Research On

Links between HRM Business Strategy with Performance: and Firm

A Cross-cultural Study among US, EU and Japanese MNCs in South Asian Emerging Economy

Comparative Perspective in HR (HRM- 680.1)

Submitted To
Md. Khasro Miah, Ph.D. Associate Professor, HRM School of Business North South University

Submitted By

Name Md. Ahsan Ali Khan Sayeef-Al-Nahian Khan Rakib Ahmed M A Zobayer

Student ID 102-0839060 101-0583060 081-679-090 102-0513560

Date of Submission: May 9, 2012

Letter of Transmittal
May 9, 2012 To Md. Khasro Miah, Ph.D. Associate Professor, HRM School of Business North South University Subject: Submission of Research on A Cross-cultural Study among US, EU and Japanese MNCs in South Asian Emerging Economy Dear Sir: We have completed our report on A Cross-cultural Study among US, EU and Japanese MNCs in South Asian Emerging Economy as group of 4. This report is required for the course HRM 680- Comparative Perspective in HR. We were assigned as a group to conduct a research on the topic mentioned above and prepare this report. The mutual understanding among the group members has enabled us to complete the assigned task successfully. We have great hope that the research paper will meet your expectation and aid you in getting a clearer idea about the subject. Please do call us for any clarification regarding the report, if required. Sincerely yours,

Name Md. Ahsan Ali Khan Sayeef-Al-Nahian Khan Rakib Ahmed M A Zobayer

Student ID 102-0839060 101-0583060 081-679-090 102-0513560

Declaration Statement

We declare that all of the work in this research paper is done by all of our group members and the information used in this research paper is completely codified with proper reference (books, class handout provided by faculty, websites, and journals/ articles) and there is no unfair means in this research paper. We also declare that this project paper is owned by only group 4 only. So the work is completely reliable on a realistic ground.

Acknowledgement

Completing a report is a rewarding task that requires both mental stamina and attention to detail. For doing this research on the assigned topic, we have went through many articles, journals, web links, and our honorable faculty. We would like to specially thank our faculty Mr. Md. Khasro Miah, Ph.D., Associate Professor, HRM of North South University for giving us his valuable time during the busy office hours and also for being patient while answering our questions. Last but not the least, we thank our group members whose devoted effort made it easy to accomplish the report within the due date.

Table of Contents Contents Abstract and Key Points Introduction Theoretical Framework Literature Review and Hypotheses 1. Determinants of Business Strategy, and Firm Performance Fit 2. Determinants of HRM Strategy, and Firm Performance Fit. 3. MNCs Comparative fit between Western MNCs and Eastern MNCs Discussion Theoretical implication Practical implications Limitation and Future contribution Conclusion Pag es 7 8-9 1012 1318 1921 1617 1718 1921 21 21 21 22

Abstract

This study explores the cultural influences along with the business and human resource practices on US, EU, and Japanese companies in its regional basis as Home/Paretn country along with South Asian domestic companies operating in South Asia. The theoretical findings propose that a US, EU, and Japanese corporate culture have a stronger control within the companies operating in that region. Additionally, these corporate culture/ practices have less influence in the South Asian companies in terms of managing or establishing the business and HR strategy and its practices; which is operating as home/parent country subsidiaries/joint ventures in South Asian country. Basically, South Asian firms are in the learning stages in terms of managing business and HR issues with foreign companies, most of the company still tend to maintain their traditional ways but also agrees that to maintain the competitive/ stable growth in the business world; it has to perform best.

Key Points: Business Strategy, HR Strategy, Firm Performance, Emerging Market, Economy, South Asia, Culture.

