Aycan (2005) → "The interplay between cultural and
institutional/structural contingencies in human resource
management practices"
Lecture 1 introduces the course's core argument → that HRM effectiveness
depends on fit with the external environment and covers basic models of that
environment under the theme "Changing organisations."
Aycan's article is a worked example of exactly this idea, but focused on two specific pieces
of the external environment:
- National culture
- Institutional/structural factors (size, industry, ownership, unions, laws).
Core argument → International HRM research has historically just described how HRM
differs across countries (e.g. "how appraisal works in Japan") without explaining why.
- Aycan argues we should instead identify the underlying cultural or structural factors
driving the difference, so findings generalise e.g. not "don't use 360-degree feedback
in Mexico" but "don't use it in high power-distance cultures.”
- Because culture and structure are often correlated, she stresses that researchers
(and analysts) need to control for structural factors to isolate culture's real effect
Theories she reviews
- A range of existing explanations for HRM variation, institutional theory and general
systems theory (organisations interact with their broader social/legal/political
context), societal effect theory (education system, industrial relations, the state,
labour markets), the political-economy and logic-of-industrialisation views (economic
development homogenizes practices regardless of culture), human capital theory and
the Harvard model (organisations must satisfy multiple stakeholders), strategic fit
models (HRM follows strategy), resource-based theory (HRM reflects available
resources like technology), transaction cost theory, agency theory, and culture-free
contingency theory (Hickson et al., arguing structure matters more than culture).
- Against these, she positions the "culturalist" view
The Model of Culture Fit (MCF)
- It proposes that internal work culture (managers' assumptions about the task and
about employees) mediates between the environment and actual HRM practices
- Task-related assumptions come mainly from the institutional environment (size,
ownership, industry); employee-related assumptions come mainly from the socio-
cultural context.
- Example finding → in fatalistic cultures, managers doubt employee
behavior can change, so they link performance to rewards less
● In high power-distance/paternalistic cultures, managers assume employees
want close supervision, leading to less empowerment.
,How culture and institutions shape each HRM function
Recruitment and selection
- Hard, skill-based criteria and formal/standardised methods in performance-oriented,
universalistic, large, or tech-heavy organisations
- Soft, relationship-based criteria (e.g. guanxi) and informal/internal recruitment in
collectivist, particularistic, small, or union-influenced organisations.
Performance appraisal
- Objective, individual, outcome-based criteria and multi-source feedback (like 360-
degree) in individualist, performance-oriented, low power-distance settings
- Relational, process-based criteria and top-down, subjective appraisal in collectivist,
high power-distance, fatalistic settings
● Feedback is direct in low-context cultures, indirect and group-oriented in high-
context ones.
Training and development
- More investment where performance orientation is high and fatalism is low; in
collectivist cultures training also builds loyalty (the concept of "pao")
- Needs assessment is participative and performance-based in low power-distance
cultures, top-down and loyalty-based in high power-distance ones
● Larger and tech-intensive organisations invest more broadly.
Job analysis
- Narrow, fixed job descriptions in high uncertainty-avoidance/specificity cultures;
broad, flexible ones in high power-distance/diffuse cultures
- Collectivist cultures define jobs at the team level
● Large and unionised organisations formalise job descriptions more.
HR planning and career management
- Long-term, participative planning in future-oriented, low power-distance cultures
- Short-term or centralised planning in fatalistic, high power-distance ones.
● Promotion is merit-based in performance-oriented cultures, seniority/loyalty-
based in collectivist, high power-distance ones.
Compensation and rewards
- Objective, performance-linked pay in performance-oriented/universalistic cultures
- Subjective, person-based pay in high power-distance/particularistic ones
● Individualist cultures favor individual pay differentials and stock ownership
- Collectivist cultures favor group rewards, welfare benefits, and non-economic
recognition.
