ihrm....

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Randall S. Schuler is fromtheDepartment of HumanResourceManagement,School ofManagementand Labor Relations, 94Rockafeller Road, Rm202,Piscataway, NJ 08854,USA. Pawan S. Budhwar isfromCardiff BusinessSchool, ColumDrive,Cardiff CF1 3EU, UK. GaryW. Florkowski is from theUniversity of Pittsburgh,Katz School of Business,Pittsburgh, PA 15260,USA.

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International humanresource management:review and critiqueRandall S. Schuler, Pawan S. Budhwar andGaryW. Florkowski

The research agenda for the field of international human resource management (IHRM) isclear. For a better understanding and to benefit substantially, management scholars muststudy IHRM in context (Jackson, S.E. andSchuler, R.S. 1995.Understandinghuman resourcemanagement in the context of organizations and their environment. Annual Review ofPsychology, 46: 237^264; Geringer, J.M., Frayne, C.A. andMilliman, J.F. 2002. In search of`best practices' in international human resource management: research design andmethodology. Human Resource Management, forthcoming). IHRM should be studiedwithin the context of changing economic and business conditions. The dynamics of boththe local/regional and international/global business context in which the firm operatesshould be given serious consideration. Further, it could be beneficial to study IHRM withinthe context of the industry and the firm's strategy and its other functional areas andoperations. In taking these perspectives, one needs to use multiple levels of analysis whenstudying IHRM: the external social, political, cultural and economic environment; theindustry, the firm, the sub-unit, the group, and the individual. Research in contextualisolation is misleading: it fails to advance understanding in any significant way (Adler, N.J.andGhadar, E. 1990. Strategic human resourcemanagement: aglobal perspective. HumanResource Management in International Comparison. Berlin: de Gruyter; Locke, R. andThelen, K. 1995. Apples and oranges revisited: contextualized comparisons and the studyof comparative labor politics. Politics & Society, 23, 337--367). In this paper, we attempt toreview the existing state of academic work in IHRM and illustrate how it incorporates thecontent and how itmight be expanded to do so.

Introduction

International human resource management(IHRM) is about the world-wide managementof human resources (e.g. Adler and Ghadar1990; Brewster 2002; Cascio and Bailey 1995;

Harris and Brewster 1999; Poole 1999;Punnett and Ricks 1992; Tung 1984). Thepurpose of IHRM is to enable the firm, themultinational enterprise (MNE), to besuccessful globally. This entails being: (a)competitive throughout the world; (b)

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efficient; (c) locally responsive;(d) flexibleand adaptablewithin the shortest of timeperiods; and (e) capable of transferringknowledgeand learningacrosstheir globallydispersed units. These requirements aresignificant, and the magnitudeof the realityis indisputable: for example, a substantialmajority of industriesin the world are underful l -scale attack by global competi tors(Bartlett and Ghoshal 1998). On the otherhand,most of the emergingmarketsare nowbombarded by foreign direct investments(FDIs) andby theMNEs of developednations(UNCTAD 1999).

IHRM for manyfirms is likely to becriticalto their success,andeffectiveIHRM canmakethedifferencebetweensurvivalandextinctionfor manyMNEs.Yet, for reasonsof cost,timeand difficulty, IHRM research has beenlimited and largely focusedon a few issues.Calls are now being made to advanceourunderstandingof this importantareain severalways, including: (1) developingmodels andframeworks to reflect the complex set ofenvironmentalfactors that impinge upon theglobal management of human resources(Adler and Ghadar 1990; Brewster 1995;BudhwarandDebrah2001;LockeandThelen1995; Shenkar 1995; Sparrow and Hiltrop1997); (2) researchinginternational humanresourceactivities in a way that recognizestheir systematic interaction (Begin 1997;Clark et al. 1999; Punnettand Ricks 1992);and(3) utilizing moretheoreticalperspectivesto predictandexplainrelationships(Black andMendenhall1990;DeCieriandDowling 1999;Schuler et al. 1993; Taylor et al. 1996;Teagardenet al. 1995).

In this paper,we reviewwhat is beingdonein the IHRM field (Schuler and Florkowski1998). A strategic framework is utilized toorganize our review and evaluation of theexisting literatureand research.While MNEsare our primary focus, issuesassociatedwithtraditional comparative HRM research arealso briefly examined. Implications andsuggestionsfor future researchagendasareofferedthroughout.

AModel of IHRM

Our model of IHRM is based on theframework offered by Schuleret al. (1993);it drawson SundaramandBlack’s (1992,733)definition of a MNE as:

any enterprisethat carriesout transactionsin orbetweentwo sovereignentities,operatingunderasystemof decisionmaking that permits influenceover resources and capabi l i ties, where thetransactionsare subject to influence by factorsexogenousto thehomecountryenvironmentof theenterprise.

This def ini tion serves to highl ight thedifferences between managing global firmsand managing domestic f irms and thusestablishes the basis for conceptualizingIHRM as substantially more encompassingthan domesti c HRM (e.g. Adler andBartholomew 1992; Bartlett and Ghoshal1992, 1998; Black et al. 1999; Dowling etal. 1999;Robertset al. 1998).A consequenceof this for most MNEs is a humanresourcedepartmentthat developsand administersthefollowing policies and practicesbut acrossawide variety of nations, each with its ownsocial,cultural, legal, economic,political andhistoricalcharacteristics(Morgan1986):

Human resourceplanning; staffing; performanceeval uat i on; t rai ni ng and devel opment ;compensationandbenefits;and labor relations.

The rise of the MNE is being acceleratedbecause the costs associated wi th thedevelopmentand marketingof new productsare too great to be amortizedover only onemarket,evena large onesuchas the USA orEurope (e.g. Bartlett and Ghoshal 1998;Buckley and Casson 1998). For manymultinationals, the likelihood of competingin several diverse environmentshas neverbeen greater.While thesescenariossuggestpaths that multinational enterprises haveindeed taken to be competitive, they aresupersededby the needto manageglobally,

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as if the world were one vast market, andsimultaneouslyto managelocally, as if theworld were a vast number of separateandloosely connected markets (Barlett andGhoshal 1998; Caligiuri and Stroh 1995;Merchant 2000). Bartlett and Ghoshal’ s(1998) basic premise is that MNEs arerepresentedby units that need to be co-ordinatedor integratedin someform and tosomedegree,spreadthroughoutthe world. Inessence,MNEs are firms that need to beglobal and local (multidomestic)at the sametime. MNEs, however, need to achievedifferent levels of globalnessand localness(HamelandPrahalad1986).Therearevaryingways to attain such levels (e.g. Adler andGhadar1990;Wells 1998).

Simultaneousconcerns for being global,transferringlearning,andbeingmultidomestic(therebyfacilitating local sensitivity)generateimportant issuesrelevantto IHRM (Brewster2002). For example, can MNEs link theirglobal ly dispersed units through humanresource policies and practices? How doMNEs facilitatea multidomesticresponsethatis simultaneouslyconsistentwith the needforglobal co-ordination and the transfer oflearning and innovation acrossunits throughhumanresourcepoliciesandpractices?

The growing importanceof MNEs anduseof complexglobalstrategicbusinessdecisionshave generateda similar phenomenonin theareaof IHRM, viz. the linkageof IHRM withthe strategicneedsof the business(GalbraithandKazanjian1986;Wright andSnell 1998).Thus, a more strategicperspectiveof IHRMhas developed(e.g. Adler and Bartholomew1992;Bartlett andGhoshal1992;SchulerandJackson1999; Schuleret al. 1993; Taylor etal. 1996).

Further reasonsfor the developmentof amore strategicperspectiveof IHRM includethe recognitionthat: (a) HRM at any level isimportant to strategy implementation (e.g.Hamel and Prahalad 1986; Schuler andJackson2001; Wright and Snell 1998); (b)major strategiccomponentsof MNEs haveasigni f i cant i nf l uence on international

managementissues,functions, policies, andpractices (Edstrom and Galbraith 1977;Roberts et al. 1998); (c) many of thesecharacteristicsof IHRM can influence theattainmentof theconcernsandgoalsof MNEs(Kobrin 1992); and (d) a wide variety offactorsmakethe relationshipbetweenMNEsandIHRM complex,therebymakingthestudyof IHRM challenging as well as important(Bartlett andGhoshal1998,2000;Dowling etal. 1999;OddouandDerr 1999).

By including a more strategicperspective,today’s model of IHRM incorporates thebroader,contextualreality describedby Adlerand Ghadar (1990). While Schuler et al.(1993) describe this phenomenon as thedevelopmentof a field calledstrategicIHRM,we treat it as the evolution of IHRM toencompassa strategic perspectiveand usethei r f ramework as a contemporarydescription of IHRM. In both cases, thetraditional comparativeaspectof IHRM andthis more recent strategic perspective ofIHRM are joined. This faci l i tates theimplementation of the researchagenda inIHRM calledfor by Adler andhercolleagues.The model for IHRM that is used here toinventory and appraisewhat we know today,as well as to suggesta researchagendafortomorrow,appearsin Figure1. This model isnow being acceptedand utilized by otherresearchersin the field (e.g. De Cieri andDowling 1997;Taylor et al. 1996)asa way toexaminethe field of IHRM.

As shownin Figure1, therearethreemajorcomponentsof IHRM: issues,functions,andpoliciesandpractices.In the interestof space,we focusour discussionon thesecomponents,referring interestedreadersto Schuleret al.(1993)for a thoroughdescriptionof theentiremodel.All aspectsof themodel,however,arewoven into the research agenda that isarticulatedhere.

IHRM Issues

IHRM issuesarebestconceptualizedin termsof interunitandintraunitneedsandchallenges.

