International Issues In
Human Resource
Management (BAHR3208)
Sem I, 2023-24
Chapter One: Outcome One:
Process of Internationalisation of business
This chapter will cover the process of internationalization
of business along with basic definition of IHRM and
various dimensions of global business environment.
Internationalization
Internationalization is the process of tailoring a product,
service or operational offering for entry and growth into
international markets.
The need for companies to do trade at international level arises
from various factors. However, it is true that international
companies start as domestic companies and slowly move
towards internationalization. Thus, creating need for
internationally managing human resources.
Companies that function globally comprise international,
multinational, transnational and global firms.
Source:Armstrong, M. (2009) Armstrong’s Handbook of Human Resource Management Practice. 11th Edition, Kogan Page Limited, London.
Taylor, S, Beechler, S, Napier, Nancy (1996) Towards an integrative model of strategic international human resource management, The Academy of Management Review, Vol. 21, No.4 , pp.
959-985
[Link]
Types of international organization
International corporation - is a domestic firm that builds on its existing
capabilities to penetrate overseas market e.g. honda is a domestic firm
that builds on its existing capabilities to penetrate overseas market e.g.
honda
Multinational corporation has operating units located in foreign countries.
Each subsidiary functions as autonomous unit and provides its goods and
services for the geographical region surrounding the country of operation
of the subsidiary eg Xerox, phillips has operating units located in foreign
countries. Each subsidiary functions as autonomous unit and provides its
goods and services for the geographical region surrounding the country of
operation of the subsidiary eg Xerox, phillips
Types of international organization-
Cont’d
Global corporation a type of MNC that controls over its
subsidiaries across the world through centralised home office.
These firm treat entire world as one market e.g. matsushita a
type of MNC that controls over its subsidiaries across the world
through centralised home office.
Transnational corporation provide autonomy to the independent
country oprations but bring separate operation together into an
integrated whole through network structure e.g. unilever provide
autonomy to the independent country operations but bring
separate opration together into an integrated whole through
network structure e.g. unilever
Stages of Internationalization
Stage 1: Domestic Operations - Stage 3: Subsidiaries or
Firms offer products or services Stage 2: Foreign Operations- Joint Ventures -Some
that are designed to primarily Products and services are operational facilities are
serve consumers in the domestic opened up to markets in physically moved to other
market (e.g., law firms). Firms offer other countries, but countries. - Corporate
products or services that are production facilities remain in headquarters in home
designed to primarily serve home country country has high control
consumers in the domestic market over foreign operations.
(e.g., law firms)
Why International Human Resource
Management?
Increasing globalization, firms and employees in them moving all over
the world.
Major problems in international operations because of human resource
management blunders
Managing a Multicultural Workforce
Developing Managerial Talent in a Global Business Environment
Definition of IHRM
• According to Armstrong (2009), International Human resource
management is the process of managing people across
international boundaries by multinational companies. It involves
the worldwide management of people, not just the management of
expatriates.
• International human resource management (IHRM) is defined as “the set
of distinct activities, functions, and processes that are directed at
attracting, developing, and maintaining multinational
enterprises’ human resources” (Taylor, Beechler, & Napier, 1996).
References:
Armstrong, M. (2009) Armstrong’s Handbook of Human Resource Management Practice. 11th Edition, Kogan Page Limited, London .
Taylor, S, Beechler, S, Napier, Nancy (1996) Towards an integrative model of strategic international human resource management, The Academy of Management Review, Vol. 21, No.4 , pp. 959-985
Cont’d:
Working across political boundaries and cultures
demands:
• Responsibility for a greater number and complexity of
activities, including expatriates
• A broadening of expertise to include knowledge of foreign
countries, languages, labour laws, market conditions, etc.
• Involvement with more diverse set of employees
• Coping with greater set of external influences and multiple
cultures
• Greater involvement in employees lives, particularly in case f
expatriates
• Ability to manage difficulties and risks in a different legal and
International Human Resource Management (IHRM)
The framework proposed by De Cieri and Dowling (1999) identifies three broad
strands within the field of IHRM:
• HRM in MNCs focusing on the management of human resources in international
companies.
• Cross-cultural management (CCM), dealing with the impact of cultural difference
on management practices.
• Comparative human resource management (CHRM), comparing HRM systems
and practices at both organisational and national levels.
Briscoe, Dennis, et al. International Human Resource Management : Policies and Practices for Multinational Enterprises, Taylor & Francis Group, 2011. ProQuest Ebook Central,
[Link] from hctom on 2020-09-21 01:38:29
IHRM on Three Dimensions
1. The broad human resource activities of procurement, allocation and utilization.
2. The national or country categories involved in international HRM activities: the
host-country where a subsidiary may be located; the parent-country where the firm
is headquartered; and ‘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); and third-country nationals (TCNs).
FACTORS INFLUENCING IHRM
• Differences in labor market
characteristics • Differences in condition of
• Cultural differences employment
• Differences in the legal • International negotiation
environment perspective
• Attitude towards employment • Staffing Policy
• International Assignments
Mutsuddi, Indranil. Managing Human Resources in the Global Context, New Age International Ltd, 2011. ProQuest Ebook Central,
[Link] Created from hctom on 2020-09-23 01:31:26.
