International and Comparative Human

Resource Management

Introduction to the Module

Module Tutor:

Rosliana Binti Ahmad Razilan

email: rosliana@ftms.edu.my

Learning Outcomes

On successful completion of this module you will be

able to:

Demonstrate an understanding of the reasons for the existence of key

similarities and differences in national HRM practices (Knowledge and

Understanding)

Critically evaluate the potential people management problems

(Intellectual, practical, affective and transferable skills)

Critically analyse a range of tasks and techniques used when

undertaking comparative HRM studies (Intellectual, practical, affective

and transferable skills)

Main Themes

Globalisation and TNCs/MNCs and the current and future trajectory of HRM

Concepts and debates about the international transfer of HRM practice (Policy diffusion)

Debates and ideas about international employee resourcing – staffing, performance management, development and rewards

Institutions, regimes, ideas and debates about the international regulation and management of Human resources, including, Corporate Social responsibility

Assessment for this module consists of one

part

Written paper 3000 word limit

Submission 8th May 2014 5pm

Write a 3000 word paper which critically

evaluates a range of potential strategic

problems facing Human Resource Managers

operating in multi-national companies.

See Module guide (pages 6-10 for details about the

assignment, including; assessment criteria,

submission guidelines, etc.

Readings (1) – Books

Brewster, C, Sparrow, P, and Vernon, G (2007): International Human

Resource Management 2nd edition. London, CIPD Publishing

Briscoe, Dennis R, Schuler, Randall, S and Claus, Lisbeth (2008):

International Human Resource Management: Policy and Practice for

Multinational Enterprises (Global HRM) 3rd edition London Routledge

Beardwell and Holden (Various editions): Human Resource

Management. Harlow, Prentice Hall/FT

Edwards, T. and Rees, C. (2011, 2006), IHRM: Globalisation, National

Systems London: FT. London: Sage,

Dicken, P. (2007) Global shift: Mapping the Changing Contours of the

World Economy (5th edition.), London: Sage

Dicken, P. (2003) Global shift: Reshaping the Global Economic Map in

the 21st Century (4th edition.), London: Sage

Rubery, J. and Grimshaw, D. (2003) The Organisation of Employment:

An International Perspective. London: Palgrave

Harzing, A. and Pannington, A. H. (eds.) (2011)) International Human

Resource Management (3rd Edition), London: Sage

Harzing, A. and van Ruysseveldt, J. (eds.) (2004) International Human

Resource Management (2nd Edition), London: Sage.

Scullion, H. and Lineham, M., (Eds.) (2005) International Human

resource management, Basingstoke: Palgrave Macmillan

Rugman, A., Collinson, S. and Hodgetts, R. (2006) International

Business, 4th Edition. Harlow: FT Prentice Hall

Readings (2) Book

Reading: Journals

European Business Review,

Human Resource Management Journal,

IDS Employment Europe,

Personnel Review,

International Journal of Manpower,

Employee Relations,

Journal of European Industrial Training,

International Journal of Human Resource Management

International Journal of Cross Cultural Management

European Journal of International Management

European Journal of Industrial Relations

Human Resource Management Journal

Journal of International Business Studies

Asia Pacific Journal of Human Resources

Reading: Journals

International and Comparative HRM

Week 1

The Globalisation of International Human

Resource Management

Alhajie Saidy Khan

Lord Ashcroft International Business School

Lecture outline

Lecture focuses upon the:

Historical developments in

international economic activity

What is Globalisation? The

definitional debate

Key characteristics of Globalisation

Globalisation: a critical perspective

Nature and dominance of MNCs

Globalisation, MNCs and

international transfer of practice

Globalisation: the historical context (1)

Historical developments in the World economy:

Long history of international trading relations

Importance of colonial expansion (C17th & C18th)

Manufacturing multinationals appeared in world economy after mid

C19th and established by WWI Annual growth of volume of international

trade of 3.4% 1870-1913.

Impact of protectionism prior to WWI; fall in world trade in 1930s

following Depression; WWII.

(Hirst and Thompson 1996, Chapter 2; Harzing & Ruysseveldt, 2004/5, 2011)

Globalisation: the historical context (2)

Post War developments in the World economy

USA domination: economic development as instrument of the cold war)

International institutions (GATT, IMF, OECD)

Exchange rate system

‘Golden Age’ by 1950s and 1960s volume of trade increasing more rapidly than production, rapid economic growth and full employment

(see Bretton Woods Revisted - Economist 9.7.1994 )

Key indicators of Economic

Internationalisation

Trends on international trade: the data(next slide

Phenomenon of Regional trading blocs and

increase in regional trade

Foreign Direct investment

Economic liberalisation

Dominance of TNCs

Growth in World production and

trade (% in volume)

Trade Production

12

10 8 6 4 2 0

1950-63 1963-73 1973-90 1990-01

(WTO, 2002)

Theories of determinants of

economic internationalisation

Theory of Absolute advantage (Adam Smith, 1776)

Relative advantage Theory (Ricardo, 1917)

H-O theorem – differences in factor endowment (Ohlin, 1933)

Porter’s 6 criteria theory of comparative and competitive advantage (1990)

Dunning’s Eclectic paradigm (2003)

See various editions of Edward and Rees

Internationalisation vs. globalisation

Internationalisation: the simple extension of economic

activities across national boundaries.

