Explaining stakeholder evaluations of HRM capabilities in MNC subsidiaries

This paper examines how functional and line-management stakeholders evaluate operational human resource management capabilities in multinational corporation (MNC) subsidiaries. We suggest that such evaluations are a function of two key structural factors: (1) that focal subsidiary human resource (HR) departments respond differentially to the expectations of differently located stakeholders; and (2) that the structural position of the stakeholder determines what cues he or she relies upon to construct the evaluation. Our findings show that the focal HR subsidiary department is likely to exert more effort towards meeting the expectations of line-management stakeholders, and we suggest that this is a function of line management’s co-location with the focal HR department. Second, we find that co-located line-management stakeholders are more likely to rely on experience-based cues when constructing evaluations, whereas headquarters-located functional stakeholders tend to rely on cognition-based evaluation, driven by their ability to compare across different subsidiary HR departments. We contribute to the literature by going beyond existing research that has tended to focus on evaluation from the perspective of organizational behavior, by providing a structural perspective on capability evaluation in MNCs that combines the insights of role theory and cognitive choice heuristics.