Asia Pacic Journal of Human Resources (2012) 50, 7591

doi:10.1111/j.1744-7941.2011.00007.x

The transfer of training and development practices in Japanese subsidiaries in Vietnam

Anne Vo Faculty of Commerce, University of Wollongong, Wollongong, Australia Zeenobyah Hannif School of Management, University of Technology, Sydney, Australia

This paper examines the interaction between home-country and host-country effects in determining human resource management (HRM) policies and practices in multinational companies (MNCs) in the context of a developing country. The paper is based on an investigation of the training and development strategies for local managers of a sample of Japanese companies operating in Vietnam, and presents clear evidence of the transfer of home-country practices. The sector emerges as a key variable in explaining variations in HRM patterns with a greater number of comprehensive training and development programs recorded in automotive than in fast-moving consumer goods (FMCG) industries. We also argue that developing host countries pose little in the way of formal constraint mechanisms to the transfer of HRM practices, but the instability of the institutional environment and the weakness of its subsystems suggest a complex and challenging situation for MNC operations, and inhibit their ability to maintain their home-country HRM practices. Keywords: Japanese multinationals, training and development, Vietnam

Key points 1 The paper presents clear evidence of the transfer of home-country HRM practices to the host country. 2 Developing host countries pose little in the way of formal constraint mechanisms to the transfer of HRM practices. 3 The instability and weakness of the host countrys system suggest a complex and challenging situation for MNCs operations.

