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Expatriates
Expatriates and the and HRM
institutionalisation of HRM practices
practices
7
Thomas Steger
Faculty of Law, Economics and Social Sciences, Received June 2009
University of Erfurt, Erfurt, Germany Revised September 2009
Accepted November 2009
Rainhart Lang
Chemnitz University of Technology, Chemnitz, Germany, and
Friederike Groeger
Diaverum GmbH, Munich, Germany

Abstract
Purpose – The purpose of this paper is to provide an in-depth description of the process of
institutionalisation and development of human resource management (HRM) practices in subsidiaries
of German multinational companies in Russia.
Design/methodology/approach – The study is based on nine case studies of Russian subsidiaries
including 26 interviews (13 German expatriates and 13 local employees), participative observations
and document analyses. The data analysis follows a qualitative methodology.
Findings – The study provides four patterns of institutionalisation processes of HRM practices.
They stress the importance of personal, institutional and contextual factors for the institutionalisation
of HRM practices. Moreover, the key role of expatriates with their specific value orientations and
behaviour in this process is highlighted.
Research limitations/implications – One suggestion for further research would be to replicate the
study quantitatively (in order to get more cases) as well as qualitatively (to get broader inter-cultural
data). Furthermore, it would be valuable to take a more long-term focus to examine the described
institutionalisation paths in the long run.
Practical implications – The paper highlights the importance of personal characteristics of
expatriates that are often underestimated in companies’ selection procedures. Moreover, the
connection between the parent company’s strategy and the pattern of institutionalisation of HRM
practices should make the company management reflect upon the preferred pattern before taking the
basic decisions. Taking into account the strong economic relationship between Russia and Germany
and the expected further development of joint activities, the paper provides also important insights for
the use of German expatriates in Russia.
Originality/value – This paper improves our comprehension of the complex process of
implementation and institutionalisation of HRM practices abroad. Moreover, it contributes to the
HRM literature as it employs the concept of “transnational spaces” as an alternative and additional
approach to explain this process. The resulting patterns may not be restricted to the Russian case only
but should be adaptable to other emerging countries as well.
Keywords Human resource management, Russia, Multinational companies, Managers,
Qualitative research
Baltic Journal of Management
Paper type Research paper Vol. 6 No. 1, 2011
pp. 7-24
q Emerald Group Publishing Limited
1746-5265
DOI 10.1108/17465261111100923
BJM Introduction
6,1 The literature on international human resource management (HRM) usually considers
expatriate managers as key actors to transfer and establish HRM practices, norms and
standards in foreign subsidiaries. This also includes the implementation of respective
structures to coordinate and control the subsidiaries in line with the HRM strategy of the
parent company. However, due to a strong focus on transfer and adoption of proved
8 practices, the theoretical concepts and empirical studies have partly underestimated that
the expatriates with their values and interests become much more vital in contextual
settings where imported management instruments and practices often have a
completely different meaning and impact beyond original expectations. This also
holds true for HRM practices (Minbaeva et al., 2003; Myloni et al., 2007; Peterson, 2003;
Ferner et al., 2005; Delmestri and Walgenbach, 2009), although some tendencies of
convergence of HRM practices in Central and East European (CEE) countries towards
general European trends can be identified (Brewster et al., 2000, 2004; Larsen and
Mayrhofer, 2006). The special conditions of CEE capitalism (Bluhm, 2007) as well as the
political, economic, social or cultural context for the activities of foreign subsidiaries in
Eastern Europe and Russia (Bakacsi et al., 2002; Domsch and Lidokhover, 2007) have
also led to a special contextual situation for the transfer of management concepts and
HRM practices (Holtbrügge, 1996; May et al., 2005; Meardi et al., 2009), for managerial
and organisational learning (Engelhard and Nägele, 2003), for employment relations
(Müller-Camen et al., 2001) or for the activities of expatriates in cooperation with country
managers (Groeger, 2006).
Moreover, the development of HRM practices in subsidiaries of multinational
companies (MNC), joint ventures or firms with other forms of foreign participation
seems to have a strong impact on the further process of institutionalisation of HRM
practices in transforming countries of CEE (Cyr and Schneider, 1996; Edwards and Lee,
1999; Warhurst, 2000). This becomes particularly visible if the foreign assignment is
strategic and supported by expatriate managers.
The main contributions on HRM practices in Russian subsidiaries of MNC have
focused on the description of the state of the art and their contingencies, while ignoring
more or less the process of transfer, modification and emergence of practices within the
special contextual setting. Moreover, the influence of expatriate managers, their
personal values, intentions, and activities seem to be underestimated in the process of
forming and changing HRM practices.
Drawing on these deficits, we aim to provide an in-depth description of the process of
institutionalisation and development of HRM practices in subsidiaries of German MNC in
Russia. We perceive them as processes of emergence and institutionalisation in
transnational spaces, whereby expatriate managers with their values, interests,
qualifications and career ambitions play a decisive role. In the first section, we critically
review the existing literature on HRM practices in Russia, particularly in foreign
subsidiaries, and derive some key deficits in this respect. Then, we design the theoretical
basis of our analysis mainly drawing on ideas developed by New Institutionalism and
European Institutionalism. On the basis of nine in-depth case studies of Russian subsidiaries
of German companies, we develop four distinctive patterns of institutionalisation of HRM
