International Human Resource Management

3rd Edition

Chris Brewster, Paul Sparrow, Guy Vernon and Elizabeth Houldsworth

Chris Brewster is Professor of International HRM at Henley Business School, University of Reading.

Paul Sparrow is Director of the Centre for Performance-Led HR and Professor of International HRM at Lancaster University Management School.

Guy Vernon is Lecturer in Human Resource Management at Southampton University.

Elizabeth Houldsworth is Lecturer in International HRM at Henley Business School, University of Reading.

CD26860.indb 1 17/08/2011 09:54

The Chartered Institute of Personnel and Development is the leading publisher of books and reports for personnel and training professionals, students, and all those concerned with the effective management and development of people at work. For details of all

our titles, please contact the publishing department:tel: 020–8612 6204

email publish@cipd.co.ukThe catalogue of all CIPD titles can be viewed on the CIPD website:

www.cipd.co.uk/bookstore

CD26860.indb 2 17/08/2011 09:54

Chartered Institute of Personnel and Development

International Human Resource Management

3rd Edition

Chris Brewster, Paul Sparrow, Guy Vernon and Elizabeth Houldsworth

CD26860.indb 3 17/08/2011 09:54

Chartered Institute of Personnel and DevelopmentPublished by the Chartered Institute of Personnel and Development, CIPD House, 151 The Broadway, London, SW19 1JQ

First published 2011

© Chartered Institute of Personnel and Development, 2011

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher.

This publication may not be sold, lent, hired out or otherwise dealt with in the course of trade or supplied in any form of binding or cover other than that in which it is published without the prior written permission of the publisher.

No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the editor, authors or publisher.

Designed and typeset by Fakenham Prepress Solutions, NorfolkPrinted in Great Britain by Charlesworth Press, Wakefield

British Library Cataloguing in Publication DataA catalogue of this publication is available from the British Library

ISBN 978 1 84398 266 1

The views expressed in this publication are the authors’ own and may not necessarily reflect those of the CIPD.

The CIPD has made every effort to trace and acknowledge copyright holders. If any source has been overlooked, CIPD Enterprises would be pleased to redress this in future editions.

Chartered Institute of Personnel and Development, CIPD House, 151 The Broadway, London, SW19 1JQ

Tel: 020 8612 6200

Email: cipd@cipd.co.uk

Website: www.cipd.co.uk

Incorporated by Royal Charter

Registered Charity No. 1079797

CD26860.indb 4 17/08/2011 09:54

Contents

LIst of tabLEs x

LIst of fIguREs xii

waLktHRougH xvi

Chapter 1 International Human Resource Management: An Introduction 1Introduction 1What is new about this edition? 2Key trends 4What is international human resource management? 8Structuring the field into three components 11How is the overall field of IHRM evolving? 14An outline of the book 16

PaRt 1 CRoss-CuLtuRaL ManagEMEnt 21

Chapter 2 The Impact of National Culture 23Introduction 23Putting the study of culture into context 26What is culture? 28National cultures and organisation 33Limitations and cultural generalisations of work at the national

level 43

Chapter 3 Culture and Organisational Life 51Introduction 51The impact of culture on organisational behaviour and HRM 52The role of the manager, leadership and management styles 56Culture and the individual 58Can we develop global leader competencies? 60Developing cultural intelligence 62

PaRt two CoMPaRatIvE HuMan REsouRCE ManagEMEnt 69

Chapter 4 Comparative HRM and Institutional Influences 71Introduction 71Universalist versus contextual HRM 72Institutional theory 75Institutional approaches to comparative HRM 77Business systems theory 81

CD26860.indb 5 17/08/2011 09:54

International Human Resource Managementvi

What do these theories mean for human resource management? 84

The USA and the rest of the world 85Convergence and divergence in HRM 87

Chapter 5 Employee Relations and Collective Communication 95Introduction 95What are trade unions? 96Comparative structures of governance 99Direct statutory regulation of the employment relationship 108Unions, management and business performance 110What influences comparative patterns of employee relations

structures? 111Best practice in employee relations 112

Chapter 6 The Organisation of Work 115Introduction 115Taylorism and fordism as a solution ... and a problem 116Direct communication: initiatives and their comparative

coverage 117Direct downward communication 119Upward direct communication 122Lateral communication 126Reform beyond communication: employee discretion and

autonomy 127All teams against taylorism? 128Cross-national comparative work organisation 129Influences on comparative patterns of the organisation

of work 131One best way internationally in the organisation of work? 133

Chapter 7 Flexibility and Work–Life Balance 136Introduction 136The implications of flexibility 138Contractual flexibility: ‘non-permanent’ employment 140Working time flexibility 142Work–life balance 146Factors underlying comparative variation in flexibility and

work–life balance 150International best practice in flexibility and work–life

balance 153

Chapter 8 Recruitment and Selection 157Introduction 157Recruitment 159

CD26860.indb 6 17/08/2011 09:54

vii Contents

Recruitment methods 164Selection 170Putting recruitment and selection into cultural context 174Regional challenges 178Global pressures on domestic recruitment 182

Chapter 9 Performance Management 186Introduction 186Definitions, and the background to performance

management 188Comparative literature on performance management 196Context and performance management 199Performance management and culture 205

Chapter 10 Rewards 211Introduction 211Reward and bases of pay 212Linking pay to post via job classification and evaluation:

comparative variation 215The incidence of pay for performance 216The significance to employees of pay for performance 222Culture and distinctive national reward systems 222Is cultural explanation of reward enough? 227The role of unions, employers’ associations and collective

bargaining 228Managing pay for performance: procedural issues 231International evidence on best practice in reward 231Space for strategy 233

Chapter 11 Training and Development 236Introduction 236Training and development in context 238The role of the state national systems: varieties of

capitalism, education, and initial vocational education and training 240

Continuing training – the role of the employer 249Management development 252

Chapter 12 The Role of the HRM Department 261Introduction 261Common ambitions for the HRM department? 262Living up to new ambitions 267The changing nature of the HRM function 272The role of line management in HRM 273The pressure to outsource some transactional activities 276

CD26860.indb 7 17/08/2011 09:54

International Human Resource Managementviii

The impact of shared services and the effects of electronic HRM 279

The influences on cross-national comparative variation in the role of HRM departments 281

Best practice in the role of HRM departments 283

PaRt tHREE IntERnatIonaL HuMan REsouRCE ManagEMEnt 287

Chapter 13 International HRM: Theory and Practice 289Introduction 289Looking to the field of international business 290Life-cycle models 296Organisational design models 301Strategic international HRM: contingency approaches 305Resource dependency theory 307The resource-based view of the firm 307The knowledge-based view of the firm and organisational

learning theory 309Relational and social capital theory 311A model of global HRM 317

Chapter 14 Managing Expatriation 321Introduction 321Strategic planning 326Selection (recruitment) 328Preparation 333Adjustment 335The reward package 338Performance measurement 341Repatriation 342The individual perspective: careers 343

Chapter 15 Managing Diversity in International Forms of Working 346Introduction 346Global skills supply strategies 347Internationalising the sourcing process in organisations 348Other forms of international working 350Types of international employees 353Women in international management 355Dual-career couples 359The implications of international working on work–life

balance 360Measuring the value of international assignments 362The multi-cultural team 364

CD26860.indb 8 17/08/2011 09:54

ix Contents

Key competencies for multi-cultural teams 368Strategies for managing multi-cultural teams 369

Chapter 16 Globalising HRM 372Introduction 372The pursuit of global operations and designs 374Reflecting global operations in IHRM 377The integration mechanisms provided by the centre 384Talent management 386Employer branding 392Global knowledge management strategies and

management through global networks 395

REfEREnCEs 401

InDEx 454

CD26860.indb 9 17/08/2011 09:54

List of tables

Chapter 2 1 Interpreting high-context communication 35 2 Power distance index (PDI) rankings for Hofstede indices 38 3 Uncertainty avoidance index (UAI) rankings for Hofstede indices 38 4 Individualism index (IDV) rankings for Hofstede indices 39 5 Masculinity index (MAS) rankings for Hofstede indices 40

Chapter 3 6 Progressive stages of transcultural competence 62

Chapter 4 7 National business system archetypes 82 8 Summary of convergence v divergence 90

Chapter 6 9 All teams against Taylorism? 128

Chapter 710 Average annual working time (hours), in manufacturing 149

Chapter 911 Percentages of firms with an appraisal system in operation for

specified staff grades 19712 Percentages of firms in which the specified people contribute

formally to the appraisal process 19813 Percentages of firms in which an appraisal system is used to

determine the specified outcomes 19814 Cross-national performance management characteristics 203