Nationalists point out that, for the time being, the world economy is fundamentally characterised by exchanges between relatively distinct national economies, in which many outcomes, such as the competitive performance of rms and sectors, are substantially determined by processes occurring at the national level (Harzing and Noorderhaven 2008;
Correspondence: Dr Anne Vo, Faculty of Commerce, University of Wollongong, Wollongong, Australia; e-mail: avo@uow.edu.au Accepted for publication 19 August 2011.
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Rowley and Benson 2002). Evidence suggests that MNCs remain primarily rooted to their country-of-origin national business system (Ferner and Quintanilla 1998). The question is now how far national states can inuence the international transfer of MNCs management practices. Abundant in quantity, rich in quality, the literature on MNCs and the transfer of HRM across countries still suffers a lack of research into developing countries. Reecting the heavy concentration of foreign direct investment (FDI), the literature on MNCs and the transfer of HRM practices has concentrated overwhelmingly on the triad of the European Union, America and Japan, and the interactions between rms of these nationalities and within these locations (Hirst and Thompson 1999). The formation and implementation of the HRM system in subsidiaries in weak host countries is therefore open for further research. Aiming at this research niche, this paper addresses the transfer of training and development policies and practices in Japanese subsidiaries in Vietnam. It examines: 1) the extent to which MNCs are inuenced by their home experience regarding training and development policies and practices; and 2) how far patterns of behaviour at home are refracted through the lens of host institutional constraints and requirements in their foreign subsidiaries. Training and development is an area of HR that not only bears strong imprints of the home country, but also potentially can lead to tensions and conicts between the MNCs and host countries, particularly developing ones. Japanese MNCs, for example, are well known for their focus on internal skill formation (Ahmadjian and Robbins 2005), job rotation and development of generalists, rather than specialists in any functional area (Pucik and Hatvany 1983). However, Japanese MNCs have a strong tendency to apply ethnocentric stafng policy, much to the dismay of developing countries that wish to promote localisation, employee development and the transfer of management technologies. Furthermore, while the strong desire of the host countries governments to import soft technology and the limitations of the national education and training system demand a high level of training from MNCs, employee poaching and job-hopping practices in a labour market that suffers from a signicant scarcity of highly skilled labour hinder such a process. Research in this area will shed light on the transfer of HRM, and further benets should accrue from understanding the level of training and development that MNCs offer to their employees and their contribution to the upgrading of the quality of the developing host countries workforce. The paper is structured as follows. The literature review is followed by an overview of the research methodology. The section that follows identies the home- and host-country effects on the transfer of training and development policies and practices. The empirical ndings are presented within three categories, namely: the extent and nature of training, training programs and the comprehensiveness of training programs. These sections argue that global policies in the Vietnamese subsidiaries reveal traits of home-country effects even though these are considerably refracted by institutionalised constraints and the market situation in the host country. Finally, some discussions and conclusions close this paper.
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Literature review The transfer of HRM practices across borders Comparative institutionalism theory has been widely used to study the diffusion of organisational practices across countries. Operating in more than one country, MNCs confront a multitude of different and possibly conicting institutional pressures (Ferner and Quintanilla 1998; Harzing and Noorderhaven 2008). Because it is vital for MNCs to establish and maintain organisational legality in all their host environments, they need to conform to the legal environment, particularly on labour issues, as well as be responsive to the cultural environment (Vo and Rowley 2010). Furthermore, as argued by Birkinshaw and Hood (1998), subsidiaries possess their own capabilities and resources (such as consumption market, resources and efciency), which are desirable to the parent company. Therefore, MNCs are under pressure to adopt local practices in the host countries (Kostova and Zaheer 1999). Conversely, Bjrkman, Fey and Park (2007) suggest that MNC subsidiaries that choose to implement HRM practices that are considered particularly suitable for their own operations (rather than the practices viewed as appropriate in the local environment) may achieve greater levels of success than rms following local practices. Similarly, an important source of competitive advantage for the MNC is the utilisation of organisational capabilities worldwide (Nohria and Ghoshal 1997). Herein lies the central issue in the literature on MNCs: the extent to which their various foreign subsidiaries act and behave as local rms local adaptation compared to the extent to which their practices resemble those of the parent rm global integration (Harzing and Noorderhaven 2008). Some evidence exists that the home country exerts a distinctive inuence on the way labour is managed in MNCs. Ferner (2000) argues that a parent company is embedded in an institutional environment located in the home country. To varying degrees, the particular features of the home country becomes an ingrained part of each MNCs corporate identity, and these features shape its international orientation as the general philosophy or approach taken by the parent company in the design of the HRM systems to be used in its overseas subsidiaries. Subsidiary actors do not possess the same power to manipulate and inuence the particular HRM practices employed (Ferner, Almond and Colling 2005). Power and inuence will affect the extent of successful resistance to the implementation of certain HRM practices (Harry and Nakajima 2007). Due to these factors, ethnocentricity and polycentrism have been identied as traits that are characteristic of multinationals of different national origins (Harry and Nakajima 2007). Thus, Japanese and American companies tend to be more ethnocentric than their European counterparts, other things such as sector of operation being equal (Ferner 1994; Harry and Nakajima 2007). From the host-country perspective, the superiority/inferiority of the host system determines its relative openness or receptiveness to dominant best practice (Whitley 1992). The introduction of country-of-origin practices is easer in a permissive/open host-country environment which imposes fewer constraints on rms (Whitley 1992). In contrast, MNCs may be prevented from transferring country-of-origin practices into a constraining/closed host-country environment that is highly regulated and distinctive (Whitley 1992). The
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subsidiaries can also utilise their resources (such as expertise about local environment and market, specialist knowledge, culture and so on) to block diffusion (Edwards, Ferner and Sisson 1993). MNCs training and development policies and practices in Vietnam Home-country inuences Japanese companies have developed a distinct HRM model, and discussion of the degree to which Japanese companies transfer this model to their overseas operations is recurrent in the literature (Yu and Meyer-Ohle 2008). Whitley (1999) classies Japan as a collaborative national business system; Hall and Soskice (2001) categorise Japan as a coordinated market economy; and Ahmadjian and Robbins (2005) liken the Japanese business environment to a community. Such classications emphasise institutional cooperation (Orr 1997) as the key feature of the Japanese capitalist structure. Institutional co-operation appears within and between institutions and is translated into a highly integrated business system in which all institutional arrangements are interlocking. In the 1990s Japan witnessed economic and regulatory changes; however, very little evidence exists that these changes have inuenced the nature of the business system as a whole, or the characteristics of Japanese rms in particular (McGuire and Dow 2003). The most important implication of the Japanese business system to the development of rms HRM systems is that it gives rms the opportunity to develop long-term strategies. Its simplistic versions have been severely criticised, but the stereotype of HRM practices in Japan is well known, and is characterised by the three pillars: lifetime employment, a seniority-based wage structure and enterprise unionism. On the notion of lifetime employment, Dore is pertinent:
Employees in large Japanese rms, both blue collar and white collar, are not people who have applied for and been given jobs in the rm. They are people who at a very early age, usually as soon as they leave school or university have successfully applied to become members of a rm. (Dore 1987, 2021)

