Multiculturals as Strategic Human Capital Resources in Multinational Enterprises

Multiculturals – individuals with notable cultural knowledge, skills, abilities, and other characteristics (KSAOs) – are widely assumed to contribute to MNE performance leading, ultimately, to global competitive advantages. We nuance this general belief by arguing that what matters for an MNE’s competitive advantage is not the employment of multiculturals per se, but rather the MNE’s ability to transform multiculturals’ KSAOs into strategic human capital resources by creating complementarities between KSAOs and emergence-enabling factors. Using a 12-month in-depth ethnographic study over the span of two years in two MNEs, we identified five emergence-enabling factors that enable the transformation of multiculturals’ KSAOs into human capital resources and strategic human capital resources: (1) a global mindset, (2) a differentiated HR architecture, (3) the language policy and practices, (4) team diversity, and (5) multicultural team leadership. We suggested that a global mindset and differentiated HR architecture are emergence-enabling factors that enable the transformation of KSAOs into unit-level strategic human capital resources that are relevant for competitive advantage, while team diversity and multicultural team leadership are emergence-enabling factors that enable the transformation of KSAOs into unit-level human capital resources relevant for performance parity. Finally, the language policy and practices were relevant for both processes.