Int. J.

of Human Resource Management 18:11 November 2007 1895– 1916

The global integration of diversity

management: a longitudinal case study

Aulikki Sippola and Adam Smale

Abstract Whilst the extant diversity management literature has provided a comprehen-
sive array of theoretical frameworks and empirical studies on how organizations can and
have approached the management of a diverse workforce, the same cannot be said about the
literature on diversity in an international setting. Indeed, from a diversity management
perspective we know surprisingly little about how multinational firms are responding to the
increasing globalization of their workforce. This study seeks to contribute to this under-
researched area through an in-depth longitudinal case study of TRANSCO, a well-known
European MNC, which has been attempting to integrate diversity management globally
throughout its worldwide operations. Adopting a Finnish host-country perspective, the
study investigates what TRANSCO has been integrating, how it has tried to facilitate this
and the challenges that have arisen throughout the process. The results indicate that
TRANSCO has committed a considerable amount of resources to the global diversity
management integration process, reflected in the myriad of integration mechanisms utilized.
In terms of their integration strategy, it was evident that TRANSCO was able to achieve
global consistency at the level of diversity philosophy, but was forced to rely on a more
multi-domestic approach to implementing diversity policies and practices. The challenges
encountered served to highlight the demographic, cultural and institutional embeddedness
of diversity management when transferred into a non-Anglo-Saxon host context.

Keywords Diversity management; multinational corporation; institutional theory;

Finland.

Introduction
Although increasing workforce diversity and its far-reaching implications have only been
slowly acknowledged amongst multinational firms (Florkowski, 1996), it would now
appear to be almost commonplace for MNCs to be planning, implementing or evaluating
some form of diversity management initiative, not only in the US but also increasingly on
an international scale (Wentling and Palma-Rivas, 2000). As the proportions of MNCs’
workforces located outside the ‘home’ country become ever greater, the key challenge
rests in leveraging the diversity of a global workforce whilst maintaining consistency
throughout the organization (Rosenzweig, 1998). However, attempts by MNCs to
internationalize their domestic diversity agendas have not been accompanied with
similar endeavours in academic research. Typically, retaining a strong national
perspective, diversity management has been poorly studied in an international context

Adam Smale, Department of Management, University of Vaasa, PO Box 700, 65101 Vaasa, Finland
(tel: þ358 6324 8519; fax: þ358 6324 8195; e-mail: adam.smale@uwasa.fi); Aulikki Sippola,
Department of Management, University of Vaasa, PO Box 700, 65101 Vaasa, Finland (e-mail:
aulikki.sippola@uwasa.fi).
The International Journal of Human Resource Management
ISSN 0958-5192 print/ISSN 1466-4399 online q 2007 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/09585190701638101
1896 The International Journal of Human Resource Management
with extant research serving to reflect the embeddedness of diversity agendas in the US
domestic environment (Jones et al., 2000; Ferner et al., 2005). Of the research on
diversity management that has been conducted in an international setting, the focus
predominantly remains on the activities of US MNCs and is somewhat descriptive in
nature and small-scale in design (see, e.g., Egan and Bendick, 2003; Wentling and
Palma-Rivas, 2000).
To the extent that managing workforce diversity is argued to represent a key issue in
the HRM agenda (e.g. Kossek and Lobel, 1996; Kandola and Fullerton, 1998; DeNisi
and Griffin, 2001), there has been a counter-intuitive paucity of research in this field
appearing in the top HRM journals (Hoobler and Johnson, 2004). Indeed, in the same
way that the globalization of the workforce now requires a critical re-think for the role
of the HR function (Roberts et al., 1998); the globalization of business has also
prompted calls for research into the newly espoused discipline of global HRM (e.g.
Novicevic and Harvey, 2001; Evans et al., 2002; Sparrow et al., 2004; Brewster and
Suutari, 2005).
In light of the above, this paper seeks to contribute to the literature in the following
main ways. First, the study serves to close the gap in our current understanding about
organizational responses to managing global workforce diversity and global HRM.
Second, by investigating a European MNC and its Finnish subsidiary, the study expands
upon our limited knowledge of how global workforce diversity is approached by non-US
MNCs in a host environment characterized by significant institutional, cultural and
demographic differences from the previously dominant Anglo-Saxon contexts. Third,
the adoption of a longitudinal case-study design allows deeper insights to be gleaned
into the dynamic nature of decision-making, interactions and challenges that arise
throughout the global integration process.
The first aim of the study seeks to identify which aspects (the design) of diversity
management TRANSCO, a well-known European MNC,1 is globally integrating and
what integrating mechanisms (the delivery) they are using to facilitate this. The second
aim is to ascertain the challenges TRANSCO has encountered throughout the integration
process. This is illustrated through the application of institutional theory, which suggests
that obstacles to integration are likely to derive from mismatches in regulatory,
normative or cognitive domains (Kostova, 1999).
The following sections discuss the emergence of a global workforce diversity agenda,
the ways in which MNCs have approached the implementation of global workforce
diversity and how global HRM represents an appropriate starting point for analysis. After
describing the study’s methodology, the design and delivery of TRANSCO’s global
diversity management intervention are outlined. The latter sections of the paper identify
the institutionally embedded challenges emerging from the efforts at global integration,
and conclude by addressing the learning points of the case study.

