UNIVERSITY OF VAASA 

FACULTY OF BUSINESS STUDIES 

DEPARTMENT OF MANAGEMENT 

 

 

 

 

 

 

Jaakko Mattila 

POLITICAL POWER GAMES AND INSTITUTIONS: A CASE STUDY OF 

e–HRM IMPLEMENTATION  FROM MICRO–POLITICAL AND 

INSTITUTIONAL PERSPECTIVE 

Case: Sympa Oy 

 

 

 

 

 

 

 

 

 

 

 

 

Master’s Thesis in 

Management and Organization 

Human Resource Management 

 

 

VAASA 2013 



 

  



 1 

TABLE OF CONTENTS       Page 

 

LIST OF FIGURES AND TABLES 5 

ABSTRACT 7 

1. INTRODUCTION 9 
1.1 Background 9 
1.2 Research Questions 11 
1.3 Research Focus 11 
1.4 Key concepts 11 

2. e–HRM 14 
2.1. Definitions and concepts of e–HRM 14 
2.2 Milestones 15 
2.3 Implementation of e–HRM 24 

2.3.1 Drivers 24 
2.3.2 Implementation process 27 
2.3.3 Implementation in MNCs 37 
2.3.4 Role of consultants 38 

2.4 “Strategic partnership” 40 

3. THEORETICAL BACKGROUND 44 
3.1 Institutional theory 44 
3.2 Organizational micro–politics 50 

3.2.1 Actors 52 
3.2.2 Resources 53 
3.2.3 Interests 54 
3.2.4 Identities 55 

3.3. Combining institutional and micro–political approaches 56 

4. METHODOLOGY 59 
4.1 Qualitative approach 59 
4.2 Single case study 60 
4.3 Case company presentation – Sympa Oy 62 
4.5 Research process 63 

5. ANALYSIS 64 
5.1 Drivers 65 

5.1.1 Relation between HR processes and technology 68 
5.2 Implementation process 69 

5.2.1 Project duration 71 
5.2.2 Common causes of conflict 71 
5.2.3 Multinational environment 72 
5.2.4 Implementation process’ impact on drivers/strategy/architecture 73 

5.3 Institutional environment in e-HRM implementations 75 
5.3.1 Laws and custom 75 
5.3.2 Legacy systems 77 
5.3.3 Imitation 79 

5.4 Micro-politics in e-HRM implementation 80 
5.4.1 Actors 80 
5.4.2 Resources 81 
 



 2 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 



 3 

5.4.3 Interest 84 
5.4.4 Identities 86 

5.5 Example case on institutional/micro-political conflict 87 
5.6 Consultants’ role in the process 88 

5.6.1 Consultant–client relationship 91 
5.7 Discussion 93 

6. CONCLUSION 98 
6.1 Managerial implications 99 
6.2 Limitations of the study and suggestions for the future research 100 

REFERENCES 102 

APPENDICES            116 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



 5 

LIST OF FIGURES AND TABLES      

Figure 1. Storhmeier’s e–HRM framework.           28 

Figure 2. e–HR as the implementation of cycles.          36 

Figure 3. Balancing the standardization and localization of HRM in MNEs.      47 
Figure 4. Adapted e–HR as the implementation of cycle model by including 

institutional and micro–political environment.         58 

Figure 5. Basic Types of Designs for Case Studies.          61 

Figure 6. Illustration of Sympa’s HR system implementation project.       70 

 
Table 1. List of revised e–HRM articles.           16 

Table 2. Summary of drivers.             27 

Table 3. Institutional pillars.                        46 

Table 4. Sympa Oy.              62 

Table 5. List of interviewees.             63 

Table 6. Drivers listed by using Lepak and Snell’s categorization.        67 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 6 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 7 

UNIVERSITY OF VAASA 

Faculty of Business Studies 

Author:  Jaakko Mattila 

Topic of the Thesis:  Political Power Games and Institutions: A Case 

Study of e–HRM Implementation from Micro–

political and Institutional Perspective 

Name of the Supervisor:  Jukka–Pekka Heikkilä 

Degree:  Master of Science in Economics and Business 

Administration 

Department: Department of Management 

Major Subject:  Management and Organization 

Line:  Human Resource Management 

Year of Entering the University:  2011 

Year of Completing the Thesis:  2013     Pages: 117  

ABSTRACT 

As companies are continuously seeking new ways to modernize their human resources 

(HR) delivery, improve their cost structures and overall business strategy, e–HRM 

systems are the latest trend which seeks to combine the potential of information systems 

(IS) into new way to deliver HR. As a result, e-HRM industry has become a 

multibillion–euro business for technology suppliers. However, this phenomenon has not 

been as popular in academic research as one would hope it to be and especially issues 

regarding micro - and macro level environment in implementation projects are almost 

without prior research. Hence, this study seeks to shed light on the implementation 

environment in international, institutional and micro–political level and particularly 

investigate the role of a vendor consultant in these projects. 

 

This paper builds from theories linked to micro–political and institutional environments 

and highlights these issues in e–HRM implementation context. This study argues that 

firstly, it is necessary to understand the implications surrounding to the e–HRM system 

implementations, secondly understand why external experts are used, and thirdly, 

comprehend the influence of external and social environment to the implementation 

projects. With this in mind, the theoretical part of this research combines and constructs 

a framework from relevant academic articles within aforementioned themes. The 

framework is then tested against empirical evidence gathered from a Finnish e-HRM 

vendor. 

 

Results suggest that consultants have a key role in the implementation and have ability 

to change the intended outcomes, but still more research is needed. Institutional 

environment, on the other hand, creates boundaries for the implementation in terms of 

critical elements that must be addressed. Within these boundaries it is the organizational 

micro–politics and social interactions (i.e. conflicts and power games) among 

stakeholders which ultimately shape how e–HRM fits in its’ unique institutional and 

social context. This means that to be successful organizations need to address both of 

these environments and thus invest enough time for analysis and preparation. 

KEYWORDS: e–HRM; implementation; micro–political view; institutional theory; 

consultant 



 8 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 9 

1. INTRODUCTION 

1.1 Background 

Information technology (IT) has a fundamental role in our lives, and that dependence is 

not going to diminish; on the contrary it will increase. In business, IT has the ability to 

enable companies to establish and sustain more flexible business networks 

(Venkatraman 1994: 73), increase productivity (Brynjolfsson & Saunders 2009: 49) and 

foster innovations (McAfee & Brynjolfsson 2008: 107). Human resource management 

(HRM) on the other hand tries to target organization’s human capital through recruiting 

new and developing existing skills (Huselid 1995: 636) or like Boxall, Hwee and 

Bartman (2011: 1504) see it as “process of managing work and people in 

organizations”. According to some authors IT has been part of HR function’s life since 

1980s (Bondarouk & Ruël 2009: 505; Martin & Reddington 2010: 1554), but De Wit 

(2011: 1) pointed out that Mayer’s (1971) article on “Electronic Data Processing 

Personnel Systems” was the birth of e–HRM phenomenon. In this thesis, this 

combination of IT and HR is defined: 

 

“(planning, implementation, and) application of information systems (IS) for both 

networking and supporting actors in their shared performing of HR activities” 

(Strohmeier 2009: 528). 

 

In early 2000s, around 75 percent of ERP implementation efforts resulted to failure 

(Hong & Kim 2002: 25). As a result, the decisions around a software implementation 

must be reviewed carefully. Despite general failures, e–HRM has gained more ground 

in organizations (CedarCrestone 2006; 2008; 2010) and the sales of HR technologies 

over the last decade were estimated to be around 300 billion US dollars (Bondarouk & 

Ruël 2009: 505). Yearly companies are making investments to e–HRM with the amount 

of 241 dollars per employee according to CedarCrestone (2008–2009) survey. This 

development is not going to slow down, CedarCrestone (2010–2011: 1) survey 

forecasted almost 100% growth in talent management, social media and 

analytics/planning applications for the years 2012 - 2015. Also Josh Bersin (2013) in 

Forbes predicts acceleration on adoption of e-HRM solutions, because e–HRM 



 10 

solutions have been argued to have the potential to transform HR and make it as a 

strategic partner for the business (Ruël, Bondarouk & Looise 2004: 369 & 373; 

Strohmeier 2009: 528; Parry 2011: 1159).  

 

Even though companies invest huge amounts of money into e–HRM systems, the 

research lacks behind of this development. Orlikowski and Scott (2008: 434) claim that 

technology is largely forgotten in organizational research and e–HRM is no exception in 

this. According to Strohmeier (2007: 22, 28 & 31) and Marler and Fisher (2012: 16) e–

HRM has received relatively low level of academic interest and as a result, there is still 

has little theoretical evidence regarding the issues surrounding e-HRM implementation.  

 

Only few studies have approached e–HRM technology as an emergent and complex 

phenomenon and for example Johns (2006: 388) argues that without understanding the 

situation where individual and group behavior happen, the research is unable to explain 

person–situation interactions. In addition, it is crucial to identify all the parties involved 

in e–HRM process and with this in mind, Bondarouk and Ruël (2009: 511) encourage 

future e–HRM research to take into consideration the multi–stakeholder perspective to 

fully understand the phenomenon. Furthermore, Marler and Fisher (2012: 17) encourage 

the future research to look and consider contextual variables like conflicting interests, 

social, cultural and infrastructural pressures. This is because organizations are socially 

embedded in its’ institutional context and its’ past (Kostova & Roth 2002: 216) and as a 

result institutional context has been seen to have a strong influence on adoption of a 

practice (Kostova & Roth 2002: 230). Therefore this research takes interest on 

institutional and micro–political matters in e–HRM implementation and investigates 

this from a vendor point of view which presents the influence of consultants in e–HRM 

implementation since Bondarouk and Ruël (2009) earlier emphasized the multi–

stakeholder view in these processes. 

 

This master thesis follows a structure where first key concepts are explained, then the 

relevant theory around the research topic is presented and synthesis of the theory is 

formed for the empirical testing. After theory section, the methodology behind the study 

is described to illustrate the process of data collection. Thereafter follows the analysis 



 11 

section, which presents the relevant empirical evidence and finally implications for 

practice and potential limitations of the research are discussed in the conclusion chapter.  

 

1.2 Research Questions 

As shortly discussed above, institutional context and micro–politics have been neglected 

in the past research and yet considered to be influential in the implementation process. 

Therefore this research’s key interested is to connect e–HRM implementation process 

with the institutional and micro–political environments. As a result, the study adopts 

following combination of research questions.   

(i) What are the key micro–political issues and conflicts in e–HRM implementation? 

[and how individual actors use their power in these negotiations to reach mutually 

satisfying agreements]?  

(ii) How institutional environment affects to the e–HRM system implementation 

decision–making?  

(iii) What is the role of consultants in implementation negotiations? 