Globalisation qualitatively different processes that

involve the ‘functional integration of internationally

dispersed activities’

(Dicken, 2003, 2007, 2011)

Globalisation: a qualitative

explanation

Globalisation as qualitatively different form of international economy?

Deep-seated (irreversible) shift in structure and operation of production and markets

Undermining of nation-states as significant economic actors

Cultural Homogeneity or dominance without hegemony?

Global corporations (TNCs/MNCs) with no allegiance to any particular place and or community

(Dicken 2011, 2007, 2003)

Or, Globalisation as illusion

No fundamental changes in world economy

World economy more open and integrated 1870-1913

Global markets can be controlled by mixture of national/supranational regulation

Importance of cultural differences (Child 2002)

Relatively few truly international companies and concentration of FDI among advanced economies

(Dicken, various eds.; and Hirst and Thompson)

Characteristics of Globalisation

Uneven development and rate of globalisation

Key role of Multi/Transnational Corporations (MNCs/TNCs) in coordinating production chains and shaping new world economy

Foreign direct investment (FDI) as indicator of MNC/TNC activity and the growth of international production

Dynamic relationship between MNCs/TNCs and national (or supranational) regulatory regimes and growth of product market competition

(Dicken, 2003, 2007, 2011)

Dominance of Multi/Transnational

Corporations

What is Multi/Transnational Corporation?

Narrow Definition

direct ownership of operations overseas measured by FDI (foreign direct

investment)

Broad Definition

‘a company which either directly or indirectly controls production or service provision in two or more countries’

covers licensing, franchising, sub-contracting, joint ventures and strategic alliances as well as FDI

Significance of Multi/Transnational

Corporations (1)

TNCs are driving force behind internationalisation of

economic activity

Dominate international and national economies

Ability to take advantage of differences between states

Ability to shift resources and operations between countries

According to the UN, the stock of FDI had increased from

$560 billion in 1980 to $7,213 billion in 2002 (about $12,500

billion in 2006).

UNCTAD, 2006

MNCs/TNCs: from investment to Global control

By 1997 the UN estimated that 53,607 parent TNCs had

controlled 448,917 foreign subsidiaries, producing about 25%

of world output

In 2002, the top 100 TNCs employed over 14.3 million

workers of which just under half worked in their foreign

affiliates in 2002 (UNCTAD)

By 2004 the UN estimated that 61,000 parent TNCs had

controlled over 900,000 foreign subsidiaries, generating

annual sales of $19 trillion and employing around 54 million

people.

MNCs/TNCs and Sovereign states

Companies vs Countries (1997)

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Micro-level explanation for why Firms go ‘multinational’

Competitive strategies for product markets Gain market power by overcoming disadvantage of being

seen as foreign)

efficiency - possessing a strategic or ownership (benefits of

which can only be realised through internal transfer within

firm)

Factor Supply

Raw materials supply (secure control)

‘Transfer pricing’ strategies.

Labour supply (cheapest labour costs, ability to divide and

rule); but issues of labour costs as proportion of total costs

and productivity

Motivations for internationalisation: Dunnings’s Eclectic paradigm

Theory of synthesis of 3 conditions:

They possess ownership-specific advantages not possessed by competing firms (in host country)

Advantage most effectively secured by production overseas

(c.f. selling or leasing) i.e the firm internalises use of ownership-specific advantages

There must be location-specific advantages which make it

profitable for the firm to exploit its assets in overseas (c.f. domestic) locations

Internationalisation: Contradicting demands of centralisation and decentralisation

Centralised control: benefits of co-ordination and control

activities across divisions and countries) e.g. McDonalds

Decentralised control: benefits of local autonomy and

ability to respond to local conditions & optimise local

expertise

But are they mutually exclusive?

Different issues require different levels of decision-making

and response.

The scope for differences could, however, define differences

between TNCs

Country of origin effects and transfer of practice

Some evidence of TNCs becoming more global (spread

of international business divisions, management teams etc.)

Evidence of TNC reorganisation within EU (mergers,

acquisitions, joint ventures and strategic alliances)

Crucially most TNCs rooted in home country

Location of majority of assets

Management board dominated by home nationals

Finance largely raised in home country

Globalisation, MNCs and International transfer of practice

Globalisation as a process which has led to ‘regime

competition’ between national capitalisms

TNCs as ‘proxies’ in the competition between highly

regulated and highly deregulated systems (of employment

relations)

Do multinationals act as vehicles for transmitting HR/IR

practices from the parent country.. to the host countries in

which they operate, or do they attempt to drop what they see

as the constraining elements of their business systems once

they leave their own borders? (Ferner, 1997:20)