Diversity management in a global context

Pressures for increased awareness and more effective management of diversity issues are
consequences of changes in demographics, the intensification of globalization and global
competition, as well as the mobility of the global workforce (e.g. Iles, 1995; Humphries
and Grice, 1995; Konrad, 2003), which have culminated in pressures for organizations to
react due to regulatory, ethical and economic forces (European Commission, 2003).
Workforce diversity is argued to be a complex and plural term, comprising a concept
which evokes different perceptions in different organizations and cultures without any
unitary meaning (Cassell, 2001; Omanovic, 2002), in addition to being society-bound
 Sippola and Smale: The global integration of diversity management 1897
(Caproni, 2005). It has been defined narrowly in terms of demographic factors (e.g. age,
gender, race, ethnicity) or, more broadly, as all personal characteristics such as
capabilities, personality, sexual orientation, education, religion, culture, language,
disability and working style (Cox, 1993; Kossek and Lobel, 1996; Kandola and Fullerton,
1998).
From a business perspective, an organization’s ability to meet future challenges is
argued to be multiplied by greater workforce diversity, more specifically through an
increased variety of skills, experiences, cultural dimensions and values (Thornhill et al.,
2000). This then can be utilized, for example, in multicultural teams, entering new
markets and developing new products (Schneider and Barsoux, 2003). Indeed,
effectively managing a global workforce is considered critical in achieving benefits for
business and in sustaining international competitive advantage (Florkowski, 1996). To
facilitate this, however, diversity initiatives need to be locally meaningful and avoid
biases in local HRM systems and culture (Schneider and Barsoux, 2003).
Research on managing a diverse workforce has so far provided a myriad of
frameworks, paradigms and guidelines. Corresponding interventions by management
have moved beyond compliance with equality legislation to accepting and valuing
differences (Liff, 1997; Cassell, 2001), learning from diversity (Thomas and Ely, 1996),
and towards the full and equal utilization of capabilities through empowerment and
inclusion (Cornelius and Bassett-Jones, 2002). Such interventions have subsequently
been categorized according to the strategic approach to equality and diversity, the type of
organization or the extent of acculturation (e.g. Cox, 1993; Herriot and Pemberton, 1995;
Kirton and Greene, 2005). An alternative classification of interventions can be found in
the presentation of four diversity paradigms, namely resistance, discrimination-and-
fairness, access-and-legitimacy and learning-and-effectiveness (Thomas and Ely, 1996;
Dass and Parker, 1999).
Within the first ‘resistance’ paradigm, organizations aim to maintain the status quo in
the absence of any pressures to increase diversity (Dass and Parker, 1999) and by
reproducing inequality without an equal opportunities or diversity policy (Kirton and
Greene, 2005). The focus in the second ‘discrimination-and-fairness’ paradigm is on
equal opportunities and fair treatment through legislative actions and by treating
everybody the same (Thomas and Ely, 1996), mostly concentrating on recruitment as a
means to increase the numbers of individuals belonging to disadvantaged groups
(Kandola and Fullerton, 1998). The third ‘access-and-legitimacy’ paradigm focuses on a
search for business benefits (Thomas and Ely, 1996), maximizing everybody’s potential
as a source of competitiveness by creating a culture and environment of respect (Cox and
Blake, 1991; Kandola and Fullerton, 1998; Maxwell et al., 2001). The fourth ‘learning-
and-effectiveness’ paradigm stresses the linkages of diversity with work and employee
perspectives, moving from identity-groups towards learning opportunities in order to
gain the benefits of diversity (Thomas and Ely, 1996; Dass and Parker, 1999). In this
paradigm, egalitarian organizational culture is seen as a means to higher standards of
performance (Thomas and Ely, 1996) and in which employees are viewed as valuable
resources, strategic assets and as an investment (Ely and Thomas, 2001; Cornelius et al.,
2001; Caproni, 2005).
The prerequisites for successful diversity interventions are argued to include changes
in individual and organizational attitudes and behaviours, working practices, structures
and culture (Tayeb, 1996; Kossek and Lobel, 1996), which are rendered even more
crucial when integrating diversity management across borders. In the same way that
SIHRM activities have been described as being influenced by several intervening factors,
diversity interventions are also purported to be influenced strongly by organizational
1898 The International Journal of Human Resource Management
strategy and pressures from local labour and product markets (Florkowski, 1996). Cross-
border implementation of diversity management is not least challenging owing to
differences in national cultures, legislation, language and ethnicity, which affect working
habits, labour composition, industrial relations and cross-border interaction (Tayeb,
2003; Adler, 2002). However, empirical studies on how international firms have
confronted such challenges is limited, the key findings of which are now summarized.

Diversity management in MNCs

Whilst empirical evidence concerning how MNCs have approached global diversity
management is scant, this research has nevertheless provided insights from which both
heterogeneities and homogeneities in (i) strategic approaches; (ii) designs (‘what’); and
(iii) delivery (‘how’) of global diversity management can be observed.

Strategic approaches In terms of strategic organizational approaches to diversity

management, and as models of SIHRM would suggest, MNCs have on the one hand been
seen to adopt an approach that reflects their overall international orientation, strategy and
structure. Indeed, Egan and Bendick’s (2003) study reveals how both global and multi-
domestic strategies have been effectively applied, despite acknowledging that most of
the surveyed US MNCs in fact adopted a strongly multi-domestic approach to diversity
management. In such cases, corporate headquarters only offered broad guidance,
resulting in differentiated diversity activities amongst foreign affiliates. The notable
preference for a more multi-domestic approach was argued to be due to first, a reluctance
to identify global diversity management with American management practices,
and second, the perceived complexity involved in developing and imposing globally
uniform diversity programmes. In conclusion, Egan and Bendick argue that in so far as
international diversity management efforts need to reflect each firm’s strategic objectives
and organizational structure, then there is no universal answer to which approach is
preferable.
However, recent case-study research has touched on some of the shortcomings of an
ethnocentrically oriented approach to integrating global diversity management policies
(Ferner et al., 2004). More specifically, and adopting host-country perspectives, studies
conducted by Jones et al. (2000) and Ferner et al. (2005) both provide compelling
accounts of how US-derived models of diversity management have been perceived as
inappropriate, resulting high levels of culturally and institutionally based resistance. In
this sense, it could be argued that the global integration of diversity management
represents an oxymoron insofar as it cannot be integrated without significant local
modification. How MNCs that are pursuing a global business strategy have approached
the global management of workforce diversity, therefore, remains an intriguing yet under
researched question.
In line with previous IHRM models, and the approach of this study, Wentling and
Palma-Rivas (2000) distinguish between the approaches of US MNCs in terms of
‘macrolevel’ activities, which comprise the planning, goal-setting and prioritizing at
corporate headquarters, and ‘microlevel’ activities, whereby host subsidiary managers
implement their own version of diversity initiatives which reflect their subsidiary-
specific needs.

Designs It has been empirically shown that whilst individual components of diversity
initiatives in MNCs can and do vary, there is often a close relationship between
domestic and international agendas. For instance, Egan and Bendick (2003) attest to the
 Sippola and Smale: The global integration of diversity management 1899
similarities of domestic and international diversity agendas in listing four common
features. These include, a broad definition of diversity, which incorporates the notion of
‘inclusion’, motives for diversity management centring on the ‘business case’,
administrative structures used to facilitate diversity, and the integration of diversity
initiatives into wider organizational change programmes. Wentling and Palma-Rivas
(2000) report a similar relationship, identifying the shared features of, first, the inclusion
and full utilization of people as guiding principles; second, the development
of understanding and appreciation for cultural differences; and, third, the adaptation of
products and services to satisfy diverse customer needs. Ferner et al. (2005) find further
evidence that global diversity structures tend to develop out of existing domestic
structures. Whilst they also acknowledge the broad definition of diversity, they also go on
to identify the setting and monitoring of targets as well as the regular collection of
diversity metrics, sometimes related to the performance management process.
Nevertheless, the collective similarities between domestic and international diversity
initiative designs identified above still arguably represent distinctly US approaches to
conceptualizing and managing the diversity of a global workforce. Within the European
context, a recent analysis of corporate websites of 241 European MNCs (Singh and Point,
2004) reveals that there are considerable differences in strategic responses to workforce
diversity with disappointingly few references to managing diversity in home countries
other than the UK. Furthermore, the evidence highlights a certain degree of heterogeneity
insofar as diversity was found to be constructed differently across European MNCs in
terms of its definitions and dimensions (Point and Singh, 2003). The extent to which
these findings represent more corporate rhetoric than managerial reality, however,
remains largely unknown and it can only be effectively corroborated through further
attempts at systematic empirical research.

