See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/238503546 Managing cross-cultural differences: Testing human resource models in Latin America Article in Journal of Business Research · December 2012 DOI: 10.1016/j.jbusres.2011.10.037 CITATIONS READS 21 1,667 3 authors: Jaime Bonache Pérez Jordi Trullen University Carlos III de Madrid Universitat Ramon Llull 65 PUBLICATIONS 2,325 CITATIONS 39 PUBLICATIONS 495 CITATIONS SEE PROFILE Juan I. Sanchez Florida International University 92 PUBLICATIONS 6,937 CITATIONS SEE PROFILE Some of the authors of this publication are also working on these related projects: Academic-Practitioner Relationships View project Implementation of organizational innovations View project All content following this page was uploaded by Jordi Trullen on 18 October 2017. The user has requested enhancement of the downloaded file. SEE PROFILE This article appeared in a journal published by Elsevier. The attached copy is furnished to the author for internal non-commercial research and education use, including for instruction at the authors institution and sharing with colleagues. Other uses, including reproduction and distribution, or selling or licensing copies, or posting to personal, institutional or third party websites are prohibited. In most cases authors are permitted to post their version of the article (e.g. in Word or Tex form) to their personal website or institutional repository. Authors requiring further information regarding Elsevier’s archiving and manuscript policies are encouraged to visit: http://www.elsevier.com/copyright Author's personal copy Journal of Business Research 65 (2012) 1773–1781 Contents lists available at SciVerse ScienceDirect Journal of Business Research Managing cross-cultural differences: Testing human resource models in Latin America ☆ Jaime Bonache a, b,⁎, Jordi Trullen c, 1, Juan I. Sanchez d, 2 a Universidad Carlos III de Madrid, Spain ESADE Business School (Ramon Llull University), Department of People Management and Organisation, Mateo Inurria, 25-27, 28036 Madrid, Spain ESADE Business School (Ramon Llull University), Department of People Management and Organisation, Av. Pedralbes, 60-62, 08034 Barcelona, Spain d Florida International University, Department of Management and International Business, 11200 SW 8 Street, RB 343 A, Miami, FL 33199, United States b c a r t i c l e i n f o Article history: Received 1 September 2010 Received in revised form 1 April 2011 Accepted 1 August 2011 Available online 21 November 2011 Keywords: Human Resource Management (HRM) Latin America Cross-cultural differences Local adaptation a b s t r a c t This study examines whether firms should adapt their Human Resource Management (HRM) practices to cross-cultural differences. The authors introduce three different positions, namely, the culturalist, the universalist, and an integrated position that reconciles the former two named the culturally-animated universalist position. The study compares the effectiveness of these three positions in a sample of 138 firms located in Latin-America. Results suggest that, contrary to common wisdom in the International HRM literature, firms following a universalist approach outdo those using a culturalist one. However, the effect of universal HR practices on HR performance is also contingent on the country's performance orientation. The authors advocate the culturally-animated universalist position. © 2011 Elsevier Inc. All rights reserved. 1. Introduction Should firms adapt their human resource management practices to cross-cultural differences? A review of the literature on International Human Resource Management (IHRM) reveals two opposite and apparently mutually exclusive answers to this question. The first answer, which the authors term hereafter as the culturalist position, argues for HRM practices that are adapted to the local environment. This position assumes that employees prefer practices that conform to local usages and that, as a result, such practices lead to higher performance. In simpler words, “When in Rome, do as the Romans do” (Newman & Nollen, 1996). In contrast, the second answer represents a view that is antagonistic to the first one, arguing that prevailing HRM practices are not necessarily the most effective ones. Indeed, this universalist position maintains that firms should ensure that their HRM practices conform to a set of principles – known as High Performance Work (HPW) principles – whose effectiveness has been empirically supported by several studies ☆ The authors thank Petra de Saa (Universidad de Las Palmas de Gran Canaria), Luigi Stirpe (Universidad Carlos III de Madrid), François Collet (ESADE Business School) and JBR reviewers for reading and comments of an early version of this article. ⁎ Corresponding author at: ESADE Business School (Ramon Llull University), Department of People Management and Organisation, Mateo Inurria, 25-27, 28036 Madrid. Tel.: + 34 913 597 714; fax: + 34 917 030 062. E-mail addresses: [email protected] (J. Bonache), [email protected] (J. Trullen), juan.sanchez@fiu.edu (J.I. Sanchez). 1 Tel.: + 34 932 806 162; fax: + 34 934 952 077. 2 Tel.: + 1 305 348 3307. 