GLOBALISATION, EUROPEANISATION AND INTERNATIONAL HRM STRATEGIES Flashcards
What is a Multinational Corporation?
Company operating in several countries but managed from one (home) country
What are the four distinct approaches to IHRM?
- Ethnocentric
- Polycentric
- Regiocentric
- Geocentric
Ethnocentric (4)
- Home country practice prevails
- Place people from home country in key positions at home and abroad
- Company not aware of foreign talent
- Struggles to communicate across countries
Ethnocentric - Aspects of the Enterprise
- Complexity of organization
- Authority/ decision making
- Evaluation and control
- Rewards; punishment; incentives
- Complex in home country; simple in subsidiaries
- High in headquarters
- Home standards applied for persons and performance
- High in headquarters; low in subsidiaries
Polycentric (4)
- Cultures of different countries vary
- As long as work is profitable, no need to intervene
- Local nationals hold key positions
- Local managers have power over their area
Polycentric - Aspects of the Enterprise
- Complexity of organization
- Authority/ decision making
- Evaluation and control
- Rewards; punishment; incentives
- Varied and independent
- Relatively low in headquarters
- Determined locally
- Wide variation; can be high or low rewards for subsidiary performance
Regiocentric (3)
- Advantages to using regional managers - train and develop local, regional individuals
- Strong connection across regions but, weak connections to separate regions and HQ
- Autonomy among regions
Regiocentric - Aspects of the Enterprise
- Complexity of organization
- Authority/ decision making
- Evaluation and control
- Rewards; punishment; incentives
- Highly interdependent on regional basis
- High regional headquarters and/or high collaboration among subsidiaries
- Determined regionally
- Rewards for contribution to regional objectives
Geocentric (4)
- Truly multinational firm
- Headquarters and subsidiaries see each as part of single entity
- Optimize resource allocation on global basis
- Good flow of information
Geocentric - Aspects of the Enterprise
- Complexity of organization
- Authority/ decision making
- Evaluation and control
- Rewards; punishment; incentives
- Increasingly complex and highly interdependent on a worldwide basis
- Collaboration of HQ and subsidiaries around the world
- Standards which are universal and local
- Rewards to international and local executives for reaching local and worldwide objectives
Evolution of an MNC
- Spectrum of attitudes in MNC’s
- Company can change and evolve
Specific approaches may offer strategic importance
- Targeted advice
- Superior service
- Quicker and more efficient interactions
Globalization (3)
Organizations gain international influence and/or operate on global scale
Transformation in social relations and transaction
“transcontinental or interregional flows and networks of activity, interaction and power” - Held & McGrew
According to Held & McGrew, globalization occurs when:
- Expansion of social and economic actors
- Greater Interconnectedness
- Quicker Global Interactions
- Greater Impacts
Three fields of thought on globalization
- Hyperglobalist
- Skeptical
- Transformationalist
The Hyperglobalist
View that the world is transitioning into a de-nationalized, integrated
global economy, both qualitatively and quantitatively.
A Hyperglobalist would most likely take a ________ approach to HRM
Geocentric
Hyperglobalist HRM Strategies: (4)
Most efficient and effective strategies in every location
- Hire best people for job irrespective of nationality
- Top management has international experience and contacts
- Clear performance standards across company
Geocentric Approach and
Hyperglobalists Disadvantages and Challenges (3)
- A constant commitment of
resources and time to keep the system functional. - Constantly and consistently
having good people in key
positions across the company is difficult. - Always evolving and may be a drain on the workforce.
Geocentric Approach and
Hyperglobalists Advantages
- Strong Company Culture
- Expertise of each manager and employee can be used to
accomplish MNC’s goals - Less resentment as feeling of
fairness increases - Shared learning across company
- Effective flows of information
Skeptic
View that globalization today is exaggerated (see 1890-1914); dismisses idea of a truly global, interdependent economy.
The world is divided into economic and political blocs; at best, a regiocentric world
A sceptic would most likely take an _________ or
possibly a ______ HRM approach.
ethnocentric or polycentric
Skeptic HRM strategies (2)
- Use same HR practices in subsidiary as headquarters
(ethnocentric) or - Adapt HR practices to fit country (polycentric)
Polycentric Approach and Sceptics Disadvantages and Challenges: (4)
- May miss the signs of issues,
that will need to get larger and
more complicated before they
are noticed - Weak integration of company
- Lack of company culture
- Low accountability from subsidiaries towards
headquarters
Polycentric Approach and Sceptics Advantages (5)
- Cheaper to hire locals
- Increase in morale
- Local managers may know best
- Enhanced productivity
- Less cultural tension
Ethnocentric Approach
and Sceptics Disadvantages and Challenges: (5)
1. May not have best people in area 2. Cultural insensitivity 3. Lack of connections to local area 4. Workplace tensions 5. Easy to misinterpret or misguide people
Ethnocentric Approach
and Sceptics Advantages: (4)
- A new company may not have reliable, local people to trust yet, so they place trusted individuals in place of key leadership roles
- Single parent company culture
- Headquarters has control
- No need for well developed
international labor market
Transformationalist
View that globalization’s outcomes and processes are unclear and undetermined
Transformationalists argue that the flow of culture is a two-way
exchange
A Transformationalist would likely take the ______ approach to HRM
Regiocentric
Transformatinalist HRM strategies: (2)
Develop practices that best fit region
Managers selected from different countries within the defined region
Transformationalist and Regiocentric Approach
Disadvantages and Challenges:
- Managers from regions may not understand viewpoint of
headquarters - Communication barriers between regions
- Weak company culture from one region to the next
- Discrepancy between regional objectives and MNC’s global objectives
Transformationalist and Regiocentric Approach
Advantages
- Culture fit within regions
- Lower costs to hire people from regional area
- Good communication across regions
- May be easier and more
profitable to have integrated
region
