International and Comparative Human Resource Management Introduction to the Module Module Tutor:

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1 International and Comparative Human Resource Management Introduction to the Module Module Tutor: Rosliana Binti Ahmad Razilan

2 Learning Outcomes On successful completion of this module you will be able to: Demonstrate an understanding of the reasons for the existence of key similarities and differences in national HRM practices (Knowledge and Understanding) Critically evaluate the potential people management problems (Intellectual, practical, affective and transferable skills) Critically analyse a range of tasks and techniques used when undertaking comparative HRM studies (Intellectual, practical, affective and transferable skills)

3 Main Themes Globalisation and TNCs/MNCs and the current and future trajectory of HRM Concepts and debates about the international transfer of HRM practice (Policy diffusion) Debates and ideas about international employee resourcing staffing, performance management, development and rewards Institutions, regimes, ideas and debates about the international regulation and management of Human resources, including, Corporate Social responsibility

4 Assessment for this module consists of one part Written paper 3000 word limit Submission 8 th May pm Write a 3000 word paper which critically evaluates a range of potential strategic problems facing Human Resource Managers operating in multi-national companies. See Module guide (pages 6-10 for details about the assignment, including; assessment criteria, submission guidelines, etc.

5 Readings (1) Books Brewster, C, Sparrow, P, and Vernon, G (2007): International Human Resource Management 2nd edition. London, CIPD Publishing Briscoe, Dennis R, Schuler, Randall, S and Claus, Lisbeth (2008): International Human Resource Management: Policy and Practice for Multinational Enterprises (Global HRM) 3rd edition London Routledge Beardwell and Holden (Various editions): Human Resource Management. Harlow, Prentice Hall/FT Edwards, T. and Rees, C. (2011, 2006), IHRM: Globalisation, National Systems London: FT. London: Sage, Dicken, P. (2007) Global shift: Mapping the Changing Contours of the World Economy (5 th edition.), London: Sage

6 Readings (2) Book Dicken, P. (2003) Global shift: Reshaping the Global Economic Map in the 21 st Century (4 th edition.), London: Sage Rubery, J. and Grimshaw, D. (2003) The Organisation of Employment: An International Perspective. London: Palgrave Harzing, A. and Pannington, A. H. (eds.) (2011)) International Human Resource Management (3rd Edition), London: Sage Harzing, A. and van Ruysseveldt, J. (eds.) (2004) International Human Resource Management ( 2nd Edition), London: Sage. Scullion, H. and Lineham, M., (Eds.) (2005) International Human resource management, Basingstoke: Palgrave Macmillan Rugman, A., Collinson, S. and Hodgetts, R. (2006) International Business, 4 th Edition. Harlow: FT Prentice Hall

7 Reading: Journals European Business Review, Human Resource Management Journal, IDS Employment Europe, Personnel Review, International Journal of Manpower, Employee Relations, Journal of European Industrial Training,

8 Reading: Journals International Journal of Human Resource Management International Journal of Cross Cultural Management European Journal of International Management European Journal of Industrial Relations Human Resource Management Journal Journal of International Business Studies Asia Pacific Journal of Human Resources

9 International and Comparative HRM Week 1 The Globalisation of International Human Resource Management Alhajie Saidy Khan Lord Ashcroft International Business School

10 Lecture focuses upon the: Historical developments in international economic activity What is Globalisation? The definitional debate Key characteristics of Globalisation Globalisation: a critical perspective Nature and dominance of MNCs Globalisation, MNCs and international transfer of practice Lecture outline

11 Globalisation: the historical context (1) Historical developments in the World economy: Long history of international trading relations Importance of colonial expansion (C17 th & C18 th ) Manufacturing multinationals appeared in world economy after mid C19th and established by WWI Annual growth of volume of international trade of 3.4% Impact of protectionism prior to WWI; fall in world trade in 1930s following Depression; WWII. (Hirst and Thompson 1996, Chapter 2; Harzing & Ruysseveldt, 2004/5, 2011)

12 Globalisation: the historical context (2) Post War developments in the World economy USA domination: economic development as instrument of the cold war) International institutions (GATT, IMF, OECD) Exchange rate system Golden Age by 1950s and 1960s volume of trade increasing more rapidly than production, rapid economic growth and full employment (see Bretton Woods Revisted - Economist )

13 Key indicators of Economic Internationalisation Trends on international trade: the data(next slide Phenomenon of Regional trading blocs and increase in regional trade Foreign Direct investment Economic liberalisation Dominance of TNCs

14 Growth in World production and trade (% in volume) Trade Production (WTO, 2002)

15 Theories of determinants of economic internationalisation Theory of Absolute advantage (Adam Smith, 1776) Relative advantage Theory (Ricardo, 1917) H-O theorem differences in factor endowment (Ohlin, 1933) Porter s 6 criteria theory of comparative and competitive advantage (1990) Dunning s Eclectic paradigm (2003) See various editions of Edward and Rees

