Globalization

The impact of globalization 1

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Globalization is the spread of products, technology, information, and jobs across national
borders and cultures. In economic terms, it describes an interdependence of nations around
the globe fostered through free trade

◉Globalization is the spread of products, technology, information, and jobs across nations.
◉Corporations in developed nations can gain a competitive edge through globalization.
◉Developing countries also benefit through globalization as they tend to be more cost-effective and therefore
attract jobs.
.

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◉ Improved methods of transport and communication, which allow for the rapid
movement of people, goods and, in particular, information across national borders.

◉ Increasing integration of newly industrializing countries (such as China, India and

Indonesia) into developing global networks.

◉ A ‘new international division of labour’ is emerging, in which unskilled manufacturing

work shifts to poorer, less developed countries, whereas research and development
activities are centred in the richer and more advanced industrial societies.

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◉ Increase in the number and power of supra-national bodies and institutions (such as the
European Union or the G8 group of countries).

◉ Labour mobility is increasing on an international scale as significant numbers of people

migrate to other countries in search of better work and better lives.

◉ Goods and services are increasingly culturally homogenized around the globe,
symbolized most powerfully by the spread of global brands such as McDonald’s restaurants,
Starbucks coffee shops and Nike shoes.

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IHRM DEFINED
 DEFINING IHRM

• HR planning

• Staffing (recruitment, selection, placement)

• Performance management

• Training and development

• Compensation (remuneration) and benefits

• Industrial relations.

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 DIFFERENCES BETWEEN DOMESTIC
AND INTERNATIONAL HRM

1. More HR activities - international taxation / international relocation and orientation /administrative

services for expatriates /host-government relations /language translation services.

2. The need for a broader perspective

3. More involvement in employees’ personal lives

4. Changes in emphasis as the workforce mix of expatriates and locals varies

5. Risk exposure

6. Broader external influences

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 When HRM Goes Interntional - IHRM
1. Procurement, allocation, and utilization.

2. The national or country categories involved in IHRM activities:

• The host-country where a subsidiary may be located
• The parent-country where the firm is headquartered
• “Other’ countries that may be the source of labor, finance, and other inputs

3 The three categories of employees of an international firm:

• Host-country nationals (HCNs)
• Parent-country nationals (PCNs)
• Third-country nationals (TCNs)

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Can you guess the Host / Parent / Other Country the company operates in

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◉ IBM employs British citizens in its British operations (HNC)
◉ Sends Mike;US citizens (PCNs) to Asia-Pacific countries on assignment
◉ Lee; Singaporean National is on an assignment to its Chinese operations
(as TCNs).

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Who is an expatriate?
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 Expatriates’ is an employee who is working
and temporarily residing in a foreign country. Many
firms prefer to call such employees ‘international
assignees’

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MNC - Multinational Corporation

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 A multinational corporation, or multinational enterprise, is an
international corporation whose business activities are spread
among at least two countries.

• Multinational corporations participate in business in two or more countries.

• MNC can have a positive economic effect on the country where the business is
taking place.

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 THE MOTIVATIONS FOR INTERNATIONALIZATION

• Desire to secure a stable source of raw materials

• Take direct control over the production raw materials in order to absorb
the profit margin and to prevent a rival cornering the market

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Globalization and MNC
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✓ 61,000 multinationals in the world
controlling around 900,000 subsidiaries

✓ Annual sales of $19 trillion and directly

employ around 54 million people Data -The United Nations Centre on
Transnational Corporations

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 THE CULTURALIST PERSPECTIVE
A cultural perspective is viewing a situation or concept through the eyes of an individual’s native
environmental and social influence. For example, when creating a product it is important to
consider the cultural perspective of the different groups of people who may purchase it.

National culture can affect organizations in many ways. It may influence

• Attitudes in international negotiations

• Investments, trade and ownership within firms.
• Assumptions about appropriate pay systems
• Organizational hierarchies / organizational structures
• Manager-subordinate relationship
• Attitudes towards job and career mobility

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 Hofstede’s (1980) study

Based on an Attitude survey of 117,000 Multinational corporation

employees:

Four major dimensions that affect national cultural equilibrium

✓ Power distance
✓ Uncertainty avoidance
✓ Individualism and Collectivism
✓ Masculinity-femininity

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 HRM practices Impact of the cultural context

Recruitment and • In societies low on ‘in-group collectivism’, individual achievements

selection represent important selection criteria.
• In societies high on ‘in-group collectivism’, the emphasis in the recruiting
process is more on team-related skills than on individual competencies.
Training and • In societies high on gender egalitarianism, women have the same
development chances for vertical career advancement as men.
• In societies low on gender egalitarianism, female managers are rare.
Compensation • In societies high on uncertainty avoidance, employees tend to be rather
risk averse and prefer fixed compensation packages or seniority-based
pay.
• In societies low on uncertainty avoidance, employees tend to be rather
risk-taking and accept high income variability through performance
based pay.
Task distribution • Societies high on collectivism tend to emphasize group work.
• Societies high on individualism rather attribute individual responsibilities in
the work system

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 Thank you
anj.jasenthuliyana@gmail.com

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