International Human Resource Management
Lecture 1 – Introduction and positioning IHRM
Notes lecture
Why growing importance of IHRM as a discipline?
- Changing world order
- Multinational companies are becoming more and more important
- Use of cheap labor and the responsibility question in the supply chain
- New barriers to trade: Brexit, protectionism Trump, disrupting war of talent
- China – supply country and world power with increasing number of talent
- Input of new economic regions to show HR practices: growth of emerging markets
- New forms of organizing, mostly international:
o HR function supports cross border organizational learning and knowledge management
o HR plays more significant role in international network organizations with more horizontal
communication
What is IHRM in academics?
- Young sub-discipline, since 1970s. Perlmutter (1969) wrote the first article on IHRM: HQ-
subsidiary relationship and the approach of staffing. There are four approaches to staffing:
o Ethnocentric staffing: focus is on the country of origin
o Polycentric staffing: hire people from Germany but also from the local
communities/countries
o Regiocentric staffing: in Europe you hire European managers, in Asia you hire Asian
managers.
o Geocentric staffing: you recruit people from everywhere in the world.
- 1980, 1900: research on expatriates. They looked in the motives for international assignments,
adjustments problems and failures.
- International Business Management and IRHM: IHRM follows transition to transnational
organization international models about how international companies organize their HR
function.
What is IHRM?
- The influence of different countries/norms/values influences all of the aspects of the HR
processes and practices. The question is how organizations deal with these differences?
- The role of cultural differences (Hofstede, 1980, 1991)
- Institutions determining the scope of SHRM comparative HRM (Rosenzeig & Nohria, 1994)
- 1990s: Strategic role of HRM entering the headquarters of MNCs.
What is strategic IHRM (S-IHRM)?
It examines the way in which internationalization influences HRM in organizations and how
international organizations manage their HR in different national contexts in which they operate.
- Focus on dualities, dilemmas: understanding the opposing forces of different institutions and
cultures, one of the most important is global integration (everything is from the country of origin)
versus local responsiveness (look at what is happening at the local level).
- Focus on global leadership, international mobility, managing international workforce
(talent/career), transfer of knowledge across the border, how do you do performance
1
, management? Appraisal is looked at differently in different countries/cultures. Usually we try to
localize this as much as possible.
- Research is still strong dependent on industrialized countries; English language orientation.
Approaches and theoretical perspectives:
IHRM consists of four main approaches:
1. Cross-cultural management: develop knowledge about cultural differences between
populations/nations/countries and how this affects HRM. Much more focused on the people and
how they behave, act, what differences in attitudes can we see and how does this impact the
HRM outcomes such as absenteeism?
o Differences in the several layers of culture: artefact – basic assumptions: mental
programming. How do we do things here?
o Expressed in typical behavior and attitudes at work (kiss, bow or shake hands).
o Focus on expats/managers’ cultural adjustment competences. Focus on how to change
behavior, how to adjust behavior.
o Changing international mobility patterns.
o Theoretical perspectives: usually from a socio-cultural perspective,
Cross-cultural adjustment theory: it looks into how people adjust themselves, and it
brings certain lessons about how to train people to make adjustment easier.
Interaction anxiety theory: the discovery that people experience more anxiety when
they have to interact with strangers.
o Important constructs:
Cultural adjustment model: looking in the adaptation
stages in adjustment, culture shock, interaction anxiety
and uncertainty,
Global management competencies, cultural intelligence
(CQ) global mindset and repatriation (moving back home,
this sometimes comes with another culture shock as you
are used to another country now, sometimes these shocks
are even worse than when you went to another country).
Cultural adjustment model
Working in another country sounds very appealing however, after a
few weeks you still work there when the honeymoon phase is over. You get in a shock because
people don’t behave as you expect or what you are used to. After a while you accept the reality
and then you start to experiment. After this is start to adapt your behavior and start to accept
this.
2. Comparative management: compare HRM practices between countries, regions, regions within a
country and how this affects HRM. Looks into a description and analyzing the differences in HR
and what the effects are of these differences.
o Look for dimensions that explain the differences, culture (Hofstede, Schwarts, Tromepnaars,
GLOBE) and institutions (Varieties of capitalism / business regimes: Hall and Soskice;
Whitley).
o Adjustment of strategy and policies according to regimes.
o Theoretical perspectives:
Neo-institutionalism (much used in comparative approach): coercive (do things because
you have to follow the rules, laws, etc.), mimetic (copying practices from best practices
2
, from other countries) and normative (comes from consultancies, the way we are used
to) isomorphic pressures (pulls) in the adoption of practices (Powell).