0148-2963/$ – see front matter © 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jbusres.2011.10.037 both in the US (e.g., Arthur, 1994; Delaney & Huselid, 1996; Huselid, 1995; Huselid, Jackson, & Schuler, 1997; Lawler, Anderson, Buckles, Ferris, & Rosen, 1995) and elsewhere (Bae & Lawler, 2000; Guthrie, 2001; Hartog & Verburg, 2004; Katou & Budhwar, 2007). The underlying assumption is that these principles have universal reach and should help us manage people regardless of national environment. A third answer, that can be named as the culturally-animated universalist position, is more nuanced than the previous two. This third position defends the existence of a set of globally applicable HRM principles but, unlike the universalist position, the culturally-animated universalist position maintains that culture interacts with HRM practices in ways that prevent the same practices from having identical results in different countries. The culturally-animated position represents a way of thinking that has already been influential in sociology (Weber, 1904; Fukujama, 1995) and in global leadership (Javidan, Dorfman, Sully de Luque, & House, 2006). The present study compares and contrasts these three theoretical positions (i.e., culturalist, universalist, and culturally-animated universalist) through an empirical test conducted in a Latin American context. Differently from other areas of the world such as North America, Europe or Asia, HRM research in Latin America is scarce and often theoretical (Montaño, 1991; Sanchez, Gomez, & Wated, 2008), and has tended to focus on single countries and on comparisons to the US (Davila & Elvira, 2009; Elvira & Davila, 2005a, 2005b; Gómez & Werner, 2004; Wated, Sanchez, & Gomez, 2008). Multicountry empirical HRM research capable of providing broad guidance regarding the effectiveness of various HRM practices across Latin America is lacking. This paucity of empirical evidence is particularly Author's personal copy 1774 J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 As stressed by authors such as Schuman and Scott (1989), generations have collective memories acquired during adolescence and youth, and such memories persist throughout their life cycle. These collective memories are hard to change and are also relatively independent of economic conditions (DiMaggio, 1994) and organizational practices (Hofstede, 1983). Drawing on these arguments, culturalism predicts that convergence around some set of “modern” practices and values is ineffective and that, even when economic and institutional conditions change a great deal, traditional values and practices will continue to exert their independent influence upon local usages. This prediction is not without empirical support. For example, longitudinal analysis of the World Values Surveys (Inglehart, 1977, 1990, 1997) indicates that although values do change, they also show the cultural heritage of a particular society. And this is so because despite facing different economic conditions and institutional pressures, those countries with a similar cultural heritage (e.g., Anglo-Saxon, Protestant, EnglishSpeaking), continue to cluster around similar value systems. troubling for multinational corporations (MNCs) wishing to operate in Latin American markets. Foreign MNCs play a crucial role in Latin America (Casanova, 2005), and scholarly research in the area is much needed (Brenes, Metzger, & Requena, 2011). The study described herein joins an emerging stream of multi-country studies focused on Latin America that should begin to fill this gap (e.g., Bonache, Sanchez, & Zarraga-Oberty, 2009). 2. Literature review In essence, each of the three positions to be compared here represents a different answer to the so-called diversity thesis. This thesis is descriptive, simply registering the fact that people's values differ across societies. This thesis seems undisputable and is backed by a number of research streams (e.g., Fukujama, 1995; Hofstede, 1984; Inglehart & Baker, 2000; Trompenaars, 1993). Next, the authors review the theoretical underpinnings of each one of these three positions (see a summary in Fig. 1). 2.1. Theoretical underpinnings of the culturalist position 2.1.2. The dependence premise According to this premise, all HR principles and practices derive their effectiveness from cultural acceptance (e.g., Newman & Nollen, 1996). Therefore, the most widely accepted practices in a given culture are those that best suit the national culture. The logic behind this dependence premise implies that (a) culture determines those HRM practices that are prevalent in a society, (b) these culturally derived practices are widely viewed by the members of that society as the correct way to perceive, think and feel (Schein, 1985), and (c) when HRM practices are at odds with the national culture, employees are likely to feel dissatisfied and uncommitted and, as a result are less able or less willing to perform well (Newman & Nollen, 1996; p. 755). The culturalist position, as its name indicates, emphasizes culture as the essential situational element that stands in the way of global homogeneity in HRM principles or practices. This position does not only acknowledge differences in practices and values, as stated by the diversity thesis, but also argues that everything depends on the local context and, therefore, that universal management principles do not exist. Three theoretical premises in the culturalist position distinguish this position very clearly from the universalist view: the persistence, the dependence, and the adaptation premises. These premises have a parallel in relativist philosophy (e.g. Putman, 1981; Rorty, 1991), where they are used in regard to cognitive (“there are no universal truths”) or ethical issues (“there are no universally valid moral principles”). Next, the authors further discuss each one of these premises. 2.1.3. The local adaptation premise According to this premise, universally effective principles or practices do not exist, because the most sensible and effective ones are always those that best fit local values and norms. For instance, as known by any minimally perceptive traveler, driving in England 2.1.1. The persistence premise Culturalists emphasize the divergence and persistence of traditional values despite economic, organizational and political changes. HR Principles P1 Universalist Approach Culturist Approach National Culture a HR System “a” HR Performance National Culture b HR System “b” HR Performance -----------------------------------------------------------------------------National Culture n The culturally animated Universalist Approach HR Performance P2 . . Pn HR System “n” HP Principles P1 P2 . . Pn Fig. 1. Culture and HR effectiveness. HR Performance National Culture HR Performance Author's personal copy J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 following the Continental convention