Module: International Human Resource Management INDU-1130

Assessment 1: Essay

Module Leader: Dr Scott Tindal

Student ID Number: GBS190410

 I. Introduction

The development of economic organizations, such as the World Trade Organization

(WTO), is creating favorable conditions for organizations and businesses to expand their
markets to other potential countries. To develop an organization in a foreign
environment, international human resource management is one of the most important
factors in expanding their markets to other potential countries. For this reason, this
essay will present two main topics surrounding IHRM.

The first are the approaches of IHRM and their role in developing the human resource
management environment of organizations when expanding their companies into new
markets.

The second is to conceptualize and compare the two convergent and divergent
approaches. Then, evaluate which one is suitable and decide which one should be used.

II. Body

Human Resource Management in an international context

To learn about the concept and importance of international human resource

management, we must first understand the basic concept of human resource
management. Bratton and Gold (2007) define HRM as a strategic approach to managing
and building relationships with individuals in an organization. With the main purpose of
providing a competitive advantage, it is very important to use the capabilities of
individuals in the organization. Moreover, companies consider their human resources as
a very important asset that needs to be trained, built, and developed to bring the best
performance and contribute to building the organization (Armstrong, 2014). There is a
view that international human resource management is simply human resource
management but in an international environment. However, for organizations that want
to develop into multinational markets, the task of international human resource
management is much more important and complex. According to the definition of
Taylor, Beechler, and Napier (1996), IHRM is the synthesis of different human resource
management processes used by multinational corporations to manage domestic and
foreign employees. It is also a collection of activities and functions for the purpose of
recruiting, retaining, and developing the human resources of multinational corporations.
In addition, international human resource management is about understanding, asking,
applying, and modifying all human resource activities in internal and external contexts
as they impact the human resource management process in different organizations
around the world to improve the experience of multiple stakeholders (Schuler & Tarique,
2007).

Aspects affecting the building of international human resource management models of

organizations are shown specifically through three lenses, including cultural approaches,
IHRM approaches, and institutional approaches. For the first lens, cultural approaches
explain the relationship between culture in human resource management and
administration of multinational corporations around the world. With each different
culture, the methods and strategies to build the human resource management system
also become different. Moreover, cultural approaches also reflect the working
environment, communication, and behavior of employees from different cultures in an
organization. The second lens talks about the IHRM approach, specifically how
multinational companies or transnational corporations manage their personnel across
multiple countries. These approaches include role-specific, managerial behavior, and
global strategies. Other than with the above two lenses, the third lens deals with
institutional approaches. The institutional approach focuses on the political, economic,
and legal factors of different countries or regions around the world. This factor plays an
important role in the formation and development of multinational organizations. To
build an organization in another country, it is imperative that all organizations know the
institutional elements of that country (Brewster, Sparrow & Vernon, 2007).

This essay focuses on a single lens, cultural approaches. Culture plays an important role
for organizations to shape the working environment when their human resources come
from many different cultures. According to Matsumoto (1996:16), Culture is the set of
attitudes, values, beliefs and behaviors shared by a group of people that are passed on
from generation to generation. Within a country, there are many diverse cultures that
differ by region, ethnicity, religion. Based on the basic definition of culture,
organizational culture is formed to orient goals and create characteristics for that
organization, thereby connecting human resources with each other. With each other
organization, they will have different cultures based on the company's orientation,
strategy, and the values that it brings. Corporate culture is often considered in terms of
aspects such as the company's regulations, the company's slogan, and the core values
that the company aspires to achieve in combination with human resources. Kotter and
Heskett (1992) also define that "culture can represent a set of values and ways of
dealing with dependencies and changes common in an organization and guided by
media, often over long periods of time".

In Schein’s view, organizational culture is formed on three levels. The first level in
Schein's model is the visible artifacts. Artifacts are the most recognizable part of an
organization's culture when it is expressed through clothing, architecture, decoration, or
what the organization wants to show on the outside. Next is values, the second level
forms the organizational culture including short-term and long-term goals, development
motto, strategies and philosophies. Values influence the shaping of the organization's
philosophy through its members. The last level at the bottom of Schein's model is the
underlying assumptions. This level represents subconscious thoughts, beliefs,
perceptions, and emotions. (Schein, 2004)

Referring to culture, it is impossible not to mention two theories that are applied by
many organizations, the theory of Hall and Hofstede.

