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Literature Review

Research Topic: Human Resource Management Issues Faced By Contemporary International

Entrepreneurial Organizations

Research Field: Business Management

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Table of Contents
Research Topic............................................................................................................................................3
Introduction.................................................................................................................................................3
Definition of Human Resource Management..........................................................................................4
Definition and Concept of Entrepreneurship...........................................................................................4
Critical Review of Major Challenges Faced By Contemporary International Entrepreneur
Organizations...........................................................................................................................................6
Legal Challenges.................................................................................................................................6
Cultural Diversity................................................................................................................................8
Employees Motivation.......................................................................................................................10
Technology Advancement and Compatibility....................................................................................13
Economic Issues................................................................................................................................16
Conceptual Framework..........................................................................................................................18
Conclusion.................................................................................................................................................18
Reference...................................................................................................................................................20
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Introduction

The human resource management plays a vital role to the success or failure of international

entrepreneur organizations while recent human resource managers within modern international

entrepreneurial organizations are facing human resource management issues regarding legal

needs, cultural diversity, employees’ motivation, technology advancements as well as

compatibility and economic concerns that are negatively impacting overall performance and

productivity of modern entrepreneurial organizations (Banerjee et al., 2013; Blooma & Reenenb,

2009; McDougall & Oviatt, 2013).

The aim of literature review chapter is to analyze the concept of entrepreneurship and

critically evaluates major human resource management issues faced by recent international

entrepreneur organizations. The literature review will discuss and critically analyzes major legal,

economical, technological, as well as cultural and social concerns within international

entrepreneurial organizations as well as major human resource management concerns that are

impacting the performance and productivity of international entrepreneurial organizations.

Definition of Human Resource Management

Human resource management is the process of evaluating and managing organizational human

resources requirements to make sure satisfaction of its strategic objectives. The human resource

management activities involve employee recruitment and retention, exit interviews , motivation ,

assignment selection , human resource rules and regulation compliance , performance reviews ,

training , professional development , mediation and change management (Chandraa & Coviello,

2010; Blooma & Reenenb, 2009).

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Definition and Concept of Entrepreneurship

Entrepreneurship is the process of identifying innovative ways of combining resources when the

market value is produced by innovative combination of resources which is greater than market

value while these resources can be utilized in other areas of business in order to make profit

(McDougall & Oviatt, 2013). In economics, entrepreneurship is incorporated with land, labor,

natural resources and capital that can generate profit (Blooma & Reenenb, 2009). While, it is

observed that entrepreneurial spirit is comprised of innovation and risk taking behaviors which is

the crucial part of organizational capability to attain success in ever changing and growingly

competitive international marketplace (McDougall & Oviatt, 2013; Rialp et al., 2005).

Entrepreneurial process involves cognition , discovery , understanding of market

opportunities and incorporated knowledge where inputs turns out to be heterogeneous outcomes

in which specific significance is required to be given role of heuristic based logic for enabling

entrepreneurs to swiftly learn regarding implications of innovative changes for particular

discoveries (Lakhani & von Hippel, 2003). According to McDougall & Oviatt (2013),

entrepreneurs are those individuals who make use of market opportunities through technical and

organizational innovation (McDougall & Oviatt, 2013; McDougall & Oviatt, 2013). The

entrepreneurs are those individuals who innovate to create something which can be recognized

for value creation in the international market and capable to achieve perceived opportunities

(Rialp et al., 2005; Chandraa & Coviello, 2010). Hisrich (1990) described as entrepreneur who

is someone illustrating initiatives and creative thinking as well as capable to organize social and

economics mechanisms to transform resources and situations with practical consideration as well

as accepting risks and failure considerations including economic , political , legal , social ,
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cultural and natural international business environment (Chandraa & Coviello, 2010; Lavie,

2006).

Background Study of Entrepreneurship

The entrepreneurial trait theory aims to identify the differentiated attributes of the entrepreneur

where successful entrepreneur involves entrepreneur skills that are interlinked with

innovativeness, risk taking, commitment, self confidence, goal setting, decision making as well

as operational, managerial, organizational and financial skills (Chandraa & Coviello, 2010;

Lavie, 2006). It is identified that new entrepreneurial activities involve major part in the process

of creative implementation of organizational goals which assist to improve innovation,

employment and growth (McDougall & Oviatt, 2013; Rialp et al., 2005). In recent international

business organizations three major human resource management concerns include selection of

right people, providing competitive compensation packages and developing business for payroll

taxes (Kupp & Anderson, 2007; Lavie, 2006). It is also argued that in recent entrepreneurial

organizations, it is crucial to hire those human resources having broad range of skills and

experience who are interested to place their pride aside and perform different level of duties.

Critical Review of Major Challenges Faced By Contemporary International Entrepreneur

Organizations

Legal Challenges

Innovation gives international exploration of ideas and experience regarding development and

implementation of entrepreneurship (Lakhani & von Hippel, 2003; Kupp & Anderson, 2007).

Legal regulation has greatest influence on the effects of social network, business skills, behaviors
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and attitudes towards risks as well as working status. It is also argued that legal regulations and

policies also influence human resource attitudes towards risk taking activities (McDougall &

Oviatt, 2013; Blooma & Reenenb, 2009). Developing clear and particular behavioral standards in

the form of rules establishment create a framework for addressing legal violations of those

standards (McDougall, 2000; Rialp et al., 2005).

