An institutional theory perspective on e-HRM’s strategic potential in MNC subsidiaries

• E-HRM practices are influenced by a number of local institutional pressures.
• Few empirical studies take into account the institutional factors.
• Chinese legislation, mindset, language, guanxi and Confucian values influence e-HRM.
• Findings present how institutional factors create positive and negative consequences.
• Some responses to pressures enabled the transposition of a new strategic IS practices.

This paper extends the application of institutional theory to electronic human resource management (e-HRM), and strategic information systems (IS) more generally, in a multinational corporation (MNC) subsidiary setting. By adopting Scott’s (2001) institutional theory perspective, this paper explores the effects of host-country institutional factors on strategic e-HRM practices in foreign subsidiaries. More specifically, the aims of this paper were, first, to shed light on how regulative, cognitive and normative institutional dimensions affect Western-based e-HRM practices in MNC subsidiaries in China, and second, to examine how these institutional factors influence the strategic potential of e-HRM in this setting. Based on interview data collected from key informants in 10 MNC subsidiaries from Beijing and Shanghai, the findings illustrate how institutional pressures create both positive transformational and negative dysfunctional consequences for subsidiaries, and that subsidiary responses to these pressures can substantially affect the ability of IS to achieve its strategic potential. Although observed local adaptations were seen to restrict the strategic potential of IS, in some cases responses seem to have enabled the transposition of a new set of strategic IS practices to this non-Western setting.