New models of strategic HRM in a global context

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1 Int. J. of Human Resource Management 16:6 June New models of strategic HRM in a global context 13 Routledge g ^ TaytoftiFranciiCroup Patrick M. Wright, Scott A. Snell and Lee Dyer Abstract Although strategic human resource management began to emerge as a domain of study around 1980, many of the field's major theoretical and empirical strides have occurred during the last decade or so. By and large these have emanated from communities of scholars operating within specific countries or, in some cases, regions of the world. The next generation of contributions, however, is beginning to emerge on a global basis. This special issue fosters the broader development of our field by bringing together a set of papers written by a cadre of scholars from various spots around the world who recently gathered at Cornell University to share thoughts and perspectives. While viewpoints vary, overall the collection offers a wealth of specific insights and suggestions for moving the field forward on the inevitable path of globalization. Keywords Human resource management; strategic HRM; intemational HRM. Personnel, industrial relations, human relations or human resource management - whatever the preferred moniker for the function of managing people in organizations - has existed for well over a century. The subfield of strategic human resource management (SHRM), however, has been in existence only about a quarter of that time. Despite its relative youthfulness, this domain of the field has been characterized by tremendous conceptual and empirical strides, especially in the past decade. Jim Walker's (1980) classic book, Hurrmn Resource Planning, was the first to suggest considering a firm's business strategy when developing a human resource plan. Devanna et al.'s (1981) article 'Human resources management: a strategic perspective', added to the foundation. In just over the two decades since, a plethora of research, theory and cases examining linkages between business and HR strategy has emerged. The greatest impetus came in the mid-1990s. This was the point at which Huselid (1995) published his landmark study demonstrating a statistically and practically significant relationship between HRM practices and corporate performance. It was also when MacDuffie's (1995) industry-focused study illustrated how particular bundles of HR practices, when aligned within an organizational logic, lead to strong plant-level performance. Since then, a steady stream of theorizing and research has focused on the impact of HRM principles and practices on important organizational outcomes (Becker and Gerhart, 1996). Patrick M. Wright, Department of Human Resource Studies, School of Industrial and Labor Relations, Cornell University, Ithaca, NY , USA (tel: ; pmw6@comell.edu). Scott A. Snell and Lee Dyer, Department of Human Resource Studies, School of Industrial and Labor Relations, Cornell University. The Intemational Joumal of Human Resource Management ISSN print/issn online 2005 Taylor & Francis Group Ltd DOI: /

2 876 The Intemational Journal of Human Resource Management Most of these developments, not surprisingly, have come from communities of scholars focusing on their own particular countries or regions, be it the US (e.g. Arthur, 1994; Batt, 1999; Delery and Doty, 1996; Huselid et al., 1997; Youndt et ai, 1996), the UK (e.g. Brewster, 1999; Guest, 1997; Guest et al., 2003; Tyson, 1997), elsewhere in Europe (e.g. d'arcimoles, 1997; Lahteenmaki et al, 1998; Rodriguez and Ventura, 2003) or Asia (e.g. Bae and Lawler, 2000; Lee and Chee, 1996; Lee and Miller, 1999). Cross-pollination across these groups has heen minimal, presumably because each one considers the work of others to he marginally relevant to its particular context because of differences in institutional structures, regulatory environments and/or cultures (Brewster, 1999). Recently, however, the boundaries separating these groups have become increasingly permeable, resulting in an enhanced sharing of knowledge and ideas. To foster this development, Cornell University's School of Industrial and Labor Relations held a conference in the spring of 2003 to which leading scholars from around the world were invited and asked to present papers on the topic 'New Models of Strategic HRM in a Global Context'. The purpose was to facilitate the emerging dialogue and thus advance perspectives on global SHRM, whether in the form of general theorizing about the topic or specific theory and research focused exclusively on global issues. The papers that make up this special issue constitute the output of that conference. A previous conference at Cornell resulted in a special volume of Research in Personnel and Human Resource Management (Wright et al., 1999). The papers comprising that volume clearly highlighted the segregation of thinking that existed across the globe. One set of papers focused on conceptual models that were largely culture and context free and had a decidedly shareholder orientation, while a second set of papers embraced cultural and context-related variables with a broader stakeholder focus. It was the transparency of this dichotomy that engendered a dialogue leading to this special issue. Overview While there is a variety of ideas and data contained in this volume, three themes connect the papers (and authors). The first theme concems the extent to which SHRM theories generalize across countries and cultures, with some authors taking a parochial view and others adopting a more universal perspective. The second theme addresses differences in viewpoints pertaining to the generalizability or applicability of HR practices across countries and cultures. The final theme focuses on factors, including contextual conditions as well as various decision-makers, which putatively influence the adoption and nature of HR systems and practices. Generalizability of SHRM theory One of the major issues facing the field of SHRM deals with extemal validity and the generalizability of theory. Brewster (1999), for example, has long argued that theories of SHRM developed in the US do not generalize to Europe because of the significantly different context surrounding HR in the European Union. The broader notion at stake here pertains to the boundary conditions of our theories. Three papers in this volume tackle this concern, albeit from rather different perspectives and approaches. The first, by Zupan and Kase (2005), questions the extent to which theories postulated by scholars in developed countries, such as the US, the UK and elsewhere in westem Europe, apply to countries that are in transition, and particularly to the eastern European Transition Economies (ETEs). After summarizing the developments infiuencing the emergence of HRM in ETEs generally, the authors call on their

