Professional Documents
Culture Documents
INTERNATIONAL
HUMAN RESOURCE
MANAGEMENT
PETER J. DOWLING
MARION FESTING
ALLEN D. ENGLE, SR
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International Human Resource © 2023, Cengage Learning EMEA
Management, Eighth Edition
ALL RIGHTS RESERVED. No part of this work may be reproduced,
Peter J. Dowling, Marion Festing, transmitted, stored, distributed or used in any form or by any means,
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BRIEF CONTENTS
Preface viii
Acknowledgments xi
About the Authors xiv
Chapter 1 Introduction1
Chapter 2 The Context of IHRM: Culture and Institutions 22
Chapter 3 The Organizational Context: Structure, Merger and Acquisition
and Global Small Business 59
Chapter 4 Global Work 105
Chapter 5 Sourcing People for Global Markets: Staffing, Recruitment and Selection 148
Chapter 6 Global Performance Management 188
Chapter 7 International Training, Development and Careers 215
Chapter 8 Global Talent Management 261
Chapter 9 Global Compensation 298
Chapter 10 IHRM Trends and Future Challenges 324
Case 1 Balancing Values: An Indian Perspective on Corporate Values from Scandinavia 342
Case 2 Quality Compliance at the Hawthorne Arms: Selection Issues 352
Case 3 Strategic Forecasts and Staffing Formulation: Executive and Managerial
Planning for Bosch, Kazakhstan 355
Case 4 Just Another Move to China? The Impact of International Assignments
on Expatriate Families 363
Case 5 Finding the Right View: Developing Local Talent in Local Markets370
Case 6 Challenges to Global Training and Development: Spanning the Globe 377
Case 7 Keeping Global Talent Local: The Challenges of Retaining Global Talent
in a Multinational Company’s Subsidiaries 383
Case 8 Local and International? Managing Complex Employment Expectations 388
Case 9 Redesigning a Global Mobility Policy: Developing Expatriate Compensation
Options for a German Mid-Sized Company 395
Case 10 Wolfgang’s Balancing Act: Rewarding Healthcare Executives in a Dispersed
Yet Integrated Firm 408
Glossary419
Index429
iii
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CONTENTS
Prefaceviii
Acknowledgmentsxi
About the Authors xiv
Chapter 1 Introduction1
Chapter Objectives 1
Scope of the Book – Approaches to IHRM 2
Defining IHRM and Global Work 2
Differences between Domestic and International HRM 5
Variables that Moderate Differences between Domestic and International HRM 9
The Cultural Environment 10
Industry Type 12
Extent of Reliance of the Multinational on its Home-Country Domestic Market 13
Attitudes of Senior Management to International Operations 14
Applying a Strategic View of IHRM 14
Summary17
Discussion Questions 18
Further Reading 18
Notes and References 18
iv
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CONTENTS v
Chapter 3 The Organizational Context: Structure, Merger and Acquisition and Global Small Business 59
Chapter Objectives 60
Introduction60
Standardization and Localization of HRM Practices 61
Factors Driving Standardization 63
Factors Driving Localization 63
The Path to Global Status 67
Control Mechanisms 76
Cross-Border Alliances 80
Cross-Border Mergers and Acquisitions 81
International Equity Joint Ventures 85
International SMEs 88
Summary93
Discussion Questions 95
Further Reading 95
Notes and References 96
Chapter 5 Sourcing People for Global Markets: Staffing, Recruitment and Selection 148
Chapter Objectives 148
Approaches to Global Staffing 149
Recruitment and Selection of International Managers 157
Selection Criteria 161
Expatriate Selection Processes 168
Dual Career Couples and Female Assignees 173
Summary179
Discussion Questions 180
Further Reading 180
Notes and References 181
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vi CONTENTS
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CONTENTS vii
Case 1 Balancing Values: An Indian Perspective on Corporate Values from Scandinavia 342
Case 2 Quality Compliance at the Hawthorne Arms: Selection Issues 352
Case 3 Strategic Forecasts and Staffing Formulation: Executive and Managerial Planning
for Bosch, Kazakhstan 355
Case 4 Just Another Move to China? The Impact of International Assignments on
Expatriate Families 363
Case 5 Finding the Right View: Developing Local Talent in Local Markets 370
Case 6 Challenges to Global Training and Development: Spanning the Globe 377
Case 7 Keeping Global Talent Local: The Challenges of Retaining Global Talent in
a Multinational Company’s Subsidiaries 383
Case 8 Local and International? Managing Complex Employment Expectations 388
Case 9 Redesigning a Global Mobility Policy: Developing Expatriate Compensation
Options for a German Mid-Sized Company 395
Case 10 Wolfgang’s Balancing Act: Rewarding Healthcare Executives in a Dispersed
Yet Integrated Firm 408
Glossary419
Index429
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PREFACE
During the writing of the Eighth Edition, the world has changed tremendously. The COVID-19 pandemic
has hit us in a somewhat unexpected way. It has not only influenced the ways we work but also the ways
of organizing cross-border interactions and thus of International Human Resource Management (IHRM).
Lockdowns and travel bans have limited global mobility to a large extent and topics such as resilience of
global workers, risk management and health and safety programs have gained importance. While digital
collaboration opportunities have emerged and been strengthened, implications for the way we do global
work, selection, training, performance management, careers, as well as compensation need to be discussed,
when IHRM is concerned.1 At the same time, global uncertainty has increased further in the context of
the war between Russia and the Ukraine. The number of refugees from this region has increased and
migration is emphasized. Travel bans have limited global mobility further, and as many countries have
imposed sanctions against Russia for the Ukraine invasion, discontinuities in global supply chains and
the withdrawal of investments in Russia have led to important disruptions in global trade with strong
implications also for international (human resource) management.2 These two major events combined
with already existing disruptions often due to digital transformation and remote work, the scarcity of
talent intensified by the Great Resignation, an increased focus on individuality, human needs and purpose,
skilling and reskilling needs, a stronger focus on sustainability, inclusivity and accountability3 describe the
context of the world of global business we are looking at today.
This is not only very different than it was in 1990 when the first edition of this text was introduced but
also very different from the time when we finalized the Seventh Edition of this textbook in 2017. Our task
remains to capture key human issues, those complexities, challenges and choices faced by individuals and
organizations engaged in global business and exchange. This world remains as compelling and critical as it
was some 33 years ago.
These changes in our environment and emerging topics have prompted significant changes to the Eighth
Edition of our IHRM textbook. The updated content is particularly evident in the new chapters introduced
in this edition. However, in addition to this new content, we explicitly take account of the fact that this is a
textbook and provides a variety of opportunities that teachers can use for the didactical design of courses
(recommendation of a serious game, shorter ‘IHRM in Action Cases’ and longer Case Studies with basic
and more advanced/demanding questions tailored to the needs of undergraduate or graduate students).
The most important changes are described in the following section.
CHAPTERS
While all chapters have been updated, especially with respect to megatrends, new insights and emerging new
topics, we have introduced three new chapters in this edition and unfortunately – for reasons of space – had to
drop the chapter on International Industrial Relations. The changes are described in detail as follows.
We have thoroughly reworked Chapter 2: The Context of IHRM – Culture and Institutions. While
we still refer to the seminal work of Hofstede and the GLOBE studies focusing on identifying national
viii
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PREFACE ix
differences in values, we have now integrated more recent cultural insights, acknowledging that the country
level might not represent the only and most appropriate unit of analysis for cross-cultural and international
HR management. For example, we outline concepts such as cultural archetypes (differentiating between
culturally distinct groups within countries as well as culturally similar groups between countries) or
polyculturalism indicating that individuals are not only shaped by one single culture but that they engage
partially and plurally with cultures. Thus, we further differentiate the cultural insights and also add insights
about the institutional environments as important context variables for IHRM. The enhanced cultural
understanding is also well reflected in the serious game ‘Moving Tomorrow – an Intercultural Journey’,
which can be used as a training tool for the cultural context of IHRM (https://cim.escp-business-school.de/
learning/moving-tomorrow/).
