HRM practices and MNC knowledge transfer

Purpose – The purpose of the paper is to determine and empirically examine the effect of human resource management (HRM) practices on knowledge transfer within multinational corporations. Design/methodology/approach – It is suggested that the employment of human resource practices, which affect absorptive capacity of knowledge receivers and support organizational learning environment, is positively related to the degree of knowledge transfer to the subsidiary. Moreover, the higher degree of knowledge transfer is expected when HRM practices are applied as an integrated system of interdependent practices. Hypotheses derived from these arguments are tested on the data from 92 subsidiaries of Danish multinational corporations (MNCs) located in 11 countries. Findings – Results of the analysis indicated the existence of two groups of HRM practices conducive to knowledge transfer. The simultaneous effect of the first group of HRM practices consisting of “staffing”, “training”, “promotion”, “compensation” and “appraisal” on the degree of knowledge transfer was found to be positive and substantial. The hypothesis regarding the effect of corporate socialization mechanisms and flexible working practices (the second group of HRM practices) was not supported by the data. The analysis also indicated that some HRM practices have a complementary effect on the degree of knowledge transfer when they are applied as a system. Research limitations/implications – While this study makes a contribution to our understanding of the relationship between HRM practices and knowledge transfer in the MNC, clearly, additional research is needed to develop this link further, which until now has been largely black‐boxed. Originality/value – Makes a contribution to our understanding of the relationship of HRM practices and knowledge transfer in MNCs.