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AlthoughtheMNE is separatedacrossseveralnations, it remains a single enterpriseandtherefore must consider how to balancecompeting pressuresfor differentiation andintegration (Lawrence and Lorsch 1967).Mul tinationals must decide how to besensitive to the unique demands of theindigenous environment without inhibitingtheir abi l i ty to co-ordinate the internaloperationsof local units in pursuit of globalst rategi es. Because these i ssues ofdifferentiation and integration are oftenfacilitated by HRM activities, they represent

a critical componentin IHRM. An exampleofthis dual focus is found in most American-basedMNEs, which tend to assignprimaryresponsibility to their subsidiariesfor localcompensationandbenefits,training,andlaborrelations, with regional uni ts assumingsecondary(i.e. co-ordinating) responsibility(Reynolds1992).

IHRM Functions

IHRM functionsrepresentthreeareas:(a) anMNE’s human resourceorientation; (b) the



Figure 1. Integrative framework of international human resources management in MNEs. Adaptedfrom R.S. Schuler, P. Dowling, and H. DeCieri (1993) An integrative framework of strategicinternational human resource management. International journal of Human Resource Management, 4,722.

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resources(time, energy,money) allocatedtoits humanresourceorganization;(c) and thelocation of thoseresourcesand HR decisionmaking. Considerable resources can bedevoted to HRM on a transnationalscale.The center can staff a rather extensiveHRdepartmentdedicatedexclusively to IHRMtasks, such as deciding how to select andrepatriate international assignees (e.g.Caligiuri 2000)aswell ashow to compensatethese employees (Hammer et al. 1996;Petersonet al. 1996). It can also hire a staffof individualsto focuson managerialtraininganddevelopment,largely to developa globalmanagement cadre (Black and Gregersen2000).Accordingly, the resourcesdevotedtoand the location of IHRM operationscan beexpectedto vary considerablyacrossMNEs(Alder and Ghadar1990; Bird et al. 1998).Dowling (1988) documentedseveraltypesofIHRM structureswithin MNEs, including: atotally centralized HR function; centralizedHR policy developmentwith regionalinput inimplementation; corporate, group, and div-isional HR units with uniqueresponsibilities;andcentralizedHR decisionmakingfor parentcountry nationals (PCNs) and third-countrynationals(TCNs). Of course,IHRM resourceconsumption should diminish as: (1) thenumber of PCNs and TCNs decreases;and(2) overseas units are awarded greaterdecision-making autonomy (i .e. decen-tralization).

IHRM Policies and Practices

IHRM policiesandpractices,which constitutethe last componentof the model, involve thedevelopmentof general guidelines on howindividuals will be managedandspecific HRinitiatives. IHRM policies and practicesrelevantto the needsof MNEs include thoserelated to planning, staffing, appraising,compensating,training and developing,andlabor relations (Dowling et al. 1999). Toillustrate, an MNE might havean HR policythat indicates that performance wil l berewarded.Given that this is a rather general

statement,each MNE unit could be free todevelop specifi c practices that are simul-taneously consistent with local conditionsand the general policy. Under this policy,one local unit might develop an individualincentiveplan for the generalmanagertied tothe salesof the local operationwhile anotherunit might institutea groupincentiveplan forthe entire top managementteamtied to host-countrysales(FulkersonandSchuler1992).

As suggestedby Adler andGhadar(1990),BartlettandGhoshal(1998),Evans(1986)andTeagardenet al. (1995), understandinganddoing researchin IHRM must encompassarathercomplexreality. Themodelin Figure1hastried to capturethis fact. It is now usedtoorganizeandcritiquewhathasbeenpublishedin the IHRM domain. Our discussion isdivided into threebroadcategories:(1) IHRMandMNE effectiveness;(2) MNEs’ impactonhost industrial relations(IR) systems;and(3)national HRM systems and competi tiveadvantage.

IHRM and MNE Effectiveness

BecauseIHRM issuesarethe main driversofIHRM functions and policies/practices,theensuingdiscussionis structuredaroundtheseissues,beginningwith interunit linkages.

Interunit Linkages

Within our framework of IHRM shown inFigure 1, the interunit linkageshave beenatraditionalfocal point for discussionof IHRM(BartlettandGhoshal1998;Pucik1988;Pucikand Katz 1986). Thesediscussionstypicallyhave focusedon recognizing the variety ofseveralworld-wideunitswhile controllingandco-ordinatingthat variety (Doz and Prahalad1986; Edstromand Galbraith 1977). Indeed,thekey objectivein interunit linkagesappearsto be balancing the needs of variety(diversity), co-ordination, and control forpurposes of global competitiveness, flexi-bi l i ty, and organizational learning (andtransferof knowledge)(Bartlett and Ghoshal

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2000).The natureof this balanceis expectedto vary,dependingon thecharacteristicsof theparticular MNE, such as i ts stage ofglobalization (e.g. Adler and Ghadar 1990;Milliman et al. 1991).

IHRM Policies and Practices

IHRM policiesandpracticesshownin Figure1 have also been a traditional focus ofresearchersandpractitionersin IHRM (Pucikand Katz 1986; Oddou and Derr 1999). Inaddition to being the basic activities in thefield of HRM domestically, they serveinternationallyto strengtheninterunitlinkagesin numerous ways, including: (a) com-prehensive human resource planning,ensuringthat the MNE has the appropriatepeoplein placearoundthe world at the righttime; (b) staffing policies that capitalize ontheworld-wideexpertiseof expatriates,third-country nationals (TCNs), and host-countrynationals(HCNs); (c) performanceappraisalsthatareanchoredin thecompetitivestrategiesof MNE headquartersand host units; (d)compensationpolicies that are strategicallyand culturally relevant;and (e) training anddevelopment i ni t i ati ves that prepareindividuals to operate effectively in theiroverseaslocations and to co-operatewithotherMNE units.How organizationsdevelop,effectively implement, and institutionalizesuch policies should be at the heart of ourresearchagendafor IHRM. Some researchhasbeeninitiated in this regard.For example,Roberts et al. (1998) have identified threepractical challengesto managingthe globalworkforce: (a) deployment; (b) knowledgeand innovation dissemination;and (c) talentidentification and development.They havealso identified four strategiesto meet thesechallenges.Theseare:(a)aspirationalcareers;(b) awareness building assignments; (c)SWAT teams; and (d) virtual solutions.Finally, they proposea diagnosticframeworkfor eachof the challengesand when to useeachof the strategies.Yet, previousstudieshavebeenskewedheavily toward the effects

thatstaffingor developmentpracticeshaveonindividuals– primarily expatriatedemployees(e.g. Hillary and Brewster 1999; Tung andPunnett 1993). One could argue that thisfocus is consistentwith the efforts of manyMNEs (especially those based in NorthAmerica) to manage interunit operationsthroughPCNs.Even within Europe,suchanethnocentricapproach is adopted by mostorganizations to organize thei r IHRM(Mayrhofer and Brewster 1996). As morefirms think andactglobally,however,thereisa compelling need to devise and sustaineffective transnationalHRM systems(Adlerand Bartholomew 1992; Brewster 2002;Edwardset al. 1996).

Given thesecaveats,linkage-relatedIHRMresearchis reviewedbelow. Although HCNsandTCNsmayenhancesuchlinkagesin vitalways, previous investigations have con-centratedon the reactionsthesegroupshaveto host-levelHRM policiesandpractices.As aresult, we will examinethat segmentof theliterature later in the section titled ‘InternalOperations’.

Human resource planning. Human resourceplanningshouldbean indispensablemeansofengineeringeffective interunit linkage, mostnotably by synchronizing the staf f ing,appraisal, and compensationsubsystemsofIHRM. Suchplanningmustbecomprehensivein scopecognizantof, and responsiveto, theMNE’s industrycharacteristics,productstage,organizationalphaseof internationaldevelop-ment, global structure, and competi tivestrategies(Bartlett andGhoshal1998).Theseconsiderationsare reflected in the followingcritical humanresourceplanningissuesfacingMNEs:

• management potential at the earl iestpossiblecareerstage

• identifying critical successfactors for thefuture internationalmanager

• providing developmentalopportunities• tracking and maintainingcommitmentsto

individuals in internationalcareerpaths



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• tying strategicbusinessplanningto humanresourceplanning,andvice versa

• dealing with the organizationaldynamicsof multiple (decentralized)businessunitswhile attempting to achieve global andregional(e.g.Europe)focusedstrategies

• providing meaningful assignmentsat theright time to ensureadequateinternationalanddomestichumanresources.

Similarly, Wong(2000)hasidentified10majorplanning and processing activi ties thatinternationalHR executivesneed to address:assignment and cost planning; candidateselection; assignment terms and conditiondocumentation; relocation processing andvendor management; cultural and languageorientation/training; compensation admini-stration and payroll processing;tax admini-stration; career planning and development;handling spouse and dependentmatters; andimmigrationprocessing.

How best to do any of these activitiesremainsa challengefor someMNEs;howbestto do them in an integrativemannerthroughHR planning initiatives is a major challengefor most MNEs (Bartlett and Ghoshal1998;Evans1986, 1992). More specific questionsabouteachof theseitemsareaddressedbelow.

I nter nat i onal human r esour ce staf f -ing. Staffing is a major IHRM practice thatMNEs have used to help co-ordinate andcontrol their far-flung global operations(e.g.Bonacheand Cervino 1997; Dowling et al.1999; Harvey et al. 2000; Mayrhofer andBrewster1996;Mendenhallet al. 2002;Pucikand Katz 1986; Stroh and Caligiuri 1998).Traditional ly, MNEs sent parent-countrynationals abroad to ensurethat the policiesandproceduresof the homeoffice were beingcarried out to the letter in foreign operations(e.g.BrewsterandScullion 1997;PunnettandRicks 1992). Scullion and Brewster (2001)provide an excellent summary of existingliterature that highlights the importance ofdistinguishing between MNEs, e.g. NorthAmerican and European. Regardless of

location,however, ascostsbecameprohibitiveandcareerissuesmadetheseassignmentslessattractive, MNEs turnedincreasingly to third-country and host-country nationalsto satisfyinternationalstaffing needs(e.g. Black et al.1999).