Chapter 4: Global Work is a completely new chapter which takes into account the increased variety
in global work. While for a long time we have focused on traditional expatriate assignments, we now
include various types of global work (corporate long-term expatriates, short-term assignees, flexpatriates,
self-initiated expatriates, international business travelers, international commuters, global virtual team
members, global domestics), the various status levels associated with them, and discuss the IHRM
implications of assigned and non-assigned expatriation processes. We have also added a section on the
specific situation of migrants and HRM. At the end of this chapter, we take the opportunity to discuss the
future of global work by looking at some major influences, including the global COVID-19 pandemic,
sustainability, generational challenges, digitalization, and diversity and inclusion.
Chapter 8: Global Talent Management is also a completely new chapter, because of the importance
of talent management in multinational enterprises due to the global scarcity of talent, which is further
intensified by the Great Resignation (employees resigning voluntarily from their jobs). Further, to date, the
number of concepts addressing this topic allows for a complete chapter on this topic. After an introduction
to talent management and understanding talent in general, we outline approaches to global talent
management (GTM), describe global talent attraction, development and retention practices and discuss
possible outcomes and KPIs for global talent management. By introducing the concept of Macro Talent
Management and giving examples about important features of talent management in selected countries
such as China, Russia and the Middle East, we show how the country context matters for the design of
talent management practices. Also in this chapter we take the opportunity of outlining some important
challenges faced by GTM. These include talent analytics, diversity and the management of virtual talents.
● IHRM in Action Case 2.6 ‘A witch hunt in Taiwan’ addresses phenomena of the COVID-19 pandemic in a
particular cultural context.
● IHRM in Action Case 4.1 ‘Beyond expatriation – hidden dreams for a better life’ addresses an example of the
specific situation of lower status expatriates in the UAE.
● IHRM in Action Case 5.1 ‘Local embeddedness of personnel selection – the impact of informal networks
in Lebanon’ introduces the notion of a sometimes overlooked factor in international selection – informal
networks, often found in Arabic countries, but with similar phenomena that can also be found in other parts
of the world. Examples from South Korea, Japan and other countries are outlined in an excursus entitled,
‘Informal Networks’.
● IHRM in Action Case 5.2 ‘Intercultural Assessment Center roleplay’, which helps to develop an understanding
of how intercultural competence can be assessed.
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x PREFACE
● IHRM in Action Case 7.1 ‘Expatriate coaching – a hidden gem for expatriate success’ illustrates the topic of
expatriate coaching and provides insights and individual case-based training opportunities.
● IHRM in ACTION CASE 8.1 ‘The talent drain – emerging-market challenges facing a GTM program’ focuses
on the opportunities and challenges of doing global talent management in an emerging market.
CASES
All cases have been updated for the new edition and further insights and recommended references have
been added to indicate the possibility of using the cases for various purposes and on various levels. As for
the ‘IHRM in Action Cases’, in the following we present a few highlights of the three new cases included
in this edition:
● Case 6 ‘Challenges to Global Training and Development: Spanning the Globe’. While this case addresses
classic training and development issues it can also be used to discuss staffing strategies and focus on
psychological contracts from an IHRM perspective.
● Case 7 ‘Keeping Global Talent Local: The Challenges of Retaining Global Talent in a Multinational Company’s
Subsidiaries’ takes a focus on Eastern European subsidiaries and their attractiveness for global talent. For an
advanced discussion, a strategic focus can be used following arguments set out by the resource-based view
of the firm or social identity issues, and their consequences can be discussed in the context of global talent
management.
● Case 9 ‘Redesigning a Global Mobility Policy: Developing Expatriate Compensation Options for a German
Mid-Sized Company’ provides encompassing real data that support decisions about global mobility. Advanced
discussions can include equity considerations within the multinational enterprise.
The ten in-depth cases at the end of the text have been written by the co-authors or solicited from
global experts to provide a range of in-depth applications for all of the major functional areas of IHRM.
Extensive teaching notes are provided for adopters of the text. Long-time users of the text will find a more
systematic and extensive set of cases, but hopefully our loyal adopters will still find some of their favorite
cases remain as well. Our feedback on these end-of-text cases was outstandingly positive in the previous
editions and we feel this new edition builds on that strength.
As in previous editions, the challenge of this Eighth Edition has been to organize the complexities
particular to HRM activities in MNEs in such a way that provides teachers (of both undergraduate and
graduate students) real choice as to how they will present the material. We have tried to find a balance
that is meaningful and appropriate to the varying cultures represented by potential adopters and readers,
and across educational traditions, institutions and forms, while accurately capturing the compelling
realities facing HRM professionals in MNEs. As always, we welcome your comments and suggestions for
improvement in this task.
The author team remains an excellent example of collaborative work (across a significant number of time
zones) in the particularly disruptive period of the twenty-first century with tri-continental representation
from Asia Pacific, Europe and North America.
ENDNOTES
1. Caligiuri, P., De Cieri, H., Minbaeva, D., Verbeke, A., & against-ukraine-abridged-version-6224dc77/, retrieved
Zimmermann, A. (2020). International HRM insights for on 26 August 2022.
navigating the COVID-19 pandemic: Implications for 3. www.kornferry.com/content/dam/kornferry-v2/
future research and practice. Journal of International featured-topics/pdf/FOW_TrendsReport_2022.pdf,
Business Studies, 51(5), 697–713. retrieved on 16 August 2022.
2. www.oecd.org/ukraine-hub/policy-responses/
international-investment-implications-of-russia-s-war-
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ACKNOWLEDGMENTS
First, we would like to thank the scores of academics and practitioners who have come up to us at
conferences and workshops, as well as communicated by emails sent over the last four years, sharing with
us their comments and suggestions. Many of the improvements to this new edition of the book outlined
above are the direct result of these conversations. The tricky task of balancing the need for continuity
and meeting expectations for an enduring and highly successful title with the need to update and revise
materials in what is still a very young and dynamic academic area of study is made easier by the support
of our peers and colleagues around the world. We thank you for your patience, ongoing interest in and
commitment to our book.
As with previous editions, we have received a great deal of assistance from numerous colleagues in
various educational institutions and organizations across the globe. Particular thanks go to the following
colleagues for their assistance with this edition of the book:
Particular thanks go to Maike Andresen, Domitille Bonneton, Stephanie-Eva Dietz, Gabi Dorner, Claudia
Fischer, Manfred Froehlecke, Martine Cardel Gertsen, Sina Kraus, Yvonne McNulty, Ihar Sahakiants and
Mette Zølner for their case contributions. For the contributions of the IHRM in Action Cases we would
like to thank Dana Abeouva, Judith Eidems, Washika Haak-Saheem, Alisa Hankache, Sina Kraus, Maral
Muratbekova-Touron and Tobias Schumacher.
xi
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xii ACKNOWLEDGMENTS
LA TROBE UNIVERSITY
Peter Dowling, Professor Emeritus at La Trobe, thanks Tim Majoribanks, Associate Head of the School
of Business and his HRM and International Business colleagues for providing a supportive academic
environment.
The Publisher would like to thank the following academics who supplied feedback on this and the
previous edition:
Francois Bester; Canadian University in Dubai
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ACKNOWLEDGMENTS xiii
Finally, our personal thanks to the following individuals for their understanding, support and
encouragement throughout the process of completing this Eighth Edition:
Fiona Dowling
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ABOUT THE AUTHORS
Marion Festing (PhD) is Professor of Human Resource Management and Intercultural Leadership
at ESCP Business School’s Berlin campus. Previous appointments include the University of Paderborn,
Germany. Further, Marion gained educational, research and work experience in many countries of the
world including various European countries, especially France, Australia, the US, several Asian countries
and Tunisia. She has contributed to ESCP’s development in recent years as the Rector/Dean of the
Berlin campus, the former Associate Dean for Research of ESCP and the holder of the Renault Chair of
Intercultural Management. Marion founded ESCP’s Talent Management Institute (TMI) and the Excellence
Centre for Intercultural Management, Diversity and Inclusion (CIMDI), which both link academic and
practitioner communities by creating new knowledge and building platforms for networking and exchange.
