Why Local Adaptation Sometimes Fails to be Effective for Multinationals
Published on 11/29/2021
Foreign multinationals abroad can often be at a disadvantage compared to local firms. For instance, they have to deal with additional difficulties of transferring and adapting their management and compensation practices to new cultural environments. Past research suggests that blending in and using practices that local companies are using – practices that are known to be inline with local cultural norms – can help multinational overcome their disadvantage. However, new research shows why sometimes local adaptation fails to be effective for multinationals (MNEs). Why do foreign MNEs that adopt compensation practices that local French firms use and that are in line with French cultural norms still face a disadvantage? Can a deeper understanding of local environments help MNEs make more strategic decisions in terms of their adaptation policies?
Nishani Bourmault (NEOMA, France) and her co-author Jordan Siegel (University of Michigan, USA) used longitudinal survey data from the French Ministry of Labor and 50 in-depth interviews of employees working in France to analyze why a MNE’s home-country cultural norms – specifically their commitment to egalitarianism – plays a role in its successful implementation of collective bonuses in France.
“Why Adopting Local Practices Doesn’t Always Help MNEs Overcome their Liability of Foreignness”, by Nishani Bourmault, Jordan Siegel | Oct 14, 2021 | Management Insights.
Bourmault, Nishani, and Jordan Siegel. “Why Local Adaptation Sometimes Fails to be Effective for MNEs: Exploring the Dynamics of Collective Bonuses, Egalitarianism, and Informal Norms.” Journal of Management Studies. Aug 2021. https://doi.org/10.1111/joms.12757