Delivery The growing scale and complexity of diversity management programmes

within MNCs would also seem to be reflected in the increasing sophistication of
organizational mechanisms being applied to implement them. Indeed, as cited in Egan
and Bendick (2003), a multiplicity of ‘administrative structures’ have been reported in
MNC attempts to internationalize diversity management. One of the most common
mechanisms is that of a ‘diversity council’ which typically serves as an overarching
taskforce, often at the corporate or global level, with the mandate of leading diversity
efforts as well as providing guidance and support where necessary. Additionally, the
significance attached to managing diversity issues often manifests itself in the creation of
independent executive posts such as ‘Chief Diversity Officer’ or ‘Diversity Co-
ordinator’. These hierarchical mechanisms are also supported by organization-wide
training interventions. Whilst the emphasis is invariably on managerial awareness,
compulsory employee-level courses are not uncommon. Last, the formation of ‘affinity
groups’ (e.g. for women or ethnic minority groups) and broader ‘diversity networks’ are
used in order to mitigate a predominantly top-down approach to diversity management
and thus act as vehicles for employees’ voices to be heard. What is less understood,
however, is how these integration mechanisms are applied, often in combination, in
foreign subsidiary settings and their perceived levels of effectiveness.

Global HRM perspectives on diversity management in MNCs

It is argued here that the study of global diversity management can be informed by the
HRM global integration-national differentiation dilemma that characterizes so much of
the SIHRM literature and which is captured in the notion of global HRM. The way in
1900 The International Journal of Human Resource Management
which this theoretical approach has been applied in the present study is illustrated in
Figure 1 and discussed next.
Whilst academic contributions have produced theoretical and practical justifications
for the labelling of global HRM (see, e.g., Novicevic and Harvey, 2001; Sparrow et al.,
2004; Brewster and Suutari, 2005), the subsequent research agendas and practical
implications collectively fail to acknowledge the significance of managing global
workforce diversity. Its conspicuous absence might be partly explained by the contention
over whether diversity management is solely an HR issue. However, the dearth of global
diversity management research in the general management literature merely serves to
highlight its overall under-representation in academic discourse. Nevertheless, the strong
presence of domestically oriented diversity research in the HRM literature, together with
the rich tapestry of conceptual models, theories and empirical evidence in the SIHRM
literature, render global HRM a constructive starting point from which to discuss issues
relating to the global integration of diversity management.

SIHRM activities and integration modes

Insofar as global diversity management is argued to represent a feature of an MNCs
overall global HRM, the global integration of diversity management can essentially be
broken down into key strategic decisions regarding what to integrate and how to facilitate
it. It is at this juncture that the various organizational levels of diversity practices and the
selection of appropriate integrating mechanisms become key considerations.
Since HRM falls into the category of a context- and culture-specific resource, as
opposed to it possessing more universal characteristics, its successful transfer is argued to
be problematic but not impossible (Tayeb, 1998). However, it has been widely argued

Figure 1 Theoretical approach to TRANSCO’s global diversity management integration

 Sippola and Smale: The global integration of diversity management 1901
that the internal differentiation of the HR function should lead to conceptualizations of it
comprising distinctly different HRM practices, of which diversity management is one,
that will vary in terms of their susceptibility to be globally standardized or locally
adapted (e.g. Rosenzweig and Nohria, 1994; Lu and Bjorkman, 1997). In this sense, some
argue that the integration of HRM is less about opting for total standardization or
localization, but is rather a choice about which practices and how much (see, e.g., Bae
et al., 1998). A further important distinction about HRM practices such as diversity
management is the organizational levels in which they reside. Schuler et al. (1993)
suggest that SIHRM activities manifest themselves at multiple organizational levels,
whereby an HRM ‘philosophy’ expresses how to treat people regardless of location,
HRM ‘policies’ establish guidelines and the meaning of the philosophy, and HRM
‘practices’ establish explicit roles for employees. The rationale behind this classification,
which has since been supported empirically, is that HRM practices are more prone to
local cultural influences and hence adaptation than higher-order HRM policies and
philosophies (Tayeb, 1998).
With regard to how global HR integration might be facilitated, a wide variety of
organizational mechanisms has been documented in the literature, including expatriation
(e.g. Bjorkman and Lu, 2001; Cerdin, 2003), internal benchmarking (Martin and
Beaumont, 1998), global expertise networks and HR centres of excellence (Sparrow
et al., 2004), as well as HR information systems (e.g. Hannon et al., 1996; Ruta, 2005).
Kim et al. (2003) remind us, however, that MNCs rarely utilize only one method, but
often use multiple integrating mechanisms simultaneously and with different levels of
intensity in order to control and co-ordinate business functions on a global scale.
Accordingly, they provide a classification of integration modes at the disposal of
organizations, namely people-based, information-based, formalization-based and
centralization-based. Based on an empirical study into the global integration of three
different business functions, they conclude that whilst each business function has a
distinctive set of preferred integrating modes, people-based and information-based
modes generally emerge as being most effective. However, it is less clear which modes
would be most appropriate in integrating HRM and, more specifically, in facilitating the
global integration of diversity management.

Institutional pressures on global HRM integration

Research within the SIHRM discipline has studied the composition of MNCs’ HRM
practices in foreign subsidiaries and has drawn on a broad range of organizational
theories in explaining the findings. In essence, such studies have illustrated not only the
dynamic interplay of exogenous and endogenous factors, but also the contingent and
multi-disciplinary perspectives being applied to explore how globalization is influencing
the transferability of HRM practices (Quintanilla and Ferner, 2003). An increasingly
common denominator in these multi-disciplinary approaches is the explanations offered
by institutional theory. Indeed, such research in the field of SIHRM has focused on the
dual institutional forces of parent (‘coercive’) pressures for and host (‘mimetic’)
resistance against global HR integration, typically revealing how the overseas operations
of MNCs differ systematically in their composition of HRM practices (see, e.g.,
Rosenzweig and Nohria, 1994; Bae et al., 1998; Björkman and Lu, 2001).
Recent comparative approaches to institutional theory have introduced the concept
of ‘institutional distance’ as a critical variable in determining the transferability of
organizational practices from one national context to another (Kostova and Zaheer, 1999;
Kostova and Roth, 2002). As a key proponent of this approach, Kostova (1999) argues
1902 The International Journal of Human Resource Management
that differences in ‘regulatory’ (e.g. laws and regulations), ‘normative’ (e.g. values and
norms), and ‘cognitive’ (e.g. interpretations and frames of thought) institutions, will
affect the degree of transfer success between two countries. This, it is argued here,
represents a particularly appropriate framework from which to study the global
integration of diversity management in view of its deep societal and institutional
embeddedness (Schneider and Barsoux, 2003; Ferner et al., 2005).
In essence, our knowledge about how MNCs are responding to the internationalization
of their workforces and the new global diversity agenda remains weak in comparison to
our understanding of similar issues at the domestic level. More specifically, it is unclear
whether global integration strategies that characterize the newly espoused global HRM
are also feasible in managing diversity given its demographic, cultural and institutional
embeddedness in different national contexts.