Chapter 1115 The form and reach of initial VET 24516 The likely impact of national/regional economy upon company

training and development 24717 European management development systems 254

Chapter 1418 The advantages and drawbacks of ethnocentric staffing 32220 A summary of expatriate compensation schemes 339

CD26860.indb 10 17/08/2011 09:54

xiList of Tables

Chapter 1520 A typology of international manager selection systems 35721 A matrix of the direct value-added contribution of an international

assignment’s value drivers to the value areas of a company 36322 Managing diversity effectively 36623 Managing diversity, based on the team’s stage of development 36724 Cross-cultural communication competencies 36925 Task and process issues to be addressed in multi-cultural teams 370

CD26860.indb 11 17/08/2011 09:54

List of figures

Chapter 2 1 Schein’s three levels of culture 29 2 Key dimensions of culture 32 3 The role of managers 36 4 Power distance index and uncertainty avoidance index comparison 42 5 Value contrast curves 45

Chapter 5 6 Coverage of collective bargaining/union recognition by organisations 100 7 Unionisation rates or density of union membership across

organisations 101 8 The incidence of works councils/joint consultative committees across

organisations 103 9 The extent to which managers communicate with employees via the

works council/joint consultative committee 10410 Personnel/HRM directors’ views of the extent to which unions

influence their organisations 10611 The ‘bite’ of legal pay minima 108

Chapter 612 An overview of Taylorism 11613 Strategic and financial briefing of different groups of employees in

Sweden, the UK and Germany 12114 Channels of upward communication 12215 A categorisation of models of the organisation of work 129

Chapter 716 Organisations with more than 5 per cent of employees on fixed-term

contracts 14117 Organisations in which more than 5 per cent of employees are

temporary or casual 14218 Organisations in which more than 10 per cent of employees work

part-time 14419 Organisations with more than half of their employees on annual

hours contracts 14520 Organisations with more than half of their employees on flexi-time 148

Chapter 821 Recruitment practices for managers in six countries 16522 Selection practices for managers in six countries 170

CD26860.indb 12 17/08/2011 09:54

xiiiList of Figures

Chapter 923 An overview of the performance management process 19124 Balanced scorecard perspectives and typical measures 19125 Example of competency feedback in the performance management

process 19326 Comparative use of appraisal for manual and clerical employees in

five countries 19727 The performance management process in context 200

Chapter 1028 The use of individualised PfP (PRP) for manual employees in six

countries 21729 The use of individualised PfP (PRP) for clerical employees in six

countries 21830 The use of team- or department-based pay for manual employees in

six countries 21831 The use of employee share ownership schemes for manual

employees in six countries 21932 The use of profit-sharing for manual employees in six countries 22033 The use of stock options for managerial employees in six countries 221

Chapter 1134 The impact of national and organisational characteristics on training

and development 23935 Comparative distribution of average training days for different

categories of employees across six countries 251

Chapter 1236 The original Ulrich three-box model 26437 The proportion of organisations with HR on the board in six

countries in 2010 27038 HR involvement in the development of corporate strategy, in six

countries 272

Chapter 1339 The Schuler framework 30640 Processes involved in globalising HRM 317

Chapter 1441 The global assignment cycle 32542 Integrative framework for pre-departure preparation 335

Chapter 1543 Spillover versus crossover 36144 The relative productivity of cross-cultural and single-culture teams 366

CD26860.indb 13 17/08/2011 09:54

chapter 1

International Human Resource Management: an Introduction

LEARNING OUTCOMES

When they have read this chapter, students will:

●● appreciate the growing internationalisation of the world in which HRM is conducted

●● understand the additional complexity of HRM in an international context

●● be able to describe the key features of the three main approaches to IHRM

●● be able to identify some of the key HRM challenges facing organisations working internationally

●● understand the format of the rest of the book.

introduction

Thischapterstartswithageneralintroductiontothetext–itoutlinesthedualobjectivesofthetext:●● togivereadersabetterunderstandingofinternationalHRM(IHRM)inawaythatwillhelpthemaspractitioners

●● and,forthosewhoareconcerned,tohelpthemgetthroughtheInternationalPersonnelandDevelopmentelementoftheCIPDStandards.

Thefirstsectionexplainswhatisnewaboutthisupdatedandenlargedlatesteditionofthebook.Thenextsection(Key Trends)considersthebackgroundofthegrowthofinternationalbusinessandtheimplicationsforHRM.Thethirdsection(International HRM)outlinestheimportanceofcountriesandpresentsthethreemainapproachestoIHRM:cultural,comparativeandinternational.InsodoingitexploresthedifferencesbetweendomesticandinternationalHRMforpractitioners.Thefinalsectionofthischapter(An Outline of the Book)providesaguidetotheotherchaptersinthebook.

CD26860.indb 1 17/08/2011 09:54

International Human Resource Management2

what is new about this edition?

Wehaveintroducedanumberofadditionalchaptersfromthepreviousedition.Notably,thetextbooknowgivesmorecoveragetoinstitutionalinfluencesonIHRM.Wehavestrengthenedthecomparativesectionsofthebookwithanewchapterontheorganisationofworkandhaveredevelopedthematerialonflexiblework.Wehavealsointroducedanewchapteronperformancemanagement.Thisnewmaterialenableslecturerstoprovidemuchbroaderfunctionalcoverageinacomparativesetting.Alltheotherchaptershavebeenupdatedtopickupdevelopmentsinboththeliteratureandpracticeoverthelastfouryears.

Theaimofthistext,however,remainsthesame:tohelpyouexplorethemeaningandimplicationsoftheconceptsofcross-cultural,comparativeandIHRM.WedonotassumethatthereisonlyonewayofdefiningorunderstandingthenatureofHRM.Onthecontrary,webelievethatHRMvariesaccordingtothecountryinwhichHRMisconducted:thatprovidestheculturalandinstitutionalenvironmentforHRM.ThistextaddressesdirectlytheissuesraisedbythefactthatHRMisdifferentfromcountrytocountry.Oneeffectthatthismusthaveisonpeoplelikeyou,whoaretryingtogainanunderstandingofthefullrangeofmeaningsofHRM.Anothereffectisonthose,likesomeofyou,tryingtomanageHRMinorganisationswhosereachcrossesnationalboundaries.Theseissuesarecoveredinthistext.

Akeytaskfororganisationswhichoperateacrossinternationalboundariesistomanagethedifferentstressesofthedriveforintegration(beingcoherentacrosstheworld)anddifferentiation(beingadaptivetolocalenvironments).ReadingthistextwillgiveyousomeflavourofthewaythatHRM–andparticularlywhatisseenas‘good’HRM–isdefineddifferentlyindifferentnationalcultures,andispresentedandoperatesdifferentlyindifferentnationalinstitutionalenvironments;someflavour,too,ofthewaysinwhichinternationalorganisationsattempttodealwiththeissuesthesedifferencescreate.

Webelievethatthetextwillbeofvaluetoanyoneinvolvedin,orinterestedin,comparativeandIHRM.WhereasinthepastthebookhasfocusedparticularlyonHRMspecialists,forthiseditionwehavesoughttotakeamoregeneralapproach,acknowledgingthatforsomereaderstheymayonlybestudyingIHRMasonecomponentinabroaderqualificationprogramme.AtthesametimewehavekeptacloseeyeontheCIPD’sInternationalPersonnelandDevelopmentStandards.Ifyouareteachingacourse,orstudyingfortheCIPDqualification,thisbookwillthereforeformacomprehensivecoursetext.

Thisbookisunusualinthatitprovidesevidenceofcross-nationalvariationinHRMpoliciesandpracticesfromtheCranetsurvey.Cranetisthelargestongoingacademicsurveyintheworldandhas,overmorethan20yearsnow,gatheredcomparativedatafromcountriesaroundtheworld.Thesurveydatabaseisbroadlyrepresentativeofthecountriesinwhichdataiscollected,matchingtheemploymentpatternsoforganisations(ofmorethan100employees)innowmorethan50countries.Thedataiscollectedfromthemostseniorpersonresponsible

CD26860.indb 2 17/08/2011 09:54

International Human Resource Management: An Introduction 3

forHRMineachorganisation,andmainlyonly‘factual’questions(involvingyes/noornumbersorpercentagesasresponses)areasked.ForconsistencywehaveusedthelatestdatafromFrance,Germany,Japan,Spain,Sweden,theUKandtheUSAineachchapter,butwehavealsoreferredwhereappropriatetorecentarticlesthatcoverawiderrangeofcountries.