of using the right lane is neither sensible nor efficient. Dressing in black clothes to attend a funeral in China, where people dress in white at this type of event, is not going to be welcomed. Similarly, if the objective is to manage people in different cultural contexts, the most effective one will be to adapt to dominant, local ways of managing, since these adapt well to local workforce preferences. The local adaptation premise is implicit in many studies in the international management literature (e.g., Adler, 1986; Adler & Jelinek, 1986; Black & Porter, 1991; Cox & Cooper, 1985; Dowling, Schuler, & Welch, 1994; Gómez Mejía & Welbourne, 1991; Luthans, Marsnik, & Luthans, 1997; Mamman, Sulaiman, & Fadel, 1996; Newman & Nollen, 1996; Schneider, 1988), as well as in HR textbooks such as Gómez Mejía, Balkin, and Cardy (1995), who build on Hofstede's cultural dimensions to conjecture what practices may be more suitable to different countries depending on their cultural profiles. For example, in a high power distance country like Venezuela, the local adaptation premise would recommend introducing a reward system that includes a large pay differential between higher and lower level jobs, visible rewards that project status, and plenty of discretion to supervisors and business units in pay allocations. If the target is a Scandinavian country with low power distance, the practices should probably be the opposite. The aforementioned premises serve as the basis for the first hypothesis: Hypothesis 1. Firms that implement idiosyncratic HR practices will be more effective in attracting, retaining and motivating a local workforce than those which do not implement such idiosyncratic HR practices. 2.2. Theoretical underpinnings of the universalist position The universalist approach does not necessarily deny the diversity thesis. In fact, this position affirms the existence of some general principles that have universal validity, regardless of cultural differences. For instance, according to the universalist position, and despite that the level of gender egalitarianism differs across nations (e.g., Inglehart & Baker, 2000), following the principle of equal employment opportunity for women is a sound recipe for organizations wishing to improve its HR performance. This recipe should hold even in a culture that has a low level of gender egalitarianism. Universalism rests on three major assumptions. 2.2.1. A core HR system that is universally effective exists All organizations, regardless of their cultural context, face the same basic problem: the need to attract, motivate, and retain talent to attain the organizations' objectives. Many studies both in the United States (e.g., Arthur, 1994; Delaney & Huselid, 1996; Huselid, 1995; Huselid et al., 1997; Lawler et al., 1995) and elsewhere (Bae & Lawler, 2000; Guthrie, 2001; Hartog & Verburg, 2004; Katou & Budhwar, 2007) support the existence of a core set of HR principles that improves organizational performance. 2.2.2. Global convergence in HR systems Authors often conceptualize the core HR system discussed in the previous section as a High Performance Work System or HPWS (e.g. Baron & Kreps, 1999; Pfeffer, 1998). Although the literature is not clear on a single set of principles that best represents HPWS, such principles usually include “careful and extensive systems of recruitment, selection and training; formal systems for sharing information with the individuals who work in the organization; clear job design; local level participation procedures; monitoring of attitudes; performance appraisals; properly functioning grievance procedures; and promotion and compensation schemes that promote the recognition and financial rewarding of high-performing members of the workforce” (United States Department of Labor, 1993; quoted by Brewster, 2007, p. 777). HPWS intends to promote the commitment of employees to their organizations as well as the firms' ability to acquire, develop and 1775 retain the best workforce (Bae & Lawler, 2000). Another oftenmentioned benefit of HPWS is flexibility. That is, the increased complexity of contemporary business environments forces companies to rely much more than before on the involvement and discretion of their employees, which improves their ability to react to environmental changes rapidly and effectively. Overall, the idea underlying HPWS is that employees, as human capital, can be a source of competitive advantage, and that HR practices should therefore facilitate the emergence of their unique talent (Guthrie, 2001). In fact, the resource-based view of the firm is the perspective that many of these authors (Becker & Huselid, 1998; Huselid, 1995; Katou & Budhwar, 2007) refer to when they establish a theoretical framework for their arguments. Note that for this position, what gives firms a competitive advantage is the implementation of all the principles underlying HPWS in combination, rather than separately. While competitors can easily replicate a single HR practice, the distinctiveness and inimitability that comes from implementing an entire set of practices are the ones providing the firm with a competitive advantage (Wright, Dunford, & Snell, 2001). Therefore, the implementation of HPWS practices can have synergic effects, as the joint effect of these practices is greater than the sum of the individual practices acting alone. 