Methodology
This paper adopts a single in-depth case-study design. In terms of justification, the use of
exploratory research methods has been advocated in HRM fields such as diversity
management due to its relative infancy (Hoobler and Johnson, 2004). More specifically,
Martin and Beaumont (1999) assert that qualitative research is a particularly constructive
approach in embellishing on the insights from the predominantly quantitatively based
IHRM typologies. Moreover, the single case-study method is instructive when the issue
of contextuality, crucial to studies on subsidiary–headquarters relations, is of key
importance in interpreting the data (Yin, 1994).
The single case-study approach has facilitated the use of in-depth longitudinal data,
which is less feasible in multiple case-study designs. The data were collected over a two-
year period. This has enabled a closer examination of developments, changes, barriers
and accomplishments in TRANSCO’s global management of diversity, all of which
have been highlighted as lacking in previous studies of this kind (Wentling and Palma-
Rivas, 2000). In order to mitigate the potential rhetorical championing of the diversity
management agenda and subsequent over-optimism regarding its progress, the study
also acknowledges the need for a more objective balance by including multiple
perspectives (Wentling and Palma-Rivas, 2000). This was achieved partly through
individual, ‘key informant’ interviews (Miles and Huberman, 1994), and partly via the
use of a focus group interview. In comparison to other qualitative methods, the unique
strength of focus group interviews, which lay behind its selection is the interaction
facilitated through the group discussion, which allows for more generalizable data
regarding experiences, views and the levels of agreement and disagreement between
respondents (Morgan, 1996).
The data sources and methods of collection are summarized in Table 1. Twelve
individual, semi-structured interviews were conducted. Face-to-face interviews were
carried out with two local respondents (Finnish Diversity Co-ordinator, who changed
during the second year, and the HR Manager) and one ‘regional’ country representative
(European Diversity Co-ordinator). Interviews lasted between 60 and 90 min, covered
issues relating to the methods and challenges of integrating diversity management, and
broadly adopted the same structure for all interviews. One focus group interview was
conducted towards the end of the first year in order to ascertain the thoughts and
experiences of different groups and included the Finnish CEO, the Area Business
Manager, the Diversity Co-ordinator and a Line Manager. The group interview lasted
80 min and was organized around the same semi-structured themes as in the individual
interviews. Last, the above data collection was supplemented by access to public and
 Sippola and Smale: The global integration of diversity management 1903

Table 1 Data sources and collection

Source Method
Diversity Co-ordinator (Finnish unit, female) Six semi-structured interviews at
even intervals over two years
HR Manager (Finnish unit, female) Five semi-structured interviews at
even intervals over two years
European Diversity Co-ordinator (Regional HQ, female) One semi-structured interview in
the middle of year one
CEO (Finnish unit, male)
Area Business Manager (Finnish unit, male)
Line Manager (Finnish unit, male)
Diversity Co-ordinator (Finnish unit, female) Themed focus group interview at
the end of year one
TRANSCO documentation:
Diversity & Inclusiveness (D&I) policy and framework
Corporate and Finnish unit D&I integration plans and
achievements (2003 –5)
Surveys and results: D&I survey, leadership self- and 3608
appraisals (2003)
Evaluation tools (intranet)
Harassment & Discrimination policy
D&I Leadership Behaviours scorecard Documentary review and
content analysis

confidential company documentation, including integration plans, attitude surveys and

results as well as diversity evaluation tools.
All interview transcripts were transcribed verbatim, coded and then analysed both
chronologically and thematically in order to isolate the key issues pertaining to the case
history and the subsequent developments in diversity management integration. The
validity of the data was addressed through the verification and further clarification of
interview transcripts by the respondents and through the approval of the final report by
the key informants.

Introduction to TRANSCO
TRANSCO is a well-known European MNC, operating in over 100 countries and
employing more than 100,000 people. Having developed into a large and diversified
MNC with operations widely dispersed on a global scale, TRANSCO found that its size
and structure meant that it had become a collection of semi-autonomous subsidiaries
who, in turn, knew too little about what each other were doing. The weaknesses of this
somewhat unintentional multi-domestic strategy came to a head in the mid 1990s and
prompted a dramatic organizational restructuring effort whereby TRANSCO consciously
tried to become more ‘global’ both in its streamlining of core businesses and in its
‘network’ approach to managing its foreign operations. The restructuring was justified as
an attempt to achieve greater synergies and organizational control as well as for financial
and sustainability reasons. Accordingly, previously decentralized decisions about a range
of issues became increasingly centralized at corporate and regional levels. However,
whilst this global approach has been further pursued through a common IT infrastructure
and the tighter strategic alignment of business functions, the recent drive towards global
diversity management is putting into question the suitability of a global approach.
1904 The International Journal of Human Resource Management
Originally conceived back in 1997, the planning and rollout of TRANSCO’s global
integration of diversity has been scheduled to take place over a ten-year period,
representing an integral part of their overall corporate strategy. Indeed, the amount of
time and resources TRANSCO has dedicated to global diversity management from
a comparatively early stage, has led to certain industry peers regarding TRANSCO as a
kind of pioneer in this area. As one of the smallest of their foreign operations, TRANSCO
Finland was established in 1911 and it currently employs over 1,700 people across 400
service outlets. Along with several other select European operations, TRANSCO Finland
was included in the first wave of diversity integration, which officially began in early
2003. The present case study reports on the activities, progress and challenges that have
taken place within the first two years.