The normative pattern in large Japanese rms nurtures long-term employment and a steadily rising salary, where status contributes to internal skill formation and the development of the internal labour market (Ahmadjian and Robbins 2005). Large Japanese rms invest extensively in training, particularly through job rotation systems that encourage employees to become generalists, rather than specialists in any functional area (Pucik and Hatvany 1983). Kono and Clegg (2001) argue that as technological requirements become higher, a generalised career path moves into specialised elds in high-tech and new industries. The existence of this general model of training and development is conrmed in the studied companies. Host-country inuences Vietnam is an emerging, developing and transitional economy. After the VietnamAmerica War, a hard-line communist-style constitution was enacted, which formally committed the
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country to the development of a socialist economic system. However, as early as 1977, the economic strategy was clearly not working. In 1980 Vietnams GDP growth rate was -1.6% (Statistical Ofce of Ho Chi Minh City 1995). In 1986 the Vietnamese government introduced a comprehensive reform program, known as Doi Moi, to liberalise the economy from a hard-line socialist economic system to a more market-oriented one. The reform focused on ve main areas: 1) the acceptance of a market economy; 2) the adoption of an open-door policy in foreign economic relations; 3) the permitting of private ownership in all activities; 4) the dismantling and reversal of the way the industrialisation model had previously given top priority to heavy industry at the expense of agriculture and light industry; 5) the downsizing and restructuring of SOEs (Tran 1997, 1113). Although the results of the economic reforms have been very encouraging, Vietnam remains a very poor country. In 2008 Vietnams gross national income per capita was US$890, classifying Vietnam as a low-income economy based on the World Banks classications (World Bank 2010a, 2010b). Meanwhile, FDI is one of the most essential sources of investment (World Bank 2005). In the middle of a radical transformation process, the formation and implementation of new legislation, including regulations governing the status and operations of foreign rms, remain a major source of uncertainty. The subsystems (the nancial system, educational and training system, the network of business associations, the system of HRM and so on) are constantly under pressure of change and innovation (Vo 2009). The weakness and destabilisation of each constitutive element makes the business system, as a whole, fragile, incoherent and ultimately weak. Even though mass education level is high, Vietnam suffers from a signicant scarcity of highly skilled labour. An estimated 96% of the Vietnamese population is literate, and 80% graduate primary school, but the skilled labour force accounts for only 8% of the total labour force (MOLISA 2002, 7). Hayden and Thiep (2007, 74) state that only 10% of the relevant age group in Vietnam participates in the higher education system, due to a lack of available places. A chronic mismatch also exists between the output of the education system and the input of companies (Duoc and Metzger 2007; Hargreaves et al. 2001), for several reasons. First, there is strong resistance to undertaking vocational and technical training and a preference for continuing with general education which opens the door to university entrance (Beresford 1988). On the other hand, graduates from the educational system lack practical experience and skills, and therefore fail to meet employers requirements (Duoc and Metzger 2007; MOET 1997). While they are wellversed in theory, their ability to apply theory to the work situation is extremely limited. Because the current curricula are not related to practical training needs (Hargreaves et al. 2001), Thang and Quang (2007) suggest that 80% of students need to be retrained before being actually assigned to work. Second, labour market data in Vietnam are scarce (Duong and Morgan 2001). Consequently, training and education providers are not aware of the types and number of workers in demand. Third, formal and professional career guidance and counselling for students is totally lacking, which means that graduates study in elds that are not suitable for them, and later switch career paths. Under