3 Wright et al.: New models of strategic HRM ill knowledge of Slovenia in particular to develop a model that emphasizes the importance of context, and especially the roles of key facilitators and related power relationships, to explain how HR activities emerge and ultimately impact on firm performance in this unique setting. Ericksen and Dyer (2005) eschew culture or country as the main construct constraining the generalizability of SHRM theory, choosing instead to emphasize organizational context and strategy. To make the case, they use high reliability organizations (HROs) as examples of tirms that are on the one hand ubiquitous, while on the other unique enough to require a special approach to HR strategy. HROs, such as nuclear power plants and hospital emergency rooms, 'strive to achieve virtually problem free performance under the most trying of circumstances'. Working back from this exigency, the authors identify critical reliability-oriented employee behaviours (ROEBs) and, then, a reliability-enhancing human resource strategy (REHRS) which facilitates the manifestation of these behaviours. In this analysis, they implicitly accept a universalistic view of SHRM when it comes to country or culture, while explicitly rejecting such a view with respect to the demands of organizational context and strategy. In contrast, Bhattacharya and Wright's paper (2005), the third to focus on this general theme, presents a generalizable theory of SHRM based on the notion of real options. Real options theory, which derives from finance and has recently been applied in the realm of business strategy, provides a framework for analysing the risks and uncertainties associated with returns on assets. These authors note that the current trend towards viewing human resources as assets tends to ignore these factors. They then extend the real options logic by applying it to the HR domain and specifically by showing how certain HR practices can be used to create HR options and thus explicitly to judge the value of investing in human resources given the risks and uncertainties associated with the returns that might accrue. Generalizahility of HR practices The second general theme of the papers in this volume relates to the generalizability of HR practices. In their paper, Brewster, Sparrow and Harris (2005) report on an extensive empirical study of international companies to examine how they adapt their HR practices to meet enhanced competitive conditions. The results reveal a cluster of five organizational drivers that, when filtered through three key HR enablers, lead to pattems of HR practices that are operationalized in various ways to deal successfully with the inevitably conflicting requirements for worldwide standardization on the one hand and local customization on the other. When it comes to local customization, Hofstede's (1980) well-known studies have led to the common assumptions that nations are characterized by unique sets of shared cultural values and that these, in turn, lead to differences in the efficacy of HR practices across countries. Gerhart and Fang's paper (2005) tests these baseline assumptions not by arguing the point theoretically or by conducting altemative studies, but by re-analysing Hofstede's (1980; Hofstede and Bond, 1988; Hofstede et al., 1990) original data. Using variance-related estimates rather than tests of statistical significance these authors show that cross-country cultural differences, while real, have been over-estimated and suggest that these may well pale in importance when compared with other unique country characteristics when it comes to explaining the effectiveness of HR practices. This paper will surely promote considerable discussion and a flurry of research over the next few years.