practices in this context. Russian subsidiaries of German multinationals have been chosen
since they stand for an important part of East-West co-operation of the two biggest
economies not only around the Baltic Sea, but also in Europe. In contrast to their importance,
studies on subsidiaries of German multinationals are still rare. We end up by summarising Expatriates
and critically discussing our main findings. and HRM
practices
Literature review
Since the early 1990s, HRM practices in Russian companies have been subject to a
number of empirical studies, targeting the situation in state-owned enterprises and
joint ventures and, later on, new private firms. Since our focus lies on subsidiaries of 9
MNC, we concentrate hereafter on contributions that deal with the transfer and
institutionalisation of HRM practices in these kinds of firms in Russia.
With respect to the effects of Western HRM concepts, Welsh et al. (1993) analysed
how bonuses, directive leadership instructions and team meetings for continuous
improvement influence the performance of Russian factory workers. Their results show
that instruments like team meetings, popular in the West, did not substantially impact
on motivation and performance while directive leadership seems to be more influential.
Since the experiment has been carried out in two Russian enterprises without Western
ownership, no stable context of Western influence can be expected. This in turn must be
stated for the case presented by Holtbrügge (1996), who analysed the conflicts within the
corporate cultures of German-Russian joint ventures. As a result, the personality of
German managers and their early assumptions about values and norms of Russian
employees seem to influence further developments, including culturally based
differences in time perceptions and forms of conflict resolution between expatriate
managers and local employees.
Between 1995 and 1999, Michailova (1998, 2000, 2002) conducted several in-depth case
studies in Russian firms with Western participation. Focusing on reasons for
organisational inertia and barriers for change and transformation of management
practices, she pointed to deficits in the communication between partners based on
divergent values, attitudes and behaviours. Camiah and Hollinshead (2003) followed this
path, dealing with the same problems of effective co-operation between “new” Russian
managers and Western expatriate managers. The authors put more emphasis on the
adaptation of Western managers to their working environment in Russia in order to
identify factors prejudicial for effective teamwork. Moreover, they point to the necessity of
a modification of proved Western management concepts before using them in Russia.
Moreover, Fey et al. (2004) found that the transfer of concepts that were well controllable by
headquarters, e.g. compensation, results in a greater degree of adaptation and similarities
across countries, while training or internal communication skills seem to differ.
Smale and Suutari (2007) point to the influence of the relational context, formed by
factors like trust or power dependence, the social-institutional context and the absorptive
capacity of a firm on the knowledge transfer through expatriates. Underlining the
relative autonomy of the expatriates, the authors identify factors of stickiness impeding
knowledge transfers in the field of HRM.
Summing up, the above-mentioned studies have not only referred to cultural
differences in values and mentalities between Western (foreign) and Russian managers
but also to economic, political, ideological, religious and social systems in which they
grew up as important for the processes of change and adaptation of HRM in Russia
(Michailova, 2000). Since the cultural differences often are enormous, the working
capacity of the managers has been absorbed to a greater extent by solving the respective
problems (Suutari, 1998). The cultural differences and the special environmental
BJM conditions for HRM activities in Russian firms (Domsch and Lidokhover, 2007) seem to
6,1 limit the effects of transferred HRM practices. Moreover, Russian and foreign managers
found themselves in a radically new economic and political situation in which cultural
assumptions from West and East need to be continuously adapted and renegotiated
(Camiah and Hollinshead, 2003), which leads to the underlining of cooperation and
communication as a key for changes.
10 Nevertheless, the above-mentioned studies have a number of shortcomings. First,
their focus often lies on selected HRM practices as recruitment, empowerment,
teamwork, or leadership behaviour. If a broader number of practices are addressed,
e.g. in the studies of Fey et al. (2004) or Shekshnia (1998), the existing practices were
only described, contrasting the situation in the West and/or giving advice for
improvements of HRM in line with Western standards.
Second, the studies hardly focused on the modes of transfer, implementation or
institutionalisation of the new practices. Only in the case of Michailova (1998) a
long-term process-like perspective is applied. Since Engelhard and Nägele (2003) have
focused on learning processes, a process perspective can be assumed, however, the
authors are more concerned with deficiencies in management skills and learning
barriers. This holds true also for the study by Smale and Suutari (2007).
Third, the focus of explanation mostly lies on national cultural differences, values or
attitudes of managers and employees, with some reference to the legacy of the old
Soviet system and the respective HRM practices (Welsh et al., 1993; Fey et al., 2004).
If the power relation between the partners is addressed, it is often considered one-sided
or static, except for some contributions by Michailova. All in all, there is a lack of
alternative theoretical reasoning.
Fourth, while contextual factors are partly included, most studies have missed to
address the special character of countries still in transition. They are merely treated in
a static way, and their background was considered a limitation from “outside” to the
introduction of modern HR management practices (Domsch and Lidokhover, 2007).
Fifth, there is a dominance of studies focusing on the activities of Anglo-American
and partly Scandinavian firms. Meanwhile, the situation of German subsidiaries seems
to be under-researched, taking into account the overall economic importance of the
cooperation between Germany and Russia.