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these conditions, the limitations of the education system create a real need for company training. The studies conducted on training and development initiatives in different economic sectors, including small and medium businesses (SMEs), state-owned enterprises (SOEs) and MNCs, conrm a positive relationship between training investment and organisational performance (see Geib 1999; King-Kauanui et al. 2006; Thang and Buyens 2008). While most Vietnamese organisations are also aware of the link between training and development and business success, they often lack the necessary monetary resources to implement adequate training initiatives (Thang and Quang 2007). This leaves employees with little option but to seek self-development through vocational schools, colleges or universities, which often fail to meet either world quality standards or the specic needs of industry; an issue that is much more pronounced in SMEs and SOEs (Friedman 2004). Research by King-Kauanui, Ngoc and Ashley-Cotleur (2006) on training initiatives in 200 Vietnamese manufacturing SMEs determined that while most provided employees with some form of training, this was largely informal and limited in terms of nancial investment, the number of training hours and the amount of training expenditure per employee. These outcomes are due to the absence of an HR department and HRM specialists and limited internal resources within SMEs (Thang and Quang 2007). Although limited, the research on the training initiatives of joint-venture and foreignowned companies in Vietnam suggests these organisations invest more in training and development initiatives than either SMEs or SOEs (Friedman 2004; Thang and Quang 2007). Foreign investors consider training and development a key strategic concern (Geib 1999; Thang and Buyens 2008), due to their recognition of the lack of skills and qualications in the Vietnamese labour market (Thang and Quang 2007). Consequently, many companies have actively sought out collaborative relations with education institutions and consultancies as a means of redressing the shortage of specic behavioural, technical and professional skills (Thang and Quang 2007). Within the limited literature, jointventures and foreign-owned companies are recognised as playing a critical part in improving the skills of the existing labour market, both through the introduction of modern training facilities and through the inuence of highly skilled expatriates (Thang and Quang 2007). Japanese MNCs training and development activities for local staff at their Vietnamese subsidiaries represent both facilitating and hindering factors in both the home and host country. In the Vietnamese environment, MNCs are faced with a dilemma: a skills shortage, and the limitations of the education and training system, which lacks focus on management and person-related skills training. This demands a high level of company investment in career development for local managerial staff. On the other hand, the unstable institutional environment and erce competition for managers have made poaching and job-hopping in order to accelerate salary and employee opportunities popular. This situation might discourage rms from investing in developing local staff. The question here therefore is how far rms are willing to go to develop their local managerial staff, considering the need to
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balance the forces of localisation and globalisation, each of which contains internally conicting forces. Methodology We utilised a case study strategy in this study due to the need to examine in detail the employment practices of companies and their relationship with broader company strategies, and because of the importance of contextualising company practices (Kelly 1999; Yin 1994). While a quantitative approach is very useful for achieving a broad overview of patterns, it cannot comprehensively capture the complexity of phenomena (Yin 1994). For the purposes of this study, a qualitative methodology represented a more sophisticated means of capturing the subtle, complex and changing ways that companies operate (Yin 1994). We conducted interviews at six Japanese subsidiaries in automotive and fast-moving consumer good (FMCG) industries. The investigated companies are coded as follows: JP Auto1, JP Auto2, JP Auto3, JP FMCG1, JP FMCG2 and JP FMCG3. Multiple interviews were held with key informants to compile information on HRM policies and practices in general, and training and development strategies in particular. The two groups of interviewees comprised: those inside the enterprise, which included the management of companies and employees on the shopoor (workplace level); and outside interviewees, which included central and local government authorities (macro level). With the rst group, the interviews included the following key themes: company prole and structure, training and development policies and practices, constraints and opportunities offered by the Vietnamese context and the mechanisms the company had developed to cope with local situations. Outside the enterprises, interviews were conducted with government ofcials at national and local levels, which provide valuable knowledge of the local environment in which the MNCs operated. In total, 97 interviews were carried out (see Table 1). The average interview took over one and a half hours to conduct. The results of interviews in Vietnam were enhanced by documentary analysis and interviews held at (or questionnaires sent to) the headquarters of the studied companies.
Table 1 Company JP Auto1 JP Auto2 JP Auto3 JP FMCG1 JP FMCG2 JP FMCG3 Total interviews conducted at workplace Interview outside companies Total Interview distribution of the case studies Interviews 14 17 14 8 11 12 76 21 97 Managers 5 8 9 3 6 3 Employees 7 7 3 3 4 8 Union 2 2 2 2 1 1

