Global Dimensions of HR Mgmt. Exam 1

Challenges coming from changing your company's structure include

centrality of decisions + type of control changing drastically, & the extent to which key decisions are made at HQ vs. being made at subsidiary units (centralization vs. decentralization)

HR involves

understanding different cultures and their rules (+ ensuring the safety of employees & focusing on people)

Organization involes

people, a goal, and structure

HR

putting the right people in the right place at the right time

HR activities

(1) planning, (2) staffing (hiring/firing), (3) performance mgmt. (conflict mgmt.), (4) training/development (DEI), (5) compensation (salary/benefits/safety), (6) industrial relations (legal/cultural)

International HR

putting the right people in the right place at the right time on a global scale (more complex)

International HR involves

HR activities, countries of operations, and nationalities of employees overlapping

International HR is more complex because

(1) there are more activities involved (legally/taxation), (2) there is a need for a broader cultural perspective (time zone/holidays), (3) there is more involvement needed in employees' personal lives (dealing with international legal issues), (4) needs are varied for different types of employees (specific training), (5) more risk exposure based on location, (6) broader external influences

Host country/HCN

where subsidiary & host country nationals are located

Parent country/PCN

where firm is headquartered (main location) & parent country nationals are located

Other countries/TCN

potential sources of labor, finance, etc. & where third country nationals are located

Limitations of Hofstede's model

Schien's goes deeper; takes political boundaries too seriously; not easily generalizable; data age changes the relevance of the model

MNE

multi-national enterprise, which refers to corporations that operate in more than one country (ex. Apple, Volkswagen, etc.)

Expatriates

employees who work outside of their parent country (ex. an American working in Canada)

Influential factors of international HR include

(1) cultural environment (ex. culture shock), (2) industries (global vs. multi-domestic), (3) dependency to home country domestic markets, (4) attitudes of senior mgmt. (some believing HR is crucial, some not)

Global industry

an industry in which competition crosses national borders on a worldwide basis (ex. airlines)

Multi-domestic industry

an industry in which competition takes place on a country-by-country basis (ex. retailing)

Internal factors

changeable factors within the company (dependency/attitudes)

External factors

environmentally fixed factors outside of the company's control (culture/industries)

PESTLE

political, economic, sociological, technological, legal, environmental

External factors effect

organizational factors, effect HR function, effect overall MNE performance,

External factors of PESTLE

links with other MNEs and national governments, environment dynamics, & asymmetric events

Organizational factors of PESTLE

balance of global integration + local responsiveness, structures of MNEs, firm size, culture, maturity, + strategy, & corporate governance

HR function of PESTLE

global corporate role, HR practices, crisis mgmt., & coordination between each part of the company

MNE performance related to PESTLE

financial, social, and enterprise performance overall, whether good or bad (the result of external + organizational factors and the function of HR)

Culture defines ___ differences

behavioral

Explaining vs. improving culture

the working behavior in cultures vs. the interaction between employees, customers, suppliers, & businesses in differetn cultures

Culture

collective perception of values, norms, and beliefs among members of a society (values + norms = culture)

Values

judgements about what is important, right, & desirable

Norms

a collective awareness about the appropriate behaviors among a group

Descriptive norms

if you don't follow them, you will be punished in one way or another

Injunctive norms

they are expected to be followed, but there is no direct punishment if they aren't

Cultural tightness vs. cultural looseness

very serious & rigid (ex. Russia) vs. relaxed (ex. U.S.)

Cultural schemas

how we interpret individual behaviors

Polyculturalism

the understanding that all of us are influenced by multiple cultures at once

Edgar Schein's Iceberg Model

culture is made up of what we see AND what is hidden; (1) artifacts (symbols/values), (2) espoused beliefs/values (ideologies/goals/shared experience, (3) basic underlying assumptions

Hofstede's Culture Dimensions

(1) power distance/dynamic, (2) uncertainty avoidance/tolerance, (3) femininity/masculinity, (4) individualism/collectivism, (5) long-term oriented/short-term oriented, (6) indulgence/resistant

GLOBE

Global Leadership and Organizational Behavior Effectiveness

GLOBE is a more specific version of ___ in relation to ___

Hofstede's model; modern culture

Hall & Halls' 4 Dimensions

(1) high vs. low context communication (high = yes means more than yes at times, low = yes always means yes), (2) spatial orientation (physical distance between people while communicating), (3) monochronic vs. polychronic time (scheduling is important vs. interpersonal relationships are important), (4) information speed (high vs. low flow during communication)

New challenges of international HR mgmt. include

international connectedness, global economic coordination, harmonization of laws, & migration

Internationalization and management demands change

a business' entire structure

___ factors must change when a business grows into an MNE

internal

Internal factors that MUST change when growing into an MNE include

size, structure, geographical dispersion, control mechanisms, national cultures + languages, host country vs. parent country demands, operation modes, flow/volume of info, etc.

