Chapter 1

INTRODUCTION

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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 Chapter 1
INTRODUCTION START
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C O N T E N T S


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Objectives cover below to
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 Scope of the book

of contents.

 Defining international HRM (IHRM)

 Differences between domestic and international HRM
 Variables that moderate these differences
O F

 The cultural environment

TA B L E

 Industry type
 Extent of MNE reliance on its home-country domestic market
 Senior mgmt. attitudes to international ops.
 Applying a strategic view of IHRM
 The changing context of IHRM

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Vocabulary
 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


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organizational culture
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Objectives
1. Define IHRM and key terms in IHRM
2. Introduce and review expatriate assignment
management
3. Outline the differences between
domestic and international HRM
4. Present the complexity and increasing challenges
to existing IHRM practices and current models

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Scope of the book

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Figure 1.1
Interrelationships between approaches to the field

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Defining international HRM

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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HRM activities
1. HR planning
2. Staffing (recruitment, selection, placement)
3. Performance management
4. Training and development
5. Compensation and benefits
6. Industrial relations

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Morgan’s “3-D” definition of IHRM
1. The broad HR activities of
procurement, allocation and 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 and other inputs
3. The employees of an international firm:
» HCNs (host country nationals)
» PCNs (parent .. .. )
» TCNs (host .. .. )

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Figure 1.2
International assignments create expatriates

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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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

This definition includes comparative analyses

of HRM in different countries.

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Domestic vs. international

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By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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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 and locals varies
5. more risk exposure
6. broader external influences

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For use with International Human Resource Management 7e ISBN-10: 1473719026
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IHRM has international HR activities
■ International taxation
■ International relocation and orientation
■ Administrative services for expatriates
■ Host-government relations
■ Language translation services

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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International relocation involves:
■ Arranging for pre-departure training
■ Providing immigration and travel details
■ Providing housing, shopping, medical care,
recreation, and schooling information
■ Finalizing compensation details such as:
 delivery of salary overseas
 determination of various overseas allowances
 taxation treatment

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For use with International Human Resource Management 7e ISBN-10: 1473719026
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Variables that moderate the differences

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Four more variables that moderate the difference
between domestic and international HRM:

1. the cultural environment

2. the industry(ies) in which the MNE is
primarily involved
3. the extent to which the MNE relies on
its home-country domestic market
4. the attitudes of senior management

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
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Figure 1.3
A model of the variables that moderate differences between
domestic and international HRM

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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The cultural environment

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Culture matters
■ Culture shock
■ Emic ≠ etic
■ Convergence hypothesis research
tends to focus on macro level
■ Divergence hypothesis research
tends to focus on micro level
■ The international HR manager must be
aware of cultural differences

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Industry type

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The MNE industry type continuum
An MNE performs somewhere in this range:
Multidomestic Industries Global Industries

Examples
retailing, distribution, insurance airlines, semiconductors, copiers

International strategy
Collapses to a Must integrate activities on a
series of domestic strategies worldwide basis

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Laurent’s steps for true IHRM:
1. Parent organization explicitly recognizes that its HRM reflects
some assumptions and values of own home culture.
2. Parent organization explicitly recognizes that its own peculiar ways
are neither universally better nor worse than others –
just different and likely to exhibit strengths and weaknesses,
particularly abroad.
3. Parent organization explicitly 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 and
take steps to make them discussable & therefore usable.
5. All parties build belief that cross-cultural learning invites
more creative and effective ways of managing people.

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Extent of reliance of the multinational on its
home-country domestic market

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Table 1.1
Fortune 2016 Global 500 Top 10 ranked by US$ millions revenues

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Senior management attitudes

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For use with International Human Resource Management 7e ISBN-10: 1473719026
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What does senior mgmt. think?

Some of the changes required to truly

internationalize HR

have more to do with a global mindset

than with behaviors.

Chapter 1
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Applying a strategic view of IHRM

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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Figure 1.4
A framework of strategic HRM in MNEs

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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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, and
negate what in other contexts are our strengths

3. Be difficult to respond to in a
discriminate and proportionate manner

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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The changing context of IHRM

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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An MNE case study result
MNEs fail primarily because of
a lack of understanding of
the
differences

in managing HR, at all levels,

in foreign environments.

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For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
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