Formanyofyou,thesefirstparagraphswillalreadyberaisingsomekeyquestions.WhatisthecultureofSpain,withitsCastilians,Catalans,Andalucians,Basques,etc?WhatisthecultureofSingapore,withitsMalay,IndianandChinesepopulations?WhatistheinstitutionalandlabourmarketpositionoftheEuropeanUnion,wheremanylawsapplyacrossnationalboundariesandtherearefewinstitutionallimitationstocross-borderlabourmarkets?And,ofcourse,basingthetextonnationaldifferencesinevitablyblurssomeoftheseimportant‘within-nation’and‘beyond-country’issues.Thesearecriticalmatters–butoutsidethescopeofthistext.Wehavechosenheretoconcentrateuponthenationaldifferencespartlybecausetheyaresopowerful(employmentlaws,labourmarkets,tradeunions,etctendtooperateatnationallevel),andpartlyasanintroductiontoanoften-neglectedelementofHRM–thefactthatitdoesvaryconsiderablyaroundtheworld.OurconsiderationoftheseissuesisfocusedonEurope,butwewilltaketheopportunitytodrawonexamplesfromothercontinentswheneverthatisappropriate.

Wehavealsotakentheopportunityintheneweditionnotjusttoimproveourcoverageofthisrapidlychangingsubject(seeSparrowet al,2004)butalsotoextendboththenumberofchaptersandthematerialcoveredwithinthechapters.IthasbeenfascinatingtonotethatthenumberofbooksandarticlesoninternationalandcomparativeHRMhasexpandedalmostexponentiallyevenintheshorttimesincethefirsteditionofthistext.WhereasinmanyorganisationsIHRMusedtobetheconcernofaratherseparatedepartmentarrangingtermsandconditionsforexpatriateemployees,itisincreasinglybecomingamoreandmoresignificantpartoforganisations’attemptstomanagetheirentireworkforceacrosstheworldinthemostcost-effectivemannerpossible.Assuch,itisbecomingakeycontributortoorganisationalsuccess.Itislittlewonderthatitisbeginningtoattracttheattentionofmoreandmoreresearchers,publishersandconsultancies.

WenoteintheOutline of the Bookthedetailsofthenewtopicsthatwehaveaddressedchapterbychapter.Hereitsufficestosaythatwehaverespondedto

reflective activity

●● Why would a global approach to managing people be beneficial to an organisation?

●● Why might it be harmful?

Provide examples for each perspective.

CD26860.indb 3 17/08/2011 09:54

International Human Resource Management4

thebook’susersbyaddingspecificchaptersdetailingcomparativeaspectsoftheorganisationofworkandofperformancemanagement,andhaveusedthelatestresearchtoextendthematerialonthewaythatinternationalorganisationsmanagetheirworkforcesinternationally.

key trends

Itisatruismtopointoutthattheworldisbecomingmoreinternational.Thisappliestoourtechnology,ourtravel,oureconomiesandourcommunications–ifnotalwaysobviouslytoourunderstanding.Thegrowthofglobalenterprisesleadstoincreasedpermeabilityinthetraditionalbusinessboundaries,whichinturnleadstohighratesofeconomicchange,agrowingnumberanddiversityofparticipants,risingcomplexityanduncertainty.

Traditionally,muchofourunderstandingaboutIHRMhasbeenbasedonthestudyofmultinationalcorporations(MNCs).Amultinationalcorporationisdefinedasanenterprisethatoperatesinseveralcountriesbutismanagedfromonehomecountry.Inpractice,onceanenterprisederivesmorethanonequarterofitsrevenuesfromoutsideitshomecountry,itisconsideredanMNC.MNCsmaytakeanyoffourforms:adecentralisedcorporationthathasastronghome-countrypresence;aglobalandcentralisedcorporationthatcanacquireacostadvantagethroughcentralisedproduction;aninternationalcompanythatbuildsontheparentcompany’stechnologyorresearchanddevelopment;oratransnationalenterprisethatcombinesallthreeoftheseapproaches.Ingeneral,anMNCmaynothaveco-ordinatedproductofferingsineachcountry,becauseitismorefocusedonadaptingitsproductsandservicetoeachindividuallocalmarket.Somepeopleprefertousetheterm‘multinationalenterprise’(MNE)becausetheword‘corporation’impliesbusinessorganisations,whereasmanyotherformsoforganisation–suchasnon-governmentalbodiesorcharities–mightbedeemedtohavemultinationalcharacteristics.Theterm‘transnationalcorporation’(TNC)istypicallyusedtodescribemuchmorecomplexorganisationsthathaveinvestedinforeignoperations,haveacentralcorporatefacility,butgivedecision-making,R&Dandmarketingpowerstoeachindividualforeignmarket.Weshallgenerallyusetheabbreviation‘MNCs’throughoutthetextbookforthesakeofconvenienceandsimplicity.

MNCsarepresentedasbeingeconomicallydominant:theworld’s1,000largestcompaniesproduce80percentoftheworld’sindustrialoutput.

TheUnitedNationsConferenceonTradeandDevelopment(UNCTAD)wasoriginallysetupasanasanintergovernmentalforumforNorth–Southdialogueandnegotiationsonissuesofinteresttodevelopingcountries,includingdebatesonthe‘NewInternationalEconomicOrder’.ItsWorld Investment Reportfocusesontrendsinforeigndirectinvestment(FDI)worldwideandattheregionalandcountrylevels.Asofpublicationthelatestdatafornon-financialorganisationsrelatesto2008.Basedonanaverageofthreeratios(theratioofforeignassetstototalassets,foreignsalestototalsales,andforeignemploymenttototal

CD26860.indb 4 17/08/2011 09:54

International Human Resource Management: An Introduction 5

employment)theTransnationalityIndexoftenpaintsasurprisingpicture.Themosttransnationalfirmsfromthetransitioneconomies,inorder,areFirstPacificCompanyLimited(HongKong,withanindexof99percent),ChinaMerchantsHoldingsInternational(HongKong,97percent),GuangdongInvestmentLimited(HongKong,95percent),RoadKingInfrastructureLimited(HongKong,90percent)andLiandFungLimited(HongKong,90percent).AcerofTaiwanwouldrate12th,TataSteelofIndia18th,andSamsung41st.

Usingoneofthethreemeasuresofgeographicspread,somemorefamiliarnamesappearinthelistofallfinancialorganisations.Intermsofscale,thetopfivefinancialfirmsbasedon2009datawereCitigroup(USA),BNPParibas(France),AllianzSE(Germany),GeneraliSpa(Italy)andSociétéGénérale(France).Inthelistofallnon-financialTNCs,using2008data,byassetthetopfivelargestfirmsareGeneralElectric,Shell,Vodafone,BPandToyota.OntheTNItheyareXstrata(UK,Mining),ABB,Nokia,PernodRicardandWPPGroup.

Acrossnations.theUNCTADWorldInvestmentReport2010expectedglobalinflowsofforeigndirectinvestment(FDI)toreachmorethanUS$1.2trillionin2010,torisefurthertoUS$1.3–1.5trillionin2011,andtoheadtowardsUS$1.6–2trillionin2012.However,theseFDIprospectswereconsideredtobefraughtwithrisksanduncertainties.Theseriskfactorsincludedtheslowglobaleconomicrecovery,investmentprotectionism,risingsovereigndebtandcontinuedvolatilityinthecurrencymarkets–alllikelytoslowdownthepaceofFDIacrosstheglobein2011.TheUnitedStates,theepicentreoftheglobaleconomicmeltdownin2008,graduallyrecoveredfromthecrisis,withFDIflowsincreasingby40percentin2010toUS$186.1billionfromUS$129.9billionin2009.DevelopingandtransitioneconomiesattractedhalfofglobalFDIinflows,andinvestedonequarterofglobalFDIoutflows.TherewasasharpincreaseinglobalFDIflowstoEastandSouth-EastAsiancountriesandLatinAmericannationsin2010.Thismarkedthefirsttimethatdevelopingcountriesoutpacedrichnationsinattractingforeigninvestments.

PROGRESS TOWARDS TRANSNATIONALISATION?

UNCTAD (2007) defines transnationalisation as the intensity of foreign activities in relation to domestic or global activities. Between 1990 and 2003, the values of assets of foreign affiliates of the world’s TNCs have increased by a factor of five, and sales and employment have multiplied respectively by three and two. By the early 1990s there were an estimated 37,000 TNCs in the world, with 170,000 foreign affiliates. Of these, 33,500 were parent corporations based in developed countries. By 2006 there were an estimated 77,000 TNCs in the world, with more than 770,000 foreign affiliates. These affiliates generated an estimated US $4.5 trillion in value added, employed some 62 million workers, and exported goods and services valued at more than US $4 trillion. Around 60 per cent of international trade involves transactions between two related parts of a single MNC. This means that the physical location of economic value creation is now difficult to ascertain.

