Chapter 1
Essay question
A core MNE research finding is that MNEs fail primarily because they don’t understand enough about the
differences in managing HR in foreign environments. Think of a particular MNE of your choice. Explain the five
variables that moderate the differences between domestic and international HRM with an example from the
MNE you chose to illustrate each one.
Answer guide
The essay has five sections organized about each variable:
1. The cultural environment
2. The industry(ies) within which the MNE is mostly involved
3. Complexity caused by operating in different countries and having employees from different countries
4. Attitudes of senior management
5. How much the MNE relies on the home-country domestic market
For full credit, each section should also include a specific example that illustrates it from the chosen MNE.
Outline of typical response:
Consider an international airline company based in country A, an IHRM manager Josephine, and baggage
handlers in country C.
1. In non-home country C, there is a more relaxed attitude towards timeliness. Arriving 30 minutes late is
considered acceptable. Josephine may need to find additional ways to motivate baggage handlers to
deliver baggage in a timely manner.
2. Suppose Josephine is hiring local baggage handlers from country C. Because these handlers come from a
culture different from country A’s, she will have to provide more culturally neutral and explicit training
than in her home country to meet international travelers’ expectations on the timely arrival of their
luggage.
3. Besides attitudes, different countries may have different policies regarding how luggage problems are
handled. This complicates Josephine’s training of local baggage handlers because she will have to juggle
several policies while trying to adhere to the company’s luggage service standard.
4. Senior management attitudes to the airline’s international operations have a major impact on the airline’s
luggage service in other countries, beyond the airline’s formal policies regarding luggage. When airline
senior managers travel on the airline, for instance, if they make a point of regularly observing and
inquiring about baggage handling operations, local handlers will receive feedback how important their
work is to the airline.
5. The more airline A’s revenue comes from its international flights, the more the airline will need to rely on
its more diverse and complex IHRM.
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
,Chapter 1
Revision questions
1. Describe a HR activity that a HCN could possibly do better than a similarly trained PCN.
Any of HR planning, staffing, performance management, training & development, compensation &
benefits, or industrial relations would work.
The reason a HCN would be better at any of these activities is because they grew up in the given country
and know its customs & culture better than any foreigner would, even after many years of immersion. If
most employees being hired are from the host country, a HCN vested in the MNE organizational culture
and processes would be better than a PCN or TCN at just about all HRM activities.
‘Differences Between Domestic and International HRM’
2. Explain the difference between a TCN and a PCN.
A TCN is an international employee not from the country where the MNE is based.
A PCN is an international employee from the country where the MNE is based.
Both TCNs and PCNs live and work in a country not their own.
‘Defining IHRM and Global Work’
3. Explain why the psychological contract between the MNE and an international assignee also includes their
immediate family.
The international assignee’s family gets uprooted from their home culture while the assignee works
abroad. Therefore, the family has additional needs such as education and language training that need to
be met before the assignee will want to accept the international job.
‘Differences Between Domestic and International'
4. What equity issues arise when HCNs and PCNs work side by side?
PCNs generally get paid an expatriate premium to live abroad. PCNs may get paid more than HCNs, even if
it is for the same work. This can cause friction between these two types of employees.
‘Differences Between Domestic and International'
5. Why are asymmetric events so difficult for MNEs to plan for?
Asymmetric events are designed to offset, work around, or negate what in other contexts are an MNE’s
strengths. They are unusual in that they don’t occur every day. They constitute unique problems that
require unique solutions. An MNE can have a ‘What to do in the event of an employee kidnapping’ policy
in place, but it is hard to capture all such possible asymmetric events in policies.
‘Applying a Strategic View of IHRM’
6. Give an example of an organizational factor and explain how it affects strategic IHRM in MNEs.
Consider an MNE that wants to move into foreign markets. Its headquarters executives’ international
orientation and ‘global mindset’ will have a huge impact on the success of new foreign subsidiaries.
‘Applying a Strategic View of IHRM’
7. Give an example of an external factor and explain how it affects strategic IHRM in MNEs.
The type of host government can dictate how many employees at a foreign MNE subsidiary are HCNs.
‘Applying a Strategic View of IHRM’
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
,8. Explain why global standardization and local responsiveness can be a problem in IHRM.
One problem is with consistency in the application of the MNE’s organizational culture. In some countries,
for example, employees may need to be union members, despite a given MNE’s inclination away from
unions.