In terms of teaching innovations, she has established ESCP’s Female Leadership Program, contributed to a
MOOC on Intercultural Management and co-developed the award-winning Serious Game Series Moving
Tomorrow – A Cultural Journey.
xiv
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ABOUT THE AUTHORS xv
Marion’s research interests include International Human Resource Management and talent
management in various institutional and cultural contexts as well as a specific focus on diversity and
inclusion. She has co-authored and edited a number of books, including a monograph on Strategic
International Human Resource Management (Strategisches Internationales Personalmanagement, 2nd ed.)
and a co-authored text on International Human Resource Management in German (Internationales
Personalmanagement, 3rd ed.). Marion has also written or co-authored over 100 book chapters and
journal articles and published in international journals such as Academy of Management Perspectives,
Human Resource Management, Human Resource Management Review, The International Journal of
Human Resource Management, Journal of World Business, Thunderbird International Business Review,
Journal of Global Mobility, Economic and Industrial Demography, European Management Journal,
European Management Review, European Journal of International Management, Journal of Personnel
Psychology, German Journal of Human Resource Management, Journal for East European Management
Studies and International Journal of Globalization and Small Business. As Co-Editor-in-Chief, Marion
has also contributed to the internationalization of the German Journal of Human Resource Management.
Currently, she serves as the chairperson of the section ‘Human Resource Management’ (Kommission
Personal) in the The German Academic Association of Business Research (VHB). She is also the German
ambassador of the HR-Division of the Academy of Management and is involved in many academic
organizations.
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Teaching & Learning
Support Resources
Cengage’s peer-reviewed content for higher and further education
courses is accompanied by a range of digital teaching and learning
support resources. The resources are carefully tailored to the specific
needs of the instructor, student and the course. Examples of the kind
of resources provided include:
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CHAPTER 1
INTRODUCTION
CHAPTER OBJECTIVES
In this introductory chapter, we establish the scope of the book. We:
● define key terms in international human resource management (IHRM) and consider several
definitions of IHRM.
● introduce the significant issue of expatriate assignment management and review the evolution of
these assignments to reflect the increasing diversity with regard to what constitutes international
work and the type and length of international assignments.
● outline the differences between domestic and international human resource management and
detail a model that summarizes the variables that moderate these differences.
● present the complexity of IHRM, the increasing potential for challenges to existing IHRM practices
and current models and the increasing awareness of a wide number of choices within IHRM
practices due to increased transparency and faster and more detailed diffusion of these practices
across organizational units and firms.
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2 CHAPTER 1 INTRODUCTION
● The first approach emphasizes cross-cultural management and HRM, examining human
behavior and people management within organizations from a cultural perspective.2
● A second approach developed from the comparative industrial relations and HRM literature and
seeks to describe, compare and analyze HRM systems in various countries. Thus, we speak
about comparative HRM.3
● A third approach seeks to focus on aspects of HRM in multinational firms.4 This is concerned
with all activities that emerge in the cross-border management of people.
In this textbook, we mainly take the third approach and focus on HRM in the multinational
enterprise, but also consider the impact of the cultural context and some insights into
comparative HRM. Our objective is to explore the implications that the process and challenges
of internationalization have for the activities and policies of HRM. The three approaches
are depicted in Figure 1.1 with a clear emphasis on how HRM is practiced in multinational
enterprises.
As Figure 1.1 demonstrates, there is an inevitable overlap between the three approaches
when one is attempting to provide an accurate view of the global realities of operating in the
international business environment. Obviously, cross-cultural management issues are important
when dealing with the cultural aspects of cross-border operations. Some of these aspects will
be taken up in Chapter 2, where we deal with the cultural context of HRM, especially when
comparing the challenges of home and host country context – indicated by (a) in Figure 1.1.
The global institutional context is also explicitly addressed in Chapter 2, and insights drawing
on literature from comparative HRM, which are often explained by the institutional context,
are integrated in all chapters focusing on IHRM practices (Chapters 4 to 9) outlining also
country-specific particularities – (b) in Figure 1.1.
While the focus of much of this book is on the established multinational enterprise (MNE) – a
firm which owns or controls business activities in more than one foreign country – we recognize
that small, internationalizing firms which are yet to reach multinational firm status, and
family-owned firms, also face IHRM issues and many of these issues are addressed in
Chapter 3.
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CHAPTER 1 INTRODUCTION 3
important role of international assignments and explain the specific features of expatriates,
who have for a long time dominated the discussion of IHRM and are – despite the increasing
variety in the field – still an important type of global work.
● HR planning
● staffing (recruitment, selection, placement)
● performance management
● training and development
● talent management
● compensation and benefits.
The question is, of course, which activities change when HRM goes international? To answer
this question, we draw on the excellent early model developed by Morgan.6 Morgan presents
IHRM in three dimensions:
1 The broad HR activities of procurement, allocation and utilization. (These three broad activities can
be easily expanded into the six HR activities already listed.)
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).
In order to illustrate the three categories of employees we take the example of the US
multinational IBM, which employs British citizens in its British operations (HCNs), often
sends US citizens (PCNs) to Asia-Pacific countries on assignment and may send some of its
Singaporean employees on an assignment to its Chinese operations (as TCNs). The nationality of
the employee is a major factor in determining the person’s ‘category’, which in turn is frequently
a major driver of the employee’s employment contract, determining the compensation package
and the extent of further support measures in case of international assignments.
Morgan defines IHRM as the interplay among the three dimensions of human resource
activities, countries of operation and type of employees. We can see that in broad terms IHRM
involves the same activities as domestic HRM, e.g., procurement, allocation and utilization,
HR planning, staffing (recruitment, selection, placement, performance management, training
and development, talent management, and compensation and benefits). However, by definition
domestic HRM is involved with employees within only one national boundary. In practice,
increasingly, domestic HRM is taking on some of the flavor of IHRM as it deals more and
more with a multicultural workforce, partly due to immigration. Thus, some of the current
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4 CHAPTER 1 INTRODUCTION
focus of domestic HRM on issues of managing workforce diversity may prove to be beneficial
to the practice of IHRM and vice versa. However, the way in which diversity is managed within
a single national, legal and cultural context may not necessarily transfer to a multinational
context without some modification.
We would like to note that we deliberately still use the term (international) human resource
management although we are aware that especially in the corporate world more and more
former HRM functions are renamed and conceptualized toward ‘People and culture’. This
reflects very much the current focus on corporate cultural and individual values7 as compared
to the formerly often dominating focus on the administration of HR. We incorporate these
more recently emerged priorities also in the various chapters of the book, but do so within the
framework of HRM practices.
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CHAPTER 1 INTRODUCTION 5
Parent-country
HQ/operations
HCNs
HCNs National
border
PCNs
PCNs
National
border
Stahl, Björkman and Morris have recognized this expansion in the scope of the field of IHRM in their
Handbook of Research in International Human Resource Management, where they define the field of
IHRM:
We define the field of IHRM broadly to cover all issues related to managing the global workforce and its contribution
to firm outcomes. Hence, our definition of IHRM covers a wide range of HR issues facing MNEs in different parts
of their organizations. Additionally we include comparative analyses of HRM in different countries.12
We believe that this broad definition accurately captures the expanding scope of the IHRM field and we
will use this definition in this book.
1 more HR activities
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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6 CHAPTER 1 INTRODUCTION
More HR activities
To operate in an international environment, an HR department must engage in a number
of activities that would not be necessary in a domestic environment. Examples of required
international activities are:
● international taxation
● international relocation and orientation
● administrative services for expatriates
● host-government relations
● language translation services.
The issues involved when expatriates return to their home country (‘repatriation’) are covered
in detail in Chapter 7. Many of these factors may be a source of anxiety for the expatriate and
require considerable time and attention to successfully resolve potential problems – certainly
much more time than would be involved in a domestic transfer/relocation such as London to
Manchester, Frankfurt to Munich, New York to Dallas, Sydney to Melbourne or Beijing to
Shanghai.
An MNE also needs to provide administrative services for expatriates in the host countries
in which it operates. Providing these services can often be a time-consuming and complex
activity because policies and procedures are not always clear-cut and may conflict with local
conditions. Ethical questions can arise when a practice that is legal and accepted in the host
country may be at best unethical and at worst illegal in the home country. For example, a
situation may arise in which a host country requires an AIDS test for a work permit for an
employee whose parent firm is headquartered in the US, where employment-related AIDS
testing remains a controversial issue. How does the corporate HR manager deal with the
potential expatriate employee who refuses to meet this requirement for an AIDS test, and
the overseas affiliate which needs the services of a specialist expatriate from headquarters?
