IHRM: Chapter 5 Flashcards
Why are there so many expats in Dubai?
- good sense of knowledge, well-rounded
- Emirates don’t want to get into the construction field, they are comfortable where they are hence they hire expats to do their job
Ethnocentric Approach (ethnicity)
- staffing subsidiary from the headquarters of the parent company
- for example foreign embassies will have a Canadian staff
Advantages of the ethnocentric approach
- need to maintain good communication, coordination and control with HQ
- firms that are in the earlier stages of internationalization can avoid risks in the environment
Disadvantages of the ethnocentric approach
- opportunities are limited for HCNs which reduces productivity and increases turnover
- expatriate managers adapting to the host country will take time and PCNs make poor decisions
- income gap between PCNs and HCNs
- expatriates overseas will experience a high cost of living
Polycentric approach (locals)
staffing subsidiary with locals (host country nationals)
Advantages of the polycentric approach
- eliminates language barriers
- avoids issues with expatriate managers and their families
- removes expenses for cultural training programs
- less expensive even if premium is paid to hire high quality candidates
Disadvantages of the polycentric approach
- range of cultural differences such as personal values and attitudes
- limited opportunities to gain experience outside their own country making it difficult to earn senior positions
Regiocentric approach (region)
- staffing subsidiary from the region (Schengen)
- Europe is the continent
- EU is the arrangement of certain countries in Europe
- Schengen is a subset within Europe which includes 26 countries who have freedom of movement (passport stamped in Portugal means you won’t need it stamped again in countries like Spain, Germany, France)
- Eurozone is the currency adoption
Advantages of the regiocentric approach
- maintains interactions between managers transferred to regional HQ
- demonstrates common sense within the environment
Disadvantages of the regiocentric approach
- produces federalism in a region and constrains MNEs to develop a global perspective
- regional barriers so MNEs cannot advance to the next position
Geocentric approach (globally)
staffing the subsidiary with anyone around the world
Advantages of the geocentric approach
- enables MNEs to develop an international executive team to develop a global perspective
- overcomes the federation of the polycentric approach
- supports cooperation and resource sharing across units
Disadvantages of the geocentric approach
- utilizes immigration controls to have a higher number of citizens employed and if not applicable, they will need training
- MNEs need to offer extensive documentation if they wish to hire a foreign national, this can be time-consuming
- it can be expensive due to the relocation and training involved
Advantages of PCNs
- organizational control and coordination are maintained
- managers promise to give international experience and skills
- subsidiary complies with MNEs objectives
Disadvantages of PCNs
- promotional opportunities of HCNs are limited
- takes time to adapt
- compensation differs in PCNs and HCNs
Advantages of TCNs
- salary and benefit requirements are lower than PCNs
- more informed about the host country environment
Disadvantages of TCNs
- need to consider national oppositions (India/Pakistan)
- the host government may resent in hiring TCNs
- TCNs might not want to return home
Advantages of HCNs
- language and other barriers are eliminated
- no work permit is required
- lower costs
- continuity of management improves
Disadvantages of HCNs
- limited career opportunities
- control and coordination of HQ may be delayed
- hiring HCNs gives limitations to PCNs and foreign experience
- may encourage federation of nationals than global units
Determinants of staffing choices - context specificities
MNEs tend to staff culturally distant subsidiaries with PCNs which has a positive effect on labour productivity. For ex: education system directly related to staff availability
Firm specific variables
relevant variables are MNE structure and strategy, international experience, corporate governance and organizational culture
IHRM practices
selection, training and compensation
What are the roles of expats?
- maintain direct control over subsidiaries
- control subsidiary’s activities by sending expats
- instill corporate values in subsidiaries
- develop interpersonal connections
- gather information for HQ
- expats being able to speak the foreign language and have local knowledge
- sharing ideas with home and host country
Why do we need non-expats despite technology
- build relationships with others
- cultures cannot be interpreted online, you need the face to face interactions
- Edward Halls’ framework about implicit and explicit communication, understanding body language and building trust before conducting business
Challenges for non-expats
- home and family life
-work intensification - travel arrangements
- health concerns
- lack of cross cultural training
Why are there international assignments?
- filling in a managerial or technical gap due to a lack of skills in certain areas of the organization
- staff cannot move into other parts of the organization, additional training will be required
- organization development: control, transfer of knowledge, procedures and practices
Short term assignments
- several days to 3 months
- involves trouble shooting, supervision, oversight
Extended assignments
- up to one year, similar activities to short term assignments
Long term assignments
- 1-5 years, traditional expatrations
Commuter assignments
- expats who fly in and fly out of neighbouring countries
- done on a weekly or biweekly basis to solve problems regarding the assigned employee
Rotational assignments
- includes both job rotation and overseas assignment so that employees can pick up new skills and one day can become a regional manager
-commonly used in hardship locations like the mining industry
Contractual assignments
- expats on a contract for 6 months to a year
- conducting research and development
Virtual assignments (not real expats)
- using technology to do their work
- can cause issues in effective communication, how much work should be done and cultural misunderstandings
Self-initiated assignments
- an individual conducts work on their own and not tracked by management
What is the role of inpatriates
- responsible for sharing local knowledge to HQ and conduct corporate activities in the local market
- socialize and learn from specific routines and behaviours that can enable future management tasks
