IHRM+6th+Edition+GlobalHRM_Ch01

Chapter 1: The Internationalization of Human Resource Management

Global HRM

• Focuses on policies and practices for multinational enterprises.

Learning Objectives

• Understand the drivers of internationalization in business.

• Recognize the growth and spread of internationalization.

• Explore different settings of international human resource management (IHRM).

• Discuss the development of IHRM.

Globalization

• Defined as a progressive force improving human conditions more effectively than any prior intervention.

Definition of IHRM

• The study and application of HR management in global enterprises, impacting how human resources are managed internationally.

Drivers of Internationalization

• Businesses of all sizes are becoming global due to innovations, digitalization, and internet access.

• These drivers create new global realities for various organizations, including NGOs and web-based firms.

Growth and Spread of Internationalization

• Rapid development is leading to faster internationalization, although recent nationalization trends and the pandemic have slowed progress.

• Internationalization vs Globalization: Both involve increasing interconnectedness across countries.

• UN estimates (2020):

  • 77,000 large multinational enterprises (MNEs) with over 840,000 affiliates.

  • Employ more than 75 million people globally, not counting subcontractors.

Economic Impact of Large Firms

• Fortune Global 500 (2019):

  • $33.3 trillion in revenues and $2.1 trillion in profits.

  • Employ 69.9 million people across 32 countries.

  • IHRM's role is crucial to achieving global competitiveness.

Importance of Transnational Corporations (TNCs)

• UNCTAD tracks TNCs, vital to the global economy.

• Introduced the Transnational Index (TNI) to measure firms' foreign business activity.

Settings of IHRM

• International HRM occurs in diverse environments; HR professionals face IHRM issues in every job setting.

• Four specific settings for HR managers:

  1. Headquarters of multinationals.

  2. Home country subsidiaries of foreign-owned firms.

  3. Domestic firms (domestic multinationals).

  4. Government agencies and NGOs.

Headquarters of Multinationals

• Common setting for HR managers.

• Local subsidiaries may use parent or host country HR policies.

Home Country Subsidiaries of Foreign-Owned Firms

• HR managers work locally while integrating foreign MNE culture.

• Communication and organizational challenges may arise from cultural differences.

Domestic Firms

• Function similarly to MNEs when hiring immigrants or establishing foreign offices.

Government Agencies and NGOs

• Operate globally, staffing operations with diverse personnel, including locals and expatriates.

Development of IHRM

• Increased expertise required from HR managers due to complexities of internationalization.

• Success depends on navigating IHRM challenges.

• Local HR managers face cultural and legal complexities when sourced from various countries.

Key Aspects of IHRM

• IHRM responsibilities exceed those of domestic HRM in complexity and risk.

• Broader expertise required to manage diverse employee backgrounds and external factors.