2.2.3. Focus on selection to manage cross-cultural differences The existence of cultural differences among countries, as the diversity thesis points out, can create problems in the implementation of the core HPWS principles, since some of these principles may clash with the idiosyncratic cultural traits of a particular country. The solution that universalism offers to this potential conflict is to exercise a tight control of the entrance gates to the organization by recruiting those people in any given country who most closely fit the HPWS principles (Arthur, 1994; Delaney & Huselid, 1996; Huselid, 1995). This type of employee selection seems feasible, because even the authors that emphasize the existence of crosscultural differences (e.g., Hofstede, 1984; Trompenaars, 1993) acknowledge that a nomothetic characterization of a country cannot apply equally to every member of its population. Furthermore, despite the proclaimed moral superiority of the culturalist view, which is presumably derived from its emphasis on tolerance for “alternate ways to do things” and the resulting need to keep an open mind, employees in multinational companies may prefer HPW systems. Employees may value the fact that, once they have been selected, HPW systems bear the implied promise of equal opportunity and merit-based rewards, thus removing some of the subjectivity that can encourage employees manipulate their bosses for what they want. Taken together, the arguments expressed above suggest that firms that implement the core set of HR principles will obtain the best results. Hence, Hypothesis 2. Firms that implement a high-performance HR system will be more effective in attracting, retaining and motivating a local workforce than those which do not implement such high-performance HR system. 2.3. Theoretical underpinnings of the culturally-animated universalist approach As explained, universalism and culturalism share the diversity thesis, but they also have important differences. While universalism underscores universal principles, convergence towards those principles, and the need to carefully monitor the organizations' entrance gate (i.e., rigorous selection), culturalism highlights the relative character and divergence of management practices, as well as the need to adapt those to local contexts. The third position, labeled as the culturally-animated approach, is best described as a combination of the previous two positions. A weak form of universalism informs the culturally-animated position. That is, even though some generic HR principles (e.g., high performance recognition and reward) enjoy universal effectiveness, the different Author's personal copy 1776 J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 interpretations represented by the various solutions to this general principle are not uniformly effective across all geographical areas (Caligiuri, Lepak, & Bonache, 2010). In this vein, Colbert (2004) notes that the same HR principle can be implemented through relatively different policies and practices. For example, offering family-related benefits may be more effective in low income countries than in rich countries, given the relevance that family has in the former group of countries (Inglehart & Baker, 2000). Or individual performance-based financial rewards will be more effective in the US, which has a very individualistic culture where individuals crave recognition for their contributions, than in countries with more collectivistic cultures, where group-incentives may have better results (Gómez Mejía et al., 1995). Three core premises underlie the culturally-animated position: the level of analysis, the differential convergence, and the culturally animated premises. 2.3.1. The level of analysis premise Researchers can analyze HR activities at different levels of abstraction (e.g., Becker & Gerhart, 1996; Colbert, 2004). One may argue that whereas universalism focuses on the level of universally desired HR principles, culturalism focuses on the presumably lower level of specific HR practices. From this vantage point, the universalist position accepts that cultural differences are legitimate and needed at this lower level of HR practices. As shown in Fig. 2, which illustrates the practices that characterize the culturalist approach, different practices constitute a valid representation of the same principle of performance-related pay in different countries. 2.3.2. The differential convergence premise According to this premise, the core HR system represented by High-Performance Work Systems moves organizations towards the same goal, but given different cultural heritages, the trajectories of these HR systems will remain divergent (Brewster, 1995). In other words, although HPWS move all organizations in the same general direction, they can move on parallel trajectories shaped by their cultural heritages (Inglehart & Baker, 2000). Therefore, the introduction of these systems lacks absolute uniformity, since country differences in implementation will remain. For example, a rigorous or formal selection process may spread across countries, but the specific selection practices will likely differ from country to country. 2.3.3. The culturally moderated-effect premise The two previous premises (i.e., compatibility and differential convergence) could suggest that culture acts only at the level of practices. However, culture can also act on principles as a moderating variable. Rather than viewing culture as a variable with no effect on the core HR system, as universalism does, or alternatively as the main Principles Universalism Level of analysis Performance based rewards Practices Culturalism Country A Country B Individual Bonus Group Bonus High pay disparity Low pay disparity Much discretion given to supervisors in pay allocations Little discretion given to supervisors in Dispensing pay Fig. 2. Two level analysis. predictor of the most effective HR system, as the culturalist approach predicts, this premise assumes that culture moderates or animates the core HR system. According to this premise, even if a core HR system of universal appeal exists, its effectiveness depends on its level of congruence with the cultural profile of the country where the firm implements it. This idea of culture as a moderating variable is rooted in a wellestablished tradition in sociology, as well as in the management literature itself. Three examples should suffice to illustrate this point. Weber (1904) illustrates how the Calvinist Doctrine contributed to the development of the capitalist system. More recently, Fukujama (1995), has argued that a cultural heritage of “low trust” puts a society at a competitive disadvantage in global markets