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This chapter aims to examine the interaction between 'country-of-origin' and 'country-of-operation' effects in determining human resource management (HRM) policies and practices in multinationals (MNCs) in the context of globalisation. As national institutional patterns can penetrate a fIrm's internal operations, this study investigates the transmission and adaptation of the home country's HRM policies and practices within the MNC subsidiaries in the developing host country. Based on an investigation of the reward systems and performance management practices of a sample of US and Japanese companies based in Vietnam, this chapter argues that while 'low power' environments pose little in the way of formal constraint mechanisms they can facilitate the penetration of novel HRM practices. Findings also suggested a complex and challenging situation exists for MNC operations, requiring a very high level of adaptation and flexibility on the part of the host country fIrm.