Sofie Julia Polman
Chapter 1 International HRM: An Introduction
1.1 Introduction
IHRM = International Human Resources Management
HRM varies according to the country in which it is conducted: the country provides the institutional and cultural
environment for HRM.
A key task for organizations which operate across international boundaries is to manage different stresses of the
drive of integration (being coherent across the world) and differentiation (being adaptive to local environments).
MNC = multinational corporations = an enterprise that operates in several countries but is managed from one home
country = MNE = multinational enterprise
MNCs may be of four forms:
• A decentralized corporation that has a strong home country presence
• A global and centralized corporation that can acquire a cost advantage through centralized production
• An international company that builds on the parent company’s technology or research and development
• A transnational enterprise that combines all three of these approaches
MNCs may not have coordinated product offerings in each country because they are more focused on adapting their
products and service to each individual local market.
TNC = transnational corporation = more complex organizations that have invested in foreign operations, have a
central corporate facility, but have decision-making, R&D and marketing powers in a variety of foreign markets.
FDI = foreign direct investment
1.2 What is International Human Resource Management?
HRM is crucial to the survival, performance and success of the enterprise. For international organizations, the
additional complications of dealing with differing institutional constraints and multicultural assumptions about the
way people should be managed become important contributors to the chances of that success.
IHRM encompasses:
• “the worldwide management of people in the multinational enterprise” (Poole, 1990, p. 1)
• “how MNCs manage their geographically dispersed workforce in order to leverage their HR resources for
both local and competitive advantage” (Scullion, 2005, p. 5)
• “how MNCs manage the competing demands of ensuring that the organization has an international
coherence in and cost-effective approach to the way it manages its people in all the countries it covers,
while also ensuring that it can be responsive to the differences in assumptions about what works from one
location to another” (Dickmann et al., 2008, p. 7)
1.3 Why Study International Human Resource Management?
Each country has its own institutional environments, with differently educated and skilled workforces, in different
economic situations, with different labor laws, trade union arrangements, government support or control, and
internationally operating organizations have to cope with differences in cultures. In order to understand how
organizations operate across these different national contexts, we need to understand the differences as clearly as
possible
1.4 Universalist Versus Contextual HRM
1.4.1 Universalist HRM
Universalist paradigm: to improve the way that human resources are managed strategically within operations à to
improve organizational performance, as judged by its impact on the organization’s declared corporate strategy, the
customers or shareholders.
à it is the same everywhere
à only operates at the level of the organization ignoring policy at the national or international level
, Sofie Julia Polman
1.4.2 Contextual HRM
Contextual/comparative paradigm: focused on understanding what is different between and within HRM in various
contexts, and what the antecedents of those differences are.
Not only will the employee and the unions have a different perspective from that of the management, and different
groups of employees within the organization will have different needs and requirements, but that even within the
management team there may be different interests and views.
à It is all about the context
1.5 Convergence and Divergence in HRM
1.5.1 Convergence in HRM
At the country level, the debate has been about convergence or divergence of HRM practice, whilst at the
organizational level it has been about standardization versus localization of practice.
Directional convergence: when comparing changes in HRM practices between two countries, directional
convergence exists when the trend (developmental tendency) goes in the same direction. Each country might start
with a different proportion of organizations using a specific practice, and over time the difference in the proportion
of organizations using that particular practice in the two countries might actually have grown larger. However, in
both cases, a greater proportion of organizations now use the practice, there is convergence in direction – in this
case going up. Similarly, the opposite might apply, with change in negative direction.
Final convergence: when changes in the use of an HRM practice in two different countries mean that the countries’
practices get more similar, there is convergence to some final point. This might imply that the country with less uses
increases faster, or that one country increases a usage whilst another one decreases it – as long as they get closer
together there may be said to be final convergence.
1.5.2 Divergence in HRM
Divergence: when the changes in the use of an HRM practice in two different countries are progressing in truly
different directions, one increasing and the other one decreasing.
1.5.3 The Evidence
There is little empirical data on the issue of convergence versus divergence, and that is largely the result of
difficulties of researching the issue.
Katz and Darbishire (2000): “converging differences. Although globalization and internationalization might be argued
to foster a general converging trend in employment systems, managers can do different things. As a result, all
societies will gradually develop a range of work practices. However, the literature on convergence shows that
national differences remain.”
