1

CHAPTER 1
THE INTERNATIONALIZATION OF HUMAN RESOURCE
MANAGEMENT
2
INTERNATIONAL HUMAN RESOURCE
MANAGEMENT
The study and application of all human
resource management activities as they
impact the process of managing human
resources in enterprises in the global
environment.

3
THE DRIVERS OF THE
INTERNATIONALIZATION OF BUSINESS
Drivers
Trade
Agreements
Search for
new markets
and reduced
costs
Rapid and
extensive
global
communication
Rapid
development
and transfer of
new
technology
Improving
global
education and
a global talent
pool
Increased
travel and
migration
Knowledge
sharing
E-commerce
Homogenization
of culture and
consumer
demands
4

TRADE AGREEMENTS

Trade between countries and within regions of the world is
constantly increasing on a global basis, regionally, and
thorough bilateral trade treaties between two countries

Decreased trade barriers and open markets have resulted in
faster-growing economies throughout the world

Local and national governments support and encourage
growing cross-border trade and foreign investment

The center of global trade is moving away from the developed
countries of Western Europe, North America, and Asia Pacific
to China, South Asia, and even Latin America, Eastern Europe,
the Middle East, and Africa
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SEARCH FOR NEW MARKETS
AND REDUCED COSTS

Global competition comes from anywhere and
everywhere

Competition forces organizations to search for
new markets and revenues and lower costs, often
best found in other countries
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RAPID AND EXTENSIVE GLOBAL
COMMUNICATION

The technological revolution (e.g., the internet) has
made global communication much easier, quicker,
cheaper, and more varied

Enables the spread of information (on a global
basis) about
How people live
What they think
What they want

Creates global expectations for an ever-increasing
quality of life

7

RAPID DEVELOPMENT AND
TRANSFER OF NEW TECHNOLOGY

New technologies are developed around the world
and are made available everywhere
New technologies make it possible to grow and
manufacture products and deliver services with
world-class quality and prices everywhere
Modern education and information technology
allow every country to play a part in this global
economy


8

IMPROVING GLOBAL EDUCATION
AND A GLOBAL TALENT POOL

Improving education around the world is enabling
firms everywhere to produce world-class products
and services

No country or set of countries has an overriding
advantage in the global economy

There is now a global talent pool that allows firms
to operate almost anywhere in the world today



9

INCREASED TRAVEL AND MIGRATION

International travel has become easier, quicker,
and cheaper
Hundreds of millions of people travel across national
borders every year, for business and pleasure
They see how people in other countries live and experience
goods and services that are available, all of which may be
better than what is known at home

Millions of people move to other countries to work
Relocate, usually for a limited time
Fill jobs for which there are not enough local workers
Flee natural disasters or political conflicts



10

KNOWLEDGE SHARING

Firms operating internationally export their
management philosophies and techniques to their
foreign subsidiaries

Spread their knowledge and their company
cultures everywhere

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E-Commerce

The World Wide Web and global transportation
and logistics services have made it possible for
large, as well as small, firms to conduct business
virtually

If a business or an individual has a website, its
business is globalanyone, from anywhere in the
world who has access to the web has access to
that website
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HOMOGENIZATION OF CULTURE AND
CONSUMER DEMANDS

Integration of cultures and values have led to
common consumer demands for some types of
products and services throughout the world

Distinct differences in culture across countries
remain

Firms operating internationally need to be
sensitive to these local differences
13

THE GROWTH AND SPREAD OF
INTERNATIONALIZATION

Internationalization vs. globalization
Both terms refer to the ever-increasing interaction,
interconnectedness, and integration of people,
companies, cultures, and countries

Beginning of globalization
50 years ago, the US economy accounted for 53%
of global GDP
Today, the US economy accounts for less than 28%
global GDP

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THE GROWTH AND SPREAD OF
INTERNATIONALIZATION (CONT.)

Business rankings found in publications such as
Fortune Global 500 and Bloomberg Business
Week focus on the largest global firms
Rankings focus on large, publicly traded firms
Findings illustrate that the global economy
increasingly involves all kinds of products and
services from around the world

IHRM plays an important role in attaining ranking
HR is called upon to recruit, select, develop, and
retain work force talent that can achieve
internationalization and global competitiveness
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DIFFERENT SETTINGS OF INTERNATIONAL
HUMAN RESOURCE MANAGEMENT

Internationalization of HRM occurs in many different
settings
HRM managers will confront at least some aspects of
internationalization
No place to hide for HRM professionals
HRM professionals must become competent in IHRM issues in
almost every job setting .
Four specific settings:
Headquarters
of
multinationals
Home country
subsidiaries of
foreign-owned
firms
Domestic
firms
Government
agencies and
non-
governmental
organizations
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HEADQUARTERS OF MULTINATIONALS

HRM professional work in the central or regional
headquarters of the traditional MNE
This setting is most common for HR managers

Headquarters use parent company HRM
policies/practices to its foreign subsidiaries or use
those that are common in host countries

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HOME COUNTRY SUBSIDIARIES OF
FOREIGN-OWNED FIRMS

HR managers works in their home country but
are employed by a local subsidiary of a foreign
MNE
HR manager will have to integrate a local culture
and organizational culture into the operations
Different communication styles, worker
motivation philosophies, and organizational
structures set in place by the parent company
can cause major problems for the local HR
manager
18

DOMESTIC FIRMS

Confront many complexities of international
business, particularly as they relate to IHRM
Referred to as domestic multinationals
Hiringor recruitingof immigrants can lead to
many of the same internationalization concerns
as those faced by traditional MNEs
Can establish small offices in other countries or
recruit talent overseas in order to meet needs
for specialized skills
19

GOVERNMENT AGENCIES AND
NON-GOVERNMENTAL ORGANIZATIONS

Government agencies, their embassies, and the
hundreds of non-governmental organizations
(NGOs) are also global in scope
Send hundreds of people from parent countries to
overseas operations
Employ many local and third country people to
staff their activities around the globe

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DEVELOPMENT OF INTERNATIONAL
HUMAN RESOURCE MANAGEMENT


HRM managers are being called upon to
contribute increasing expertise to
internationalization
Several IHRM-related questions need to be
answered within each multinational entity
The success or failure of an enterprise is often a
function of how it handles IHRM issues


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International HRM vs. Domestic HRM
IHRM is responsible for more HR functions
IHRM is responsible for a broader expertise and
perspective
IHRM is responsible for greater involvement in
peoples lives
IHRM is responsible for dealing with and
managing wider mix of employees
IHRM is responsible for more external factors
and influences
IHRM is responsible for a greater level of risk






DEVELOPMENT OF INTERNATIONAL
HUMAN RESOURCE MANAGEMENT (CONT.)


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IHRM is relatively new as a profession and
academic area

Two largest Human Resource professional
associations:
Chartered Institute for Personnel and
Development (CIPD) in the UK
Society for Human Resource Management
(SHRM) in the US




DEVELOPMENT OF INTERNATIONAL
HUMAN RESOURCE MANAGEMENT (CONT.)


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Establishment of Global Professional in Human
Resources (GPHR) certification by the Human
Resource Certification Institute (HRCI) in 2003
was turning point in the professionalization of
IHRM
Field continues to grow as a business discipline
and academic field of study
As organizations have internationalized, so has
IHRM

2012 Taylor and Francis


DEVELOPMENT OF INTERNATIONAL HUMAN
RESOURCE MANAGEMENT (CONT.)