Introduction
HRM practices that need to be implemented in their subsidiaries in emerging economies like South Asia is an issue of central concern for multinational corporations (MNCs). Usually a company would to take advantage of on labor costs and regional advantage that, these economies might offer for business collaborations. Now, the nature of emerging economies with relatively poorly defined managerial systems and little experience of elaboration, sophistication in human resource management (HRM) practices may create a potential obstacle in success of such economies (Habibullah, 1974; Miah, 2000; Miah et al., 2001). In the age of global village where MNCs rule; the selection and allocation of human resources have become tailored or customized enough where understanding of culture, people, lifestyle, taste and preferences are so important to do business in addition with traditional style and autocratic HR practices. To view the operational and productive scenario in South Asia, the HR issues needed to be matched enough so that the successful partnership may establish in-between the South Asian firm and the MNC in the emerging Economy. The HRM practices of a given foreign subsidiary (US, EU, and Japan) are developed in response to influences from its parent company and from its host country (South Asia) environment, expecting that there is the potential for a cultural gap to exist. MNC subsidiaries and joint ventures prefer to transfer their HRM system to all of their subsidiaries where HCN prefer to trust the locals with the development of their own HRM system. Recently, it has become evident that MNCs can adopt hybrid approaches as a means of accommodating cross-cultural competing issues that influences in oversea business. (Miah and Bird, 2007) The contrast between the sophisticated, highly elaborated HRM systems of MNCs and the traditional, often simple, but evolving systems found in the domestic companies of emerging economies is perhaps best characterized as a contrast between participative and autocratic approaches to HRM (Miah et al., 2003). Nevertheless, there may be certain conditions under which participative approaches are less effective. The suitability of any HRM system depends on variables such as institutions within the host country, the age of company, the size of company, and the overall economic development of the country, among other contingency variables. (Miah and Bird, 2007)

Figure# 1: Doing Business Data (2006-07) [Source: World Bank] Cultural variations across nations and organizational culture-based differences between organizations that are involved in the transfer of various kinds of HRM and business strategies are considered major factors that influence the success of firm performance in an emerging economy like South Asia. Relevant contributions from cross-cultural studies on management and organizations are integrated into the literature on organizational culture and diffusion of innovations. In the field of international human resource management, issues concerning effective integration of HRM and business strategies that have been regarded as central issue. A great deal of emphasis has been placed on economic factors that affect incorporation of cultural, political, historical, socialization issues in terms of managing human resources when it involves at least two organizations located in two distinct cultures, values, norms, languages etc. for a fairly long period of time business partnership or integration (Bhagat, Kedia, Harveston, & Triandis 2002). Based on the above background information, the present research on companies operating in South Asia (regardless of origin) provides us with a unique opportunity to elaborate extant theory in the HRM field by examining firm behaviors in the context of emerging economies, specifically in the management of firms in South Asia. The overarching objective of this study is to explore and assess national cultural influences along with the Business Strategy and HRM Strategy in relation with the firms performance.

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Theoretical Framework

South Asia and rest of the world; the Multinational companies have the intention to attain as much market share and profitability as possible (Beechler and Yang, 1994). Additionally, the long term plan of these organizations is to ensure existence and acceptability through innovation and access of the competitive arena (Palepu and Khanna, 2010). Based on a number of previous researches, we can affirm that the values, beliefs, and cultures of home countries( i.e. United States, Japan and countries of EU) has tremendous influence on their employee management policy, and on the decision of top management (Lincoln and Kalleberg 1990). For United States and European cultures, power is consistently distributed throughout all levels of the organization (Bose, 1998) which usually creates friction between the top and lower level management. However if MNCs operate in different cultural background like South Asia, they might find it difficult to understand the formal communication process. The Westerners are individualist whereas the South Asian and Japanese people are collectivists (Bose, 1998) so significant attention has to be given when work teams or groups are designed in an organization. Existing investigations provide evidence that Multinational Corporation acclimatize to certain extents to the culture in which they operate. This is in order to be more effectual and efficient (Beechler and Yang 1994).
US Individualism Work Comes First Social Life Large Number of Population over Large Geographical Area Tradition Less Important Utility Among Diversity EU Collectivism Work and Family Social Large Number of Population Japan Teamwork Family Comes First Anti-confrontation South Asian Countries Individualism/ Collectivi sm Family Comes First Social

Large Number of Large Number of Population over Small Population over Small Area Area History and Tradition is Important Least Diversed Environmently not Conscious Less Tech Shavvy

Tradition is Important Tradition is Important Less Diverse Environmently not Conscious Technologically Advanced

Less Diverse Environment Strict Environmental Laws Causcious Technologically Technologically Advanced Advanced