1.6 Structuring The Field Into Three Components
Three headings under IHRM:
• National institutional and cultural differences: every nation has its own unique set of institutions and many
share a common culture, the deep-lying values and beliefs reflected in the ways societies operate, and in the
ways the economy operates and people work and are managed at work
• Aspects of comparative human resource management: the way people work and explore the differences
between nations in the way that they manage these process à comparative tradition makes more of the
institutional differences than the cultural differences
• International human resource management: examines the way organizations manage their human resources
across these different national contexts.
1.7 How Is The Overall Field Of International HRM Evolving?
IHRM has evolved in three directions
• Growing influence of institutional perspective
• Development of critical perspective: to understand IRHM, ask questions about who it serves, who the key
stakeholders are and the context in which it operates.
, Sofie Julia Polman
• Problem-solving perspective on IHRM: focusing on the progressive issues that have been created n the
conduct of business operations as a consequence of internationalization.
Key Learning Points
• Much of our initial understanding about IHRM was traditionally based on the study of MNCs
• Definitions of IHRM have concentrated on examining the HRM issues, problems, strategies, policies and
practices which firms pursue in relation to the internationalization of their business
• The additional complexities of managing an international workforce in organizations that are
internationalizing call for a different mindset and different skills for practitioners
• Internationalization is also becoming more widespread. The levels of foreign direct investment can be huge
although these developments are always fraught with risks and uncertainties
• There are continental shifts occurring in the focus of this economic activity, leading to new patterns of
mobility and trade, and MNCs dominated by the new mindsets and approaches.
• We are also witnessing the global transfer of work – either in terms of the creation of new jobs or through
the global sourcing of certain parts of an individual’s or unit’s work. This is having a major impact on the type
of organizations and nature of work that remain viable in different parts of the world.
• Rather than just studying the operation of MNCs, the subject matter of IHRM is best covered under three
headings: exploration and explanations of national differences in HRM; specific aspects of comparative HRM
practice and international HRM
• These three fields each show that there is an increasingly wide set of contextual factors at play. Each field
has expanded in depth, in parallel with the progressively complex problems of internationalization.
Chapter 4: Culture and Organizational Life
4.1 Introduction
GLOBE = Global Leadership and Organizational Behavior Effectiveness
It is important to understand the way differences in national cultures can affect attitudes and behaviors in the work
environment. These attitudes and behaviors in turn become embedded in the organizational cultures and systems.
Many management texts still adopt a universalist approach, focusing on “best practice”, often without any
acknowledgement of how transferable these practices might be in different societal contexts.
4.2 The Impact of Culture on Organizational Behavior and HRM
Cultural assumptions are therefore linked to a wide range of organizational behaviors.
Management practices are heavily influenced by collectively shared values and belief systems. Laurent (1986, p. 97)
warned against assuming that management approaches developed in one particular culture can be deemed to be
valid for any other culture.
Literature indicates that cultural values shape the conduct of HRM through the following mechanisms (Sparrow and
Hiltrop, 1997)
• Attitudes held about, and definitions of, what makes an effective manager, and their implications for the
qualities recruited, trained and developed
• The giving of face-to-face feedback, level of power distance and uncertainty avoidance, and their
implications for recruitment interview, communication, negotiation and participation processes
• Expectations of the manager-subordinate relationship, and their implications for performance management
and motivational processes
• Differential concepts of distributive justice, socially healthy pay and the individualization of rewards, and
their implications for the design of pay systems
• The mindsets used to think about organizational structuring or strategic dynamics
4.3 Do Cultural Studies Have Any Utility?
National culture has a deep impact on many aspects of HRM.
Ronen and Shenkar (1985) believed that variation in cultural values that is tied to workplace behaviors, attitudes and
outcomes is systematic.
, Sofie Julia Polman
The ecocultural perspective Ronen and Shenkar use for their research in 2013 sees culture as an evolving adaptation
to ecological and sociopolitical influences. Individual psychological characteristics in a given population similarly
adapt to their cultural context. Their examination uses three variables: the combined role of language, religion and
geography, in generating cluster information. Their analysis is described as utilitarian: designed to reduce the
complexity in cultural studies and to and aid data manageability.
The more we wish to link national culture to the “nitty-gritty” of organizational life, and people management at
individual level, the more we need to refine our understanding.
