International Human Resource ManagementManaging people in a multinational context

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We learn about:• Global perspective on IHRM with external

partners• Cross-border alliances• Equity-based alliances (M&As, IJVs)• Globalizing SMEs

Chapter Objectives

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Terms

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SMEnon-equity cross-border allianceequity modesmergeracquisitionborn globalsboundary spanning positions

pre-M&Adue diligenceintegration planningimplementation planning

resourcesprocessesvalues

M&AIJV

UNCTADTNC

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Equity and non-equity modes of foreign operationFigure3-1

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The formation processes of M&As and HR challengesFigure3-2

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Mergers and acquisitions in US billionsFigure3-3

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Typical cross-border M&A problems

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1. Within first year of merger, up to 20% of executives may be lost. Over a longer time frame, this tends to increase even further.

2. Personnel issues are often neglected.3. A high number of M&As fail or do not

produce the intended results.

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Impact of the human integration and task acquisition on acquisition outcome

Figure3-4

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HR activities in the phases of a cross-border M&AFigure3-5

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Table3-1

Post-acquisition trends in HRM practices

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Formation of an international equity joint ventureFigure3-6

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The main reasons for engaging in an IJV

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1. To gain knowledge and to transfer that knowledge2. Host government insistence3. Increased economies of scale4. To gain local knowledge5. To obtain vital raw materials6. To spread the risks (e.g. share financial risks)7. To improve competitive advantage in the face of

increasing global competition8. Provide a cost effective and efficient response

forced by the globalization of markets

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IJV development stages and HR implicationsFigure3-7

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Table3-2

SME definition

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Top 10 barriers to international markets by SMEs

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Shortage of working capital to finance exports.Identifying foreign business opportunities.Limited information to locate/analyze markets.Inability to contact potential overseas customers.Obtaining reliable foreign representation.Lack of managerial time to deal with internationalization.Inadequate quantity of and/or untrained personnel forinternationalization.Difficulty in managing competitor’s prices.Lack of home government assistance/incentives.Excessive transportation/insurance costs.

1.2.3.4.5.6.7.

8.9.

10.

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SME employer image and internationalizationFigure3-8

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Learning in small organizationsFigure3-9

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Discussion Questions

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1. Describe the formation process of cross-border mergers, acquisitions and international joint ventures. What are the major differences?

2. Describe the development phases of an M&A and the respective HR implications.

3. Outline the development phases of an IJV and the respective HR implications.

4. In which ways do cultural and institutional differences impact the HR integration in M&As and in IJVs?

5. What are the barriers to internationalization for SMEs?6. What are some of the typical challenges for HRM in

internationalized SMEs?