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IHRM in The Host-Country Context: Chapter Eight

The chapter discusses the challenges that multinational enterprises face in balancing the standardization and localization of their human resource management practices across different country contexts. It explores how the cultural norms and institutional environments of the home country, host country, and third countries influence HRM. The chapter also examines factors that drive both standardization and localization of HRM practices and how the subsidiary's role, firm characteristics, and ownership structure can impact the degree of standardization versus localization.

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Xahra Mir
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4K views21 pages

IHRM in The Host-Country Context: Chapter Eight

The chapter discusses the challenges that multinational enterprises face in balancing the standardization and localization of their human resource management practices across different country contexts. It explores how the cultural norms and institutional environments of the home country, host country, and third countries influence HRM. The chapter also examines factors that drive both standardization and localization of HRM practices and how the subsidiary's role, firm characteristics, and ownership structure can impact the degree of standardization versus localization.

Uploaded by

Xahra Mir
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Chapter Eight

IHRM In The Host-Country


Context

1
Standardization and Localization of
HRM Practices

 MANAGING PEOPLE
• the most culture-bound
resource in an international
context

• high level of complexity


because of the diverse
cultural environment
2
Standardization and Localization of
HRM Practices

The challenge of MNEs


is to create a system
that operates
effectively in multiple
countries by exploiting
local differences and
interdependencies and
at the same time
sustaining global
consistency.
3
The Global Mindset and
Local Responsiveness
• The aim of localization
– Respect for local culture and traditions
– Adaptation to local institutional
requirements such as legislations and
government policies
– Educational system and HR practices
– Workplace practices and employee
expectations

• The aim of global standardization


– Consistency
– Transparency
– Ease of administration
– Efficiency and effectiveness
– Sense of equity 4
Balancing the Standardization and
Localization of MNE HRM

5
Three Cultures Interact to Influence
Standardization and Adaptation

6
Institutional Effects On MNEs

7
Country-of-Origin Effect

• MNEs are shaped by


institutions existing
in their country of
origin, and attempt
to introduce these
parent-country-based
HRM practices in
their foreign
subsidiaries
8
Host-Country Effect

• extent to which HRM practices in subsidiaries are


impacted by the host country context

9
Home-Country Effect

• extent to which MNEs try to transfer HRM activities


shaped by their home-country environment to foreign
locations.

10
Reverse Diffusion

• transfer of practices from foreign locations to the


headquarters

11
Factors Driving
Localization

12
Factors Driving
Standardization

13
Host-country Culture

• Work behavior is culturally determined, contained in role


definition and expectations.
• Whether corporate culture would supersede or other
‘cultures’ is a subject of much debate.
• Often, what is meant by corporate culture translates into
common practices rather than common values.

14
Mode of Operation

• Ownership and control are important


factors:
– Acquisition may constrain ability to transfer
technical knowledge, management know-
how, systems, and HR practices
– Wholly owned subsidiaries provide greater
opportunities for transferring work practices
than in IJV
– Management contracts provide skills,
expertise and training to HCNs, without
carrying equity or risks associated with FDI,
and may have HC government support.
15
Impact of the Cultural & Institutional
Context on HRM Practices

16
Impact of the Cultural & Institutional
Context on HRM Practices

17
Firm size, maturity and
international experience
• The size of the firm, maturity, and international experience
are important firm level factors.
• Motorola in China is a case in point:
– Large size
– Wealth of international experience
– A wholly owned operation in Tianjin, China, 1992
– Centralized IHR programs
– Management could draw on these aspects when entering China

18
Subsidiary Roles

Global  Innovators
• provide significant knowledge  for 
other units (the IHRM policies and
practices are transferred to the MNE
affiliates)

Integrated Players
• create and receive knowledge (the
IHRM practices and policies of the
MNE and subsidiary are similar,
characterized by global
standardization and localization)
19
Subsidiary Roles

Implementers
• rely on knowledge from the parent or peer
subsidiaries and create a relatively small
amount of knowledge themselves (IHRM
policies and practices are mainly made in
the parent company and implemented at
the local level)

Local Innovators
• engage in the creation of relevant
country/region-specific knowledge and
have complete local responsibility ( the HRM
policies and practices are localized) 20
HRM Roles With Global Code of
Conduct

21

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