Theoretical background
Looking at existing theoretical concepts and empirical results of the process of
institutionalisation and implementation of HRM practices in subsidiaries of multinational
firms, a number of explanatory factors have to be taken into account. In order to address
the above-mentioned shortcomings, we take, in contrast to other studies, a process
perspective. We distinctively focus on the whole range of HRM practices: from
recruitment, development and remuneration to teamwork, leadership and outplacement,
and the respective instruments. By this, we aim to tackle shortcoming one mentioned
above. Moreover, we concentrate on concepts that allow to include the influences of
existing and changing power relations as well as of cultural aspects and, thus, enabling to
contextualise the process of institutionalisation, beyond a simple contingency perspective
or “classic” country comparisons.
Figure 1 shows the process of transfer and institutionalisation of new HRM practices
as influenced by the process and especially the modes of transfer, the various forms
 (3) Contextual factors: Expatriates
• National Culture: Russia (vs Germany) and HRM
• Transformational settings: Institutions at the macro level
• Organizational contingencies: Size, branch etc. practices

11
(5) Process of (6) Patterns of HRM
Institutionalisation practices and
of HRM practices established order
(4) Modes of transfer • Adaptation • Imitative order
of HRM practices • Modification • Recombinant order
• Coercive • Decoupling • Corporate battlefield etc.
• Mimetic • Façade building and
• Professional • Learning • Russian
• Recombination • German
• Recreation • Mixed/Self-standing
• Emergence
etc.

(1) German parent (2) Expatriates

• Values Figure 1.
company
• Country experiences The process of transfer
• Strategy
• Career ambitions and institutionalisation
• Power
• Relations to subordinates of HRM practices
• Reputationin parent company

and processes of institutionalisation within the CEE subsidiary, and the established
system or order. Moreover, the process itself is influenced by contextual factors
(e.g. national culture), organisational factors (e.g. orientation, power and strategy of the
parent company), and personal and social factors established around the expatriates,
their power position and sources, values, career ambitions and relations to their
subordinates. We numbered the different boxes according to the following description in
the text and highlighted the main focus of our empirical analysis, i.e. the process from
transfer to established order:
(1) The concepts of transfer and establishment of HRM practices in subsidiaries of
foreign companies are usually based on the assumption of an asymmetric
division of power with parent companies having a strong position to transfer their
practices to the subsidiaries (Gooderham and Nordhaug, 2006; Paik and Sohn,
2004, Ferner et al., 2005). With reference to principal-agent-theory, it is argued to
be a necessary and useful strategy for subsidiary control (Yu et al., 2006).
(2) Those theoretical positions, however, obviously fail to explain the differences in
HRM practices between parent companies and subsidiaries in different settings
(Ferner et al., 2005; Farndale et al., 2008), as they systematically underestimate
the active role of expatriates and other relevant actors, their interests, values,
career ambitions as well as the expatriates’ country experiences and their position
within the subsidiary (Peterson, 2003; Minbaeva et al., 2003; Myloni et al., 2007).
Moreover, it should be asked about the reputation of the expatriate in the parent
company. Parts (1) and (2) of the concept clearly relate to shortcoming three.
BJM (3) The context of transformation countries in CEE must be considered leading to an
6,1 enormous increase of complexity for expatriate management. The special
conditions of CEE capitalism (Bluhm, 2007) as well as the political, economic and
social context create what Kostova (1999) calls “institutional distance” between
parent (Germany) and subsidiary (Russia) countries, which influences
the transferability of practices. In addition, the distribution of power between
12 the different actors is influenced by the national culture as well as by the corporate
cultures of the parent company and of the subsidiary as contextual settings.
Regarding CEE countries, a low expectation of participative behaviour (cf. GLOBE
results for those countries, e.g. Bakacsi et al., 2002 as well as findings from other
research, e.g. Michailova, 2002) involves a high degree of authority and influence
attributed to CEOs and to foreign managers. So, an increased influence of the
personal interests, experiences and relationships of those actors on the local
situation as well as on the ongoing processes of transfer and institutionalisation of
HRM practices can be stated. The position of expatriates and the strategic interest
of parent companies also depend on contingency factors such as subsidiary size or
branch. This part of the concept particularly addresses shortcoming four.
(4) Looking at the process of transfer, new institutionalism suggests coercive and
mimetic processes and professionalisation as important modes for the spreading
out and the establishment of management practices (DiMaggio and Powell,
1983). Scott (1987, 1995) pointed to additional mechanisms of structural
adaptation to environmental expectations such as “imprinting of structures” or
“bypassing”. Instead of a transfer and implementation of practices enforced by a
parent company, the practices are transported by values and norms of influential
actors, e.g. expatriate managers.
(5) A process of institutionalisation of practices takes place when the newly established
rules and practices become accepted, adopted and used by other local actors and, at
the same time, are recognised as generally accepted practice for subsidiaries by the
parent company. In addition, the institutionalism approach argues that
organisations and parts of organisations have the potential for decoupling and
building façades of legitimacy (Meyer and Rowan, 1977). In this respect, the
institutionalist approach has proved to be helpful to understand the transfer and
diffusion of management practices and the related processes (Ferner et al., 2005;
Tempel et al., 2005; Tempel and Walgenbach, 2007; Delmestri and Walgenbach,
2009), particularly in the context of CEE countries (Lang and Steger, 2002).
However, if a decisive role of active actors like expatriates or influential local
management is assumed, the above concepts seem to be too narrow, and lack
necessary explanations for different patterns of HRM practices emerging in the
same contextual setting and the same parent companies. Consequently, a need for
some broader explanatory approaches has been stated (Clark and Geppert, 2002;
Müller-Camen et al., 2001; Tempel et al., 2005). Based on earlier ideas about different
types of organisational reactions such as resistance against institutional forces
(Oliver, 1991), the concept of “transnational social space” (Morgan, 2001) seems to
be an appropriate approach to our topic. It assumes a higher degree of freedom for
local and foreign actors involved in the process of establishing new HRM practices.
The processes of transfer, adaptation, modification, re-interpretation,
re-combination, re-creation, or even emergence of HRM practices are therefore
 influenced by actors’ intentions and personal interests. In sum, parts (4) and (5) of Expatriates
the concept distinctively tackle shortcoming two. and HRM
(6) On this background, Clark (2005) developed a frame in which structural practices
asymmetry between East and West and the respective orientations lead to optional
patterns within the process of cooperation. The Western orientation to local
management can be characterised as varying between an exploitative-ethnocentric
and an exploratory-polycentric approach or strategy. By these terms, the 13
concept relates to Perlmutter’s (1969) ideal types “ethnocentrism/exploitation” and
“polycentrism/collaboration” as well as to some prominent considerations in the
literature on organisational learning (e.g. explorative vs exploitative learning –
March, 1991). While the exploitative-polycentric orientation is based on
ethnocentric values, such as superiority of their own ideas and preferences,
the exploratory or collaborative orientation is culturally sensitive, acknowledging
the values, expertise and experiences of the local staff. It can be assumed that the
latter approach supports a wider process of exchange and negotiation within the
transnational space, and finally gives room for the evolution, and emergence of new
practices. Accordingly, the orientations of local managers in CEE countries to
foreign collaborators may vary between active acceptance of new Western
knowledge, concepts, and practices, passive acceptance, passive non-conformity,
or active opposition. The possible eight combinations emanating from this can be
described as process patterns or as results of the introduction process of new
HRM practices. Clark (2005) describes “recombinative transnational order”
(i.e. combination of exploratory polycentrism with active acceptance), “imitative
transnational order” (i.e. combination of exploitative ethnocentrism and
active acceptance), and “corporate battlefield” (i.e. combination of
exploitative-ethnocentrism and active opposition) as most common patterns.
Although this concept has been developed for joint ventures or transnational
institutions (Djelic and Quack, 2008), with more powerful local management or
partners, an application to parent subsidiary relations seems to be appropriate, even
if the institutional or cultural distance between the countries is high, as in our case.