‘The Cultural Environment’
9. According to Perlmutter which elements are well established as important factors for HRM in MNEs?
The organizational factor headquarters' international orientation recognizes that international orientation
of the MNE's headquarters will involve aspects such as the extent and diversity of experience in managing
international operations.
‘Applying a Strategic View of IHRM’
10. Explain why an oil company would be considered a global industry.
Petroleum products such as gas or diesel are used by cars, airplanes, and boats all over the world. These
have been standardized, so the oil company’s petroleum refining produces the same products no matter
where in the world these are delivered. An oil company’s drilling and marketing activities worldwide must
be integrated in order to gain competitive advantage.
‘Industry Type’
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
, Chapter 1
Test Your Knowledge
1. International HRM has more (but less diverse) HR activities than domestic HRM.
(false)
‘Differences Between Domestic and International HRM’
2. Coca Cola tastes different in different countries. This is a clue that Coca Cola might perform as a
multidomestic industry.
(true)
‘Industry Type’
3. Research that focuses on the macro level, such as organization structure and processes, tends to support
the convergence hypothesis.
(true)
‘The Cultural Environment’
4. It is possible for an employee to be both a PCN and a TCN for the same MNE.
(false)
‘Defining IHRM and Global Work’
5. An expatriate is an employee that works and resides in a foreign country.
(true)
‘Defining IHRM and Global Work’
6. Domestic HRM is more likely than IHRM to provide job-finding assistance to the spouse of an employee.
(false)
‘Defining IHRM and Global Work’
7. Most MNEs fail because they underestimate the differences in managing HR in foreign cultures.
(true)
‘Attitudes of Senior Management to International Operations’
8. 9/11 and the Arab Spring are examples of asymmetric events which are difficult for MNEs to prepare for.
(true)
‘Applying a Strategic View of IHRM’
9. Some changes to internationalize HR have more to do with senior management’s global mindset than with
behaviors.
(true)
‘Attitudes of Senior Management to International Operations’
10. Successful IHRM realizes that how things are done at home is not inherently better than how they might
be done abroad.
(true)
‘Applying a Strategic View of IHRM’
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
Essay question
A core MNE research finding is that MNEs fail primarily because they don’t understand enough about the
differences in managing HR in foreign environments. Think of a particular MNE of your choice. Explain the five
variables that moderate the differences between domestic and international HRM with an example from the
MNE you chose to illustrate each one.
Answer guide
The essay has five sections organized about each variable:
1. The cultural environment
2. The industry(ies) within which the MNE is mostly involved
3. Complexity caused by operating in different countries and having employees from different countries
4. Attitudes of senior management
5. How much the MNE relies on the home-country domestic market
For full credit, each section should also include a specific example that illustrates it from the chosen MNE.
Outline of typical response:
Consider an international airline company based in country A, an IHRM manager Josephine, and baggage
handlers in country C.
1. In non-home country C, there is a more relaxed attitude towards timeliness. Arriving 30 minutes late is
considered acceptable. Josephine may need to find additional ways to motivate baggage handlers to
deliver baggage in a timely manner.
2. Suppose Josephine is hiring local baggage handlers from country C. Because these handlers come from a
culture different from country A’s, she will have to provide more culturally neutral and explicit training
than in her home country to meet international travelers’ expectations on the timely arrival of their
luggage.
3. Besides attitudes, different countries may have different policies regarding how luggage problems are
handled. This complicates Josephine’s training of local baggage handlers because she will have to juggle
several policies while trying to adhere to the company’s luggage service standard.
4. Senior management attitudes to the airline’s international operations have a major impact on the airline’s
luggage service in other countries, beyond the airline’s formal policies regarding luggage. When airline
senior managers travel on the airline, for instance, if they make a point of regularly observing and
inquiring about baggage handling operations, local handlers will receive feedback how important their
work is to the airline.
5. The more airline A’s revenue comes from its international flights, the more the airline will need to rely on
its more diverse and complex IHRM.
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
,Chapter 1
Revision questions
1. Describe a HR activity that a HCN could possibly do better than a similarly trained PCN.
Any of HR planning, staffing, performance management, training & development, compensation &
benefits, or industrial relations would work.
The reason a HCN would be better at any of these activities is because they grew up in the given country
and know its customs & culture better than any foreigner would, even after many years of immersion. If
most employees being hired are from the host country, a HCN vested in the MNE organizational culture
and processes would be better than a PCN or TCN at just about all HRM activities.