4.4 Corporate Social Responsibility and National Culture
Main sources of cross-national difference in approaches to CSR:
• The institutional environment: this differs across countries and this influences the rules of the game.
• Cultural values: corporate social responsibility derives from accepted values and these values differ across
countries. They influence managerial decision-making and indicate which choices and behaviors are
acceptable or unacceptable.
• Education: managerial education plays a key role in shaping the worldviews of future managers. It diffuses a
particular management ideology that will emphasize the compatibility (or incompatibility) of corporate
economic and social responsibility.
The two cultural values from Hofstede power distance and individualism-collectivism have been linked to attitudes
about CSR, however there is still some confusion about the impact of power distance.
There are different types of CSR
• Economic
• Legal
• Ethical
• Philanthropic
Meeting social responsibilities is necessary in the long run for full economic and shareholder value to be achieved; a
strong corporate image (or the lack of it) drives business development.
National culture plays a role, and it seems that differences in individual perceptions, attitudes and perceptions
within any one country about the trade-off between CSR and economic values are less than the differences found
between countries.
4.5 Placing Boundaries Around the Impact of Culture
A key problem that can occur when working in intercultural situations is the tendency to confuse personality and
culture: culture is, by definition, a group-based concept, whereas personality is an individual-based concept.
Although people from a particular culture can on average share or endorse a given cultural value or believe, and is
on the level of the country that is the single most important determinant of these scores; when values are measured
at the individual level, there is still enough distribution of scores across a cultural scale. But, between members from
within any single country for their scores on the value orientation to be traded as an important individual difference.
Tung et al (2012) looked at the interplay between ethnicity, religious affiliation and income levels. Findings showed
that high-income groups could be treated as one consumer (or internally, employee) segment, but people in low-
income brackets made investment strategies that varies on the basis of ethnicity or religion, according to their
values.
4.6 Is Country More Important Than Region in Explaining Work Values?
Peterson and van Iterson (2015): Whilst job security goals and goals for working with pleasant people varied
between regions, the largest differences between regions were between regions with national boundaries, rather
than between regions across the two nations. Within-nation regional differences were noticeable, mainly along
religious groups, but they were ultimately small.
Chapter 1 International HRM: An Introduction
1.1 Introduction
IHRM = International Human Resources Management
HRM varies according to the country in which it is conducted: the country provides the institutional and cultural
environment for HRM.
A key task for organizations which operate across international boundaries is to manage different stresses of the
drive of integration (being coherent across the world) and differentiation (being adaptive to local environments).
MNC = multinational corporations = an enterprise that operates in several countries but is managed from one home
country = MNE = multinational enterprise
MNCs may be of four forms:
• A decentralized corporation that has a strong home country presence
• A global and centralized corporation that can acquire a cost advantage through centralized production
• An international company that builds on the parent company’s technology or research and development
• A transnational enterprise that combines all three of these approaches
MNCs may not have coordinated product offerings in each country because they are more focused on adapting their
products and service to each individual local market.
TNC = transnational corporation = more complex organizations that have invested in foreign operations, have a
central corporate facility, but have decision-making, R&D and marketing powers in a variety of foreign markets.
FDI = foreign direct investment
1.2 What is International Human Resource Management?
HRM is crucial to the survival, performance and success of the enterprise. For international organizations, the
additional complications of dealing with differing institutional constraints and multicultural assumptions about the
way people should be managed become important contributors to the chances of that success.
IHRM encompasses:
• “the worldwide management of people in the multinational enterprise” (Poole, 1990, p. 1)
• “how MNCs manage their geographically dispersed workforce in order to leverage their HR resources for
both local and competitive advantage” (Scullion, 2005, p. 5)
• “how MNCs manage the competing demands of ensuring that the organization has an international
coherence in and cost-effective approach to the way it manages its people in all the countries it covers,
while also ensuring that it can be responsive to the differences in assumptions about what works from one
location to another” (Dickmann et al., 2008, p. 7)
1.3 Why Study International Human Resource Management?
Each country has its own institutional environments, with differently educated and skilled workforces, in different
economic situations, with different labor laws, trade union arrangements, government support or control, and
internationally operating organizations have to cope with differences in cultures. In order to understand how
organizations operate across these different national contexts, we need to understand the differences as clearly as
possible
1.4 Universalist Versus Contextual HRM
1.4.1 Universalist HRM
Universalist paradigm: to improve the way that human resources are managed strategically within operations à to
improve organizational performance, as judged by its impact on the organization’s declared corporate strategy, the
customers or shareholders.
