Strategic Issues and Local Constraints in Transnational Compensation Strategies:: An Analysis of Cultural, Institutional and Political Influences

In response to globalisation, increasing numbers of multinational enterprises (MNEs) have implemented transnational corporate strategies characterised by global standardisation as well as local responsiveness. If human resource management (HRM) is to provide a support function, it is suggested that these strategic developments should be reflected in the compensation strategies of the MNEs.The authors apply a resource dependence perspective to analyse power relations in MNEs. Political influences, in addition to cultural and institutional influences, may impact the balance between global standardisation and local responsiveness within the transnational compensation strategy. This theory-based analysis is applied to the case of a transnational compensation strategy implemented by a pharmaceutical MNE. The result of these theoretical and empirical considerations is a framework of critical resources being responsible for different power relations in MNEs.