Standardization

HRM practices being conducted in the exact same way in both parent & host countries

Localization

customized HR practices to fit the specific needs of subsidiary locations

Standardization is MORE/LESS efficient than localization

more (more revenue and less costs due to consistency, transparency, and alignment of goals & ideas)

Standardization's potential issues include

legal issues, government policy issues, and cultural issues

Localization emphasizes

respecting local culture/values/traditions/legislations/government policies/education systems

Localization is MORE/LESS efficient than localization

less (less revenue and more costs due to lack of consistency, transparency, and alignment of goals & ideas)

Standardization and localization are not

mutually exclusive (some companies use one and not the other, and other companies use both simultaneously [preferred method])

Balancing standardization and localization depends on

the style of the company, its product/service, & how the company operates

Factors that drive standardization

(1) multinational/transnational corporate strategies, (2) corresponding organizational structures supporting the company, (3) whether or not the company is reinforced by a shared worldwide corporate culture (LARGE COMPANIES)

Multinational corporate strategy

big HQ located in parent country + multiple subsidiaries

Transnational corporate strategy

multiple HQs everywhere

Factors that drive localization

(1) cultural environment, (2) institutional environment (country-of-origin vs. host-country effects), (3) subsidiary roles (magnitude + direction of their knowledge flows) (4) mode of operation abroad (level of ownership in subsidiaries) (SMALL COMPANIES)

Country-of-origin effect

stronger parent company affecting host companies positively or negatively

Host-country effecy

stronger host companies affecting parent company positively or negatively

Gupta & Govindarajan's Four Subsidiary Roles

local innovators, global innovators, implementers, and integrated players

Local innovators

low inflow of support and low outflow of output (in LOCALIZED companies)

Global innovators

low inflow of support and high outflow of output (in STANDARDIZED companies)

Implementers

high inflow of support and low outflow of output (in LOCALIZED companies)

Integrated players

high inflow of support and high outflow of output (in STANDARDIZED companies)

Exporting leads to ___, both of which are then sent to ___ ___, leading to ___ ___, then to ___, and finally creating the overarching ___ ___ ___

licensing; sales subsidiaries; foreign production; subcontracting; network of subsidiaries

The need to change your company's structure can be spurred by

growth, geographical spread, coordination + control across business units, & host-government regulations on ownership + equity

10 different company structures

(1) export, (2) sales subsidiary, (3) international division, (4) global product/area division, (5) matrix, (6) mixed structure (mix of 1 or more of the previous forms), (7) heterarchy (centers that replace HQs), (8) transnational (interdependence of resources in centers), (9) network (no HQ; all power in centers), (10) meta-nationals (sensing, magnet, and marketing/production units are all spread apart)

Structural-formal focus

an internal company focus based on hierarchy (large companies)

Cultural-informal focus

an internal company focus based on interpersonal relations (small companies)

Cross-border alliances

cooperative agreements between 2+ firms from different national backgrounds to benefit all partners

7 different types of cross-border businesses

(1) subcontracting, (2) franchising, (3) licensing, (4) management contracts, (5) mergers + acquisitions, (6) joint ventures, (7) subsidiaries

Subcontracting

an agreement in which a corporation contracts with another (usually smaller) firm to provide specialized components, products, or services to the larger corporation

Subcontracting outsourcing

employing another business as a third party to perform some production activities

Subcontracting offshoring

moving operations from the country where a company is headquartered to a country where pay rates are lower but the necessary skills are available to lower costs

Franchising

selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and a share of the profits

Licensing

allowing another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge

Management contracts

arrangements in which one company provides personnel to perform and control general management functions for another company

Mergers and acquisitions

two companies partnering to achieve a goal; one business buying another

Joint ventures

when two or more companies join forces to share resources, risks, and profits, but not actually merging companies

Subsidiaries

companies owned or controlled by the parent corporation

Foreign Direct Investment (FDI)

any direct investment in business operations in a foreign country

Equity modes

involving having stakes in a foreign market

Non-equity modes

involving having no ownership stakes in a foreign market

Horizontal merger/acquisition

similar companies with similar products combine to expand both of their offerings

Vertical merger/acquisition

companies in the same industry combining to increase logistics + staffing and decrease product time to market

Conglomerate merger/acquisition

companies in different industries combining to broaden their range of products

Concentric merger/acquisition

companies with the same customer base but unrelated products combining to provide different products with a competitive relationship

Cross-border mergers/acquisitions allow for

rapid entry into new markets, a larger market share, & the elimination of future competition

Many mergers/acquisitions do OR do not product intended results

they do not, and often end in company death

The reasons for many mergers and acquisitions failing include

talent/executive loss, ambiguous policies + procedures that hurt people, & short-sighted planning

HR works in cross-border mergers/acquisitions by

(1) screening for the best partner, (2) deep analysis of options, (3) planning, (4) implementation + assessment

Joint ventures project

two companies joining together to accomplish a shared project/goal

Functional joint ventures

two companies joining together to create a symbiotic environment of shared benefits

Vertical joint ventures

two companies joining together to be in the same supply chain

Horizontal joint ventures

two companies joining together to have competitive advantages over each other

Benefits of joint ventures include

(1) knowledge transfer, (2) expanding markets, (3) competitive advantages

Joint ventures have the same OR different issues as mergers/acquisitions

different (talent/executive loss, ambiguous policies + procedures that hurt people, & short-sighted planning)

The issues shared between mergers/acquisitions and joint ventures can be solved by

partnering efficiently, implementing effective strategies, continuously innovating, & collaborating

SME

small-to-medium enterprises

SMEs become SMEs due to their

personnel + revenues levels falling below certain limits

SMEs are very similar to ___ when it comes to going international

MNEs; this is because revenue, number of customers, number of talents, and investment opportunities will all increase after globalizing