The big-picture synthesis
Aycan collapses all the cultural dimensions into three continua
1) One runs from performance orientation to interpersonal-harmony orientation,
producing either merit-based or relationship-based HRM
, 2) A second runs from status-hierarchy maintenance to egalitarianism/participation,
producing either centralised/differentiated or uniform/participative HRM
3) A third runs from inflexibility/fatalism to flexibility/belief in change, producing either
stability-oriented HRM (internal recruitment, job security) or dynamic HRM (external
recruitment, performance-linked pay)
Culture matters less in large, tech-intensive, public-sector, or multinational organisations,
and more in small, private, service-sector ones
Practical implications
When there's a misfit between an HRM practice and the surrounding culture, Aycan
suggests two remedies:
1) Modify the practice to fit the culture (e.g. train staff in direct-feedback skills before
rolling out 360-degree appraisal)
2) Try to shift the culture toward the practice (harder, requiring sustained leadership).
Misfit itself tends to cause dissatisfaction and lower performance.
Self-check questions:
1) Why does Aycan call earlier IHRM research "atheoretical," and what's her fix?
2) Give one cultural and one institutional explanation for the same HRM pattern (e.g.
internal recruitment), why does disentangling them matter?
3) What mediates between environment and HRM practices in the MCF, and what are
the two types of managerial assumption involved?
4) Compare performance appraisal in a high power-distance/collectivist country vs. a
low power-distance/individualist one.
5) Why does she predict culture matters less in large, tech-heavy, public, or
multinational firms?
6) What are her two strategies for resolving cultural misfit, and what's the trade-off?
Colakoglu, Lepak & Hong (2006) → "Measuring HRM effectiveness:
Considering multiple stakeholders in a global context"
How it fits the course
- This is a second core reading for Theme 1, alongside Aycan (2005)
- Where Aycan asks why HRM practices differ across countries (culture vs.
institutions), Colakoglu et al. ask a related but distinct question: how should we judge
whether HRM is working at all, once you accept that organisations operate in a
changing, globalising external environment and answer to more than just
shareholders.
- Both readings push you away from a simple, one-size-fits-all view of HRM and
toward "it depends on context", which is the course's core argument about fit
Core argument → Strategic HRM research has mostly measured "HRM effectiveness" using
financial or market performance (ROA, ROI, stock price, sales).
- The authors argue this is too narrow
institutional/structural contingencies in human resource
management practices"
Lecture 1 introduces the course's core argument → that HRM effectiveness
depends on fit with the external environment and covers basic models of that
environment under the theme "Changing organisations."
Aycan's article is a worked example of exactly this idea, but focused on two specific pieces
of the external environment:
- National culture
- Institutional/structural factors (size, industry, ownership, unions, laws).
Core argument → International HRM research has historically just described how HRM
differs across countries (e.g. "how appraisal works in Japan") without explaining why.
- Aycan argues we should instead identify the underlying cultural or structural factors
driving the difference, so findings generalise e.g. not "don't use 360-degree feedback
in Mexico" but "don't use it in high power-distance cultures.”
- Because culture and structure are often correlated, she stresses that researchers
(and analysts) need to control for structural factors to isolate culture's real effect
Theories she reviews
- A range of existing explanations for HRM variation, institutional theory and general
systems theory (organisations interact with their broader social/legal/political
context), societal effect theory (education system, industrial relations, the state,
labour markets), the political-economy and logic-of-industrialisation views (economic
development homogenizes practices regardless of culture), human capital theory and
the Harvard model (organisations must satisfy multiple stakeholders), strategic fit
models (HRM follows strategy), resource-based theory (HRM reflects available
resources like technology), transaction cost theory, agency theory, and culture-free
contingency theory (Hickson et al., arguing structure matters more than culture).
- Against these, she positions the "culturalist" view
The Model of Culture Fit (MCF)
- It proposes that internal work culture (managers' assumptions about the task and
about employees) mediates between the environment and actual HRM practices
- Task-related assumptions come mainly from the institutional environment (size,
ownership, industry); employee-related assumptions come mainly from the socio-
cultural context.
- Example finding → in fatalistic cultures, managers doubt employee
behavior can change, so they link performance to rewards less
● In high power-distance/paternalistic cultures, managers assume employees
want close supervision, leading to less empowerment.