Methods
In order to explore the process of institutionalisation of HRM practices in Russian
subsidiaries of German MNC and, thus, to particularly tackle shortcoming five, this study
is based on the analysis of nine case studies. With the help of interviews with different
actors, participative observations as well as the analysis of company documents we
focused on aspects such as the characteristics of the expatriates, the situation of the
subsidiary, the strategy and behaviour of the parent company regarding the subsidiary
and the expatriates, the characteristics and amount of knowledge transfers between parent
company and subsidiary, and the characteristics of the HRM practices of the subsidiary.
The nine case studies comprised one representing office, four smaller subsidiaries
(15-50 employees) and four larger subsidiaries (60-250 employees). Eight of them were
located in the Moscow region, one in Voronezh. Between May and July 2004 one
co-author took a total of 26 interviews – 13 expatriates and 13 local employees. All
expatriates had either a position on the first level (CEO) or on the second hierarchical
level (head of department or deputy CEO) with exclusively commercial background.
HR managers were not included since, where available, those were all local managers.
BJM Eight expatriates had grown up in West Germany, five in East Germany (the former
6,1 GDR). With only one exception, all expatriates were male.
The interviews followed the concept of a problem-focused interview that enables both
to concentrate on certain problem aspects and to allow respondents to give their personal
narrations (Groeger, 2006). The interviews with the expatriates were taken in German
and lasted between 90 and 180 minutes, while the interviews with the Russian local
14 employees were taken in English or German and lasted between 30 and 90 minutes.
Since the co-author was familiar with the Russian language, she was able to give
additional information or to ask additional questions in Russian. Table I summarises the
main characteristics of the case studies.
Company visits were feasible in all cases. In some companies, the co-author was even
allowed to have some additional conversations, which were completed by March 2005.
Moreover, in the Voronezh subsidiary she could make some participative observations
(e.g. to accompany a candidate interview and to follow the employees’ daily work). The
document analysis included some firm advertising material, internet presentations,
internal notices, internal presentations and organisational diagrams. The knowledge of
the Russian language and culture proved to be rather helpful in this context, particularly
facilitating an open communication with the interviewees and several observations in
the subsidiaries.
All interviews have been fully transcribed. The analysis of the data followed a four-step
procedure: first, the interviews were coded according to the categories developed in our
conceptual model (cf. Figure 1 and the respective discussion) and some additional topics
particularly mentioned by the interviewees (e.g. expatriates’ reputation in the parent
company). This means, we investigated each interview for any indices that describe how
those categories are worked out in the respective case. Second, each case study was
described and condensed separately. For this purpose, the information collected in Step 1
was ordered along the nine case studies. Moreover, some additional data, e.g. notes taken
from the participant observation or the document analysis, was added. By this, we
continuously improved the distinctiveness of each case’s own “story”. Third, the nine case
studies were crosschecked to identify some similarities and differences between them.
This resulted, fourthly, in four patterns of institutionalisation processes of HRM practices
to be described in the following section.