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The main purpose of the interview/questionnaire conducted at global/regional level was to identify what international HRM policies were present at this level and to what extent the companies expected them to be transferred to Vietnam. Four out of six studied rms kindly lled in the questionnaires and allowed follow-up e-mails to clarify some of their answers. The combination of data-gathering methods (that is, triangulation) is vital in the case study method for cross-checking data, and thus ensuring reliability (Yin 2003). Empirical ndings This section examines training and development in the Japanese MNCs under three categories: the extent and nature of training, training programs and the comprehensiveness of training programs. The extent and nature of training We found that in the automotive industry, training and development was formalised and centrally controlled. The subsidiaries training activities were monitored and backed up by experts from headquarters (HQs) or other countries, who might drop by for irregular quick check and x, and the activities were followed by an annual full audit. Training was one of the most important components of the JP Auto1s production system, which is audited annually on a globally scaled score. It was certainly one of the most crucial components of quality control from HQs. The use of coercive comparisons (Ferner and Edwards 1995) tightened the co-ordination process from HQs and prevented subsidiaries from diverging from the global mould. Training and development courses offered in the studied automotive rms covered both production-related and managerial skills. Quite often, Vietnamese managers were sent to Japan or other overseas subsidiaries to attend short courses and training programs. In the fast-moving consumer goods (FMCG) industry, training was production focused and occurred on an ad hoc basis (such as for production needs and the availability and convenient timing of courses offered by the company or outside training providers). JP FMCG3 reported that on-the-job training was the most common training method in the company. It mainly focused on technical workers and involved learning through the assistance and supervision of an experienced and senior employee, normally the production line leader, who helped the trainee learn some useful knowledge and skills directly applicable to the trainees production lines. One interviewed worker at FMCG1 revealed:
Since I started my job here, I have only trained briey with my direct supervisor and picked up bits and pieces from my workmates. The job is repetitive and simple enough that management thinks there is no need for proper training . . . More training to prepare me for more complex tasks would be nice.