MNEs neverthelesscontinue to expatriatePCNs as technical troubleshooters, structurereproducers, and general managementoperatives.Precise data are lacking on theextent to which there is cross-cultural orindustry variation in the utilization of short-versus long-term tours of duty and singlepostingsversuscareerrotations.Tung (1982)found that JapaneseMNEs expatriatedmorefrequently when filling senior- and middle-management posi t i ons i n advancedindustrialized economies than did Europeanor Americanfirms. The staffing approachforlower managerial positions was polycentric(i.e. staffedfrom the host labor market)in theadvancedindustrializedcountriesregardless ofMNE home country; however, Japanesemultinationals displayed levels considerablybelow thosefor their Western-basedcounter-parts.In general,US companiesareleastlikelyto staff management vacancies in theselocations with PCNs; nevertheless,Americancompaniesdo use PCNs. Reasonsfor usingthesePCNsor expatriates,include: protectingcompanyinterests; broadeningglobal perspec-tives; providing functional perspectives;broadening global knowledge; providingdevelopmental assignments; building localtalent via PCN training; orchestratingbettercareerplanning;managingmaturebusinesses;andmanagingnew andjoint ventures.

MNEsremainconcernedaboutthebestwayto identify and selectexpatriatesfor foreignassignments(e.g. Black et al. 1999; Harzing2001).DavisonandPunnett(1995)arguethatinternationalmanagersand researchersneedto avoid an ‘ostrich-like’ attitude of ‘genderand race bl indness’ when deal ing withinternational assignments. The existingresearchsuggeststhat the foreign assignmentselection process should be done moresystematicallywithout genderbias and more

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strategically, e.g. using expatriatesto helptransferknowledgeandlearning(BonacheandFernandez1999).

Thetrendhereappearsto be in thedirectionof developinga selectionprocess basedon theidentification of critical job dimensions(suchas: accept foreign assignments; spouseandfami ly support; knowledge of foreignlanguage; adjustment to l iving abroad;adjustment to foreign business practices;establishing/maintaining business contacts;technical competence;working with others;communicating/persuading; initiative/effort;and companysupport) and the developmentof predictorsthat can be usedto increasetheprobability of success (Dowling et al. 1999).Ultimately, researchersmaywantto isolatetherelative impact that individual characteristics(e.g.knowledge,skills, abilities) haveon suc-cessful completion of international assign-mentsas well as other organizational factors,e.g. appraisal and compensation policies,supportsystems(Petrovic et al. 2000;ScullionandStarkey2000)

The ‘spouseandfamily support’dimensiontypically restson assumptionsthat the spouseis femaleandwill not be working abroadin acareer-relatedposition (Punnettet al. 1992).However, dual -income and dual -careercouplesare becomingincreasinglyimportantsegmentof professionalmanagersin the US(Harvey and Buckley 1998). It is nowexpected that the dual-careercouples willincreasingly be involved in internationalassignments,many of which will entail theexpatriationof women managers(e.g. Adler1994,2001;HarveyandBuckley1998).Thereremainsa paucityof researchon theinitiativesthat US- and non-US-based MNEs areundertakingto capitalize on these develop-ments (e.g. spousal employment searchservices,waivers of immigration restrictionson working spouses),a deficiencythat shouldbe remedi ed i n subsequent I HRMinvestigations.

Furtherresearchopportunitiesaboundin theareaof staffing with third country and host-country nationals. While the use of more

TCNs andHCNs may solvestaffing needs,itraisesconcernsaboutthe ability to satisfytheneedsof co-ordination and control and thetransferof learningacrossregionalunits (e.g.Dowling et al. 1999;Harzing2001;OuchiandMacGuire 1975; Pucik 1988). As Pucik andKatz (1986) argued,firms can redresssuchneedsby (a) establishingrulesandproceduresfor HCNs or TCNs to carry out or (b)socializing the HCNs or TCNs to think andbehavelike expatriates.Of course,thesepurearchetypesmight not be found asMNEs seekthe most appropriate solution to fit thecircumstances.For example,underconditionsof rapid change,high uncertainty, and theneedfor socialinformationto begatheredandutilized, MNEs would more likely socializeindividuals (Van Maanenand Schein1979).Under conditions of stability, certainty, andthe need for technical information to beutilized, firms would more likely establishrules and proceduresfor individuals to carryout (Banal 1992). Since MNEs rarely findpurely one set of conditions or another,combinations of the two approaches arecommonplace.

Repatriation. Along with this research onexpatriation is the work on repatriation(Mendenhallet al. 2002). The quality of therepatriationprocessis viewedascritical to theoverall careersuccessof expatriates.It hasalsobeenlinked to theadjustmentprocessandturnoverof expatriatesfollowing their returnhome (Adler 2001; Black et al. 1999;Brewster and Scullion 1997; Stroh 1995).Much progresshasbeenmadein capturingthecomplexity of the repatriation process.Forexample,Black et al. (1999)havepresentedarich frameworkincorporatingmany variablesassociated with the anticipatory and in-country repatriation adjustment process.Basedon their framework,they presented18propositions waiting to be tested. Alter-natively, Welch et al. (1992) describedtheprocessof repatriationashaving four phases:preparation, physical relocation, transition,and readjustment.While some would argue



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this conceptualizationreally goesfar beyondthe processof ‘coming home’, otherswouldclaim that it representsall the variablesthatpotential l y impact the longevi ty andperf ormance of the i ndi vi dual oncerepatriated.Stroh (1995) examinedthe mainturnover predictors among repatriatesin 51US-based MNCs. Her study revealed:corporatevaluesrelatedto the importanceofoverseas assignment to the organization,whether the organization has a careerdevelopment plan for repatriates, and theperceivedimpact of corporateturbulenceonbeing able to place repatriatesadequatelyupon their return as the main predictorsofrepatriatesturnover. Hammer et al. (1998)examined the adjustment of Americancorporate managers and spouses to theirprofessional and social environmentsupontheir return to the US. They investigatedtherelationshipof backgroundvariables(e.g.age,prior national experience), host countryvariables and re-entry variables of expec-tations to re-entry satisfaction and re-entrydifficulties of 44 returning managersand 33spousesfrom two MNCs. Hammer et al.(1998) found support for the relationshipbetweenre-entryexpectationsand overall re-entry satisfactionfor managersand re-entryexpectationsand re-entrysatisfactionand re-entry difficulties for spouses.Such ongoingresearch, along wi th earl ier discussedframeworks in the field such as by bothWelch et al. (1992) and Black et al. (1999)reflect thetrendsin IHRM to bemoresystem-atic, strategic, inclusive, and contextual. Indoing so, they offer fertile groundfor futureresearch.

Socialization/MNEsynergy.Concernsremainabout the biasingeffects that the culture andnorms of parent f i rms can have onsocial ization processes (Pucik and Katz1986). These ethnocentri c forces cancompromise the MNE’s ability to identifyand benefit from cultural synergiesin theiroperating units. One means of combatingmanagement ethnocentrism would be to

engagemore TCNs in preferenceto PCNs,individuals who would be expectedto havebeen previously socialized (Cappell i andMcElrath 1992). But we still cannot definethe bestway to socializea culturally diversesetof individuals.It appears,however,thatasMNEsbecomemoreglobal,their socializationprocessneedsto be lessethnocentricculturaldifferencesaretoo importantto ignoreor deny(Adler 2001;Adler andGhadar1990).In fact,facilitating and diffusing cultural synergiesmay be critical to economic success asindustries become more transnational innature(Adler 2001; Adler and Bartholomew1992). Recently, Caligiuri (2000) examinedthe relationshipbetweenhostnationalcontactand cross-nationaladjustmentof expatriates.Her findings suggestthat greatercontactwithhost nationals positively relates to cross-cul tural adjustment when an expatriatepossessesthe personality trait of openness.The personality characteristicof sociabilitywasalsorelatedto cross-culturaladjustment.

On the way to developing a globalworkforce and cadre of global managers,MNEs needto opentheir recruitmentprocessand enhance the attractiveness of globalassignments (Adler 1994; Adler andBartholomew 1992; Harvey et al. 1999).Remainingto be researched,however,is therelationship between an open recruitingprocessand MNE effectiveness.Indeed,yetto be investigatedis the extentto which thereare gaps betweenwhat MNEs ‘now do’ inrecruitingandwhat they ‘should do’.

Staffing researchhas targetedexpatriates,TCNs, and HCNs, but this approachis lesstrue of works exami ni ng apprai sal s,compensation,andtraining.This shortcomingis beingredressedgraduallyasMNEs seektoglobalizetheir operationsin their attemptstoincrease global effectiveness and facilitatemore knowledgetransfer and organizationallearning.

Appraisingperformance.While theexpatriateis on assignment,the individual performancemust be appraised(Brewster and Scullion

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1997; Dowling et al. 1999). Petersonet al.(1996), in their comparativeIHRM study ofBri tish, German, Japanese and the USmultinationals found that expatriates hadperformanceappraisalswhile serving in thef orei gn assi gnment. Thei r apprai salmechanisms varied from quantitative (e.g.graphic scale) to qualitative (e.g. MBO ornarrative). Many types of assignmentsexistentai l i ng numerous j ob perf ormancedimensions.For the expatriateassignment,incontrast to the domesticassignment,MNEsneedto evaluatedimensionsof performancenot specifically job-related, such as cross-cultural interpersonalqualities; sensitivity toforeignnorms,laws,andcustoms;adaptabilityto uncertainandunpredictableconditions;andthehostlocation’sintegrationwith otherMNEunits. The significanceof thesefactors willvary by the type of expatriate.So far, theresearchon expatriateperformanceappraisalhasnot fully addressedthe relative impactofthese uniquely international dimensions ofperformance, regardless of the type ofexpatriate assignment. Audia and Tams(2002), however,offer somesuggestionsformovingaheadwith researchin this area.Thus,the researchopportunities in this area arerelatively unlimited, but feasible.

