5 Factors Affecting

Approaches to
International Human
Resource Management
(IHRM)
Article shared by Vignesh Rajshekar

Factors affecting approaches to international human resource management (IHRM) are

discussed below:

While these attitudes have been a useful way of demonstrating the various approaches
to staffing foreign operations, it should be stressed that the above categories refer to
managerial attitudes that reflect the socio-cultural environment in which the
internationalising firm is embedded. A number of factors influence the IHRM approach
taken by an MNC.
These include the level of international experience of the firm, the method by which
worldwide subsidiaries are founded, the technology and the nature of the product or
products of the MNC, etc.

Factors
1. The nature of IHRM may be restricted by government policies and legal regulations in
the host country.

This is especially felt in developing countries, where management and technical training
within the host country’s educational system is rudimentary and the local government
views the presence of MNCs as a means of developing local expertise.

2. Culture, particularly national culture at the headquarters, plays a role in determining

IHRM practices. Culture may affect HQ decisions in two ways:

(a) Some cultures are simply more comfortable than others in taking an ethnocentric
approach to management.
(b) The mix of cultures in the subsidiaries of an MNC and the level of cultural difference
among the subsidiaries of an MNC will restrict the IHRM approach taken.

3. MNCs with extensive international experience have had the opportunity to develop
more diverse methods of maintaining coordination and control over their foreign
operations.

4. The method used to establish operations in foreign locations may also affect HR
policies. For example, HR practices in the acquired/ merged operation will reduce the
wholesale exportation of home-country HR systems into the subsidiary.

5. An MNC opening subsidiaries in developed countries face a much different I HRM

challenge than one opening subsidiaries in developing countries. Developed countries
have well educated staff having technical and management experience.

Therefore, there is the opportunity to develop polycentric or geocentric IHRM strategies.

Whereas in developing countries a more centralised IHRM strategy is necessary.

For technologically sophisticated products, or services, the need to maintain specific

production standards and quality controls necessitates a greater degree of
centralization of IHRM functions at the MNCs headquarters. Whereas in some products
like food items, the host-country tastes have to be looked into to succeed in the local
market.

Strategic factors influencing

international human resource
management practices
A theory-driven conceptual model is used to identify factors that shape the
international human resource management (IHRM) activities of Australian
multinational corporations (MNCs) in their overseas subsidiaries. The findings
show that their IHRM activities appear to be shaped, to varying degrees, by
strategic factors. The most important explanatory variables are subsidiary role
and national cultural distance between home and host countries, although the
results of national culture may change through adopting a more sophisticated
framing and measurement of the variable. Interestingly enough, the parent HR
managers were found to stress the role of subsidiary company factors in
determining HR policies and practices in the subsidiaries. However, these
findings should be interpreted with caution because the cross-sectional nature of
the study is limited in explaining very complicated HRM phenomena that evolve
over time.