Continentalshiftsineconomicactivitycontinueatapace.In2003economistsatGoldmanSachsbracketedBrazilwithRussia,IndiaandChinaastheeconomiesthatwouldcometodominatetheworld.However,interpretingtrendsin

CD26860.indb 5 17/08/2011 09:54

International Human Resource Management6

internationalHRMthatmightresultfromshiftsineconomicpowerisnevereasyandcomplexfactorsarealwaysatplay.

Weseeanumberoftraditionalregionalstrategies,oftenreflectingpastculturalandinstitutionallinkages.Forexample,whiletheSpanisheconomywascontractingin2009,SpanishMNCscapitalisedontheirLatinAmericanconnections.Telefónica,thetelecommunicationscompany,wasthebiggestinvestorintheregion,making35percentofitsprofitthere.ItsUS$100billionofinvestmentsinLatinAmericarepresentedaboutathirdofthecompany’svalue(Economist,2009a).Santandermade43percentofitsprofitthere.SixSpanishMNCsaccountedfor95percentofalltheSpanishinvestmentinLatinAmerica.Atthesametime,however,SpanishMNCsmadelargeacquisitionsinEuropeandtheUSAtobalancetheirexposuretoLatinAmerica.MNCshedgetheirbetsacrossgeographies.

Theyalsocreatenewpatternsofmobilityandtrade.ChineseexpansionintoLatinAmericaandAfricacreatesbothanewgeographicaldemographyintermsofinternationalmobility,andnewpatternsofcomparativemanagement.Forexample,in2009theChinaDevelopmentBankandSinopeclentUS$10billiontoBrazil’sstate-controlledoilcompanyPetrobrasinreturnfor10years’supplyof200,000barrelsofoiladay.AsforeigndirectinvestmenthasgoneintoBrazil,ithasspawnedanewsetofBrazilianMNCs,suchasPetrobasinoil,Vale–oneoftheworld’slargestminingcompanies–andEmbraer,theworld’sthird-largestmakerofpassengerjets,withsteel-makers,bus-builders,foodcompanies,textileandcosmeticsfirmssoonexpectedtofollow(Economist,2009c).Outofalistof100companiesfromtheemergingmarketsthatareexpectedtoevolveintoMNCs,compiledbyBostonConsultingGroup,14arebasedinBrazil.Livingintheshadowsofthisshiftineconomicpower,UNdatasuggeststhattheinformaleconomystillrepresentsabout40percentofBrazilianGDP–itisonly13percentofGDPinChina.ChinahasnowbecomeAfrica’slargesttradingpartnerandbuysone-thirdofitsoilfromthecontinent.ItexportsUS$60billiontoAfrica,andimportsalittlemorefromAfrica(Economist,2011d).14percentofChineseoverseasinvestmentisinsub-SaharanAfrica,with19percenttoLatinAmerica,17percenttotheMiddleEastandNorthAfrica,17percenttootherpartsofAsia,13percenttoEurope,11percenttoAustraliaandonly9percenttotheUSA.

Muchisspokenaboutrelativelevelsofproductivityaroundtheworlddrivinginvestmentandgrowth.Infact,muchofChinaandtheUSA’sgainsinproductivitywereduetocapitalinvestmentratherthantrueimprovementsinefficiency.From1990to2008,OECDdataonabettermeasureof‘totalfactorproductivity’–thepercentageincreaseinoutputthatisnotaccountedforbychangesininputs(iethevolumeofworkhoursandcapitalinvestments)–showedthatChinastillhadanannualgrowthrateof4percentinproductivity.Noothercountryinhistoryhasenjoyedsuchrapidproductivitygains(Economist,2009d).Onthesamemeasureandtimeperiod,productivityincreaseswere2.8percentinIndia,2.3percentinSingapore,and1.8percentinThailand,fallingto1.2percentinBritain,1.1percentintheUSA,0.3percentinBraziland0.2percentinRussia.Thedeterminantsofsuchlong-termproductivityaretherateofadoptingexistingtechnologies,thepaceofdomesticscientificinnovation,andchangesinorganisationandproduction,whichinturn

CD26860.indb 6 17/08/2011 09:54

International Human Resource Management: An Introduction 7

dependonopennessstoforeigndirectinvestment(FDI)andtrade,educationandtheflexibilityoflabourmarkets.China’stechnologypenetrationandinnovationisveryhigh,soChina’sgrowthistwiceasfastasseeninJapanandSouthKoreawhentheywereatsimilarstagesofdevelopment.

Wealsowitnessdifferentresponsesinternationallywithinthelabourforce.Forexample,withintherichGroupofSeveneconomies,theUSAhasthelowestshareof‘primeage’malesagedbetween25and54inwork(Economist,2011e).Theproportionhasfallenfrom95percentinthe1960sto80percenttoday.Thefigureisstill96percentinJapanand94percentinFrance.ThemainreasonforthefallsineconomicparticipationintheUSA,theUKandCanadaarestructuralchangesthathavereduceddemandforless-skilledworkers.USuniversitygraduationrateshaveslippedinrecentyearsfromnearthetopoftheworldleaguetabletothemiddle.

Anotherissueislabourarbitrage.Althoughtakingadvantageoflowerwagesabroad,especiallyinpoorcountries,hasbeenimportant,inpracticeMNCsconsidermanyfactorswhentheythinkoflocatingactivitiesoffshore.AstudybyBostonConsultingGroupin2011(Economist,2011f)foundthatpayforfactoryworkersinChinaincreasedby69percentbetween2005and2010.Oncurrenttrendsofannualwagegrowthof17percentinChina,modestappreciationinthevalueofChinesecurrencyandexistingproductivitygrowthrates,by2015,theyargue,manufacturersproducingforconsumptioninAmericawillbeindifferenttolocatinginAmericaorChinaoncostgrounds.Factoriestaketimetobuild.ThebehaviourofMNCshasthereforealreadystartedtofactorinsuchtrends.CaterpillarandNCRhavealreadybeguntomovesomemanufacturingfromabroadbacktotheUSA.GeneralMotorsisinvestingUS$2billionandadding4,000jobsat17Americanplants.Complexsupplychainsatriskofdisruption,energyprices,inventorycostsassociatedwithimportingallrequireconsideration.

Theseshiftsarenotalwaysaseasyorrapidasmadeoutinthebusinesspress.Forexample,intheareaofconsumerelectronics,whenfirmsmovedproductiontoAsiatheycreatedasupplierbaseandinfrastructurethatwouldnowbehardtoreverse.DespiterapidlyrisingwagesinIndia,productivitygrowthmeansthatthesoftwareandback-officeoffshoringindustryissimilarlyexpectedtoretaincostadvantagefortheforeseeablefuture.Infosys,India’smostcelebratedITcompany,earnsonly1.2percentofitsrevenueintheIndianmarket,earning375percentmorefromoverseasexportsthanindomesticoperations.SodespiteInfosys,WiproandTataConsultancyServices,itistheUSfirmIBMthatistheleadingproviderofITservicestoIndiancompanies(Economist,2009a).

Whateverthedrivingfactors,wearenonethelesswitnessingtheglobaltransferofwork–eitherintermsofthecreationofnewjobsorthroughtheglobalsourcingofcertainpartsofanindividual’sorunit’swork.Thisishavingamajorimpactonthetypeoforganisationsandnatureofworkthatremainviableindifferentpartsoftheworld.Inthefirstwaveofglobalisationtwodecadesago,low-levelmanufacturingworkbegantotransfertolow-costlocations.Inthesecondwave,simpleserviceworksuchascredit-cardprocessingbegantorelocate.Inthethirdwave,higher-skillwhite-collarworkisbeingtransferred.

CD26860.indb 7 17/08/2011 09:54

International Human Resource Management8

what is international human resource management?

InalltheseMNCsorMNEs,HRMisakeytosuccess.Forthevastmajorityoforganisations,thecostofthepeoplewhodotheworkisthelargestsingleitemofoperatingcosts.Increasingly,inthemodernworld,thecapabilitiesandtheknowledgeincorporatedinanorganisation’shumanresourcesarethekeytoperformance.Soonboththecostandbenefitsidesoftheequation,HRMiscrucialtothesurvival,performanceandsuccessoftheenterprise.Forinternationalorganisations,theadditionalcomplicationsofdealingwithmulticulturalassumptionsaboutthewaypeopleshouldbemanagedanddifferinginstitutionalconstraintsbecomeimportantcontributorstothechancesofthatsuccess.