Whi le the performance appraisals ofexpatriates who are assigned for specialtechnical projects and short-termstays tendto be operati onal and task-f ocused,evaluationsof the expatriatemanagertend tobe more strategic, more related to theoperationof the entireunit andhow it relatesto theotherlocations(Evans1986;SelmeranddeLeon1997).Appraisingtheperformanceofthis manager,therefore,becomesanimportantissueat the interunit linkage level of IHRM(Dowling et al. 1999; Fulkersonand Schuler1992).Units within a largeMNE may pursuedifferent strategic missions, face differentlegal conditions,and encounterfar differentcompetitive situations.Consequently,MNEsmust account for these envi ronmentalcondi tions when constructing appraisalformats and individual objectives for unit

managers.While it appearsthat this approachto PCNappraisalis not unknownwithin largemultinationals(Fulkersonand Schuler1992),there is little empirical evidenceto suggesthow widespreadthe practiceis or underwhatconditions (e.g. degreeof trust) it is moreeffective. It does appear, however, thatperformanceappraisalof expatriatemanagerscan be a critical meanswherebyMNEs linktheir units together (e.g. by appraisingco-operative behaviors and incorporating thevarious environmentaldimensionsinto eachmanager’ s appraisal format di f ferently)(Harzing 2001). It can also facili tate thedevelopmentof a common appraisalformatthat recognizes and makes si tuationaldifferences legitimate, so that the relativecontributionsof managersaround the worldcanbetracked,evaluated,andcompared.Thisstrategical ly and cultural ly standardizedinformation should guide managerialcareerdevelopment,future promotiondecisions,andcompensationadjustments.As the next twosectionsdetail, though, there is only modestevidencethat stronglinkagesactuallyexist.

Compensating the expatriate. It has beenargued that expatriatecompensationcan beassignificantasappraisalin fosteringinterunitlinkages and the attainmentof internationalstrategic objectives (Dowling et al. 1999;Reynolds 1992, 2001). ‘‘In theory, [parentcountrynationals]shouldhavenomoreor lessat risk economically than their domesticcounterparts’ ’ (Reynolds 1992, 75). Thereality is that expatriatestend to havegreaterincome securi ty because performanceevaluations usually are a rather modestdeterminant of their total compensationpackage. Whi le PCNs may have feweropportunities to invest in tax shelters andothereconomicamenitiesthantheir functionalequivalents at home, the former can costMNEs up to five times as much (Dowling etal. 1999).A sideeffectof this costdifferentialis the substantialdisparitybetweenthe salaryof PCNs and that of HCNs or TCNs. Thisdisparity has the potential to create status



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distinctions in an MNE’s global workforce,thereby inhibiting interunit linkages. Theextentto which this actuallyoccurs,however,is not documented publicly. It appears,however, that expatriate compensation aspracticedby US MNEs tends to reflect theassumptionof the homecountry (e.g. moneyis the most importantmotivator)andthushasbeen very cul ture bound (Schuler andRogovsky1998).

Similar patterns areevidentin the provisionof benefits. American and Japanesemulti-nationalsnormally limit TCNs to the fringebenefitsavailablefor indigenousemployeesatthe sametime asPCNs receivehome-countryentitlements (Towers Perrin 1987). EuropeanMNEsaremoreegalitarian asarule,extendinghome-country benefits to TCNs and PCNs.Given how little we know about ‘standard’international compensation and benefi tsadministration, researchopportunities abound(Sparrow 2000).Someof the key issuesto beinvestigatedincludethe following:

• How can MNEs develop pay structuresthat are cost-effective,fair, and adaptableto different employeegroups?

• How can MNEs developmore culturallysensi tive compensation schemes thatrecognize country differences, yet areequallymotivatingandstill equitable?

• How can i nternat i onal -assi gneecompensation be better linked to thestrategyand industry characteristicsof agiven MNE?

Further issuesthat can be examinedinclude:managing expatriate expectations; adding‘appropriate’ valueto expatriatecompensationpackages;‘localization’ of expatriatecompen-sation; cost containment; global pensionschemes;integration of HR planning withexpatriatecompensation; managementdevel-opmentas a crucial factor in expatriate com-pensationplanning; regionalization; revisitingthe ‘balancesheet’ concept;and centralizinganddecentralizingthe assignmentpolicy.

Addressing these several general andspecific issuesin expatriatecompensationis

likely to provide a full researchagendaforthoseinterestedin IHRM rewardstructures.

Training and developing. Training anddevelopment, or human resource develop-ment, is an aspect of IHRM that presentsanothermeansof linking thedispersedunitsofan MNE.1 Traditionally, researchhasfocusedon thepredeparturetrainingextendedto PCNsand their famil ies. Lack of preparationgenerally has beenassociatedwith a higherexpatriatefailure rate;US multinationalstendto engage in less training than do theirEuropeanand Japanesecounterparts(Noble1997; Tung 1982). Moreover, US MNEsordinarily place less emphasison language,interpersonalskills, and culture sensitivity intheir training programsthan do MNEs basedelsewhere(e.g. Dowling et al. 1999; Tung1982).Consequently,it is not surprisingthatUS MNEs experiencehigherexpatriatefailureratesthan do other multinationals.At times,such claims are contradictory: for example,Petersonet al. (1996,550)reportlower failureratesthanreportedby Tung(1982).However,assuggestedabove,thefindingsof Petersonetal. (1996) also confirm higher expatriatefailure rates in American multinationals incomparison with Western European andJapaneseMNCs. As much of this researchisbasedon self-reporteddata, therefore,morerigorous designs are needed to controlpotential cultural biases better (e.g. home-country differences in the willingness todiscloseorganizationalshortcomingsor seekearly repatriation).

Increasingly,scholarsandprofessionalsarecasting the training and developing ofinternational assigneesinto a much largerframe, one consistent with broader, moretheoretical, and systematic description ofIHRM, as shownin Figure 1 (Mendenhalletal. 2002). For example, the family is nowrecognized as a very significant factor inexpatriatesuccess(Adler 2001;Dowling et al.1999),particularlywhendual-careerissuesareinvolved (Punnett et al. 1992; Harvey andBuckley 1998). Better paradigms(e.g. social

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learning theory and culture theory) havebegunto emergeconcerningthe impact andlikely successof cross-culturaltraining (e.g.Bhawuk 1998; Black and Mendenhall1990;Kim 1995).InternationalHR planningis seenmoreoften asa key orchestratorof expatriatecareerdevelopment,incorporatingexpatriateassignment decisions and the repatriationprocess(Black et al. 1999).

Perhapsmost indicative of this shift inperspectiveis the contentionthat training anddevelopmentis no more important for PCNsthanit is for individualsfrom otherpartsof theworld (Adler andBartholomew1992).In fact,global firms can enhance their interunitlinkagesby creatingapoolof globalmanagerswith citizenshipfrom anywherein the world(Bartlett and Ghoshal 2000; Fulkerson andSchuler1992).As these‘global’ managersaredeveloped,however,it appearsthey needtohavetheglobalawarenessof theMNE andthesensitivity to local culturesandknowledgeoflocal conditions, particularly labor relationsandlaws.Managementdevelopmentactivitiescould be housed in corporate or globalheadquarterswith local, regional, and otherHR units assisting in program design anddelivery (Bartlett andGhoshal1998;Dowlinget al. 1999;Evans1992).The efficacy of thisor other structural approaches remains anempiricalquestion.

Superordinate Values for IHRM PracticeDevelopment

Part of the challenge in developing HRpractice to facilitate interunit linkages is toallow simultaneously for some flexibility.Flexibi l i ty supports change and enablesadaptationto local conditions. Flexibility isattainedin part by ensuringthat (1) practicesare not carved in stone (mental ly orphysically) and (2) practicesare formulatedwithin a larger context, most notably anoverriding human resourcephilosophy andcore human resourcepolicies (Buckley andCasson1998; Schuler 1992). Statementsofhumanresourcephilosophyproscribelimits on

the actual treatmentof individuals regardlessof location through its top-down impact onHR policy making (Schuler 1992). CoreIHRM policies, in turn, operationalizethisphilosophyand arguablyconstrainthe set ofIHRM practices in use (i .e. types ofcompensation,staffing procedures,appraisalmethods, and training and developmentmodes).Thereare many choicesin the arrayof possible IHRM practices (Schuler andJackson1987); becausethesepracticeswillinf luence the behaviors, competencies,assignmentsand motivation of individuals,they need to be closely aligned with otherIHRM activities (Begin 1997; Schuler andJackson1999;Wright andSnell 1998).

Developing core IHRM pol icies thatfacilitate interunit linkagesmaybeeasiersaidthan done, especi al l y i f uni ts havedramatically different local environmentsorare pursuing different competitive strategieswith different technologies.This confoundingmay make the task more challenging,but itdoes not make i t impossible. Perhaps,however, it does require more resourcestodevise systematicallyHR practicesthat areanchored in common HR policies. Longi-tudinal investigations of the growth andallocation patternsof IHRM budgetswithinMNEs may shedsome light on this matter.Discussionnow turns to findings associatedwith the internaloperationsof MNE units.

Internal Operations and IHRM

Internaloperationsrequirethesamedegreeofresearchattentionas interunit linkages,sinceboth havean influenceon MNE effectiveness(PunnettandRicks 1992;Taylor et al. 1996).Local units must recognize and abide byindigenous employment law, tradition, andcustom,unlessvariancesor exemptionshavebeen grantedby the host government;thus,overseas units need to be given someautonomy to adapt HR practices to localconditions.Yet, becausethey needto be co-ordinatedwith the rest of the MNE (e.g. tofacilitate the transferof local managers)some



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commonal i ty must exist regarding HRpolicies.The local unit needsto developHRpractices that advanceits own competitivestrategyaswell (De Cieri andDowling 1997;Schulerand Jackson1987).Exactly how thisfit might beobtainedis only suggestedbelow,but the implication hereis that the local unitneeds to transcend mere conformity withindigenousculture.

