Management International and Comparative HRM - Essay Example

? Management International and Comparative HRM Table of Contents Management International and Comparative HRM Introduction 3 Globalization 3 Strongand weak globalization and influence of MNC’s in national laws 3 Importance of international and comparative context of HRM 5 Objectives of paper 7 Main body 8 Convergence and divergence issues in IHRM 8 National culture: a brief overview 9 Significance of cultural dimension 10 Implications of national cultural and institutional differences on MNC’s 12 Varieties of capitalism 13 Conclusion 15 References 17 Bibliography 19 Introduction Globalization Globalization is the intensification of social relations worldwide which links the localities at distant places in such a way that events which occur miles away shape the local happenings and vice versa. Some interrelated ideas are embodied in this definition in relation to accelerating interdependence and time space compression. Accelerating interdependence is the phase where the development in one country has a direct impact on another country. However, time space compression refers to the way in which the geographical time and distance is shrinked by the globalization (Varkkey, 2009, p.87). Time and distance are not considered as the major constraints in the world of instantaneous communication on the patterns of human interaction and organization. Globalization leads to convergence and homogenization in the strategies of organization, processes and structures and consumer choice along with a global division of labor that widens the income gap between and within societies between haves and have not’s (Mathis and Jackson, 2010, p.56). The world today is organized by accelerating globalization which strengthens the dominance of capitalist economic system of world by eroding the local traditions and cultures through a global culture. Strong and weak globalization and influence of MNC’s in national laws Strong globalization refers to the state where the globalization has a positive impact on the operation of organizations in the countries. Weak globalization refers to the state where globalization has a negative impact on the operation of organization in countries. The multinational companies can influence, evade or manipulate national institutions and laws for suiting their labor management purposes. Globalization widens the gap between rich and poor. The implications of globalization are required to be incorporated by the governments in its policies and the companies are required to cope with it in order to survive in the industry. The public in many countries become anxious as it may affect the culture and values negatively or it may displace jobs. There are both losers and gainers in the process of globalization. There is a fear regarding globalization that it may widen the gulf between have and have not’s, strong and weak, traditional and modern (Poole, 1999, p.75). In one side, it enrich the people or countries to take the advantage or lead the process while on the other side, it will leave behind many others who will be worse or marginalized. The cultural and economic globalization is growing through many countries. The persistence of poverty, growing inequities among and within countries and the link between phenomenon’s is very strong. The external environment has been more significant in influencing the level of available resources and the way they are used. The thesis of strong globalization argues that the growing pervasiveness of multinational enterprises is creating a borderless world where the economic and political interventions undertaken by nation states are becoming increasingly meaningless (Briscoe, Schuler and Tarique, 2012, pp.56-57). In other words, the public policies implemented by national legislatures for regulating the activities of multinational companies are increasingly becoming ineffective. Globalization need not necessarily be bad. But it can have more negative effects on the countries that are not prepared to adapt globalization. There has been a return to laissez-faire. The economic, social, developmental and welfare role of the state is eroded greatly in the southern countries (Pollis, 2008. pp.344). The shift of power to private sector results in reduction of wastage, losses in private sector and growth of some indicators. It has increased unemployment and poverty and has marginalized larger sections of people. The rich nations at the international level have made a consolidation of their strong holdings on relations and global institutions. The nation states can resist the efforts of national laws and institutions (Briscoe, Schuler and Tarique, 2012, pp.45-50). The institutions having democratic or more open character and with social or development orientation like economic and social agencies of UN have gradually depleted in respect of power, function and importance. Thus, though globalization offers various advantages at global level but sometimes it leads to the marginalization of developing countries in the process of globalization (Stahl, Bjorkman and Morris, 2012, pp.85). The thesis of weak globalization argues that the pervasiveness of multinational companies is far from all-encompassing and the nation states play an important role in shaping the management and operation of such companies.  Importance of international and comparative context of HRM The emergent global culture and economy is described as a network society which is embedded with information technology and new communications. Globalization is viewed as a force of freedom, wealth, progress, happiness and democracy and the continuation of modernization. It is also viewed by others as another form of imposition (Lee, 2008, pp.53-55). Globalization is viewed as harmful by the critics and is perceived as a force that brings about increased control and domination by overdeveloped and wealthier nations over the underdeveloped and poor countries (Stahl, Bjorkman and Morris, 2012, pp.60). The adoption of liberalizing and globalizing policies for Indian economy was done in 1991. During this time, the country was facing huge debt obligation, massive fiscal deficit and depleting forex reserves throughout the world. The conservative Indian economy got open to the extensive global participation. Many industrial regulations which were binding the organizations all over