Hrm In Multinationals Introduction - HR Management

This chapter examines HRM from a comparative and international perspective. The comparative and international study of HRM is born out of quite distinct theoretical research traditions, namely institutional and strategic perspectives respectively, and as such are concerned with addressing different questions about the nature of HRM. Despite this, we will illustrate the significance of the institutional approach to further explicating international HRM and addressing questions of convergence and divergence.

Comparative HRM is concerned with understanding in what ways and why HRM differs across countries. The ‘national business systems’ approach provides a basis for analytical comparison emphasising the institutional structures that have a direct and indirect influence on corporate strategies and in turn on HR practice. The primary analytical focus is the institutional environment – namely the legal and regulatory frameworks, industrial relations traditions and employment systems – in terms of its impact on organisations.

This perspective zooms in on the institutional influences that constrain or enable organisational action. This gives rise to questions such as to what extent are the HR policies adopted in one country relevant or feasible for organizations in other countries? This perspective rejects unitarist theoretical perspectives that attempt to prescribe universal models of HRM. In contrast, international HRM is concerned with identifying and understanding how multinational organisations manage their geographically dispersed workforces in order to leverage their HR resources for both local and global competitive advantage.

The focus here is on organisational strategy and structure and its interaction with market competition. Organisations are assumed to have a high degree of strategic choice enabling them to find the best way of organising their resources for competitive advantage, in other words achieving a ‘fit’ between the organisation’s strategy-structure and its external business environment. The types of questions addressed by academics in this field are concerned with what are the ‘best’ ways of organising the HR function to meet the divergent needs of multidomestic, global and transnational competition;

what role can expatriate managers play in achieving strategic integration and control for multinationals? While environmental constraint is recognised, its influence tends to be under-emphasised and under-explored. As a consequence, the approach towards international HRM is prescriptive in nature and directed towards defining universal organisational models, i.e. models of international HR organisation, policy and practice that fit the competitive context. The ways in which this competitive context is affected by, for example, cooperative institutional links or collective tradition and the implications for strategic choice go largely unrecognised.

The study of international and comparative HRM may be considered relatively embryonic up until now. International organisations and the business markets they operate in are notoriously complex and dynamic. Conducting research in the field is often expensive and methodologically difficult (Adler, 1984; Brewster et al., 1996; Tregaskis et al.2003) owing to the complex interplay of organisational and environmental factors.

Despite this, we would argue that it is precisely this dynamic and complex area of interplay between institutional and strategic factors that warrants greater attention and is necessary as one means of taking theory and empirical work in the field of international HRM forward. In this chapter we attempt to address some of the issues of importance here by outlining the current empirical and theoretical contributions in the comparative and international HRM fields and demonstrating the significance of an institutional analysis to the examination of HRM in multinationals.

The chapter begins by introducing the concept of ‘national business systems’ as a basis from which to understand the emergence of comparative analysis in HRM. Applying this analytical perspective to indigenous organisations, the divergent nature of HRM across countries is illustrated. Moving to an analysis of MNCs, the literature and models of international HRM and their limitations are considered. To conclude, we draw together themes from both the comparative and international HRM fields as a means of considering the state of the current debate regarding the convergence and divergence of HRM practice and the implications this has for the management of HRM in MNCs and ultimately for the future direction of international HRM.

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