4 878 The Intemational Journal of Human Resource Management Broadening the actors infiuencing HR Historically HR has been viewed largely as an internal function with internal processes and intemal constituencies. Much of the SHRM literature (particularly in the US) has assumed that HR decision-makers have tremendous freedom to develop and design HR strategies. Some question this premise. Further, the scope of actors who might be expected to influence HR policies and practices broadens considerably in today's technology-driven and globalized world. This brings us to the third major theme in this volume. Institutional theorists have long recognized the influence of governmental and nongovernmental organizations on HR (e.g. Boselie et al., 2001). In their paper in this volume Paawe and Boselie (2005) expand on this viewpoint by attempting to explain the adoption of HR practices by integrating outside-in and inside-out explanations. Using concepts from both new institutionalism and co-evolution, as well as selected results from studies of innovation adoptions, they contrast the effects of economic rationality and normative rationality to propose a typology of adoption pattems and to develop a number of related hypotheses to be tested in future research. In a related vein, Kinnie, Swart and Purcell's paper (2005) examines the effects of firms' networks (of suppliers, customers, regulators and the like) on their choices of HR strategies. They note that, while the dominant paradigm assumes that HR actors possess considerable freedom in choosing their HR systems, this assumption ignores the realities of network relationships. Using comparative case studies, these authors explore how the organizations' network structures, relationships, and dynamics shape the features of their HR practices. They conclude that students of HR strategy, whether interested in the process of strategy-making or in relationships between HR strategies and firm performance, ignore these pattems of influence only at their peril. In contrast, Thompson and Heron (2005) take us inside the firm to explore enabling and constraining forces posed by managerial capability. Specifically, they hypothesize that the adoption of high-performance work organizations (HPWOs) should be strongly influenced by two types of managerial capability: general (competence of line managers) and HR specific (competence of HR managers). Using data from a multi-year study at the establishment level, they found support for both hypotheses at one point in time, but no support for either hypothesis (using both lagged and concurrent data) three years later. Somewhat serendipitously, they also found that HPWOs exerted a positive effect on employee productivity when firms' general management capability was low but not when it was high. This suggests the intriguing possibility of a trade-off: firms investing in HPWOs may be able to rely sufficiently on the contributions of lower-level employees that investments in developing general management talent may be not only redundant, but also possibly even counter-productive. Finally in this theme, the paper by Gardner (2005) suggests how HR decision-makers can manage their contexts to enhance the range of strategic altematives. Labour market altematives such as temporary help firms and employee-leasing organizations have long been part of the HR strategy mix. Gardner goes further, however, by examining alliances with other firms as means of managing HR flows and headcounts. His comprehensive analysis identifies types of potential alliances, the types of employees most susceptible to being managed through alliances, a number of factors that influence the use of alliances and several factors that affect the choice of collaborators. The paper includes a number of propositions for further exploration, as well as a number of concrete suggestions about relevant research designs.

5 Conctusion Wright et al.: New models of strategic HRM 879 The conference at Cornell was successful in bringing together leading HR academics from around the globe to enhance the emerging intemational dialogue on SHRM theory and research. The resulting papers suggest general agreement on one point: that differences in institutional environments, and perhaps cultures, serve as boundary conditions with respect to the generalizability of our models and empirical results. Clearly, however, there is less agreement about the nature of these boundary conditions and the direction and magnitude of their effects, or on the stakeholder vs stockholder controversy. We hope that SHRM theorists and researchers in all corners of the globe will see this situation as a challenge. The papers in this volume represent a promising start. The task now is to build on this work by incorporating a fuller range of boundary conditions in our research, explicitly wrestling with the global universality vs local adaptability issue and experimenting with a wider range of outcomes in our models and studies - preferably doing so through networks of intemational collaborations and consortiums. Ultimately, we must make absolutely certain that our field continues to hold its own in the ubiquitous drive to globalize. Acknowtedgements Funding for the conference was provided by the Center for Advanced HR Studies (CAHRS) and the Dean's Faculty Excellence Fund, School of ILR, Comell University. References Arthur, J.B. (1994) 'Effects of Human Resource Systems on Manufacturing Perfonnance and Turnover', Academy of Management Joumal, 31: Bae, J. and Lawler, J.J. (2000) 'Organizational and HRM Strategies in Korea: Impact on Firm Perfonnance in an Emerging Economy', Academy of Management Joumal, 43: Batt, R. (1999) 'Work Organization, Technology, and Performance in Customer Service and Sales', Industrial and Labor Relations Review, 52: Becker, B. and Gerhart, G. (1996) 'The Impact of Human Resource Management on Organizational Performance: Progress and Prospects', Academy of Management Joumal, 39: Bhattacharya, M. and Wright, P. (2005) 'Managing Human Assets in an Uncertain World: Applying Real Options Theory to HRM', Intemational Joumal of Human Resource Management, 16(6): Boselie, P., Paauwe, J. and Jansen, P.G.W. (2001) 'Human Resource Management and Performance: Lessons from the Netherlands', International Joumal of Human Resource Management, 12(7): Brewster, C. (1999) 'Different Paradigms in Strategic HRM: Questions Raised by Comparative Research'. In Wright, P., Dyer, L., Boudreau, J. and Milkovich, G. (eds) Research in Personnel and Human Re.wurce Management: Strategic HRM in the 2I.it Century, Supplement 4. Greenwich, CT: JAI Press. Brewster, C, Sparrow, P. and Harris, H. (2005) 'Towards a New Model of Globalizing HRM', International Joumal of Human Resource Management, 16(6): d'arcimoles, C.H. (1997) 'Human Resouree Policies and Company Perfonnance: A Quantitative Approach Using Longitudinal Data', Organization Studies, 18: Delery, J.E. and Doty, D.H. (1996) 'Modes of Theorizing in Strategic Human Resource Management: Tests of Universalistic, Contingency and Configurational Performance Predictions', Academy of Management Joumal, 39:

