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International and Comparative Human

Resource Management

Introduction to the Module


Module Tutor:

Rosliana Binti Ahmad Razilan


email: rosliana@ftms.edu.my
Learning Outcomes

On successful completion of this module you will be


able to:

Demonstrate an understanding of the reasons for the existence of key


similarities and differences in national HRM practices (Knowledge and
Understanding)

Critically evaluate the potential people management problems


(Intellectual, practical, affective and transferable skills)

Critically analyse a range of tasks and techniques used when


undertaking comparative HRM studies (Intellectual, practical, affective
and transferable skills)
Main Themes

Globalisation and TNCs/MNCs and the current and future trajectory of


HRM

Concepts and debates about the international transfer of HRM practice


(Policy diffusion)

Debates and ideas about international employee resourcing – staffing,


performance management, development and rewards

Institutions, regimes, ideas and debates about the international


regulation and management of Human resources, including, Corporate
Social responsibility
Assessment for this module consists of one
part

Written paper 3000 word limit


Submission 8th May 2014 5pm

Write a 3000 word paper which critically


evaluates a range of potential strategic
problems facing Human Resource Managers
operating in multi-national companies.

See Module guide (pages 6-10 for details about the


assignment, including; assessment criteria,
submission guidelines, etc.
Readings (1) – Books

Brewster, C, Sparrow, P, and Vernon, G (2007): International Human


Resource Management 2nd edition. London, CIPD Publishing

Briscoe, Dennis R, Schuler, Randall, S and Claus, Lisbeth (2008):


International Human Resource Management: Policy and Practice for
Multinational Enterprises (Global HRM) 3rd edition London Routledge

Beardwell and Holden (Various editions): Human Resource


Management. Harlow, Prentice Hall/FT

Edwards, T. and Rees, C. (2011, 2006), IHRM: Globalisation, National


Systems London: FT. London: Sage,

Dicken, P. (2007) Global shift: Mapping the Changing Contours of the


World Economy (5th edition.), London: Sage
Readings (2) Book
Dicken, P. (2003) Global shift: Reshaping the Global Economic Map in
the 21st Century (4th edition.), London: Sage

Rubery, J. and Grimshaw, D. (2003) The Organisation of Employment:


An International Perspective. London: Palgrave

Harzing, A. and Pannington, A. H. (eds.) (2011)) International Human


Resource Management (3rd Edition), London: Sage

Harzing, A. and van Ruysseveldt, J. (eds.) (2004) International Human


Resource Management (2nd Edition), London: Sage.

Scullion, H. and Lineham, M., (Eds.) (2005) International Human


resource management, Basingstoke: Palgrave Macmillan

 Rugman, A., Collinson, S. and Hodgetts, R. (2006) International


Business, 4th Edition. Harlow: FT Prentice Hall
Reading: Journals

 European Business Review,


 Human Resource Management Journal,
 IDS Employment Europe,
 Personnel Review,
 International Journal of Manpower,
 Employee Relations,
 Journal of European Industrial Training,
Reading: Journals

 International Journal of Human Resource Management


 International Journal of Cross Cultural Management
 European Journal of International Management
 European Journal of Industrial Relations
 Human Resource Management Journal
 Journal of International Business Studies
 Asia Pacific Journal of Human Resources
International and Comparative HRM

Week 1

The Globalisation of International Human


Resource Management

Alhajie Saidy Khan


Lord Ashcroft International Business School
Lecture outline

Lecture focuses upon the:

Historical developments in
international economic activity

What is Globalisation? The


definitional debate

Key characteristics of Globalisation


Globalisation: a critical perspective
Nature and dominance of MNCs
Globalisation, MNCs and
international transfer of practice
Globalisation: the historical context (1)

Historical developments in the World economy:

Long history of international trading relations


Importance of colonial expansion (C17th & C18th)
Manufacturing multinationals appeared in world economy after mid
C19th and established by WWI Annual growth of volume of international
trade of 3.4% 1870-1913.

Impact of protectionism prior to WWI; fall in world trade in 1930s


following Depression; WWII.

(Hirst and Thompson 1996, Chapter 2; Harzing & Ruysseveldt, 2004/5, 2011)
Globalisation: the historical context (2)

Post War developments in the World economy

USA domination: economic development as instrument of the


cold war)

International institutions (GATT, IMF, OECD)


Exchange rate system
‘Golden Age’ by 1950s and 1960s volume of trade increasing
more rapidly than production, rapid economic growth and full
employment

(see Bretton Woods Revisted - Economist 9.7.1994 )


Key indicators of Economic
Internationalisation

Trends on international trade: the data(next slide


Phenomenon of Regional trading blocs and
increase in regional trade

Foreign Direct investment


Economic liberalisation
Dominance of TNCs
Growth in World production and
trade (% in volume)

Trade Production

12
10
8
6
4
2
0
1950-63 1963-73 1973-90 1990-01
(WTO, 2002)
Theories of determinants of
economic internationalisation

Theory of Absolute advantage (Adam Smith, 1776)


Relative advantage Theory (Ricardo, 1917)
H-O theorem – differences in factor endowment (Ohlin, 1933)
Porter’s6 criteria theory of comparative and competitive
advantage (1990)

Dunning’s Eclectic paradigm (2003)


See various editions of Edward and Rees
Internationalisation vs. globalisation

Internationalisation: the simple extension of economic


activities across national boundaries.