Findings
Pattern 1 – our man in Moscow!
An expatriate with strong references to and long-standing experiences in Russia stands
in the core of this first pattern. Often he has been socialised in the former GDR. His career

Medium-sized Small Represent.

company company office
Company A B C D E F G H R

Number of expatriates at the time of the case study 6 6 1 20 1 1 2 1 2

Number of expatriates interviewed 3 2 1 1 1 1 1 1 2
Table I. Hierarchical level of the expatriates interviewed 1/2 1/2 1 2 2 1 2 1 1/2
Characteristics of Number of local employees 250 250 80 60 30 50 17 20 23
the case studies Number of local employees interviewed 3 0 2 1 2 1 1 1 2
ambitions are relatively low since he has already reached the hierarchical top level and Expatriates
intends to remain in Russia in the long run. It is not surprising that he is well integrated and HRM
in the subsidiary and his employees consider him as “one of us” (cf. box 2 in Figure 1).
There is obviously no need for façade building on the side of the local staff towards the practices
expatriate. Against the background of a young and relatively small company the climate
is rather informal and familiar, which can be considered well adapted to the local
employees’ cultural expectations (3): 15
At least once per week we also sit together with all employees [. . .] usually on Friday at
2:30 p.m., silence, before they leave, half an hour. Then, I say what I was not happy about,
I say where I perceive the problems to be; I say what we have renounced. Well, we are quite
close together because we are still quite familiar with each other (Expatriate/Company H).
The parent company’s orientation can be considered explorative: although there is a
distinctive interest in the Russian market, its leadership style is quite loose and “laissez
faire”. Transfers do not really play an important role. The parent company rather
concentrates on immaterial aspects and smoothly tries to convince the subsidiary
management to adapt (1).
The expatriate has a considerably strong reputation in the parent company – he is
the one who stands for the Russian business and its success. So, the expatriate does not
need to build up any façades towards the parent company. He rather acts as a
“translator” who is entitled to explain the parent’s executives how Russia functions:
[. . .] because there is nobody else who could report about Russia. He ,the expatriate. was
indeed the only one. Then they open up their ears, [. . .] when he is talking about his experiences in
Russia (Exp 2/R).
Consequently, the HRM practices of pattern 1 are considerably Russian, i.e. there is
rather continuity of traditional practices than institutionalisation of new ones (6). This
situation, nevertheless, is even perceived appropriate by the parent company. So, the
established order may be perceived rather stable and traditional since no distinctive
attempts can be identified to fundamentally change the current, inherited practices.
The success of this kind of HRM is usually rather good as it fits with the local staff’s
cultural values and expectations. However, it also involves the risk of a too easy way of
life and, therefore, limited success of the company. Along with the suffering of the
overall performance, the reputation of the locally adapted management practices tends
to erode which may ultimately lead to a radical change of the parent company’s policy
about Russia.

Pattern 2 – our master’s voice!

The characteristics of the expatriate of pattern 2 are rather opposite to the previous one:
his reference to Russia is low and his experiences in the country are limited. He perceives
Russia first of all as a kind of stepping stone for his career. Consequently, he is loosely
integrated in the subsidiary. The local employees consider him predominantly a
delegate of the parent company and eventually an expert with important know-how
(cf. box 2 in Figure 1). Given the fact that the subsidiary is still in an early phase of its life
cycle (3), his expertise is highly acknowledged.
The parent company’s high interest in the Russian market and exploitative
orientation (1) lead, on the one hand, to a rather strict leadership style and, on the other
hand, to a broad variety of supporting transfers (e.g. intensive training of salespersons).
BJM Sometimes those transfers are accompanied by a high number of short-term expatriates
6,1 who are entitled to establish the different functions of the (new) company with high
velocity (e.g. case D). The implementation and institutionalisation of those new practices
is promoted by imposition, incentives, and persuasiveness (4):
The first thing you have to communicate to the people, you must give them a vision what they
are working for. You take them by the hand, fly with them to any place and you show them
16 what they are working for [. . .] Particularly during the starting phase we got them all (Exp/D).
The employees’ reaction is somewhat ambiguous: on the one hand, they gratefully
acknowledge the diverse incentives and partially adapt their behaviour accordingly.
On the other hand, we can identify a certain trend to build up some façades towards the
expatriate and his expectations (5):
I started to work with this German company and from the first day on I was taught order and
behaviour. I am fully satisfied with that. I do not feel bothered by anything (Local employee 1/E).
The expatriate enjoys a good reputation in the parent company although he does not
hold a higher position and although he seems to be exchangeable at any time. He does
not need to engage in façade building towards the parent company.
The institutionalised HRM practices in the subsidiary are by far “copies” adopted
from the parent company and, therefore, look rather German (6):
We have some relatively loose manners here [. . .] everybody talks to everybody, the country
manager does not ignore anybody and the area managers does not either [. . .] We also want to
openly perform this, that’s just our mentality that we have not to make any differences.
Nevertheless, it is clear that I possess a company car and it is clear that I receive a higher salary
(Exp/D).
The established order can be perceived imitative transnational, however, if opposition
among the local staff occurs a real battlefield may develops (Clark, 2005). The success of
this kind of HRM is limited since in spite of the great effort any quick positive results are
hardly to be found. The behavioural patterns of the local staff often turn out to be little
changeable. Nevertheless, even when the overall company performance remains weak
this will not lead to a fundamental change in strategy. It rather gets the parent company
to exchange horses, i.e. to send a new expatriate to effectuate a turnover (in a fairly
similar way).

