MNCs as diffusers of best practices in HRM/LR in developing countries

The purpose of this chapter is to explore the role of the multinational company (MNC) as a “diffuser” of best practices in human resource management and labor relations (HRM/LR) to domestic firms in developing countries. It is clear that in their search to find ways to compete globally and achieve rapid economic growth, many developing countries have increasingly sought foreign direct investment (FDI) (Chapter 2 in this volume). To be outside the global learning loop is a risk that local firms in developing countries can ill afford, especially in a period marked by fast-changing technology and markets. Hence, one potentially important benefit from FDI is the exposure gained by domestic firms in developing countries to alternative forms of management. Indeed, several authors have argued that MNCs play a critical role in the diffusion of best practices as such. At the center of the globalization process, MNCs can be viewed, therefore, as important transmitters of product, process, and organizational innovation to developing countries (Frenkel, 2000). The extent to which this transmission takes place is also relevant in the context of the global convergence debates in the literature. As reported by Brewster and Tregaskis in the preceding chapter, there is reason to doubt that there is emerging convergence of HRM/LR practices across borders, at least with respect to contingent employment practices across Europe