Examining the impact of institutional environments on the HRM practices of MNCs and their operation and the path dependency between developed and developing countries

Purpose: This paper seeks to examine and understand how country institutional environments differently determine the Human Resource Management (HRM) of Multinational Companies (MNCs) from developed countries operating in developing countries, as well as MNCs from developing countries operating in more advanced market economies. Approach: It adopts a qualitative desk-based research to provide an extensive review of relevant literature. The review focuses predominantly on the following strands of literature: (1) Institutional theory and the environment; (2) HRM practices and systems; (3) Path dependency and MNCs within the context of developed and developing countries. Findings: The effort reveals that a gap exists in elucidating the impact of institutional environments on the HRM practices of MNCs, between developed and developing countries. The last few decades has seen a plethora of research on the HRM practices of MNCs which originate from developed but operate in developing countries. Most of these, however, tend not to consider in an explicit way the dynamics of the HRM practices of MNCs from developing economies operating in more developed and different institutional contexts where path dependency is also a crucial root for both groups of MNCs and its competitive edges. Research limitation: The findings are based solely of secondary data and is a theory based paper, therefore, it is limited in terms of empirical evidence. Practical Implications: A more complete understanding of the dynamic influences of institutional environments allows MNCs both contexts to orient HRM practice in a way that aligns with key institutional features in order to more effectively fulfil wider organisational objectives. Value: The paper contributes to the comparatively sparse literature in term of the impact of institutional environments on HRM practices in both developed and developing country contexts. In particular, it examines institutional influences on the HRM practices of MNCs from developing countries operating in developed contexts