Interview data reveal that in the automotive industry, each management staff member spent 7 to 8% of their working time annually on training programs. These companies stated that they believed that the long-term investment was worthwhile. Most importantly, they
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Table 2 Company

Training provided to managerial staff in 2009 Training time/working time (%) 8 7 7 4 5 3 Training expenditure/ employee (US$) 167 141 128 76 87 64

JP Auto1 JP Auto2 JP Auto3 JP FMCG1 JP FMCG2 JP FMCG3

Source: Company data and interviews. Note: The training budget in a particular year may not accurately reveal the whole picture of management training and development strategy of a company. The budget can uctuate, inuenced by the companies short-term business strategies.

understood that training was the key to retaining local managers. All interviewed Vietnamese managers, without exception, acknowledged that having the opportunities for further training and development in the form of foreign investment companies training and overseas training was one of the strongest inuences in their decision to work for those companies. For example, a production manager at JP Auto1 said:
Compared to other companies, such as European and American ones, Japanese companies do not offer a high level of salary. However, a lot of young people want to start their careers with us. After a few years working in [a very well-known Japanese automotive company], any potential employers would look at our employees as well trained and thus very desirable.

Interviews conducted by companies with the group regretted that turnover also conrmed this. The most cited reason for leaving the companies was the lack of training or a feeling of receiving fewer training and development opportunities than expected. The average training per employee ranged from US$64 to US$167 per annum, which compares favourably to indigenous rms, where the average training per employee of some state-owned enterprises in the same industries ranged from US$14 to US$18 per annum (Vo 2009). Companies in the automotive industry had invested a much higher amount in employee training than had those in the FMCG industry. A lower level of investment (3 to 5%) was recorded in the FMCG industry. This suggests that Japanese rms, especially those operating in global industries, had recognised the importance of employee training and had adopted proactive methods to secure a quality labour force. FMCG companies spent very little on training blue-collar workers, citing as a reason that the simplicity of the production process requires very little training. Line workers were virtually only trained for basic production techniques during their induction (see Table 2). Training programs Generally, management training programs in Vietnam must start with the very basics of business education in their curriculum. All Japanese employers provide broad foundational
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training for their staff as a basis for further training later. JP Auto2, for example developed a six-step on-the-job training model which covered the companys whole workforce. Step 1 was for the lowest level of employees, step 6 for managerial staff. The model aims to upgrade employees skills and knowledge from the very basic level; for example, step 1 covers how to complete routine, repeatable jobs under detailed instructions and regular supervision, while step 6 covered using the employees own judgement and creativity to complete tasks with limited supervision. Managers and professional/technical staff tended to undergo more external training programs than internal. When internal training was used, it was mainly on-the-job training for clerical, sales and production employees. Companies often establish a regular relationship with training providers to cater for basic training needs. Employees can choose the courses to suit their personal development needs or take them as a compulsory requirement for their current/new posts. Many of these programs are taught overseas or led by foreign experts, so that Vietnamese managers can gain international exposure and experience. Some of them are required to take international assignments as part of their training programs. One of the more advanced approaches adopted by the studied Japanese MNCs is e-learning, whereby the companys networks are used to deliver training courses to employees, allowing Vietnamese employees to access a wealth of knowledge available to the companies global workforce. However, given that the medium of instruction is computer technology, the lack of personal interaction has some weaknesses, such as the lack of instructor interaction (Banks 2004). In the Vietnamese context, some interviewed managers pointed out that e-learning might not be optimal, because the workforce might not have a strong knowledge platform to make effective use of the company global resources. Companies in the automotive industry also introduced the relatively new training concept of blended learning, which aims to incorporate e-learning with other training methods such as on-the-job training or classroom-style training (Bersin 2004; Mackay and Stockport 2006). An increasingly popular approach to blended learning involves combining both e-learning and manager-led, on-the-job training, and has proven popular with Vietnamese employees and to be more effective than a singular classroom or e-learning program. Employees can learn and apply their training more immediately in a real work environment, and can gain increased levels of motivation because the relevance of training to the job is clearly demonstrated. Blended learning also transfers the responsibility of learning to the individual, provides more immediate feedback from the supervisor and offers greater exibility in the pace and timing of delivery (De Jong and Versloot 1999). Besides the formal training and development channels, all companies stated that they were aware of and used informal cultural aspects of management development to create a common language and shared attitudes. Japanese corporations encourage employees to identify themselves within the corporation by emphasising the companys philosophy. In addition, e-forums and e-networks, which were very popular in the studied rms, contribute greatly to create a global culture and transfer soft skills.
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In the Vietnamese market, companies are faced with a dilemma: they can invest heavily in the training and developing of their management staff, but could thereby risk seeing them leave the company (newly equipped with skills which make them more desirable in the market) for higher paying employers in many cases, a competitor company. Because skills are scarce within and across industries, job-hopping to accelerate salary is popular. This might force employers to think twice before determining their training budget. JP Auto3 claimed that they were unwilling to bear the training costs for managers because of the perception that such employees were highly individualistic and inclined to switch jobs whenever a more attractive opportunity becomes available. Within Vietnam, an industry is narrow enough for all key talent to be widely known to insiders. The top managers of the studied rms could easily name the top/key performers in other rms; the competition for high-quality staff was erce. This study also reveals that preventative strategies had been applied to retain trained managers within the companies. The studied rms provided training and education programs and/or nancial support for managers self-education on the condition that they would be bound by a legal contract to stay with the company for at least ve years after the program. JP Auto2 offered highly rm-specic training courses (such as the companys New Circle Leader, Training Within Industry, Company Philosophy Higher Level and so on), which greatly improved the chances of being acknowledged and promoted within JP Auto2, but were of little help for those persons seeking jobs elsewhere. No normal degree or certicate had ever been given. JP Auto2 thus limited the ability of their employees to use the knowledge gained in their company to advance their positions in other companies. Comprehensiveness of training programs In both automotive and FMCG industries, training programs in the studied Japanese rms focused heavily on technical knowledge and neglected people management skills. For example, the situation in JP Auto3 had hardly changed since 2004, when a former HR manager said:
The focus of [JP Auto3] training is technology which serves production activities. A large number of technicians are sent overseas every year, to Taiwan, Thailand and Japan. However, there is no budget for people management skills. Ive been the one person in the company who received a non-production training course. They sent me to Japan for CCS [customer and community satisfaction] training.

