Management Research, vol. 6, no. 1 (Winter 2007–8), pp. 63–73.
© 2008 M.E.Sharpe, Inc. All rights reserved.
ISSN 1536-5433 / 2008 $9.50 + 0.00.
Over the past decade, the intensiﬁcation of internationalization
processes experienced by enterprises has fueled the develop-
ment of international human resource management (IHRM),
in relation to both the area speciﬁcally relating to day-to-day
management and to strategic management. Signiﬁcant studies
published during the last decade bear witness to this (Bird,
Taylor, & Beechler, 1998; Briscoe & Schuler, 2004; Hannon,
Huang, & Jaw, 1995; Milliman, Von Glinow, & Nathan,
1991; Schuler, Dowling, & DeCieri, 1993; Taylor, Beechler,
& Napier, 1996). Among the questions that attract the most
attention within this more strategic approach, I ﬁnd the issue
of whether the policies and practices of headquarters should
be exported or adapted to subsidiaries of multinational enter-
prises (MNE). The implications of this decision can be assessed
from different points of view. In this paper, I focus on cost.
Application of this factor has produced valuable contributions
to the literature, but there is frequently a marked tendency
among authors to center their analysis on recruitment and on
transaction costs (Benito, Tomassen, Bonache-Pérez, & Pla-
Barber, 2005; Bonache-Pérez & Pla-Barber, 2005; Erdener &
Torbiörn, 1999; Festing, 1997).
In an effort to widen this perspective, this study contem-
plates other factors that serve to add to previous contributions
so as to more precisely estimate the relative cost of different
strategies—system cost and opportunity cost. Furthermore,
as the main contribution within the analysis, I incorporate the
efﬁciency of the human resource management (HRM) system
as a factor that can play a determining role in the evalua-
tion of global cost, through opportunity cost. My opinion is
that, despite the cost involved in transferring the system, its
competitive superiority might make it advisable for it to be
exported rather than be adapted. In fact, from a resource-based
view of the ﬁrm, high efﬁciency eventually translates into
an improvement in entrepreneurial performance (Delaney &
Huselid, 1996; Delery & Doty, 1996; Huselid, 1995; Huselid,
Jackson, & Schuler, 1997; Lado & Wilson, 1994; MacDufﬁe,
1995; Pfeffer, 1994; Wright, McMahan, & McWilliams,
1994), which leads us to understand that a decision against
standardization would be accompanied by a relatively high op-
portunity cost due to its potential beneﬁts not being diffused
to the rest of the organizational units. I will, therefore, stress
the need for comparative analysis to include consideration of
HRM system’s quality.
Aitziber Lertxundi is a lecturer in management at the Faculty of
Economics and Business of the University of the Basque Country.
Her research interests include issues of cross-cultural management
in strategic international human resource management, speciﬁcally
the transfer of human resource practices within the multinational
enterprise (MNE) in multicultural environments and also the “best
practices” or high-performance work systems. She is currently in-
volved in research about the universality of these “best practices” in
the context of MNE’s units.
The author thanks Elizabeth F. Cabrera and two anonymous review-
ers for helpful comments.
TRANSFER OF HRM PRACTICES TO SUBSIDIARIES
Importance of the Efﬁciency of the HRM System
ABSTRACT: This work shows the importance of evaluating the efﬁciency of the human resource management system in
the analysis of transfer/adaptation costs of human resources practices in multinational enterprises. In addition to the cost
factors that have traditionally been considered, system cost and opportunity cost are examined. Concretely, I propose to
estimate the latter in accordance with the quality of the human resources function and conclude that the optimum strategic
option would depend on the effectiveness of the system as a source of competitive advantage.
RESUMEN: En este trabajo, se pone de maniﬁesto la importancia que tiene la evaluación de la eﬁciencia del sistema de
DRH en el análisis de costes de la transferencia/adaptación de las prácticas de recursos humanos en la MNE. A los factores
de coste que se han considerado tradicionalmente, se le añaden el coste del sistema y el coste de oportunidad. En concreto,
proponemos estimar este último en función de la calidad de la función de recursos humanos y concluimos que la opción
estratégica óptima dependería de la efectividad del sistema como fuente de ventaja competitiva.