Figure# 2: Summary of Key Cultural Issues (collected) On the other hand, the degree of control over various dimensions like legal, political, historical, social and socio-cultural factors also has influence in molding the Human Resource Management strategy of any MNC as these aspects vary across the border. Significant amount of investigations have been carried out regarding the complexity between the difference of national business system and the institutions that govern the product, labor and financial market. So when MNCs from the United States, EU and Japan comes in South Asia they might come upon a significantly diverse environment which they may find hard to deal with. Again; union, government regulation, trade association, consumer interest groups and other community organizations have a great effect on the practice and

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policy of the MNCs that showed willingness to work in South Asia (Minbaeva, Pedrsen, Bjorkman, Fey and Jeong, 2003). Some of these MNCs practices might have to comply with South Asias country specific laws and regulations, and consequently be obliged to follow local practice through coercive isomorphism (Dimaggio and Powell 1983). The political atmosphere can also be an important factor which can regulate the Multinational Companies strategies. As political environment in South Asia is not too stable the MNCs have to shape their strategy accordingly. Local pressures, for instance political or social pressure, separately or in combination would lead MNC affiliates to adhere to HRM practices founded in local environment rather than the ones in foreign partners (Minbaeva et al., 2003). The availability of labor in this region also works as a factor shaping the MNCs business strategy. The degree of control of these dimensions has huge effect on particular factors. The structural factor of the subsidiary has influence over the transfer of policy and practices from one country to another (Lourdes Susaeta and Jose R Pin 2008). Additionally, the nature of the industry in which the corporation is going to enter can also have effect on the Human Resource practice transformation (Porter 1986, Prahalad and Doz 1986). The dependence of local resources may in addition have significance on the adoption of local practices (Minbaeva et al., 2003). Molding of the firm specific factor is done by the process of internationalization the firm desires to acquire. The internationalization strategy affects the firm specific factors and this generates the Human Resource activity that firm utilizes in its specific overseas operations. The Japanese firs usually use exportive orientation; where the organizations from United States and EU go for the adaptive orientation. The one state first gives the parent companys Human resource management system closest resemblance to the affiliates Human Resource system, and the second one will result in lowest semblance (Taylor, Beechler and Napier, 1996). MNC business model requires companies to generate and implement the most suitable HRM strategies in order to survive and excel in an environment which is very different from that of the home country. It is widely observed around the world in recent years that MNCs usually try to come up with a strategy that fits best with each subsidiarys unique local condition. This sort of approach is known as the formulation of a hybrid strategy. When it comes to internationalization, MNCs may adopt different strategies; in a broader context which is either to choose adaptive or absorptive internationalization strategy. In this particular study, we examine which of the two main internationalization strategies (adaptive or absorptive) may lead to better performance for the subsidiaries of MNCs in the Southern Asia, given the key cultural and HRM factors that determine the dominating strategic influence in the HRM scenario of an organization. In other words, we at finding out which of the two main internationalization strategies (adaptive or exportive) is a better fit for subsidiaries of MNCs in the South Asia to derive better organizational performance. MNCs have been examined and categorized in a multicultural HRM context based on

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the work of previous researchers and academics. Based on a review of the relevant and recent literature, two key cultural and HRM factors were identified as key components of an organizations HR transformation process. The two key factors are: (1) Business Strategies (Defender, Analyzer, and Prospector) and (2) HRM Strategies (Accumulator, Facilitator, and Utilizer). Bangladesh has been taken for the location of the study as its culture is similar to those of the South Asian region. In the context of Bangladesh, we will see how the national culture of the host country is affecting the home country, in this case United States of America, Japan, and Countries of European Union. This study will also reveal which culture is more dominant, and how cultural dominance affects the internationalization of an MNCs subsidiary in a developing economy and thus the HRM transformation process of an economy. The study also shows how organizations can derive the optimum outcome from the HRM transformation process.