The Finnish host context and workforce diversity

When looking at the Finnish national context for diversity, one can draw two quite
contrasting conclusions. On the one hand, Finland appears to be a model example of the
Nordic welfare state system in which political ideology and legislative infrastructure
work together in successfully promoting the equality of its societal members. The
legislative foundations of equality and diversity are grounded in the Constitution of
Finland (revised in 1999) according to which everyone is equal before the law. In turn,
this is complemented by the Penal Code, the Employment Contracts Act (55/2001), the
Act on Equality between Women and Men (609/1986, 2005) and the Equality Act
(21/2004), which collectively prohibit direct and indirect discrimination in working life
on the grounds of gender, national or ethnic origin, religion, age, health, disability, sexual
orientation, belief or opinion.
Despite the persistence of some income inequality and a general lack of women in
business leadership and management (Hearn and Piekkari, 2005), evidence of a positive
legislative effect on working life is clearly visible in gender equality. Having been the first
country to give women full political rights, in Finland today it is a legal requirement to
have a minimum of 40 per cent male and female representation on all state and municipal
bodies, and organizations employing over 30 people are legally required to have a gender
equality plan. One notable, cumulative result has been Finland’s recent ranking as having
the world’s fifth smallest gender gap based on a range economic, political, educational,
health and well-being related indicators (Lopez-Claros and Zahidi, 2005).
On the other hand, however, it would seem that the progress being made in some areas
has not been accompanied with similar developments in others, particularly in the
‘emerging’ areas of ethnicity and sexual orientation. In a report on Finland, the European
Commission against Racism and Intolerance (ECRI) noted that despite increased
provisions against ethnic minority discrimination in working life, these measures were
deemed to be under-utilized in view of the ‘daily life’ occurrence of such discrimination
(ECRI, 2002). This criticism was largely based on the results of a study on immigrant
experiences, which indicated frequent accounts of discrimination that were mostly going
unreported (Jasinskaja-Lahti et al., 2002). With regard to sexual orientation, one of few
major studies that exist on the subject reveals that half of all lesbian, gay and bisexual
employees in Finland ‘consume a considerable amount of energy to hide or cover up their
sexual orientation or gender identity’ (2004: 256) from all or most of their co-workers
with 13 per cent unaware of the anti-discrimination legislation dating back to 1995
(Lehtonen and Mustola, 2004).
One possible reason behind Finland’s perceived need to catch up with the rest
of Europe in these areas could be its relative cultural homogeneity and thus lack of
 Sippola and Smale: The global integration of diversity management 1905
multicultural experience, where the clear majority has belonged to the same race
(Finnish), the same religion (Lutheran) and spoken the same language (Finnish) (Alho
et al., 1989). However, these demographics in Finland, as in many other Western
countries, are changing. Most notably, the domestic labour market is declining because
of an aging population and it is being partly offset by the employment of an increasingly
foreign-based workforce (Forsander, 2002). Whilst this has prompted a recent (2005)
government-led initiative to support workplace multiculturalism, Finnish domestic
multiculturalism still remains low both in absolute and relative terms, with the amount of
foreign citizens representing only 2 per cent, of which an estimated 28 per cent are
unemployed, in a population totalling five million (Employment Report, 2004). Although
recent research indicates that favourable attitudes towards immigrants in Finland have
increased consistently since the recession of 1993 (Jaakkola, 2005), the Finnish
workplace remains an intriguing context for diversity with world class equality standards
in some areas, but others that are in need of clearly more development.

Results
TRANSCO’s global diversity management design
In connection with the first aim of the study, Schuler et al.’s (1993) distinction between
three organizational levels of strategic IHRM activities (philosophy, policy, practice) are
applied in reporting what aspects of its diversity management program TRANSCO is
globally integrating.

Diversity management ‘philosophy’ Defined as expressions of how to treat and value

people (Schuler, 1992), the diversity management philosophy at TRANSCO is represented
through its Global Standard, which has been communicated as a new global ‘must.’
TRANSCO’s global diversity ‘philosophy’ comprises statements on the values and core
commitments to diversity and inclusiveness, laying out its intent, business case, as well as
the expected organizational outcomes and individual behaviours. The Standard is
explicitly required to be standardized globally and the wording translated directly without
any local modifications, except where legal limitations apply. As described by the
European Regional Diversity Co-ordinator, ‘the Standard you do not change. There are no
choices about that. As long as they [foreign subsidiaries] apply that Standard . . . , they can
add to it, but we tell them to be very selective about what they add . . . .’ Throughout the
global integration process, however, it became noticeable that perceptions within
the Finnish subsidiary differed slightly, exemplified by the view of the local Diversity Co-
ordinator, ‘at the strategy level there is no freedom to move since everyone is a
TRANSCO person’, compared to that of the HR Manager, ‘even though this is now a tight
Standard, this is also such a standard, which gives a little, so to say, room for feelings’.
It was also noticeable during integration that the espoused philosophy of diversity
management was shifting its emphasis towards the notion of inclusiveness. Indeed, early
on it was acknowledged that diversity management was being perceived as an external,
and largely Anglo-Saxon, intervention concerned only with the narrower issues of
gender, nationality and the use of expatriates. Subsequently, TRANSCO has heavily
promoted the inclusiveness component of the philosophy in order to broaden employees’
and managers’ perspectives about where discrimination might occur in the workplace.

Diversity management ‘policies’ With the purpose of establishing guidelines for action
on people-related business issues and HR programmes (Schuler, 1992), TRANSCO has
employed the use of a top-down Global Policy Framework to provide more detailed
1906 The International Journal of Human Resource Management
provisions for the attainment of the Global Standard. Within the Policy, guidelines are
given about, for example, the identification and monitoring of common performance
criteria, the setting of clear targets and plans as well as the development of appropriate
leadership behaviours. More specifically, the Policy has assumed a key role in globally
integrating organization-wide diversity administrative infrastructures. The Policy and
subsequent plans, however, are implemented regionally and at local subsidiary level.
This balance between global standardization and local adaptation at the policy level was
evident in the implementation of a new Harassment and Discrimination (H&D) policy, as
summarized by the Finnish HR Manager,
We will implement it here locally in a way that we see best. But the H&D policy is the same. The
guide is translated exactly as it is. It needs to be the same all over the world, but practical
measures can vary. . . . We asked for an extension since we wanted to explain it face-to-face and
it was accepted, even though it did not fit with their global schedule. They are flexible.
This has meant that whilst the type of diversity management targets (e.g. proportion of
women and expatriates in managerial positions, graduate quotas), annual plans and time
schedules are determined centrally and applied on a global basis, the actual targets and
means of policy implementation are routinely modified to reflect local legislative,
demographic and business needs.

Diversity management ‘practices’ In so far as practices refer to motivating needed role

behaviours which have direct implications for employees (Schuler, 1992), the practices
associated with diversity management assumed a combination of both globally
standardized and locally customized forms. At the general HRM practice level, for
example, it appeared that few efforts at global integration have been made, reflected in the
HR Manager’s synopsis that ‘diversity and inclusiveness is not included in writing in HRM
processes nor is written guidance given, but it is one point of reference; a kind of new lens
within each HR practice’. However, the launch of new globally standardized forms for
conducting appraisals, together with the universal integration of diversity criteria reflected
in reward and bonus schemes suggest that traces of a global approach at the practice level
were also evident. A further example of this global and local combination is training, in
that certain courses have been standardized (e.g. diversity awareness training for
managers) whereas others have been locally adapted to include a diversity perspective.