 

1.3 Research Focus 

In this study, the e–HRM implementation process is reflected from a micro–political 

perspective, where the aim is to illustrate the issues regarding each stage of the 

implementation with the help of theory from e–HRM, IT, institutional and micro–

political environments. To achieve this, the study adopts a single case study approach in 

data gathering to get a deep understanding on the phenomenon. The idea thus is to find 

evidence on the micro–politics influence in decision–making at the e–HRM 

implementation in the MNC context and as a result make its’ own contribution to the 

academic discussion and to give some practical suggestions for companies to 

understand these issues. 

 

1.4 Key concepts 

In this section the main concepts around the research are presented to the reader and 

these concepts lay a foundation around the topic area. Following themes, however, are 



 12 

not meant to be extensive descriptions of the concepts, instead, these are to give a 

starting point for the reader to be able to comprehend and start a vibrant dialogue with 

the paper around the e–HRM implementation process and the factors surrounding it. 

 

HRM 

“Human resource management (HRM) is the process of managing work and people in 

organizations” (Boxall, Hwee & Bartram 2011: 1504). To open this up, HR's ultimate 

jobs are to link the people issues of the organization with the customer–focused 

business strategies and thus play a part in harnessing individual abilities and 

organization capabilities in a search for competitive advantage (Ulrich & Brockbank 

2009: 26 & 31).  

 

Information Systems  

Information systems (IS) is interpreted by Laudon and Laudon (2002: 7) as “a set of 

interrelated components that collect (or retrieve), process, store, and distribute 

information to support decision making and control in an organization”.  

 

e–HRM 

This research uses Strohmeier’s (2009: 528) description of e–HRM “(planning, 

implementation, and) application of information systems (IS) for both networking and 

supporting actors in their shared performing of HR activities”.  

 

MNC 

The multinational corporation (MNC) context, where this paper operates, is seen as 

“MNC as a geographically–dispersed set of value–adding activities, each activity of 

which can be viewed as a semi–autonomous entity, with ownership ties, normative links 

and certain obligations to head office” (Birkinshaw, Holm, Thilenius & Arvidsson 

2000: 323).  

 



 13 

Micro–political view  

Dörrenbächer and Geppert’s defines micro–political perspective, “micro–political 

perspective focuses on evaluating how actors with different targets, needs and identities 

operate together, without taking into consideration national or functional implications, 

when there are conflicts of interest. Its main reason is to show the influence of social 

structures and human relations on decision–making and co–operation ” (Dörrenbächer 

and Geppert 2006: 255–256). Schotter and Beamish draw the interest on managerial 

level actors in their definition, “micro–political perspective is specifically concerned 

with individual managers and their subjective interests in strategizing, organizing, and 

interactions between managers across functional and national divisions” (Schotter and 

Beamish 2011: 245). This is the view adopted in this study. 

 

Institutional perspective 

 

Scott (2001: 48) defines institutions to be tightly embedded social structures composed 

from regulative, cognitive and normative elements that provide stability and meaning 

and carried by symbolic and relational systems, routines and artifacts. Also institutions 

can be seen in various levels from individual to the global level and these institutions 

are transforming overtime together with their environments (Scott 2001: 48). As a result 

institutional perspective attempts to justify the fact that inside industries there are strong 

resemblances in organizational structures and practices between companies (DiMaggio 

and Powell 1983: 148).  

 

Now the relevant concepts, the background and the aims of the study has been discussed 

to give the reader a glance around the theme of the study. In the next two chapters; the 

relevant literature is reviewed and the theoretical framework of the study is presented. 

In other words, the implications around e–HRM, the current research and e–HRM 

implementation process are clarified. 

 

 

 

 

 



 14 

2. e–HRM 

The purpose of this chapter is to review the literature and to give the reader an 

understanding of the topics related to e–HRM implementation. As a result, the reader 

should be familiar with the theoretical setting surrounding the research questions. The 

first section of this chapter defines the e–HRM, the second section illustrates some of 

the past research, the third section focuses on the implementation process and discusses 

the role of consultant and the fourth section links the e–HRM to the wider strategic aims 

of HRM. 

 

2.1. Definitions and concepts of e–HRM 

To begin with, Strohmeier (2009: 528) defines e–HRM as “planning, implementation, 

and application of information systems (IS) for both networking and supporting actors 

in their shared performing of HR activities”. Further, Martin and Reddington (2010: 

1554) interpret e–HRM to be a complex phenomenon integrating IT technology and HR 

policies and practices, and the extending the HR to be a joint activity of the whole 

company (Martin & Reddington 2010: 1554). These activities include, for example, 

recruitment, securing talent, supporting administrative HR and optimization of people 

management (Shrivastava & Shaw 2003: 201). In addition, Lepak and Snell (1998: 216) 

extend this view by presenting that “Virtual HR is based on network structure, which 

relies on partnership and information technologies to recruit, develop and relocate 

intellectual capital”. In this case, virtual HR can be understood as synonym to e–HRM. 

 

Above mentioned views are backed up in Bondarouk and Ruël’s (2009: 507) definition 

of e–HRM, “an umbrella term covering all possible integration mechanisms and 

contents between HRM and information technologies aiming at creating value within 

and across organizations for targeted employees and management”. This means that e–

HRM can be seen as universal term for HR and IT integration which aims to add value 

within its’ network. To combine the presented definitions, e–HRM can be seen as a 

process which involves several actors and its’ sole purpose is to harness HRM and IT 

for the benefit of the company and its’ different stakeholders.  

 



 15 

Before the term e–HRM was used to describe the integration between HR and IT, 

Tannebaum (1990) combined IS, IT and HRM elements into one definition, on human 

resource information system (HRIS); IT based system to acquire, store, manipulate, 

analyze, retrieve and distribute relevant HR information (Shrivastava & Shaw 2003: 

202 cited Tannebaum 1990). In this context information system is seen as being a 

general term for covering firms’ and its’ networks’ interconnected information 

processes such as purchasing, suppliers and manufacturing and HRIS being one part of 

the system. As a result Laudon and Laudon (2002: 7) summarizes it as “a set of 

interrelated components that collect (or retrieve), process, store, and distribute 

information to support decision making and control in an organization”. Human 

resource management on the other hand means, “the process of managing work and 

people in organizations” (Boxall, Hwee & Bartram 2011: 1504). Therefore even though 

both e–HRM and HRIS are focusing in delivering HR practices, distinction can be made 

through their client focus and the level of information sharing, HRIS serves HR 

professionals and it is mainly applied for automation of HR activities and e–HRM 

connects the whole company together and fosters communication across the functional 

boundaries (Martin & Reddington 2010: 1554; Marler & Fisher 2012: 4; Ruël et al. 

2004: 365).  

  

With the above discussion in mind, this paper selects Strohmeier’s (2007: 2009) 

definition as a guideline for the thesis. To conclude, e–HRM systems approach 

differently on the HR delivery compared to HRIS systems, the first is aimed to serve the 

whole company and the latter is a tool of HR professionals. Both systems take 

advantage of the latest IT and is build on the IS idea presented by Laudon and Laudon 

(2002). The next section focuses on illustrating to the reader the main directions and 

potential gaps of e–HRM research, which is gathered together from over 40 HRIS and 

e–HRM related publications. 

 

2.2 Milestones 

The following list of researches (see table 1.) are reviewed briefly and then categorized 

to open up some of the existing e-HRM research.  



 16 

Table 1. List of revised e–HRM articles. 

# Author/s & year Category Source 

1 Alcaraz, Domenech & Tirado (2012) Outcomes Information and Organization 

2 Al–Dmour & Shannak (2012) e–HRM adoption European Scientific Journal 

3 Bell, Lee & Yeung (2006) Impact on HR job Human Resource Management 

4 

Bondarouk, Ruël & van der Heijden 

(2009) Perception 

The International Journal of Human 

Resource Management 

5 Bondarouk & Ruël (2008) Implementation European Management Journal 

6 Bondarouk & Ruël (2009) Review 

The International Journal of Human 

Resource Management 

7 Chapman & Webster (2003) Recruitment 

International Journal of Selection and 

Assessment 

8 

Farndale, Paauwe & Hoeksema 

(2009) Outcomes 

The International Journal of Human 

Resource Management 

9 Florkowski & Olivas–Lujan (2006) e–HRM adoption Personnel Review 

10 Gardner, Lepak & Bartol (2003) Impact on HR job Journal of Vocational Behavior 

11 

Grant, Dery, Hall, Wailes & Wiblen 

(2009) Strategic e–HRM 

Conference Paper: Annual CIPD 

Centres' Conference 

12 Girard & Fallery (2010) Recruitment 

The Journal of Contemporary 

Management Research 

13 Gupta & Saxena (2010) Perception Management Insight 

14 Hainess III & Lafleur (2008) Impact on HR job Human Resource Management 

15 Heikkilä & Smale (2011) Perception Journal of World Business 

16 Heikkilä (2010) Future scenarios 

3rd European academic workshop e–

HRM 

17 Hussain, Wallace & Cornelius (2007) Impact on HR job Information & Management 

18 Hustad & Munkvold (2005) Outcomes Information Systems Management 

19 Kassim, Ramayah & Kurnia (2012) Impact on HR job 

International Journal of Productivity 

and Performance Management 

20 

Lengnick–Hall & Lengnick–Hall 

(2006) Strategic e–HRM Human Resource Management 

21 Lepak & Snell (1998) Drivers 

Human Resource Management 

Review 

22 Lin (2011) Strategic e–HRM 

The International Journal of Human 

Resource Management 

23 Lippert & Swiercz (2005) Implementation Journal of Information Science 

24 Marler (2009) Strategic e–HRM 

The International Journal of Human 

Resource Management 

25 Marler & Fisher (2012) Strategic e–HRM 

Human Resource Management 

Review 

26 Martin & Reddington (2010) Strategic e–HRM 

The International Journal of Human 

Resource Management 

27 

Martin, Reddington, Reddington & 

Sloman (2009) Future scenarios Education+Training 

28 

Olivas–Lujan, Ramirez & Zapata–

Cantu (2007) e–HRM adoption International Journal of Manpower 

29 

Panayotopoulou, Vakola & Galanaki 

(2007) e–HRM adoption Personnel Review 

30 

Panayotopoulou, Galanaki & 

Papalexandris (2010) e–HRM adoption 

New Technology, Work and 

Employment 

31 Parry (2011) Strategic e–HRM 

The International Journal of Human 

Resource Management 

32 Parry & Tyson (2011) 

Goals & 

outcomes 

Human Resource Management 

Journal 

33 Ruta (2009) Strategic e–HRM 

The International Journal of Human 

Resource Management 



 17 

34 Ruël, Bondarouk & Looise (2004) 

Drivers & 

outcomes Management Revue 

35 

Ruël, Bondarouk & van der Velde 

(2007) Outcomes Employee Relations 

36 Ruël & van der Kaap (2012) Strategic e–HRM Zeitschrift für Personalforschung 

37 

Schalk, Timmerman & van den 

Heuvel (2012) Drivers 

Human Resource Management 

Review 

38 Smale & Heikkilä (2009) Micro–politics 

Handbook of Research on E–

Transformation and Human Resource 

Management Technologies: 

Organizational Outcomes and 

Challenges 

39 Stone & Lukaszewski (2009) Implementation 

Human Resource Management 

Review 

40 

Stone, Stone–Romero & Lukaszewski 

(2006) Implementation 

Human Resource Management 

Review 

41 Strohmeier & Kabst (2009) e–HRM adoption Journal of Managerial Psychology 

42 Strohmeier (2007) Review 

Human Resource Management 

Review 

43 Tansley & Newell (2007) Politics Management Learning 

44 Teo, Lim & Fedric (2007) Strategic e–HRM 

Asia Pacific Journal of Human 

Resources 

45 Tixier (2004) Outcomes 

International Journal of Human 

Resource Development and 

Management 

46 Voermans & Veldhoven (2007) Perception Personnel Review 

47 Zafar (2012) Security 

Human Resource Management 

Review 

 

e–HRM and its’ predecessors have been around more than 20 years, although the 

research around it is still limited compared to the most popular research directions in 

HR field (Strohmeier 2007: 22 & 34). IT has been part of HR function’s life since 

1980s (Bondarouk & Ruël 2009: 505; Martin & Reddington 2010: 1554), although De 

Witt (2011: 5) argues its’ origin been already from 70’s and e–HRM phenomenon, the 

latest HR technology manifestation, has been studied since 1995 (Strohmeier 2007: 22). 