Figure# 3: Conceptual Model

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Literature Review and Hypotheses

In this section, we review the research literature on HRM systems and firm performance, with a particular focus on the effectiveness of participative systems where business strategy and HRM strategy fits in. As global competition increases, organizations trying to find best strategic fits actively to pursue the tremendous opportunities for strategic success in emerging economies. Organizations that can select the appropriate market entry for the product line strategies along with measuring the development program performance generally has greater chances of success, even in the face of tougher international competition and dramatic economic cycles like South Asia. (Cherian, Crooker, Knight, McPhaul and Manion, 2010). According to Wilson and Stupnytska (2007), Next Eleven (N11) group of nations which includes Bangladesh and Pakistan offers the greatest potential for organizations seeking to enter emerging economies. So, Organizations needs to follow specific business entry strategies to understand and utilize the incredible potential rewards of rising economies, (yip, 2003). The HR system is one of the most important organizational systems of any company like finance system, marketing system, production system etc and it plays the most important role in the formulation of organization wide strategies (Abdul-Halim and Che-HA, 2009). Based on four national surveys and observations on more that 2,000 firms, our judgment is that the effect of a one standard deviation change in the HR system is 1020% of a firms market value (Huselid & Becker, 2000). That is why there have been many attempts to classify different HR strategies. (http://www.mcu.edu.tw/department/management/mcuba/ba/symposium/2005/Manpower%20resources%20management %20group/11.pdf by: Rough-Yun and Yan-Hwa). The concept of HRM strategy is relatively new in South Asian country. But the effectiveness of scale to measure the HRM strategy is very much popular and has been used in numerous studies in Western countries. In 1984, Miles and Snow has shown the link between business strategy and HRM strategy. Utilizer, accumulator and facilitator; these three HRM strategies has been recognized while linking business strategies with HRM strategies and these three strategies goes pretty well with the business strategy typology( Abdul-Halim and Che-HA,. 2009) Citing work by Bailey (1993), Huselid mentioned that high-involvement HRM strategies give Firms higher level of flexibility to react to chang-ing circumstances in any difficult situation since workers can do the au-tonomy without first obtaining permission from higher management. Theoretical work by other authors supports Huselid's point of view. High-involvement HRM strategies can improve, strengthen, and maintain and gain competitive advantage in today's first changing business environments (Lado & Wilson, 1994; Ulrich, 1998; Ulrich & Lake, 1990). (Lawer, and Bae, 2007) and this is what is really needed for better firm performance not only in South Asia but all over the world. With this as a foundation, we propose seven hypotheses relating to the use and efficacy of different types of business strategy and HRM systems in South Asia and their relationship to performance. These Hypotheses has been divided into 3 parts

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1. Determinants of Business Strategy, and Firm Performance Fit 2. Determinants of HRM Strategy, and Firm Performance Fit. 3. MNCs Comparative fit between Western MNCs and Eastern MNCs 1. Determinants of Business Strategy, and Firm Performance Fit How effective the business strategy of a firm depends on the fit between business strategic choices and market dynamism. (KZ and Li CB 2010). According to Slater S, Olson E, Hult G; they had studied the Firm performance implications of matching business organizational architecture to four generic business strategies (Prospectors, Analyzers, and Defenders). These three strategies have also been discussed by many researches such as (Pelham and Lieb), (Snow, Fjeldstad, Lettl and miles 2010), (Bird and Beechler 1995). Prospectors, defenders, and analyzers can coexist in an industry but it is important for the MNC to choose the best strategy that will fit them. (Snow et al,. 2010). According to (Cherian et al,. 2010), Prospectors emphasize more new to the world projects in their development programs; Defenders emphasize product improvements; and Analyzers emphasize market re-positioning and additions to product lines and further discussion is available on about these strategies are in (Gatignon & Xuereb, 1997, and Zhou et al., 2005). So to understand what business strategy will best fit the organization we need to understand the basic definition of it. Prospectors view the environment as "changing and as containing opportunities" (Pelham A and Lieb P). It generally is the first to enter emerging new market with new product lines not necessarily that new products will be profitable and they may withdraw unsuccessful products in the short term. (Cherian et al., 2010) The strategy, structure, systems, and behaviors of the most successful Prospectors are driven and supported by an emerging culture where firm has enough opportunity for commitment to innovation, propensity for risk, commitment to flexibility. Offensive marketing warfare strategies are a common way of obtaining additional market share. It is the most entrepreneurial of strategy types where opportunity to have a high propensity for risk and be able to move rapidly in order to capitalize on emerging opportunities is required. (Slater and Olson, 2010). It pursues market expansion and innovation. It is very important for human resource units to perform an entrepreneurial role so that it can identify develop crucial human resources as early as possible through the rapid movement. (Bird and Beechler, 1995) The industry that they operate in tends to be in the introduction or growth stage of its life cycle, with few competitors and evolving technology. These strategies requires continually develop new products and achieve success by moving first relative to their competitors through anticipating the market based on their research and development efforts and by understanding the capabilities of their customers for purchasing their product/services. (Snow et al., 2010).