Theneedforhumanresourcespecialiststoadoptanincreasinglyinternationalorientationintheirfunctionalactivitiesiswidelyacknowledgedandbecomingeverclearer.ItisimportantnotjusttopeopleworkinginthegiantMNEs,butalsotomanyinsmalltomedium-sizeenterprises(SMEs).Thefreereconomicenvironmentofthetwenty-firstcentury,thereductionofrestrictionsonlabourmovementinareassuchastheEuropeanUnion,andtheadventofnewtechnologyhavecombinedtomeanthatmanyfledglingenterprisesoperateinternationallyalmostassoonastheyareestablished.Itisalsoworthremindingourselvesthatinternationalorganisationsdonothavetobeintheprivatesector.Governmentshavestaffworkingaroundtheworld.ManyinternationalorganisationssuchasthoseintheUNfamily,theOECD,theregionaltradebodies,etchaveemployeesworkingacrossnationalborders.Sodomanycharitiesandreligiousgroups(BrewsterandLee,2006).

Anyreviewofworldeventsoverthelastfewyearswillemphasisetheessentiallyunpredictableandrapidlychangingnatureofpolitical,economicandsocialupheavals.Vaill(1989;p2)usedthemetaphorof‘permanentwhitewater’todescribethenatureofdoingbusinessinthelatterpartofthetwentiethcentury:

Mostmanagersaretaughttothinkofthemselvesaspaddlingtheircanoesoncalm,stilllakes...Sure,therewillbetemporarydisruptionsduringchangesofvarioussorts–periodswhentheywillhavetoshoottherapidsintheircanoes–butthedisruptionswillbetemporary,andwhenthingssettlebackdown,they’llbebackinacalm,stilllakemode.Butithasbeenmyexperiencethatyounevergetoutoftherapids!

Managersworkinginaninternationalenvironmentareobviouslymoresubjecttotheimpactofmulti-country,regionalandglobalchangeanddynamismthanmanagersinasingle-countryoperation.AndthisappliestoHRmanagersasmuchasanyothers(Stiles,2006).Hardlysurprisingly,choicesinthiscontextbecomecomplexandambiguous.

HRMprofessionalswhocontemplateinternationalisationtypicallyneedtoaddressthefollowing:●● Dowehaveastrategyforbecominganinternationalfirm?●● Whattypeofmanagerswillweneedtobesuccessful?Andhowdowefindordevelopthem?

CD26860.indb 8 17/08/2011 09:54

International Human Resource Management: An Introduction 9

●● HowcanIfindoutaboutthewaythatHRMisconductedinothercountries:thelaws,tradeunions,labourmarket,expectations,etc?

●● Whatwillbetheimpactoflocalculturalnormsonourhome-basedwaysofworking?Canweusealloranyoftheminothercountries?

●● Howwillwechoosewhethertosendexpatriatesoruselocalemployees?●● Howdowemanageinternationalmovesifwechoosetosendsomepeopleoutfromhome?

●● Howdowemanageknowledgeacrossgeographicalandculturaldistance?

Theadditionalcomplexitiesofmanaginganinternationalworkforceinanyoftheseorganisationscallforadifferentmindsetanddifferentskillsforpractitioners.ApublicationfortheCharteredInstituteofPersonnelandDevelopment(CIPD,2002)arguedthatindividualsworkinginaninternationalcontextneedtobecompetentin:●● interpersonalskills(especiallyculturalempathy)●● influencingandnegotiatingskills●● analyticalandconceptualabilities●● strategicthinking

andthattheywillalsoneedabroaderbaseofknowledgeinsuchareasas:●● internationalbusiness●● internationalfinance●● internationallabourlegislation●● locallabourmarkets●● culturaldifferences●● internationalcompensationandbenefits.

Furthermore,andtocompleteforamomentthelistofcomplexitiesthatinternationalisationaddstotheroleofHRmanagers,theywillhavetomanageawidersetofmultiplerelationships.HRmanagersintheEuropeancontext,forinstance,mightfindthemselveshavingtodealwithsuchgroupsas:●● headquarters,regionalandsubsidiarylinemanagers●● headquartersandsubsidiaryemployees●● national,European-levelandinternationaltradeunionbodies●● nationalandEuropean-levellegislativebodies●● localandregionalcommunities.

Fromthemid-1980stotheturnofthe1990sthefieldofIHRMwasconsideredtobeinits‘infancy’(Laurent,1986).Sinceitsearlybeginnings,therehasbothanevolutionofterritorycoveredbytheIHRMfieldaswellasmorecriticaldiscussionofwhetherthisevolutionhasbeentowardsanexpandedfield,orrepresentsaprocessoffragmentation.

CD26860.indb 9 17/08/2011 09:54

International Human Resource Management10

Scullion(2005)trackedtheevolutionofdefinitionsofIHRM.Heobservedthatalthoughtherehasbeenlittleconsensus,definitionshavebroadlyconcentratedonexaminingtheHRMissues,problems,strategies,policiesandpracticeswhichfirmspursueinrelationtotheinternationalisationoftheirbusiness.Schuleret al(2009)similarlyrecentlypositionedthedifferentviewsthathaveexistedaboutthenatureofIHRM.

DEFINITIONS OF IHRM

IHRM encompasses:

‘. . . the worldwide management of people in the multinational enterprise’ (Poole, 1990; p1)

‘. . . human resource management in an international environment . . . problems created in an MNC performing business in more than one country, rather than those posed by working for a foreign firm at home or by employing foreign employees in the local firm’ (Briscoe and Schuler, 2004; p1)

‘. . .how MNCs manage their geographically dispersed workforce in order to leverage their HR resources for both local and global competitive advantage’ (Scullion, 2005; p5)

‘. . . a branch of management studies that investigates the design of and effects of organisational human resource practices in cross-cultural contexts’ (Peltonen, 2006; p523)

‘. . . all issues related to the management of people in an international context [including] human resource issues facing MNCs in different parts of their organisations [and] comparative analyses of HRM in different countries’ (Stahl and Björkman, 2006; p1)

‘. . . complex relationship between globalisation, national systems and companies [which provides us with] three distinct “levels of analysis” for interpreting and understanding HRM strategies and practices [the globalisation effect, the regional and national effect, and the organisation effect]’ (Edwards and Rees, 2008; p22)

‘. . . the subject matter of IHRM [must be] covered under three headings: cross-cultural management; comparative human resource management; and international human resource management’ (Brewster et al, 2007, p5)

‘. . . how MNCs manage the competing demands of ensuring that the organisation has an international coherence in and cost-effective approach to the way it manages its people in all the countries it covers, while also ensuring that it can be responsive to the differences in assumptions about what works from one location to another’ (Dickmann et al, 2008; p7)

‘. . . the ways in which the HRM function contributes to the process of globalisation within multinational firms’ (Sparrow and Braun, 2008; p96)

‘. . . the implications that the process of internationalisation has for the activities and policies of HRM’ (Dowling et al, 2008; p293).

reflective activity

Look at the sequence of definitions used above to define what IHRM is about. How do the definitions change over time? What do these changing definitions tell you about the sorts of knowledge – and the theoretical understanding – that might be important for the field and that should be incorporated into a textbook like this?

CD26860.indb 10 17/08/2011 09:54

International Human Resource Management: An Introduction 11

structuring the f ield into three components

Howarewetostarttheprocessofunderstandingallthiscomplexity?Thefirststepistobeclearaboutdifferentkindsofanalysis.Thesearenotalwaysdefinedintheliterature–partlyperhapsbecauseofaconfusionintheUSA,where‘international’isoftenappliedtoanythingoutsidetheUSA.However,generally,thesubjectmatterofIHRMiscoveredunderthreeheadings:●● cross-culturalmanagement●● comparativeHRM●● IHRM.

