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Abstract
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The purpose of this research is to explore and compare human resource man-
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agement (HRM) practices between foreign and local garment companies operat-
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ing in Bangladesh. This study surveyed 30 human resource, administrative and
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of HRM practices has been adopted by the foreign companies, ranging between
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imitating home country practices and host country practices. Results also found
that foreign garment companies focus more on home country HRM practices,
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garment companies are widely adopting host country HRM practices in indus-
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from the foreign company HRM practices. Since this study is based on a limited
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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
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issue in research. The rapid progress of the South Asian countries, especially
Bangladesh, has attracted foreign investment, which demands efficient HRM prac-
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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
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international perspective (Adler & Ghadar, 1991; Brewster & Scullion, 1997).
A number of scholars have identified a need for more research on HRM practices
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in South Asia due to the limited number of comparative HRM studies between
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developing and developed countries (Budhwar & Sparrow, 2001; Miah & Kitamura,
2005; Miah, Wakabayashi & Takeuchi, 2003). One primary issue in the literature is
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to what extent MNCs and their subsidiaries’ practices resemble the parent company
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and host country practices. Several authors have acknowledged that HRM repre-
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sents a major restriction when MNCs are trying to implement global strategies in
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the different cultural and institutional framework of each affiliate where the MNCs
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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,
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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
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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
(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).
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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-
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ing debate between home country versus host country effect (Glover & Wilkinson,
2007; Guest & Hoque, 1996; Innes & Morris, 1995; Roche & Geary, 1996;
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Rosenzweig & Nohria, 1994). A central question is whether the HRM of foreign
subsidiaries is determined by the “foreignness” of the invested capital (country of
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origin) or by locally prevalent customs and practices (Roche & Geary, 1996). The
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(Heenan & Perlmutter, 1979; Koh, Gammoh & Okoroafo, 2014; Perlmutter, 1969).
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However, when it comes to transferring HRM practices abroad, other factors, such
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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,
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nies operating in Bangladesh. This research is important for two reasons; (i) more
foreign companies from developed economies are entering into South Asia and
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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
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home country effect on HRM practices in Bangladesh.
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ments at competitive prices for some of the world famous retailers. Total asset
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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
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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
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standards and exporting ready-made garments since then. With 80,000 pieces per
month production capacity, fabrics used are numerous, including solid and yarn
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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
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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
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growth are modest. This garment company has placed a great emphasis on satisfy-
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ing the buyers’ requirements and has managed to build an award-winning busi-
ness on this philosophy.
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Methodology
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For this research, one Bangladeshi garment company, one US-based and one
UK-based garment company operating in Bangladesh were selected. Table 1 pro-
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No of foreign expertise Only local employees 10 8
Total asset (US $ in millions) 350 5,099.4 3,056.7
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% Sale in domestic market 55% Nil Nil
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% of overseas market US $ $100
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in millions)
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Interviewed manager 10 10 10
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Average age 37 32 35
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developed for all HRM practices. The relevant information is then used to rear-
range the evidence into categories between foreign and local garment companies
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and to explain the occurrence of HRM phenomena or causal relationships among
the transferability of HRM practices in Bangladesh (Piekkari, Nell & Ghauri,
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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-
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ment companies in Bangladesh.
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Results
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Table 2 shows the hiring and selection approaches of foreign and local garment
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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-
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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.
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
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Recruitment Internal Internal, external Internal, external
sources
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Use of Not practised Some times Not practised
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recruitment IA
agencies
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Apprentices Not practised Some times Some times
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Selection process For entry level its For entry level its For entry level its
walk in interview, for walk in interview, walk in interview,
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mid level, verbal and for mid level, verbal for mid level, verbal
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interview interview
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Psychometric Not practised For mid and high For mid level
testing level
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check
Aptitude test No Yes Yes
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Firm’s country
of origin Bangladesh UK US
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
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training programme designing the next
training programme
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Support for training Depends on Both in-house and In-house resource
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in-house and outsourced resource
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outsourced utilized.
sources
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Training location Home country Home and host Home and host
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country country
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depends on
needs
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Job rotation Not practised Practices at the entry Practices at the entry
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level level
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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
of origin Bangladesh UK US
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
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Feedback of Verbal feedback Written feedback given Written feedback
performance given to employee to employee given to employee
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appraisal
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Influence of parent Not applicable To a moderate extent,
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company as it is a local headquarter adoption extent headquarter
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company is visible adoption is visible
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Performance Appraisal
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Table 4. The survey results showed that key employees, managers and professional/
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technical staff are frequently appraised formally on an individual basis. The domi-
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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.
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The foreign companies provide written feedback to the employees and the local
companies choose verbal feedback. Table 4 shows that foreign garment companies
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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.
