, 2000).

To respond to these challenges, the MNCs are obliged to develop global com-
petitiveness, multinational flexibility and worldwide learning capability. That is,
a cultural orientation towards learning, innovation and change is most likely to
result in more positive attitudes towards the transfer process, which may lead to
the eventual success of the MNCs (Bartlett & Ghoshal, 1989; Herkenhoff, 2000;
Poedenphant, 2002). This effect is not practice specific, since it reflects character-
istics of the subsidiary that apply to all types of activities associated with learning,
innovation and change in general. Therefore, MNCs have a need to formally con-
trol and coordinate their subsidiaries. This outcome can be achieved through
reporting systems and targets, or less formally through relationships and the bonds
of corporate culture (Bartlett & Ghoshal, 1989; Dowling, Schuler & Welch, 1987).
With these forms of control, trust between the involved parties is a key element
(Bartlett & Ghoshal, 1989).
In this study, we found that both US and UK garment companies are not adopt-
ing local HRM practices, but rather transferring headquarter influence to operate
business in Bangladesh. Assigning specialists in specific HR issues with global
responsibility, such as a top management appointment, as occurs in UK and US
cases, undermines the opportunity of the assigned specialist to develop personal
relationships or a deep understanding of a country or region (Adler, 2001; Dowling
et al., 1999). The Asian subsidiaries regard the assigned headquarter specialist as
effective, which suggests that the formal control mechanism does work well. This
renders the HR headquarter staff assigned to the subsidiary virtually powerful and
with parent country effect (Dowling et al., 1999; Evans et al., 2002). The parent
company trains the local employees to implement headquarter developed training
practices to have some level of control on the quality of the work and employee
performance.
Conclusion and Implication

In an effort to explore the distinctive features of HRM practices across the com-
panies, this study has analyzed and explored HRM practices adopted by two UK-
and US-based companies and one Bangladesh company. HRM practices used by
UK and US companies and local Bangladesh company are identified. The results
suggest that these two MNCs behave similarly to MNCs from US and UK which
tend to transfer the concepts and practices of HRM system from parent company
to their subsidiaries in Bangladesh; for example, union avoidance strategy. At the
same time, they are adopting varied HR approaches in Bangladesh due to home
and host country effect.
Results indicate that certain major socio-cultural and institutional norms push
the MNCs to adjust practices conforming to local model (Miah & Wali, 2012;
Tayeb, 1998). The companies engage in a considerable degree of HRM transfer,
which results in mixed HRM practices. The conflict that arises is due to the fact
that certain HRM practices are more restricted and affected by the host country’s

socio-cultural and institutional environment, while other practices are much

expected to be incorporated throughout the MNC and demonstrate an advanced
level of compliance to the practices of the headquarters (Chow et al., 2000; Hasan,
2010; Yeh, 1987).
Finally, this study found that significant exportive HRM approach has taken
place in the two foreign subsidiaries researched. A number of cross-organizational
learning activities were also identified adding to the small body of research that
has emphasized the significance of parent country organizational learning
(Edwards, 1998).
The headquarters’ influences depend on the control of employment regulations
in the host country, the level of cultural and institutional differences between
home and host country, and the role and purpose of individual subsidiaries
(Harzing, 2004; Myloni, 2002; Rosenzweig & Nohria, 1994). Multinationals may
modify their HR rule orientations with their stages of internationalization (Adler &
Ghadar, 1991; Banai, 1992). For instance, Monk, Scullion & Creaner (2001)
found that Irish MNCs developed more formal and pro-active HR policies, and
appointed a higher number of headquarter expatriates in the overseas subsidiaries
with their increased global operations.
The sample size is not as large as the researchers would have preferred. The
limitations of cross-cultural HRM practices created an obstacle in carrying out
this study to better represent the overall garment industry in Bangladesh. However,
this study makes a considerable contribution to the understanding and implemen-
tation of cross-cultural comparison and its overall impact of home and host coun-
try effect in a South Asian context. Future research studies in the context of the
garment companies of Bangladesh may include large samples and longitudinal
studies. They should also focus on the changes in the managerial practice arising
from cross-cultural HRM issues (Rosenzweig & Nohria, 1994; Tayeb, 1998;
Taylor, Beechler & Napier, 1996). Such studies would be more helpful in imple-
menting the best international HRM strategy to contribute to successful foreign
MNCs garment company HRM practices that are most appropriate in Bangladesh.
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South Asian Journal of Human

A Comparative Study of HRM Practices between Foreign and Local Garment

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A Comparative South Asian Journal of Human

Md. Khasro Miah

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Home and Host Country Effect on HRM Practices

Rationale of the Study

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manufactured in Bangladesh. With only 3 per cent contribution to the GDP of

Background Information of the Garment Companies

Case Two (US-based Garment Company)

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the company is around $3,056.7 million. It has manufacturing and distribution

Case Three (Bangladesh-based Garment Company)

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Table 1. Background Information of Local and Foreign Companies

Firm’s country of origin Bangladesh UK US

Some researchers have contended that quantitative research methods may

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contrast the findings, equivalence of research methods and research administra-

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Table 2. Comparison of Recruitment and Selection Practices between the Local

Training and Development

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Table 3. Comparison of Training and Development Practices between the Local

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Compensation and Benefits

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South Asian Journal of Human Resources Management, 1, 1 (2014): 67–89

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Firm’s country of origin Bangladesh UK US

be strictly followed by the local as well as foreign companies. Similarly, adminis-

HRM Practices between the Local

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Organizational Top down Open-communication No formal methods

formal methods of communication for any level of management. The

Firm’s country of origin UK US

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Firm’s country of origin UK US

effects in the area of selection and recruitment, performance appraisal, organiza-

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