Another feature that all the investigated companies shared was job rotation. Even though some limited movement had been recorded (for example, staff from the human resource management to the public relations department), such movement was designed to ll the human resource gap and for the convenience of the company, rather than as an intended rotation. Rotation for workers in production lines was much more popular. Vietnamese managers in these companies are often seen as stuck in narrow specialities. JP Auto2 serves here as an example. An ethnocentric approach in global stafng strategy restrained JP Auto2 from developing their local management staff. The rotation rule, which
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requires that a person not remain longer than three years at their post, was applied to senior management and upper levels only. In effect, this eliminated the possibility of rotation for the local managerial staff. JP Auto2 showed a strong trend towards developing Vietnamese managerial specialists rather than generalists. These practices contrasted with what was recorded in their headquarters in Japan. In the literature, Pucik (1984) comments that Japanese managers generalist career path is probably one of the unique features of Japanese organisations; while Ouchi (1981) conrms that all managers rotate through all areas of the business. Under pressure because of the lack of expertise in the Vietnamese labour market, companies are forced to invest extensively in their managerial staff in order to upgrade their skills. In order to obtain a higher return on their investment in training in the context of high turnover and poaching, companies develop counter-strategies, such as legally binding their staff for a certain number of years after providing training or rm-specic programs. The Japanese rms focused on production-related training and one area of mastery. Discussions and conclusions While operating in more than one country, MNCs confront various institutional pressures which can impinge on the transferability of their HRM practices (Ferner and Quintanilla 1998; Harzing and Noorderhaven 2008). This study examines the transmission and adaptation of the host countrys HRM policies and practices within MNCs subsidiaries in a developing host country, in this case, Vietnam. The research uncovered several complexities in the process of transfer, reecting the constraints represented by Vietnam acting as a host country. As far as the home countrys inuence is concerned, the ndings from this study show that the distinctiveness of the Japanese models of training and development for local managerial staff practices are considerably refracted and diffused in the transfer process. Key elements of the typical Japanese training and development system (such as job rotation and managers training towards a generalist career path, see Ouchi 1981; Pucik 1984) were not present in the Vietnamese subsidiaries. However, interviews with Japanese expatriate managers and responses to questionnaires sent to the studied rms HQs conrm that these practices were exercised in the mother companies in Japan. Most literature on the transfer of MNCs HRM policies and practices assumes that superior HRM practices are a signicant actual or potential source of competitive advantage for foreign investment rms over indigenous rms (for example, Taylor, Beechler and Napier 1996). Even if it can be demonstrated that a particular set of HRM practices contributes signicantly to superior performance in home-country operations, an MNC must determine whether it wishes to transfer these practices at all. This paper argues that MNCs may consider the transfer of HRM policies and practices in itself unnecessary for their successful operation in Vietnam; in fact, the costs are thought to outweigh the likely benets of transfer. The sector emerged as a key variable in explaining variations in HRM patterns. More investment in training and development policies and practices were recorded in automotive
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than in FMCG industries. This nding concurs with other authors works, which argue that foreign subsidiaries in global industries show a higher degree of interdependence with headquarters, due to the need for integration and co-ordination; meanwhile, those in multi-domestic industries tend to be more localised (Rosenzweig and Singh 1991). These ndings also conrm that institutional pressures vary sectorally, which adds greater complexity to interpretations of the contextual environment, while also accounting for variations in patterns of HRM practices. The ndings of this study reveal some critical features of a weak or permissive host business system. This type of host country imposes a minimal formal mechanism of constraint on the transfer of managerial technology conducted by MNCs. Legal regulations that appear to impose constraints can sometimes be avoided or minimised by MNCs due to weak or ineffective law enforcement. The Vietnamese Labour Law 1992 emphasises the importance of on-the-job training and stipulates that:
an employer shall establish a job training system, set aside funds for job training and use them according to the regulations of the State, so as to be able to train its employees systematically in the light of its circumstances.