because such society is less able to develop large and complex institutions. Finally, in the management field, the Globe study on global leadership, while reporting cultural differences across countries, also identifies a set of leadership profiles of universal use (Javidan et al., 2006). Therefore, the performance orientation of a country could affect the successful implementation of a high performance system. Javidan et al. (2006) have shown that the level of performance orientation varies internationally, and the researchers employed this cultural dimension to test the culturally-moderated effect premise in the next hypothesis (see Fig. 1 too): Hypothesis 3. The effectiveness of a high-performance HR system will be moderated by the extent to which the country in which the firm operates has a performance-oriented culture, such that a high-performance HR system will work best in performance-oriented cultures. Table 1 summarizes how the three approaches described here differ in their views on the universality of HR potential, global HR trends, the best way to manage cross-cultural differences, as well as their predictions concerning the HR-Performance Link. Next, the researchers describe an empirical test of the three hypotheses in the context of Latin America. 3. Methodology 3.1. Sample The researchers collected data through a survey distributed to CEOs or HR managers of Latin American companies (either local companies or subsidiaries of MNCs) during the spring of 2010 (questionnaire items are available under request from authors). A hundred and thirty eight Latin American managers from 16 different countries answered the survey. The researchers secured access to these managers through their executive education assignments at well-known business schools in Spain and Costa Rica. These executive courses aimed at top managers and covered different HR topics. The researchers also used snowball sampling so that managers could circulate the survey to indirect contacts. The survey asked respondents to indicate the country in which the firm operated as well as the firm headquarters' country of origin when the company was a subsidiary of a foreign MNC. The survey also asked them to indicate whether the company was family-owned or not, as well as the industry to which the firm belonged. The researchers deleted from the sample managers who were neither general managers nor HR managers (e.g., managers from finance or marketing departments). Summary statistics of the companies appear in Table 2. 3.2. Measures 3.2.1. High-performance HR system This construct refers to the extent to which the focal company uses a set of high-performance work principles together as previous studies have described them (e.g., Becker & Huselid, 1998). The researchers include nine different principles, which refer to the use of Author's personal copy J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 1777 Table 1 Comparison among the three approaches. Culturalist approach Universalist approach Culturally-animated universalistic approach HRperformance link The dependence thesis: HR principles derive their efficiency from cultural acceptance Global trend in HR Systems Basic way to manage cross-cultural differences Hypothesis The persistence thesis The core HR system thesis: there is a determinate set of HR principles that are universally valid and efficient The global convergence thesis The level of analysis thesis: universalism at the level of principles and open to culturalism in practices The differential convergence thesis Adapt HR principles and practices to the local way of doing things Focus on Selection and apply HPW principles The success of HPW principles will be moderated by culture H1. Firms that implement idiosyncratic HR practices will be more effective in attracting, retaining and motivating a local workforce than those which do not implement such idiosyncratic HR practices. H2.Firms that implement a high-performance HR system will be more effective in attracting, retaining and motivating a local workforce than those which do not implement such high-performance HR system H3. The effectiveness of a high-performance HR system will be moderated by the extent to which the country in which the firm operates has a performance-oriented culture, such that a highperformance HR system will work best in performance-oriented cultures. Table 2 Sample. Country Family business? Number of employees Industry Subsidiary of MNC? Categories Percentage Mexico Argentina Puerto Rico Peru Costa Rica Nicaragua Panama Ecuador El Salvador Paraguay Honduras Guatemala Colombia Bolivia Uruguay Chile Yes No Less than 100 100 to 500 500 to 1000 More than 1000 Agriculture and Fishery Energy, manufacturing, construction Wholesale and retail trade; hotels; catering; repairs Transport and Communications Banking; financial services; insurance; business services Public Administration Others Yes No 17.9 0.7 0.7 11.2 18.7 12.7 6.0 6.7 5.2 1.5 7.5 7.5 0.7 1.5 0.7 0.7 44 56 17.8 35.6 13.3 33.3 4.3 15.9 6.5 5.8 23.2 2.2 42.0 42.3 57.7 formal recruiting methods, formal performance appraisals, profit sharing policies, career development programs, multifunctional training, teamwork training, employee participation in decision making and information sharing policies. The survey asked respondents to state on a scale from 1 to 5 the extent to which they agreed that their company was implementing these HR principles. To compute an overall measure of high-performance HR system the researchers used z scores for each of the nine principles to obtain an overall averaged value for each company. All items loaded on a single factor. Cronbach's alpha for this scale was .86. 