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March 2002
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.
ßBlackwell Publishers Ltd 2002,108 Cowley Road, Oxford OX41JF,
UK and 350 Main Street,Malden, MA 02148, USA
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
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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
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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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