Candidate Number: 131865

Theory of International Staffing

The world we live in today is becoming increasingly inter-connected and global. Concerning
businesses, there is a constant demand for a global supply of human talent. Organizations must
identify and recruit the best available employees around the world. This report will explore the
theory of international (global) staffing and argue that the implementation of a successful
international staffing policy can potentially improve knowledge transfer, innovation,
organizational integration and learning capacity of the MNE. The theory addressed in this report
was mentioned in podcast three - regarding Human Resource in a globalized world. The podcast
claimed, Increasing role of globalization make us consider the International Human Resource
Management. They pointed to the importance of global staffing in modern day business and
that it is an important international human resource management practice. The podcast also
identified three different approaches to international staffing and mentioned how each
approach can benefit the organization. Global staffing is a key aspect of the management of
human resource management for MNEs. This practice is considered a primary HR practice used
by MNEs in order to maintain control and coordinate their globally dispersed operations. In
modern business, staffing issues are linked to the organizational strategy of the MNE, so this
topic is considered to be of much significance to MNEs. Research on issues around global
staffing has increased in significance and volume over time due to the increasing importance of
the topic. (David G. Collings & Hugh Scullion).

David G. Collings, Hugh Scullion and Peter J. Dowling (year) defined the theory of global staffing
as critical issues faced by MNEs - regarding staffing decisions - to fill key positions in HQs and in
subsidiaries around the world. Staffing decisions for MNEs are concerned with the choice
between different types of employees: Parent country nationals (PCNs), host country nationals
(HCNs) & third country nationals (TCNs). The authors stress that an appropriate mix of
employees (home, host and third country nationals) plays a significant role regarding MNEs
ability to transfer knowledge, improve innovation and corporate integration. MNEs capability to
identify firm-specific innovations and transfer them across their globally-dispersed subsidiaries
is considered to be a key factor for MNEs to obtain a competitive advantage. An organisation
learns better & faster when it has enough psychological safety to implement those techniques,
be open to new ideas & allow appreciation of differences. Additionally, having a supportive
learning environment, concrete learning process & practices and having leadership that
emphasizes on learning improves the learning and innovation process. (Book). A successful
International Human Resource Management (IHRM) practice, global staffing, can ensure
psychological safety, appreciation of differences, and openness to ideas that in return will cause
better learning & innovation. Therefore, it can be concluded that better IHRM practice ensure a
better innovative and learning organisation.

Organizations must implement a global staffing strategy that best fits their organizational
strategy and help the firm reach their desired goal. Taylor et al. (1996) argued that in order to
provide value for the firm, HRM system of global firms should be constructed around specific
organizational competences that are crucial to securing competitive advantage globally. For
 Candidate Number: 131865

example, if the firm want to leverage home countrys innovation than they must hire the right
employees and undergo a proper global staffing practice. Taylor (2007) urged that leveraging
internal knowledge and innovation makes the organization take advantage of its global access to
information and improve its learning and creativity and in return improve the global business
performance. In this regard, organizations might consider using PCN expatriates as they are a
key factor in transferring knowledge from HQ to subs. Moreover, it is important for the MNE to
fully understand the local culture and local needs so the organization must implement a global
staffing strategy that allows them to grasp all the local aspects. Luo and Peng (1999) pointed to
the potential benefits of knowledge of local tastes and cultural values in improving subsidiary
performance. In this case, the firm should consider hiring HCN to gain access to local knowledge
& information. Additionally, experienced TCH would also benefit the business. Makela (2007)
suggests that managers who have previous expatriate assignment have more social capital
(defined below) than managers with only a domestic experience. Working abroad also expands
the managers network of professional contacts. Gong (2003), calls for building a heterogeneous
staff (appropriate mix of PCNs, HNCs and TCNs) to best manage knowledge, facilitate
innovation, organizational learning and improve overall performance. MNEs must identify their
needs and strategy and build their global staffing strategy accordingly.

Furthermore, an MNEs acquisition and exploitation of knowledge depends heavily on social

capital. Nahapiet & Ghoshal (1998) define social capital as the sum of the actual and potential
resources embedded within, available through, and derived from the network of relationship
possessed by an individual or social group between its holders and users and in particular the
ability to leverage internal knowledge and aid in coordination and cooperation. Social
relationships are very important channels for information flows when facilitating knowledge
exchange. International HR practices plays a crucial role in the formation of social capital
because the employment policies determine the nature of employees and thus their specific
communication efficiency and effectiveness. Therefore global staffing is crucial when it comes to
knowledge acquisition and interpretation.

Another key role played by global staffing is in improving corporate integration. Integration is
define by Schuler and colleagues (1993) as inter-unit linkages within the MNE. It is very
beneficial for MNEs to integrate their human resource management (HRM) policies among
different countries that they operate in. It is expected that integrating an HRM policy across
various countries would increase in importance due to two factors. Firstly, the increasing focus
on creating social capital through the MNEs global internal network combined with emphasis
on ensuring the sustainability of MNEs global operations. The second factor that increase the
importance of transferring HRM practices across borders is driven by the desire to internalize
ownership of specific advantages by replicating the employment practice in the HQ as the firm
think that their HRM practices provide advantages in the host country. The desire for global
integration is to ensure the development of a common corporate culture and the potential to
enhance equity and justice within the MNE through transfer of HQ practices. Implementing a
successful global staffing practice would enable a better corporate integration. Hiring the right
employees can help the organization better get their corporate culture to their subsidiaries and
enable subsidiaries to generate and transfer knowledge.
 Candidate Number: 131865

To conclude, global staffing is a significant theory of IHRM. Successful implementation of global

staffing can potentially improve knowledge transfer, innovation, organizational integration and
learning capacity of the MNE. The research on this particular theory have increased notably due
to increasing importance of the topic as a result of globalization pressures. MNEs should
implement a global staffing strategy constructed around their core competencies and that fits
their organizational culture and strategy. The acquiring and exploitation of knowledge depends
so much in social capital. Successful global staffing can potentially improve social capital and
thus improve knowledge transfer. Finally, the right hiring of employees may result in a better
corporate integration which is crucial to improving business performance.