Chapter 1 For use with International Human Resource

Chapter 1 For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 1 of 32 Chapter 1 INTRODUCTION

START Chapter 1 Click on an item to go to its section. § § § Vocabulary Objectives Scope of book Defining IHRM Domestic vs. international Variables that moderate the differences The cultural environment Industry type Extent of MNE reliance on HC market Senior mgmt. attitudes to international ops. Applying a strategic view of IHRM The changing context For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 2 of 32 Chapter 1 T A B L E O F C O N T E N T S INTRODUCTION Click on the book cover below to return to this table of contents.

§ § § § 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 organizational culture For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 3 of 32 Chapter 1 Vocabulary

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 For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 4 of 32 Chapter 1 5. Discover complexity & increasing challenges to existing IHRM practices and models

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 5 of 32 Chapter 1 Scope of book

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 6 of 32 Chapter 1 Figure 1. 1 Inter-relationships between approaches to the field

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 7 of 32 Chapter 1 Defining international HRM

HRM activities 1. Human resource planning 2. Staffing: recruitment, selection, placement 3. Performance management 4. Training & development 5. Compensation & benefits For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 8 of 32 Chapter 1 6. Industrial relations

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 » » » HCNs (host country nationals) PCNs (parent. . ) TCNs (host. . ) For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 9 of 32 Chapter 1 3. The employees of an international firm:

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 10 of 32 Chapter 1 Figure 1. 2 International assignments create expatriates

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 For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 11 of 32 Chapter 1 This definition includes comparative analyses of HRM in different countries.

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 12 of 32 Chapter 1 Domestic vs. international

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 6. broader external influences For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 13 of 32 Chapter 1 5. more risk exposure

IHRM has international HR activities ■ International taxation ■ International relocation & orientation ■ Administrative services for expatriates ■ Host-government relations For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 14 of 32 Chapter 1 ■ Language translation services

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: For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 15 of 32 Chapter 1 ü Delivery of salary overseas ü Determination of overseas allowances ü Taxation treatment

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 16 of 32 Chapter 1 Variables that moderate the differences

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 For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 17 of 32 Chapter 1 4. The attitudes of senior management

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 18 of 32 Chapter 1 Figure 1. 3 A model of all 5 variables that moderate the differences between domestic and international HRM

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 19 of 32 Chapter 1 The cultural environment

Culture matters ■ Culture shock ■ Emic ≠ etic ■ Convergence hypothesis research tends to focus on macro level ■ Divergence hypothesis research tends to focus on micro level For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 20 of 32 Chapter 1 ■ The international HR manager must be aware of cultural differences

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 21 of 32 Chapter 1 Industry type

The MNE industry type continuum An MNE performs somewhere in this range: Multidomestic Industries International strategy Collapses to a series of domestic strategies. For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. airlines, semiconductors, copiers Must integrate activities on a worldwide basis. ISBN-10: 1408032090 © Cengage Learning 22 of 32 Chapter 1 Examples retailing, distribution, insurance Global Industries

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. For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 23 of 32 Chapter 1 Laurent’s steps for true IHRM:

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 24 of 32 Chapter 1 Extent of MNE reliance on HC market

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 25 of 32 Chapter 2 1 Table 1. 1 The world’s top 10 non-financial TNC, ranked by TNI, 2008 a

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 26 of 32 Chapter 1 Senior management attitudes

What does senior mgmt. think? Some of the changes required to truly internationalize HR For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 27 of 32 Chapter 1 have more to do with a global mindset than with behaviors.

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 28 of 32 Chapter 1 Applying a strategic view of IHRM

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 29 of 32 Chapter 1 Figure 1. 4 A framework of strategic HRM in MNEs

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 For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 30 of 32 Chapter 1 3. Be difficult to respond to in a discriminate & proportionate manner

For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 31 of 32 Chapter 1 The changing context of IHRM

An MNE case study result MNEs fail primarily because of a lack of understanding of the differences For use with International Human Resource Management 6 e By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr. ISBN-10: 1408032090 © Cengage Learning 32 of 32 Chapter 1 in managing human resources in foreign environments.