Research by Scot: Regulative (laws), normative (=mimetic) and cultural/cognitive pillars
that shape practices (Scott) in an organizational field (all multinationals could be an
organizational field for example).
Culturalist perspective: national culture values determine attitudes and behavior.
o Important concepts: cultural dimensions, varieties of capitalism, loose (culture that allows
much more deviant behavior, diversity is okay) and tight (if you cross a certain norm you
really are a bad person) cultures, convergence – divergence & final convergence –
directional convergence, business systems or regimes. Culture gives you the danger of
stereotypes, this can influence the adoption of certain practices.
o Business models and VoC: business system: economic orientation, we look at coordination,
market relations. It is distinctive configurations of hierarchy-market relations which become
institutionalized as relatively successful ways of organizing economic activities in different
institutional environments. How ownership structures, company relationships and
managerial strategies combine in an effort to coordinate business activity. Influencing how
HRM is configurated.
3. (Strategic) International Human Resource Management in MNCs: how does HRM operate in
MNCs
o Strategies and IHRM more intensively related
o Balance pressure for (global) integration with pressure for local responsiveness – the
classical dilemma for international organizations
o Manage variety in systems
o Companies strive for the best fit between external environment, strategy and HRM policy
o Multinational companies can be structured in several ways.
Centralized hub: very traditional form. There is a headquarter and subsidiaries in
different countries. The headquarter decides everything, the
subsidiaries do their tasks.
Decentralized federation: companies where there is a holding
structure, there is also autonomy for subsidiaries. Common for
companies where the local production is also locally consumed.
Integrated network / coordination federation: is a combination
between the centralized hub and a coordination. These three
are development stages according to some people to achieve
an integrated network.
o Theoretical perspectives:
Dynamic capabilities perspective (RBV): IHRM as a resource bundle capable of
generating sustainable competitive advantage for the MNC, process and HRM
configuration in MNC (HRM is seen as generating resources in a multinational
company).
Relational and social capital theory: Relational networks reduce costs of transactions,
give access to capabilities in networks, enables equal learning, stimulate creating new
links.
Information processing theory: Reduce uncertainties; e-technology supporting factor in
building relational networks.
o Important concepts: global standardization vs local adaption, transfer of practices: country
of origin effect (dominance effect) or mimetic spill over effect, institutional distance (the
3
, country of origin effect is difficult when the distance between
institutions (values, etc.) is bigger, Social Networking and Cross border
learning (Glue technology: effective use of HRM to stimulate
coordination and integration), institutional duality (situation that on the
one hand have institutional pressure from the HQ and local institutional
pressures that push the local managers in conflicting corners) and
balancing in different domains.
o Dualities in the transnational: basic duality in MNEs: responding to variety of demands
combined with a clear and consistent global business strategy. Tension between on one
hand local responsiveness and on the other global integration. Different pressures per
industry/function.
4. Critical perspectives in IHRM: for example trying to reach the cheapest labor, be critical about
what multinational organizations are doing.
o Critical management studies (CMS) and political economy approach (post-colonial and
postmodern views)
o Critical views search for (sometimes hidden) relationships of power and how they lead to a
given situation.
o These relationships can appear for example, in the use of words, in discourses.
o Analysis of discourses or searching for power relationships enable to grasp what is at stake
for those involved in a given situation.
o It highlights that talking about cultural differences is not an objective depiction of reality,
otherwise the argued cultural differences would be the same.
o Consistency is found when one looks at the hierarchical levels. In both countries, people
who have a superior of a different nationality argue that their boss’s national culture is
hierarchical.
o This means that the power inequalities are important in determining what cultural
differences people see as relevant. These boundaries serve the reproduction of power and
status inequalities in their organizations.
o Power of MNCs in relocating its production sites and management of human resources: wild
capitalism and race to the bottom.
o Creating competition between sites and regions
Q&A Lecture 1
Exam will be essay questions and an open book exam.
- It will be an application of knowledge kind of questions. So for example discussion statements.
- In the exam: all the articles and the lectures are the mandatory literature to study for the exam.
- Not sure how many statements/questions there will be.
Example question: “The existence of national culture as an important explanatory variable for the
configuration of HRM in MNCs is decreasing in the wake of continued globalization.”
Get as much arguments as possible that support and falsify this statement.
Keep the answers short but don’t use bullet points as in the slides.