Near the millennium the focus in e–HRM research was at virtual organizations and thus 

to virtual HR, one of the most influential articles around this time would arguable be 

Lepak and Snell’s (1998: 215) research around the incentives to implement virtual HR. 

They found that the main driving force for the implementation is a search for HR to 

become more responsive, adjustable, cost–effective and strategic (Lepak & Snell 1998: 

231). Ruël, Bondarouk and Looise (2004: 366) later studied in their case study the 

implication of e–HRM adoption, precisely goals, types and outcomes of e–HRM. They 

found out that e–HRM is linked to aims for globalization and shared HR process 

(standardization), the goals are to improve efficiency, service and strategic orientation 



 18 

resulting into similar findings as Lepak and Snell (1998) mentioned earlier (Ruël et al. 

2004: 373–375). Although Schalk, Timmerman and van den Heuvel (2012: 1, 4 & 7) 

studied through case study evidence the implications of strategic considerations to the 

decision–making process of e–HRM introduction, they discovered that HR deliverables 

and business drivers are not as influential in the decision–making process, except the 

aim for cost reduction, as the existing HR technology and current people management 

trends.  

  

As inspired from this and Ulrich’s (1997: 318) earlier recognition that HR needs to 

become more like a strategic partner for the business, the current research is now 

focused on the e–HRM phenomenon which expanded the coverage of HR software to 

include also line managers and employees. Thus the links between strategic HRM and 

e–HRM has gained relative large amounts of interest compared to some other areas in 

e–HRM research. In order to be strategic, HR should add value to the business, this was 

tested by Parry (2011: 1146 & 1159–1160), who analyzed through resource–based view 

the potential of e–HRM’s ability to lift the value of HR function and finding some 

evidence on e–HRM’s influence on HR becoming strategic. Ruël and van der Kaap 

(2012: 260 & 276–277) were also interested in the value creation aspect of e–HRM, 

recognizing that e–HRM does have a positive relation with value creation, thus 

supporting Parry’s (2011) earlier statement and also showed that contextual factors have 

an impact to this. Also Olivas–Lujan, Ramirez and Zapata–Cantu (2007: 418 & 430) 

were interested on how e–HRM strategies are being implemented in Mexico and finding 

also the influence of unique contextual factors in e–HRM implementation. Although 

Tixier (2004: 414 & 427–428) studied the outcomes of HRIS implementation in MNCs 

on HR job and the result showed that taking into account contextual factors in e–HRM 

implementation does not always result into success.  

 

Ruta (2009: 562 & 574–575) analyzed the role of HR portals in creation and fostering 

intellectual capital through a case study and came to a conclusion that, if HRM policies 

are aligned with the business strategy, HR portals can affect to the intellectual capital 

development. Also Lin (2011: 235 & 250–251) studied how e–HRM influences in 

organizational innovation through the virtual organization structure and IT adoption, the 



 19 

results implicated that e–HRM had a positive influence on organizational and individual 

creativity. Nevertheless Marler (2009: 515 & 525–526) found in her study evidence that 

e–HRM alone is not likely to make the HR function strategic and thus claimed that the 

HR function itself should be already strategic to realize all the benefits of e–HRM. 

Similar indications were found by Grant, Dery, Hall and Wailes (2009: 1 & 17), who 

analyzed the possibilities of HR function with the HRIS software to take a relevant role 

in organizations’ strategy creation, their main finding showed that the case companies 

have not yet realized the potential and therefore the software is mainly linked to 

transactional HR activities. Finally two research papers, Martin and Reddington (2010) 

and Marler and Fisher (2012), have illustrated and evaluated the whole network of 

connections between e–HRM and strategic HRM.  

 

Other theme with close linkages to strategy has been the outcomes of e–HRM, which 

has also generated wide interest among researchers. Ruël et al. (2004) found as 

outcomes of e–HRM adoption for example cost reduction and the responsibility shift of 

administrative task from HR personnel to the hands of line managers (Ruël et al. 2004: 

375 & 377). Farndale, Paauwe and Hoeksema (2009: 544–545 & 558) saw similar 

results, when they studied how the HR shared service centers impacted on the HR 

delivery and the expectations, the results showed an improved customer–orientation 

through better focus, increased quality and cost effectiveness of the service. Also Parry 

and Tyson (2011: 335 & 352) examined in their case study the relation of the intended 

goals and the outcomes of e–HRM implementation, they found that mainly transactional 

and relational goals where realized and thus neglecting the strategic side of e–HRM. 

Alcaraz, Domenech and Tirado (2012: 106 & 119–121) on the other hand, were 

interested in their study what kind of benefits Western HRM practices bring to the 

developing countries in e–HRM context and as a result found supportive evidence to 

earlier research that the main benefit was the standardization of HR practices. Ruël, 

Bondarouk and van der Velde (2007: 280 & 288–289) came to alternative conclusion in 

their study, introduction of e–HRM had brought to the case company technical and 

strategic effectiveness, also employee participation combined with support and 

information had a positive relation with the quality of e–HRM applications. Hustad and 

Munkvold (2005: 78, 83–84 & 86) examined IT implementation of strategic 



 20 

competence management application in Ericsson and revealed multi–level benefits, for 

example, the ability of e-HRM to support strategic competence management, and also 

dysfunctional outcomes in such themes as friction between global and local practices, 

commitment and designing the competence framework. Furthermore, Lengnick–Hall 

and Lengnick–Hall (2006: 180 & 190–191) examined the relationship of HR and ERP 

systems in knowledge and capability creation, they found a positive relation with the 

two by using dual–core structure, HR being the architect of ERP implementation. As 

seen from above e–HRM’s strategic nature has received wide interest among 

researchers, although Bondarouk and Ruël (2009: 508) argue that the current research 

orientation should withdraw itself from studying duplicate studies on e–HRM’s cost 

reduction capabilities or e-HRM’s ability to transform HR to become more strategic. 

 

The only micro-level study found on e-HRM outcomes was Stone, Stone–Romero and 

Lukaszewski’s (2006: 229 & 241–242) study which was interested in the factors after e-

HR system implementation resulting to intended and unintended consequences for both 

individuals and organizations. As a result they recommended focusing on the fit 

between individual and organizational values and goals, on information flows between 

the individuals and e–HR system, on social interaction and on perceived control. Stone 

and Lukaszewski (2009: 134) further studied the acceptance and effectiveness of e–

HRM design and implementation and thus as a result added new elements, media and 

message characteristics, into their earlier model from the 2006 study.  

 

Another interest area in e–HRM research has been issues related to the implementation 

of e–HRM. Lippert and Swiercz (2005: 340, 344–345 & 350) explored the relation of 

trust and HRIS implementation success and as a result formed a model, which include 

variables from technological, organizational and individual dimensions, for empirical 

testing the earlier mentioned relationship. Bondarouk and Ruël (2008: 155–156 & 160–

162) also draw the attention in their research paper to the e–HRM implementation 

process, they illustrated through three case study examples 17 HRM practices that had 

an influence to user behavior and to the success of IT implementation. Furthermore Teo, 

Lim and Fedric (2007: 44) studied the interconnectedness between innovation, 

organizational and environmental characteristics and the adoption of HRIS in 



 21 

Singapore. They found a positive relationship with organizational characteristics and 

adoption of HRIS and thus developed criteria for evaluating the adoption decision of 

HRIS (Teo et al. 2007: 60). Unlike previous research Smale and Heikkilä’s (2009: 153 

& 166–167) study looked the phenomenon on the other side and targeted on identifying 

issues (micro–political), actors and resources that tend to generate conflicts during e–

HRM integration in MNC setting. They found as sources of conflict issues such as e–

HRM system design, standardized use of English and grey areas of HR policy.  

 

Strohmeier and Kabst (2009: 482 & 495–497) focused in their paper to evaluate factors 

influencing MNCs adoption of e–HRM in European context, they came to a conclusion 

that the size, work organization and configuration of HRM are the most relevant 

variables in e–HRM adoption. Also the study sample showed that almost 70% of 

organizations have adopted e–HRM solution and Eastern European countries being the 

most penetrated in the adoption (Strohmeier & Kabst 2009: 495–497). Panayotopoulou, 

Galanaki and Papalexandris (2010: 253 & 266–267) examined how the national context 

influences e–HRM use in European scale and highlighted the influence of socio–

cultural factors on e–HRM adoption and as a result managed to divide Europe into three 

clusters. Florkowski and Olivas–Lujan (2006: 684 & 704) analyzed the spreading 

patterns of eight HR technologies within organizations and across countries and came to 

a conclusion that communication between individuals is the main driving force for the 

growth.  

 

In addition, Al–Dmour and Shannak (2012: 1 & 228) were interested in studying the 

implementation level of e–HRM in Jordanian shareholding companies and trying to 

explain this through analyzing internal and external factors of the sample companies, 

they found that current e–HRM penetration being at moderate level and that internal 

factors matter the most. Panayotopoulou, Vakola and Galanaki (2007: 277 & 289–290) 

studied the changing role of HR function due e–HR adoption in Greek firms and found 

that firms in the sample lacked behind in e–HR adoption compared to rest of the Europe 

and the main pressure for firms to adopt e–HRM comes from external environment, 

however this result contradicts with Al–Dmour and Shannak’s (2012) conclusions. 

