1. ¹Institute of International Business, Stockholm School of Economics, Stockholm, Sweden
2. ²Stockholm School of Economics Russia, St Petersburg, Russia
3. ³J. Mack Robinson College of Business, Georgia State University, Atlanta, USA
4. ⁴Swedish School of Economics, Helsinki, Finland

Correspondence: CF Fey, Institute of International Business, Stockholm School of Economics, Box 6501, Stockholm S-11383, Sweden. Tel: +46 8 736 9450; Fax: +46 8 31 9927; E-mail: Carl.Fey@hhs.se

Received 28 September 2006; Revised 22 December 2007; Accepted 10 January 2008; Published online 27 November 2008.

Abstract

This paper investigates the extent to which different human resource management (HRM) practices work better in different countries. We also try to open the black box between HRM and multinational enterprise (MNE) subsidiary performance by considering mechanisms through which HRM practices affect MNE subsidiary performance. The study utilizes a unique data set consisting of subsidiaries of 241 MNEs operating in Russia, USA, and Finland. In the partial least-square analysis used to examine our hypotheses, we demonstrate that different HRM practices are preferable in different countries, and that motivation and ability are important mediating variables in the HRM–MNE subsidiary performance relationship.