Pattern 3 – managing the crisis with the help of German know-how!

With pattern 3 the expatriate’s reference to Russia is low as well, although he disposes
of some experience in the country (cf. box 2 in Figure 1):
I am long enough in the region that I can comprehend the Russian values. But this does not
always mean that they are mine (Exp 2/B).
A constitutive aspect of this pattern is that the expatriate enters the subsidiary in a
crisis situation (3), holding a distinctive mandate from the parent company. So, his
career ambitions are still strongly developed. He is more or less well integrated in the
subsidiary, since local staff quickly recognises that their future is fairly dependent on
the expatriate and his (future) actions.
Similar with pattern 2, the parent company’s orientation must be perceived
exploitative and it exerts a rather strict leadership style towards the subsidiary,
mainly due to the crisis the company undergoes (1). Transfers from the parent to the Expatriates
Russian subsidiary are strong and diverse (e.g. the introduction of a German styled and HRM
wage system). On the one hand, the implementation of the transferred ideas and
practices is based on imposition (4): practices
This is not a “should-be event” and not a “would-like event” either. It is a “must event”! (Exp/D).
On the other hand the local employees, at least for a short period and due to the crisis 17
situation they experienced, also seem to accept the superiority of Western concepts and
freely imitate them. This, however, is also paralleled with a clear tendency to build up
façades towards the new foreign executive (5).
The reputation of the expatriate in the parent company is somewhat conflicting since
he often is a trouble shooter hired from outside the firm. Moreover, the parent’s optimism
about the Russia project was considerably decreased by the crisis. Nevertheless, there
seems to be no need for the expatriate to build up any façades towards the parent
company.
The implemented HRM practices are clearly oriented towards the German
requirements (6). On the side of the expatriate a distinctive black-and-white perspective
can be found in this context:
I recognise that for instance my Russian employees do not like talking about problems. It is
often the case that you must force them to do so [. . .] But this seems to be a Russian problem
[. . .] (Exp 2/B).
As a result of this great dedication, a certain success in the HRM sector can be identified.
The established order can (still) be perceived imitative transnational (Clark, 2005).
However, success rather seems to be on a short-term level and mainly forced by the
situation that is characterised by a deep crisis of the subsidiary and by strong pressures
from the parent company. If the subsidiary survives, it is highly questionable whether
the (imposed) HRM practices will endure in the long run since they are hardly grounded
in the local cultural framework.

Pattern 4 – you need to compromise!

The expatriate of pattern 4 takes a kind of average position as both his references to
Russia and his experiences in the country are on a medium level. The same can be said
about his career ambitions. His behaviour is often characterised by a tendency to find a
compromise between conflicting interests (cf. box 2 in Figure 1). This kind of expatriate
is usually quite well integrated in the subsidiary and the local employees appreciate his
flexibility and his willingness to compromise that often fits well with the local culture (3).
So, façade building of the local employees towards the expatriate can hardly be found.
The parent company’s orientation is a kind of mixture between explorative and
exploitative. It prefers to take a rather flexible, case-by-case leadership style (1). Even
the amount of transfers from the parent company to its Russian subsidiary differs. The
implementation of transfers is mainly based on persuasiveness and education (4):
He ,the Russian employee. was close to being dismissed [. . .] I did not dismiss him, I pointed
out that we continue to coach him. He has the potential, so we try to uncover this potential
(Exp 3/A).
Accordingly, the local employees often freely imitate the new ideas and practices,
though they usually try to mix them with to local values and customs (5).
BJM The expatriate’s reputation in the parent company is on a medium level since his
6,1 openness to compromise is to some extent considered a weakness of leadership.
Consequently, the expatriate from time to time needs to engage in façade building
towards the parent company.
The realised HRM practices must be characterised as rather self-standing, partly even
hybrid (6). Not surprisingly, therefore, that the success of the HRM can be fairly diverse:
18 a strong and highly efficient organisational culture as a positive extreme and a situation
of insecurity and chaos due to numerous incompatible practices as a negative extreme:
I think this is both giving and receiving. I also learn a lot from her ,a female local
manager. and she also needs be mirrored. On the other hand, when I attended a visit of a
customer in the Gazprom context, then I learned a lot from her, what I should say in which
moment and what I should not – indeed mutually stimulating (Exp 3/A).
English should become the language. However, we have the problem today, that we still have
some people who are speaking German but no English. Very few people only speak Russian
and no German and no English or only very badly. [. . .] So, we currently have gibberish,
everybody tries to express himself in the language that he speaks best which indeed provides
a veritable communication problem (Exp 1/A).
This situation is typical for a recombinative order (Clark, 2005). The implemented
HRM usually is rather successful. However, as described in pattern 1, here too, there is
a latent danger that the parent company may stop tolerating the self-standing way of
the subsidiary at the moment when its balance sheet does not satisfy them anymore.
Table II summarises the four patterns and their respective characteristics described
above, thus also highlighting the distinctive differences between them. The numbers of
the first columns refer to the respective boxes of factor bundles in Figure 1. The first
line even mentions some typical cases although not each company could be perfectly
attributed to one single pattern.