Strategic issues rose in the study as the most significant reason for adoption and the 



 22 

study showed as critical success factors in adoption, for example, collaboration between 

IT and HR and the influence of organizational culture (Panayotopoulou et al. 2007: 

292).  

 

Fourth interest area has been the perception towards e–HRM among different 

stakeholders. For example, Gupta and Saxena (2010: 3 & 20–21) studied employees 

perception towards e–HRM in service organizations, findings from the quantitative 

study revealed mixed results and therefore some suggestions were presented, such as 

training in all levels, focusing on negative attitudes and to communicate positive effects 

of e–HRM, to improve the perception. Voermans and van Veldhoven (2007: 887 & 

899–900) studied attitudes towards e–HRM in the quantitative study at Philips, they 

found that IT environment and the preferred strategic role for HR had a positive effect 

to the attitudes towards e–HRM. Bondarouk, Ruël and van der Heijden (2009: 578 & 

588–589) examined the relation of e–HRM and effectiveness in their qualitative study 

in public sector, the study revealed that e–HRM effectiveness was perceived differently 

among the stakeholders and thus stressing the importance to discover in early stage the 

interest of stakeholders and to adapt to the situation with improvements. Heikkilä and 

Smale (2011: 1 & 8) on the other hand were interest in their study to look at the effects 

of language standardization on the acceptance and use of e–HRM systems in foreign 

subsidiaries, they found both functional and dysfunctional effects of language 

standardization to IT acceptance and use.  

 

Gardner, Lepak and Bartol (2003: 159 & 173–175) examined in their survey based 

study how IT impacted in HR professionals job, the study showed that IT has 

implications to HR professionals’ job such as intensified information dissemination and 

heightened requirements for new IT skills, which enabled the professionals to engage in 

developing new ways for HR delivery. Bell, Lee and Yeung (2006: 295 & 303) studied 

the relation between e–HR and its’ influence in competencies required from the HR 

profession, the study revealed that e–HR has the potential to push the competence 

requirements of HR professionals to demand more business and expertise skills. 

Hussain, Wallace and Cornelius (2007: 75 & 84–85) tried to shed a light on their 

quantitative study to the impact of IS on HRM and on HR professionals, the research 



 23 

showed that HRIS usage had a strategic nature and it improved the status of HR 

professionals within the organization. Haines III and Lafleur (2008: 525 & 534–535) 

analyzed the linkages between IT use and HR roles and HR effectiveness, the result 

illustrated that through automation HR professionals have an opportunity to grasp the 

strategic role they so pursue. Kassim, Ramayah and Kurnia (2012: 603 & 616) studied 

in their quantitative study antecedents and outcomes of HRIS in Malaysia, they found 

that IT could act as a medium to provide value for both HR professionals and 

organizations.  

 

Some other topics of interest in e-HRM research are the e–HRM’s implication to the 

recruitment function, the security concerns and the future studies. According to 

Strohmeier (2007: 26) the major body of research on e–HRM influence to HR activities 

is focusing on recruitment and selection. Girard and Fallery (2010: 2 & 11–12) 

reviewed through resource based view and social network theory can Web 2.0 practices 

reveal new e–recruitment strategies. Their exploratory study in France showed a change 

in e–recruitment approach from transactional to relationship based, for example interest 

in applicant relationship management. Chapman and Webster (2003: 113 & 119) 

studied the factors, the goals and the outcomes of HR technology on recruitment and 

selection, they found that traditional and technology based factors are used still side by 

side in most organizations. Zafar (2012: 7–8) on the other hand analyzed e–HR and 

HRIS linkages to the security concerns and created a framework to handle upcoming 

security issues. Tansley and Newell (2007) studied the narratives of IS and HR 

managers in their case study to find evidence on the influence of politically oriented 

public and private rhetorical activities. Martin, Reddington, Reddington and Sloman’s 

(2009: 370 & 376–377) used scenario building techniques to discover the potential of 

Web 2.0 for HRM and as a result formed suggestions for organizations to experiment 

with Web 2.0 in intra–organizational communication. Another future oriented study is 

Heikkilä’s (2010) Delphi study on the future directions of e–HRM, where he used 

Delphi technique to get insights from HRM professionals and researchers on possible 

future developments in e–HRM field. Additionally there have been conducted reviews 

on the current state of e–HRM research by authors like Strohmeier (2007) and 

Bondarouk and Ruël (2009).  



 24 

To draw the section together, one can say that the most researched topics in e–HRM 

studies have been strategic, implementation and outcome related research. Also the 

impact to HR profession has been discussed extensively compared some other topics. 

Recruitment has gained most interest of HR functions in e–HRM research. In regards of 

the results of this review, there is need for additional research in the micro–level issues, 

giving some justification for the chosen study interest. In order to fully understand the 

issues surrounding the topic, the next section discusses the issues surrounding e–HRM 

implementation. 

 

2.3 Implementation of e–HRM 

2.3.1 Drivers 

Current two–level HR function (HR and line managers) is suggested to be stiff, lack of 

innovativeness and as a result falling behind in efficiency and effectiveness compared to 

the multi–level e–HRM solutions that challenges the conventional HRM infrastructure 

by taking into consideration the influence of contingencies through decentralization of 

HR responsibility (Strohmeier 2009). Reasons behind this statement can be driven from 

earlier comments that HR needs to become more like a strategic partner, to create value 

and to align with other business functions and with external environment (Ulrich 1997: 

318; Ulrich, Brockbank, Johnson & Younger 2007: 1–2; Ulrich, Younger & Brockbank 

2008: 830). Martin and Reddington (2010: 1555) see two approaches for HR strategy 

outside–in, where HR strategy derives from business strategy, and inside–out which 

sees HR strategies potential to affect and even drive the development of business 

strategies. Enforcing the inside–out view, HR can help creating a competitive advantage 

through disruptive technology and knowledge, taking advantage of economies of scale 

in exploitation of existing knowledge and developing customer perception on HR 

(Martin & Reddington 2010: 1558). HR is able to adjust different resource flows inside 

the company, thus it has a pivotal role in developing capabilities which can result into 

above normal returns (Parry 2011: 1147–1148). According to Ulrich and Brockbank 

(2005: 3) development of capabilities should be done jointly within companies.  

 



 25 

This has a fundamental effect on e–HRM strategy, for example, Strohmeier (2007: 34) 

presents e–HRM phenomenon as an innovative development of HR and a source of 

major change, which is going to leave a permanent mark on HR. Although, it is argued 

e–HRM being strategic is an outcome of strategic HR and not the other way around 

(Marler & Fisher 2012: 14; Ruël et al. 2004: 369). Its’ key mission is to ensure efficient 

information flows inside the company, thus have a potential to create competitive 

advantage and aligning HR function with the business strategy (Martin & Reddington 

2010: 1553). This value chain has begun to change the way HR operates, presently the 

push is towards HR self–service with more personal and interactive content and services 

(Martin & Reddington 2010: 1554). Also it has been argued that e–HRM allows HR 

professionals to improve their organizational contribution and elevate their role as 

internal consultants (Bondarouk & Ruël 2009: 509). As a result being in line with 

Ulrich’s earlier demand. This trend shifts the HR responsibility into the hands of line 

managers and employees (Strohmeier 2007: 20). Furthermore e–HRM has the potential 

to connect the whole company together and fosters communication across functional 

and national boundaries (Martin & Reddington 2010: 1554; Marler & Fisher 2012: 4; 

Ruël et al. 2004: 365; Strohmeier 2007: 20).  

 

As shown from above, e–HRM strategy derives from HR strategy, therefore it is 

essential to identify the drivers of e–HRM adoption since it gives the basis for defining 

the goals of e–HRM and furthermore presents later on a change to reflect if the 

implementation was successful. Yeung and Brockbank (1995) saw as the drivers of e–

HRM investment the need of HR to reduce costs, improve service quality and foster 

cultural change (Shrivastava & Shaw 2003: 203 cited Yeung & Brockbank 1995). 

Lepak and Snell (1998: 231) on the other hand described, as the driving force for e–

HRM implementation the search for HR to become more responsive, adjustable, cost–

effective and strategic. Ruël et al. (2004: 372–373) added that e–HRM is linked with the 

aims for globalization and shared HR process (standardization), its’ goals are therefore 

to improve efficiency, service and strategic orientation (Ruël et al. 2004: 369 & 373; 

Strohmeier 2009: 528). Also Parry (2011: 1159) mentions the need to develop HR’s 

strategic orientation. Although Ruël et al. (2004: 374) later question, can the quality and 

the efficiency of HR service be improved simultaneously. They also ignore the cost 



 26 

reduction goal in short term and think it as more like part of selling speech for e–HRM 

systems (Ruël et al. 2004: 374). Martin and Reddington (2010: 1564) also included as a 

driver of e–HRM the intention to create common corporate identity. So far there is 

evidence that cost cuts have been the most dominating driver for e–HRM (Bondarouk & 

Ruël 2009: 508).  

 

Ruël et al. (2004) noted also changes in external environment like the change 

phenomenon in employment relationship, supply shortage in the labour market, the 

individualization of society and the increased educational level of citizens are just some 

of these drivers. This has shifted the power in the employment relationship to the 

direction of the employees, thus desire to control their own career paths drives the 

change (Ruël et al. 2004: 367.). Boston Consulting Group (BCG) and European 

Association for Personnel Management (EAPM) report (2007: 3) give evidence that at 

least in Europe companies are facing talent shortages, loss of capacity and knowledge 

due retirement and ability respond to pressures (increased complexity and speed) 

generated by global economy. e–HRM can give tools for companies to respond to these 

trends (Ruël et al. 2004: 367).  

 

Ciborra (2002) mentioned as a driver of e-HRM the pressure to imitate which has in 

many cases been the main driving force behind expansion in technological innovations 

(Bondarouk & Ruël 2009: 509 cited Ciborra 2002). Also social pressure and general 

acceptability that IT equals cost efficiency drives IT investments forward (Strohmeier 

2007: 29). CedarCrestone (2010: 2) survey shows evidence of this by indicating that 

organization are starting to benchmark each other in e–HRM adoption. Martin and 

Reddington (2010: 1554 & 1569) see as the latest extension in HR transformation the 

use of Web 2.0 technologies and its potential to develop organization’s social capital. 

Martin and Reddington (2010: 1559) conclude that decisions in HR strategies and 

policies are the strategic drivers of e–HR, whether its transactional or transformational 

goals. Marler and Fisher (2012: 3) supported Reddington’s (2010) earlier statement by 

arguing that organizational goals influence IT in design and implementation. 