Inbroadterms,authorsinthecross-culturaltraditionarguethateverynationhasitsownuniquesetsofdeep-lyingvaluesandbeliefs,andthatthesearereflectedinthewaysthatsocietiesoperate,andinthewaysthattheeconomyoperatesandpeopleworkandaremanagedatwork.ThecomparativeHRMtraditionfocusesmorespecificallyonthewaythatpeopleworkandexploresthedifferencesbetweennationsinthewaythattheymanagethisprocess.Ingeneral,thecomparativetraditionmakesmoreoftheinstitutionaldifferencesthantheculturaldifferences.InternationalHRM(anditsmorerecent‘strategic’derivative,SIHRM)examinesthewayorganisationsmanagetheirhumanresourcesacrossthesedifferentnationalcontexts.

cross-cultural management

Akeyfactorintheincreasinginternationalisationofemploymentisthatthereareculturaldifferencesbetweennations–differencesinnationalvaluesandattitudes.ManyofushavestereotypesoftaciturnFinns,ebullientSpaniards,work-obsessedAmericans,politeJapanese,modestMalays,etc.Thesearestereotypes:eventhoughthenextFinnwemeetmaybeloudandconfident,thenextSpaniardquietandreserved,andsoon,theyindicatereal,general,truths.Thereisnowplentyofresearchevidence(seeChapter2)thatdifferentnationalitiesdohavedifferentvaluesandthattheseaffectthewaypeopleorganise,conductandmanagework.AnawarenessofculturaldifferencesisthereforeanessentialpartofaninternationalHRmanager’sbrief.ThenormalHRMactivitiessuchasrecruitmentandselection,traininganddevelopment,rewardandperformanceappraisal,mayallbeaffectedbyculturalvaluesandpracticesintherespectivehostcountries.Asaresult,greatcaremustbetakenwhendecidingwhetherornottoadoptstandardisedHRMpoliciesandpracticesthroughouttheworld.

comparative human resource management

ThedistinctionbetweencomparativeHRMandIHRMwasclearlymadebyBoxall(1995).ComparativeHRM(CHRM)explorestheextenttowhichHRMdiffersbetweendifferentcountries–oroccasionallybetweendifferentareaswithinacountryordifferentregionsoftheworld,suchasNorthAmerica,thePacificRimstatesorEurope(BrewsterandLarsen,2000).Weknowthatcountriesmaybesmallorlarge,havemoreorfewerregionaldifferences,include

CD26860.indb 11 17/08/2011 09:54

International Human Resource Management12

oneormanylanguagegroups,andbemoreorlesseconomicallydeveloped.Moreimmediatelyweknowthattheymayhavedifferentlabourmarketsandeducationsystems,differentemploymentlawsandtradeunions,andthedifferentculturalexpectationsthatwehavealreadynoted.Itshouldbenosurprise,therefore,tofindthatemploymentsystemsdiffernoticeablybetweencountriesandthatmanaginghumanresourceshastovaryfromcountrytocountry.

Asshouldalreadybeclear,‘HRM’isatermwithwidelydisputeddefinitions:manybooksandarticleshaveattemptedtopinpointitsmeaning.Onelessoftenexploredsourceofvariationarisesfromnationaldifferences.TheconceptofHRMitselforiginatesinandbuildsonaparticularviewoftheworld,aviewinitiallyfromtheUSA.AsLegge(1995;pxiv)putitinhertypicallytrenchantway:

WhytheappealofHRM’sparticularrhetoric?Becauseitslanguage...celebratesarangeofveryWASP[WhiteAnglo-SaxonProtestant]values(individualism,workethic,thoseoftheAmericanDream)whileatthesametimemediatingthecontradictionsofcapitalism.

OthercountrieshavebeenmoreresistanttothenotionofHRM,eithertakingitupasaconceptmuchlaterorstayingwiththe‘personnelmanagement’label.Itisnotable,forexample,thattheEuropeanandtheworldprofessionalbodiesstillcallthemselves,respectively,theEuropeanAssociationofPersonnelManagementandtheWorldFederationofPersonnelManagementAssociations.Thisisnotaquestionofbackwardness:theNewZealandassociationisoneofthemostmodern,butstillusesthePersonnelManagementtitle.Inmanycases,the1990sandthefirstdecadeofthetwenty-firstcenturysawacademicsandconsultantsinacountrytakingupthetermwhilepractitionersinthesamecountryremainedstubbornlyattachedto‘personnel’asthetitleoftheirareaofwork.

Whereassomecommentatorslookforuniversalissues,othersaremoreconcernedaboutunderstandingtheirlocalcontingencies.ResearchersintheUSAtypicallyassumethatthefocusofHRMisonthewell-beingoftheorganisation.Ontheotherhand,inmanyothercountries,commentatorstendtobemorecriticalandtotakeaccountofanumberofstakeholderswhoseinterestsdonotalwaysoverlap–andtheyarelessthancommittedtotheideathattheshareholders’interestsarealwaysparamount.Thisissummedupinaquotation(Storey,1995;p23)aboutthewayHRMispresentedinUStexts:

IbelieveHRMtobeamoralandanti-social,unprofessional,reactive,uneconomicandecologicallydestructive.

Evenwhentheterminologyhasbeenadopted,weshouldnotassumethatthesubjectmatterisuniformacrosstheworld.WhenthemultinationalteaminvolvedinrunningtheCranetsurveysonHRMpolicyandpractice(Tregaskiset al,2003)mettodecideontheareastheirsurveywouldcover,therewasfarfromtotalunanimityinunderstandingthenatureofthetopic.‘Where,’theSwedishcolleagueswantedtoknow,‘arethequestionsabouttherelationshipoftheorganisationtothenaturalenvironment?’TheysawthisasanelementoftheHRMrole.Germancolleagueswantedmoreontheroleofworkscouncils,

CD26860.indb 12 17/08/2011 09:54

International Human Resource Management: An Introduction 13

Frenchcolleaguesmoreonthesocialenvironment.WhentheJapanesejoinedthenetwork,theyfeltthatdespitetheimportanceofnationalcomparisonstheycouldnotuseallofthequestions,someofwhichwouldbeperceivedastoointrusive.

ResearchintheCHRMfield,then,whichhasgenerallybutnotexclusivelybeenofmoreinteresttoEuropeanresearchers,hastypicallyincorporatedacountrycomparisonperspective.

ThebulkofworkintheCHRMfieldhasthusconcentratedonthenatureandimpactofinstitutionaldifferencesbetweencountries,theconsiderationofwhichHRMpracticesaremoreorlessculturallysensitive,andanempiricalexaminationofpatternsofconvergenceordivergenceinHRMpracticesacrossnationalborders.TheCHRMfieldhascoveredcomparisonsofmanagementpracticesacrossdifferentculturesandnationsandstudiesthatlookatmanagementinspecific(single)countries.Itconcentratesonhowpeoplearemanageddifferentlyindifferentcountriesbyanalysingpracticeswithinfirmsofdifferentnationalorigininthesamecountryorcomparingpracticesbetweendifferentnationsorregions.

international human resource management

IHRMhastraditionallyexaminedthewayinwhichinternationalorganisationsmanagetheirhumanresourcesacrossthesedifferentnationalcontexts.EarlyresearchinthefieldofIHRMreflectedthatinthebroaderfieldofinternationalmanagement,andfocusedontheroleofMNCsandMNEs.ResearchhassincefocusedonunderstandingthoseHRMfunctionsthathadtochangewhenfirmswentinternational.Findingandnurturingthepeopleabletoimplementinternationalstrategywasseenascriticalforsuchfirms,andconsiderableattentionwasgiventothemanagementofexpatriates.

Theorganisationthatmanagespeopleindifferentinstitutional,legal,andculturalcircumstanceshastobeawarenotonlyofwhatisallowedandnotallowedinthedifferentnationsandregionsoftheworld,butalsoofwhatmakesforcost-effectivemanagementpractices.Totakeoneoften-quotedexample:aperformanceappraisalsystemwhichdependsuponUS-styleopennessbetweenmanagerandsubordinate,eachexplainingplainlyhowtheyfeeltheotherhasdonewellorbadlyintheirjob,mayworkinsomeEuropeancountries.However,

TYPICAL QUESTIONS ASKED BY COMPARATIVE RESEARCHERS

How is HRM structured in individual countries? What strategies are discussed? What is actually put into practice? What are the main differences and similarities between countries ? To what extent are HRM policies influenced by national factors such as culture, government policy, and educational systems?

CD26860.indb 13 17/08/2011 09:54

International Human Resource Management14

itisunlikelytofitwiththegreaterhierarchicalassumptionsand‘loss-of-face’fearsofsomeofthePacificcountries.Itmayevenbeunlawfulinsomestates.Theliteratureisrepletewithexamplesofsuchhome-countrypracticesthatmaybeallowedinothercountriesbutwhichdepressratherthanimproveproductivityandeffectiveness.

OrganisationsthataddressIHRMthereforehavetodealnotjustwithavarietyofpracticesbutalsowitharangeofpolicyandevenstrategyissues.IHRMexploreshowMNEsmanagethedemandsofensuringthattheorganisationhasaninternationalcoherenceinandcost-effectiveapproachtothewayitmanagesitspeopleinallthecountriesitcovers,whileatthesametimeensuringthatitisresponsivetothedifferencesinassumptionsandinwhatworksfromonelocationtoanother.Thisincludes,inparticular,themanagementofthosepeoplewhohavetoworkinternationally.IHRMresearchhasalsoidentifiedtheimportantcontingenciesthatinfluencedtheHRMfunctionasitbecamemoreinternationalised,suchasthecountrythattheMNCoperatedin,thesizeandlife-cyclestageofthefirm,andthetypeofemployee(parent-companynational,home-countrynationalandthird-countrynational).IHRM,then,isfocusedonhowdifferentorganisationsmanagetheirpeopleacrossnationalborders.

