International HRM and Development in Emerging Market Multinationals

Paresha Sinha, Parth Patel, Verma Prikshat, Paresha Sinha, Parth Patel, Verma Prikshat

• Publisher: Routledge
• Year: 2021
• Print ISBN: 9780367478261
• eBook ISBN: 9781000520330
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Business allgemein

Emerging multinational enterprises (or EMNEs) have made a huge impact on the international business stage by internationalising at a rapid rate. And they have performed remarkably well in both developing and developed countries. Accordingly, there is a growing strand of literature on how EMNEs manage their international human resource (IHRM) practices in different international contexts.

However, the majority of the literature on IHRM practices of EMNEs is limited to explaining what international management practices EMNEs implement in their foreign subsidiaries and how they implement them. Too often, EMNEs struggle to transfer their weak management practices across national borders as they have limited experience, resources and capabilities when compared to MNEs from developed countries. Developing a better understanding on the manner in which EMNEs adopt their international human resource management and development practices abroad is, therefore, paramount to fully understand their globalisation-related behaviours. This dedicated book will aim to provide a holistic picture and contemporary insights on IHRM in emerging multinational enterprises.

It will be of interest to researchers, academics and students in the fields of business and management, especially those with a particular interest in human resource management, firm internationalisation and emerging markets.

1 Introduction to International Human Resource Management and Development in Emerging Market Multinationals

Paresha Sinha, Parth Patel, and Verma Prikshat

DOI: 10.4324/9781003057130-1

Defining IHRM and EMNEs

Human resource (HR) plays a significant role in the management of a multinational enterprise (MNEs) (Cooke et al., 2019). When MNE's manage their subsidiaries, they are often faced with the dilemma of human resource management (HRM) practices that should be monitored from the headquarters (HQ) and the HRM practices that should be diffused at the subsidiary (Azungah, Hutchings and Michailova, 2020; Chang, Mellahi and Wilkinson, 2009). This has led to a large body of literature and research on the discipline of international human resource management (IHRM) in the context of multinational enterprises (MNEs). International HRM is defined as the transfer of HRM strategies, practices and activities across national borders to manage the activities of MNEs. IHRM is particularly concerned with the global management of HR functions in MNEs such as international recruitment and selection, global staffing, international training and career development, global talent management, international remuneration (or compensation) and rewards systems, etc. Finally, there are three broad approaches to IHRM (Adler, 1997; Brewster and Hegewisch, 1994), these are:

• Cross-cultural HRM – The focus remains on understanding the differences in cultural values and attitudes influencing HR strategies, practices and activities.
• Comparative HRM – Where the focus remains on comparing HRM strategies, practices and activities between and across nations; and
• International HRM – The focus remains on understanding the management of HR in MNEs

An MNE is ‘a firm that has the power to coordinate and control operations in “more than two countries”, even if it does not own them’ (Dicken, 2007, p. 106). In other words, if a company has subsidiaries in multiple countries, then it can be considered as an MNE (Birkinshaw and Morrison, 1995). MNEs, thus, operate in a range of economic, political, social and cultural settings (Ritzer, 2011). Emerging market multinational enterprises (or EMNEs) are those categories of MNEs that originate from an emerging economy; for example, Brazil, Russia, India, China and South Africa. These EMNEs refer to larger MNEs and small to medium enterprises (SMEs) such as born-global companies or international entrepreneurial firms (Luo and Zhang, 2016). Their main characteristic is that they have their HQ located in an emerging market, and they engage in outbound FDI (Luo and Tung, 2007). In this book, we provide contemporary insights into the IHRM and development approaches of MNEs from emerging markets.

The Role of International HRM and Development in the Internationalisation of EMNEs

As MNEs have grown in size and stature, so have their need for managing HR within and across national boundaries. One of the prime responsibilities is how MNEs transfer their HRM practices across their subsidiaries in different parts of the world and vice versa in their quest for internationalisation. Although there is extensive debate present in the academic literature on this issue, much research and debate have been limited to understanding MNEs from Western countries operating in other developed countries or developing countries. Despite the growing academic debate, there is still limited discourse on understanding the international HRM and development activities of EMNEs operating in developed countries (Patel et al., 2018). The next decade of economic growth is going to come from emerging markets. In particular, the twenty-first century is marked by the rise of countries like China and India, often referred to as the Asian century (World Economic Forum, 2019). Therefore, academic debate and scholarly research on IHRM must be increased and enhanced.