the country were done away with liberalization. This led to the increase of participation of private player in the market (Edwards and Rees, 2011, pp.150). The human resource department faces many challenges in the age of globalization. It has to create a global mindset for both employees and managers (Bloom, Milkovitch and Mitra, 2003, p.1352). The human resource should be recognized by the organizations as a strategic element of business to meet these challenges. The human resource department is required to create an atmosphere of co-operation and unity in diversity throughout the corporation and a culture with global approach. It requires understanding the need for developing a set of practices that meet the needs of organization everywhere and anywhere in world. The employees should be trained and developed by the organizations in such a manner so that they can perform with efficiency throughout the world (Edwards and Rees, 2011, pp.87). The policies of structural adjustments initiated the process for opening the closed economy of country. There was a huge chance of de-licensing and deregulations in the legal and political environment on foreign investments. Along with the removal of monopoly of public sector upon certain industries, the FEMA and MRTP also act. This has made the business environment hyper-competitive and has led to a major turbulence in various organizations. A new system in the processes of human resource is required by the companies to stay in the race (Forster, 2000, p.127). The innovative practices began to develop inside the companies for hiring the best talent and to retain them. For maintaining a good rapport with employees, they were introduced by the companies to the professional culture of corporate which is required in the growing competition to stay ahead. The human resource managers develop certain skills among the employees in the hyper competitive environment which allow the organization and its workforce to become cutting edge (Poole, 1999, pp. 269). The policies of human resource should be effective in enabling people to respond to the challenges and opportunities of environment in the best interest of company. Innovativeness in people and entrepreneurship ensures value innovation as an ongoing exercise in company. Further, an essential element of entrepreneurship in companies is self-discipline. This attribute enables people to act as a voluntary check over oneself and to act responsibly. In today’s business environment, speed is a critical factor. If such traits can be entrusted into the framework and policies of human resource, a huge advantage could be gained by the respective organization over its competition (Mathis and Jackson, 2010, pp.87).The company could be taken to a higher planer of competitiveness by the institutionalization of such traits. The significance of human resource reaches the indispensable levels in such environments. A company is likely to wither away without proper management of human resources. Objectives of paper Our present study focuses on defining strong versus weak globalization thesis and acknowledging the importance of comparative and international context of human resource management, if the multinational companies can influence, evade or manipulate national institutions and laws for suiting their labor management purposes or prerogatives or whether the nation states have the ability of resisting such efforts, the debate over the convergence and divergence in human resource management, the impact of national cultural differences, institutional differences and varieties of capitalism on the organization and its employees.  Main body Convergence and divergence issues in IHRM With the continuous growth of global economy, the practices and policies of International Human Resource Management can be influenced by institutional and cultural differences in complex and multiple ways. The diversity of the practices and policies of International Human Resource Management across nations is examined by using the framework of convergence and divergence. This framework examines that why and how certain practices and policies of IHRM differ across the countries or whether there is a growing similarity of specific policies and practice of IHRM across the countries (Edwards and Rees, 2011, pp.110). The polar extremes are represented by the perspectives of divergence and convergence. It is suggested by the convergence perspective that the business practices and organizational structures and values over time in different regions and countries will be similar (Shen, 2005, p.127). The argument is that as there is a response by the institutions to the similar challenges, features and pressures across regions and countries, a common usage pattern will be created for the practices and policies of human resource with a role that the multi-national enterprises plays critically in the creation of this convergence. The concept of convergence accepts the fact that practices and policies are quite different in the beginning (Dowling, Festing and Engle, 2008, pp.453). At the same time, it also argues that these differences will be decreased. The divergence perspective in contrast, suggests that the national, business and institutional values are deeply embedded and integrated in a society and it also resist change to accommodate the practices and policies which has been introduced from outside like from foreign multinational enterprises. Since most countries have their unique business and national values and institutions, this will sustain and create national differences which will be unique (Onis, 1991, pp.109-126). This issue of divergence versus convergence in the policies and practices of international human resource management around the world is applicable to various policies and practices of international human resource management. The study of convergence has been provided in different forms. There exists final convergence when a variable development in different unit of analysis is pointed towards a common end point, decrease in difference between countries. There is an occurrence of directional convergence when the tendencies of development of variables in analysis units go in same direction irrespective of the initial starting level. Majority of convergence refers to dispersion or homogeneity of practices within a country (Edwards and Rees, 2011, pp.98-99). In