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So, from the above discussion we can make hypothesis: H1: Prospector Business Strategy will be positively associated with firm performance perceived by managers. Analyzers will emphasize market re-positioning and additions to product lines. (Cherian et al., 2010). These firms are followers of Prospectors into attractive emerging economy or market with improved products and with lower prices. These firms compete by quickly improving on the Prospector's value proposition through features and price. (Slater and Olson, 2010) Firms with Analyzer Strategy are not the first mover in an emerging market but they enter market where they can server their existing products well. They tend to Operate independently. (Snow et al., 2010). Firms who follow Analyzer business strategy generally enter growth markets with existing product and try to enhance firm performance by promising new product lines. (Cherian et al.,2010). Firm with Analyzer strategies, managers judge that the firm can participate both in early and later phase of the products. The human resource division needs to focus on extensive and proper training and maintenance role for the employees. For innovative developments, flexible and inspirational team structures needs to be created by the HR division so that firm can play a more developmental. Thats why Self- motivated employees are keys for Analyzer strategy. (Bird and Beechler, 2010) So, from the above discussion we can make hypothesis: H2: Analyzer Business Strategy will be positively associated with firm performance perceived by managers. Defenders perceive the environment easily analyzable and stable and the management is aware to protect what their company is having currently. (Pelham A and Lieb P). This strategy tends to create a secure market share with reasonable, stable growth and sustain this specific strategy; Defenders rely heavily on internally developed human resources such as careful selection of employees, their placing and training. Not only that, this strategy needs those loyal employees who are willing to be with the company as long as they can. (Bird and Beechler , 1995). This strategy entails a decision not to aggressively pursue markets. As a result, they tend to do none of the things prospectors do. A defender strategy entails finding, and maintaining a secure and relatively stable market, that means searching for economies of scale in markets that are predictable and expandable are the key for the firm here. (Snow et al., 2010). Rather than being on the cutting edge of technological innovation, product development, and market dynamics; a defender tries to insulate themselves from changes wherever possible. Rather than focusing on new opportunities its focuses attention within on ways to improve organizational efficiency. (Bird and Beechler, 1995). It work better when industry needs to protect their presented markets with a more narrow variety of products with superior quality and service, lower prices, and bigger value. They are

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characterized as remaining in current markets and having a limited number of stable product lines (Cherian et al., 2010). So, from above discussion we can make the following hypothesis: H3: Defender Business Strategy will be positively associated with firm performance perceived by managers.

2. Determinants of HRM Strategy, and Firm Performance Fit. What HRM practices to implement in their subsidiaries in emerging economies is an issue of central concern to multinational corporations (MNCs) (Miah and Bird, 2007). Analyzing connection between contributory business and HRM strategy and the link to HRM outcomes and firm performance is very important (Bird and Beechler, 2010) to reduce the cultural distance between individualist and collectivist cultures (Fujimoto et al 1990) that has gained a bigger interest in international business research. (Tiganyi L and Griffith D, 2005). One of the most significant effects of international business is the transfer of Multinational Corporations policies and practices throughout the different nations in which they operate. Gaining the robust between environment,Business strategy and HRM is difficult under any circumstances (Bird and Beechler, 1995) because the best practice in one country not necesserrily the best practice in another country since culture and value system as well as institutional and structural factors are very different from one country to another (Aycan, 2005) while culture of South Asia is pretty different from EU and US. TO minimize this conflict Lots of studies have been provided for HRM strategy and plentiful attempts have been made to characterize its concept operational (Abdul-Halim and Che-HA, 2009). In close approximation with the business strategy methods, three types of HRM strategy discussed by Miles and Snows in 1984 and these are known as Utilizer, accumulator and facilitator. Where, link between HR and business strategy can be found in Accumulator-Defender, Facilitator- Analyzer and Utilizer- Prospector. (Bird A and Beechler S, 2010). Accumulator HRM strategy develops companys workforce from a long term perspective. It provides steady career corridor within the organization (Rouh-Yun Y and Yan-Hwa C). Firms, that believes frequent innovation through employee training and development are best fits for this strategy [Bird and Beechler, 1995]. Accumulator is based on maximum involvement and skilled execution that can build the employees of the organization through the acquisition of personnel with large latent potential and the development of that hidden prospective over time in a manner reliable with the needs of the organization (Abdul-Halim and Che-HA, 2009). Among this three strategies, Accumulators invest and emphasis on training the most and certainly they wants their employees to stay in the organization for longer period. So organization that follow Defender Strategy can emphasize

