Institutional complexity in cross-border HRM practices: a comparative analysis in India

Abstract

Purpose This study aims to conduct a comparative analysis of human resource management (HRM) practices between domestic and multinational enterprises within India, a large emerging economy. It also highlights the distinct institutional arrangements that potentially influence the employment practices of these organizations. Design/methodology/approach Data were collected from a diverse sample of domestic and multinational enterprises in India. The study utilized multivariate analysis to examine HRM practices, focusing on training and development, incentives and rewards and retention practices. Findings Contrary to initial expectations, the results indicate that DEs place significantly more emphasis on HRM practices than MNEs. This finding suggests that organizational scale and global presence do not consistently translate into a greater emphasis on critical HRM parameters. Instead, DEs leverage their local market knowledge and understanding of cultural and institutional nuances to prioritize effective HRM strategies. Research limitations/implications The study did not categorize the nationality of MNEs, which could reveal how different cultural contexts impact HRM practices. It is possible that MNEs headquartered in distinct cultural contexts may exhibit varying behaviors compared to enterprises based in different cultural environments. Additionally, while our findings reveal that domestic enterprises prioritize certain HRM practices over multinational firms, the question remains whether this emphasis translates into favorable organizational performance outcomes. Practical implications Both multinational and domestic enterprises should tailor their HRM practices to align with local dynamics and institutional arrangements. DEs can use their emphasis on HRM practices as a competitive advantage in attracting and retaining local talent, while MNEs should enhance cross-cultural competence to better integrate within different national contexts. Originality/value This study introduces a critical rethinking of HRM practices by illustrating the unique ways DEs and MNEs navigate institutional complexities within India. Unlike traditional assumptions that emphasize the superiority of MNE practices, this research uncovers how DEs strategically leverage local institutional knowledge to outperform MNEs in HRM dimensions. By embedding these findings within institutional theory, this study extends the theoretical discourse on organizational adaptability in emerging markets and provides actionable insights for aligning HRM strategies with local institutional contexts, fostering a comprehensive understanding of HRM dynamics across diverse economies.