Discussion
Our paper focused on the process of institutionalisation of HRM practices in Russian
subsidiaries of German MNCs. We have merged some different corpuses of knowledge and
concepts into a process model that displays the topic in a highly differentiated manner
(Figure 1). Furthermore, based on qualitative research in nine small and medium-sized firms
we developed four patterns to describe and explain this process. By this, we aimed at
contributing to a better comprehension of the complex process of implementation and
institutionalisation of HRM practices abroad. We can argue, moreover, that the resulting
patterns may not be restricted to the Russian case only but should be adaptable to other
emerging countries as well. In particular, a few important findings should be mentioned
here.
First, our findings have stressed the importance of personal, institutional and
contextual factors (Figure 1 as well as shortcomings three and four). They must be
considered, on the one hand, strongly interrelated with each other. On the other hand,
they also considerably influence the process of implementation of HRM practices at the
same time. Together, they seem to form a special pattern (“Gestalt”), including the parent
company’s strategy, amount and modes of transfers, experience and ambitions of
the expatriates in relation to Russia, and established HRM practices. So, for instance,
low experience and interest together with high career ambitions within the company
 Pattern 1 Pattern 2 Pattern 3 Pattern 4

Typical cases F, H, R D, G B A, C
(1) Parent company’s orientation Explorative Exploitative Exploitative Mixed
Parent company’s leadership style towards Loose Rather strict Strict Case by case
the subsidiary
(2) Expatriate’s reference to Russia High Low Low Medium
Expatriate’s experience with Russia High Low Medium Medium
Expatriate’s career ambitions Low High High Medium
Expatriate’s integration in the subsidiary High Medium Medium Medium to high
Façade building of local employees Low High High Low
towards the expatriate
Expatriate’s reputation in the parent Medium to Medium Low to medium Medium
company high
(3) Phase of the subsidiary’s life cycle Setting up/ Setting up/growth Maturity All phases
growth
(4) Amount of transfers from parent company Low High High Medium
to subsidiary
Mode of transfers from parent company to Convincing Imposition, incentives, Imposition, free Convincing, education, free
subsidiary education, convincing imitation imitation
(5) Mode of institutionalisation of HRM Hardly any Adaptation, façade building Adaptation, learning, Modification, recombination,
practices façade building façade building
(6) Established order Traditional/ Imitative/battlefield Imitative Recombinant
stable
Character of the subsidiary’s HRM Russian German German Self-standing
practices