In theory, the law provides scope for the integration of training into business strategies and HRM systems. However, this study points out that MNCs are not necessarily willing to shoulder these responsibilities, as in the case of the FMCG industry. Without imposing a base training budget level and establishing proper inspecting, monitoring and enforcing mechanisms to ensure implementation of the law, ultimately, the level of investment in human development still depends on each companys goodwill. On the other hand, an informal mechanism of constraint might present challenges and suggests a complex situation for MNC operations. Such hindering factors do not come from a wall of legislation; rather, the greatest burden emerges from weaknesses that exist in the business system as a whole, and particularly the subsystems that comprise it. Specically, the instability of the institutional environment, the low quality of the education system, the weak associations that exist among employers groups and fragmented bargaining practices encourage employer and employee opportunism, particularly poaching and job-hopping. While measures may be introduced by MNCs to counter the skills decit, local institutional pressures such as these may act to mitigate their effectiveness. From the MNC perspective, this necessitates a very high level of awareness of institutional weaknesses that may place constraints on the context generalisability of HRM practices (Geppert and Williams 2006). A high level of exibility is also needed as a means of ensuring local adaptation of the implementation of managerial practices transferred from the home country (Harzing and Noorderhaven 2008). The pre-existing research in this eld points out that permissive host-country environments impose fewer constraints on rms, and facilitate the introduction of country-oforigin practices (see for example, Whitley 1992). This paper furthers the argument by adding that while the liberalisation of the Vietnamese economy has allowed for greater levels of cross-border business activity, Vietnams status as a weak host country does not
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necessary imply fewer constraints and a smoother transfer of HRM practices. On the contrary, a permissive host country still imposes signicant constraints that inhibit MNCs ability to maintain unique and distinct HRM practices. Last but not least, for HR practitioners, the ndings of this study indicate that there is a real need for companies to focus their budgets on training and development. Due to the weaknesses in the education and vocational training system, the workplace is expected to be the major source of skill formation and training in Vietnam. This study indicates that the onus has now been placed on MNCs to intensify training efforts to upgrade the quality of their workforce. Similar ndings have been reported by Geib (1999) and Thang and Quang (2007), who suggest that MNCs play a crucial role in the upskilling process, and Thang and Buyens (2008), who highlight training initiatives as a key strategic concern for MNCs. This research was conducted within a nite timescale and is subject to some limitations in research methodology and scope. First, it concentrates only on the Japanese subsidiaries of two industries. In general, it witnesses an attempt by companies to transfer relatively constructive policies and practices. However, if the research had investigated more labourintensive industries (textiles, footwear and so on) and/or companies of different nationalities, especially those of Taiwan, Korea and Hong Kong, which are notorious for their cost-reduction strategies, it might have gained a different picture. Furthermore, by adopting a qualitative method, this research does not rely on a large sample, as would occur with a survey approach, and thus broad generalisation to a large number of MNC subsidiaries will carry certain risks.
Anne Vo (PhD, De Montford Univ., UK) is a senior lecturer at the School of Management and Marketing, University of Wollongong, Australia. She researches and publishes in three main areas: the transfer of multinational companies HRM policies and practices across borders, the transformation of HRM systems in developing countries, and gender equity. Zeenobiyah Hannif (PhD) is a lecturer at the University of Technology Sydney, Australia and senior research fellow at the Centre of Occupational Health and Safety Research at Auckland University of Technology, New Zealand. Dr Hannif has researched and published extensively on human resource management, particularly in call centres and multinational corporations. Other research interests include occupational health and safety, and precarious employment.

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