‘Differences Between Domestic and International HRM’
2. Explain the difference between a TCN and a PCN.
A TCN is an international employee not from the country where the MNE is based.
A PCN is an international employee from the country where the MNE is based.
Both TCNs and PCNs live and work in a country not their own.
‘Defining IHRM and Global Work’
3. Explain why the psychological contract between the MNE and an international assignee also includes their
immediate family.
The international assignee’s family gets uprooted from their home culture while the assignee works
abroad. Therefore, the family has additional needs such as education and language training that need to
be met before the assignee will want to accept the international job.
‘Differences Between Domestic and International'
4. What equity issues arise when HCNs and PCNs work side by side?
PCNs generally get paid an expatriate premium to live abroad. PCNs may get paid more than HCNs, even if
it is for the same work. This can cause friction between these two types of employees.
‘Differences Between Domestic and International'
5. Why are asymmetric events so difficult for MNEs to plan for?
Asymmetric events are designed to offset, work around, or negate what in other contexts are an MNE’s
strengths. They are unusual in that they don’t occur every day. They constitute unique problems that
require unique solutions. An MNE can have a ‘What to do in the event of an employee kidnapping’ policy
in place, but it is hard to capture all such possible asymmetric events in policies.
‘Applying a Strategic View of IHRM’
6. Give an example of an organizational factor and explain how it affects strategic IHRM in MNEs.
Consider an MNE that wants to move into foreign markets. Its headquarters executives’ international
orientation and ‘global mindset’ will have a huge impact on the success of new foreign subsidiaries.
‘Applying a Strategic View of IHRM’
7. Give an example of an external factor and explain how it affects strategic IHRM in MNEs.
The type of host government can dictate how many employees at a foreign MNE subsidiary are HCNs.
‘Applying a Strategic View of IHRM’
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
,8. Explain why global standardization and local responsiveness can be a problem in IHRM.
One problem is with consistency in the application of the MNE’s organizational culture. In some countries,
for example, employees may need to be union members, despite a given MNE’s inclination away from
unions.
‘The Cultural Environment’
9. According to Perlmutter which elements are well established as important factors for HRM in MNEs?
The organizational factor headquarters' international orientation recognizes that international orientation
of the MNE's headquarters will involve aspects such as the extent and diversity of experience in managing
international operations.
‘Applying a Strategic View of IHRM’
10. Explain why an oil company would be considered a global industry.
Petroleum products such as gas or diesel are used by cars, airplanes, and boats all over the world. These
have been standardized, so the oil company’s petroleum refining produces the same products no matter
where in the world these are delivered. An oil company’s drilling and marketing activities worldwide must
be integrated in order to gain competitive advantage.
‘Industry Type’
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
, Chapter 1
Test Your Knowledge
1. International HRM has more (but less diverse) HR activities than domestic HRM.
(false)
‘Differences Between Domestic and International HRM’
2. Coca Cola tastes different in different countries. This is a clue that Coca Cola might perform as a
multidomestic industry.
(true)
‘Industry Type’
3. Research that focuses on the macro level, such as organization structure and processes, tends to support
the convergence hypothesis.
(true)
‘The Cultural Environment’
4. It is possible for an employee to be both a PCN and a TCN for the same MNE.
(false)
‘Defining IHRM and Global Work’
5. An expatriate is an employee that works and resides in a foreign country.
(true)
‘Defining IHRM and Global Work’
6. Domestic HRM is more likely than IHRM to provide job-finding assistance to the spouse of an employee.
(false)
‘Defining IHRM and Global Work’
7. Most MNEs fail because they underestimate the differences in managing HR in foreign cultures.
(true)
‘Attitudes of Senior Management to International Operations’
8. 9/11 and the Arab Spring are examples of asymmetric events which are difficult for MNEs to prepare for.
(true)
‘Applying a Strategic View of IHRM’
9. Some changes to internationalize HR have more to do with senior management’s global mindset than with
behaviors.
(true)
‘Attitudes of Senior Management to International Operations’
10. Successful IHRM realizes that how things are done at home is not inherently better than how they might
be done abroad.
(true)
‘Applying a Strategic View of IHRM’
For use with International Human Resource Management 8e, by Peter J. Dowling,
Marion Festing, and Allen D. Engle, Sr. 9781473773790 © Cengage Learning
