Country of origin and competitive advantage : the case of MNCs transferring reward management practices to subsidiaries in Australia.

This thesis examines how subsidiaries utilise their parents' capabilities as a source of competitive advantage. More specifically, the reward management practices of multinational corporations of different country of origin are investigated to assess how they provide advantages to their subsidiaries in Australia through the transfer of knowledge and practices. This important area of research has been sparsely addressed to date. The research also examines the factors that influence how reward management practices are transferred. The study comprises two stages. The first stage seeks to identify the character of reward management practices of US, UK and Japanese subsidiaries, and locally owned Australian companies, and the extent to which the differences reflect the country of origin. For this stage, the study makes use of The Australian Workplace Industrial Relations Survey (A WIRS) data collected for the Commonwealth Department of Industrial Relations in 1995 which has been widely used by scholars and continues to be an important source for exploring management issues in Australian workplaces. The second stage gathers qualitative data using a case study approach. The case studies were designed to shed light on the A WIRS findings and serve a triangulation function. The case studies help in understanding the transfer of knowledge and practices by explaining the reward strategies and policies pursued by MNCs, and how they are implemented and integrated in the Australian context. Fourteen case studies of American, British, Japanese and Australian firms during the period 2006-2008 are reported. This research makes two academic contributions. First, within the Australian context, the study reveals country of origin influences on both extrinsic and intrinsic reward management practices, implying that MNCs seek to transfer home country knowledge and practices to advantage their subsidiaries. In order to gain competitive advantage, local Australian firms also attempt to match the reward management practices of their foreign counterparts, but awareness of local circumstances is required in formulating such practices. Second, the study sheds light on the pivotal role of subsidiary managers in knowledge utilisation and subsidiary learning. Even where there are cultural similarities between home and host country of the subsidiaries, in the transfer of xiii management practices such as reward management, country of origin differences can cause dissatisfaction among the local workforce. The role of subsidiary managers, therefore, becomes crucial in understanding the reasons behind such dissatisfaction, and influencing the parent in formulating reward management strategies. The project show that multinational companies which recognise the country of origin influences and adapt strategies according to host country requirements and culture, have more satisfied and motivated employees and make better use of their parent's capabilities for competitive advantage. xiv