Another example includes vaccinations during the COVID-19 pandemic. In many countries
of the world such vaccination proof is an entry requirement. However, not all employees may
want to get vaccinated. This has implications for international travel and for the management
of international staff. These issues add to the complexity of providing administrative services
to expatriates.
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CHAPTER 1 INTRODUCTION 7
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8 CHAPTER 1 INTRODUCTION
in order to provide the level of support required and will need to know more about the
employee’s personal life. For example, some national governments require the presentation of
a marriage certificate before granting a visa for an accompanying spouse. Further, the extent
to which same-sex relationships and marriages are accepted is different in different countries.
Thus, marital status could become an aspect of the selection process, regardless of the best
intentions of the MNE to avoid using a potentially discriminatory selection criterion. In such
a situation, the HR department should advise all candidates being considered for the position
of the host country’s visa requirements with regard to marital status and allow candidates
to decide whether they wish to remain in the selection process. Especially as it has become a
goal of many international organizations to overcome barriers to global mobility for women,
people of the LGBTQ+ community, people of color and other underrepresented groups, in
order to increase diversity and inclusion,18 solutions for country-specific constraints need to
be found.
Apart from providing suitable housing and schooling in the assignment location, the HR
department may also need to assist children placed at boarding schools in the home country – a
situation that is less frequently encountered in the US but relatively common in many other
countries, particularly former British colonies such as Singapore, Hong Kong, Australia and
New Zealand and in Europe. In more remote or less hospitable assignment locations, the HR
department may be required to develop, and even run, recreational programs. For a domestic
assignment, most of these matters either would not arise or would be seen as the responsibility
of the employee rather than the HR department. In a sense the ‘psychological contract’, i.e.,
the informal working contract, which is based on mutual expectations and obligations, is now
between the MNE and the entire immediate family of the international assignee.19
Risk exposure
Frequently, the human and financial consequences of failure in the international arena are
more severe than in domestic business. For example, while we discuss the topic in more
detail in Chapter 5, expatriate failure (defined as the premature return of an expatriate from
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CHAPTER 1 INTRODUCTION 9
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10 CHAPTER 1 INTRODUCTION
that moderate (that is, either diminish or accentuate) differences between domestic and IHRM.
These four additional moderators are:
Together with the complexity involved in operating in different countries, these five variables
constitute a model that explains the differences between domestic and international HRM
(refer to Figure 1.3).
FIGURE 1.3 A model of the variables that moderate differences between domestic and international HRM
The industry
The cultural (or industries) within
environment which the multinational
is primarily involved
Domestic and
international
activities of the Complexity involved in
Extent of reliance of
HRM function operating in different
the multinational on
countries and employing
its home-country
different national
domestic market
categories of employees
Attitudes of
senior management
Source: Dowling, P. J. (1999). Completing the puzzle: Issues in the development of the field of international human
resource management. Management International Review, Special Issue, 3(99), 27–44, p. 31. Reproduced with kind
permission from VS Verlag für Sozialwissenschaften.
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CHAPTER 1 INTRODUCTION 11
people who move across cultures (refer also to Chapter 5). The new environment requires many
adjustments in a relatively short period of time, challenging people’s frames of reference to such
an extent that their sense of self, especially in terms of nationality, comes into question. People,
in effect, experience a shock reaction to new cultural experiences that cause psychological
disorientation because they misunderstand or do not recognize important cues. Culture shock
can lead to negative feelings about the host country and its people and a longing to return home.27
Because international business involves the interaction and movement of people across
national boundaries, an appreciation of cultural differences and when these differences are
important is essential. Research into these aspects has assisted in furthering our understanding
of the cultural environment as an important variable that moderates differences between
domestic and IHRM. However, while cross-cultural and comparative research attempts
to explore and explain similarities and differences, there are problems associated with such
research. A major problem is that there is little agreement on either an exact definition of
culture or on the operationalization of this concept. For many researchers, culture has become
an omnibus variable, representing a range of social, historic, economic and political factors that
are invoked post hoc to explain similarity or dissimilarity in the results of a study. As Bhagat
and McQuaid have noted, “Culture has often served simply as a synonym for nation without
any further conceptual grounding. In effect, national differences found in the characteristics
of organizations or their members have been interpreted as cultural differences”.28 To reduce
these difficulties, culture needs to be defined a priori rather than post hoc and it should not
be assumed that national differences necessarily represent cultural differences. Further, recent
evidence in cross-cultural research has questioned the concept of cultural value homogeneity in
countries, i.e., that cultural values are common to the whole population of the whole country.
There is evidence that also within countries there are groups of persons who have distinct
common values and are more similar to the same professional or generational group with
another country-of-origin.29 We discuss these issues in detail in Chapter 2.
Another issue in cross-cultural research concerns the emic-etic distinction. 30 ‘Emic’ refers
to culture-specific aspects of concepts or behavior, and ‘etic’ refers to culture-common
aspects. These terms have been borrowed from linguistics: a phonemic system documents
meaningful sounds specific to a given language, and a phonetic system organizes all sounds
that have meaning in any language.31 Both the emic and etic approaches are legitimate research
orientations. A major problem may arise, however, if a researcher imposes an etic approach
(that is, assumes universality across cultures) when there is little or no evidence for doing
so. A well-known example of an imposed etic approach is the ‘convergence hypothesis’ that
dominated much of US and European management research in the 1950s and 1960s. This
approach was based on two key assumptions. 32 The first assumption was that there were
principles of sound management that held regardless of national environments. Thus, the
existence of local or national practices that deviated from these principles simply indicated a
need to change these local practices. The second assumption was that the universality of sound
management practices would lead to societies becoming more and more alike in the future.
Given that the US was the leading industrial economy at that time, the point of convergence
was the US model.
To use Kuhn’s terminology, the convergence hypothesis became an established paradigm that
many researchers found difficult to give up, despite a growing body of evidence supporting a
divergence hypothesis.33 In an important early paper that reviewed the convergence/divergence
debate, Child made the point that there is evidence for both convergence and divergence. 34
The majority of the convergence studies, however, focus on macrolevel variables (for example,
organizational structure and technology used by MNEs across cultures) and the majority of the
divergence studies focus on microlevel variables (for example, the behavior of people within
firms). His conclusion was that, although firms in different countries are becoming more alike
(an etic or convergence approach), the behavior of individuals within these firms is maintaining
its cultural specificity (an emic or divergence approach). As noted above, both emic and etic
approaches are legitimate research orientations, but methodological difficulties may arise
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12 CHAPTER 1 INTRODUCTION
INDUSTRY TYPE
Porter suggests in his seminal work that the industry (or industries if the firm is a conglomerate)
in which an MNE is involved is of considerable importance because patterns of international
competition vary widely from one industry to another. 40 At one end of the continuum of
international competition is the multidomestic industry, one in which competition in each
country is essentially independent of competition in other countries. Traditional examples
include retailing, distribution and insurance. At the other end of the continuum is the global
industry, one in which a firm’s competitive position in one country is significantly influenced
by its position in other countries. Examples include commercial aircraft and semiconductors.
The key distinction between a multidomestic industry and a global industry is described by
Porter as follows:
The global industry is not merely a collection of domestic industries but a series of linked domestic
industries in which the rivals compete against each other on a truly worldwide basis [. . .] In a
multidomestic industry, then, international strategy collapses to a series of domestic strategies. The
issues that are uniquely international revolve around how to do business abroad, how to select
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CHAPTER 1 INTRODUCTION 13
good countries in which to compete (or assess country risk), and mechanisms to achieve the
one-time transfer of know-how. These are questions that are relatively well developed in the literature.
In a global industry, however, managing international activities like a portfolio will undermine the
possibility of achieving competitive advantage. In a global industry, a firm must in some way integrate
its activities on a worldwide basis to capture the linkages among countries.