Theinternationalcontextaddsextracomplexitytothemanagementofpeoplebeyondthatfoundinapurelynationalsetting.IHRMhasthesamemaindimensionsasHRMinanationalcontext,butisunderstoodtooperateonalargerscale,withmorecomplexstrategicconsiderations,morecomplexco-ordinationandcontroldemands.SomeadditionalHRMfunctionswereconsiderednecessarytoaccommodatefouradditionalpressureswhengoinginternational(Dowlinget al,1998):●● theneedforgreateroperatingunitdiversity●● moreexternalstakeholderinfluence●● higherlevelsofriskexposure●● morepersonalinsightintoemployees’livesandfamilysituations.

how is the overall f ield of ihrm evolving?

Whatdoesthissequenceofdefinitionstellus?Therehavebeenthreedirectionsoftravel:●● agrowinginfluenceofaninstitutionalperspective●● acriticalperspectiveonIHRM●● aproblem-solvingperspectiveonIHRM.

Recently,Delbridgeet al(2011)editedaspecial issueofHuman Relationson‘Beyondtheenterprise:BroadeningthehorizonsofinternationalHRM’,situatingIHRMwithinwidereconomic,organisational,politicalandinstitutionalcontexts.Thecriticalperspectiverunsasfollows(Peltonen,2006;DeCieriet al,2007;Hippler,2008;Delbridgeet al,2011).Thefieldisvery

CD26860.indb 14 17/08/2011 09:54

International Human Resource Management: An Introduction 15

fragmented.Themajorityoftheoriesthatthefielddrawsupon–asis indeedmadeclearthroughoutthischapter–havebeencreatedoutsidethefieldofIHRM.Thishasbeenreflectedinadegreeofexperimentationandabstractnessintheissuesthataretypicallycovered.DeCieriet al(2007)arguethatglobalisation–whenseenintermsoftheworldwideflowofcapital,knowledgeandotherresourcesnecessarytointerconnectinternationalproductmarkets–isassociatedwithconcomitantprocessesinvolvedinthegrowthinscopeandscaleofcompetition.IHRMacademicsarethereforeforcedtounderstandthe(many)waysinwhichMNEsoperateeffectively.Ratherthanleadingtoanyintegrationofideas, imitationofideasfromoutsideHRMbecomesmoreimportant.Ifyoulookatwhatisbeingsaidbyacademicsandresearchers,moreandmoreattentionisbeinggiventothepoliticsofglobalisationandtheimportanceof localcontext.

Rather than attempt to integrate ideas and claim that there canbeall-encompassing approaches to the studyof IHRM, the critical view arguesthatwe shoulddraw reference from theory in existingpractices anddisciplinesthathelp explain the complexproblems (andoftendysfunctional impacts)facedwhen trying tomanage acrossnational boundaries.As attention turnsfromunderstanding thepolicy andpracticeneeded tomanage internationalcadresof people, and internationalisingorganisations, towards theneed tounderstand anyoneHRMpolicy andpractice in its broader international orinstitutional context,many academicfields argue that theyhave something tosay about thephenomenaof IHRM.Thecritical viewof IHRM is (Sparrow,2009; p7):

anacknowledgementthatweareexaminingorganisationalissuesthatareofhighcomplexity,inanenvironmentofchangingcontext,andwithquestionableassumptionsabouttheexistenceofrulesofthepastthatcanbegeneralisedtofutureactions,andthereforeconcernsthattherearetoomanypredictableandcontingentsolutionsthatcanhelporganisationsexplainhowbesttheycansolveIHRMproblems.

Thereis,then,stillanevolutionaryviewofthefield(StahlandBjorkman,2006;SparrowandBraun,2008;Dickmannet al,2008;Sparrow,2009).Byfollowingaproblem-solvingapproachtoIHRM–iebyfocusingontheprogressiveissuesthathavebeencreatedintheconductofbusinessoperationsasaconsequenceofinternationalisation–thisperspectiveseesIHRMasentailinganexplainablesetofexplorations(Sparrow,2009,p4):

IHRMhasmovednotthroughahaphazardandopportunisticexpansion,butthroughasequentialdevelopmentofthinkingthathascapturedthesuccessivelyevolvingcultural,geographicalandinstitutionalchallengesfacedbythemultinationalcorporation...WhilstIHRMindeednowcoversalargeandcomplexterritory,ithascometorepresentanacceptedsetofdoctrineaboutthenatureofIHRM...Thereisalogicalpatterntothe‘issues-driven’concernsthatthefieldofIHRMhastoface,absorb,interpret,thenreanalysethroughinternationallenses...withanumberofcontemporaryissues–reverseknowledgeflows,skillsupplystrategies,

CD26860.indb 15 17/08/2011 09:54

International Human Resource Management16

employerbranding,e-enablement,outsourcing,globalnetworks–nowneedingtofind[more]voicewithintheliterature.

Theproblem-solvingperspectiveacknowledgesthatthereisanincreasinglycomplexsetofcontextualfactorsatplay,butalsoconsidersthattheIHRMfieldhasexpandedinparallelwith–andhasbeendrivenbythedrumbeatof–progressiveproblemsofinternationalisation.Theseproblemshaveundoubtedlybecomemoredeeplyembeddedwithinorganisations.

an outline of the book

Followingthisintroductorychapter,thetextisdividedintothethreeareasoftheorywehavealreadyidentified,andasectionexaminingnewdevelopmentsandtheroleofHRM.

Part Onedealswithcross-cultural management.●● Chapter 2 The impact of national culture definesthemeaningofculture,outlinestheliteratureonculturaldifferences,andexplorestheextenttowhichaspectsofworkpracticesarenationallyorlocallybased.Itusessomepreviouslydevelopedframeworksandappliesthesetotheworldofwork.

●● Chapter 3 Culture and organisational lifecontinuesthisexploration,lookingattheimplicationsofoperatingacrossnationalculturesforconceptsofbusiness,managementandHRM.ItfirstexaminestheimpactofcultureonorganisationalbehaviourandHRM.Itthenexaminesconceptsofleadership.Theextenttowhichnationalcultureshavedifferentstylesofleadershiparediscussed,andwhetherorganisationscancreategloballeaders.Finally,itconsidersthedebatesaboutthenatureofculturalintelligence.

Part Twoaddressestheissueofcomparative human resource management.ThereisanoveralltheorychapterandthenaseriesofchaptersexploringthewaythatdifferentaspectsofHRMpracticesvaryacrossnationalboundaries.ItisimportantthatreadersunderstandthatinthesetopicsthereisnolongerasimpledividebetweencomparativeandinternationalHRMmodules.ManyofthetopicsandissuescoveredunderacomparativethemewouldfindrelevanceonacourseoninternationalHRM.Toprovideanexample:inthechapteronRecruitment and selection,thediscussionoftheimpactofcultureonpracticesisusedtoshowhowanin-countrybusinesspartnerofanMNEhastounderstandthelocalcomplexitiesofpractice–atopiceasilytaughtunderanIHRMbanner.Similarly,thecoverageofnewdevelopmentsinglobalmobilityandresourcinginthatchaptercouldwellbetaughtalongsidetraditionalIHRMtopicsofexpatriation.Wehaveadoptedthisstructuretobestorganisethematerial,butstressthattheconceptualdividebetweenPartsTwoandThree–andtherelativenumberofchaptersineachPart–shouldnotbeseenasindicativeofthebestwaytoeitherteachorlearnaboutthesetopics.IntheworldofactualHRMpractice,thetwoperspectivesareinherentlyinterconnected.PartTwo,therefore,concentratesprincipallyonkeyHRMfunctions.

CD26860.indb 16 17/08/2011 09:54

International Human Resource Management: An Introduction 17

●● Chapter 4 Comparative HRM and institutional influencesidentifiesthedifferencesbetweentheuniversalistandthecontextualistparadigmandexploresthecontextualdeterminantsfordifferencesincountry-levelHRMpractices.AttentionispaidtothedifferentemploymentlawandinstitutionalcontextswithinwhichHRMspecialistshavetooperate.Thischapteralsoexplorestheattemptsthathavebeenmadeto‘group’countriesinrelationtosimilaritiesofHRMpractices,exploreswhetherHRMindifferentcountriesisconvergingasaresultofglobalisationand,giventheoriginofthenotionofHRMintheUSA,exploreshowfarHRMprescriptionsfromtheUSAmightapplyintherestoftheworld.