Between different cultures, the way people communicate also becomes different. This is
a thesis that anthropologist Edward T. Hall developed in 1976. Hall argues that there is a
connection between context and meaning. Therefore, depending on how people from
different cultures interact, interpret, or perceive information about an issue, different
cultures arrange a diagram from high to low context. By going through words, gestures,
relationships, body language, and other non-verbal messages, it is possible to judge
whether a country belongs to a low-context culture or a high-context culture. From
there, build a suitable environment and organizational culture. (Hall, 1976)

Unlike Hall, Hofstede's theory compares the differences between the world's cultures
based on six key dimensions. These dimensions include power distance, uncertainty
avoidance, individualism-collectivism, masculinity-femininity, short vs. long-term
orientation, and restraint-indulgence. Hofstede's cultural aspects are used to compare
the differences between the rules and conditions of communication between different
cultures in a variety of fields. (Hofstede, 2002)

Although Hofstede's theory of culture is widely used, it is still subject to many doubts
and criticisms. Firstly, Hofstede's assessment is not objective when the participants are
only employees of a multinational corporation. Second, according to Williamson, in
culture there is also an element of human nature, which is the influence of institutions
and society. (Williamson, 2002). Third, Hofstede's model also ignores culturally diverse
countries, which are made up of many ethnic groups (Mead & Andrews, 2009).

However, Hofstede's theory still has many notable strengths. McSweeney (2002) argues
that Hofstede's studies of cultural aspects have formed a basic foundation for later
research frameworks. In addition, it also stimulates the development of many other
scholars' cultural studies.

Convergence and divergence debate

Globalization is a development trend for many organizations around the world. This
increases the importance of IHRM as the competitive factors of organizations shift
toward international and multicultural human resources. Depending on each country,
the working environment, culture, and laws will change and have an impact on the
organization's personnel operations and business activities. Therefore, companies need
to consider whether using the parent company's culture and human resources practices
is the best choice when expanding the scope of the organization's activities or if it
requires a change. Convergence or divergence, that is always the criteria that
multinational corporations are interested in when they want to build subsidiaries in
other countries.

Convergence

Convergence, also known as the universal model, describes that IHRM practices will
converge for two main reasons: globalization and industrialization. The purpose of this
model is to find "best practices" that focus mainly on simplicity, ease of use, and high
efficiency that can be widely applied to many organizations in other countries. To keep a
competitive edge in the global environment, companies need to use common
management methods (Kerr et al, 1960). In addition, another important factor leading
to the convergence of management systems across enterprises around the world is
technology. This shows that, in order to remain competitive and build an effective HRM
environment, organizations are having to adopt homogenous technology models (Kidger,
1991; Gooderham & Brewster, 2008). It is for this reason that competitive pressures
have created "best practices" for organizations around the world.

Divergence

In contrast to convergence, divergence, also known as the contextual model, is a model

that is less focused on the concept of "best practices". There are two factors that
contribute to the divergence: culture and institutions. Regarding cultural differences,
Kaufman (2016) argues that cultural background has a great influence in building human
resource management models in organizations. In addition, each country will also have
its own policies to help organizations in the formation and management of human
resource models. In terms of institutional factors, depending on the country and
territory, the law and employment standards are different. Because of this, if they want
to come up with "best practices" for businesses, many countries have to modify their
institutions to better suit the common ground of the world.

Evaluate
Both convergence and divergence models have strengths and weaknesses when applied
to the business of organizations. Depending on the purpose of the organization, the
appropriate model is used. Globalization, the development of science and technology,
and competitive factors are gradually bringing organizations to the development of
human resource management systems in a converging trend. As can be seen, the "best
practices" approach is very beneficial for short-term strategies in the early stages as
organizations build companies in new markets. The model that brings convenience and
is easily transferred from the parent company will help the organization to operate
stably for the first time when the knowledge and research on culture, law, market, and
child factors are incomplete and unstable. When the company has stabilized its
personnel model and has clear studies on the culture and legal institutions of that
country, it should switch to a divergent model to ensure stability and long-term
development. Organizations need to skillfully balance the "best practice" approach with
the adaptation of management techniques from different countries to provide
employees with a suitable and effective working environment.

III. Conclusion

In short, through the essay, it is possible to clearly recognize the importance of culture
in developing IHRM of organizations. Culture plays an important role in engaging people
in an organization. From there, the organization can set directional goals to shape and
build appropriate behaviors for its members. In addition, the essay also demonstrates
the theory, purpose, and role of the two methods convergence and divergence.
Although the convergence method is being used more and more widely in countries
with developed economic potential, there are still many obstacles due to the legal
system and human factors in many countries.
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