Role of IHRM
where staffing,
management It is not enough that
development, the people recruited
performance fit the skill
The strategic role of evaluation, and requirement, but it is
HRM is complex compensation equally important
enough in a purely activities are that they fit in to the
domestic firm, but it complicated by organizational culture
is more complex in profound differences and the demand of
an international between Countries in the diverse
business, labour markets, environments in
culture, legal which the
systems, economic organization
systems, and the functions
like.
International Business
Environment
An International Business Environment (IBE) refers to
the surroundings in which international companies carry on
their businesses.
It is the sum total of all factors outside the organisation that
may affect its functioning.
It plays a critical role in the development and growth of a
country.
• It is sum total of all external
Features of factors
the • It is both specific and general
internation • It is interrelated
• It is dynamic
al business • It is uncertain
environme • It is complex
nt • It is relative in nature
Importance of International
Business Environment
It allows organizations to identify opportunity
It allows organizations to identify threats
It helps in tapping useful resources
It helps in coping with rapid changes
It helps in assisting in planning and policy making
It helps in improving performance
Importance of International
Business Environment
- It allows organizations to identify opportunity
Early identification of opportunity helps in early mover
advantage; thus, giving huge advantage over the
competitors.
It allows organizations to identify threats
Early detection of threats give time to the organization to
take corrective measures. Failure to do so may be
harmful for the business in the long run
Importance of International
Business Environment
- It helps in tapping useful resources
The resources come in forms such as access to finance,
early access to information, access to labour,
access to raw material, understanding of the law,
use of existing laws for the benefit of the organization.
It helps in coping with rapid changes
From customer taste to fashion to technology everything
is changing faster, thus better understanding of the
environment along with timely action helps firms in
coping with the rapid changes.
Importance of International
Business Environment
- It helps in improving performance
A continuous monitoring and adaption to the
environment allows organizations to improve their
performance.
Dimensions of International Business
Environment
Socio- Technologic
Political Economic Legal
Cultural al
Dimensions of International Business
Environment- Cont’d
Political Environment
Businesses are required to take care of the
following aspects of political environment while
taking business decisions:
• Approach of the government towards business i.e. either supportive or
restrictive.
• Incentives provided by the government.
• Restrictions for licensing and reservations of certain sectors for the public
sector.
• Policy of the government regarding capital goods, raw material, etc.
• Restrictions on exporting certain products and services.
• Restrictions on pricing and distribution.
Cont’d - Economic Environment
- Economic system followed in the country of business.
- Stage of economic growth.
- Growth rate of economy.
- Policy regarding taxation, both direct, indirect and personal
income tax.
- Availability of infrastructure.
- Ease of availability of raw material.
- Availability of financing and its cost.
- Availability of the workforce.
- Cost of workforce.
- Productivity of workforce.
Socio–Cultural Environment- Cont’d
The socio-cultural environment of business includes trends,
developments, values, customs, traditions, society’s
expectations from a business ,etc. prevalent in a society at
any given time.
Present trend towards healthy lifestyle has created
opportunity for organic food, food supplements, sports
equipment's etc.
-Traditions define social practices that provide opportunity
for business. Example can celebration of religious festivals
provide opportunity to businesses.
Socio–Cultural Environment-
Cont’d
Influence of culture and religion on acceptability of a product
Lifestyle of people and products used by them.
Level of acceptance of new products and resistance to change.
Demand for specific products and services on special occasions
Value attached to a particular product (possessive value or functional
value).
Consumption pattern of the buyers.
Legal Environment –Cont’d
Businesses should be aware of the following aspects of
legal environment.
- Laws regarding incorporation of business
- Labour laws in general and in particular which applies to
that business.
- Laws regarding closure of business.
Technological Environment –
Cont’d
Factors to care of:
- Keep an eye on changes in technology in related field
which may be have direct impact on business.
- Keep an eye on changes in technology in diverse areas
which may have impact in future on the business.
- Look at the ethical implications of using technology.
- Ensure to implement technological changes as per the
law such as environmental laws to reduce pollution.
Vocabulary Bank
• Local staff or Host Country National (HCN) : an employee
who is a citizen of a country in which an organization’s
branch or plant is located, but the organization is
headquartered in another country
• Multicultural: Celebrating human diversity by willingly
promoting legal, political, and social recognition of
cultural, ethnic, linguistic and religious differences.
References:
• Armstrong, M. (2009) Armstrong’s Handbook of Human Resource
Management Practice. 11th Edition, Kogan Page Limited, London.
• Johanson, Jan & Finn Wiedersheim-Paul. 1975. The internationalization of
the firm-Four Swedish cases. Journal of ManiagemtienSittudies, 12(3): 305-
22.
• Otto Andersen (1992) On the internationalization process of firms: A critical
analysis. Available at: Accessed on 21 September 2022
• Taylor, S, Beechler, S, Napier, Nancy (1996) Towards an integrative model
of strategic international human resource management, The Academy of
Management Review, Vol. 21, No.4 , pp. 959-985
• [Link]
ent/stages-in-globalization/
CONTACT INFORMATION:
Name of the Staff : Dr. Zareen Mazumder
Office:: 032
Email: [Link]@[Link]
VERSION HISTORY
Version No Date Approved Changes incorporated
01 Sem. (II)
2022/2023
30