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Accumulator HR strategy to make their organization run best. [Bird and BeechlerS, 1995] So, from above discussion we can make the following hypothesis: H4: Accumulator HRM Strategy will be positively associated with firm performance perceived by managers. Utilizer HRM strategy is based on minimal commitment and high skill utilization. It seeks to deploy the HR of an organization as efficiently as possible through acquiring and dismissing personnel based on short term needs and matching employee skills to specific task requirements (AbdulHalim and Che-HA; Bird and Beechler, 2010). Organization facing with constantly changing economy is best fit for this strategy. Utilizer firms does not emphasize must . Employees are moved to match abilities and employ ready to use talent. This Strategy is more dynamic and decentralized that can be (Bird and Beechler, 1995). So, from above discussion we can make the following hypothesis: H5: Utilizer HRM Strategy will be positively associated with firm performance perceived by managers. Facilitator strategy pays more attention on new knowledge formation. It seeks to develop the human resources of the firm through acquisition of self-motivated personnel and the encouragement and support of personnel to develop, on their own, the skills and knowledge which they, the employees, believe are important (Abdul-Halim and Che-HA, 2009). It focuses employee traits over skills and after that it offers extensive trainings and finally evaluation (Rouh-Yun Y and Yan-Hwa C). It focuses on generating new knowledge and new knowledge creation for the organizational strategy. A Facilitator strategy fits the organizational requirements of Analyzer firms because this strategy can accommodates the management of dual pressures imposed by an Analyzer strategy. It involve on less training than Accumulator business Strategy but more than Utilizer HRM strategy. So, from above discussion we can make the following hypothesis: H6: Facilitator Business Strategy will be positively associated with firm performance perceived by managers. 3. MNCs Comparative fit between Western MNCs and Eastern MNCs The utilization of local resources, disclosed by the implication of hybridization theory (incorporation of best resources/ practices to ensure the best fit in competitive market) results Westernized Easterners and Easternized Westerners. This brings West in the East and East in the West in terms of resource and cultural coalition. Experiences and transfer of knowledges assuring global standards to the local environment may bring a

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comparative fit that eliminates gap. In fact the participative approach in the process of transfer but rather translation as we refer to the distinction of Latour, mentioned by Clark and Geppert. Certain parts of original Western and Eastern considerations of strategies (translation) of action are lost, and certainly get a new implication (as flexibility, for example) which latterly reinterpreted. Most importantly several research was made with an assumption that managers and employees of (hybridized) MNCs internalize new issues which individualize (leaving behind possibilities of new forms of collective identities of employees) and then socialize very neatly to the working in the global organization. We should rather see them as ever more dynamic processes which involve transformations of not only societies and their economies but also transformations of individual identities. This leads us to the more general hypothesis on relations between cultural context and economic factors and actions. Usually, managerial studies tend to look how managerial strategies and companies behavior is transformed by local context, local circumstances. We propose to turn this perspective upside down and focus on how MNCs transform local cultures not by transfer of technological knowledge and know-how, neither by socializing to new life-styles, associated with consumption but how they bring specific interdependencies creating new kinds of identities. Culture encounters could be understood from such a vantage point more as multilayered tensions and co ordinations between various strategies of action used by actors who are embedded in interdependencies. The cultural encounters do not occur merely on the level of what actors find artificial but as in the case of Eastern Westerners or Western Easterners, become parts of their natural identity. So, from above discussion we can make the following hypothesis: H7: Western MNCs firm performance is better than Eastern MNCs firm performance perceived by managers

Formula for the Hypothesis: Firm Performance= f ( Business Strategy, HRM Strategy) Where, Firm Performance= Dependent Variable Business and HRM Strategy= Independent Variables f = Function of