the perspective of divergence, the demand for labor is heterogeneous and supply of labor is heterogeneous. Different skills, capabilities and knowledge of employees is required by each organization. Each person has different skills, capabilities and knowledge to contribute and offer to the organization so the value to be added by each person to the organization varies. National culture: a brief overview The national culture constitutes shared assumptions, values, beliefs and norms that have been incorporated into the core of society. The national culture as a system of values has been perceived as a collective programming of human mind which influences directly the manifestation of behavior of a society within the group and environment. National culture provides a means to overcome the universal obstacles within the society in terms of internal integration and external adaptation. It is a thread intertwining the nation’s heart with essence of community, organization and individual. It is a thread stitching the fragmented society into a commonality (Edwards and Rees, 2011, p.250). As the institutional and human foundations of nation are the fruit of its roots of culture, similarly national culture has also a significant impact on the operations of business within the multi-national corporations, specifically with regard to the human resource management policies of organization which are its soft aspects. The culture of a nation has an influence in a broad spectrum which shapes every action, every decision, every thought and every organization. Conceptualizing national culture The values that have been embodied by a vast array of cultures are highly diverse worldwide. The business operations are no longer constrained by any geographic boundaries so this diversity must be acknowledged by the multi-national corporations. Though the global barriers are widely acknowledged, the transfer of practices of human resource management from the country of origin to its subsidiaries is subjected to difficulties, so the implications of culture for corporations are indispensable for the management of multinational corporations (Brewster, 2007, p.770). The cultural differences have implications on the human resource management policies of organization in terms of importance of regulation, leadership style, linking of compensation to seniority or individual performance. Significance of cultural dimension Power distance The dimension of acceptability of inequality in society underpinning the functioning of societies indicates the degree to which the power distribution has been accepted within the nations in an unequal manner (Stahl, Bjorkman and Morris, 2012, pp.350). While in the societies of high power, there is large acceptance of inequality which gives rise to the autocratic practices of management, on the other side, the societies of low power are featured by the desire for strong interpersonal relationships, equality and heightened involvement of employee. Uncertainty avoidance It reflects the extent to which unpredictability and uncertainty are accepted in a society. Societies having higher uncertainty avoidance has the central focus of creating long term predictability and sense of security (Edwards and Rees, 2011, p.375). On the other side, the societies having low uncertainty avoidance encourages to take risk and unpredictability. So, the regulatory procedures have less importance. Individualism vs. collectivism It reflects the degree to which there is a reliance of self identity on the characteristics of group or individual. In the individualist societies, there is a predominance of individual concern, initiative and responsibility (Edwards and Rees, 2011, p.28). On the other hand, the collectivist societies are featured by concern and loyalty for social network which is wider. These societies have more reliance on community, country and organization. Masculinity vs. femininity It reflects the significance of the differences within a society between genders and the extent to which the orientations of traditional males are emphasized over the females. The masculine societies are featured with ambition of success in terms of acquiring material possessions. On the other hand, the feminine societies have the core as interpersonal harmony (Edwards and Rees, 2011, p.312). The emotional satisfaction, consideration for environment and quality of life is fundamental. Implications of national cultural and institutional differences on MNC’s The national culture has been engraved into the society’s skeletal framework. The human resource management has been embedded both socially and historically. This area of management is most susceptible to the differences in culture (Mathis and Jackson, 2010, pp.450). The national culture influences various aspects of the human resource management policies of corporations including performance appraisal, leadership style, resource administration, management of relations with employee, provision of opportunities of development and strategic decision making. The practices and policies of human resource management in any given country are the artefacts of culture which is a reflection of the norms and values of culture in which all organizations are incorporated (Briscoe, Schuler and Tarique, 2012, pp.200). Multinational corporations and policy of human resource management The orientation of the policy of human resource management which is adopted by the multi-national corporations with their respective subsidiaries should be focused towards tension between the imperatives of local responsiveness and global integration. The multi-national corporations within its foreign affiliates can adopt three generic orientations of human resource management policy. These are exportive, integrative and adaptive. The management practices of multinational corporations within its overseas subsidiaries can resemble local practices and can seek idle ground between differentiation and integration and can mirror the parent company (Edwards and Rees, 2011, p.750). While the exportive strategy is adopted on the basis of the existence of universal truths, the differences between the national cultures are deeply rooted in today’s society, so, the adaptation to local practices is of prime importance. The central issue of multi-national corporations is not to determine effective human resource management policy rather