Thereare at leastthreeways of enhancinginternaloperationsthroughIHRM policiesandpractices. The first entails matching andadapting HR practices to accommodateclosely the unit’s competitivestrategy,localculture,andgoverninglegal system(Hofstede1998). The second necessitatescreating amodusoperandiwherebyHRM practicescanbe modified swiftly to respondto changinghost conditions.The third calls for a set ofIHRM policies at the MNE level that canencompassand legitimize the HRM practicesof the local units.

Matching and adapting HR practices. Onemeans of ensuring that HR practices areconsistent with labor-market requirementswould be to staff the HR function with host-country nationals.In fact, this is one of thepositionsthat MNEs seemmost proneto fillwith indigenouspersons(e.g. Dowling et al.1999). To complementthis fit, the locationmanager,in turn, needsto inform the HRmanager of the unit’s business needs, inparticularits competitivestrategy.

The processof systematicallyaligning HRpractices,policies,andphilosophieswith eachother and the unit’s strategicneedsis similarfor domesticcorporationsandMNEs.A majordifference, however, lies in the need tobalancethe competitivestrategyand culturalimperatives(Adler 2001; Punnettand Ricks1992). The cul tural imperati ve is anencompassingterm that can include aspectsof the local culture, economy,legal system,religious beliefs, and education. Its impor-tance to IHRM residesin the definition ofacceptable, legitimate, and feasible workpractices and behaviors (e.g. Adler 2001;

Adler and Bartholomew1992; Bhawuk andTriandis 1996; Laurent 1986). Acceptableinterms of questionssuch as ‘‘Can we payworkers di f f erent rates, and therebydif ferentiate them, according to perfor-mance?’’ Legitimate in terms of questionssuch as ‘‘ Are there any legal statutesprohibiting us from not paying workersovertime for work done on Saturday andSunday?’’ Feasiblein termsof questionssuchas ‘‘While this societyespouseshierarchical,authoritarian,andpaternalisticvalues,canweempower the workforce to make workplacedecisions in order to facilitate our qualitystrategy?’’ All of these componentsshouldinfluencedecisionsaboutwhereto locateunitsand which HR practicesto use therein. Theextent to which MNEs deliberate on thesematters prior to host entry has not beenexaminedin previousstudies.

Localunitsalsomustbereadyto ensurethatHR practices,oncedeveloped,canbeadaptedto fit MNEs’ evolving needsand goals.Forexample, host managementmight institutemuch more comprehensivesuccessionplan-ning and development schemes than arewarranted in the host envi ronment toaccommodate the larger multinational ’ spotential staffing and transfer needs.In alllikelihood, this will bedonefor a limited poolof individuals (i.e. personstargetedas globalmanagers). Future investigations need toidentify andcritiquetheincentivemechanismsthat MNE headquarters utilizes to secureongoingco-operationin this regard,especiallywhenhostunits arepursuingdistinct businessstrategies.Another key issue is the relativeimpact that organizational and personalfactors haveon the lag period within MNEsfor responsiveadaptationsin HR practice.

Creating a modus operandi. It is equall yimportant for HR policies and practices toreflect changesin the local environment.Tofacilitatethis,hostmanagementmustestablishproceduresfor, and recognizethe legitimacyof, alteringHR practicesto fit newconditions(e.g. Walsh 1996). This will help ensurethe

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neededflexibility that is a concernand goalfor MNEs today. Exactly what thesemechanismsare, and what role culture playsin them,awaitsfuture study.

Developing global HR policies. The centerhasa fundamentalresponsibilityandstrategicinterestin developingbroadHR policies thatareappropriateenoughfor local units to adaptto their local environment and competitivestrategy needs (Brewster 2002). Thisdiscussioncomplementsthe earlierdiscussionunder ‘ Interunit Linkages’ . There it wasargued that policies have to be created tofacili tate interunit linkage and transfer oflearning,while still recognizingthe needsofthe local units.Thatdiscussionsuggestedhostunits must not only systematicallyanalyzetheir own environmental needs, but alsoensurethat thosefactors are folded into theprocess whereby global HR policies arecreated(Bartlett and Ghoshal2000; Schuler2001). As l ocal uni ts become moregeographically and culturall y dispersed, itbecomesmore difficult for headquarterstoidenti fy and track factors bearing oncompetitiveness.For example,internal labor-marketdatathat areusefulto the largerMNEbut unnecessaryfor local compliancemaynotneed to be maintainedby host units unlessheadquartersexercisessomecontroloverlocalHR information systems (Florkowski andNath 1993;Niederman1999).

Schuleret al. (1993) proposedthat MNEswill devotemoreresourcesto thedevelopmentand implementation of such overarchingpol icies as environmental heterogeneity.Subsequent investigations must verify theextentto which this is true.

Auditing IHRM initiatives. To ensurethat allthe HR-related challengesare met, MNEsneed to evaluate systemati cal l y thei rfunctional capacity and responsiveness inIHRM. While therehasbeena growing bodyof literature devotedto HRM auditing (e.g.Becker et al. 2001; Biles and Schuler1986;Ulrich 1999),this matterreceivessurprisingly

little attention in practice – the closestapproaches are payroll audits or formalreviews of employment-law compliance indomesticoperations.Ethnocentrismtends toafflict theseauditingparadigmsaswell, giventheir inherent reliance on a single cultural,regulatory, and structural context for HRpolicies(MayrhoferandBrewster1996).Withfew exceptions,they also fail to assesshowwel l HRM prof i les f i t the business’ senvironment,structure,and strategyor whatchanges need to occur to foster betteralignment.

Florkowski and Schuler (1994) proposedauditingstrategicIHRM activitiesfrom multi-constituent, strategic fit, and efficiency–effectiveness perspectives. This synergisticapproachexaminesthe potential for conflictamong the audit’s stakeholders;the need todifferentiateits contentsbasedon competitivestrategy,organizationallife-cycle stage,andnati onal cul ture; and the ways thateffectiveness can be operational ized inmultinational settings. Several propositionswere developedthat require close empiricalscrutiny. There are also other ways ofconductingIHRM audits.For example,Ulrich(1999) suggests that HR audits can beconducted by assessing: (1) HR practices(i.e. assessingthe array of servicesofferedby an HR department),(2) HR professionals(for example,doing a 360 feedbackon theextent to whi ch an HR professionaldemonstrates competence), and (3) HRfunctionor department(suchasby computingfunctional competence, by investigatingoverall indicators of HR functions, or bymeasuringthecompetenceagainstestablishedbenchmarkstandards).

So far, discussion has concentratedexclusively on the internal policies andpracticesof multinationalenterprisesas theyrelate to HRM. Two other aspectsof IHRMresearchthat warrant attention are (1) theeffects of MNEs on the industrial relationssystemsof hostcountriesand(2) comparisonsof nationalHRM systems.The former offersinsight into the propensityof multinational



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f irms to act as change agents in theiroperating environments, while the latterbegins to clarify the impact that societalHRM policies may haveon the internationalcompeti tiveness of f i rms operating inparticularhostsettings.

MNEs' Impact on Host IR Systems

So far, we have discussedindigenouslabor-market practi ces as though they wereexogenousfrom the MNEs’ perspective.Yet,transnational decision-making structures,superior f inancial resources, and moreextensiveinformation systemsarguablyequipmultinationalssubstantiallyto influence,if notdictate, industrial relations patterns in hostcountries.2 Weinberg(1977)allegedthatMNEsutilize these advantagesto secure regressivechanges in coll ective bargaining and laborlegislation,gravitating toward the lowest levelof socialresponsibilitytoleratedin a givenhostcountry. Selective examples of US-ownedoperationsin Europewerepresentedto buttressthis view. The OECD has voiced similarconcerns, cul mi nati ng i n non-bi ndi ngguidel i nes for the HRM acti vi t i es ofmultinationalsoperatingin membercountries.Respect for and compl iance wi th localemploymentstandardsare stressedthroughouttheguidelines(seeBamberandLansbury1998;Lee 1997).National and local governmentsofHCNsdictateto a greatextentthe employmentregulationsandrelatedguidelines(Peng2000).

Such dynamics raise critical issues forinternational HRM researchers. Paramountamong them is whether the characterizationof MNEs as cultural tsunamis stems fromoverpublicized,isolatedincidentsor patternedpractice.With oneexception(Jain1990),priorstudieshavenot systematicallycataloguedtheHRM profiles of foreign-owned businessesand compared them with the structuralconfiguration evident in matched domesticcompanies.3 Lately, Marginsonet al. (1995)found that a majority of the firms in theirstudy monitored labor performance acrossunits in different countries.

However, there has been a tendency toassessmultinationals’ sphereof influenceonworkplaceor institutional relationshipsby (1)aggregating case studies across industrieswithout adequatecontrols or (2) solicitinggeneric perceptionsof foreign-ownedfirmsvia questionnaires.

The first type of design appears inBlanpain (1977). Mixing a diverse set ofcasereports,he arguesthat MNEs havenotsignificantlyalteredmajorcomponentsof theIR systemsin the UK or Belgium. On theotherhand,owing to thegrowthof EuropeanUnion, thereis a trendemergingtowardstheinternationalization of industrial relations(Streeck 1998). However, such a devel-opment has its own problems (see Blytonand Turnbul l 1996). Al though largerorganizationstended to export ‘innovative’policies at the outset,each systemrejectedthosedeemedto be culturally unacceptablewithin a relatively shortperiodof time. Jedeland Kujawa (1977) uti l ized the secondapproach to compare f orei gn- andAmerican-ownedbusinessesin the USA. Onbalance, nei ther group of managerialrespondents expected MNEs to diffuseHRM innovationsinto the US labor market.Thoseaffiliated with British enterprisesheldthe strongest bel i ef i n thi s regard.Furthermore, most of the foreign parentorganizationshadstaffedtheseniorindustrialrelations position in a polycentric manner,increasing the likelihood of adaptation tolocal conditions.This is now a moregeneraltrend. Presently,MNEs generally delegatethe managementof labor relations to theirforeign subsidiaries.However, a policy ofdecentralization does not keep corporateheadquarters from exercising some co-ordination over labor relations strategy.General ly, corporate headquarters wi l lbecomeinvolved in or overseelabor agree-mentsmadeby foreign subsidiariesbecausetheseagreementsmayaffect the internationalplansof the firm and/orcreateprecedentsfornegotiationsin other countries(Dowling etal. 1999,234–235).

