Chapter 01 IHRM

Chapter 1
For use with International Human Resource Management 6e

By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr.
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INTRODUCTION
Chapter 1
Click on an item to
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INTRODUCTION
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cover below to
return to this table
of contents.
Vocabulary
Objectives
Scope of book
Defining IHRM
Domestic vs. international
Variables that moderate the differences
The cultural environment
Industry type
Extent of MNE reliance on HC market
Senior mgmt. attitudes to international ops.
Applying a strategic view of IHRM
The changing context
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START
HRM, IHRM
PCN, HCN, TCN
MNE
expatriate = international assignee, inpatriate
repatriation
equity issues
psychological contract
culture shock
convergence/divergence hypotheses
Porters value chain model
index of transnationality
global mindset
asymmetric events
environmental dynamics
organizational culture
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Vocabulary
Objectives
1. Define IHRM and key terms
2. Introduce & review expatriate assignment mgmt.
3. Outline differences between domestic & IHRM
4. Detail a model that captures these differences

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5. Discover complexity & increasing challenges to

existing IHRM practices and models

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Scope of book

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Figure 1.1
Inter-relationships between approaches to the field

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Defining international HRM
HRM activities
1. Human resource planning
2. Staffing: recruitment, selection, placement
3. Performance management
4. Training & development
5. Compensation & benefits

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6. Industrial relations
Morgans 3-D definition of IHRM

1. The HR activities of
procurement, allocation & utilization
2. The countries where IHRM occurs:
Host-country where subsidiary may be located

Parent-country where firm is headquartered
Other-countries that may be
source of labor, finance & other inputs
HCNs (host country nationals)

PCNs (parent ..
..
)
TCNs (host
..
..
)
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3. The employees of an international firm:

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Figure 1.2
International assignments create expatriates
Stahl-Bjrkman-Morris def. of IHRM

The field of IHRM covers
All issues related to firm outcomes
A wide range of HR issues facing MNEs in
different parts of their organizations

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This definition includes comparative analyses

of HRM in different countries.

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Domestic vs. international
IHRM is more complex than

domestic HRM
IHRM has
1. more HR activities
2. a need for a broader perspective
3. more involvement in employees personal lives

4. changes of emphasis as
the mix of expatriates & locals varies
6. broader external influences
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5. more risk exposure
IHRM has international HR activities

International taxation
International relocation & orientation
Administrative services for expatriates

Host-government relations

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Language translation services
International relocation involves:

Arranging for pre-departure training
Providing immigration & travel details
Providing housing, shopping, medical care,

recreation & schooling information
Finalizing compensation details such as:

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Delivery of salary overseas

Determination of overseas allowances
Taxation treatment

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Variables that moderate the differences
Four more moderators

in addition to IHRM complexity
1. The cultural environment
2. The industry(ies) with which the MNE is
primarily involved
3. The extent to which the MNE relies on
its HC domestic market

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4. The attitudes of senior management

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Figure 1.3
A model of all 5 variables that moderate the differences
between domestic and international HRM

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The cultural environment
Culture matters
Culture shock
Emic etic
Convergence hypothesis research

tends to focus on macro level
Divergence hypothesis research
tends to focus on micro level

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The international HR manager must be

aware of cultural differences

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Industry type
The MNE industry type continuum

An MNE performs somewhere in this range:
Multidomestic Industries
International strategy
Collapses to a
series of domestic strategies.

airlines, semiconductors, copiers
Must integrate activities on a

worldwide basis.
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Examples
retailing, distribution, insurance
Global Industries
1.
Parent org. recognizes that its HRM reflects

some assumptions & values of own home culture.
2.
Parent org. recognizes that its own peculiar ways are

neither universally better nor worse than others
just different & likely to exhibit strengths & weaknesses,
particularly abroad.
3.
Parent org. recognizes that its foreign subsidiaries may prefer

other ways to manage people ways that are neither
intrinsically better nor worse, but possibly more effective locally.
4.
Headquarters is willing to acknowledge cultural differences &

take steps to make them discussable & therefore usable.
5.
All parties build belief that cross-cultural learning invites

more creative & effective ways of managing people.

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Laurents steps for true IHRM:

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Extent of MNE reliance on HC market

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1
Chapter 2
Table 1.1
The worlds top 10 non-financial TNC, ranked by TNI, 2008a

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Senior management attitudes
What does senior mgmt. think?

Some of the changes required
to truly internationalize HR

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have more to do with a global mindset

than with behaviors.

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Applying a strategic view of IHRM

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Figure 1.4
A framework of strategic HRM in MNEs
Asymmetric events tend to be

Unmatched in our capabilities & plans
Highly leveraged against our particular assets
Designed to
1. Secure leverage against our assets
2. Work around,
Offset, &
negate what in other contexts are our strengths

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3. Be difficult to respond to in a
discriminate & proportionate manner

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The changing context of IHRM
An MNE case study result

MNEs fail primarily because of
a lack of understanding of
the
differences

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in managing human resources

in foreign environments.

Chapter 01 IHRM

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Chapter 01 IHRM

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Chapter 1

For use with International Human Resource Management 6e

Click on the book

For use with International Human Resource Management 6e

5. Discover complexity & increasing challenges to

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

Defining international HRM

5. Compensation & benefits

For use with International Human Resource Management 6e

Morgans 3-D definition of IHRM

Host-country where subsidiary may be located

HCNs (host country nationals)

3. The employees of an international firm:

For use with International Human Resource Management 6e

Stahl-Bjrkman-Morris def. of IHRM

For use with International Human Resource Management 6e

This definition includes comparative analyses

For use with International Human Resource Management 6e

Domestic vs. international

IHRM is more complex than

3. more involvement in employees personal lives

5. more risk exposure

IHRM has international HR activities

Administrative services for expatriates

For use with International Human Resource Management 6e

Language translation services

International relocation involves:

Providing housing, shopping, medical care,

For use with International Human Resource Management 6e

Delivery of salary overseas

For use with International Human Resource Management 6e

Variables that moderate the differences

Four more moderators

For use with International Human Resource Management 6e

4. The attitudes of senior management

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

The cultural environment

Convergence hypothesis research

For use with International Human Resource Management 6e

The international HR manager must be

For use with International Human Resource Management 6e

The MNE industry type continuum

For use with International Human Resource Management 6e

airlines, semiconductors, copiers

Must integrate activities on a

Parent org. recognizes that its HRM reflects

Parent org. recognizes that its own peculiar ways are

Parent org. recognizes that its foreign subsidiaries may prefer

Headquarters is willing to acknowledge cultural differences &

All parties build belief that cross-cultural learning invites

For use with International Human Resource Management 6e

Laurents steps for true IHRM:

For use with International Human Resource Management 6e

Extent of MNE reliance on HC market

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

Senior management attitudes

What does senior mgmt. think?

For use with International Human Resource Management 6e

have more to do with a global mindset

For use with International Human Resource Management 6e