institutionalisation
Expatriates

practices

characteristics
Four patterns of
and HRM

processes and their main

19

Table II.
BJM of the expatriate lead to high amounts of transfer of practices towards the subsidiary,
6,1 lower integration of the expatriate into the subsidiary, and at least on the surface level,
some rather Germanic HRM practices (pattern 2).
Second, our findings emphasise that expatriates with their specific value orientations
and behaviour play a key role in this process. It therefore approves the findings of earlier
studies (Peterson, 2003; Myloni et al., 2007). We assume that this holds particularly true
20 in the cultural context of Russia with its highly developed power distance. Consequently,
the expatriate’s re-interpretation of existing company rules and his behaviour to modify,
adapt or bypass them is of high importance. In the nine cases observed as well as with the
four patterns of processes, we found some rather different forms of how to deal with the
parent company’s directions. Moreover, it became apparent that these different patterns
of behaviour are also consequential for the implementation and further development of
both management culture and organisational culture in the company. As exemplified in
pattern 1, the activities of expatriates with strong references to Russia and long-term
country-specific experiences may result in a far-reaching separation of the subsidiary
from the parent company as well as in a locally adapted corporate culture of the
subsidiary. Those practices gain legitimacy through the fit with the expectations of their
immediate environment and through the high acceptance the expatriate receives herein.
Third, it has become obvious that the power balance between the parent company and
the subsidiary must be considered an important mediator in the process of
institutionalisation of HR practices (Clark, 2005). The development of new and locally
adapted practices will not succeed if, on the one hand, there is too much pressure to
unanimously implement the Western practices or, on the other hand, there is too much
dependency of the parent company on the local experiences of the expatriate. Both would
quickly limit the ground for any experiments and developments of adequate HRM
practices.
Fourth, with the help of our typology some diverse theoretical concepts suggested in
the past could be successfully replicated. The well-known concepts of de-coupling and
façade building (Meyer and Rowan, 1977) proved to be well adapted to describe some
crucial behavioural pattern in the process of institutionalisation of HRM practices in
Russian subsidiaries. Moreover, the findings also provided some impressive examples
of several forms of established systems/orders as proposed by Clark (2005). We namely
found some “imitative orders” (pattern 3), some “recombinant orders” (pattern 4) and
some “battlefields” (pattern 2).
Fifth, our findings also highlighted some development patterns taking place in the long
run: both patterns 1 and 4 showed that expatriates with a medium or high level of references
to Russia become more and more dependent on success by time. If they do not succeed, their
engagement to “go native” and to introduce some HRM practices different from the parent
company tends to become de-legitimised. This may lead to a shift in direction of pattern 2
(the parent company delegates a new expatriate to improve professionalism of the
subsidiary) or pattern 3 (the parent company delegates a new expatriate to resolve the crisis).
In the worst case, the parent company even takes the exit option to end the “Russian
experiment”. Another long-term pattern to be found in our findings is the (re-produced)
short-termism of expatriates in pattern 2 (and sometimes in pattern 3). As their references to
Russia are fairly limited, the fluctuation among them tends to become rather high,
particularly if they are not successful. Then, the parent company may exchange one
expatriate by another (of similar characteristics). Only seldom, a shift in direction
of pattern 4 occurs, when the expatriate tries to more intensively adapt the HRM Expatriates
practices to local conditions. and HRM
Moreover, this paper made some clear theoretical implications: first of all, the need for
qualitative process analysis is highlighted, since the institutionalisation of HRM practices practices
in subsidiaries must be perceived not only highly complex but also very dynamic. As was
pointed out above, our process model as well as the qualitative analysis approach provide
a long-term perspective, merge several important aspects and influence factors and, thus, 21
contribute to a deeper understanding of the complex phenomenon investigated here.
Second, our analysis has clearly approved the adaptability and the high explanatory
power of the transnational space concept (Morgan, 2001) and, particularly, of the adaptive
model proposed by Clark (2005). By this, we successfully broadened the reservoir of
explanations for these complex processes (cf. shortcoming three).
Several implications for practice emanate from this paper, especially for the HRM of
multinational companies: first, our findings have stressed the importance of a long-run
perspective of HRM measures, in particular when dealing with transformation countries
of Central and Eastern Europe where dynamism is still very high and business relations
often still are under (re-)construction. In this context, the responsible management is well
advised to ground and support important decisions with the help of scenarios (e.g. about
the subsidiary’s further development) and other instruments of strategic planning.
Second, the modality and pace of transfer and implementation of HRM practices should
be well considered. As it has been demonstrated in our case studies, those processes
include some distinctive long-run consequences that can hardly be revoked later. Third,
our findings have highlighted the role and impact of expatriates and their characteristics,
such as personal values and orientations as well as career ambitions, on the development
and success of foreign subsidiaries. Consequently, the selection of an expatriate who will
be charged to establish and run a foreign subsidiary must be considered as of strategic
importance by the responsible HR management. Fourth, the high relevance of
HR development in the subsidiary should not be underestimated since it deals with the
question about what kind of personnel the subsidiary will need in the future.
Consequently, the HR development concept must be well adapted on the one hand to the
overall HRM strategy pointed out above and, on the other hand, to the diverse other HRM
activities (e.g. remuneration policy and organizational culture) developed in the
subsidiary. Finally, the possible changes of business strategy in the long-run have to be
taken into account as well. As already discussed above (cf. point 5), the patterns described
are not completely independent from each other. In some circumstances, one pattern may
be replaced by another one. This kind of changes, however, needs to be prepared with
care since it also includes some severe changes on lower levels, namely regarding HRM
practices and the relating values and norms of the organizational culture. Short-sighted
measures in this context may endanger the success of the whole project.
Notwithstanding the interesting findings, this study also has some limitations: first
of all, although the patterns presented above may be rather illustrative and convincing
they are only based on a relatively small sample of nine case studies. Moreover, the
single company cases should not be considered homogeneous (e.g. the 20 expatriates of
company D) and fully consistent with one single pattern (e.g. company E). They
sometimes even displayed some aspects of different patterns. So, our study does not
claim to be strictly representative. To make their findings more robust, some further
test will be necessary. Furthermore, we could only make few considerations about
BJM the institutionalisation paths in the long run. This seems to be a question particularly
6,1 worth to be subject to further examination. Last but not least, in our analysis several
variables were left aside. So, further research may observe how far company size or
industry pattern impact on the process of institutionalisation of HRM practices.
Another important aspect to be explored are the effects of different combinations of
nation cultures (besides of the Russian-German example).
22
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Corresponding author
Thomas Steger can be contacted at: thomas.steger@uni-erfurt.de

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