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The USA has shown particular interest inthe industrial relationsandequalemploymentopportuni ty (EEO) posture to foreignsubsidiaries. For example, acknowledgingseveral well-known incidents where unfairlaborpracticechargeshadbeenleviedagainstJapanese-owned f i rms, Marett (1984)indicatedthatsitelocationsdid notnecessarilycoincidewith regionshavinglow unionizationlevels. Staffing patterns at Japanese-ownedfaci l i t i es have rai sed the specter ofdiscrimination, though. For instance, theirauto plants are consistentlysituatedin areasthat have lower black-to-white populationratios than is the norm for US auto plants(Cole andDeskin1988).A subsetof US andJapanese-owned greenf ield si tes furtherrevealedthat the latter hadhired significantlyf ewer mi nori t i es than l abor marketdemographicswould predict.4 Nearly 60% ofthe Japanesefirms doingbusinessin the USAfaced possible EEO litigation by the late1980s (Labor Letter 1989), suggestingonceagain that the host systemactively works toneutralizeobjectionableMNE policies.

With much of the Western world mes-merizedby Japanese-stylemanagementoverthe last few decades,it is not surprisingtofind a paucityof researchon the effectsthatforeign-owned firms are having on thatcountry’s labor market practices.This mayprove to be a fruitful areaof study over thenext decadeas Japanundergoeseconomicrestructuring to rebound from the recentglobal economic downturn. Aggressivelong-term downsizing and the refusal tohonor job contracts extended to collegegraduatesaretwo departuresfrom traditionalJapanese HRM practices appearing withgreaterfrequency(Miller 1993).Sofar, theseactions have been depicted as domesticinitiatives rather than as spillover effectsfrom operationsthat are foreign-controlled.The impetus for sustainedchange in theHRM systemmay shift, though,asJapanesemarkets and investment opportuni tiesbecomemore accessibleto the internationalcommunity.

It is worth noting that virtually all of theinvestigations discussed above focused onhighly industrialized host countries. Theextentto whichMNEsdrive theHRM policiesin developing countries, places where theformer’s economicleverageshould be at itszenith, is also of interest (Wells 1998).Regrettably,the literature offers little insighton this point (Budhwar and Debrah 2001;Napier and Vu 1998). Schregle (1985)discusses the l ingering inf luence thatcolonizing nations often have on the post-independencelabor laws of former colonies.To i l lustrate, French-speaking Africancountriesdrew heavily from France’sLabourCodefor OverseasTerritorieswhen enactingtheir own national labor codes. Sardi andWil l iamson (1989) detai l the industrialrelations strategy of a vertically integratedmultinational operatingin Nigeria; however,no comparisonswere made with indigenouscompetitorsin the samelines of business,norwas an evaluationmade of the implicationsthose strategies had for the larger labormarket. Whi le valuable, the qual i tativeinsightsof the abovementionedwould havebeenbolsteredsubstantiallyby morerigorousquant i tat i ve anal yses. For exampl e,regressionscould have been run in whichHRM policy sophistication indices weretreated as dependentvariables and variousfinancial, organizational, and operationalvariablesaspredictors.

Much still needsto be learnedabout thedynamicsof MNEs’ adaptationprocesswithinand across host countries. Several studiesindicate that the IR decision making isdecentralizedas a rule (e.g. Reynolds2001;Robertsand May 1974). Yet, Hamill (1984)cautioned that there might not be uniformapplicationof a single policy within MNEs.He uncoveredvarying levels of home officeinvolvementacrossunitsbasedonsuchfactorsas differences in inter-subsidiary productintegration, uni t l i fe-cycle stage, localperformance, and the scale of parentinvestment.Discussionsby Gearyand Roche(2001)andTurneret al. (2001)alsoreinforce



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the notion that thereis no answerto whetheror not MNEs dictate IR practices in hostcountries.

Anotherunansweredquestionis ‘‘Is therealearningcurve phenomenonacrossMNEs, inwhich previous host-country experiencesprogressivelyreducethe magnitudeand timeof adjustmentwhen expansioninto new hostnations occurs?’’ If not, then what are thestructural and cul tural impediments toeffective learningand its transfer?Onecouldargue that f irms with transnational HRsystems have a competitive advantage inrecognizi ng and responding to thesechallenges(Adler and Bartholomew 1992;Bartlett and Ghoshal 1998). How is thelearningrateaffectedby hostmix andhome-countrybase?An appropriateanalogymaybethe impact that cultural toughnesshas onexpatriate acculturation (Mendenhall andOddou 1985; Mendenhall and Stahl 2000).MNEs functioningprimarily in very ‘foreign’cultural environmentsshould have a hardertime avoiding indigenous backlashes andinstitutingswift, correctivemeasuresthanwillthose confined to more familiar culturalterrains. This problem will be exacerbatedwhenhigh levelsof regulatoryheterogeneity,complexity, and relevancecoincidewith lowlevelsof regulatorystability andpredictability(Florkowski andNath 1993;Lee 1997).

National HRM Systems and CompetitiveAdvantage

The existing literature is replete with cross-country comparisonsof selectedHRM prac-tices (e.g. Brewster and Hegewisch 1994;Geringeret al. 2001;Sparrowet al. 1994;VonGlinow andChung1989).However,thisgenreof work typically documentsproceduralorideological differences in HRM withoutempi ri cal l y l i nking such variation tobehavioralor economicoutcomesfor organiz-ations or societies.In an increasinglyglobaleconomy, researchersneed to addresshowcountry-level HRM systems impact oninternational trade and the competitiveness

of national economies(e.g. Kochan et al.1992). Recently, Debrah et al . (2000)highlighted the benefits of appropriateHRdevelopment policies for the participatinggovernmentsof a ‘South-eastAsian growthtriangle’ . This growth triangle is a jointcollaboration between the governments ofSingapore,Malaysia and Indonesia.Further,accompany i ng methodol ogi cal andsubstantiveissuesarediscussednext.

Comparative Framework

Devising an analytic schemethat effectivelycapturesand evaluatesthe diversity of HRMstructures, processes, policies, and policyeffects across nations remains a challengefor researchers. Yeung and Wong (1990)deviseda 2� 2 classificationmatrix reflectingsocietal variations in HR orientation andadministration.The first dimensionindicateswhetherperformanceor individual welfare isemphasized in the workplace, while thesecond refers to a reliance on internal orexternal labor markets. China, Japan, theUSA, andthe Scandinavianclusterwereusedto illustrate the resultantfour cells. Althoughthis framework highlights somefundamentalHRM differences,its overall utility is verylimited. For example, macro-level linkagesamong governments, empl oyers, andorganizedlabor are not addressed.The sameholds true for the legal systemsregulatingemploymentrelationships.Most significantly,themodelprovidesno insightinto thestabilityof HRM patternsover time or likely directionof future changes.

Convergencetheory (e.g. Kerr et al. 1973)offers a more dynamic, albeit deterministic,view of societalHRM systems.It postulatesthat global market and technologicalforcesinduce economically advancedsocieties toerect very similar, increasingly tripartite,superstructuresfor industrial relations in thelong run. Large macro-level differences inthese arrangementsessentially indicate thatnations occupy dif ferent points on thematurity curvefor industrialization.However,

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avai lable evidence does not support ahomogenizationof institutions and practiceswithin or among developedeconomies(e.g.Brewster 1999; Dore 1973; Sparrow andHiltrop 1997).

Begin (1997) discusses national HRMsystems in terms of lif e-cycle transitions,stressingtheir ongoing synchronizationwitha country’s dominantindustrial structure.Heusesinformationfrom six countries:Japan,theUS, the UK, Germany, Sweden, andSingapore. Unlike the preceding model,changesdo not necessarilyreflect movementtoward a final set of insti tutional con-f i gurations nor are they i rreversible.Accordingto Begin,HRM systemscontaininglimited, informal rulesshouldemergewhenanation’s firms areoperatingpredominantlyinsimple but dynamic environments.As thetechnologicallysimple environmentbecomesmore stable, there is an expectation thatorganizations that function as machinebureaucracieswill proliferate and eventuallyalter thegeneralcharacterof HRM systemsinthat society. This aggregate ‘ shi f t’ inorganizational form and its accompanyingformalization of virtually all HRM activitiesallegedlymarksthearrival of a maturemarketeconomy(for moredetails,seeBegin 1997).

Movementto thenextevolutionarystageofmore temporaryand adaptableorganizationswill not be triggeredunlessa preponderanceof firms enterandcompetein morecomplex,dynamic environments.5 Here, businessessecureandmaintaininternationalcompetitiveadvantage through continual innovation,which is fueledby relaxedwork/job allocationsystems as wel l as development- andretention-oriented systems for staf f ing,governance, and rewards (Begin 1997).However, a societal decline in innovativeactivity eventually leads to some form ofretrenchment in HRM systems. Moreover,nations failing to keep abreastof the state-of-the-art in technology risk backslidingfurther into the machine bureaucracyphasewith its restrictiveHRM systems.Indigenousemployeesalso find themselvesconfronted

with a declining standardof living becauseproductivity gains do not generateenoughrevenueto advancethegeneralsocialwelfare.

NumerousresearchissuesareembeddedinBegin’s (1997) broad framework. To beginwith, how do nationalrewardstructuresaffecta country’scompetitivenesswithin andacrosstheselife-cycle stages?The level, form, andstability of thesecomponentsover time areparamountconcerns.The ability to competewithin andacrosslife-cycle stagesmayalsobea function of organizedlabor’s control overlaborcostsandindustrialconflict levels.Eachof theseitems is addressedmorefully below.