 

 

 



 27 

Table 2. Summary of drivers. 
Cost & efficiency (transactional) Drivers Strategic (transformational) drivers 

 Cost reduction 

 Cost–efficiency 

 Improving communication 

 Elevate HR professionals’ role 

 Improving HR service quality 

 Social pressure 

 Alignment with internal and external 

environment (cross boundaries) 

 Improving HR flexibility 

 Improving HR responsiveness 

 Pressure to imitate 

 HR strategy and organizational goals 

 Need for HR to be a strategic partner 

 HR value creation 

 Cultural change 

 Common corporate identity 

 Standardization 

 Globalization 

 Changes in external environment 

 Social capital development 

 

To conclude this section, drivers of e–HRM (see table 2.) derives from pressures linked 

to HR and also in many cases pressures that are coming from wider institutional and 

micro-environment of the company. Following section focuses on the implementation 

process of e–HRM. 

 

2.3.2 Implementation process  

This paper presents the e–HRM implementation process through Strohmeier (2007) a 

framework (see figure 1.). It evaluates the context of e–HRM from both micro and 

macro perspective. e–HRM configuration consists of actors, strategies, activities and 

technologies in micro and macro level and finally the consequences of e–HRM 

implementation in micro and macro level are considered. (Strohmeier 2007: 21.) 

Strohmeier’s model in this research is extended to take into consideration also in micro 

level the micro–political issues and in macro level the institutional issues since 

Rupidara and McGraw (2011: 179) argue that actors implementing HR systems are 

facing pressures from both these environments. 



 28 

 

Figure 1. Storhmeier’s e–HRM framework. (Strohmeier 2007: 21) 

 

e–HRM context 

Earlier drivers section described macro and micro level issues that push e–HRM 

implementation forward. The next phase is the analysis of the micro/macro context 

where e–HRM implementation is done (Strohmeier 2007: 21; Shrivastava & Shaw 

2003: 204; Ruël et al. 2004: 366). Analysis can reveal issues like availability of 

computers and level of IT skills (Ruël et al. 2004: 376; Strohmeier 2007: 21), attitudes 

of individuals and the influence of organizational culture (Strohmeier 2007: 21). Also 

Ruël and van der Kaap (2012: 276–277) found evidence that e–HRM adoption was 

positively influenced by micro–level contextual factors such as facilitating conditions, 

data quality, HR competence in IT and HR policy–practice alignment. As a result, 

Martin and Reddington (2010: 1570) recommend doing a gap analysis between present 

and desired situation in every stage of e–HRM implementation.  

 

Also the intra–organizational dependence between HQ and the subsidiary have an effect 

to the micro–political environment of the subsidiary (Rupidara & McGraw 2011: 176). 

Hence subsidiaries are battling over shared resources and legitimacy within the MNC 

(Ambos & Birkinshaw 2010: 450), which then determine the level of influence the 

subsidiary has during the e–HRM implementation process (Rupidara & McGraw 2011: 

176). In this process the local institutional environment, like the local laws and norms 

can serve as a source of power in implementation negotiations (Rupidara & McGraw 

2011: 179). For example HR managers are taking advantage their local professional 

networks to interpret the regulative and the cognitive environment affecting the HR 

delivery choices (Rupidara & McGraw 2011: 181). As a result Strohmeier (2007: 21) 



 29 

pushes companies to make constant analysis of the variables in micro and macro level 

to be able to respond to the needs of both environments and thus be proactive in 

development of their HR delivery. From this analysis relevant stakeholders can form 

with the desired outcomes in mind their initial approach to e–HRM (Ruël et al. 2004: 

366–367). The broadness of the analysis is constrained by available time and 

information quality (Shrivastava & Shaw 2003: 204–205).  

 

 e–HRM configuration 

In configuration stage, “actors” evaluate, who are the people involved in planning, 

implementation and using e–HRM systems. Martinson and Chong (1999) argue that 

each relevant stakeholder should be given a change to be involved in the decision–

making process (Shrivastava & Shaw 2003: 205). Thus e–HRM should be developed in 

cooperation between HR professionals, line managers and employees to address the 

different needs of the parties (Bondarouk & Ruël 2009: 510). These are the people 

together with HQ representatives, who should negotiate and as a result find an 

acceptable solution between the institutional pressures of local environment and HQ 

needs (Rupidara & McGraw 2011: 179), thus enforcing the importance of micro–

political negotiations. Otherwise there is a danger that if the differences in perception of 

e–HRM system are not taken into consideration in system design phase, it may lead to 

misunderstandings and lack of usage when the system is operational (Bondarouk & 

Ruël 2009: 510). As a solution, Shrivastava and Shaw (2003: 205–206) suggest that for 

the analysis a special team should be selected to involve cross–functional capabilities 

from areas like HR, legal, IT and business, also using external consultants is common. 

Also Bondarouk and Ruël (2009: 505–506) confirm that e–HRM projects are handled 

today by cross–functional teams.  

 

Also HR can have affect to external relationships through shared experiences in 

fostering build of intellectual capital, social capital and the communities beyond the 

boundaries of the firm (Lengnick–Hall & Lengnick–Hall 2006: 189–191). To develop a 

competitive advantage from IT implementation, organizations need talent in their 

internal and external networks (suppliers), thus the role of HR is crucial in keeping and 

developing the talented workers throughout the supply chain focused on ensuring 



 30 

successful IT implementation process (Lengnick–Hall & Lengnick–Hall 2006: 186). 

Thus beside chosen HR strategy, HR’s technological capability and competence, and 

competence in business management have an effect to the e–HRM architecture that the 

company adopts (Martin & Reddington 2010: 1559–1560). These matters regarding 

talented people emphasize the influence of the local institutional environment to e–

HRM implementation, like for example with good cooperation and integration with 

local universities companies can reduce the risk of talent shortage and as a result 

provide an advantage to the company, such as Morgan and Kristensen (2006: 1485) and 

Festing and Eidems (2011: 167) intended. Therefore managing complex relationships is 

the key challenge to e–HRM to ensure internal and external fit between organization 

and its’ external co–operators (Lepak & Snell 1998: 221). As a result e–HRM is a 

multilevel phenomenon, beside the micro level actors searching and sharing 

information, there are also macro level actors like groups, organizational units, even the 

whole MNC involved in e-HRM (Strohmeier 2007: 20). Therefore it can be argued that 

also the institutional actors have an influence in HR system decisions (Rupidara & 

McGraw 2011: 178–179).  

 

Strategies 

Strategies mean setting objectives and a plan for e–HRM implementation (Strohmeier 

2007: 21). It is clear that the HR and e–HRM strategy drive the e–HRM implementation 

(Ruël et al. 2004: 367). For example HR is able to adjust different resource flows inside 

the company, thus it has a pivotal role in developing capabilities, which can result into 

above normal returns. This increases the importance of HR development and 

implementation. Hence through successful management of HR delivery in more 

efficient and effective manner can support the creation of a competitive advantage. 

(Parry 2011: 1147–1148.) According to Lin (2011: 237) e–HRM to be successful needs 

integration with the business strategy throughout the firm in order to gain efficiency 

advantages, also beside the strategy, the organization structure must be adapted to the 

changes in both HR delivery and in the environment. In this process decision makers are 

simultaneously constrained and shaping their social and institutional context by their 

actions concerning HR configuration (Rupidara & McGraw 2011: 178–179). Even 

though the importance of strategic alignment is recognized, still many organizations 



 31 

forget to link the HRM strategy with the selected e–HRM solution or the goals of e–

HRM implementation are defined poorly (Ruël et al 2004: 374). Therefore Ruël et al. 

(2004: 379) argue that organizations should invest enough time in preparing a proper e–

HRM strategy, clear goals and plans make it easier to define the advantages of e–HRM 

to the potential users. 

 

Technologies  

Technologies involve around the decision, which technological solution is right for the 

organisation (Strohmeier 2007: 21). These decisions are closely related to the drivers of 

e–HRM like globalization and standardization as Ruël et al. (2004: 372–373) suggested 

earlier and also they can be constrained by such institutional embedded things like local 

regulatory or cultural environment, for example when deciding about the system’s user 

language (Heikkilä & Smale 2011: 308–310; Smale & Heikkilä 2009: 162–165). As an 

outcome of the analysis company needs to define which path is best for them between 

the two alternatives. The choices are process–driven or technology driven approach, the 

first choice forces the technology to adapt resulting into some stage of customization of 

software which is though to be more expensive, and the alternative choice prefers HR 

function to bend in the requirements of e–HRM technology solution which is seen to 

put the present HR delivery under scrutiny (Shrivastava & Shaw 2003: 204–206.).  

 

Other decision is the spread that technology has over HR, choosing between two 

extremes a singe function best of breed solution or integrated enterprise wide solutions 

which enforces the company towards shared culture and standardization (Shrivastava & 

Shaw 2003: 208). As a result firms that adopt the technology–driven approach favor 

standalone solutions, usually these organizations are agile in their nature and those that 

adopt the process–driven approach favor enterprise–wide solutions, common 

characteristics for these firms are the emphasize on standardization of processes and 

shared culture (Shrivastava & Shaw 2003: 208; Lengnick–Hall & Lengnick–Hall 2006: 

179). Ideal state is when these choices involve minimal reengineering in both HR 

activities and technology (Shrivastava & Shaw 2003: 207). Outcome of these 

aforementioned decisions determinate the labor structure and the capabilities needed in 

operating the e–HRM system in organizations (Lin 2011: 238).  



 32 

 

Also above–mentioned decisions regarding e–HRM technology and the drivers define 

the requirements that a company expects from e–HRM system and thus helps in 

mapping the possible vendors for the system (Shrivastava & Shaw 2003: 204). These 

vendors and the software should be ranked in such terms as cost, functionality, security, 

how they match with company needs, the compatibility with existing legacy systems 

and technical know–how needed for implementing and operating the system 

(Shrivastava & Shaw 2003: 206). Bondarouk and Ruël (2009: 508) argue that off–the–

shelf e–HRM applications promoted by vendors and consultants hinder any possibilities 

to capitalize organization’s unique features and hence achieve the competitive 

advantage. 

 

Activities  

Activities are the HR processes that e–HRM tries to influence. This is not without 

consequences since HR is highly instititutionally embedded and thus hard to integrate 

into MNC wide systems (Smale & Heikkilä 2009: 155 cited Tayeb 1998). HR activities 

can be categorized in transactional, traditional and transformational HRM or like Lepak 

and Snell (1998) defined in operational, relational and transformational HRM (Ruël et 

al. 2004: 368; Lepak & Snell 1998: 219–220). Operational HRM is linked to basic 

administrative HR tasks (Lepak & Snell 1998: 219; Ruël et al. 2004: 368; Shrivastava 

& Shaw 2003: 203). Relational HRM is linked with HR tools like HR intranet to 

support HR activities like recruitment, training, performance management and rewards 

(Lepak & Snell 1998: 220; Ruël et al. 2004: 368 & 371; Shrivastava & Shaw 2003: 

203). Transformational HRM is associated with already described HR’s aim to become 

strategic through involving in decisions regarding organizational change, strategy 

formulation and developing firm’s strategic resources and capabilities (Lepak & Snell 

1998: 220; Ruël et al. 2004: 368; Shrivastava & Shaw 2003: 203). In MNCs the choices 

regarding HR activities that should be integrated into e–HRM system are evaluated and 

negotiated by HQ and subsidiary HR representatives (Smale & Heikkilä 2009: 157). 

