IHRM

CHAPTER 4
Dr Nur Kamarul Hafiz bin Jamil
Faculty of Business and Accountancy
Lincoln University College
IHRM in Cross-
Border
 Cross-border alliances
Mergers &  Cross-border mergers and acquisitions
Acquisitions,  International equity joint ventures
International  International SMEs
Alliances and
SMEs
  Cross-border alliances are cooperative agreements between two
0r more firms from different national backgrounds, which are
intended to benefit all partners.

Cross-Border i. Non-equity cross-border alliances

➢ an investment vehicle in which profits and other responsibilities are
Alliances assigned to each party according to contract.
➢ Each party cooperates as a separate legal entity and bears its own
liabilities.
ii. Equity modes
➢ involves a foreign direct investor’s purchase of shares of an enterprise
in a country other than its own.
  Equity as well as non-equity cross-border alliances pose specific
challenges to IHRM.
Equity vs. Non-  As Schuler and Tarique note, “Some of the HR issues that are
Equity Cross- critical to the success of equity-based international or cross-
border alliances may also rise in non-equity cross-border alliances,
Border but they are often less central to the success of the alliance”.

Alliances  Hence, the difference in HRM in equity and non-equity cross-

border alliances is supposed to lie in the differing extent to which
specific HR measures are used.
  A merger is the result of an agreement between two companies to
join their operations together.
Cross-Border  Partners are often equals. E.g. Celcom Digi
Mergers and  An acquisition, on the other hand, occurs when one company buys
Acquisitions another company with the interest of controlling the activities of
the combined operations. E.g. MBF Cards (M) Sdn Bhd by AMMB
Holdings Bhd
Cross-Border
Mergers &
Acquisitions
  UNCTAD defines cross-border M&A as follows:
Definitions of
Cross-Border  Cross-border M&As involve partial or full takeover or the merging of
capital, assets and liabilities of existing enterprises in a country by
Mergers & TNCs (Transnational corporations) from other countries.
 M&As generally involve the purchase of existing assets and
Acquisitions companies.
M&A Phases
and HR
Implications
Strategic HRM
and the Role of  Scholars argue that firms should match their M&A strategy with
their HR strategy while relying on three conceptual tools
the HR
Function in
M&As
  Respect to knowledge transfer between the acquiring and the
acquired company.
 However, the transfer of embedded knowledge is not guaranteed
by each international assignment.
The Role of
 M&As in Germany revealed that successful integration is
Expatriates in dependent upon managers’ industry experience, experience with
similar projects, and particularly in the case of cross-border
M&As alliances, level of intercultural competence.
 Creating a strong team including a mix of both groups –
expatriates and local members of top management – and that the
acquisition integration be viewed as a collective learning process.
International
Equity Joint
Ventures
IJVs Challenges
in IHRM
Main Reasons
for Engaging in
an IJV
 The Partnership HR managers should take the needs of all
Role stakeholders into account and demonstrate a
thorough understanding of the business and the
market.

IJV A Change Facilitator

and Strategy
HR managers should be able to conceptualize and
implement new strategies involving trust-based
Development Implementer communication and cooperation with relevant
partners. This also requires the creation of a stable
Stages and learning environment.

HRM An Innovator HR managers should be able to identify talent for

executing IJV strategies and adapting to changes in
Implications the IJV stages
A Collaborator HR manager’s strengths should lie in creating win-
win situations characterized by sharing rather than
competing between the different entities engaged
in the joint venture.
  What are SMEs?
 A business that maintains revenues, assets, or a number of
International employees below a certain threshold.
 SMEs include both manufacturing and service businesses.
SMEs:  The government categorizes them based on a combination of
Strategic annual turnover and equipment investment.

Importance
and Barriers to
Internationaliz
ation
SMEs  Two thirds of all jobs in the region are in SMEs, while one third of
all jobs are provided by large enterprises.
Important  SMEs constitute the backbone of the Asia Pacific region,
Roles in the accounting for 90% of enterprises between 32 and 48 percent of
employment and between 80 and 60 percent of GDP in individual
World Asia Pacific economies.
Economy
 1. Shortage of working capital to finance exports
10 Barriers to 2. Identifying foreign business opportunities
access to 3. Limited information to locate/analyse markets

International 4. Inability to contact potential overseas customers

5. Obtaining reliable foreign representation
Markets
6. Lack of managerial time to deal with internationalization
Identified 7. Inadequate quantity of and/or untrained personnel for
Through internationalization

Survey on 8. Difficulty in managing competitor’s prices

9. Lack of home government assistance/incentives
SMEs
10. Excessive transportation/insurance costs
  The Importance of the Founder/Owner – the owners/founders who
had work experience, or established personal networks and
relationships abroad would posses the skills necessary to conduct
international business arrangement.
 Recruitment, Selection, and Retention – It has been argued that
many less-qualified employees are employed by SMEs because they
do not meet the recruitment requirements of large organizations and
were forced to work for SMEs as their second choice.
 Human Resource Development: The Challenge of Learning –
IHRM Features training and development activities tend to be rather short-term
oriented in SMEs and are not always designed to meet long-term
strategic needs.
in SMEs  Expatriate Management – When SMEs needed cross-cultural training
for potential expatriates, these employees were sent to external
training institutions. Given the small number of expats, in-house
training is not an option.
 Limited Resources of the HR Department and Outsourcing – small
HR group in an SME is usually on transacting administrative tasks and
most important HR decisions are taken by the founder/owner of the
enterprise.