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Discussion
Before thinking of doing any particular business it is very significant to understand target customers and their wants?, Maturity level of the products in that economy and figuring out offerings that can generate superior value for the customers in that target economy and finally finding out the organizational architecture to implement the strategy ( Slater S and Olson E, 2010). Country with different levels of cultural diversity experience unrelated dynamics and organizational outcomes. In South Asian context within culturally homogeneous groups, members tend to communicate with one another more often and in a greater variety of ways, perhaps because they share worldviews and collectivist in nature. Although moderate levels of cultural heterogeneity may create barriers to effective social intercourse but high levels of heterogeneity could actually deteriorate these barriers, since group members will be more evenly diffused over the categories of cultural diversity will be reduced (Richard 2004). But it is difficult to MNCs to achieve since complications may arise as people of different nationalities set out to cooperate with their own cultural differences and language blending that it brings about. (Tienari J and Vaara E, 2011). So both Business Strategies and HRM Strategies need to be fit together to run MNCs in Emerging countries(Bird and Beechler , 1995) and South Asian countries are not exception. In the following Paragraphs we will try to figure out through literature review whether our Hypothesis is associated positively or negatively: Defender firm does work best to concentrate on defending its domestic market share against the onslaught of international rivals. (Jain N, 2009.). , The Defenders strives to maintain market position in emerging economy (Bird and Beechler, 1995). This Strategy works best for easily analyzable and stable economy. (Pelham A and Lieb P), For example, for mature products and production processes. This Strategy best fit for Narrow product Market. (Bird A and Beechler S, 1995). The Human Resource unit mainly emphasis extensive training and maintenance role appropriately

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rather than market development (Cherian et al., 2010). More likely Accumulator HRM Strategy fits best here since this strategy mainly focus on Extensive employee development and loyal employees (Abdul-Halim and Che-HA, 2009 H and Che-Ha N, 2009) which is only appropriate for firm if they can find existing product line in existing market in new economy. (Cherian et al., 2010). But still Entering in new emerging market through Defenders can but not always a very good idea, even with existing product lines incase other MNCs does further research on mature products and come up with something new, but instead firm should concentrate on producing the best possible product for their existing market niche. (Cherian et al.,2010). So, we can say that Foreign MNCs can use defenders strategies in South Asia only if they have the existing product that they can offer in South Asian emerging market with full confident that product is fully mature. Usually firms, that follow Analyzer business strategy grows through being more innovative than defenders but less innovative than prospectors. These firms are also known as opportunity seeking firms. (Jain, 2009). Like Defenders, Anlyzer need some high training and development also but its different. Analyzers Business strategy works best when to improve existing product lines for emerging markets in (Cherian et al., 2010). It mainly focuses training that will enhance firms innovation process rather than employees interpersonal skill. HR strategy that fits focuses on HR T&D and recruitment process that seeks dynamic employees (loyalty is not necessary) is key here that best fit for this organization organizations. For innovative developments, flexible and inspirational team structures needs to be created by the HR division so that firm can play a more developmental. Thats why Self- motivated employees are keys for Analyzer strategy. (Bird and Beechler, 1995). New innovation requires new knowledge creation and this is what Facilitator strategy does best. As mentioned in hypothesis building Employee traits over skills get priority in Facilitator strategy and extensive trainings comes only after that. (RouhYun Y and Yan-Hwa C). Both Analyzer business strategy Facilitator Business Strategy tends to follow parents company norms more (Abdul-Halim and Che-HA, 2009 H) which is more likely to be US and EU MNCs. In Emerging Market like South Asia Firms generally do not get existing market and existing products at the same time. Besides being the fast mover in the emerging market need Huge Market research which is pretty expensive. So, firms that wants to be the respondents competing new entrants with more effective products other than Firm that follow prospector HR Strategies and tend to stay longer (Cherian et al., 2010) can follow this strategy effectively. Firms that follows Prospectors business strategy is also known as the entrepreneurial firms for emerging economies into emerging markets. These firms see new organization as market expansion and innovation. This Strategy works best when they enter emerging economies by introducing new product lines to complete new Markets. (Bird and Beechler, 1995). Since these firms follow pioneer strategy through enter then complete new Market first, they have a high tendency for risk and be able to move rapidly

