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Purpose -This article aims to explore the nature of contemporary HRM practice in Mozambique, and the extent to which ''best practice'' HRM strategies are likely to emerge, given present institutional realities. Design/methodology/approach -The research was based on an extensive survey of Mozambican employers concentrated in the major urban centres of the country. Findings -The survey revealed little evidence of innovation or of leading edge practices, other than in a small minority of firms. It is concluded that the diffusion of higher value added managerial strategies is only likely to take place in a more supportive institutional context. Practical implications -The failure of innovative HRM techniques to diffuse across the economy, despite heightened external pressures, highlights organizational inertia, including the continued reliance of many firms on low-paid and low-skilled workers, and on autocratic paternalism. It remains uncertain whether a more ''high value'' added path is viable in a context of cut-throat competition from abroad. Originality/value -The Mozambique experience underscores the importance of an institutional context which encourages firms to buy into mutually advantageous sets of rules governing fair play and limits the rewards accruing to bad practice. Whilst the more efficient enforcement of legislation may encourage the broader adoption of ''high road'' practices, their sustainability is, at least in part, contingent on the diffusion and reconstitution of supportive conventions; regrettably, this makes it extremely difficult to depart from the low value added path.