3.2.2. Idiosyncratic HR practices The researchers measured this construct using four HR practices that the literature describes as consistent with prototypical Latin American cultural values, and that at the same time are in contradiction with a high-performance HR system. These four practices are (1) promotions based on seniority, (2) promotions based on popularity or “fitting in”, (3) lack of individual reward recognition, and (4) use of status symbols by top management. Latin American countries score high on Hofstede's “power distance”, “uncertainty avoidance”, and “collectivism” dimensions (Davila & Elvira, 2005). Gómez Mejía et al. (1995) provide a description of HR staffing, appraisal, and reward practices that are expected to be effective based on Hofstede's cultural dimensions. Among those, seniority-based promotions and rewards are recognized as being well adapted to both collectivist and uncertainty avoidance national cultures. Gómez Mejía et al. (1995) also describe “fitting-in” as a crucial aspect that is taken into account in collectivistic cultures when it comes down to staffing and appraisal decisions. Finally, lack of individual reward recognition is common in collectivist societies. All these practices (i.e., seniority and fit-based appraisals as well as lack of individually-based rewards) are good examples of HR practices that are in line with the underlying Latin American values and that contradict the emphasis on performance-based rewards and Author's personal copy 1778 J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 4. Results career policies that characterize HPW systems. Finally, the use of status symbols such as expensive cars or large offices as management rewards is, according to Gómez Mejía et al. (1995), consistent with high power distance cultures such as the Latin American, while clearly against the more egalitarian approach adopted in high-performance HR systems. Hence, this item was also included as an example of a “culturalist” HR practice. In addition to the four HR practices mentioned, the researchers also included as “culturalist” two high performance work practices, reversely coded from their original wording in the questionnaire. These practices were participation in decision making (which reversed was a proxy of hierarchical decision making) and formal search methods (which reversed was a proxy of informal or “grapevine” based search methods). Newman and Nollen (1996) describe lack of participation in decision making as typically associated with high power distance cultures, such as Latin American. As for lack of or limited formal search methods, this practice is also consistent with high power distance cultures, where the emphasis is on personal connections and “who you know” (Gómez Mejía et al., 1995). The “culturalist” practices included in the analyses did not cluster under a single factor, which led us to treat them individually rather than as a single “culturalist” HR system. Descriptive statistics and correlations for high-performance HR principles, idiosyncratic HR practices (presented individually), HR performance, MNC, family ownership, and company size (as the log of the number of employees) appear in Table 3. An examination of the bivariate correlations suggests positive associations between high-performance HR system and HR performance, as well as a negative association with the use of three “culturalist” HR practices (i.e., informal search methods, hierarchical decision making, and promotion based on popularity). In addition, these three HR policies as well as promotion based on seniority negatively correlate with the use of high-performance HR principles. Lack of individual reward recognition, which positively correlates with a universalist high-performance HR system, is the exception. Finally, being a MNC negatively associates both with family ownership and with the use of seniority-based promotions, and positively associates with the adoption of high-performance practices; this finding is in line with the notion that MNCs are the main diffusers of these HR practices (Bonache, 2000). To test Hypothesis 1, which stated that firms implementing idiosyncratic HR practices would be more effective in attracting, retaining, and motivating employees, the researchers regressed HR performance on the individual “idiosyncratic” HR practices described earlier (i.e., informal search methods, promotion based on seniority, promotion based on popularity, hierarchical decision making, use of status symbols by top management, and team-based rewards). The results appear in Model 2 (Table 4). Informal search methods, hierarchical decision making, and popularity-based promotion policies are strongly and negatively associated with HR performance. Therefore, Hypothesis 1 is not supported. To test Hypothesis 2, which stated that the use of a highperformance HR system would increase firms' effectiveness in attracting, retaining, and motivating employees, the researchers regressed HR performance on high-performance HR system. The results in Model 1 (Table 4) show that high-performance HR system is a significant and strong predictor of HR performance, hence supporting Hypothesis 2. To test Hypothesis 3, which stated that the extent to which the country in which the firm operated had a performance-oriented culture would moderate the effectiveness of a high-performance HR system, the researchers used Hierarchical Linear Modeling (HLM). The level-2 data for the cross-level analysis came from the GLOBE study, which reported average scores for performance orientation for different Latin American countries (Javidan et al., 2006). Because the GLOBE study does not include every Latin American country, the researchers employed a subset of 78 firms in these cross-level analyses. In addition, the researchers gathered GDP (adjusted per person) for each country to control for potential confounds with cultural values. The results (Table 5) indicated that, as predicted by Hypothesis 3, 3.2.3. HR performance This construct refers to the perceived ability of the company in comparison to its competitors to attract, retain and motivate its workforce. In the past, other authors have used perceptual measures (Björkman & Budhwar, 2007; Delaney & Huselid, 1996; Youndt, Snell, Dean, & Lepak, 1996) and studies show that subjective measures of firm performance correlate well with more objective measures (Geringer & Hebert, 1991; Wall et al., 2004). In addition, the firms in the sample came from a variety of industries and countries, were embedded in a variety of markets, and ranged in size from less than 100 to more than 1000 employees. These broad and numerous differences made it difficult to draw comparisons across more objective indicators. The survey asked respondents to rate on a scale from 1 to 5 the extent to which their company had more (or less) ability than the industry average to (1) attract talent to the company, (2) retain the best professionals, and (3) obtain very productive workers. Cronbach's alpha for this scale was .87. 