16 Internationalisation vs. globalisation Internationalisation: the simple extension of economic activities across national boundaries. Globalisation qualitatively different processes that involve the functional integration of internationally dispersed activities (Dicken, 2003, 2007, 2011)

17 Globalisation: a qualitative explanation Globalisation as qualitatively different form of international economy? Deep-seated (irreversible) shift in structure and operation of production and markets Undermining of nation-states as significant economic actors Cultural Homogeneity or dominance without hegemony? Global corporations (TNCs/MNCs) with no allegiance to any particular place and or community (Dicken 2011, 2007, 2003)

18 Or, Globalisation as illusion No fundamental changes in world economy World economy more open and integrated Global markets can be controlled by mixture of national/supranational regulation Importance of cultural differences (Child 2002) Relatively few truly international companies and concentration of FDI among advanced economies (Dicken, various eds.; and Hirst and Thompson)

19 Characteristics of Globalisation Uneven development and rate of globalisation Key role of Multi/Transnational Corporations (MNCs/TNCs) in coordinating production chains and shaping new world economy Foreign direct investment (FDI) as indicator of MNC/TNC activity and the growth of international production Dynamic relationship between MNCs/TNCs and national (or supranational) regulatory regimes and growth of product market competition (Dicken, 2003, 2007, 2011)

20 Dominance of Multi/Transnational Corporations What is Multi/Transnational Corporation? Narrow Definition direct ownership of operations overseas measured by FDI (foreign direct investment) Broad Definition a company which either directly or indirectly controls production or service provision in two or more countries covers licensing, franchising, sub-contracting, joint ventures and strategic alliances as well as FDI

21 Significance of Multi/Transnational Corporations (1) TNCs are driving force behind internationalisation of economic activity Dominate international and national economies Ability to take advantage of differences between states Ability to shift resources and operations between countries According to the UN, the stock of FDI had increased from $560 billion in 1980 to $7,213 billion in 2002 (about $12,500 billion in 2006). UNCTAD, 2006

22 MNCs/TNCs: from investment to Global control By 1997 the UN estimated that 53,607 parent TNCs had controlled 448,917 foreign subsidiaries, producing about 25% of world output In 2002, the top 100 TNCs employed over 14.3 million workers of which just under half worked in their foreign affiliates in 2002 (UNCTAD) By 2004 the UN estimated that 61,000 parent TNCs had controlled over 900,000 foreign subsidiaries, generating annual sales of $19 trillion and employing around 54 million people.

23 GDP or Total Sales (US$ bn) MNCs/TNCs and Sovereign states Companies vs Countries (1997) General Motors Thailand Norway Ford Mitsui & Co. Saudi Arabia Mitsubishi Poland Itochu South Africa Royal Dutch/Shell Marubeni Greece Sumitomo Exxon Toyota Wal Mart Malaysia Israel Colombia Venezuela Phillipines Country or Corporation

24 Micro-level explanation for why Firms go multinational Competitive strategies for product markets Gain market power by overcoming disadvantage of being seen as foreign) efficiency - possessing a strategic or ownership (benefits of which can only be realised through internal transfer within firm) Factor Supply Raw materials supply (secure control) Transfer pricing strategies. Labour supply (cheapest labour costs, ability to divide and rule); but issues of labour costs as proportion of total costs and productivity

25 Motivations for internationalisation: Dunnings s Eclectic paradigm Theory of synthesis of 3 conditions: They possess ownership-specific advantages not possessed by competing firms (in host country) Advantage most effectively secured by production overseas (c.f. selling or leasing) i.e the firm internalises use of ownership-specific advantages There must be location-specific advantages which make it profitable for the firm to exploit its assets in overseas (c.f. domestic) locations

26 Internationalisation: Contradicting demands of centralisation and decentralisation Centralised control: benefits of co-ordination and control activities across divisions and countries) e.g. McDonalds Decentralised control: benefits of local autonomy and ability to respond to local conditions & optimise local expertise But are they mutually exclusive? Different issues require different levels of decision-making and response. The scope for differences could, however, define differences between TNCs

27 Country of origin effects and transfer of practice Some evidence of TNCs becoming more global (spread of international business divisions, management teams etc.) Evidence of TNC reorganisation within EU (mergers, acquisitions, joint ventures and strategic alliances) Crucially most TNCs rooted in home country Location of majority of assets Management board dominated by home nationals Finance largely raised in home country

28 Globalisation, MNCs and International transfer of practice Globalisation as a process which has led to regime competition between national capitalisms TNCs as proxies in the competition between highly regulated and highly deregulated systems (of employment relations) Do multinationals act as vehicles for transmitting HR/IR practices from the parent country.. to the host countries in which they operate, or do they attempt to drop what they see as the constraining elements of their business systems once they leave their own borders? (Ferner, 1997:20)