Chapter 1

Introduction: The Enduring Context of IHRM

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Chapter Objectives
In this introductory chapter, we establish the

scope of the textbook:

Define key terms in IHRM Outline the differences between domestic HRM and IHRM Identify the variables that moderate these differences And discuss trends and challenges in the global work environment and the enduring context in which IHRM functions and activities are conducted, including the way in which forces for change affect the operations of the internationalizing firm and have consequences for the management of people in the multinational context.
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Three Approaches to IHRM

Cross-cultural management

Examine human behavior within organizations from an international perspective Seeks to describe, compare and analyze HRM systems and IR in different countries Explore how HRM is practiced in multinationals
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Comparative HRM and Industrial Relations

HRM in multinational firms

Interrelationships between Approaches to the Field

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The General Field of HR

Major Functions and Activities Human resource planning Staffing

Recruitment Selection Placement

Performance management Training and development Compensation (remuneration) and benefits Industrial relations
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What does IHRM add into the Traditional Framework of HRM?

Types of employees

Within and cross-cultural workforce diversity Coordination Communication Procurement Allocation Utilization of human resources

Human resource activities

Nation/country categories where firms expand and

operate

Host country Parent country Third country

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A Model of IHRM

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What is an expatriate?
An employee who is working and temporarily

residing in a foreign country

Some firms prefer to use the term international assignees Expatriates are PCNs from the parent country operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

Global flow of HR

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International Assignments Create Expatriates:

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Differences between Domestic HRM and IHRM

More HR activities The need for a broader perspective

More involvement in employees personal

lives Changes in emphasis as the workforce mix of expatriates and locals varies Risk exposure Broader external influences
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Variables that Moderate Differences between Domestic HR and IHRM

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The Top Ten Multinationals

1.
2. 3. 4. 5. 6. 7.

8.
9. 10.

Rio Tinto (UK/Australia) Thomson Corporation (Canada) ABB (Switzerland) Nestl (Switzerland) British American Tobacco (UK) Electrolux (Sweden) Interbrew (Belgium) Anglo American (UK) AstraZeneca (UK) Philips Electronics (The Netherlands)
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Source: UNCTAD Index of Transnationality

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Forces for Change

Global competition Growth in mergers, acquisitions and

alliances Organization restructuring Advances in technology and telecommunication

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Impacts on Multinational Management

Need for flexibility Local responsiveness Knowledge sharing Transfer of competence

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Managerial Responses
Developing a global mindset More weighting on informal control

mechanisms Fostering horizontal communication Using cross-border and virtual teams Using international assignments

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Factors that Influence the Global Work Environment

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Chapter Summary (cont.)

We have established the scope of the textbook:

Defined IHRM and the term expatriate. Discussed major differences between domestic HRM and IHRM looking at six factors:

More HR activities Need for a broader perspective More involvement in employees personal lives Changes in emphasis as the workforce mix of expatriates and locals varies, Risk exposure and More external influences
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Chapter Summary (cont.)

Examined the enduring context of IHRM. The

focus is on the current global work environment, looking at forces for change, requirement for MNE
and managerial responses that have implications for the way in which people are being managed in multinationals at the turn of the 21st century.
This treatment has enabled us to provide an overview of the

field of IHRM and to establish how the general environment affects IHRM. The next chapter examines the organizational context where we explore how IHRM activities are determined by, and influence various internal changes as the firm internationalizes.
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