Thus configuration process is influenced by dynamic interactions among actors, who 

are comparing the alternatives against their personal and shared interests and goals 

(Rupidara & McGraw 2011: 177). Similar way Ruël et al. (2004: 368) advice 



 33 

organizations to decide which services in their point of view are better to be handled 

face–to–face or alternatively through e–HRM solutions. This way understood e–HRM 

is just a new approach to deliver HR services in organizations (Ruël et al. 2004: 368; 

Ulrich & Brockbank 2005: 2).  

 

e–HRM consequences 

The consequences of e–HRM adoption are the outcomes of earlier decision in micro 

(satisfaction & acceptance) and macro level, these can be either positive or negative 

functional or dysfunctional consequences (Strohmeier 2007: 21; Martin & Reddington 

2010: 1562). Furthermore Martin and Reddington (2010: 1562) point out that 

perceptions are always subjective to the viewer. Gueutal and Stone (2005: 228) claim 

that based on the latest research and theory, cultures which share Western European 

values will accept and get better results from e–HRM solutions. This finding could 

indicate that institutional similarity has a positive effect to the outcome of e–HRM 

implementation.  

 

e–HRM will push the responsibility of implementing HRM to line management and 

employees, also IT can streamline processes and have positive effects to the HR’s 

administrative burden (Lepak & Snell 1998: 219; Ruël et al. 2004: 377). Also increase 

of automation in services will result into cost savings and productivity increases and 

therefore into a shift from labor to technology–intensive HR (CedarCrestone 2010: 2; 

Strohmeier 2007: 27). This is especially true in areas like operational HR and 

information processing due less need of HR staff, therefore the costs have shrunken 

(Ruël et al. 2004: 371; Shrivastava & Shaw 2003: 217; Strohmeier 2009: 535). 

Regarding e–HRM’s aim to be cost–effective, it is unclear whether or not the 

administrative time has actually shrunken or has it just transferred to line managers and 

employees (Strohmeier 2007: 28). Parry (2011: 1158–1159) also found no evidence on 

cost savings from reduced HR headcount due e–HRM adoption. Furthermore Martin 

and Reddington (2010: 1564) saw no short–term cost benefits from e–HRM 

implementation since benefits did not exceed the implementation costs during the first 

two years.  

 



 34 

If one is to consider the aspect of relational e–HRM, HR intranet with improved 

precision and service level has altered the way HR is experienced in organizations and 

also fewer HR people are required since employees and managers use the HR tools 

(Lepak & Snell 1998: 220; Shrivastava & Shaw 2003: 203; Ruël et al. 2004: 371 & 

378). Examples of the change are having constantly up to date information available, 

opportunities to discuss HR matters online, more support in flexible working and 

possibilities for personnel to influence on their career paths (Ruël et al. 2004: 376 & 

378). Martin and Reddington (2010: 1560) agreed with the previous comment and 

added that beside electronic HR service center have the possibility to change the HR 

delivery, it can also in some cases pre–determine the way HR professionals do their 

work due lack of flexibility in the systems. Strohmeier (2007: 26) notes that e–HRM 

adoption may result to improved acceptance and satisfaction through more accurate 

search results and occurred timesaving. Even though because of e–HRM solution less 

HR professionals are needed in operational HR activities, there is still demand for HR 

staff to renew the tools for the fluent intranet based use (Ruël et al. 2004: 371). 

Therefore IT also increases the opportunities to develop HR tools that would not be 

otherwise possible such as personal assessment and measurement tools (Ruël et al. 

2004: 379). 

 

e–HRM also creates dysfunctional consequences, for example there is evidence on line 

managers’ growing workload and increased negative attitudes towards HR professionals 

(Martin & Reddington 2010: 1567). There should be an opportunity to address these 

concerns during micro–political negotiations. Ruël et al. (2004: 375) add as a downside 

of e–HRM that it may generate a new profession in assistance to use e–HRM system. 

Also Gueutal and Stone (2005: 236) found dysfunctional consequences of e–HR in 

recruitment and selection like lack of computer availability, lack of computer skills to 

access to the recruitment sites and problems in verification and updating data. Also data 

maybe limited in its’ nature, presented in a simplistic way and shared without the 

applicant being aware of it (Gueutal & Stone 2005: 242). This has also implications for 

the organization (Gueutal & Stone 2005: 243). Furthermore online tests used in 

recruitment and selection have a moral hazard problem since applicants can have 

outside help with filling the questionnaires (Gueutal & Stone 2005: 243). 



 35 

In performance management reported dysfunctional consequences of e–HRM adoption 

are related to danger of depersonalizing feedback, decrease in social support, building 

personal relationships is slower and the understanding of contextual information 

diminishes (Gueutal & Stone 2005: 246). Also employees might react negatively on 

electronic performance monitoring and think that these systems neglect some aspects of 

performance. Danger is also that these systems are experienced as invasive for the 

privacy (Gueutal & Stone 2005: 246). Also Ruël el al. (2004: 378) found that 

institutional issues like security of private information and cross–cultural matters are 

sensitive in e–HRM implementation. Managers might also face information overload 

issues (Gueutal & Stone 2005: 247; Ruël et al. 2004: 375). The system may also fail to 

deliver information on interpersonal and organizational citizenship behavior (Gueutal & 

Stone 2005: 247).  

 

In the end the success of adoption of e–HRM solution depends on the willingness of 

line managers and employees to take over the responsibilities that used to belong to HR 

personnel (Ruël et al. 2004: 375 & 379; Martin & Reddington 2010: 1561 & 1567). 

Although Koch (2002) point out that it is challenging to change people’s behavior 

(Shrivastava & Shaw 2003: 206). As a result e–HRM can be irritation if the needs of 

HR, line managers and employees are not met (Ruël et al. 2004: 379). This can happen 

when the results do not meet the intended goals, when the implementation path is not 

clear or when the transformation is too technology–driven (Ruël et al. 2004: 379). Also 

critical for the process is the top management support (Marler & Fisher 2012: 17; Lin 

2011: 252), clear HRM objectives regarding the implementation and the recognition of 

the need for organization to have change management capabilities to overcome the 

resistance towards the intended change (Marler & Fisher 2012: 17). Ruël et al. (2004: 

379) added that also the acceptance of HR professionals is a key for the success. 

 

As obstacles of successful implementation, based on the evidence from the case studies, 

Martin and Reddington (2010: 1561) identify neglecting line managers needs, unclear 

division of responsibilities between HR and line managers, insufficient amount of 

training, lack of support from HR and problems due the change in working methods 

from face–to–face to virtual (Martin & Reddington 2010: 1561). To ease the adoption 



 36 

of e–HRM, companies should pay a special interest in developing the interface as 

intuitive as possible (Ruël et al. 2004: 375). Furthermore Shrivastava and Shaw (2003: 

212) suggest as solutions for increasing user acceptance, e.g. increasing communication, 

empowerment of employees into the process, training and integrating reward systems to 

the process. Other authors have also noted the importance of training (Martin & 

Reddington 2010: 1567; Strohmeier 2009: 536). Bondarouk and Ruël (2009: 507) see 

implementation of e–HRM as a process of adoption and utilizing the system by 

organization’s members. Ruël et al. (2004: 375) noticed that users do not fully adopt 

and learn to take advantage the full potential of e–HRM solution. Thus technology 

needs to be sold and incorporated into day–to–day working routines otherwise it will 

fail (Ruël et al. 2004: 376).  

 

Simplifying the implementation process into steps, Martin and Reddington (2010: 

1569–1570) present the e–HRM implementation in five cycles (theorizing, promoting, 

involving, integrating and evaluating). Their model (see figure 2.) illustrates more 

dynamic connections with chosen e–HRM strategy, e–HRM technologies (including 

social media driven technologies) and technological capabilities of the personnel 

(managers, employees and HR) into e–HR architecture (Martin & Reddington 2010: 

1555 & 1570). This model has five cycles combining e–HR strategy, e–HR 

architectures and the evaluation on what extend the adopted system has been able to 

meet stakeholders’ needs (Martin & Reddington 2010: 1569). 

 

Figure 2. e–HR as the implementation of cycles. (Martin & Reddington (2010: 1570) 



 37 

The first cycle “Theorizing” is laying the ground for the change, this involves getting 

the support of senior and line managers by sharing the vision and the potential benefits 

of E–HRM for the different stakeholders (Martin & Reddington 2010: 1569). 

“Promoting” is related to marketing the vision, architecture and the potential of the 

system to the organization’s change agents (Martin & Reddington 2010: 1570). 

“Involving” is concerned on extending the responsibility of implementation as widely as 

possible in the organization. “Integrating” the new system with older legacy systems 

and seeing that users get value from the system. “Evaluating” is reflecting the vision’s 

promise with the actual outcomes of the system implementation. (Martin & Reddington 

2010: 1570.) 

 

As a result this paper have so far presented the drivers of e–HRM, linked them with the 

implementation process and illustrated some of the micro and macro level 

consequences. The last section has also showed some evidence on the implications that 

e–HRM adoption faces from both institutional and micro–political side. This trend will 

continue in next sections, which are considering the implementation from MNCs and 

consultants’ perspective. 

 

2.3.3 Implementation in MNCs 

The complex international environment with numerous pressures, like the subsidiary’s 

institutional environment, have its’ own implications to HR system implementation in 

MNCs (Rupidara & McGraw 2011: 175). e–HRM systems, in general, force MNCs to 

think their different functions’ interconnectedness in terms of information and processes 

(Shrivastava & Shaw 2003: 207). Therefore even though IT has the potential to push 

HR into global integration and to support MNC’s international strategy (Strohmeier 

2007: 28 cited Hannon et al. 1996), MNCs are also forced to think choices between 

central governance and local autonomy in HR practices as a result of these pressures to 

gain legitimacy in their environments (Rupidara & McGraw 2011: 175 & 178). This is 

conflicting with Ruël et al. (2004: 373) earlier study which presented evidence on 

MNCs aim to standardize HR policies and practices through e–HRM. Shrivastava and 

Shaw (2003: 205) point out that larger firms prefer decentralized modes of corporate 

governance over their subsidiaries through enterprise wide systems such as ERP.  