Compensation. The US Bureau of LaborStati st i cs has compi l ed standardi zedinformation on international compensationpol i cies in the manufacturing sector.Unpublishedreportsare available on hourlycompensationcosts,which include paymentsmade directly to employeesand employerbenefit contributions,adjustedfor exchangerates.6 Begin (1997)classifiedMexico, SouthKorea,Taiwan,Canada,and GreatBritain ascountrieswhere the dominantHRM systemsare machine bureaucracies.7 A low-wagestrategyseemsto endowthefirst threenationswith a distinct labor factor advantagerelativeto the other two in this stage,not to mentionthose occupying more industrially advancedstates. Cost competition intensified in the1980sand early 1990s,best illustratedin thedisappearing Japanese–American wagedifferential. Frenchmanufacturersalso cameever closer to parity with their Americanrivals. By 1992, Italy and Germany wereencumbered with labor costs that weresubstantial l y higher than those foundelsewhere.

A major shortcoming in this kind ofanalysisis the failure to integrateproductivityand quality measures.Theseitems constitutethe return on investmentfrom compensationexpenditures.In the USA, for example,manyfirms that initial ly relocated in Mexicobecauseof lower wagesare repatriatingtheiroperationsbecauseof low productivity and



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anci l l ary costs (Mayer 1993). Whi lestandardizedproductivity data are availablefor manycountries(e.g.Staff 1991),pertinentqual i ty indices general ly are not. Suchinformation must become more accessiblebeforemeaningfulcomparisonscanbe made.Also, there is a need to understand theassumptions that underl ie much rewardbehavior, and the implications of perceivedchangesin trust,motivationandcommitment.It is also important to understandwhat paymeansto peoplein differentcultures(Sparrow2000).

Benefits. Appropriately configured benefitplans may be instrumental in securing anemployee mix that promotes competitiveadvantagefor individual firms (e.g. BowenandWadley1989).To whatextentcanthis beextrapol ated to nati onal economi es?Aggregated policies may have distinctivesignaturesregarding the proportion of totalrewards comprising benefits, the benefitoptions typically offered, and the extent towhich these items are privately or publiclyfinanced. International positioning on thesedimensions may raise serious motivational(i .e. valences, performance-reward con-tingencies) and cost concerns within thedominant industrial structuresof competitornations.

Moreover,severalUS studiesindicate thatemployeestendto underestimatesubstantiallythe benefit costsborneby the employer(e.g.Wilson et al. 1985).If this canbegeneralizedacrosscultures,feelingsof payinequityanditsdysfunctional organizational consequencesshould becomemore widespreadin nationallabor markets as employers channel largerfractions of their labor costs into benefits.Differencesin the way benefitsare paid formay be more tel l i ng of a country’ scompetitiveness (White et al. 1998). Toillustrate, nationalhealthcareand/orpensionsystems potential l y f ree up employerresourcesto invest in new benefit categoriesor pay-for-performance schemes.This socialreallocation of costs may have a more

significant impact on internationaltradethanthe relative level of benefitsper se (Belous1984, 23). Recentl y, Sparrow (2000)examined the dynamics of internationalrewardmanagementin a numberof countries.Discussingthe importanceof culture valueorientations, distributive justice and paydi f ferentials, he concludes that MNEsattemptingto harmonizerewardsystemswillface predictablepatternsof resistanceacrossdifferent nations.Highlighting the importanceof local institutional context,Sparrow(2000)suggeststhat there should be considerablelocal autonomy of practice allowed withinMNEs and distinctive pay and benefit prac-t i ces wi l l remai n wi thi n domest i corganizations.

Trade Unions. Research shows thatAmerican unions general ly exert morei nf l uence over wages than do thei rcounterpartsin other industrialized nations(Blanchflower and Freeman1992; Katz andDarbishire 2000). A US governmentstudycriticized theway that labor leaderswield thispower, concluding that import penetrationlevelsstemlargely from high union wagesintheUS (US FederalTradeCommission1987).Other evidenceindicatesthat import activitycreates substantial downward pressuresonNorth American union–non-union wagedifferentials and union-sector employment(e.g.MacphersonandStewart1990).

Economicpolicies of Americanunionsareone reason why US firms have difficultycompeting with foreign producers. Yet,unionization rates are not systematicallyhigher in high net-importing industriesthanthey are in low net-importing ones (Karier1991a,b). Furthermore, LeGrande (1988)found that changesin the value of the USdollar againstforeign currencieshad a muchmore significant effect on the relative laborcostsof domesticand foreign manufacturersduring the 1980s than did col lectivelybargainedwage levels. If so, then securingwageconcessionsdoesnot go to the heartofthe competitiveness problem – unstable

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exchangerates– which cannotberedressedatthe bargainingtable. More empirical work isneededto reconcilesuchdivergentfindings.Itmay be particularly fruitful to examine therelationshipbetweenuniondensityandimportpenetrationin industriesoutsidethe USA.

Thepropensityfor industrialconflict shouldsignificantly impede a society’s ability todevise and administer competitive HRMsystemsregardlessof the market niche thathas been targeted. Ofori-Dankwa (1993)conjecturedthat conflict levels are dictatedby a country’sdominantunion paradigmandenvironmentalmunificence(i.e. resource-orinstitutional-basedbuffering). During periodsof positivemunificence,nationscharacterizedby unions that operatewith a high-politicallow-economicparadigm(e.g. France)shoulddisplay less conflict than thosesaddledwithunions embracing a low-pol i tical high-economic orientation (e.g. USA). Theconverseis predicted in times of negativemunif icence, as pol i tical ly active labororganizationsseekto embarrassthe opposing(‘anti-labor’) party in power. High-politicalhigh-economicparadigms(e.g. GreatBritain,Sweden)should engenderresponsesthat aremore sensitive to specific combinationsofpositive/negative resource and institutionalbuffering (Puchala1999).

While thesehypothesizedrelationshipsareintriguing, there are formidable impedimentsto testingthemat this time. Industrialconflictmeasuresarenot standardizedtransnationally,raising seriousconstructvalidity concernsini nter-country compari sons. I dent i calworkplacedisputescan be treateddifferentlybased on the prevai l ing decision rulesgovernmentsusefor statisticalrecordkeeping.There also are severalaspectsof strikes toconsider, including frequency, breadth,duration,and impact (Stern1978).How doesone integrate these factors to provide acomprehensive evaluati on of societalperformance?Poole(1986) developedstrike-activity profiles for 18 countriesutilizing thefirst threedimensions.While this schemedoesfacilitate assessmentswithin eachof the five

patternsthat were presented,it is less clearhowonemakesinterprofilejudgmentswithoutreferringto somequantificationof impact.Forexample,is it moredesirableto seeduration,breadth, or frequency as the dominantstructuralfeatureof strikes?Onemustdecidethis on thebasisof culturalpreferencesunlessinformationaboutimpact is integrated.

There is even less work regarding unionpolitical activities and institutional buffering(Weiss 1998). Neither construct has beensufficiently operationalizedfor cross-culturalstudies. The conventional wisdom is thatEuropeanunions are much more engrossedin politics than their Americancohorts,but itis hard to separatewell-publicized, militantrhetori c f rom actual i nvol vement oreffectiveness(e.g. per capita dues allocatedto political activity, the relative structureofthose activi ties, impact on regulatoryprocesses, and outcome). Such indicatorsmay be relevant in sorting out unions’concentration on strategic, as opposed tofunctionalor workplace,issuesamongnations(Kochanet al. 1984).

HRM and International Joint Ventures

ShenkarandZeira (1987)andShenkarandLi(1999) indicated that researchon the HRMaspectsof internationaljoint ventures(IJVs)hasbeensporadicandlimited. Additional IJVstudies have emergedsince then, most ofwhich further conceptual ize the HRMchallengesof thesestrategic initiatives. Forexample,Zeira andShenkar(1990)devisedaresearchframeworkfor IJV personnelpoliciesthat tiesa typologyof ventureemployeeswithcharacteristicsof theparentfirms. Othershavediscussedhow socio-culturalfactorsaffect thetransferabilityof HRM practicesfrom foreignparentsto their overseasventures(e.g.FernerandVarul 2000).

Less attention has been focused on thepractices associatedwith partner selection,IJV startup, or venture control. Geringer(1991) used proxies for managerial andtechnical talent as possible predictors of



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partner selection – the only HRM-relatedvariablesthat havebeentestedso far. Yet, acomprehensive case study indicates thatscreeningpotential partnerson the basis ofmanagerialand HRM compatibility increasesthelikelihood of successfulventureoperations(e.g. Schuler et al. 1992; Schuler and VanSluijs 1992).Onesurveyfound that lessthan5% of the total time associatedwith venturecreation was spent resolving HRM-linkedissues (Coopers and Lybrand 1986). Thisforeshadowsan abdicationof venturecontrol,sinceHRM-basedmechanismsmaybea moresignificant determinantof IJV control-systemeffectivenessthanareownershippositionandrelatedformal controls(Cyr 1997;FrayneandGeringer1990).

Each of these topics invites a stream ofresearch,demonstratingthattheneedfor morerigorousempiricalstudiesof HRM in IJVshasintensified rather than abatedin the 1990s.Schuler(2001) hasdonean extendedreviewon HR issues and activi ties in IJVs. Hediscussesin depth most of the issuesraisedabove. What follows is a summaryof HR-relatedissuesin IJVs.

Key HR issuesin IJVs. In today’s globalizedworld, partnerships, al l iances and IJVsbetween two or more firms are becomingincreasingly common (Merchant 2000). TheexistingIHRM literaturehighlightsissuessuchas importanceof IJVs (Cyr 1995),reasonsforthe formation of JVs, successand failures ofJVs,conflict in IJVs (Fey andBeamish2000),culture and control IJVs (Cyr 1997) andlearning in and from IJVs (e.g. Child andFaulkner 1998). Al l these issues haveimplications for the managementof HRs inIJVs. Considering the fact that internationalalliances and joint ventures are particularlydiff icult to manage and HR issues andactivities are directly associated with thesuccessof IJVs (Child and Faulkner 1998;Cyr 1995),we highlight the key HR issuesinIJVswhich form animportant researchagenda.

