International strategy, human resource management practices, and competitive advantage : a case study of the electronics industry in Thailand

Abstract

To date, Thailand is the destination of foreign direct investment ofmultinational corporations (MNCs). MNCs need to create and to sustain competitiveadvantage in order to survive and to attain profits. Sources of competitive advantageare from external and internal factors. For companies to compete in the sameindustry, internal factors such as strategy, management practices, research anddevelopment, etc. play a major role in the companies' success. Thus, this researchinvestigates internal factors, namely, international strategy and human resourcemanagement practices, which are critical in research area. In the field of strategicmanagement, there has been no empirical study on the impact of international strategyand human resource management practices on competitive advantage. This presentresearch, therefore, attempts to integrate these three concepts and empiricallyinvestigates the proposed framework in the Thai electronics industry by selectingonly international companies. Expert interview is used as an instrument to pretestand to check any flaws of the questionnaire, and mail survey is employed to collectdata. Hypotheses of this study have been developed to test the relationship ofinternational strategy and human resource management practices with competitiveadvantage and to investigate the link between international strategy and humanresource management practices. Competitive advantage is categorized into processinnovation, product innovation, and productivity. This study finds thatstandardization strategy has a significantly negative relationship with processinnovation, product innovation, and productivity. National responsiveness strategyhas a significantly negative relationship with product innovation but no significantrelationship with process innovation and productivity. Global integration with localresponsiveness strategy has a significantly positive relationship with productinnovation, but no significant relationship with process innovation and productivity.For human resource management practices, this study empirically finds that employeecontribution has a significantly positive relationship with process innovation.Selection by job competence has a significantly positive relationship with productinnovation. Finally, reward system at management level and employment security have asignificantly positive relationship with productivity. For the link betweeninternational strategy and human resource management practices, the finding suggeststhat firms with different international strategies have significantly different humanresource management practices of employee participation, clarity of work direction,employee contribution, reward system at management level, employment security, andselection by job competence. Finally, this study empirically finds that internationalcompanies with different international strategies have no significantly differentcontrol