The efficacy of talent management in international business: The case of European multinationals

• Author: Chukwuneke Okorie,Chitalu Kabwe
• Published date: 01 November 2019
• DOI: http://doi.org/10.1002/tie.22090
• Date: 01 November 2019

RESEARCH ARTICLE

The efficacy of talent management in international business:

The case of European multinationals

Chitalu Kabwe | Chukwuneke Okorie

Plymouth Business School, University of

Plymouth, Plymouth, UK

Correspondence

Chitalu Kabwe, Plymouth Business School,

University of Plymouth, Drake Circus,

Plymouth PL4 8AA, UK.

Email: cbkabwe@yahoo.com, chitalu.

kabwe@plymouth.ac.uk

Abstract

The focus of this study is on the efficacy of talent management (TM) practices to the

performance and operations of international businesses. There are relatively limited

dedicated studies on the value and effectiveness of TM as an identifiable interna-

tional practice and its contribution to international business. Anecdotal research and

consultants' reports have argued for an increase in the return on investment where

TM practices are aligned with the business strategy. Conceptually, human capital the-

ory is adopted to explain investment in high potentials in addition to the resource-

based view, which help explain the development of internal sources of competitive

advantage, which are rare, inimitable, nonsubstitutable, and valuable. This article

builds on knowledge by qualitatively examining managerial experiences of TM prac-

tices within 17 European internationally operating businesses with employees rang-

ing from 800 to 200,000. An exploratory qualitative approach is adopted, with

semistructured interviews as the main data collection tool. Findings accentuate the

significance of developing the most valuable source of competitive advantage—peo-

ple. We argue that, if TM is effectively implemented can result in the development of

unique competences, which can ease the burdens of cross-border business chal-

lenges and lead to sustainable competitive advantage.

KEYWORDS

international business, talent, talent management

1|INTRODUCTION

The focus of this study is the efficacy of talent management

(TM) practicesto the performance and operations of international busi-

nesses. Inparticular, we explore:(a) What is the value of TM practicesin

international firms and; (b) To what extent do TM practices contribute

to the productivity of international firms? The study employs data col-

lected from senior managers and human resource (HR) managers

involved in TM within 16 European internationally operating business

with the number of employees ranging from 800 to 200,000. Through

the use of data from these companies, the current research offers the

much-neededempirical evidence on a growing research fieldof TM. As

noted by McDonnell, Lamare,Gunningle, and Lavelle(2010), TM as field

of academic research lacks empirical research and has tended to be

based upon anecdotal practitioner and/or consultancy views and small

case study-based investigations(c.f. Hartmann, Feisel,& Schober, 2010;

McDonnell et al., 2010; Stahl et al., 2007). Although there is now an

increase in research on TM at an international level (Ahamand et al.,

2018; Ambrocious, 2018; Bhattacharyya, 2017;Co, Nguyen, Nguyen, &

Tran, 2018; Latukha, 2018; Lazaris & Freeman, 2018), a gap remains as

regards to the context (Collings, Scullion & Dowling, 2009; Tarique &

Schuler,2010; Thunnissen, Boselie,& Fruytier, 2013; Thunnissen, 2016)

and effectiveness of the approaches taken to managetalent in different

types of international organizations. The present research contributes

to filling this gap by exploring the efficacy of TM to international busi-

ness throughlived experiences ofsenior and HR managers in Europe.

DOI: 10.1002/tie.22090

Thunderbird Int. Bus. Rev. 2019;61:857–872. wileyonlinelibrary.com/journal/tie © 2019 Wiley Periodicals, Inc. 857

Europe presents an interesting context for developing an under-

standing of TM. In 2007, the Boston Consulting Group survey con-

cluded the HR profession within the European context was least

competent in managing talent although TM was regarded one of the

five key managerial challenges (Boston Consulting Group, 2007).

Despite this perturbing conclusion, the Boston Consulting Group

(2007) survey report argued over a five-year period, organizations

with TM programs, which are aligned with the business strategy,

delivered a return on investment measured by return on common

equity (ROE), 20% higher on average than those of rival companies

where strategies are not aligned. Where key elements of their TM

programs are aligned, ROE over a five-year period averages 38%

higher than that of competitors without alignment (Collings et al.,

2010). Another report by Ernst and Young (2010, p. 4) argue “Superior

TM correlates strongly with enhanced business performance.”How-

ever, the academic literature shows there is little empirical evidence

on TM and its contribution to organizational performance in the long-

term (Joyce & Slocum, 2012; McDonnell, 2011; Schuler, Jackson, &

Tarique, 2011a, 2011b; Sparrow & Makram, 2015). This is a key

starting point for this study.