International recruitment and selection and global staffing have become crucial factors for the success of the overseas operations of MNEs (Ge, Ando and Ding, 2020). The success or failure of international assignments rests on the international recruitment and selection of expatriates, and this needs to be effectively conducted due to the high costs associated with hiring ex-pats. MNEs may select between ethnocentric, polycentric and geocentric staffing approaches that take into consideration staffing of parent country nationals (PCNs), host country nationals (HCNs) and third-country nationals (TCNs). Here familiarity with COO has been found to have a positive effect on the willingness of western people to work for subsidiaries in advanced countries of EMNEs (Zhang et al., 2020). However, many multinationals have found it challenging to hire expatriate employees and international managers due to the changing trends in globalisation. For example, several Indian tech firms found it difficult to bring skilled workers from India due to the H1-B visa reforms in the United States (US) under the previous Trump administration (India Today, 2017). In response to the Covid-19 pandemic, there has been an increase in the use of virtual assignments by EMNEs to manage their foreign subsidiaries. MNEs have discovered organisational tasks previously thought to require face-to-face interaction can be performed in an online fashion (ILO, 2020). Increase in virtual work has aggravated the challenges of collaborating and leading from a distance, and managers need to be trained to do so (Caligiuri et al., 2020). Meanwhile, MNEs have found the previously non-offshore-able service-related tasks, can also be performed anywhere, this will likely unlock the potential for new jobs to be performed by workers in emerging market countries, and research on this major global shift in labour demand is needed (Brakman, Garretsen and van Witteloostuijn, 2021).

International training and development is another critical IHRM function that is important for EMNEs due to its ability to improve human capital and the motivation of expatriates, HCNs (Kang and Shen, 2017) and TCNs. While EMNEs want to ensure that the staff working in the subsidiaries are thoroughly trained and competent in their jobs, they may also be required to align their training with the host country institutions. Hence, EMNEs need to decide to what extent their career systems, policies and practices need to be standardised or localised? And, what career outcomes can individual employees like expatriates, repatriates and/or inpatriates gain from the opportunities provided to them? For example, does the opportunity to gain foreign work experience provide reasonable outcomes for expatriates to achieve their career-related goals? (Dickmann and Doherty, 2010). This is also vitally important for EMNEs in their ability to attract, retain and develop global talent who can lead international operations and be nurtured into leadership roles (Meyer and Xin, 2018). Thus, it is important to research leadership styles needed to promote common understanding and shared values when employees from emerging economies and developed economies come together in EMNEs (Khan et al., 2021).

International performance management is another crucial IHRM function of EMNEs where the tension between global standardisation and localisation plays out in these firms (Mellahi, Frynas and Collings, 2016). While performance management needs to be consistent with the strategic aims and objectives of an organisation, the need to be aligned with the national cultural values and local practices of the host country is equally important. Despite plenty of research, the dynamics of how performance management is conducted in EMNEs in limited, which calls for further research into this area (Malik et al., 2021) including further research on expatriate performance management. In particular, extant research is not clear on the flow of HR practices between the headquarters (HQs) of EMNEs and their subsidiaries (Mellahi, Frynas and Collings, 2016), including how EMNEs from different countries manage the performance of their expatriates (Bader et al., 2021). Accordingly, more research into understanding performance management, systems, practices and policies will shed new light on the diffusability of these practices.

Furthermore, international compensation (also referred to as remuneration) and rewards is a particular area of IHRM that has received very little attention in the academic literature. Managing compensation and rewards for expatriates, HCNs and TCNs are one of the core functions of IHRM (Dowling, Festing and Engle, 2013). It is well established that poorly designed international compensation and rewards policies and practices are a significant cause of expatriate failure, including their premature return and sub-standard performance in international assignments (Shen and Darby, 2006). Given that compensation and reward influence employee work attitudes and behaviours, they are given due consideration to EMNE's subsidiary management (Kang and Shen, 2015). However, global reward management is not a simple choice between standardisation and localisation; a distinction between dissimilar reward practices for different employee groups such as senior and middle management, as well as operational employees is needed (Festing and Tekieli, 2018).

