Chapter 1ihrm

Chapter 1
INTRODUCTION
Chapter 1
For use with International Human Resource Management 6e ISBN-10: 1408032090
By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. © Cengage Learning
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INTRODUCTION
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of contents.
 Vocabulary
C O N T E N T S
 Objectives
 Scope of book
 Defining IHRM
 Domestic vs. international
 Variables that moderate the differences
O F
 The cultural environment

TA B L E
 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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Vocabulary
 HRM, IHRM
 PCN, HCN, TCN
 MNE
 expatriate = international assignee, inpatriate
 repatriation
 equity issues
 psychological contract
 culture shock
 convergence/divergence hypotheses
 Porter’s value chain model
 index of transnationality
 global mindset
 asymmetric events
 environmental dynamics
Chapter 1
 organizational culture
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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
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
International Human Resource Management (IHRM) can be defined as a set of activities targeting human resource
management at the international level. It strives to meet organizational objectives and achieve competitive advantage
over competitors at national and international level
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HRM activities
1. Human resource planning
2. Staffing: recruitment, selection, placement
3. Performance management
4. Training & development
5. Compensation & benefits
6. Industrial relations
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Morgan’s “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
3. The employees of an international firm:
» HCNs (host country nationals)
» PCNs (parent .. .. )
» TCNs (host .. .. )
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Figure 1.2
International assignments create expatriates
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Stahl-Björkman-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
This definition includes comparative analyses

of HRM in different countries.
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Domestic vs. international
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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
5. more risk exposure
Chapter 1
6. broader external influences
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IHRM has international HR activities
■ International taxation
■ International relocation & orientation
■ Administrative services for expatriates
■ Host-government relations
■ Language translation services
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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:
 Delivery of salary overseas
 Determination of overseas allowances
 Taxation treatment
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Variables that moderate the differences
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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
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
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Culture matters
■ Culture shock
■ Emic ≠ etic
■ Convergence hypothesis research
tends to focus on macro level
■ Divergence hypothesis research
tends to focus on micro level
■ The international HR manager must be
aware of cultural differences
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Industry type
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The MNE industry type continuum
An MNE performs somewhere in this range:
Multidomestic Industries Global Industries
Examples
retailing, distribution, insurance airlines, semiconductors, copiers
International strategy
Collapses to a Must integrate activities on a
series of domestic strategies. worldwide basis.
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Laurent’s steps for true IHRM:
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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Extent of MNE reliance on HC market
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Table 1.1
The world’s top 10 non-financial TNC, ranked by TNI, 2008a
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1
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Senior management attitudes
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What does senior mgmt. think?
Some of the changes required to truly

internationalize HR
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
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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
3. Be difficult to respond to in a
discriminate & proportionate manner
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The changing context of IHRM
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An MNE case study result
MNEs fail primarily because of
a lack of understanding of
the
differences
in managing human resources

in foreign environments.
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 The cultural environment

This definition includes comparative analyses

Some of the changes required to truly

have more to do with a global mindset

in managing human resources

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