3.2.4. Control variables Control variables included industry, country, company size (operationalized as the log of the number of employees), family ownership, and whether the company was a subsidiary of a foreign multinational company or not. Analyses of variance for all relevant constructs found no significant differences across industries or countries. Size, family ownership, and multinational company status were control variables in the regression analyses. None of these controls was significant. Table 3 Correlation matrix. 1. High-perform. HR system 2. Informal search methods 3. Promotion based on popularity 4. Promotion based on seniority 5. Hierarchical decision making 6. Status symbols for top mgmt. 7. Team-based rewards 8. HR performance 9. MNC 10. Size 11. Family-owned Mean S.D. 1 0 2.1 2.4 2.7 3.1 2.9 2.7 3.3 .4 2.7 .4 .7 1.2 1.3 1.4 1.1 1.4 1.1 .9 .5 .8 .5 1 −.65** −.35** −.28** −.70** .03 .45** .60** .23** .05 −.17 Note: n = 138. ⁎p b .05 ⁎⁎p b .01 two-tailed. 2 3 4 5 6 7 8 9 10 1 .42** .28** .24** −.15** −.34** −.16 −.01 .04 1 .09 .14 −.09 −.12 −.30** −.01 .08 1 .11 −.36** −.54** −.12 .00 .09 1 −.09 −.05 .01 .18* .00 1 .19* .08 −.07 −.04 1 .10 .06 −.01 1 .05 −.06 1 −.14 1 .19* .19* .34** −.13 −.13 −.43** −.12 −.15* .18* Author's personal copy J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 Table 4 Regressions on HR performance. Independent variables Model 1 Model 2 .60⁎⁎ High-performance HR system Idiosyncratic HR practices Informal search methods Popularity-based promotion Seniority-based promotion Hierarchical decision making Status symbols for top mgmt. Lack of individual rewards R2 Adjusted R2 F −.27⁎⁎ −.19⁎⁎ .05+ −.40⁎⁎ .01⁎ .01 .39 .36 13.34⁎⁎ .36 .36 72.54⁎⁎ Note: n = 138. Standardized regression coefficients are shown. ⁎⁎ p b .01. + p b .10. ⁎ p b .05. Table 5 Results of HLM analyses. Variable HR performance Intercept High-performance HR system Performance orientation High performance HR principles × performance orientation 3.09⁎⁎ .60⁎⁎ .66 1.35⁎⁎ Note: n = 78. Table entries are estimations of fixed effects (γs) with robust standard errors. ⁎⁎ p b .01 (two-tailed tests). the GLOBE value of performance orientation moderated the effectiveness of high-performance HR principles, such that these practices were most effective in firms located in performance-oriented countries. The interaction graph (Fig. 3) suggests that universalist practices are more efficient in high performance oriented countries. The two lines represent a standard deviation above and below the mean. 5. Discussion and conclusion The goal of this study was to answer the question of whether firms should adapt their Human Resource Management practices to crosscultural differences. The authors address this question both 3.95 PERFOR =-0.174 PERFOR = 0.226 HRPERFOR 3.54 3.14 2.73 2.33 -0.85 -0.40 0.04 0.49 0.94 UNIVERSA Fig. 3. Interaction effect between universalist practices and performance orientation. 1779 theoretically and empirically. Theoretically, the authors introduce three positions in the literature (i.e., universalist, culturalist, and culturally-animated). The universalist position states that a set of HR principles used in combination increases HR performance regardless of the local context where these principles are applied. The culturalist position states the opposite, namely that such universal set of HR principles does not exist and that the principles to be applied are dependent on cultural work values. The third position, the culturally-animated one, has been less explored in the HR literature comparatively to the other two. This position partly reconciles the universalist and culturalist positions by acknowledging the existence of a body of HR principles of universal application, while arguing that culture moderates their relative effectiveness. The results provide support for both the universalist and the culturally-animated universalist approaches, but fail to lend support to the culturalist position. That is, HR performance positively associates with the use of universal high-performance HR principles. In addition, several HR practices fitting core values of the Latin American region (e.g., informal search methods, popularity-based promotion, or hierarchical decision making) but opposing high-performance HR principles negatively associated with HR performance, hence running counter to the culturalist position. These results hint that the extent to which the country in which the firm operates has a performanceoriented culture that moderates the effectiveness of high-performance HR principles, thereby supporting the culturally-animated position. The findings suggest that extreme versions of both the universalist and the culturalist positions are unlikely to be effective. That is, while the culturalist position original emphasis on the need to adapt to cultural diversity is based on sound judgment and empirical evidence (c.f. Newman & Nollen, 1996), this does not imply that companies should reject certain, universally valid HR principles. Similarly, whereas the literature has established the positive effects of highperformance HR principles (e.g., Arthur, 1994; Delaney & Huselid, 1996; Huselid, 1995; Huselid et al., 1997; Lawler et al., 1995), this does not imply that the same HR practices should be indistinctively applied across all cultural contexts. The culturally-animated thesis, which represents