Globalisation qualitatively different processes that


involve the ‘functional integration of internationally
dispersed activities’

(Dicken, 2003, 2007, 2011)


Globalisation: a qualitative
explanation

Globalisation as qualitatively different form of international


economy?

Deep-seated (irreversible) shift in structure and operation of


production and markets

Undermining of nation-states as significant economic actors


Cultural Homogeneity or dominance without hegemony?
Global corporations (TNCs/MNCs) with no allegiance to any
particular place and or community

(Dicken 2011, 2007, 2003)


Or, Globalisation as illusion

No fundamental changes in world economy

World economy more open and integrated 1870-1913


Global markets can be controlled by mixture of national/supranational
regulation

Importance of cultural differences (Child 2002)


Relatively few truly international companies and concentration of FDI
among advanced economies

(Dicken, various eds.; and Hirst and Thompson)


Characteristics of Globalisation

Uneven development and rate of globalisation


Key role of Multi/Transnational Corporations (MNCs/TNCs) in
coordinating production chains and shaping new world economy

Foreign direct investment (FDI) as indicator of MNC/TNC activity and


the growth of international production

Dynamic relationship between MNCs/TNCs and national (or


supranational) regulatory regimes and growth of product market
competition

(Dicken, 2003, 2007, 2011)


Dominance of Multi/Transnational
Corporations

What is Multi/Transnational Corporation?

Narrow Definition
 direct ownership of operations overseas measured by FDI (foreign direct
investment)

Broad Definition
 ‘a company which either directly or indirectly controls production or
service provision in two or more countries’

 covers licensing, franchising, sub-contracting, joint ventures and


strategic alliances as well as FDI
Significance of Multi/Transnational
Corporations (1)

TNCs are driving force behind internationalisation of


economic activity

 Dominate international and national economies

 Ability to take advantage of differences between states

 Ability to shift resources and operations between countries

According to the UN, the stock of FDI had increased from


$560 billion in 1980 to $7,213 billion in 2002 (about $12,500
billion in 2006).

UNCTAD, 2006
MNCs/TNCs: from investment to Global control

By 1997 the UN estimated that 53,607 parent TNCs had


controlled 448,917 foreign subsidiaries, producing about 25%
of world output

In 2002, the top 100 TNCs employed over 14.3 million
workers of which just under half worked in their foreign
affiliates in 2002 (UNCTAD)

By 2004 the UN estimated that 61,000 parent TNCs had


controlled over 900,000 foreign subsidiaries, generating
annual sales of $19 trillion and employing around 54 million
people.
G GDP or Total Sales (US$ bn)
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Country or Corporation
Micro-level explanation for why
Firms go ‘multinational’

 Competitive strategies for product markets


 Gain market power by overcoming disadvantage of being
 seen as foreign)
 efficiency - possessing a strategic or ownership (benefits of
which can only be realised through internal transfer within
firm)

Factor Supply
 Raw materials supply (secure control)
 ‘Transfer pricing’ strategies.
 Labour supply (cheapest labour costs, ability to divide and
rule); but issues of labour costs as proportion of total costs
and productivity
Motivations for internationalisation:
Dunnings’s Eclectic paradigm

Theory of synthesis of 3 conditions:


 They possess ownership-specific advantages not
possessed by competing firms (in host country)

 Advantage most effectively secured by production overseas


(c.f. selling or leasing) i.e the firm internalises use of
ownership-specific advantages

 There must be location-specific advantages which make it


profitable for the firm to exploit its assets in overseas (c.f.
domestic) locations
Internationalisation: Contradicting demands
of centralisation and decentralisation

Centralised control: benefits of co-ordination and control


activities across divisions and countries) e.g. McDonalds

Decentralised control: benefits of local autonomy and


ability to respond to local conditions & optimise local
expertise
 But are they mutually exclusive?
 Different issues require different levels of decision-making
and response.
 The scope for differences could, however, define differences
between TNCs
Country of origin effects and transfer
of practice

Some evidence of TNCs becoming more global (spread


of international business divisions, management teams etc.)

Evidence of TNC reorganisation within EU (mergers,


acquisitions, joint ventures and strategic alliances)

Crucially most TNCs rooted in home country


 Location of majority of assets
 Management board dominated by home nationals
 Finance largely raised in home country
Globalisation, MNCs and International
transfer of practice

Globalisation as a process which has led to ‘regime


competition’ between national capitalisms

 TNCs as ‘proxies’ in the competition between highly


regulated and highly deregulated systems (of employment
relations)

Do multinationals act as vehicles for transmitting HR/IR


practices from the parent country.. to the host countries in
which they operate, or do they attempt to drop what they see
as the constraining elements of their business systems once
they leave their own borders? (Ferner, 1997:20)