Managing employee engagement (or involvement) and communication is critical for MNEs as it requires not only an understanding of country-specific HR practices but also its national business systems (Looise and Van-Riemsdijk, 2001), as this can lead to different models of worker participation being adopted across the subsidiary. In other words, while some EMNEs may adopt a more formalised approach, others may rely on more informal ways of engaging and communicating with their subsidiary staff. For example, in emerging markets like India, due to the high power distance (Hofstede, 1980), employees do not prefer to speak against their manager as doing so may disrupt supervisor-subordinate harmony (Saini and Budhwar, 2008). Accordingly, employee engagement and may be limited in Indian EMNEs, and communication may be top-down. Nonetheless, as the dominant approach in IHRM literature is whether HRM in EMNEs is shaped by their COO or the host country standards (Pudelko and Harzing, 2007; Zhu, Zhu and De Cieri, 2014), the macro-environment in which the EMNE operations will have a major influence over its HR policies and practices. This includes the relative positions of the home and host countries and the level of institutional maturity within these countries, which will have implications on International HRM and development in EMNEs (Zhu, 2019). Based on the contextual factors, the HRM practices of EMNEs will either converge into standardised practices (i.e. become similar), diverge into local practices (become different as per the local context), or crossverge into global best practices (i.e. combine the two approaches). Research on transfer of EMNE practices to subsidiaries is needed as it may involve adjusting dual pressures from home- and host-country including direct host-country effects and strategic initiatives of subsidiaries to change host-country institutions (Song, 2021). Initiative taking is associated with assigned or assumed autonomy by the subsidiary (Cavanagh et al., 2017) and can include engaging in Corporate Social Responsibility, which works, as insurance for handling reputational risk spillover from their parent (Zhou and Wang, 2020). Overall, subsidiary initiatives can stimulate the continuous adaptation and ‘constant reinvention’ required to compete in the global environment (Scott et al., 2010).

About the Book: IHRM and Development in EMNEs

Over the past decade, EMNEs have made a huge impact by internationalising rapidly and have performed remarkably well in developing and developed countries. In this context, there is a growing body of literature on how EMNEs manage people and their HRM and development practices in different international contexts. However, most of this literature has been very limited in explaining what international management practices EMNEs implement in their foreign subsidiaries and how they implement them. Too often, EMNEs struggle to transfer their weak management practices across national borders as they have limited experience, resources and abilities compared to MNEs from developed countries. Indeed, developing a better understanding of how EMNEs adopt their management and practices abroad is important to apprehend their globalisation-related behaviours fully. This dedicated book, therefore, aims to provide a holistic picture and contemporary insights on IHRM and development in emerging multinational enterprises. By reading this book, the readers can gain an in-depth and contemporary insight into the IHRM and development approaches of EMNEs. More particularly, readers can learn about: (a) how EMNEs adopt various HRM policies and practices when operating in different international contexts, and (b) how their HRM approaches and practices influence their internationalisation-related behaviours.

The Chapter Layout

Following is the chapter layout and the essence of the issues tackled in various chapters of the book:

In chapter 2, Patel, Verma and Sinha review the literature on the impact of a variety of home and host country factors and explains how they might influence the adaptatio...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• About the Authors
• 1 Introduction to International Human Resource Management and Development in Emerging Market Multinationals
• 2 Home and Host Country Influence on the International Adaptation of HRM in Subsidiaries of EMNEs in Advanced Economies: A Literature Review and Future Research Agenda
• 3 HRM Policies and Practices in Emerging Market Multinationals: A Contextual Analysis
• 4 International HRM Practices of Russian MNEs
• 5 How Do Thai MNEs Overcome Two Types of Liabilities through People Management?
• 6 Nesting Ambidexterity Strategies to Buffer Institutional Voids: The Case of Colombian EMNEs
• 7 Management Philosophies and Knowledge Transfer in China-Africa Partnerships
• 8 More than Knowledge Seeking: A Cooperation-seeking Motive for Innovation in MNEs
• 9 The Evolution of Knowledge Transfer in Mexico, from Physical to Virtual Spaces
• 10 Grasping the Concept of Wasta and Its Place in HRM in the Middle East (ME)
• 11 The Emiratization Policy in Abu Dhabi National Oil Company (ADNOC)
• 12 Global Mobility in the Asia-Pacific Region and Role of Talent Management and International HRM
• 13 HRM Practices of Sub-Saharan African MNEs: Following the Best Practice Western MNE HRM Model?
• 14 Indonesian Based MNEs: Local or Global HRM Focus?
• 15 The Uncharted Link between CSR and HRM in Emerging Market Economies: The Cases of Bangladesh, India and China
• 16 Diffusing Best Practices in IHRM: A Qualitative Case Study Analysis of a Mauritian Multinational
• 17 Emerging Multi-National Enterprise (EMNE)'s Approaches and Challenges for the Management of Human Resources in BRICs Countries
• Index