a more sensible position that draws from both universalism and culturalism, seems to work best. The superiority of the culturally-animated position may stem from the fact that, unlike universalism and culturalism, this position distinguishes among different levels of analysis (Colbert, 2004). Researchers can analyze the HRM function at different levels such as that of principles, practices, or implementation processes; whereas principles are the broader level, implementation processes are the most specific. One could situate on this continuum the universalist position at the broadest level, that of basic principles. Consider for example, the management principle that employees need to be rewarded based on their performance. This principle may have universal validity, therefore being applicable to Latin American countries. However, when it comes down to implementing this principle, one could choose from a number of policies (e.g., sales commissions, performance bonuses, merit increases, stock options plans) that best fit the Latin American context. In other words, the same universal HR principle can be implemented in a number of different ways, some of them better suited than others to the focal Latin American context. Colbert (2004) notes that the strategic HR literature often ignores these differences in the level of abstraction. More recently, Davila and Elvira (2009) have noted that each HR “practice consists of the tool or instrument, the content of the tool, the management of the process involved in using such tool, and the outcome produced” (p. 181). While the basic tool used may be the same, the other elements may vary from context to context. The distinction among levels of abstraction is important, because the data suggest that culture acts not only at the fine-grained level of practices or implementation processes, but also at the level of general principles. The results show that in countries with a higher Author's personal copy 1780 J. Bonache et al. / Journal of Business Research 65 (2012) 1773–1781 performance-orientation culture, high-performing HR systems are likely to work better than in countries with a lower performanceorientation culture. The international human resource management literature has not fully acknowledged this moderating role of culture at the level of principles, which is commonly found in sociology (Fukujama, 1995; Inglehart & Baker, 2000; Weber, 1904). In essence, this finding supports the argument that the same HR principles can be translated into different HR practices depending on the country. This position does not deny the existence of universalist HR systems; on the contrary, the culturally-animated universalist position acknowledges the relevance of national culture. This study also contributes to a nascent stream of literature on HR management in Latin America (Bonache et al., 2009; Davila & Elvira, 2009; Elvira & Davila, 2005a, 2005b; Montaño, 1991). The study provides multi-country Latin American evidence supporting the validity of culturally-animated, universalist HR principles. The results are also in line with previous evidence (Gómez & Ranft, 2003; Ramirez & Zapata-Cantú, 2009) showing that foreign MNCs can successfully adopt HPWS in Latin America, in spite of the initial difficulties associated with their implementation. This study has some limitations that are common to other quantitative studies in the same area such as the use of cross-sectional data, the use of perceptual or self-report measures, or the fact that the researchers collected data from a single respondent per firm, even if the respondent (i.e., general manager or HR manager) was always someone very familiar with the HR system implemented in the firm. Whereas the use of questionnaire-based measures raises the threat of common method variance, the researchers used the Harman's one-factor test (Podsakoff & Organ, 1986) to assess that threat. The analysis produced multiple factors, showing that common method variance was not pervasive in this study. Second, secondary data were the basis for the country performance-orientation measure, significantly limiting the study's exposure to common method bias. Third, the most essential finding was a non-linear interaction, which is less likely to be inflated by common method variance than linear relationships (Crampton & Wagner, 1994; Podsakoff, MacKenzie, Lee, & Podsakoff, 2003). Despite these limitations, the study makes seemingly important both theoretical and practical contributions. The study makes explicit a too often latent debate in the literature between proponents of universalism and culturalism, and proposes a synthetic position (i.e., culturally-animated) that surpasses this debate by drawing from both theories. In addition, the study findings have practical implications for HR managers in Latin American countries and elsewhere, as they warn against the indiscriminate use of local HR practices when these run counter to well-established high-performing HR principles. These findings suggest that these high-performing principles will not work equally well across different contexts. Two complementary implications for practice follow from the findings: (1) HR principles that firms translate into HR practices in ways that are insensitive to local culture are less likely to be effective than those that consider cultural nuances, and (2) locally adapted HR practices that openly contradict universal HR principles are unlikely to improve, and they may even harm HR performance. Further research should concentrate on shedding light on the process through which firms should adapt high-performance HR principles to countries with very different cultural profiles. This process would require a great deal of both cultural awareness and creativity (see Gómez & Ranft, 2003 for an example). In addition, a study examining the three positions presented in this paper not from the managers' perspective, but from that of employees, would also be interesting. 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