TRANSCO’s global diversity management delivery

Adopting the classification of integration modes proposed by Kim et al. (2003), the ways
in which TRANSCO have attempted to globally integrate diversity management are
outlined with a more detailed listing in Table 2.

People-based integration Representing the first of the four integrating modes, people-
based integration refers to measures such as the transfer of managers, meetings, training
and integrators which are argued to be most effective in situations where information and
knowledge are best conveyed face-to-face (Kim et al., 2003). In TRANSCO Finland’s
case, expatriates from corporate headquarters are not used; however, the appointment of
local Diversity Co-ordinators is used as an alternative. With full working responsibility
for the integration of diversity into the local subsidiary, the Finnish Diversity Co-
ordinator is actively involved in meetings with other Diversity Co-ordinators to discuss
ideas and to develop informal benchmarks. These discussions and other corporate
communications are then filtered into local management team, HR and departmental
Table 2 Diversity management integration mechanismsa at TRANSCO Finland
People-based Information-based Formalization-based Centralization-based

Sippola and Smale: The global integration of diversity management 1907

Local ‘Diversity Co-ordinators’ Corporate internet D&I Standard (mission & values) Diversity Council
(corporate level)
Benchmarking amongst Stakeholder communication D&I Policy Framework Diversity Steering
Group (corporate level)
Diversity Co-ordinators D&I publications, news and D&I integration into existing organizational policies Regional HQ
progress (e.g. harassment & discrimination)
Diversity training courses Local ‘Diversity Co-ordinators’
Managerial-level and regionally Company intranet ‘Barometer’-style survey on working environment
standardized Evaluation tools
Database of survey results D&I-focused survey
‘Diversity Auditors’ E-learning material Leadership self- and 3608 appraisals
Diversity ‘games’ and quizzes
Development and appraisal Annual corporate, regional and Diversity criteria on organizational and
discussions at managerial level local diversity plans individual balanced scorecards
Local voluntary workshop sessions Diversity criteria added to reward and
bonus schemes
Signing of Annual Diversity
Assurance Statements
Diversity issues made compulsory in all
meeting agendas
a
Taken from Kim et al. (2003).
1908 The International Journal of Human Resource Management
meetings. Additionally, all local line managers are brought to the European headquarters
for centrally delivered training in the form of a one-day ‘awareness’ session and some of
them to a three-day ‘intensive’ diversity course. From a control perspective, a further
‘personal’ form of integration is the often-cited monitoring function of ‘Diversity
Auditors’. These audits are unplanned and are used as a power resource to motivate local
integration efforts. As the HR Manager explains,
. . . they [European HQ] ask whether you have done such and such. It is then quite possible that
one day the Auditors might arrive, who want to see what we have done and if we really have
these plans in place.
The people-based integrating mechanisms are also revealing in the identification of
who has been truly leading local diversity efforts, in particular the role of HRM.
Reflected in TRANSCO’s overall approach to global diversity management and the
employment of Co-ordinators, diversity and inclusiveness is not considered to be HR-
owned but driven by the whole business. In this sense, and since diversity work largely
takes place independently from the HR function, the local HR Manager perceives its role
instead as ‘shaping’ and ‘supporting’ diversity and, more generally, in facilitating an
appropriate culture change. Accordingly, HRM practices are seen more as targets for
diversity integration than the key forces behind it.

Information-based integration Involving the international flow of information through

impersonal communication systems, information-based integration is argued to be most
effective when there is a great need to provide information quickly, or when large
volumes of information can be easily analysed and interpreted without extensive face-to-
face communication (Kim et al., 2003). In TRANSCO, this form of integration is mainly
applied as a reference point to agreed policies and tools and as a channel for
communication. The internet is used to publish TRANSCO’s global values and
commitment to managing diversity, including its progress, for the benefit of its diverse
set of stakeholders. The main corporate website also extends further to include detailed
supplementary information regarding their general approach to diversity issues and the
business- and non-business-related drivers for managing global workforce diversity.
The internal corporate intranet is also extensively used in storing large volumes of
basic diversity-related information, training material, organizational surveys and
leadership self-assessment tools. The Diversity Co-ordinator acknowledges the
effectiveness of such systems in communicating changes quickly, but became
increasingly critical of its lack of translation into the Finnish language and by the end
of the research period regarded the intranet as being insufficient in integrating diversity
given the general lack of incentives for employees to refer to it. Argued to be somewhat
more effective was the annual distribution of corporate, regional and local diversity
plans, which helped to illustrate the progress that should have been made and the targets
for the coming year.

Formalization-based integration Kim et al. (2003) refer to this mode of integration as

comprising the standardization of work procedures, rules, policies and manuals, which
are likely to be most effective when the process of conducting specific activities can be
codified into a set of identifiable procedures, rules and formulae. In addition to the
philosophy, policies and practices already mentioned in the design of their global
diversity management programme, TRANSCO has formalized the diversity agenda
through the operationalization and strict application of performance measures in
conjunction with organizational and individual tools of assessment. Starting from the
 Sippola and Smale: The global integration of diversity management 1909
annual regional diversity plans, diversity and inclusiveness performance criteria are
formally integrated into company-level balanced scorecards and the scorecards of
individual managers. This has meant that diversity management has come to represent a
feature of subsequent decisions about individual rewards and bonuses. Furthermore,
‘barometer’-type surveys are carried out both organization-wide and on an individual
basis in the form of general working environment surveys, diversity and inclusiveness
surveys, leadership self-assessments and 3608 appraisals. Indeed, TRANSCO’s
assurance approach to diversity integration is reflected not only in the wide use of
formalized measures and Diversity Auditors, but also in the process whereby local CEOs
around the world have to sign an annual Diversity Assurance Letter, which is used to
confirm how far subsidiaries have come in working towards agreed regional targets.

Centralization-based integration Characterized by the centralization of decision-

making authority at higher levels where there exists a more complete understanding of
various units and activities around the world, this mode of integration is suggested to be
most effective in integrating geographically dispersed units in achieving the benefits
of global scale, scope and learning (Kim et al., 2003). As indicated earlier, the degree of
centralization is higher at the level ‘philosophy’ than at the ‘policy’ and ‘practice’
levels. Similarly, the setting of targets and the drawing up of plans are centrally
determined by the corporate-level Diversity Council and Diversity ‘Steering Group’ with
implementation allowing the most room for decentralized decision-making. With regard
to implementation, however, it was stated that whilst support and guidance was available
from corporate and regional headquarters, it was not generally needed. This combination
of flexibility and autonomy in executing plans was explained to derive from a
relationship of mutual trust between the local Finnish subsidiary and the parent, which
has its roots in several decades of working in a previously decentralized organizational
structure. From this perspective, the Finnish CEO stressed that in addition to
accomplishing the obligatory annual measures within the given frames, it has also been
important to find the balance between centralization and decentralization, emphasizing
everybody’s own ability to contribute to diversity management implementation. The
subsequent ‘arms length’ approach that was seen to be used by headquarters often meant
that feedback, both positive and negative, was minimal.