Of most reasonsfor the formation of IJVs,the reasonthat appearsto gaining substantial

momentuminvolves learningandknowledge,sharingand transfer(e.g. Child and Faulkner1998;ShenkarandLi 1999).In this regard,therole and importance of HRM issues andactivitiesin IJVsbecomeof primeimportance.More specifically, within the IJV context,thereare a multitude of organizationalissuesthatareat thesametime HR issues(Child andFaulkner1998). Broadly presented,they canbe categorizedby organizational level andindividual/group level. At the organizationallevel, the organizational/HRissuesinvolve:parent-to-parent relationships; parent-to-IJVrelationships; IJV-environmental contextrelationship; and parent characteristics(fordetailsseeSchuler2001).

Developingandutilizing an organizational-level capabilityappearsto be more importantfor competitivepartnersthat engagein IJVs(Pucik 1988). Several organizational/HRissuesat the individual/group level in IJVsinclude: learning,sharing,and transferringofknowledge; development of competencies(e.g. knowledge,skills, abilities, personalityand habits); relevant behaviors,actions andattitudes;motivation and commitment to beproductive;andlack of businesssuccessin theIJV due to HR issues (such as lack ofcompetentandmotivatedstaff).

Virtually all of the issueslisted abovearesignificantin the IJV processandinvolve anddepend upon HRM. These issues havesignificant HR implications for HR activitiesin IJVs (Schuler2001). The relationshipsofHR policiesandpracticeswith theIJV processare developedthroughan analysisof the HRi mpl i cat i ons associ at ed w i t h t heorganizational/HR issues identified above.These issues and implications are furthercategorizedas they unfold in the IJV processin stageswith theHR implicationsfor specificHR activities. Researchersin the field (seePucik 1988) suggestfour stagesof the IJVprocess:(1) formation(the partnershipstage);(2) development (the IJV i tsel f ); (3)implementation (the IJV itself); and (4)advancement (the IJV and beyond). Theorganizational/HRissuesin eachstageof the

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IJV processare numerousand so are theirimplications for HRM. There are then amultitude of organizationaland HRM issuesat each stage that are f i l led with HRimplications.Someof theseimplications arepresentedin Table1. Theseimplicationsformthebasisfor describingtheHR activitiesin theIJV processand should form the agendaforfuture research.

Similarly, thereare a large numberof HRissuescritical for the successof mergersandacquisitions. Researchopportunities in thisareaarein abundance(for details,seeSchulerandJackson2001).

Conclusion

Overthe lastdecadeor so,theIHRM researchhas covered a lot of ground; however, thepublishedresearchto date raisesmany morequestionswhich shouldbe the focusof futureresearch.This review of the literature wascouchedin a strategiccontext basedon theexpectation that IHRM increasingly wil lbecomea sourceof competitiveadvantageinglobal aswell asmulti-domesticmarkets.

Accordingly, there is a strong need toimprove our understandingof the approachesthat MNEs utilize to satisfy the competingneeds for integration and differentiation in



Table 1. HR Implications in the Four Stages of the IJV Process: IJV Stage

Organizational/HR issues HR implications

Stage 1 Formation Themore important learning is, the greater the role for HRM

Identifying reasons Knowledge needs to be managed

Planning for utilization Systematic selection is essential

Selecting dedicated manager Cast a wide net in partner search

Finding potential partners Be thorough for compatibility

Selecting likely partners Ensure extensive communications

Resolving critical issues More skilled negotiators are more effective

Negotiating the arrangement Integrative strategies for learning

Stage 2 Development Concerns of multiple sets of stakeholders need toconsidered for long term viability and acceptance

Locating the IJV The structure will impact the learning and knowledgemanagement processes. These are impacted by the qualityof IJV managers

Establishing the right structure Recruiting selecting and managing senior staff can makeor break the IJV

Getting the right senior managers

Stage 3 Implementation These will provide meaning and direction to the IJV andemployees

Establishing the vision, mission, values, the strategy and These will impact what is learned and sharedstructure

Developing HR policies and practices Need to design policies and practices with local globalconsiderations

Staffing and managing the employees The people will make the place

Stage 4 Advancement and beyond Partners need to have the capacity to learn from eachother

Learning from the partner HR systems need to be established to support knowledgeflow to the parent and learning by the parent

Transferring the new knowledge to the parents Sharing through the parent is criticalTransferring the new knowledge to other locations

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their operations(Brewster 2002). Adler andBartholomew (1992) found that a growingproportionof publishedOB/IHRM researchisfocusing on international interactions (i.e.interactions among organizational membersfrom two or more countries). ImprovingMNEs’ ability to managecultural interactionsenhances the prospects of satisfying bothneeds.And as Brewster(2002) suggests,thisappliesto smallaswell aslargeMNEs. It alsoappliesto not-for-profit internationalorganiz-ations.

Specific IHRM policies and practiceshavecommanded varying levels of researchattention,clusteringprimarily in staffing andtraining. We have pointed out where futurestudies can make incremental advancesinthesefunctionalareasaswell as in thosethathavebeenlargelyoverlookedin thepast.Evenstrongeris theneedto link internationalHRMpolicies empirically with behavioral andfinancial outcomes/firm’s performance inindividual businessunits and the overall firm(Beckeret al. 2001).

All this goesbeyonddescriptive casestudiesandsurveysconveyingfrequencydistributions,modesof analysisthat still representa largeproportion of reportedresearchin this field.More rigorous designs must be devised thatoperationalize international HRM variablesbetter,formally testa priori hypothesesabouttheir impact on efficiency and effectiveness,and incorporateadequatecontrols (see alsoBoyacigiller andAdler 1991, 279–280;Guest1997; Wood 1999). Such refinements willgreatly improve our ability to document thevalue-added that flows from internationalHRM initiatives a prerequisiteto meaningfulcomparisonsof transnationalHR systemsandless sophisticated alternatives. Qualitativeresearchremainsan essentialtool in studyingthe process by which international HRMpolicies evolve, diffuse, and are institution-alized in multinationals. Qualitative researchcanalsobe useful in investigating the severalquestions regarding IJVs, particularly thosearoundthe significanceof knowledgetransferandlearning.

Finally, researchersshouldnot losesight ofthe interface between HRM systems thatMNEs utilize and the nationalHRM systemsthat comprise their operating environment.Prior studies indicatethat multinationalshavea limited capacity to alter the entrenchedfeaturesof indigenous employment relation-ships. It remainsunclear how multinationalsreactto impendingHRM life-cycle transitionsin a given country.Are MNEs proneto adaptto such changes faster than their domesticcompetitors? What role do MNEs play in therate of change and stabilization of new HRMsystems? Do host countries selectivelypressuremultinationals with ‘deviant’ HRMsystemsto conform to prevailing practicesbasedon their home country? For example,advancedindustrialized nations may enforcetheir employment laws more vigorouslyagainstMNEs from other developednationswith objectionabletrade barriersthan againstthosebasedelsewhere.Ultimately then, IHRMresearchmust unite these micro- and macrolevel-perspectives.

As demonstratedby this review, interestedscholarshavea myriad opportunitiesto helpinternational businessorganizationsdevelopandsustainHR-basedcompetitiveadvantages.Researchersand firms that chart thesewaterseffectively wi l l secure enviable marketpositionsin the decadesahead.

Acknowledgements

The authorswish to thank David McGuire,Ibraiz Tarique, Oded Shenkar,BJ Punnett,PeterDowling and Helen De Cieri for theirinvaluableinput.

Notes

1 Giventhestrategiccontextwithin which this paperis written, useof the conceptof HumanResourceDevelopment (HRD) might be preferable toTraining and Development because for someHRD is seenasmorecloselylinked to thestrategicneeds of the business imperatives (Sambrook2000), and becauseHRD is more closely linked

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with HRM andthemutualattainmentof individualand organizationalgoals (Legge 2001; McGuire,D., personalcorrespondencewith first author, 2August2001).While the authorsappreciatethesesentiments,theyusethemoretraditionalterminol-ogy for its consistencywith the literature.

2 Some controversyexists regardingthe extent towhich MNEs operateaschangeagentswithin theindustrial relations systems of host countries.Available evidenceon this point is reviewedlaterin the papers

3 Hamill (1984) analyzednumerouslabor relationspracticesof US- andBritish-ownedMNEs in threeBritish industriesand found somedifferences.Asnotedearlier,Tung (1982) found that the deploy-mentpatternsfor hosttop managementdifferedbyMNE home-countryandassignmentregion.Train-ing contentalsovariedwith homeoffice location.Other investigationshavecomparedthe compen-sation/benefitspackagesof MNEs and domesticfirms in industrialized host countries, reportingthat multinationalsgenerallymeetor exceedwhatdomesticfirms provide. It is our contentionthatthe complete set of HRM policies must beinventoried and evaluated to ascertain theircultural ramifications,as well as their ability toelicit the role behaviorsessentialto a particularcompetitivestrategy(SchulerandJackson1987).

4 However,the authorsnotedthat US firms in otherindustrieshavenot behavedmarkedly differentlywhenlaunchinggreenfieldoperations.

5 BeginalsocontendsthatadhocraticHRM systemsmayserveasanalternativestartingpoint,althoughit is difficult to envisionhow this would occur.

6 The former componentencompassestake-homepay, paymentsfor non-work time (i.e. holidays,vacations),and the cost of in-kind benefits; thelatter coverspaymentsfor legally requiredinsur-anceprogramsand collectively bargained/privatebenefits.

7 The first threecountriesaresolidifying their recententry into this life-cycle stage, the fourth neverreally evolvedbeyondit, while thefifth hasrecededback into it during the post-WorldWar II era.

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