The role of the HRM function in multidomestic and global industries can be analyzed
using Porter’s well-known value-chain model.41 In Porter’s model, HRM is seen as one of four
support activities for the five primary activities of the firm. Since HRM is involved in each of
the primary and support activities, the HRM function is seen as cutting across the entire value
chain of a firm. If the firm is in a multidomestic industry, the role of the HR department will
most likely be more domestic in structure and orientation. At times there may be considerable
demand for international services from the HRM function (for example, when a new plant
or office is established in a foreign location and the need for expatriate employees arises), but
these activities would not be pivotal – indeed, many of these services may be provided via
consultants and/or temporary employees. The main role for the HRM function would be to
support the primary activities of the firm in each domestic market to achieve a competitive
advantage through either cost/efficiency or product/service differentiation.
If the multinational is in a global industry, however, the ‘imperative for co-ordination’
described by Porter would require an HRM function structured to deliver the international
support required by the primary activities of the MNE. The need to develop co-ordination
raises complex problems for any multinational. Increasingly, multinationals are taking a more
strategic approach to the role of HRM and are using various kinds of global work and training
programs to assist in co-ordination of activities. We discuss these issues in more detail in
Chapter 3 and subsequent chapters of this book.
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14 CHAPTER 1 INTRODUCTION
of a dominant position in the large USMCA market. In terms of large domestic markets, it is
also important to look at China (1,426 million) and India (1,417 million). China is represented
with three Chinese firms in the top 10 of the Fortune 500.
TABLE 1.1 Fortune 2021 Global 500 Top 10 ranked by US$ millions in revenues
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CHAPTER 1 INTRODUCTION 15
External Factors
• PESTLE
• Organizational links with other
MNEs and with national
governments
• Asymmetric events
• Environmental dynamics HR Function
MNE Performance
• Global corporate HR role
• Financial performance
• HR practices
• Social performance
Organizational Factors • Crisis management and
• Enterprise resilience
co-ordination
• MNE balance of global integration
and local responsiveness
• MNE structure
• Firm size and maturity
• MNE strategy
• Corporate governance
• Headquarters’ international
orientation
• MNE culture
Source: De Cieri, H., & Dowling, P. (2012). Strategic human resource management in multinational enterprises:
Developments and directions. In Stahl, G., Björkman, I., & Morris, S. (Eds.), Handbook of research in international
human resource management. (2nd ed., pp. 13–35). Cheltenham, UK: Edward Elgar. Reproduced with permission
from Helen De Cieri and Peter J. Dowling.
In strategic management practice, the acronym ‘PEST’, which represents the political,
economic, sociological and technological acronym and analytical tool, has often been used to
describe the macroenvironmental factors that may influence MNEs. Recent additions to this
set of factors include legal and environmental/ecological elements (PESTLE). Although this
analytical tool is popular in consulting and management practice, it appears to have received
little academic research attention or usage.46 De Cieri and Dowling suggest that exploration
and adoption of the PESTLE acronym in academic work would help to bring research and
practitioner approaches closer together. They propose that external factors have a direct
influence on both internal/organization factors and strategic human resource management
(SHRM) strategy and practices, and that external factors have a direct influence on MNE
performance. A large body of research has explored these relationships; of particular note is the
CRANET Research Network that originated in western Europe and has now expanded on a
global scale with 50 countries represented.47
Other external factors include organizational links with other MNEs and national
governments, asymmetric events and environmental dynamics. Organizational networks
and alliances may be complex relationship webs based upon personal relationships and may
include parent-country managers and employees, host-country managers and employees, and
host-country governments. Central to network management is an emphasis on HR that
recognizes that knowledge, power and perceived trustworthiness are often person-specific
rather than organization-specific.
In the twenty-first century, the context for international business also reflects heightened
concerns about security, risk and volatility in global markets. In particular, terrorism has been
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16 CHAPTER 1 INTRODUCTION
● unmatched in our arsenal of capabilities and plans – such events may or may not appear truly
dangerous, but they will certainly look different from war as we have known it
● highly leveraged against our particular assets – military and, probably more often, civil
● designed not only to secure leverage against our assets but also intended to work around, offset
and negate what in other contexts are our strengths
● difficult to respond to in a discriminate and proportionate manner.
Thus, asymmetric events are not only difficult to deal with when they occur, they are difficult
to plan for, recognize and respond to with specific planning processes and training. 50 The
COVID-19 event can be regarded as a similar event. Reactions by IHRM practitioners to these
kinds of events are outlined in the various chapters of this book.51 The influence of external
factors on MNEs involves complex environmental dynamics. As Andreadis has noted, MNEs
operate in a dynamic environment and that environment should be taken into consideration
when evaluating organizational effectiveness.52
Organizational (or ‘internal’) factors have been a major focus of international business and
SHRM research because these factors are suggested to hold implications not only for areas
such as HRM but also for overall MNE performance. The first organizational factor listed in
Figure 1.4 is MNE balance of global integration and local responsiveness. The act of balancing
global integration and local responsiveness refers to the extent to which MNEs can maximize
local responsiveness and also integrate units into a cohesive, global organization. To achieve this
balance is no easy task because, as Morris et al. have noted, replication of HR practices across
subsidiaries may be difficult due to the influences of external factors in the local context.53 With
regard to MNE structure, the organizational structure literature has shown the importance not
only of the structure of international operations54 but also of mechanisms of co-ordination and
mode of entry into foreign markets for HRM in MNEs.55
With regard to firm size and maturity, for both the MNE overall and for each subsidiary,
the size and maturity of the organization (or unit) may influence decisions with respect to
HRM. For example, staffing decisions and demand for HR practices such as training will be
influenced by the skill and experience mix within the firm and/or subsidiary.56 In terms of MNE
strategy, as has been well documented, organizational strategy in the MNE has substantial
implications for HRM in MNEs.57 Issues related to corporate governance and incorporation
of ethical principles and values into international business practice have become increasingly
important for MNE managers, particularly in light of cases of corporate wrongdoing.58 HR
managers may be required to play important roles in corporate governance, such as the design,
implementation and maintenance of corporate codes of conduct.
Following on from the pioneering work of Perlmutter (refer to Chapter 5), the organizational
factor headquarters’ international orientation recognizes that international orientation of the
MNE’s headquarters will involve aspects such as the extent and diversity of experience in
managing international operations.59 These elements are well established as important factors
for HRM in MNEs, as is the factor organizational culture, which is defined by Kidger as the
“sense of common identity and purpose across the whole organization”, 60 and is the final
organizational factor included in the framework. For MNEs seeking a high level of global
integration, this factor may facilitate the development of a global mindset and enhance firm
performance. 61 Overall, the model offered by De Cieri and Dowling aims to assist in the
cross-fertilization of ideas to further develop theory and empirical research in strategic HRM
in multinational firms.
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CHAPTER 1 INTRODUCTION 17
The discussion in Chapter 1 has highlighted the domain of IHRM, investigated some of
the complexities involved and (in Figure 1.1) presented an initial overview of the remaining
chapters of this book. The goal was to define the domain and present a series of issues and a
context for subsequent chapters. We will revisit this framework model in Chapter 10.
SUMMARY
The purpose of this chapter has been to provide an overview of the emerging field of IHRM.
We did this by:
● Defining key terms in IHRM and considering several definitions of IHRM, concluding that the
complexity involved in operating in different countries and employing different national categories
of employees is a key variable differentiating domestic and IHRM, rather than any major
differences between the HR activities performed.
● Introducing different types of global work occurring in the MNE to reflect the increasing diversity
of international assignments and outlining the differences between domestic and IHRM by looking
at six factors which differentiate international and domestic HR (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; and more external influences).
● Detailing a model which summarizes the variables that moderate these differences including the
cultural environment; the industry (or industries) with which the multinational is primarily involved;
the extent of reliance of the multinational on its home-country domestic market; the complexity
of operations, functions, products or customer groups; and the attitudes of senior management.
These five variables are shown in Figure 1.3.
● Discussing a model of SHRM in multinational enterprises (Figure 1.4) which draws together a
number of external factors and organizational factors that impact on IHRM strategy and practice
and, in turn, MNE goals.
In our discussion of international human resources, we shall be drawing on the HRM literature.
