Control of subsidiary HRM Policies by Multi-national Corporate Headquarters: The Role of Institutional Differences and Labor Unions

There is a lack of clarity about the institutional sources of variation in the control of multi-national enterprise (MNE) subsidiaries by corporate headquarters (CHQ). Applying comparative institutional theory, we focus on the control of HRM policies by CHQ. First, we argue that when there are substantial home-host institutional differences in national employment protection regulation the dissimilarity in CHQ-subsidiary mindsets increases the likelihood of CHQ control. Second, we argue that union influence within the subsidiary amplifies that effect. We analyze a sample of 708 MNE subsidiaries in 32 countries with CHQs distributed across 39 countries. Unlike some prior work on subsidiary autonomy, we account for the multi-level nature of country and firm-level data. The evidence for the first of our arguments is mixed. However, in that we find a significant three-way interaction effect of CHQ control on home country and host country employment protection regulation and union influence, the second argument finds support.