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in order to capitalize on emerging opportunities. They focus heavily on customers and innovation, and the least focused on internal Employee Development. (Slater S and Olson E). This business strategy is more like short term basis since they might withdraw their business if the business don give any positive outcome. This particular strategy works best on changing economy and as we have discussed before South Asian economy is changing (Cherian et al., 2010) this business strategy can be a positive fit for South Asia as well. So, obviously firms with these strategy is less committed with their employees since they can withdraw their product anytime and that fit pretty well with Utilizer HRM strategy which is based on minimal commitment and high skill utilization (Abdul-Halim and Che-HA, 2009 H). However, from the above discussion we cant draw a conclusion which business and HRM strategy is best for the South Asian Economy since this economy is more on collectivist and not necessarily any HR strategy can fit collectivist strategy well. To understand it we need to discuss another Hypothesis: H*: HRM and Business Strategy is positively associated with the Culture of Host country for Firm Performance perceived by managers. And H**: HRM and Business Strategy is positively associated with the Culture of Host Country for Firm Performance perceived by managers.

Theoretical implication:
This study proposes that future researchers will understand the role of HRM and Business Strategy with firm performance. Researchers can also extension this particular research from where it has stopped. They should have clear understanding on the strategy of different MNCs they need to consider in emerging economies, if they consider their entrepreneurial traits, more specifically their market entry and product line strategies. From this research it has also been found that many of the Eastern MNCs are now doing lot better than few years and their performance is as better Western MNCs. So, it can be a handy research for researchers who will make article regarding western and Eastern MNC

Practical implications:
The causal linkage process between HR Strategy and Business Strategy design can bring better operational results to enter in South Asian emerging economy for US, EU and Japanese firms. The focuses of the HRM is to understand the business strategy company is trying focus on and make HRM Strategy accordingly through considering the Home and Host country cultural factors as well. This study has found that, HR practice does show direct causal connection with Business strategy that can significantly influence
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organizational outcomes directly and indirectly. Hence it would not be wise to rely on these practices only; firm should go for even depth research to figure out if there are any other hidden issues that needs to comply with firms business strategy.

Limitation and Future contribution:

One major limitation of this strategy is lacking of our own knowledge regarding these research. This is the first time we have done these types of research so it is obvious that we might do mistakes in research. Another problem was time constraints. Two make a very good report 2-3 month is merely enough. If we could do some further research then we might come with even better result. Our report was completely on literature basis; So, if there is any wrong information on any of the research paper that we have used to make this paper, We may come up with wrong conclusion though to avoid this bias we have used Scholary Articles and research paper only. There was no sample size in our report and thats why we could not make any specific conclusion with quantitative research. This report is consist of well information that can be used for further future research by researchers. It would be ideal to take up a larger sample size so that methodological restrictions could be avoided. The application of software packages that support the maximum likelihood method could be employed to test the overall model without much difficulty. Further research would focus more on quantitative information rather than subjective information of the variables and parameters that has been discussed theoretically. New proposed hypothesis can be discussed both theoretically and with quantitative analysis to make this report even better.

CONCLUSION

This study examined linkages between business strategy and HRM practices for firm strategies such as Japan EU and US in South Asian Economy. Through this it specifically investigated whether or not fit between a subsidiary's business strategy and its HRM strategy were associated with higher performance through literature review. Importance of cross cultural functions has also been discussed here. A complete finishing was disturbed while it has been found that Linking of HRM and Business strategy was alone not enough to find the best fit strategy in South Asian Market. Further Hypothesis needed to be discussed to relate to cultural orientation to find out the best entry strategy for US, EU and Japanese MNCs in South Asian Market. Therefore, generalization of this study's findings

cannot be made as a complete conclusion rather it has opened a new discussion.

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http://www.mcu.edu.tw/department/management/mcuba/ba/symposium/2005/Manpower%20resources%20management%20group/11.pdf by: Rough-Yun, Y. and Yan-Hwa C. :MATCHING HUMAN RESOURCE MANAGEMENT STRATEGY WITH LOGISTIC STRATEGY TO ENHANCE FIRM PERFORMANCE was seen on May 3 at 2012

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