Subsequent chapters will examine the cultural and institutional contexts of HRM as well as its
organizational context (including MNEs), cross-border mergers and acquisitions, international
alliances, and small and medium-sized enterprises (SMEs); staffing, recruitment and selection
as well as the important topics of dual career couples and female expatriates; international
performance management; training, development and careers; global talent management; global
compensation; and trends and future challenges in IHRM. We will provide comparative data on
HRM practices in different countries, but our major emphasis is on the IHRM in MNEs, whether
large or small, when facing the challenge of managing people globally.
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18 CHAPTER 1 INTRODUCTION
DISCUSSION QUESTIONS
1 What are the main similarities and differences 5 Why is a greater degree of involvement in employees’
between domestic and international HRM? personal lives inevitable in many IHRM activities?
2 Define these terms: IHRM, PCN, HCN and TCN. 6 Discuss at least two of the variables that moderate
differences between domestic and international HR
3 Which types of global work can occur?
practices.
4 Discuss two HR activities in which a multinational
7 What are the major influence factors in strategic
firm must engage that would not be required in a
IHRM?
domestic environment.
FURTHER READING
Andersen, N. (2021). Mapping the expatriate literature: A Cooke, F. L., Wood, G., Wang, M., & Veen, A. (2019). How far
bibliometric review of the field from 1998 to 2017 and has international HRM travelled? A systematic review of
identification of current research fronts. The International literature on multinational corporations (2000–2014). Human
Journal of Human Resource Management, 32(22), 4687–4724 Resource Management Review, 29(1), 59–75.
Brewster, C., Mayrhofer, W., & Farndale, E. (2018). Handbook Gooderham, P. N., Mayrhofer, W., & Brewster, C. (2019). A
of research on comparative human resource management. framework for comparative institutional research on HRM.
(2nd ed.). London, UK: Edward Elgar. The International Journal of Human Resource Management,
Caligiuri, P., & Bonache, J. (2016). Evolving and enduring 30(1), 5–30.
challenges in global mobility. Journal of World Business, McNulty, Y., & Selmer, J. (2017). Research handbook of
51(1), 127–141. expatriates. London, UK: Edward Elgar.
Caligiuri, P., De Cieri, H., Minbaeva, D., Verbeke, A., & Reiche, B. S., Lee, Y.-T., & Allen, D. G. (2019). Actors,
Zimmermann, A. (2020). International HRM insights for structure, and processes: A review and conceptualization
navigating the COVID-19 pandemic: Implications for future of global work integrating IB and HRM research. Journal of
research and practice. Journal of International Business Management, 45(2), 359–383.
Studies, 51(5), 697–713.
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER 1 INTRODUCTION 19
Resource Management Journal, 28(1), 1–13; Farndale, 11. For an example of the way in which the term is being
E., Raghuram, S., Gully, S., et al. (2017). A vision of used, refer to Harvey, M., Novicevic, M., & Speier, C.
international HRM research. The International Journal (2000). Strategic global human resource management:
of Human Resource Management, 28(12), 1625–1639; The role of inpatriate managers. Human Resource
Gooderham, P. N., Mayrhofer, W., & Brewster, C. (2019). Management Review, 10(2), 153–175.
A framework for comparative institutional research on 12. Stahl, G., Björkman, I., & Morris, S. (Eds.). (2012).
HRM. The International Journal of Human Resource Handbook of research in international human resource
Management, 30(1), 5–30. For research process management (2nd ed.). Cheltenham, UK: Edward
implications refer to Bonache, J., & Festing, M. (2020). Elgar, p. 1.
Research paradigms in international human resource 13. Dowling, P. (1988). International and domestic personnel/
management: An epistemological systematisation of the human resource management: Similarities and
field. German Journal of Human Resource Management, differences. In Schuler, R., Youngblood, S., & Huber,
34(2), 99–123; Farndale, E., Raghuram, S., Gully, S., et al. V. (Eds.), Readings in personnel and human resource
(2017). management. (3rd ed.). St. Paul, MN: West Publishing.
2. For an example of this approach, refer to Adler, N. J., & 14. There are a large number of international consulting
Gundersen, A. (2008). International dimensions of firms set up to assist in this fast-changing area. CCH’s
organizational behavior. (5th ed.). Cincinnati, OH: South longstanding annual publication, the Master Tax Guide
Western Thomson Learning. For details refer also to (e.g. 2022), available for the US and some other
Chapter 2. countries, contains an extensive discussion of the various
3. Refer to e.g., Lamare, J., Farndale, E., & Gunnigle, issues of taxation, e.g., tax rates, health and employee
P. (2015). Employment relations and IHRM. In benefits or retirement plans. Further, there is even a
Collings, D., Wood, G., & Caligiuri, P. (Eds.), The specialized journal, International Tax Journal, published
Routledge companion to international human resource by CCH. Although US in focus, it does present the
management. (pp. 99–120). London, UK: Routledge. interaction of international tax regulations and US tax
4. Refer to Dowling, P., Festing, M., & Engle, A. (2008). laws.
International human resource management (7th ed.). 15. For up-to-date information on the FCPA refer to the
Andover, UK: Cengage. US Department of Justice website: The United States
5. Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, Department of Justice. (2022). Foreign corrupt practices
P. M. (2021). Human resource management, gaining a act. Retrieved 10 June 2022 from https://www.justice.
competitive advantage (10th ed.). New York: McGraw Hill. gov/criminal-fraud/foreign-corrupt-practices-act. For
6. Morgan, P. (1986). International human resource an overview of corruption and culture, refer to Akbar,
management: Fact or fiction. Personnel Administrator, Y., & Vujic, V. (2014). Explaining corruption: The role
31(9), 43–47. of national culture and its implications for international
7. Linkedin Talent Solutions. (2022). Global talent trends: management. Cross-Cultural Management, 21(2),
the reinvention of company culture. Retrieved 28 July 191–218.
2022 from https://business.linkedin.com/content/dam/ 16. For these considerations refer also to Chapter 4.
me/business/en-us/talent-solutions-lodestone/body/pdf/ 17. BCG. (2021). Decoding global talent, onsite and virtual.
global_talent_trends_emea_2022.pdf. Boston, MA: BCG.
8. Reiche, B. S., Lee, Y.-T., & Allen, D. G. (2019). Actors, 18. McNulty, Y., & Hutchings, K. (2016). Looking for global
structure, and processes: A review and conceptualization talent in all the right places: A critical literature review
of global work integrating IB and HRM research. Journal of non-traditional expatriates. The International Journal
of Management, 45(2), 359–383; Shaffer, M. A., Kraimer, of Human Resource Management, 27(7), 699–728;
M. L., Chen, Y.-P., et al. (2012). Choices, challenges, Hutchings, K., Lirio, P., & Metcalfe, B. D. (2012). Gender,
and career consequences of global work experiences: globalisation and development: A re-evaluation of the
A review and future agenda. Journal of Management, nature of women’s global work. The International Journal
38(4), 1282–1327. of Human Resource Management, 23(9), 1763–1787;
9. This is based on the work by Shaffer, M. A., Kraimer, Johnson, L. (2018). Global mobility trends. Danbury,
M. L., Chen, Y.-P., & Bolino, M. C. (2012). Choices, CT: Crown World Mobility; White, J. (2018). International
challenges, and career consequences of global work relocation and the LGBTQ community. Bloomber Law
experiences: A review and future agenda. Journal of and The Bureau of National Affairs Cartus. Retrieved
Management, 38(4), 1282–1327. 31 July 2022 from https://www.cartus.com/en/blog/
10. Refer to De Cieri, H., McGaughey, S., & Dowling, P. international-relocation-and-lgbtq-community/.
(1996). Relocation. In Warner, M. (Ed.), International 19. Some evidence of how HR practitioners view and deal
encyclopedia of business and management. (Vol. 5, with how complex the personal and professional lives of
pp. 4300–4310). London, UK: Routledge, for further MNE members can become is presented by Bardoel, E.
discussion of this point. For a presentation of the (2016). Work-life management tensions in multinational
significant impact international assignment research has enterprises (MNEs). The International Journal of Human
had on IHRM and international business research, refer to Resource Management, 27(15), 1681–1709.
Welch, D., & Bjorkman, I. (2015). The place of international 20. McNulty, Y., & Brewster, C. (2019). Working
human resource management in international business. internationally: Expatriation, migration and other global
Management International Review, 55, 303–322. work. Cheltenham, UK: Edward Elgar.