This article presents a more focused exploration of the effective-

ness of TM for international business to fill the highlighted gap earlier.

Although there have been valuable contributions to TM at a global

level (Collings & Mellahi, 2009; Farndale, Scullion, & Sparrow, 2010;

McDonnell et al., 2010; Tarique & Schuler, 2010), TM and expatriation

(Cerdin & Brewster, 2014; Vaiman, Haslberger, & Vance, 2015), and

global TM (GTM) and competitiveness (Petkovic & Dordevic, 2013),

an interest in MNCs (Cascio & Boudreau, 2016; Hartmann et al.,

2010; McDonnell, 2009; Mellahi & Collings, 2010) and empirical stud-

ies remain sparse (Tansley, Kirk, & Tietze, 2013; Thunnissen et al.,

2013). There are limited studies that address the extent to which TM,

as an identifiable international practice and its contribution, has to

international business. For example, Cerdin and Brewster's (2014)

study highlights the gap between expatriation management and TM,

which are undeniably closely related, but are hardly ever studied or

managed together despite their contribution to international business.

In this vein, we build on knowledge in the field of TM in three

major ways.

First, we explore the managerial practical experience of the effi-

cacy of TM by qualitatively examining these practices. Although there

has been recent research examining the link between TM and organi-

zational performance (Gelens, Hofmans, Dries, & Pepermans, 2014;

Luna-Arocas & Morley, 2015) and studies investigating employee

work attitudes as mediating variables in TM research (Chami-Malaeb &

Garavan, 2013; Luna-Arocas & Morley, 2015), the practical explora-

tion gap still remains (Sparrow & Makram, 2015). Second, we make a

theoretical contribution through the adoption of the human capital

theory (HCT) and the Resource-based view (RBV). Although previous

research has suggested linking TM to HCT (Crane & Hartwell, 2019;

Tarique & Schuler, 2010) and using the framework as a conceptual

underpinning of TM (McDonnell, 2009). The theories appear not to

have been applied as a dual interpretive framework for TM practices

in international organisations.

Finally, we make a contribution by studying TM within interna-

tional businesses in the context of Europe. Recent studies (Tansley

et al., 2013; Thunnissen et al., 2013) have called for consideration of

relevance of context in TM. The study also builds on the work of Thu-

nnissen et al. (2013, p. 1745) who noted the current concepts and

assumptions in the TM literature are more related to U.S.-based

MNCs, which renders a description of TM in another context inaccu-

rate. Therefore, industry-related and national-related characteristics

have to be taken into account to define and describe TM precisely

(Boselie, 2010).

2|WHAT IS TALENT MANAGEMENT?

Before the introduction of the concept of TM, competence and skills

development were the most commonly used terminology in the

Human Resources Management (HRM) literature (Boulter & Hill,

1996; Hooghiemstra, 1992; Mansfield, 1999). There has been a more

generic emphasis on competence development within the HRM litera-

ture because of the focus on the development of all employees and

ensuring everyone performs to the required standard. Undoubtedly,

TM as a management practice and academic field has emerged as an

important and clearly novel practice that makes a departure from the

HRM egalitarian approach, which focuses on the welfare of all

employees. TM employs segmentation of the workforce as a key dif-

ferentiating characteristic, which enables concentration on the devel-

opment of a selected few individuals who are capable of making a

disproportionate impact on organizational performance (Iles, Chuai, &

Preece, 2010). Two key points are presented below.

First, TM presents an important managerial practice necessary for

building an inimitable, rare, and sustainable source of competitive

advantage. The practice of TM allows an organization to develop their

identified talent internally using a variety of development activities

(Iles et al., 2010; Collings et al., 2010). In this respect, TM is not only

important in creating inimitable intangible assets and cultivating an

internal labor market but also plays a key role in retaining talent

(Sparrow & Makram, 2015). As noted by Sparrow and Makram (2015),

creation of value through TM at the organizational level is done

through exploiting the organization's internal resources and capabili-

ties to implement strategies that enable them to respond to market

opportunities, for example, by creating economic value and enhancing

an organization's performance in international operations.

Second, in relation to the line of argument by Hamel and Prahalad

(1993, 1994), TM can be regarded as a means of building an organiza-

tion's core competences. These authors argue that, competitive

advantage in the long term stems from building core competences in a

firm, which are superior to those of rivals. Sparrow and Makram

(2015) refer to what they call the TM architecture, which is the combi-

nation of systems, processes, and practices developed and

implemented by an organization to ensure the management of talent

is carried out effectually. By assuming the operation of these TM

architectures, there is an implied reliance on human capital thinking to

make a series of value claims including the fact that value resides in

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