International Human Resource Management

A Cross-Cultural and Comparative Approach

Paul Iles, Crystal L Zhang

• Publisher: CIPD - Kogan Page
• Year: 2013
• Print ISBN: 9781843983002
• eBook ISBN: 9781843983538
• Edition: 1
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

International Human Resource Management is an essential book for all students and HR professionals looking to really understand international HRM. Covering the context of International HRM, HRM and National Culture, HRM in different regions and international HRM policies, this book provides thorough discussion and comprehensive consideration of all elements of international HRM, Full of contributions from experts in specific regions including North America, the Middle East and North Africa, India, Russia and China, this book will provide readers with a thorough understanding of HRM around the world. With crucial coverage of international HRM issues including cross-cultural leadership, business ethics, global talent supply and management as well as performance management of international staff, International Human Resource Management is essential reading for all those working or looking to work in HR around the world, particularly those looking to work in multinational companies. Fully supported by online resources including powerpoint slides, a lecturer guide, additional case studies and a bonus chapter on issues and new directions in International Human Resource Management as well as annotated web links and self-test questions for students.

Part 1

INTRODUCTION AND CONTEXT

CHAPTER 1

International HRM, National Differences and the Transfer of HRM

Paul Iles

LEARNING OUTCOMES

By the end of this chapter, you should be able to:

•Identify approaches to international, comparative and cross-cultural HRM.

•Define the concepts of institutional theory and national business systems.

•Appreciate national differences in HRM policy and practice.

•Consider and analyse some key theoretical perspectives on institutional theories and national business systems, with particular respect to the employee relations and national vocational education and training systems.

•Evaluate the implications of the above perspectives on international HRM.

•Evaluate the usefulness of neo-institutionalist explanations of global diffusion, adoption and adaptation of HRM policies and practices.

•Evaluate approaches to understanding the convergence, standardisation and transfer of IHRM practices.

INTRODUCTION

This chapter outlines the approach the book will take and analyses national differences in IHRM from a critical perspective of institutional systems (for example institutional theories and national business systems). For this chapter, ‘institutionalist’ perspectives and approaches will be the main focus; Chapter 2 explores competing or complementary ‘cultural’ theories of national difference, whereas Chapter 3 looks at IHRM policies of the enterprise, and in particular discusses the global ‘transfer’ of HRM practices. In doing so, it offers a more developed critique of both institutionalist and culturalist explanations through a discussion of neo-institutionalist theories. The following sections explore each of these areas in more depth.

The aim of Chapter 1 is to familiarise the student with an understanding of institutional theories of national business systems in different national and regional contexts to provide a contextual framework for an understanding of international, comparative and cross-cultural HRM. IHRM has become increasingly significant for countries, firms and individuals. Not only are Western and Japanese companies increasingly operating globally, but companies from the BRICS countries – Brazil, Russia, India, China and South Africa – are also rapidly internationalising (O’Neill 2011).

While many textbooks focus on mobile international managers/expatriates, all staff in international/multinational companies (MNCs) and public sector/voluntary agencies, for example non-government organisations (NGOs), will also have to display an international mindset. This book therefore does not just focus on MNCs, but on public sector/third sector agencies as well as educational bodies, collectively referred to here as IEs (international enterprises). This book therefore focuses on specific HR issues faced by international enterprises (IEs) in the context of international business, as international human resource management (IHRM) and cross-cultural HRM (CCHRM) have become increasingly significant for countries, firms and individuals.

As Dowling et al (2008) point out, the field of IHRM is often characterised by three broad approaches:

1 comparative HRM, describing, comparing and analysing HRM systems in various countries or regions

2 cross-cultural management, focusing on organisational behaviour in an international context

3 international HRM, focusing on aspects of HRM in IEs.

This is an approach taken by Garavan and Carberry (2012) to international HRD (IHRD); they distinguish between the ‘international HRD trajectory’ (HRD research in the context of the MNC – we explore this area further in Chapters 4 and 16) and the ‘cross-cultural HRD trajectory’ (analysing how national culture can influence IHRD; again, this is explored further in Chapters 4 and 16). In this chapter we discuss their third dimension on IHRD, the ‘comparative HRD trajectory’ or comparative analyses of HRD approaches across nations, and how societies can develop what is usually called ‘national HRD’, describing characteristics of national systems and how they influence national and organisational HRD practices (G. Wang 2008; Wang and Swanson 2008).

Our textbook therefore incorporates all three perspectives of international HRM, at national, firm and individual levels. It aims to provide a comprehensive and up-to-date overview of international HRM; analyses of and recommendations for solutions to global and cross-cultural challenges are discussed in Part 2, while an in-depth analysis is presented in Part 3 of some of the emerging economies in Eastern Europe, the Middle East, India, Africa and China, as well as the EU, USA and Japan. In Part 4, the IHRM policies of the enterprise in their institutional and cultural context are discussed.