Copyright 2023 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
20 CHAPTER 1 INTRODUCTION
21. Bešić, A., & Ortlieb, R. (2019). Expatriates of host-country considered. Organization Studies, 15(3), 429–446; Delery,
origin in South Eastern Europe: Management rationales in J., & Doty, D. (1996). Modes of theorizing in strategic
the finance sector. European Management Review, 16(3), human resource management: Tests of universalistic,
667–681. contingency, and configurational performance
22. Refer to Chapter 4 for the various types of global work predictions. Academy of Management Journal, 39,
and their implications for IHRM. 802–835; Sparrow, P. (Ed.) (2009). Handbook of
23. Czinkota, M., Knight, G., Liesch, P., et al. (2010). international human resource management. Chichester,
Terrorism and international business: A research agenda. UK: John Wiley & Sons.
Journal of International Business Studies, 41(5), 826–843. 36. Huntington, S. (1996). The West: Unique, not universal.
24. For the latest information on epidemic and pandemic Foreign Affairs, November/December, 28–46.
crises refer to the World Health Organization website at: 37. Brewster, C. (2006). Comparing HRM policies and
https://extranet.who.int/goarn/ and the U.S. Center for practices across geographical borders. In Stahl, G., &
Disease Control at https://www.cdc.gov/. Björkman, I. (Eds.), Handbook of research in international
25. Caligiuri, P., De Cieri, H., Minbaeva, D., et al. (2020). human resource management. (pp. 68–90). Cheltenham,
International HRM insights for navigating the COVID-19 UK: Edward Elgar.
pandemic: Implications for future research and practice. 38. Schneider, S., Barsoux, J.-L., & Stahl, G. K. (2014).
Journal of International Business Studies, 51(5), 697–713. Managing across cultures (3rd ed.). London: Pearson
26. Erez, M., & Earley, P. C. (1993). Culture, self-identity and Financial Times Prentice Hall.
work. Oxford, UK: Oxford University Press. 39. Horak, S., & Paik, Y. (2022). Informal network context:
27. Refer, e.g., to Lai, H. S., Hu, H. H., & Chen, Z. Y. J. Deepening the knowledge and extending the boundaries
(2020). The effects of culture shock on foreign employees of social network research in international human
in the service industry. Service Business, 14, 361–385. resource management. The International Journal of
28. Bhagat, R. S., & McQuaid, S. J. (1982). Role of subjective Human Resource Management, in press. doi: https://
culture in organizations: A review and directions for future doi.org/10.1080/09585192.2022.2090268; Minbaeva,
research. Journal of Applied Psychology, 67, 653–685. D., Ledeneva, A., Muratbekova-Touron, M., & Horak, S.
29. Venaik, S., & Midgley, D. F. (2015). Mindscapes across (2022). Explaining the persistence of informal institutions:
landscapes: Archetypes of transnational and subnational The role of informal networks. Academy of Management
culture. Journal of International Business Studies, 46(9), Review, in press. doi: http://dx.doi.org/10.5465/
1051–1079. amr.2020.0224.
30. Refer to Berry, J. (1980). Introduction to methodology. In 40. Porter, M. (1986). Changing patterns of international
Triandis, H., & Berry, J. (Eds.), Handbook of cross-cultural competition. California Management Review, 28(2),
psychology. (Vol. 2: ‘Methodology’). Boston, MA: Allyn & 9–40.
Bacon; De Cieri, H., & Dowling, P. (1995). Cross-cultural 41. Porter, M. (1985). Competitive advantage: Creating and
issues in organizational behavior. In Cooper, C., & sustaining superior performance. New York, NY: The Free
Rousseau, D. (Eds.), Trends in organizational behavior. Press.
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Sons; and Teagarden, M., & Von Glinow, M. A. (1997). Handbook on small nations in the global economy:
Human resource management in cross-cultural contexts: The contribution of multinational enterprises to national
Emic practices versus Etic philosophies. Management economic success. Cheltenham, UK: Edward Elgar.
International Review, 37(1), 7–20. 43. Laurent, A. (1986). The cross-cultural puzzle of
31. Refer to Buckley, P., Chapman, M., Clegg, J., et al. international human resource management. Human
(2015). A linguistic and philosophical analysis of emic Resource Management, 25, 91–102, p. 100.
& etic and their use in international business research. 44. Refer to Bartlett, C., & Beamish, P. (2014). Transnational
Management International Review, 54, 307–324. management: Text, cases & readings in cross-border
32. Refer to Hofstede, G. (1983). The cultural relativity management. (7th ed.). Boston, MA: McGraw-Hill/Irwin.
of organizational practices and theories. Journal of 45. De Cieri, H., & Dowling, P. (2012). Strategic human
International Business Studies, 14(2), 75–89. resource management in multinational enterprises:
33. Kuhn, T. (1962). The structure of scientific revolution. (2nd Developments and directions. In Stahl, G., Björkman, I.,
ed.). Chicago, IL: University of Chicago Press. & Morris, S. (Eds.), Handbook of research in international
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L., & Staw, B. (Eds.), Research in organizational behavior. 46. Hughes, T., O’Regan, N., & Wornham, D. (2008). The
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35. Refer to Ricks, D. (1993). Blunders in international Strategic Change, 17(7–8), 215–233.
business. Cambridge, MA: Blackwell for a comprehensive 47. Refer to for the CRANET Research network:
collection of mistakes made by MNEs that paid https://cranet.la.psu.edu/; Brookes, M., Croucher,
insufficient attention to their cultural environment in R., Fenton-O’Creevy, M., et al. (2011). Measuring
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(1994). Organizations and national culture: Methodology Management Review, 21(1), 68–79.
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER 1 INTRODUCTION 21
48. Henisz, W., Mansfield, E., & Von Glinow, M. A. (2010). American multinationals: An institutional model. Journal of
Conflict, security, and political risk: International business International Business Studies, 42(2), 202–220.
in challenging times. Journal of International Business 56. Lawler, J., Chen, S., Wu, P., et al. (2011). High
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Parameters, 32(1), 5–14. International Business Studies, 42(2), 202–220.
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Organizing to counter terrorism: Sensemaking amidst Strategic resources and performance: A meta-analysis.
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1201–1223. 58. Czinkota, M., & Ronkainen, I. (2008). Trends and
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indications in international business: Topics for future and the changing world of business. London, UK: Eygm
research. Management International Review, 49, Limited.; Levy, O., Beechler, S., Taylor, S., et al. (2007).
249–266. What we talk about when we talk about ‘‘global mindset’’:
55. Lawler, J., Chen, S., Wu, P., et al. (2011). High Managerial cognition in multinational corporations.
performance work systems in foreign subsidiaries of Journal of International Business Studies, 38, 231–258.
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
CHAPTER 2
THE CONTEXT OF
IHRM: CULTURE AND
INSTITUTIONS*
CHAPTER OBJECTIVES
Chapter 1 observed that international human resource management (IHRM) differs from nationally
oriented human resource management (HRM) predominantly in the complexities that result from employees
of various national origins working in different countries. Individuals who work in internationally
operating companies, as well as customers, suppliers or representatives of government institutions in the
host country, often face very different cultural and institutional environments due to various socialization
experiences. In this chapter, we systematically review the environment of international HRM decisions
so that the complexity of these decisions can be better understood and adequate solutions for their
management developed. The following themes are discussed:
● definitions of culture
● cultural concepts
* The authors would like to acknowledge the contribution of Tobias Schumacher to the cultural sections of this chapter. Together with
Marion Festing, he has developed the award-winning serious game ‘Moving Tomorrow’ (https://cim.escp-business-school.de/learning/
moving-tomorrow/), which aims at developing intercultural competence among players/students and creating a more inclusive environment
in organizations and society. Cultural concepts used in the game are to a large extent reflected in this chapter. Tobias Schumacher was also
involved in the Renault Chair of Intercultural Management at ESCP Business School.