TRANSCO’s global diversity management challenges

In order to highlight the types of challenges that TRANSCO faced throughout the global
integration process, Kostova’s (1999) institutional framework of ‘regulatory’ (e.g. laws
and regulations), ‘normative’ (e.g. values and norms), and ‘cognitive’ (e.g.
interpretations and frames of thought) pressures, is applied as an explanatory framework.
With regards to challenges in the regulatory environment, TRANSCO has been
cautious from the outset in its approach to globally integrating diversity management.
Indeed, their philosophy explicitly allows variations to occur in line with the laws of the
applicable host country. Accordingly, there were no identifiable cases where
TRANSCO’s global integration efforts have met ‘regulatory’ obstacles. This is also
reflected in how union representatives in the Finnish subsidiary have been relatively
silent throughout the diversity integration process, despite some short-lived defensive
reactions at the beginning when discussions turned to the employment of immigrants.
The most significant challenges were in fact found to exist in the domains of
‘normative’ and ‘cognitive’ adjustments to the notion and practice of diversity and
inclusiveness. For example, one key challenge that was seen to confront Finnish
1910 The International Journal of Human Resource Management
management and employees at the beginning was the broad scope of diversity, which had
previously not been visible or properly acknowledged. This was reflected in comments
such as, ‘we have done well when comparing, for example, the positions of men and
women in different salary categories. We have more young career women than men. But
they are all Finns, which we need to think about’ (HR Manager).
In general, however, the broad remit that diversity and inclusiveness was shown to
cover, by TRANSCO, made typically reserved Finnish people begin to feel noticeably
uncomfortable. As noted by the Diversity Co-ordinator, ‘when they see how significant
the issue is; that it concerns everyday life between people, they become embarrassed,
shy’. Similarly, middle managers started to voice concerns about whether these types
of discussions would require them to ‘reveal who we really are’ to their colleagues
and subordinates. The questioning of people’s values and norms regarding diversity and
inequality was also shown to be a painful experience for some Finnish organizational
members. The Diversity Co-ordinator recalls a certain ‘landmark’ team meeting a year
into the integration process in which issues of inequality were discussed, ‘the atmosphere
was unique. The subjects of discussion were unique. The inner dynamics of that team
were discussed openly . . . . It had people crying. And that was certainly unique in that
department.’ In many respects, however, these kinds of reactions were not only
considered to be a challenge, but also as a necessary process and a positive sign that
Finnish employees’ were beginning to better understand the meanings behind diversity
and inclusiveness and, crucially, were mustering up the courage to discuss them.
Nevertheless, even after two years of intensive integration efforts it was still generally
felt that the magnitude of normative adjustments required to discuss diversity openly
meant that the Finnish subsidiary considered itself not ready to embrace everything that
was being suggested by regional headquarters. For example, the advocated use of affinity
groups was regarded as inappropriate and was subsequently not used by the Finnish
subsidiary. It was argued that they represented a culture-specific tool reflecting Anglo-
Saxon assumptions that everybody is ready and willing to discuss issues such as
homosexuality with others in a group. Although some progress had been made, the
Diversity Co-ordinator was still adamant that if affinity groups were offered in Finland
that few would sign up.
In terms of cognitive-based barriers to integration, the first key challenge identified
was to change the dominant perception that ‘everything is fine here’. To the extent that
employees and managers were only referring to surface-level evidence, the diversity
efforts at the Finnish subsidiary initially focused on going deeper into diversity issues.
This approach of trying to make diversity issues more conscious in the minds of
individuals (e.g. through surveys and keeping diversity on meeting agendas) was already
starting to show signs of success after the first year of integration, for example ‘people
now talk about D&I in unexpected situations, . . . by stating that ‘from a D&I perspective
the matter could be . . . .’ (Diversity Co-ordinator).
A further cognitively related challenge was the individual interpretation of diversity
rhetoric into meaningful organizational practices and behaviours. Indeed, a major
concern for the Finnish CEO was that diversity tools and templates, which were
designed to enable a cognitive and behavioural shift in individuals, were also serving to
increase the level of bureaucracy. The uncertainty surrounding how to interpret the
implications of workforce diversity was also reflected in the common usage of
metaphors amongst respondents when speaking about diversity. In the group interview,
the Area Manager additionally expressed scepticism about certain male colleagues in
his business unit ever attaining the required cognitive abilities needed to embrace
 Sippola and Smale: The global integration of diversity management 1911
workforce diversity, stating ‘ . . . it is more challenging for the Operations Managers,
unlike HR Managers, to be able to handle issues of the [human] “spiritual” kind’.
In general, however, a key challenge was perceived to be the constant battle to win over
the hearts and minds of local management. A factor that has rendered this a particularly
significant challenge has been the absence of appropriate ‘hard’ targets at the local
subsidiary level. Although there are global targets regarding the number of expatriates in
the highest management positions and the proportion of women in senior executive posts,
neither of these have been relevant in Finland since the CEO has always been Finnish and
the ‘senior executive posts’ for women do not exist in the comparatively small Finnish
subsidiary. Instead, the local Diversity Co-ordinator and HR Manager have devised their
own targets, which received only passive agreement from regional headquarters. The
absence of appropriate measures has thus led local Finnish management to question
why they should do anything above what is officially required. As a result, the Diversity
Co-ordinator and HR Manager have experienced difficulties in enforcing
diversity management without any power resources at their disposal. Instead, the case
for diversity has been presented emotively as ‘the right thing to do’ on a personal level.

Discussion and conclusion

The present case study has investigated how a well-known European MNC has
approached global workforce diversity through the integration of diversity management
amongst its foreign subsidiaries. The aims of the study were, first, to identify what
(the design) TRANSCO is globally integrating and how (the delivery) it has facilitated
this, and, second, to ascertain the challenges TRANSCO has encountered throughout the
integration process.