 38 

Global standardization is difficult to achieve since MNCs are complex institutional 

environments themselves. For example, Martin and Reddington (2010: 1571) argue that 

considering contextual issues in HR changes are utmost relevant in MNC cases, 

especially in part of the organizational context which refers to institutional and cultural 

distance between the parent company and the subsidiary. Therefore it would be vital 

that powerful line managers, who are acting as opinion leaders in subsidiaries, should be 

involved in the MNCs implementation process in order to achieve broad support for the 

transnational HRM practices (Festing & Eidems 2011: 170). Martin and Reddington 

(2010: 1571) comply with the importance subsidiary managers’ attitudes towards the 

intended change and add that the present level of alignment in practices between the 

subsidiary and HQ is also important for the success (Martin & Reddington 2010: 1571). 

Furthermore Strohmeier and Kabst (2009: 495–497) as well came to a conclusion that 

configuration of HRM in MNCs is a relevant variable in e–HRM adoption.  

 

Another important area in implementation is the relational context, which concentrates 

on HQ managers’ attitudes towards the subsidiary staff and how depended the 

subsidiary is from HQs resources (Martin & Reddington 2010: 1571). In this context the 

subsidiary HR managers need to balance with the possibly conflicting interests of HQ 

and the subsidiary (Rupidara & McGraw 2011: 181). Rupidara and McGraw (2011: 

177) further argue that this dynamic micro–political interaction works in both ways and 

therefore actors are viewing things through their own unique set of perceptions.  

 

To conclude, e–HRM implementation is a multilevel phenomenon in MNCs, which 

requires constant analysis of the institutional and micro–political environment since 

organizations are socially embedded in their context and this phenomenon will further 

be discussed in-detail in the chapter 3. Next section evaluates the role of consultants in 

IT implementation projects as there exists no previous research focusing particularly on 

the role of consultants in the e-HRM implementation projects. 

 

2.3.4 Role of consultants 

Nowadays there are numerous consultancy instances providing IT consultancy service 

to the possible clients (Kubr 2002: 412). It is argued that use of consultants in projects 



 39 

makes managers to look more professional and knowledgeable (Kitay & Wright 2004: 

3). Consultancy services can assist IT projects in analysis of the business needs, 

recommending suitable software, and managing the implementation (Thong, Yap & 

Raman 1994: 211; Kubr 2002: 286 & 290). For example an experienced consultant can 

use his expertise to forecast and prepare organizations against possible problems (Kubr 

2002: 286). Although Kubr (2002: 9) note that the final responsibility over the decisions 

should still be in hands of the client. Consultants and the client should invest enough 

time in the analysis phase to map the needs and the relevant stakeholders of the project 

(Kubr 2002: 295), since difficulties arise when the client and the consultant have 

conflicting opinion on what is required in the task (Kitay & Wright 2004: 15). Kubr 

(2002: 16 & 285–286) adds that beside expertise service, consultants can help clients to 

network with the right key players for the project and help in planning the 

implementation.  

 

This role of a networker between the client and the supplier has generated a new 

business model, where consultants are simultaneously serving the client and the supplier 

when recommending possible technology solutions (Kubr 2002: 285). This emphasizes 

the boundary spanner role of consultants, connecting two different organizations 

together (Kitay & Wright 2004: 4). In the field of e-HRM, Smale and Heikkilä (2009: 

161–162) found that consultants in e–HRM implementation negotiations can be 

simultaneously serving HQ interest and their own agenda without the knowledge of the 

local constrains. Also these researchers found that lack of HR knowledge gave to the 

subsidiary HR managers’ additional power in system design negotiations (Smale & 

Heikkilä 2009: 162). Thus conflicts are bound to emerge when these parties exploit 

their power over each other (Kitay &Wright 2004: 16). Therefore it is suggested for the 

consultants to know the individual preferences and the cultural and other implications 

affecting the decision–making process in the client organization (Kubr 2002: 227). Also 

Rupidara and McGraw (2011: 181) argue that consulting firms are powerful influencing 

forces in institutionalism by providing services that are utilizing their branded tools and 

frameworks based on similar ideas, thus promoting the institutional isomorphism. In 

similar vein Kubr (2002: 413) warns that in e–HRM projects organization should prefer 

specialist HR consultants over IT consultants since the latter in many cases recommends 

too sophisticated and expensive software compared to the needs of the client. Also 



 40 

Kitay and Wright (2004: 3) note that sometimes consultants are using managers’ lack of 

knowledge to sell the currently hyped management tools. As a result Bondarouk and 

Ruël (2009: 508) argue that consultants pushing same kind of solutions to each client 

erode the possibility to acquire a competitive advantage through e–HRM.  

 

Previous section considered the role of consultant in IT projects and also some issues 

related to the theme from micro–political and institutional side were elevated. The next 

section ponders e–HRM adoption’s strategic influence on, Lepak and Snell (1998: 220) 

and Ruël et al. (2004: 368) previously mentioned, transformational HRM and reflects it 

against Ulrich’s (1997: 318) demand for HR to become a strategic partner of the 

business. 

 

2.4 “Strategic partnership”  

On transformational level the target is on the strategic nature of HRM, Shrivastava and 

Shaw (2003: 204) thus point out that e–HRM should eliminate the bureaucracy and 

have an impact on the organization’s structure. The focus is on activities regarding 

organizational change processes, strategic re–orientation, strategic competence 

management, and strategic knowledge management, in generally speaking activities that 

add value (Ruël et al. 2004: 368; Parry 2011: 1146 & 1158). Although Shrivastava and 

Shaw (2003: 218–219) argue that HR should elevate itself in phases, first attempt to 

establish its’ credibility by successfully responding to the operational and relational 

drivers and only then attempt to drive forward the culture change.  

 

On the other hand the selected primary role of HR function defines the development 

direction and hence like in many cases, if the role is administrative it is likely not going 

to yield any competitive advantages from e–HRM adoption (Marler 2009: 518–519 & 

525). Marler (2009: 525) further continues that HR and e–HRM being strategic, HR 

function should be thought as strategic and thus as a source of competitive advantage. 

Transformation requires fundamental internal change on how HR is delivered in order 

to develop resources and capabilities into sources of strategic advantage. Resource 

based view thus suggests doing things in unique way which combined with social 

process and path dependency will result into hardly imitable advantage. Hence 



 41 

customized e–HRM system can support in creation of a competitive advantage unlike 

any best practice applications. Interestingly, Parry (2011) found a link in organizations 

which had used e–HRM in strategic purposes, normally had an experienced HR 

manager (Parry 2011: 1158). Although in many times due HR’s primary role being 

administrative or because of social forces, like management inertia or skepticism, can 

erode any changes to achieve competitive advantages through adoption of e–HRM 

technology. (Marler 2009: 520–525.) 

 

Additionally it is argued that IT has created a paradox around its’ strategic benefits, this 

accelerates imitation and thus diminishing any changes for a competitive advantage (Lin 

2011: 240). Hence Bondarouk and Ruël (2009: 509) argue that firms should think their 

motives and if the motive is imitation, they question how these companies are going to 

yield any competitive advantages out of e–HRM? If this is not the case, Ruël et al. 

(2004: 376) list as the most important benefit of the system the strategic integration of 

HRM with the company strategy, structure and culture, hence e–HRM role in this is to 

ease the centralization and standardization of HR policies and practices and 

decentralizing their implementation. In general level there is supporting empirical 

evidence suggesting that a tighter fit between HR competencies and business strategy 

leads to superior performance (Ruta 2009: 574). Although Strohmeier (2007: 24) 

criticizes this view by arguing that the evidence considering the relationship between e–

HRM strategy and business strategy is still insufficient. 

 

Above described development of transformational e–HRM increases the need for 

strategic HRM specialists, which are able to form strategic HRM plans and support 

business decisions (Ruël et al. 2004: 369–371; Lepak & Snell 1998: 230). Also Bell, 

Lee and Yeung (2006: 300–301) agree in demand for HR talent in areas like business, 

functional HR delivery and technology know–how. Despite of e–HRM’s potential, 

Marler and Fisher (2012: 1, 13 & 16) found extremely weak empirical evidence on e–

HRM ability to influence in HRM strategic outcomes. Marler and Fisher (2012: 2) 

argue that without hard evidence on the strategic nature of e–HRM, investment 

decisions are made without a clear picture on the potential outcomes of these systems. 

Then it is possible that organizations fall into vendor’s claims that e–HRM is strategic 

and potentially failing to measure it by themselves (Marler & Fisher 2012: 16). Thus 



 42 

Shrivastava and Shaw (2003: 218) point out that if the development of transformational 

side does not accelerate there is a danger that e–HRM regresses to being only a cost 

cutting tool for companies due responsibility shift of HR work.  

 

To prevent this regression, beside alignment of HR goals with the business needs, IT 

enables the HR to be proactive against the changes in its environment (Lin 2011: 252–

253). These changes could be for example ones presented in BCG and EAPM report 

(2007: 3), therefore European companies face pressures to develop five capabilities, 

managing talent, demographics, work–life balance, becoming a learning organization, 

managing change and cultural transformation, in response to these ongoing pressures. 

For HR this means mastering following processes, excelling in recruitment and staffing 

and transforming HR into a strategic partner (BCG & EAMP 2007: 5). Also e–HRM 

enforces HR professionals to be more capable on information and relationship 

management (Lepak & Snell 1998: 229). Thus Kovach, Hughes, Fagan, and Maggitti, 

(2002) note that e–HRM can prove to be for management a decision–making tool rather 

than just a robust database (Shrivastava & Shaw 2003: 217). Hence e–HRM solutions 

like HR portals make it possible to build organization wide knowledge resources, 

monitor and bundle information, as a result allow companies to make information 

supported business decisions and thus reaching their business goals more efficiently 

(Bondarouk & Ruël 2009: 509; Lin 2011: 236).  

 

Also e–HRM can respond to these pressures, presented by BCG and EAMP, by 

developing firms’ intellectual capital (Bondarouk & Ruël 2009: 509–510; Lin 2011: 

253). Therefore e–HRM has a important role in organizational capital development, 

affecting structures, systems, processes and databases, and in the future social capital 

building will be in bigger role through the help of Web 2.0 technologies, together these 

two have the potential to create new innovations in organizations (Martin & Reddington 

2010: 1568–1569). As a result Ruel et al. (2004: 369) add that e–HRM system has the 

potential to develop organizations’ social capital in such areas like high commitment 

(trust between employees and management), high competence (capabilities to learn 

new) and high congruence (fair reward system). Thus the role of HR is not to create a 

dependency between the employee and the HR unit, but to forge a partnership that leads 

to increased intellectual capital, enhanced commitment, improved adaptability, and 



 43 

greater awareness of opportunities to make a difference. In its’ essence e–HRM is a 

fundamental change in responsibility and way people experience HR. Thus HR 

becomes more personal, open and on organizational level it desires to fulfill its’ 

strategic nemesis and hence be a business partner. For HR professional this means a 

change in attitude and increase in demand to become more customer and business 

oriented. (Lengnick–Hall & Lengnick–Hall 2006: 187.)  