,How culture and institutions shape each HRM function
Recruitment and selection
- Hard, skill-based criteria and formal/standardised methods in performance-oriented,
universalistic, large, or tech-heavy organisations
- Soft, relationship-based criteria (e.g. guanxi) and informal/internal recruitment in
collectivist, particularistic, small, or union-influenced organisations.
Performance appraisal
- Objective, individual, outcome-based criteria and multi-source feedback (like 360-
degree) in individualist, performance-oriented, low power-distance settings
- Relational, process-based criteria and top-down, subjective appraisal in collectivist,
high power-distance, fatalistic settings
● Feedback is direct in low-context cultures, indirect and group-oriented in high-
context ones.
Training and development
- More investment where performance orientation is high and fatalism is low; in
collectivist cultures training also builds loyalty (the concept of "pao")
- Needs assessment is participative and performance-based in low power-distance
cultures, top-down and loyalty-based in high power-distance ones
● Larger and tech-intensive organisations invest more broadly.
Job analysis
- Narrow, fixed job descriptions in high uncertainty-avoidance/specificity cultures;
broad, flexible ones in high power-distance/diffuse cultures
- Collectivist cultures define jobs at the team level
● Large and unionised organisations formalise job descriptions more.
HR planning and career management
- Long-term, participative planning in future-oriented, low power-distance cultures
- Short-term or centralised planning in fatalistic, high power-distance ones.
● Promotion is merit-based in performance-oriented cultures, seniority/loyalty-
based in collectivist, high power-distance ones.
Compensation and rewards
- Objective, performance-linked pay in performance-oriented/universalistic cultures
- Subjective, person-based pay in high power-distance/particularistic ones
● Individualist cultures favor individual pay differentials and stock ownership
- Collectivist cultures favor group rewards, welfare benefits, and non-economic
recognition.
The big-picture synthesis
Aycan collapses all the cultural dimensions into three continua
1) One runs from performance orientation to interpersonal-harmony orientation,
producing either merit-based or relationship-based HRM
, 2) A second runs from status-hierarchy maintenance to egalitarianism/participation,
producing either centralised/differentiated or uniform/participative HRM
3) A third runs from inflexibility/fatalism to flexibility/belief in change, producing either
stability-oriented HRM (internal recruitment, job security) or dynamic HRM (external
recruitment, performance-linked pay)
Culture matters less in large, tech-intensive, public-sector, or multinational organisations,
and more in small, private, service-sector ones
Practical implications
When there's a misfit between an HRM practice and the surrounding culture, Aycan
suggests two remedies:
1) Modify the practice to fit the culture (e.g. train staff in direct-feedback skills before
rolling out 360-degree appraisal)
2) Try to shift the culture toward the practice (harder, requiring sustained leadership).
Misfit itself tends to cause dissatisfaction and lower performance.
Self-check questions:
1) Why does Aycan call earlier IHRM research "atheoretical," and what's her fix?
2) Give one cultural and one institutional explanation for the same HRM pattern (e.g.
internal recruitment), why does disentangling them matter?
3) What mediates between environment and HRM practices in the MCF, and what are
the two types of managerial assumption involved?
4) Compare performance appraisal in a high power-distance/collectivist country vs. a
low power-distance/individualist one.
5) Why does she predict culture matters less in large, tech-heavy, public, or
multinational firms?
6) What are her two strategies for resolving cultural misfit, and what's the trade-off?
Colakoglu, Lepak & Hong (2006) → "Measuring HRM effectiveness:
Considering multiple stakeholders in a global context"
How it fits the course
- This is a second core reading for Theme 1, alongside Aycan (2005)
- Where Aycan asks why HRM practices differ across countries (culture vs.
institutions), Colakoglu et al. ask a related but distinct question: how should we judge
whether HRM is working at all, once you accept that organisations operate in a
changing, globalising external environment and answer to more than just
shareholders.
- Both readings push you away from a simple, one-size-fits-all view of HRM and
toward "it depends on context", which is the course's core argument about fit
Core argument → Strategic HRM research has mostly measured "HRM effectiveness" using
financial or market performance (ROA, ROI, stock price, sales).
- The authors argue this is too narrow