Longitudinal perspectives
The considerable amount of time, financial and human resources TRANSCO has
dedicated to the integration process over the two-year study is testament to the
significance of global workforce diversity as a key emerging theme in MNCs
(Florkowski, 1996). The present study has adopted a longitudinal perspective, which has
revealed how TRANSCO initiated the integration process through a large ‘push’
involving the use of multiple integrating mechanisms and rigorous follow-up procedures.
The second year, however, has been characterized by incremental reductions in
integration efforts, both intentionally and unintentionally, under the premise that
diversity management should become everybody’s responsibility, that is to say not just
that of Diversity Co-ordinators, HR or Line Managers. By the end of the study, the
general feeling was that TRANSCO Finland has been a ‘star pupil’ in the implementation
of policies and plans, but still remains some way off the desired ingrained behaviours and
practical application of diversity and inclusiveness principles. In this sense, whilst it has
been demonstrated that TRANSCO Finland has moved beyond compliance with equality
legislation towards the stage of valuing differences (Liff, 1997; Cassell, 2001) and of a
willingness to learn from diversity (Thomas and Ely, 1996), it has made comparatively
smaller steps in changing individual attitudes and behaviours, and culture (Tayeb, 1996;
Kossek and Lobel, 1996). This would collectively seem to imply that TRANSCO Finland
finds itself entering the ‘access-and-legitimacy’ paradigm with evidence to suggest that,
with more time, some inroads could be made into the paradigm of ‘learning-and-
effectiveness’ (Thomas and Ely, 1996; Dass and Parker, 1999).
Whilst the domestic diversity agenda has heavily emphasized the interventions of the
HR function (e.g. Kossek and Lobel, 1996; Kandola and Fullerton, 1998), it would appear
1912 The International Journal of Human Resource Management
that TRANSCO’s global diversity management responsibilities and tasks are not owned
by HR in the same way. Indeed, similar to the findings in Wentling and Palma-Rivas’
(2000) study on diversity management in MNCs, the role of HRM that TRANSCO has
adopted is more supportive and a target of integration than a driving force behind it.

Global diversity management design

The present study confirms that one of the key dilemmas occupying the thoughts of
MNCs is the ability to leverage the diversity of a global workforce whilst maintaining
organization-wide consistency (Rosenzweig, 1998). This was not least evident in the
design of TRANSCO’s integration process where there were clear differences in
pressures for standardization according to the various levels of diversity management
activities. Indeed, the case-study evidence largely supports the assertion that HRM
practices are more prone to cultural and institutional influences and hence adaptation
than HRM activities at the policy and philosophy levels (Schuler et al., 1993; Tayeb,
1998). TRANSCO’s blend of standardized and locally adapted practices would also seem
to support previous SIHRM arguments for conceptualizing the HR function as internally
differentiated whereby individual practices, such as diversity management, are more or
less susceptible to global integration (Lu and Bjorkman, 1997; Bae et al., 1998).

Global diversity management delivery

With regard to the delivery of global diversity management integration, TRANSCO has
employed a myriad of mutually supporting integrating mechanisms, which has been
argued elsewhere as helping to facilitate greater acceptance of diversity (Gilbert and
Ivancevich, 2000). Since successful diversity interventions require changes in individual
and organizational attitudes and behaviours (Tayeb, 1996; Kossek and Lobel, 1996), it
could be assumed that people-based integration modes would be most effective in their
capacity to integrate knowledge face-to-face (Kim et al., 2003). However, this form of
global integration was not extensively used by TRANSCO (see Table 2). Interestingly,
TRANSCO’s integrating activities were much more visible in the array of formalization-
based mechanisms. To the extent that this integration mode is argued to be most effective
when specific activities can be codified into identifiable rules and procedures (see
Table 2), this also highlights TRANSCO’s fundamental approach that diversity
management integration is an assurance process. This assurance approach explicitly
referred to as such, was subsequently reflected in the widespread usage of hard measures
and audit-style progress reports.
On the one hand, this formalization-based approach is questionable in its assumption
that an organization can codify and measure changes in individual perceptions about
diversity and inclusiveness. On the other hand, however, TRANSCO’s assurance
approach, supported by the employment of dedicated Diversity Coordinators at the
subsidiary level, has also ensured that the management of global workforce diversity has
not remained a rhetorical or purely idealistic notion. On the contrary, the deployment of
formalization-based mechanisms would appear to have been among the most effective
forms of integration, in particular in forcing TRANSCO employees and managers to
think about everyday diversity issues when self-initiative was not forthcoming.

Global diversity management challenges

In reference to Kostova’s (1999) institutional framework, regulatory challenges were
effectively mitigated by TRANSCO’s explicit acknowledgement from the outset that
 Sippola and Smale: The global integration of diversity management 1913
legislative anomalies in different host countries will necessitate local adaptation. Instead,
the challenges of integrating global diversity management were found to reside in
normative and cognitive barriers related to the Finnish host context. In this regard, the
Finnish institutional context proved to be both receptive and impervious to the principles
of diversity and inclusiveness. In short, the polarized nature of the Finnish institutional
environment in relation to diversity meant that whilst gender equality was considered to
be a non-issue, the cognitive and normative shifts required to discuss openly the issues of
sexual orientation and ethnicity were shown to be a slow and, at times, painful process.
This has subsequently led to the general diagnosis that TRANSCO Finland has
demonstrated ‘ceremonial adoption’ (Kostova and Roth, 2002) of diversity through its
efficient ‘implementation’ of policies and practices, but is currently lacking in the
‘internalization’ (Kostova, 1999) of diversity which would see organizational members
recognize its value and use.

Implications
In terms of the theoretical implications of the study, the large-scale activities and
investments witnessed at TRANSCO in managing global workforce diversity highlight a
strong need for both further empirical research and theoretical development in this poorly
understood field. With regard to how global diversity management is designed and
delivered, the question as to whether a global or multi-domestic strategy is more
appropriate might better be answered when conceptualizing global diversity manage-
ment as comprising differentiated activities occurring at various organizational levels. As
emphasized by the recent theoretical justifications for global HRM, and largely
supported in this study, the answer might then be found in more global integration and
consistency of diversity philosophies which supersede nationality, with a leaning towards
a multi-domestic approach to diversity policies and practices which are more
demographically and institutionally embedded and more susceptible to Anglo-Saxon
cultural bias. Such assertions, however, remain empirically under supported and in need
of further corroboration.
In addition, two key practical implications can be inferred from the present study.
First, the scale and sophistication of any global diversity management intervention must
be able to be translated to all relevant local host destinations. As highlighted here, whilst
a multi-domestic approach is often deemed most appropriate in dealing with host-specific
challenges of workforce diversity, the lack of intervention from the centre can also
manifest itself in a more serious lack of support. In this sense, both parent and subsidiary
should co-operate to find mutually beneficial solutions. Second, and from a longitudinal
perspective, MNCs need to remain both persistent and patient in the pursuit of managing
global workforce diversity. Indeed, whilst investments in integration mechanisms and
evaluation tools can be very constructive in affecting surface-level changes, the required
shifts in organizational and individual attitudes and behaviours necessitate a long-term
commitment and continuous efforts which see the ‘initiative’ perceptions of diversity
management replaced with something more permanent and meaningful on workplace
agendas.

Note
1 For reasons of confidentiality, a pseudonym has been used and some of the terms pertaining to
their global diversity management activities have been altered.
1914 The International Journal of Human Resource Management
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