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Chapter 4 - IHRM
Chapter 4 - IHRM
IHRM in
cross-border M&As,
international alliances,
and SMEs
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
1 of 23
Chapter 4
IHRM in
cross-border M&As,
international alliances,
and SMEs START
▪
Click on an item to
Vocabulary go to its section.
▪ Cross-border alliances
▪ Cross-border mergers and c
acquisitions
▪ International equity joint ventures
▪ International SMEs
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
2 of 23
Vocabulary
▪ non-equity cross-border alliance, equity modes
▪ TNCs, EEA
▪ greenfield investments, acquisitions, mergers, M&As
▪ pre-M&A, due diligence, integration planning, and implementation phases
▪ resources, processes, values
▪ HR functions: strategic partner, administrative expert, employee
champion, change agent
▪ knowledge transfer, embedded knowledge
▪ performance-related pay, IJVs
▪ recruitment, training, and development
▪ partnership role, change facilitator and strategy implementer, innovator,
collaborator
▪ multicultural teams
▪ International SMEs
▪ internationalization process theory
Chapter 4
▪ experiential market knowledge
Chapter 4
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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Cross-border alliances
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
5 of 23
Figure 4.1
Equity and non-equity modes of foreign operation
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
6 of 23
Cross-border mergers & acquisitions
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
7 of 23
Figure 4.2
The formation processes of M&As and HR challenges
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
8 of 23
Figure 4.3
Mergers and acquisitions, 2005-2015 (billions of US$)
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
9 of 23
Typical cross-border M&A problems
▪ Within the first year of a merger,
up to 20% of executives may be lost
▪ The percentage lost gets worse over a longer
time frame
▪ Personnel issues are often neglected,
delayed, or not made a priority
▪ A high number of M&As fail or do not
produce the intended long-term
results
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
10 of 23
Figure 4.4
HR activities in the phases of a cross-border M&A
Based on information in the article ‘The correct spelling of M&A begins with HR by
Jeffery A. Schmidt, HR Magazine, June 2001. © 2001, Society for Human Resource
Management, Alexandria, VA. Used with permission. All right reserved.’
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
11 of 23
Strategic HRM in M&As
Firms should rely on three conceptual tools:
1. Resources
money, people, brands, relationships
2. Processes
activities used to convert resources into
valuable goods and services
3. Values
the way employees think about
what they do and why they do it
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
12 of 23
Comparing HRM in M&As
▪ Convergence across nationalities in HRM policies; move towards
performance-related pay, training, and team-based product
development
▪ Most acquirers also adjust to suit the local culture
▪ American HRM reflects a short-term individualistic national
business culture
▪ Recruitment in US is more short-term than in Germany, France,
and UK
▪ Japanese still has longest-term, consensual, team-based,
collectivist national philosophies
▪ French still favor French managers
▪ Germans are the most anxious to adopt
international practices for their M&As
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
13 of 23
International equity joint ventures
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
14 of 23
IJV challenges include
▪ HR must manage relations at the interfaces
between IJV and parent companies
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
15 of 23
Figure 4.5
Formation of an international equity joint venture
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
16 of 23
The main reasons for an IJV
▪ Gain knowledge and transfer that knowledge
▪ Host government insistence
▪ Increase economies of scale
▪ Gain local knowledge
▪ Obtain vital raw materials
▪ Spread the risks (e.g., share financial risks)
▪ Improve global competitive advantage
▪ Provide an efficient and cost-effective response
required by the globalization of markets
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
17 of 23
IJV development stages
▪ Partnership role
▪ Change facilitator and strategy implementer
▪ Innovator
▪ Collaborator
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
18 of 23
International SMEs
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
19 of 23
Table 4.1
SME definition
Source: European Commission (ed.) The New SME Definition. User Guide and Model Declaration
(Brussels: European Commission, 2005), p. 14. Reproduced with permission.
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
20 of 23
SMEs play an important role
In EEA and Sweden:
▪ 99+% of 16 million enterprises in EEA & Sweden
are SMEs
▪ Two thirds of all jobs are in SMEs
In Asia Pacific region:
▪ 90% of all enterprises are SMEs
▪ 32-48% of employment is by SMEs
In US:
▪ 80+% of employment is by SMEs
with less than 20 employees
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
21 of 23
Barriers to international markets by SMEs
1. Shortage of working capital to finance exports TOP
Chapter 4
For use with International Human Resource Management 7e ISBN-10: 1473719026
By Peter J. Dowling, Marion Festing, and Allen D. Engle, Sr. © Cengage Learning
22 of 23
IHRM features in SMEs
▪ The founder or owner has large impact
▪ Recruitment, selection, and retention:
SMEs struggle because of perceptions
▪ Yet SME requirements are similar to those of
large organizations
▪ Human resource development:
the challenge of learning
▪ Expatriate management
▪ Limited resources of the HR department
and outsourcing
Chapter 4
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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