4
Lecture 1 – Introduction and positioning IHRM
Notes lecture
Why growing importance of IHRM as a discipline?
- Changing world order
- Multinational companies are becoming more and more important
- Use of cheap labor and the responsibility question in the supply chain
- New barriers to trade: Brexit, protectionism Trump, disrupting war of talent
- China – supply country and world power with increasing number of talent
- Input of new economic regions to show HR practices: growth of emerging markets
- New forms of organizing, mostly international:
o HR function supports cross border organizational learning and knowledge management
o HR plays more significant role in international network organizations with more horizontal
communication
What is IHRM in academics?
- Young sub-discipline, since 1970s. Perlmutter (1969) wrote the first article on IHRM: HQ-
subsidiary relationship and the approach of staffing. There are four approaches to staffing:
o Ethnocentric staffing: focus is on the country of origin
o Polycentric staffing: hire people from Germany but also from the local
communities/countries
o Regiocentric staffing: in Europe you hire European managers, in Asia you hire Asian
managers.
o Geocentric staffing: you recruit people from everywhere in the world.
- 1980, 1900: research on expatriates. They looked in the motives for international assignments,
adjustments problems and failures.
- International Business Management and IRHM: IHRM follows transition to transnational
organization international models about how international companies organize their HR
function.
What is IHRM?
- The influence of different countries/norms/values influences all of the aspects of the HR
processes and practices. The question is how organizations deal with these differences?
- The role of cultural differences (Hofstede, 1980, 1991)
- Institutions determining the scope of SHRM comparative HRM (Rosenzeig & Nohria, 1994)
- 1990s: Strategic role of HRM entering the headquarters of MNCs.
What is strategic IHRM (S-IHRM)?
It examines the way in which internationalization influences HRM in organizations and how
international organizations manage their HR in different national contexts in which they operate.
- Focus on dualities, dilemmas: understanding the opposing forces of different institutions and
cultures, one of the most important is global integration (everything is from the country of origin)
versus local responsiveness (look at what is happening at the local level).
- Focus on global leadership, international mobility, managing international workforce
(talent/career), transfer of knowledge across the border, how do you do performance
1
, management? Appraisal is looked at differently in different countries/cultures. Usually we try to
localize this as much as possible.
- Research is still strong dependent on industrialized countries; English language orientation.
Approaches and theoretical perspectives:
IHRM consists of four main approaches:
1. Cross-cultural management: develop knowledge about cultural differences between
populations/nations/countries and how this affects HRM. Much more focused on the people and
how they behave, act, what differences in attitudes can we see and how does this impact the
HRM outcomes such as absenteeism?
o Differences in the several layers of culture: artefact – basic assumptions: mental
programming. How do we do things here?
o Expressed in typical behavior and attitudes at work (kiss, bow or shake hands).
o Focus on expats/managers’ cultural adjustment competences. Focus on how to change
behavior, how to adjust behavior.
o Changing international mobility patterns.
o Theoretical perspectives: usually from a socio-cultural perspective,
Cross-cultural adjustment theory: it looks into how people adjust themselves, and it
brings certain lessons about how to train people to make adjustment easier.
Interaction anxiety theory: the discovery that people experience more anxiety when
they have to interact with strangers.
o Important constructs:
Cultural adjustment model: looking in the adaptation
stages in adjustment, culture shock, interaction anxiety
and uncertainty,
Global management competencies, cultural intelligence
(CQ) global mindset and repatriation (moving back home,
this sometimes comes with another culture shock as you
are used to another country now, sometimes these shocks
are even worse than when you went to another country).
Cultural adjustment model
Working in another country sounds very appealing however, after a
few weeks you still work there when the honeymoon phase is over. You get in a shock because
people don’t behave as you expect or what you are used to. After a while you accept the reality
and then you start to experiment. After this is start to adapt your behavior and start to accept
this.
2. Comparative management: compare HRM practices between countries, regions, regions within a
country and how this affects HRM. Looks into a description and analyzing the differences in HR
and what the effects are of these differences.
o Look for dimensions that explain the differences, culture (Hofstede, Schwarts, Tromepnaars,
GLOBE) and institutions (Varieties of capitalism / business regimes: Hall and Soskice;
Whitley).
o Adjustment of strategy and policies according to regimes.
o Theoretical perspectives:
Neo-institutionalism (much used in comparative approach): coercive (do things because
you have to follow the rules, laws, etc.), mimetic (copying practices from best practices
2
, from other countries) and normative (comes from consultancies, the way we are used
to) isomorphic pressures (pulls) in the adoption of practices (Powell).
