Chapter 1
International Human Resource Management
§ The study and application of all human resource management activities as they impact
the process of managing human resources in enterprises in the global market
Drivers of internationalization of business
1. Decreased trade barriers through trade agreements and treaties
2. Search for new markets and decreased costs
3. Rapid and extensive global communication
4. Rapid development and transfer of new technology including improved transportation
5. Increased travel and migration, exposure to new countries and cultures
6. Knowledge sharing across borders/cultures
7. E-commerce
8. Homogenization of culture and consumer demands
9. Global internet and social media, television, music, movies, sports, publications, news
10. Competitiveness of emerging market MNE’s and SME’s
Globalization
§ The integration of markets, nation-states, and technologies to a degree never witnessed
before – in a way that enabling individuals, corporations, and nation-states to reach
around the world farther, faster, deeper, and cheaper than ever before and in a way
that is enabling the world to reach into individuals, corporations, nation-states farther,
faster, deeper, and cheaper
UNCTAD = the United Nations Conference on Trade and Development
TNC = transnational corporations
TNI (Transnational Index)
§ Based on average percentage of its foreign assets, foreign sales, and foreign
employment to its total assets
§ Identifies the relative importance of foreign business activity to the world’s largest firms
Four settings of IHRM
1. Headquarters of multinationals
2. Home country subsidiaries of foreign owned firms
3. Domestic firms
4. Government agencies and non-governmental organizations
International HRM vs. Domestic HRM
- IHRM is responsible for more HR functions
- IHRM is responsible for a broader expertise and perspective
- IHRM is responsible for greater involvement in people’s lives
- IHRM is responsible for dealing with/and managing wider mix of employees
, - IHRM is responsible for more external factors and influences
- IHRM is responsible for a greater level of risk
Chapter 2 & 3
SIHRM = Strategic International Human Resource Management
§ Is the part of IHRM that focuses on creating and implementing IHRM policies and
practices that help achieve an MNE’s international vision and objectives
Strategic Management
§ The approaches that managers employ in running a company and that are derived from
the firm’s vision and objectives
Basic elements of the strategic management process:
Organizational vision, mission, goals
Environmental scanning
Global strategy formulation
Global strategy implementation
Evaluation and control
§ In an ideal word, an international firm will be actively engaged in strategic planning and
strategic management process on a global basis. Based on the vision, mission and goals,
the organization will regularly perform an environmental analysis and from that develop
its global strategies, which are then implemented for global success. Finally, evaluation
of success of implementation of chosen strategy to make any change and re-evaluate
the strategy
IHRM helps and MNE to improve its overall performance:
- Global competitiveness
- Efficiency
- Local responsiveness and global strength
- Flexibility
- Organizational and transfer of learning
, The internationalization processes
Stage 1 Portfolio investment and exporting
Stage 2 Sales subsidiary/local sales office
Stage 3 Operations through:
• Licensing
• Franchising
• Contracting/subcontracting
Stage 4 Operations through wholly owned subsidiaries
Stage 5 Operations through:
• International Joint Venture
• International mergers and acquisitions
• International alliances, partnerships,
consortia
Auxiliary methods of internationalization
- Outsourcing
- Offshoring
Integration Global Transnational
International Multi-domestic
Local responsiveness
Integration Local responsiveness
- Economies of scale - Adaption to local needs, competition and culture
- Improved quality - Compliance with regulations
- Standardization - Attracting local employees/networks
Ethnocentrism
§ In this orientation managers use a home-country standard as a reference in managing
international activities
Polycentrism or Regio-centrism
§ Here, as international investment and involvement increase, host-country cultures and
practices assume increased salience