 

IT and virtual organizations have already in some cases proven to be a useful in 

fostering open communication culture and turn education and training of employees into 

creativity and organizational innovation (Lin 2011: 236, 241–242 & 250). Companies 

are now using Web 2.0 technologies in internal and external communication resulting in 

structural integration through coordinative effort (McKinsey Quarterly 2008: 1; Lin 

2011: 239 & 242). Shrivastava and Shaw (2003: 212) argue that this has an affect to the 

micro–politics within HR work through increased information availability, influence on 

the job design and pressure towards more cooperation. As a consequence HR 

professionals may feel threatened, because loss of information control (Shrivastava & 

Shaw 2003: 212). On the other hand e–HRM allows organizations to achieve improved 

performance in HR delivery and HR professionals to focus more on internal consulting 

(Bondarouk & Ruël 2009: 508–509; Ruël et al. 2004: 370 & 378). The consultancy role 

has become possible since administrative tasks and positions have continued to 

diminish (Ruël et al. 2004: 370). This allows HR to focus on strategic goals and to take 

business partner roles changing the nature of HR work (Ruël at al. 2004: 369; Parry 

2011: 1158; Strohmeier 2007: 28).  

 

As seen there are conflicting arguments for and against on e–HRM strategic nature, 

some evidence even lifting HR to foresee role of a strategic partner. Since e–HRM is 

argued affecting in things such as structures, delivery, communication and job designs, 

as a result the importance of regarding employee’s attitudes and perception increases 

and thus enforces the need for cooperation between different stakeholders and elevating 

the role of micro–politic negotiations. This chapter further presented numerous 

institutional and micro–political implications regarding e–HRM adoption and the next 

chapter presents the key theoretical framework of institutional and micro–political 

environment and in the end unifies these three elements into together.  



 44 

3. THEORETICAL BACKGROUND 

This chapter presents institutional and micro–political theory linked to organizations, 

and especially concerning MNCs, and e–HRM implementation. Now the reader should 

be able to link the previously seen institutional and micro–political evidence with the 

forthcoming theoretical discussion. At the end of this chapter the relevant theory is 

synthesized and as a result, a model is presented in order to theoretically illustrate the 

research phenomenon. 

 

3.1 Institutional theory 

Institutional perspective attempts to justify the fact that inside industries there are strong 

resemblances, “isomorphism”, in organizational structures and practices between 

companies (DiMaggio & Powell 1983: 148; Kostova & Roth 2002: 215). Organizations 

apply approaches designed to conform with the social norms and rituals within the 

industry, which is facilitated by the external pressures and organizational level 

interaction (Tello, Latham & Kijewski 2010: 1262). Thus Scott (2001: 48) defines 

institutions to be tightly embedded social structures composed from regulative, 

cognitive and normative elements, that provide stability and meaning, and carried by 

symbolic and relational systems, routines and artifacts. Also institutions can exist in 

various levels from individual to the global level and these institutions are transforming 

overtime together with their environments (Scott 2001: 48).  

 

Organizations compete not only resources and customers, but for political influence and 

institutional legitimacy, to improve their social and economical presence (Dimaggio & 

Powell 1983: 150). As a result Powell and Dimaggio (1983: 148) argue that powerful 

forces towards homogenization forge organizations operating in the same field, this 

long line of rational decisions create eventually an environment that limits their ability 

to change in the future. Also Kostova and Roth (2002) argue that organizational 

practices have molded over time by the influence organization history, people, interest 

and actions and are deeply united with the social context (Kostova & Roth 2002: 216). 

Therefore institutional theories are mainly interested in the social forces, with the 

exception of economic forces, that shape the performance of an organization (Marler & 



 45 

Fisher 2012: 6). Dimaggio and Powell (1983: 149) explain this development through 

concept of isomorphism, which states that organizations’ characteristics are in course of 

time modified to become compatible with its’ environment. Therefore in MNC 

subsidiaries differ from each other in their strategic configuration on the capabilities 

they control and the different environments they operate, as a result the value of this 

configuration determines subsidiary’s role (legitimacy) within the MNC (Ambos & 

Birkinshaw 2010: 453). This way adopting e–HRM can improve organizational 

legitimacy in certain context (Strohmeier 2007: 29). 

 

Dimaggio and Powell separated isomorphism into three sub–elements of coercive 

isomorphism, mimetic isomorphism and normative isomorphism (Dimaggio & Powell 

1983: 150). Coercive isomorphic pressures originate from formal and informal 

influence of other organizations like standard reporting systems of the MNC and the 

cultural expectations like the norms and the legal environment of the society which are 

more powerful than the MNC (Dimaggio & Powell 1983: 150–151; Kostova & Roth 

2002: 216). Mimetic isomorphism derives from uncertainty, when organization faces a 

difficult problem without clear solutions it easily adopts imitation of others as a solution 

for the problem (Dimaggio & Powell 1983: 151; Kostova & Roth 2002: 216). This may 

result innovation diffusion as early adopters success is replicated by others or to avoid 

the image of being a laggard (Teo, Wei & Benbasat 2003: 20). Normative isomorphism 

on the other hand is subjected to professionalization, like favoring educated personnel 

from similar backgrounds and stressing the importance of professional networks 

(Dimaggio & Powell 1983: 152).  

 

Scott (2001) compiled a set of institutional factors and presented it as institutional 

pillars (see table 3.) that allow countries to be compared based on their institutional 

environment (Scott 2001: 51–58; Kostova & Roth 2002: 217). These pillars take 

regulative (law and rules), cognitive (social knowledge and cognitive factors) and 

normative (values, beliefs and norms) elements under scrutiny and these factors can 

directly/indirectly explain what pushed organizations to comply with Dimaggio and 

Powell’s earlier presented isomorphic pressures (Scott 2008: 428; Kostova & Roth 

2002: 217). MNCs and their subsidiaries are rather special in this case that in some 



 46 

instances subsidiaries are not allowed to be as isomorphic as the local organizations 

(Kostova & Roth 2002: 217; Kostova, Roth & Dacin 2008: 999). Later Kostova et al. 

(2008: 999) have argued that isomorphism among MNC in cognitive and normative 

pressures could be neglected to have any influence, only coercive legal pressure have 

some effect to the MNC behavior and as a result complying with the institutional forces 

are not necessary for MNC to survive. Also institutional pillars make it possible to 

evaluate the institutional conditions of the planned implementation, thus some countries 

may have more favorable institutional conditions than others (Kostova & Roth 2002: 

217–218). There has been evidence that favorable institutional environment has a 

positive effect to the implementation (Kostova & Roth 2002: 227). 

 

Table 3. Institutional pillars. (Scott 2001) 

 

 

Regarding IT implementation, Teo et al. (2003: 39 & 43) found in their study that 

institutional factors had an significant influence in intentions to adopt IT systems and 

concluded that organizations are embedded in their institutional networks. Additionally 

Kostova and Roth (2002: 230) got results that institutional context had an effect to the 

adoption of the practice. Also institutional factors have an influence to HRM since 

human behavior and expectations are institutionally embedded (Festing & Eidems 2011: 

166). Institutionalized organizational structure, like hierarchy, and HR function serve as 

a stable causal pattern of behavior, which are taken for granted by members of a social 

group (Marler & Fisher 2012: 8). Thus institutional elements can be seen to have a 

symbolic meaning among organizational members (Scott 2008: 429). 



 47 

Festing and Eidems (2011: 166) recognize that also HRM practices and policies are 

influenced by local factors like cultural and institutional environment. For example 

Ferner, Edwards and Tempel (2011: 178) presented some evidence that institutional 

actor such as German work councils have the power in some circumstances to resist or 

alter the planned change. Transnational organizations aiming at transnational HRM 

systems must define an appropriate balance between global standardization and local 

adaptation (see figure 3.) (Festing & Eidems 2011: 165). Thus context is very 

influential force in organizational change (Martin & Reddington 2010: 1571 cited 

Pettigrew 1995; Van de Ven 2007). For example subsidiaries can develop distinctive 

advantages, which they build out of their connections with the local institutional context 

(Morgan & Kristensen 2006: 1485; Festing & Eidems 2011: 167). Strohmeier (2007: 

29) argues that e–HRM system could be this kind of disruptive technology.  

 

 

Figure 3. Balancing the standardization and localization of HRM in MNEs. (Festing & 

Eidems 2011: 166) 

 

The change does not happen easily since MNCs have complicated internal 

environments with many times conflicting institutional settings among its’ subsidiaries 

and itself, power struggles and other conflicts in things such as interest, values or 

practices (Kostova et al. 2008: 997). Therefore the global–local relationship is dynamic 

and the conflict is indeed part of ongoing organizational and strategic adjustment 

process, thus MNCs should think both global integration efficiency and local 

responsiveness effectiveness as equal sources of competitive advantage (Schotter & 

Beamish 2011: 256). Also Kostova and Roth (2002: 215) argue that MNCs need to 



 48 

reach and maintain legitimacy in all its’ environments which require some adaptation 

with the local institutional environment. The contradictive statement indicates that 

MNCs are in fact shaping their own institutional environments proactively (Kostova et 

al. 2008: 1001).  

 

Subsidiaries on the other hand are in the middle of dual challenge of adapting 

simultaneously to the local environment, and linking itself with the HQ imposed 

practices that stem from the HQ’s institutional environment, since these interest are not 

always compatible with each other (Ambos & Birkinshaw 2010: 454; Kostova & Roth 

2002: 216 & 218). Although at the same time they share a same intra–organizational 

institutional environment which sometimes could overpower the local institutional 

forces (Kostova et al. 2008: 998). Kostova and Roth (2002: 216) call this situation as 

institutional duality. The subsidiary interprets the importance of these pressures forced 

by the MNC through their relational context, the level of trust, dependence on resources 

and the identity (the level of attachment subsidiary feels to the HQ) (Kostova & Roth 

2002: 218–220). The relational context has been found to have a strong influence to the 

implementation (Kostova & Roth 2002: 227–288).  

 

As a result Morgan and Kristensen (2006: 1484) predict two alternative outcomes on 

local–global problems in MNC, first one implies that HQ committed to standardization 

will gradually suppress the local resistance. The danger in this approach is that internal 

innovation suffers and thus innovations are searched from external options like from 

consultants or through new acquisitions (Morgan & Kristensen 2006: 1484–1485). 

Other alternative approach allows subsidiaries some flexibility in their strategies 

(Morgan & Kristensen 2006: 1485). Kostova and Roth (2002: 220) add that subsidiary 

can also do ceremonial adoption, because of institutional and relational pressures, of the 

practice without believing its’ promised value. Although later arguments have showed 

that MNC and its’ sub–units are visible and controlled by HQ through formal/informal 

measures (Kostova et al. 2008: 1000). Also subsidiary managers are seen to enforce HQ 

practices, because they are protecting their personal interests (career) (Kostova et al. 

2008: 1000).  As a result companies should invest in development of the relational 

context and in the role of subsidiary managers to create more favorable c