●● Chapter 5 Employee relations and communicationexplorestherangeofstructuresofemployeerelationscommoninEuropeandaroundtheworld.Itexaminesthedifferencesinthemeaningandroleofunionsandotherrepresentativeemployeebodies.Itdrawsattentiontotheroleofhistory,nationalculturesandlegalinstitutionsininfluencingthesestructuresandbodies,andsignalswhatthismeansforthemanagersofpeople.

●● Chapter 6 The organisation of workisanewchapterthatintroducesthetopicofworkorganisationandreviewsinternationalvariationinpracticesofdirectcommunication.ItconsidersTaylorismandotherbroader-basedalternatives.Itexamineshowthesealternativesareappliedindifferentcountriesandexplainsthebasesofcross-nationalcomparativevariationinworkorganisation.

●● Chapter 7 Flexibility and work–life balanceexplorestrendsintheissueofflexibleworkingpracticesandpatterns.Flexibleworkingpracticesincludethedevelopmentofsuchapproachesaspart-timeemployment,short-termemploymentandahostofothernon-standardworkingforms.Itexploresthesimilaritiesanddifferencesintheuseandmeaningofsuchpracticesacrossnationalboundariesandconsiderstheimpactofthesepracticesatnational,employerandindividuallevels,aswellastheimplicationsforHRMspecialists.Finally,itlooksatdevelopmentsconcerningwork–lifebalanceinaninternationalcontext.

●● Chapter 8 Recruitment and selectionexploresandcomparessomeofthewaysinwhichorganisationsacrossdifferentcountriesactinordertoobtainandretainthekindsofhumanresourcestheyneed.Thechapterexaminestheresourcingprocess:makingsuretheorganisationhaspeopleoftherightquality.ItthereforelooksfirstatrecruitmentandselectionandconsidersthewaysinwhichculturecanbeseentoinfluencesuchlocalHRMpractices.However,muchinternationalrecruitmenttodayiscarriedoutinthecontextofglobalresourcingstrategiesandincreasinglygloballabourmarkets.Thechapterthereforealsolooksatglobalskillsupplystrategiesandtheroleofrecruitmentintheinternationalisationoftheorganisation.Finally,itintroducessomeofthequestionsthatthesedevelopmentsraiseabouttherecruitmentofinternationalemployees.

●● Chapter 9 Performance managementisanewchapterwhichdefinesperformancemanagementandperformanceappraisal,andprovidesanoverviewoftheirWesternorigins.TypicalapproachestoperformancemanagementwithinMNCsaredescribedwithreferencetotheelementsofplanning,managingandreviewing.Thechapterthenconsidersthefactors

CD26860.indb 17 17/08/2011 09:54

International Human Resource Management18

whichimpactonperformancemanagementindifferentcontextsandpresentsacomparativeanalysiswhichincludestheinfluenceofculture.

●● Chapter 10 Rewardsexploresthenatureofrewardsandthedifferentbasesofpay.Itconsidersanumberoftheoreticalperspectivesimportantforthestudyofrewardssuchasagencytheory,sociallyhealthypayanddistributivejustice.Thelinksbetweennationalcultureandrewardspracticeareexploredandattentionisgiventotheinternationaldifferencesintheincidenceofpayforperformanceandcomparativeevidenceonbestpractice.

●● Chapter 11 Training and developmentidentifieskeytrends,similaritiesanddifferencesatcountrylevelinrelationtovocationaleducationandtrainingsystems.Italsoexploresworkplaceandon-the-jobtraining.Finally,attentionisgiventomanagementdevelopmentandcomparativeexperiencesofthis.

●● Chapter 12 The role of HRM departmentslooksatsimilaritiesanddifferencesatcountrylevelinrelationtothemeaningofHRM,theroleofthenationalinstitutes,andtheroleoftheHRMdepartmentintermsofissuessuchasstrategicintegrationanddevolvement.ThechangingnatureofHRMisbrieflyconsidered,butparticularattentionisgiventotheroleoflinemanagementinHRM.

Part Threeofthebookdealswithinternational human resource management,thewaythatdifferentorganisationsrespondto,dealwithandexploitthedifferentculturalandnationalinstitutionalcontextswithinwhichtheyhavetooperate.●● Chapter 13 International HRM: theory and practicebeginsbyexaminingthedifferentlevelsofanalysisacrosswhichglobalisationmightbestudied.ItcoverssomeofthemainmodelsthathaveinfluencedthefieldofIHRM,suchaslifecycle,organisationdesignandcontingencymodels.ItthenreviewstheoreticalperspectivesinthefieldofstrategicIHRM(SIHRM).

●● Chapter 14 Managing expatriationconsidersthemostwidelydiscussedaspectofinternationalHRMactivities–managingpeopleoninternationalassignments.Itexamineshowinternationalassignmentslinktoanorganisation’sinternationalstrategyandevaluatesthemaintrendsinthenatureofexpatriation.Itlooksatthewholeexpatriatemanagementcycle,givingparticularattentiontotheoryversuspracticeininternationalmanagerselection.Theantecedentstoadjustmentininternationalassignmentsareconsidered,asisthechallengeofdesigningappropriatepre-departurepreparationprogrammesforexpatriates.Finally,theissueofrepatriationisexamined.

●● Chapter 15 Managing diversity in international forms of working●addressesissuesofdiversityininternationalorganisations.Thischapterexaminesthevariousformsofinternationalworkingandassessestheprosandconsforinternationalenterprisesofusingeachform.Itconsiderswhatshouldbeinvolvedinmeasuringthevalueofinternationalassignments.Attentionisgiventothestrengthsandweaknessesofvariousformsofdiversityinitiativesininternationalorganisations,andhoworganisationscouldincreasethenumberofwomenininternationalmanagement.Theproblemsofassessingperformanceininternationalworkarediscussed.Finally,thechapterexaminesthechallengeofmanaginginternationalmanagementteams.

CD26860.indb 18 17/08/2011 09:54

International Human Resource Management: An Introduction 19

●● Chapter 16 Globalising international HRM and contemporary challenges.InthelastchapterweexaminesomeoftherecentactivitiesinMNCsastheycontinuetoattempttoglobalisetheirHRMprovision.WediscusstheadoptionofglobalHRMdeliverymodels,thee-enablementofHRMprocessesonaglobalbasis,andtheuseofintegrationmechanismssuchasglobalknowledgemanagementstrategies,managementthroughglobalnetworks,andthepursuitofglobaltalentmanagement,strategicworkforceplanning,andemployerbranding.

●● Much of our initial understanding about IHRM was traditionally based on the study of multinationals (MNCs).

●● Definitions of IHRM have concentrated on examining the HRM issues, problems, strategies, policies and practices which firms pursue in relation to the internationalisation of their business.

●● The additional complexities of managing an international workforce in organisations that are internationalising call for a different mindset and different skills for practitioners.

●● Internationalisation is also becoming more widespread. The levels of foreign direct investment can be huge – over $1 trillion a year – although these developments are always fraught with risks and uncertainties.

●● There are continental shifts occurring in the focus of this economic activity, leading to new patterns of mobility and trade, and MNCs dominated by new mindsets and approaches.

●● We are also witnessing the global transfer of work – either in terms of the creation of new jobs or through the global sourcing of certain parts of an individual’s or unit’s work. This is having a major impact on the type of organisations and nature of work that remain viable in different parts of the world.

●● Rather than just studying the operation of MNCs, the subject matter of IHRM is best covered under three headings: cross-cultural management, comparative human resource management, and international human resource management.

●● These three fields each show that there is an increasingly wide set of contextual factors at play. Each field has expanded in depth, in parallel with the progressively complex problems of internationalisation. We devote a separate Part of the book to each approach.

ke

y l

ea

rn

ing

po

ints

learning questions

1 From your experience and study of the subject, what do you consider to be the key elements of ‘best practice’ in HRM? To what extent can these be applied on a global level? Identify the reasons underlying your arguments.

2 Imagine that you are a HR manager in a domestically based company that has decided to operate internationally. You have been charged with sorting out the HR effects of the decision. What questions should you be asking?

CD26860.indb 19 17/08/2011 09:54

International Human Resource Management20

NE

WS

ex

plo

re

fu

rth

er

The following websites provide useful information:

The United Nations Conference on Trade and Development (UNCTAD) website can provide updated information on transnational organisations: http://www.unctad.org/

OECD guidelines for multinational enterprises: http://www.oecd.org/department/0,3355,en_2649_34889_1_1_1_1_1,00.html

CIPD International Research: http://www.cipd.co.uk/research/_inthrm.htm

CD26860.indb 20 17/08/2011 09:54