à it is the same everywhere
à only operates at the level of the organization ignoring policy at the national or international level
, Sofie Julia Polman
1.4.2 Contextual HRM
Contextual/comparative paradigm: focused on understanding what is different between and within HRM in various
contexts, and what the antecedents of those differences are.
Not only will the employee and the unions have a different perspective from that of the management, and different
groups of employees within the organization will have different needs and requirements, but that even within the
management team there may be different interests and views.
à It is all about the context
1.5 Convergence and Divergence in HRM
1.5.1 Convergence in HRM
At the country level, the debate has been about convergence or divergence of HRM practice, whilst at the
organizational level it has been about standardization versus localization of practice.
Directional convergence: when comparing changes in HRM practices between two countries, directional
convergence exists when the trend (developmental tendency) goes in the same direction. Each country might start
with a different proportion of organizations using a specific practice, and over time the difference in the proportion
of organizations using that particular practice in the two countries might actually have grown larger. However, in
both cases, a greater proportion of organizations now use the practice, there is convergence in direction – in this
case going up. Similarly, the opposite might apply, with change in negative direction.
Final convergence: when changes in the use of an HRM practice in two different countries mean that the countries’
practices get more similar, there is convergence to some final point. This might imply that the country with less uses
increases faster, or that one country increases a usage whilst another one decreases it – as long as they get closer
together there may be said to be final convergence.
1.5.2 Divergence in HRM
Divergence: when the changes in the use of an HRM practice in two different countries are progressing in truly
different directions, one increasing and the other one decreasing.
1.5.3 The Evidence
There is little empirical data on the issue of convergence versus divergence, and that is largely the result of
difficulties of researching the issue.
Katz and Darbishire (2000): “converging differences. Although globalization and internationalization might be argued
to foster a general converging trend in employment systems, managers can do different things. As a result, all
societies will gradually develop a range of work practices. However, the literature on convergence shows that
national differences remain.”
1.6 Structuring The Field Into Three Components
Three headings under IHRM:
• National institutional and cultural differences: every nation has its own unique set of institutions and many
share a common culture, the deep-lying values and beliefs reflected in the ways societies operate, and in the
ways the economy operates and people work and are managed at work
• Aspects of comparative human resource management: the way people work and explore the differences
between nations in the way that they manage these process à comparative tradition makes more of the
institutional differences than the cultural differences
• International human resource management: examines the way organizations manage their human resources
across these different national contexts.
1.7 How Is The Overall Field Of International HRM Evolving?
IHRM has evolved in three directions
• Growing influence of institutional perspective
• Development of critical perspective: to understand IRHM, ask questions about who it serves, who the key
stakeholders are and the context in which it operates.
, Sofie Julia Polman
• Problem-solving perspective on IHRM: focusing on the progressive issues that have been created n the
conduct of business operations as a consequence of internationalization.
Key Learning Points
• Much of our initial understanding about IHRM was traditionally based on the study of MNCs
• Definitions of IHRM have concentrated on examining the HRM issues, problems, strategies, policies and
practices which firms pursue in relation to the internationalization of their business
• The additional complexities of managing an international workforce in organizations that are
internationalizing call for a different mindset and different skills for practitioners
• Internationalization is also becoming more widespread. The levels of foreign direct investment can be huge
although these developments are always fraught with risks and uncertainties
• There are continental shifts occurring in the focus of this economic activity, leading to new patterns of
mobility and trade, and MNCs dominated by the new mindsets and approaches.
• We are also witnessing the global transfer of work – either in terms of the creation of new jobs or through
the global sourcing of certain parts of an individual’s or unit’s work. This is having a major impact on the type
of organizations and nature of work that remain viable in different parts of the world.
• Rather than just studying the operation of MNCs, the subject matter of IHRM is best covered under three
headings: exploration and explanations of national differences in HRM; specific aspects of comparative HRM
practice and international HRM
• These three fields each show that there is an increasingly wide set of contextual factors at play. Each field
has expanded in depth, in parallel with the progressively complex problems of internationalization.
