Chapter 1

Introduction:
The enduring context of IHRM
Chapter objectives
In this introductory chapter, we establish the
scope of the textbook. We:
 define key terms in international human
resource management (IHRM)
 outline the differences between domestic and
international human resource management
and the variables that moderate these
differences
(cont.)
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Chapter objectives (cont.)
 discuss trends and challenges in the global
work environment and the enduring context in
which IHRM functions and activities are
conducted – including the way in which forces
for change affect the operations of the
internationalizing firm and have
consequences for the management of people
in the multinational context.

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Figure 1-1: Inter-relationships between approaches in the field

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Figure 2-1: A model of IHRM

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HR activities slide 1
 Human resource planning
 Staffing
Recruitment
Selection
Placement
 Training and development

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HR activities slide 2

 Compensation (remuneration)
and benefits
 Industrial relations

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What is an expatriate?
 An employee who is working and temporarily
residing in a foreign country
 Some firms prefer to use the term
‘international assignees’
 Expatriates are PCNs from the parent country
operations, TCNs transferred to either HQ or
another subsidiary, and HCNs transferred into
the parent country

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Figure 1-3: International assignments create expatriates

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Differences between domestic and
international HRM
 More HR activities
 The need for a broader perspective
 More involvement in employees’ personal
lives
 Changes in emphasis as the workforce mix
of expatriates and locals varies
 Risk exposure
 Broader external influences

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Figure 1-4: Variables that moderate differences between domestic
and international HRM

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The ‘top ten’ multinationals
1. Rio Tinto (UK/Australia)
2. Thomson Corporation (Canada)
3. ABB (Switzerland)
4. Nestlé (Switzerland)
5. British American Tobacco (UK)
6. Electrolux (Sweden)
7. Interbrew (Belgium)
8. Anglo American (UK)
9. AstraZeneca (UK)
10. Philips Electronics (The Netherlands)
UNCTAD Index of Transnationality

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Figure 1-5: Factors influencing the global work environment

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Forces for change
 Global competition
 Growth in mergers, acquisitions and alliances
 Organization restructuring
 Advances in technology and
telecommunication

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Impacts on multinational
management
 Need for flexibility
 Local responsiveness
 Knowledge sharing
 Transfer of competence

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Managerial responses
 Developing a global mindset
 More weighting on informal control
mechanisms
 Fostering horizontal communication
 Using cross-border and virtual teams
 Using international assignments

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Chapter summary
This chapter has established the scope of this book.
We have:
 Defined international HRM and the term ‘expatriate’.
 Discussed the differences between domestic and
international HRM – looking at six factors: 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.
(cont.)
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Chapter summary (cont.)
 Examined what we have called the enduring context of IHRM. The
focus is on the current global work environment, looking at the
forces for change that have prompted managerial responses that
have implications for the way in which people are being managed
in multinationals at the turn of the 21st century. However, we have
made a brief comparison with the situation that confronted a 14th-
century merchant as a way of drawing out some of the constants
in international business.
This treatment has enabled us to provide an overview of the
field of IHRM and establish how the general environment
affects IHRM. The next chapter examines the organizational
context where we explore how IHRM activities are determined
by, and influence, various internal changes as the firm
internationalizes.
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