Human resource management in domestic vs. multinational enterprises: an investigation in the country of Brunei

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.Very little past work has focused on the comparative analysis of human resource management (HRM) practices between domestic (DEs) and multinational enterprises (MNEs). The majority of the work in this area has instead concentrated on comparing the HRM practices employed by the subsidiaries of MNEs, and has mostly been conducted in the context of developed countries. This research studies the behavioural differences in the HR practices--recruitment, training, internal career opportunities, appraisals, rewards and incentives, as practiced in DEs and MNEs in the emerging country context of Brunei Darussalam. A survey of literature yielded nine major testable hypotheses. These included MNEs being more stringent with regard to their recruitment and training and rigorous with their promotion practices. Performance appraisal (PA) processes were hypothesised to be more advanced and better structured in MNEs when compared to DEs. Incentives and reward systems were also observed and following from literature, these were predicted to be more advanced and better structured in MNEs. In addition, we also hypothesised that the role of HR directors has become more strategic in the two genres of enterprises. We also tested the impact of several control variables on HR practices. In order to put our hypotheses to test, we collected primary data from a cross-section of firms. A count revealed a total of 465 firms in operation; of these, 214 were drawn for study. A total of 151 firms (70%) responded; 88 of these (58%) were DEs and 63 (42%) were MNEs. We applied a mix of parametric and non-parametric tests to analyse the data. On balance, we found support for most hypotheses. In terms of recruitment and selection practices, MNEs are found to be more rigorous in their recruitment, placing more emphasis on such traits as candidates’ willingness to travel, devotion to task, self-motivation, and independent judgment. We also found that MNEs place more emphasis on training; they also emphasise a stronger work culture by relying on ‘induction by socialisation’, and ‘buddy system /mentoring’. Moreover, while the statistical differences on its importance are seen to be higher in MNEs, the mean score emphasising the importance of training for DEs comes out to be high as well. This shows that both sets of enterprises rank the issue of training of their employees high. In terms of internal career opportunities, the results show that MNEs prefer to avoid competition between internal candidates by preparing one person well in advance. Compared to DEs, MNEs rely on sound individual technical skills for promotion purposes, also displaying their preference for technically sound employees in senior positions. Our analysis also shows that MNEs conduct PAs more frequently than DEs, and their feedback system is also rapid. The HR directors and employees of MNEs are more receptive to PAs than those in DEs whilst; in contrast, HR directors in DEs face less opposition to feedback when compared with those in MNEs. It emerges that PAs are an important part of the HR function in both types of organisations. In terms of incentives and rewards systems, MNEs follow market ethos and principles. They also show that DEs tend to look at the industry standards when setting rewards such as ‘basic pay’. There is also higher appeal for social and psychological benefits to employees of MNEs when compared to DEs. When analysing the role of the HR director, HR directors of MNEs show a tighter fit between HR policy and business strategy compared with DEs. With regard to the subject of HR devolvement, HR directors from both DEs and MNEs indicated that rather than having sole responsibility, routine HR responsibilities were shared with line management. The area in which there is less inclination to devolve to line managers is in strategic HR work. Moreever, these traits were more pronounced in MNEs than in DEs. Further, HR directors of MNEs clearly regarded their tasks as more important than the HR directors of DEs. Our analysis also showed that MNEs had higher perceived financial performances when compared to DEs. When analyzed by age, older firms were found to place more importance on language and commitment. With regard to size, larger firms place emphasis on employees’ willingness to travel and work experience in other countries as the main recruitment criteria. Younger firms are more likely to be following market principles in terms of explaining incentives and reward system to their employees, whilst older firms claim that working for them carries social and psychological benefits for employees

Can HRM Alleviate the Negative Effects of the Resource Curse on Firms? -Evidence from Brunei

Purpose: The resource curse literature suggests that firms operating in non-oil and gas industries in petrostates face considerable challenges in securing competitiveness and sustaining themselves. Based on a firm level survey within a micro-petrostate, Brunei, this study explores the relationship between specific HR policies and practices and organisational performance, analysing, comparing and contrasting oil and gas with non-oil and gas sectors, and draws out the comparative lessons for understanding the potential and performance consequences of HR interventions in resource centred national economies. Design/methodology/approach: Data for this study was generated from a primary survey administered amongst the HR Directors in companies operating in all sectors in Brunei. A statistically representative sample size of 214 was selected. Findings: We confirmed that firms in the oil and gas sector indeed performed better than other sectors. However, we found that the negative effects associated with operating outside of oil and gas could be mitigated through strategic choices: the strategic involvement of HR directors in the affairs of the company reduced employee turnover and added positively to financial returns across sectors. Practical implications: Developing and enhancing the role of people management is still very much easier than bringing about structural institutional reforms: the study confirms that at least part of the solution to contextual difficulties lies within, and that the firm level consequences of the resource curse can be ameliorated through strategic choice. Originality/value: The nature of the present investigation is one of few studies conducted in South East Asia in general and in the context of Brunei in particular. It also contributes to our understanding whether HR interventions can ameliorate the challenges of operating in a nonresource sector in a resource rich country

Institutions, complementarity, human resource management and performance in a South-East Asian Petrostate: the case of Brunei

This is a study on the incidence and impact of specific sets of HR practices on organisational performance (OP) across different types of firm, within an emerging market setting, where institutional arrangements are fluid and developing. The literature on comparative capitalism suggests that, within advanced societies, formal and informal regulations are mutually supportive, and will be sustained by associated HR systems, optimising OP. In contrast, in settings where institutional arrangements are weaker, there will not be the same incentives for disseminating mutually supportive HR bundles, and when these do exist, they are unlikely to yield any better outcomes. We found that this was indeed the case in the petrostate of Brunei as the usage of integrated HR models did not work better than individual interventions. Whilst it is often assumed that, in petrostates, the primary focus of institution-building is to service the needs of the oil-and-gas industry, we found no evidence to suggest that integrated HR systems were any more effective there; this may reflect the extent to which the industry’s HR needs may be simply resolved through turning to overseas labour markets – both for skilled and unskilled labour. At the same time, we found that the efficacy of HR practices varied according to firm characteristics: even in challenging contexts, firms may devise their own solutions according to their capabilities and endowments

An analysis of recruitment, training and retention practices in domestic and multinational enterprises in the country of Brunei Darussalam

This paper studies the behavioural differences in the recruitment, training and retention practices of domestic (DEs) versus multinational enterprises (MNEs) in the country of Brunei Darussalam. Hypotheses from literature survey predict MNEs to be more stringent in their recruitment and training and rigorous with promotion practices. Results show this is to be largely true. MNEs are found to be more rigorous in recruitment and place more emphasis on such traits as candidates’ ‘devotion to task’, ‘self-motivation’, and ‘independent judgment’. DEs rely more on internal appointments than external. MNEs place more emphasis on training; they also emphasise a stronger work culture by relying on ‘induction by socialisation’, and ‘buddy system for mentoring’. When analysed by age, older firms were found to place more importance on language and commitment. They also rely on training via the buddy system and on external appointments for senior posts. Large firms place emphasis on employees’ willingness to travel and work experience in other countries as the main recruitment criteria. Large firms also believe in external appointments for senior positions. The study which is one of few of its kind conducted in non-western environment, and the only one in the context of Brunei, adds to our understanding of HR practices in the context of two different genres of enterprises and has implications for future research