Research by Scot: Regulative (laws), normative (=mimetic) and cultural/cognitive pillars
that shape practices (Scott) in an organizational field (all multinationals could be an
organizational field for example).
Culturalist perspective: national culture values determine attitudes and behavior.
o Important concepts: cultural dimensions, varieties of capitalism, loose (culture that allows
much more deviant behavior, diversity is okay) and tight (if you cross a certain norm you
really are a bad person) cultures, convergence – divergence & final convergence –
directional convergence, business systems or regimes. Culture gives you the danger of
stereotypes, this can influence the adoption of certain practices.
o Business models and VoC: business system: economic orientation, we look at coordination,
market relations. It is distinctive configurations of hierarchy-market relations which become
institutionalized as relatively successful ways of organizing economic activities in different
institutional environments. How ownership structures, company relationships and
managerial strategies combine in an effort to coordinate business activity. Influencing how
HRM is configurated.
3. (Strategic) International Human Resource Management in MNCs: how does HRM operate in
MNCs
o Strategies and IHRM more intensively related
o Balance pressure for (global) integration with pressure for local responsiveness – the
classical dilemma for international organizations
o Manage variety in systems
o Companies strive for the best fit between external environment, strategy and HRM policy
o Multinational companies can be structured in several ways.
Centralized hub: very traditional form. There is a headquarter and subsidiaries in
different countries. The headquarter decides everything, the
subsidiaries do their tasks.
Decentralized federation: companies where there is a holding
structure, there is also autonomy for subsidiaries. Common for
companies where the local production is also locally consumed.
Integrated network / coordination federation: is a combination
between the centralized hub and a coordination. These three
are development stages according to some people to achieve
an integrated network.
o Theoretical perspectives:
Dynamic capabilities perspective (RBV): IHRM as a resource bundle capable of
generating sustainable competitive advantage for the MNC, process and HRM
configuration in MNC (HRM is seen as generating resources in a multinational
company).
Relational and social capital theory: Relational networks reduce costs of transactions,
give access to capabilities in networks, enables equal learning, stimulate creating new
links.
Information processing theory: Reduce uncertainties; e-technology supporting factor in
building relational networks.
o Important concepts: global standardization vs local adaption, transfer of practices: country
of origin effect (dominance effect) or mimetic spill over effect, institutional distance (the
3
, country of origin effect is difficult when the distance between
institutions (values, etc.) is bigger, Social Networking and Cross border
learning (Glue technology: effective use of HRM to stimulate
coordination and integration), institutional duality (situation that on the
one hand have institutional pressure from the HQ and local institutional
pressures that push the local managers in conflicting corners) and
balancing in different domains.
o Dualities in the transnational: basic duality in MNEs: responding to variety of demands
combined with a clear and consistent global business strategy. Tension between on one
hand local responsiveness and on the other global integration. Different pressures per
industry/function.
4. Critical perspectives in IHRM: for example trying to reach the cheapest labor, be critical about
what multinational organizations are doing.
o Critical management studies (CMS) and political economy approach (post-colonial and
postmodern views)
o Critical views search for (sometimes hidden) relationships of power and how they lead to a
given situation.
o These relationships can appear for example, in the use of words, in discourses.
o Analysis of discourses or searching for power relationships enable to grasp what is at stake
for those involved in a given situation.
o It highlights that talking about cultural differences is not an objective depiction of reality,
otherwise the argued cultural differences would be the same.
o Consistency is found when one looks at the hierarchical levels. In both countries, people
who have a superior of a different nationality argue that their boss’s national culture is
hierarchical.
o This means that the power inequalities are important in determining what cultural
differences people see as relevant. These boundaries serve the reproduction of power and
status inequalities in their organizations.
o Power of MNCs in relocating its production sites and management of human resources: wild
capitalism and race to the bottom.
o Creating competition between sites and regions
Q&A Lecture 1
Exam will be essay questions and an open book exam.
- It will be an application of knowledge kind of questions. So for example discussion statements.
- In the exam: all the articles and the lectures are the mandatory literature to study for the exam.
- Not sure how many statements/questions there will be.
Example question: “The existence of national culture as an important explanatory variable for the
configuration of HRM in MNCs is decreasing in the wake of continued globalization.”
Get as much arguments as possible that support and falsify this statement.
Keep the answers short but don’t use bullet points as in the slides.
4