to identify best fit between the overall strategy of firm, its human resource management policy and its external environment. The degree to which a multinational corporation differentiates its policy of human resource management to fit the cultural context of its affiliates is correlated directly with the firm’s heightened performance. The policies of human resource management consistent with the culture of a nation have been reflected in self-efficacy, improved performance of organization and heightened motivation of employee. In the same manner as congruence is required between the internal strategy and external environment, a misfit between the human resource management policies and national culture causes rifts in the foundations of organization (Ghoshal and Nohria, 1993, pp.23-24). The multinational corporations in order to be competitive in global scale, it is crucial for them to recognize the relationships and adjust its practices of compensation to the specifics of culture of host country. Varieties of capitalism LME vs. CME Varieties of capitalism provide an approach to compare the relations of employment in different countries. The exercise of comparison provides the understanding of divergence and convergence in the comparison of various countries. With respect to idealism, its two ideal forms have been provided within those approaches which are LME and CME i.e. liberal market economies and coordinated market economies. In the markets of liberal market economies, most of the economic activities are regulated by the mechanism of price while in the markets of coordinated market economies, various kinds of cooperation and coordination coexist between the economic actors (Wilkinson, Bacon, Redman and Snell, 2009, pp.87-90). It is argued that the behavior of LME and CME countries differs in mainly five spheres like vocational education and training, inter-firm relations, industrial relations, relation with own employees and corporate governance. It is required by all economies to coordinate in all the five spheres for obtaining financial and economic advantages. In liberal market economies, the economies rely on hierarchy and forces of market for resolving the problem of coordination. These are short term and developed capital markets. There are the forms of industrial relations based on market and provides short term commitments between workers and employers (Wilkinson, Bacon, Redman and Snell, 2009, pp.100). It provides corporate governance which is based on the agency of shareholder. It provides the contracts and market mechanisms that provide coordination in the relations within buyers and supplier. The coordinated market economies include all such economies that use non market mechanisms and collective bargaining for resolving the problems of coordination where the determinations of wages are normally made on the basis of each industry. These economies have corporate governance which is based on cross shareholding. It provides commitment on longer term between the employees and employers (Wilkinson, Bacon, Redman and Snell, 2009, pp.120-123). These are the forms of capital market forms for longer term. It provides collaborative networks and non market mechanisms for coordinating the relations within industries between the firms. Other than liberal market economies and coordinated market economies, there is another capitalism cluster called AME i.e. Asian Market Economies. It is used for some of the economies of Asia that do not fall under the cluster of LME or CME. In the approach of varieties of capitalism, United States has been provided as an example of liberal market economies whereas Germany has been provided as an example of coordinated market economies (Pudelko and Harzing, 2007, pp.535-540). It has been argued that United States has a typical structure of governance which is based on shares and stocks or on forms of outsider. There, the relation of employee has been assumed for shorter term (Wilkinson, Bacon, Redman and Snell, 2009, p.150). The vocational training is not offered there in companies and there exist few relations of union. The market is mainly based on competition. Germany has a typical structure of governance which is based on the insider forms like bank loans. There, the relations of employee are assumed for longer term and in the training process of companies, vocational training is normally offered. The market is based mainly on collaborative networks. The trade unions commonly exist in industry. Conclusion The success of international human resource management in future depends on the ability of companies in developing the executives of international human resource with a broad global perspective having a global mindset, strong strategic and technical business skills and international experience. The function of international human resource management is faced with many challenges in the hyper-competitive and chaotic global market place of today. The multinational enterprises are required to confront with these issues now and in future. The emerging model in the coming future is not the multinational enterprise rather it is a globally integrated enterprise which is very different in operation and structure (Wilkinson, Bacon, Redman and Snell, 2009, pp.540). The international human resource departments are required to provide and develop the support services at international level. The continuing globalization or internationalization of human resource management parallels the continuing globalization or internationalization of business. The firms are required to make its development and increase the professionalization of international human resource management to be called global human resource management.  References Bloom, M., Milkovitch, G. and Mitra, A., 2003. International compensation: learning from how managers respond to variations in local host contexts. United Kingdom: Routledge. Brewster, C., 2007. Comparative HRM: European views and perspectives. United Kingdom: Taylor & Francis Ltd. Briscoe, D., Schuler, R. and Tarique, I., 2012. International Human Resource Management, 4E. United Kingdom: Routledge. Dowling, P., Festing, M. and Engle, A., 2008. International Human Resource Management: Managing People in a Multinational Context. 5th edition. Stamford: Cengage Learning EMEA. Edwards, T. & Rees, C., 2011. 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