Academy of Management Internal Knowledge Transfer and MNCs: The impact of Context and Culture Transferring codes of conduct within a multinational firm: The case of Lebanon By Dr.Samer Francois Nakhle- Beirut Arab University Dr.Eric Davoine- University of Fribourg

Codes of conduct: A transferable practice Codes of conduct formalize detailed rules to guide subordinates and control their behavior. Codes of conduct have a normative character. In MNCs, codes of conduct are control instruments. They formalize a corporate culture (universal standards versus local contingencies). As an instrument, it is a transferable organizational practice.

Codes of conduct: A transferable practice (cont’d) From an institutional approach, the transfer depends on country of origin, host country and strategies of actors. (Adoption, adaptation or resistance). Some subsidiaries decide to defend their identity by continuously producing specific local practices which are against the will of the parent company to standardize the practices.

Codes of conduct: A North-American practice Since codes of conduct are a “value infused” practice, it is difficult to transfer (Values defined at the parent company). Several studies dealt with this issue (Example of German MNC in Japan (Blazejewski, 2006). Codes of conduct come from the USA, they are not culturally neutral (rooted in the American history and institutions). Difficulties to adopt these codes in Europe.

The Lebanese context Limited number of studies about HR practices in Lebanese companies. 75 % of companies are family businesses.(The owner controls). Local companies lack a formalized HR practice. Subsidiaries of MNCs in Lebanon have a “hybrid HRM” (Mix of parent company practices and local companies’ practices)

The Lebanese context (cont’d) Lebanon has a strong denominational diversity (18 Christian and Muslim sects). Lebanon has a very special cultural specificity. Study of Yousfi (2010): interpersonal relations at work and emotional influence. Interpersonal trust is very important. It is a particularistic culture (versus universalistic see Trompenaars 1993).

The Lebanese context (cont’d) The application of bureaucratic rules generates distrust and suspicion. Written contracts could be considered as an opposition to shared confidence among workers usually characterized by an oral expression of words and an emotional commitment. The spirit of clan and family spirit influence management practices. (See collectivism of Hofsetde)

The Lebanese context (cont’d) Yousfi sums up by saying : “A good working relationship in Lebanon is shaped mainly by the need to find a balance between the group’s unity and consideration for specific individual contributions”

Research questions and methodology Two research questions: Is there a difference between the transfer of codes of conduct towards European subsidiaries of MNCs and the transfer towards North American subsidiaries of MNCs? how such an instrument, linked to individualist, universalist and contractual values could be transferable in a cultural context as pluralist, communitarian and personalized as the Lebanese context?

Research questions and methodology (cont’d) Exploratory research, in-depth interviews and documents in 10 MNC subsidiaries in Lebanon (6 European and 4 American). Cases built based on methodological approaches of the institutionalist qualitative research on the transfer of practices in multinational companies (Geppert and Mayer, 2006; Tempel et al., 2005; Marschan-Piekkari et al., 2004).

Research questions and methodology (cont’d) Conceptual approach follows the model of Ferner et al. (2005, 2007) which used qualitative method to study the effects that home country and host country have on the transfer of human resource practices..

Differences between European and North-American MNCs Codes of conduct are most often globally standardized in North American multinationals and less often adapted to the local context than European multinationals. (“It is a Bible”) European MNCs have margins to maneuver and to adapt the code to the Lebanese context.

Which adaptations? What do adaptations reveal about the Lebanese context? The forbiddance of private questions, a problem for a society where emotional relationships are important. The sexual harassment: A theme that reveals a strong Lebanese tolerance, atypical to an Arab country, for jokes of sexual nature including discussions between men and women.

The replacement of ethnic discrimination clauses by religious and sectarian discrimination. Reinforcement of sections related to corruption and gifts. Specific sections about the recruitment of family members - The importance of clans and families.

Conclusion American MNCs are stricter than the European MNCs regarding the application of codes of conduct in their subsidiaries. Despite the strict compliance with the code, some adjustments that are not declared nor written but lived through interpersonal relations at work also existed. European MNCs (French, British and Swiss) are more flexible in the adaptation of the contents of the code.

Recurring problematic themes exist during the transfer of codes which highlight certain specificities of the Lebanese context: - Difficulty to prohibit personal questions at work. - Other forms of discrimination were highlighted. - Corruption related issues (gifts, clientalism). - Importance of clans and family spirit (recruitment of relatives).