Summary of: Ewards, T. & Kuruvilla, S. (2005). International HRM: National Business Systems, Organizational Politics, and the International Division of Labour in MNCs. International Journal of Human Resource Management, 16(1)
INTERNATIONAL HRM
Strategic human resource management: The RBV suggests that the firm’s human resources can be used to achieve a sustainable competitive advantage. But failures by the HRM policy can turn human resources into a major source of disadvantage. Considering transaction cost economics, the decision to add one or more factory workers on the assembly line might be made using the logic of transaction cost analysis. But maybe not when we talk about skilled workers and probably even less again when we’re talking about workers core to our firm.
Human resource management (HRM) is a field of theory and practice that deals with decisions related to policies and practices, that together help to shape the relationship between the firm and its employees. It is suggested that:
Most conceptual models provide grounds for expecting MNCs to adopt a global element to the way they manage their international workforces to reap the benefits from coordination and integration; consistency and contribution; and learning lessons across operation (transferring knowledge). Another pressure for global HR policies is the country of origin effect (i.e. export the home country style). In contrast, there are also a variety of grounds expecting MNCs to adopt a local element in their HR policies. Decentralization is pressed for by differing national cultures (i.e. multi-culturalism) and national-level regulations and institutions.
A variety of authors argue for a middle way, a combination of the global and local pressures. Yet, the tension between integration (consistency of HR practices in the MNC) and differentiation (local adaptation) is determined by a list of endogenous and exogenous factors, so many in fact that the models are difficult to operationalize.
There are three significant weaknesses and problems to the existing literature:
1. Inadequate conceptualization of national influences
The weak explanatory power of the precise origins and nature of both global and local effects. Importantly, where there is an attempt to analyze a national system it is often couched in terms of culture.
This can take two forms:
Either culture is used in a loose way to capture all aspects of national differences
Use is made of a particular typology of culture, such as Hofstede’s.
Apart from the utility for HR policy, perhaps the major problem with these cultural approaches is that they explain relatively little.
An alternative approach is to focus on the key institutions within a nation. Focus on a national business system, which is a set of interlocking structures and institutions in different spheres of economic and social life that combine to create a nationally distinct pattern of organizing
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