22
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CHAPTER 2 THE CONTEXT OF IHRM: Culture and Institutions 23
● results of intercultural management studies such as Hofstede and the Global Leadership and
Organizational Behavior Effectiveness (GLOBE) study
● other influential approaches employed to conceptualize culture, going beyond the understanding of
it as static national values
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24 CHAPTER 2 THE CONTEXT OF IHRM: Culture and Institutions
The common feature of cross-cultural management research is the basic assumption that
there are differences between management practices in various countries and that the respective
environment is of particular significance in explaining these variations. This perspective
rejects the approach of researchers who assume the universal transferability of management
knowledge, i.e., a universalistic, culture-free approach to management.27
Cross-cultural studies have often been the focus of substantial debate and criticism. The
rather atheoretical foundations of some cross-cultural research, aligned with methodological
weaknesses in many empirical studies, are problematic and they have frequently caused
contradictory research results and led to vigorous debate in this field. Criticisms have been
voiced on the nature and use of the construct ‘culture’ – a collective term or residual variable that
is undefined or inadequately defined and/or operationalized at the start of a research study – as
an independent variable for explaining variations in management practices between different
countries. Despite numerous critical arguments, the knowledge gained from intercultural
comparative research is a first step toward understanding the complexity of international
management and HRM. The next section covers the possibilities of conceptualizing the concept
of culture and its content.
Definition of culture
Numerous definitions and concepts of culture have been discussed in the relevant literature.
The term originated from the Latin word colere, which was used in the context of tilling the soil
and simply signified plant cultivation. To date, there is no predominant consensus on the exact
meaning of culture.28 As early as the 1950s, Kluckhohn and Kroeber had already put together
164 definitions from English-speaking countries and condensed them into a comprehensive,
well-established and accepted definition of culture:
Culture consists in patterned ways of thinking, feeling, and reacting, acquired and transmitted
mainly by symbols, constituting the distinctive achievements of human groups [...] including their
embodiments in artefacts; the essential core of culture consists of traditional [...] ideas and especially
their attached values.29
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CHAPTER 2 THE CONTEXT OF IHRM: Culture and Institutions 25
This understanding was labeled by the well-known Dutch researcher Geert Hofstede as
‘mental programming’ or Software of the Mind, the title of his 1991 book:30
Using the analogy of the way in which computers are programmed, this book will call such patterns
of thinking, feeling, and acting mental programs, or, as the subtitle goes: ‘software of the mind’. This
does not mean, of course, that people are programmed the way computers are. A person’s behavior
is only partially determined by her or his mental programs: (s)he has a basic ability to deviate from
them, and to react in ways which are new, creative, destructive, or unexpected. The ‘software of the
mind’ [...] only indicates what reactions are likely and understandable, given one’s past.31
The diversity of definitions and concepts underlines the need for a clear, unambiguous
definition of the term ‘culture’. This is even more important because this brief discussion has
already indicated that the basic understanding of culture affects its operationalization and
eventually the handling of the phenomenon.32
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26 CHAPTER 2 THE CONTEXT OF IHRM: Culture and Institutions
● Artifacts are described as visible organizational structures and processes. They can be analyzed
using conventional methods of empirical social research, but their meaning is often hard to
decipher. In addition to tangible artifacts like computers or artworks, artifacts also comprise
non-tangible structures and processes like vocabularies, stories or rituals,43 the latter of which
can be differentiated into complete rituals or ritual-like activities and encompass standardized and
repetitive behaviors occurring under specific conditions that can enhance group solidarity and
promote inclusion. An example would be an office Christmas party.44 Stories are detailed narratives
of past management actions or employee interactions that are communicated informally within
the organization.45 Examples of stories that are often told in an organization are: Can the little
person rise to the top? How will the boss react to mistakes? How will the organization deal with
obstacles? Vocabularies are systems of words that are used by communities to describe roles,
processes or even the nature of reality.46 As such, role descriptions such as ‘Chief Executive
Officer’ represent an example of vocabulary, as does the word ‘talent’. Depending on the cultural
group we are looking at, however, the vocabulary structure surrounding these words is different.
In communities that value performance and achievement, the ‘Chief Executive Officer’ description
might be embedded in positively connoted words such as ‘successful’ or ‘powerful’, while it might
likely be the complete opposite in communities that are critical of the impact that businesses have
around the world (e.g. promoting unfair working conditions or generating CO2 emissions).
● The middle level comprises the values of a company or society, which are found in the
intermediate level of consciousness; in other words, they are partly conscious and partly
unconscious. We provide an in-depth review of values in the next section of this chapter, as they
arguably represent the construct through which culture has been conceptualized the most in
current research.47
● The third level is described as underlying assumptions, which are often presumed to be
self-evident. They include convictions, perceptions, thoughts and feelings, which are usually invisible
and unconscious. Nevertheless, they are the sources of values and the actions based on them.
Schein emphasizes that relationships that lead from artifacts through values to underlying
assumptions are much weaker than those leading in the contrary direction, because the influence of
underlying assumptions on values and artifacts is stronger than vice versa. The basic assumptions
of Schein’s ideas originate in the work of Kluckhohn and Strodtbeck.48 According to the authors,
assumptions are organized independently of individual cases in typical patterns in each culture,
based on the human capacity to survive. Some of these underlying assumptions are explained in
more detail below.49 The following questions are implicit in the six underlying assumptions:50
1 The nature of reality and the nature of truth: What is real and what is not? Do members of a
culture assume more of an experimental position, where decisions about true and false outcomes
depend on an experiment, or do they follow more traditional convictions?
2 The time dimension: How is the time dimension defined and calculated? How important is time?
Do members of a culture live more in relation to the past or to the future? Are they oriented more
to the long term or the short term?
3 The effect of spatial proximity and distance: How is space attributed to members of a society?
What objects and locations are private and what are public? What role does spatial distance play
in evaluating relationships, e.g., in regard to the level of intimacy?
4 The nature of being human: What does it mean to be human? Is human nature marked more by
good or bad intentions? Can people change and develop, even as adults?
5 The type of human activity: How is the relationship with the environment evaluated? Is the
environment considered more compelling or overpowering? Are the members of a society more
passive in their fate or do they try to actively change it?
6 The nature of human relationships: What ideas about social order criteria dominate in a society
(e.g., age, origins and success)? What characterizes relationships between people? Is team
success or individual success important?
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CHAPTER 2 THE CONTEXT OF IHRM: Culture and Institutions 27
This conceptualization also has important implications for working in teams, as research
has found that those with a high degree of value consensus (e.g., team members with similar
values) are less likely to experience conflict than work teams with low value consensus.56 This
is not to say, however, that it is necessarily desirable to have a high level of value consensus in
work teams, as diverse values might help to increase team performance. 57 In some situations,
for instance, an individual who values power-dominance might help to push a team to reach a
deadline, thereby asserting themselves against the team members, even though the rest of them
might have some reservations in relation to a highly dominant character. While Schwartz and
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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
Another random document with
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Nej, blif i askan du, det är din plats.
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kuten sanottu, hänen pankkiirinaan. Siihen aikaan ei vielä tiedetty,
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häntä huhujen levittämisestä ja toisten asioihin sekaantumisesta.
»Olen vain puhunut totuutta, kertonut, että lääkäri on käskenyt sinua
vaikenemaan, en ole puhunut mitään pahaa», vastaa Maria Grape ja
vetoaa vanhaan palvelusintoonsa. Juuri näihin aikoihin Maria
Grapen liike teki vararikon. Hänellä oli vielä hallussaan Ida Aalbergin
rahoja 700 markkaa, ja Ida Aalberg, ihmeissään siitä, ettei Maria
Grape, vaikka he vastikään olivat tavanneet, ollut mitään puhunut
odotettavasta surkeudesta, tiedusteli rahojensa kohtaloa erään
yhteisen tuttavan välityksellä. Tästä toimenpiteestä Maria Grape oli
hyvin pahastunut, hän selitti Ida Aalbergin rahojen kyllä olevan
turvassa ja sanoi maksavansa ne milloin tahansa. Välit menivät
lopullisesti rikki Ida Aalbergin palattua Suomeen. Rouva Winterhjelm
oli tiedustellut Maria Grapen tilaa Ida Aalbergilta, ja tämä oli antanut
epäedullisia selostuksia. Tosiasia olikin, että Maria Grape näihin
aikoihin etsi pikarista lohdutusta intohimoiselle mielelleen.
»Ida kulta!
Hedvig Winter-Hjelm.»
»Suurenmoinen Taiteilija!