6 880 The International Joumal of Human Resource Management Devanna, M., Fombrum, C. and Tichy, N. (1981) 'Human Resources Management: A Strategic Perspective', Organizational Dynamics, Winter: Ericksen, J. and Dyer, L. (2005) 'Toward a Strategic Human Resource Management Model of High Reliability Organization Performance', Intemational Journal of Human Resource Management, 16(6): Gardner, T. (2005) 'Human Resource Alliances: Defining the Construct and Exploring the Antecedents', International Joumal of Human Resource Management, 16(6): Gerhart, B. and Fang, M. (2005) 'National Culture and Human Resource Management: Assumptions and Evidence', International Journal of Human Resource Management, 16(6): Guest, D. (1997) 'Human Resource Management: When Research Confronts Theory', Intemational Journal of Human Resource Management, 12(7): Guest, D., Michie, J., Convk-ay, N. and Sheehan, M. (2003) 'A Study of Human Resource Management and Corporate Performance in the UK', British Journal of Industrial Relations, 41: Hofstede, G. (1980) Culture's Consequences: International Differences in Work-Related Values. Beverly Hills, CA: Sage. Hofstede, G. and Bond, M.H. (1988) 'Confucius and Economic Growth: New Trends in Culture's Consequences', Organizational Dynamics, 16(4): Hofstede, G., Neuijen, B., Ohayv, D.D. and Sanders, G. (1990) 'Measuring Organizational Cultures: A Qualitative and Quantitative Study across Twenty Cases', Administrative Science Quarterly, 35: Huselid, M.A. (1995) 'The Impact of Human Resource Management Practices on Turnover, Productivity, Corporate Financial Performance', Academy of Management Journal, 38: Huselid, M.A., Jackson, S.E. and Sehuler, R. (1997) 'Technical and Strategic Human Resources Management Effectiveness as Determinants of Firm Performance', Academy of Management Joumal, 40(1): 171. Kinnie, N., Swart, J. and Purcell, J. (2005) 'Influences on the Choice of HR System: The Network Organization Perspeetive', International Joumal of Human Resource Management, 16(6): Lahteenmaki, S., Storey, J. and Vanhala, S. (1998) 'HRM and Company Perfonnance: The Use of Measurement and the Influence of Economic Cycles', Human Resource Management Joumal, 8: Lee, J. and Miller, D. (1999) 'People Matter: Commitment to Employees, Strategy and Performance in Korean Firms', Strategic Management Journal, 20: Lee, M.B. and Chee, Y. (1996) 'Business Strategy, Participative Human Resource Management and Organizational Performance: The Case of South Korea', Asia Pacific Journal of Human Resources, 34: MacDuffie, J.P. (1995) 'Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry', Industrial and Labor Retations Review, 48(2): 197. Paauwe, J. and Boselie, P. (2005) '"Best Practices... in Spite of Perfonnance": Just a Matter of Imitation?', International Journal of Human Resource Management, 16(6): Rodriguez, J.M. and Ventura, J. (2003) 'Human Resource Management Systems and Organizational Performance: An Analysis of the Spanish Manufacturing Industry', International Journal of Human Resource Management, 14: Thompson, M. and Heron, P. (2005) 'Management Capability and High Performance Work Organization', Intemationai Joumal of Human Resource Management, 16(6): Tyson, S. (1997) 'Human Resource Strategy: A Process for Managing the Contribution of HRM to Organizational Performance', Intemational Journal of Human Resource Management, 12(3): Walker, J. (1980) Human Resource Planning. New York: McGraw-Hill.

7 Wright et al,: New models of strategic HRM 881 Wright, P., Dyer, L., Boudreau, J. and Milkovich, G. (eds) (1999) Research in Personnel and Human Resource Matiagement: Strategic HRM iti the 21st Century, Supplement 4. Greenwich, CT: JAI Press. Youndt, M.A., Snell, S.A., Dean, J.W. and Lepak, D.P. (1996) 'Human Resource Management, Manufacturing Strategy, and Firm Performance', Academy of Management Journal, 39: Zupan, N. and Kase, R. (2005) 'Strategic Human Resource Management in European Transition Economies: Building a Conceptual Model on the Case of Slovenia', Intemational Journal of Human Resource Management, 16(6):

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