Table 5. Comparison of Compensation and Benefits between the Local and Foreign
Companies
Firm’s country
of origin Bangladesh UK US
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
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Payment system Based on Based on company Based on company
company payroll payroll system added with payroll system
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system performance bonus
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Parent company Not applicable To a moderate extent, local Followed to a
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influence as it is a local adoption is visible limited extent
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company
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Equal Yes. However, Yes. Both male and female Yes. Both male
employment mid and employees get equal and female
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dominated by
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male
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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
of origin Bangladesh UK US
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,
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competency counts
Age as promotion To a moderate No No
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criterion? extent
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Gender as promotion No No IA No
criterion?
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Importance of right Highly important Highly important Highly important
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on promotion practised
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promotion
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Promotion Policy
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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
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Existence of trade union No No No
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Influence of parent Not applicable No influence is No influence is
company as it is a local observed observed
company
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Visibility of political Not visible inside Not visible inside Not visible inside
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engagement among office office office
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trative labour agreements are maintained with proper care at both the local and
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and employees are highly willing to solve the crisis if any arises. The political
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Table 8. Comparisons of HRM Practices between the Local and Foreign Companies
Firm’s country
of origin Bangladesh UK US
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
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mouth, reference
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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
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modality. But on the the job training
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priority on-the-job job gets priority
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training is practised
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the top and those at the top and those at pay system with
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formal methods of communication for any level of management. The
Bangladeshi garment company follows informal criteria in management
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appointment such as emphasis on generating unofficial connection. The
US-based company has hard criteria, such as bottom line delivery in more than
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one business area. The UK-based company decides management appointments
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by individual performance.
From Table 9, it is observed that the US and UK subsidiaries adopt a mixed
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HRM strategy in Bangladesh. They are inclined to focus on home and host country
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Table 9. HRM Adaptation between Home and Host Country Effect in Foreign Companies
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Recruitment and selection Home and host country Home and host country
effect effect
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Performance appraisal Home and host country Home and host country
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effect effect
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Table 10. The Effect of HRM Transfer between Home and Host Country in Foreign
Companies
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tional communication and host country effect in the area of training and develop-
ment, industrial relation, compensation and benefit and middle and lower level
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management appointments criteria. The foreign companies are, however, follow-
ing their home country HRM practices in areas like top management appoint-
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ments criteria and participatory management.
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Table 10 gives a representation of the level of transfer of HRM practices of UK
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and US subsidiaries operating in Bangladesh. Both the subsidiaries are observed
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following a mixed hybrid system. Both of the companies transfer their home
country HRM practices and adopt less HRM practices from the host country.
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Level of parent affiliate and level of home HRM adaptation is high in UK-based
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firm. On the other hand, the US-based garment company’s HRM adaptation and
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level of parent affiliate are moderate. Employee commitment and satisfaction are
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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
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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
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of recruitment and selection, performance appraisal, organizational communica-
tion, top management appointment criteria and participative management. Due to
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strong pressure from the host country to conform with the local environment, the
subsidiaries were more influential in relation to decisions on compensation and
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benefit, training and development, industrial relations and middle and lower man-
agement appointments criteria.
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Institutional influences from the host country, such as legal environment and
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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
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UK and US garment companies in Bangladesh. This suggests that due to the tight
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budget and cost control over the subsidiaries, HR managers are sensitive to mini-
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used for rewarding and promoting employees. The behaviour of MNCs in host
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countries may be a blend or hybrid in which host country norms reconcile the
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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-
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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).
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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
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business in Bangladesh. Assigning specialists in specific HR issues with global
responsibility, such as a top management appointment, as occurs in UK and US
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cases, undermines the opportunity of the assigned specialist to develop personal
relationships or a deep understanding of a country or region (Adler, 2001; Dowling
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et al., 1999). The Asian subsidiaries regard the assigned headquarter specialist as
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effective, which suggests that the formal control mechanism does work well. This
renders the HR headquarter staff assigned to the subsidiary virtually powerful and
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with parent country effect (Dowling et al., 1999; Evans et al., 2002). The parent
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practices to have some level of control on the quality of the work and employee
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performance.
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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-
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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
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modify their HR rule orientations with their stages of internationalization (Adler &
Ghadar, 1991; Banai, 1992). For instance, Monk, Scullion & Creaner (2001)
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found that Irish MNCs developed more formal and pro-active HR policies, and
appointed a higher number of headquarter expatriates in the overseas subsidiaries
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with their increased global operations.
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The sample size is not as large as the researchers would have preferred. The
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limitations of cross-cultural HRM practices created an obstacle in carrying out
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this study to better represent the overall garment industry in Bangladesh. However,
this study makes a considerable contribution to the understanding and implemen-
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tation of cross-cultural comparison and its overall impact of home and host coun-
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try effect in a South Asian context. Future research studies in the context of the
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studies. They should also focus on the changes in the managerial practice arising
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from cross-cultural HRM issues (Rosenzweig & Nohria, 1994; Tayeb, 1998;
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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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