Chapter 4: Culture and Organizational Life
4.1 Introduction
GLOBE = Global Leadership and Organizational Behavior Effectiveness
It is important to understand the way differences in national cultures can affect attitudes and behaviors in the work
environment. These attitudes and behaviors in turn become embedded in the organizational cultures and systems.
Many management texts still adopt a universalist approach, focusing on “best practice”, often without any
acknowledgement of how transferable these practices might be in different societal contexts.
4.2 The Impact of Culture on Organizational Behavior and HRM
Cultural assumptions are therefore linked to a wide range of organizational behaviors.
Management practices are heavily influenced by collectively shared values and belief systems. Laurent (1986, p. 97)
warned against assuming that management approaches developed in one particular culture can be deemed to be
valid for any other culture.
Literature indicates that cultural values shape the conduct of HRM through the following mechanisms (Sparrow and
Hiltrop, 1997)
• Attitudes held about, and definitions of, what makes an effective manager, and their implications for the
qualities recruited, trained and developed
• The giving of face-to-face feedback, level of power distance and uncertainty avoidance, and their
implications for recruitment interview, communication, negotiation and participation processes
• Expectations of the manager-subordinate relationship, and their implications for performance management
and motivational processes
• Differential concepts of distributive justice, socially healthy pay and the individualization of rewards, and
their implications for the design of pay systems
• The mindsets used to think about organizational structuring or strategic dynamics
4.3 Do Cultural Studies Have Any Utility?
National culture has a deep impact on many aspects of HRM.
Ronen and Shenkar (1985) believed that variation in cultural values that is tied to workplace behaviors, attitudes and
outcomes is systematic.
, Sofie Julia Polman
The ecocultural perspective Ronen and Shenkar use for their research in 2013 sees culture as an evolving adaptation
to ecological and sociopolitical influences. Individual psychological characteristics in a given population similarly
adapt to their cultural context. Their examination uses three variables: the combined role of language, religion and
geography, in generating cluster information. Their analysis is described as utilitarian: designed to reduce the
complexity in cultural studies and to and aid data manageability.
The more we wish to link national culture to the “nitty-gritty” of organizational life, and people management at
individual level, the more we need to refine our understanding.
4.4 Corporate Social Responsibility and National Culture
Main sources of cross-national difference in approaches to CSR:
• The institutional environment: this differs across countries and this influences the rules of the game.
• Cultural values: corporate social responsibility derives from accepted values and these values differ across
countries. They influence managerial decision-making and indicate which choices and behaviors are
acceptable or unacceptable.
• Education: managerial education plays a key role in shaping the worldviews of future managers. It diffuses a
particular management ideology that will emphasize the compatibility (or incompatibility) of corporate
economic and social responsibility.
The two cultural values from Hofstede power distance and individualism-collectivism have been linked to attitudes
about CSR, however there is still some confusion about the impact of power distance.
There are different types of CSR
• Economic
• Legal
• Ethical
• Philanthropic
Meeting social responsibilities is necessary in the long run for full economic and shareholder value to be achieved; a
strong corporate image (or the lack of it) drives business development.
National culture plays a role, and it seems that differences in individual perceptions, attitudes and perceptions
within any one country about the trade-off between CSR and economic values are less than the differences found
between countries.
4.5 Placing Boundaries Around the Impact of Culture
A key problem that can occur when working in intercultural situations is the tendency to confuse personality and
culture: culture is, by definition, a group-based concept, whereas personality is an individual-based concept.
Although people from a particular culture can on average share or endorse a given cultural value or believe, and is
on the level of the country that is the single most important determinant of these scores; when values are measured
at the individual level, there is still enough distribution of scores across a cultural scale. But, between members from
within any single country for their scores on the value orientation to be traded as an important individual difference.
Tung et al (2012) looked at the interplay between ethnicity, religious affiliation and income levels. Findings showed
that high-income groups could be treated as one consumer (or internally, employee) segment, but people in low-
income brackets made investment strategies that varies on the basis of ethnicity or religion, according to their
values.
4.6 Is Country More Important Than Region in Explaining Work Values?
Peterson and van Iterson (2015): Whilst job security goals and goals for working with pleasant people varied
between regions, the largest differences between regions were between regions with national boundaries, rather
than between regions across the two nations. Within-nation regional differences were noticeable, mainly along
religious groups, but they were ultimately small.
