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.