In this book we therefore distinguish three levels of analysis, discussed in more detail in Part 1:

1 Country/region level: comparative HRM. This involves an analysis of different national/regional business systems and employment systems. This analysis tends to employ macro-level theories, for example institutional theory. Many UK/European texts are located here, and we discuss IHRM at a regional level in Part 3. We clearly cannot cover every country and region, so we have been selective in our focus. We primarily focus on the major economies – USA, UK, European Union (EU) and Japan – in their regional context and on the major ‘emerging economies’. These include the so-called BRICS countries – Brazil, Russia, India, China and South Africa – and some of the leading ‘Next 11’ or N-11 countries, such as Nigeria and Mexico, all of which are likely to have an increasing impact on the world economy in the forthcoming decades (O’Neill 2011).

2 Individual level: cross-cultural management/OB. This involves an analysis of such organisational behaviour (OB) topics as leadership, communication, teamwork, motivation, conflict, communication and negotiation from the perspective of the individual manager; here we tend to use OB/organisational psychology perspectives and theories of culture. Part 2 of the book focuses on this area in more detail.

3 Firm level: international HRM. This level of analysis focuses on company policies and practices such as recruitment/selection, training/development, reward/compensation, talent management, employee relations and performance management. The focus is often on international staff, especially expatriates, and their management and development. Analyses tend to employ meso-level theories; many US texts are located here. We discuss enterprise IHRM policies in their institutional and socio-cultural context in Part 4.

First we explore institutionalist approaches to national differences in HRM policy and practice at the country/region level (comparative HRM) after introducing what we mean by IHRM and why it is important. Chapter 2 introduces the individual level of analysis (cross-cultural HRM) and Chapter 3 the firm level (international HRM).

REFLECTIVE ACTIVITY 1.1

1 So, what is IHRM and

2 Why is its study important and worthwhile?

If possible, discuss these questions in pairs or a small group, and try to arrive at a consensus view.

Some points you may have mentioned include:

(a) What is IHRM?

•HRM examines the way that organisations recruit, reward, train and motivate their most important resource – their staff.

•IHRM explores HRM processes from a comparative and international perspective.

•IHRM is about strategies for competitive edge.

•IHRM is about exploiting human capital to the full around the world.

•IHRM involves such issues as recruitment, reward, training and development … but also issues such as cooperation, commitment and motivation, which means cultural competency and cultural understanding are important.

(b) So why study IHRM?

You may have mentioned:

•Business and management has globalised, so HRM needs to also become more international.

•Management should be international and outward looking.

•There is a requirement for enterprises to compare and learn from different nations and cultures.

•MNCs need international management skills and knowledge transfer to subsidiaries.

•There is a global spread of best practice and diffusion.

•Strategic and governmental processes are international and global.

•Industrial relations are internationalising to reflect global business.

You may have come up with other interesting ideas on these two questions!

SO HOW DOES IHRM DIFFER FROM DOMESTIC HRM?

The difference between international and domestic or national HRM does not lie in the activity or function of HRM; in both, similar activities and functions are carried out (for example recruitment and selection, HRD, career management, performance appraisal/management, reward, etc). The difference lies in other areas – one is the location in which HRM is being performed: is it in the home or the host country? This brings in issues of cultural and institutional differences, as well as geographical dispersion and differences in time zones.

Another key difference lies in which group of employees are involved; there are three main categories here:

•HCNs – host-country nationals or locals

•PCNs – parent-country nationals (of which expatriates are a major sub-category)

•TCNs – third-country nationals, neither locals nor expatriates but citizens of a third country.

As an example, if Guinness Nigeria employed Irish expatriates as, say, the CEO or finance director, these would be PCNs (as Guinness is headquartered in Ireland); Nigerians, probably the bulk of the workforce, are HCNs, or locals. If a British or Dutch employee was the operations manager, or a South African the HR director, they would be TCNs. We explore the management of these three categories in Chapter 3.

There are other differences, such as the amount of risk involved, including health and security risks, and the role of the state, which is likely to be more extensively involved in IHRM than in domestic HRM. A particular issue is the separation by time and distance of international operations; IEs are attempting to manage operations not only physically distant, but often culturally different and distant too. This is explored in more depth in Chapter 2; here we explore the differences in institutions between countries and regions, which also raise challenges for IHRM. To do this, we use ‘institutional’ theories, in particular the concept of differences in ‘national business systems’.

THE ‘NATIONALITY THESIS’ IN COMPARATIVE HRM: HOW DO WE BEST UNDERSTAND DIFFERENCES BETWEEN COUNTRIES AND REGIONS?

In comparative HRM, the ‘nationality thesis’ argues that globalisation – which we explore further in Chapter 3, especially in terms of its implications for IHRM – does not necessarily force countries, sectors and firms towards a convergence in their structure, culture, patterns of behaviour and HRM policies and practices. Institutional and cultural legacies exert a structuring influence, and national patterns still show divergence in their HRM systems; US firms, for example, differ from German firms in the strategic role played by HR, the role of unions and the commitment to training and development. Different frameworks have...

Table of contents

• Cover
• Title Page
• Publisher Information
• Copyright Page
• Contents
• List of figures and tables
• Authors’ biographies
• Acknowledgements
• Walkthrough
• PART 1 INTRODUCTION AND CONTEXT
• PART 2 HRM AND NATIONAL CULTURE
• PART 3 HRM IN DIFFERENT REGIONS
• PART 4 INTERNATIONAL HRM POLICIES IN IES
• Index