Apart from concerns regarding employees there are administrative issues that should be

addressed where employees are required to consider factors related to employer identification

number with the internal revenue service and registering for payroll taxes (McDougall & Oviatt,

2013). It is identified that legal issues are mainly faced by construction and factory development

industries while suitable measures concerning proper utilization of insurance coverage is

required to prove invaluable in the situation of a costly liability lawsuit (Rialp et al., 2005). It is

also identified that recent newly developed international organizations are suffering from lacking

of stability either political and economic downfalls including mismanagement of legal system,

trade policies, radical structural changes to incorporate with international markets (Blooma &

Reenenb, 2009).

In recent international business environment, several economists have initiated to

consider cultural aspects more seriously in evaluating economic outcomes and argued that

considering the significance of social capital in human resource management practices of new

organization in which trust greatly influence number of economic dimensions (Lakhani & von

Hippel, 2003). It is also identified that contracts in international organizations can be well

enforced which is required to enable decentralization to observing more delegation in countries

where rule and laws are strong while contracts are never perfectly enforceable which leaves a
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role for trust to assist organizations in generating more delegations (McDougall & Oviatt, 2013;

Chandraa & Coviello, 2010).

One of the most concrete responsibilities of human resource management is to make sure that

organization is fulfilling the legal needs in hiring, analysis and promotion. While, legal

regulations and policies in the form of disabilities act and age discrimination act assist to make

sure equal rights in most cases are provided to employees in terms of diverse age, race, ethnicity,

religion, gender and disability (Dana et al., 2009; Ibrahim & McGuire, 2001). It is observed that

legal regulations should be compatible with overall business requirement of international

entrepreneurial organizations to make fair hiring process on the basis of defined job standards

which is the key of screening candidates (Dana et al., 2009). It is observed that legal compliance

and monitoring of fair standards is turned out to be crucial responsibility of human resource

managers in international entrepreneurial organizations (Kupp & Anderson, 2007; Dubey, 2011).

Cultural Diversity

It is identified that entrepreneurial orientation is the organizational level construct which is

closely interlinked with strategic management and strategic decision making process (Chandraa

& Coviello, 2010). It is also observed from the findings of research study that three major

entrepreneurial orientation dimensions including innovativeness, risk taking and proactiveness

that are strongly communicative with cultural diversity to influence organizational performance

but it is also argued that the moderating influence of these dimensions are highly predictable to

these dimensions (Dubey, 2011).

While , development of cultural diversity involves racial and gender diversity may lead to

the development of in-groups and outgroups , stronger identification of members along with
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other members of their own race and gender in comparison to other management groups and

hence the potential for poor intergroup communication may increase conflict among employees

within modern entrepreneur organizations (Dana et al., 2009). It is also identified that

incorporation of innovative strategic postures and comparatively moderate levels of cultural

diversity lead to decreased level of organizational performance (Dana, 1995). Furthermore,

increasing pressures for cultural diversity are predictable to be considered as threats (Hayton,

2005; Ibrahim & McGuire, 2001). In recent entrepreneur organization, there is increasing

predictability of diverse culture in early 21st century which has emphasized on improving human

resource planning to incorporate focus on the fact that in what way, it is appropriate to leverage

advantages of diverse groups and reducing issues that are usually come up with such form of

cultural diversification (Ibrahim & McGuire, 2001).

It is also observed that modern level of cultural diversity may develop barriers towards

efficient social communication while growing level of cultural diversity may decrease these form

of cultural barriers (Schuler, 1986). As group members within international organization are

more diffused over categories of cultural diversity which helps to decrease in-group and out-

group identities (Chandraa & Coviello, 2010; Kupp & Anderson, 2007). It is identified that

cultural diversity in the management of modern entrepreneurial organizations may have a U-

shaped curvilinear association towards performance (Lakhani & von Hippel, 2003). It is also

identified that cultural diversity may sustain multiple perspectives and insights of cultural diverse

workforce in order to improve broad range of innovative decision alternatives, efficient decision

making and premium quality decisions of human resource managers in the international

entrepreneurial organizations (McDougall, 2000; Vandermerwe & Birley, 1997). Furthermore,

organizations focusing on the requirement of innovativeness within diverse management group

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which is required to be efficiently responding to take benefits of diverse backgrounds,

perceptions and global views which is highly incorporated with negative social identity and

categorization influences (McDougall & Oviatt, 2013).

It is also identified from the findings of research study that human resource management should

develop culture in which managers and employees are promoting diverse culture and setting

good example of motivating and guiding diverse workforce group to value cultural differences

and respecting others cultural backgrounds (Rialp et al., 2005). Human resource managers are

required to conduct orientations and informal meetings to permit employees in building rapport

with their coworkers having different cultural backgrounds (Dana et al., 2009). Human resource

managers permit employees to participate in local events that should encourage cultural diversity

and assisting international entrepreneurial organizations to achieve increasing credibility in the

organization (Chandraa & Coviello, 2010).

It is also argued that in recent entrepreneurial organizations , cultural diversity is the

business requirement whose major objective is cost reduction , decreased turnover , improved

profitability resulting from enhanced morale and team spirit and enhanced market value (Dubey,

2011; Kupp & Anderson, 2007). Furthermore, creativity is essential to produce a sense of

similarity among diverse cultural, functional and hierarchical groups which is essential when

differences and identification options are experienced through downsizing and diversity clashes

(McDougall, 2000; Lavie, 2006).

Employees Motivation

It is identified from the findings of research study that proper human resource management

demands costs which balances and generates positive influence of HRM on international
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organizations (Vandermerwe & Birley, 1997; Chandraa & Coviello, 2010). However, it is argued

that existing performance of employees can be reduced due to time and money spend on training

as company may face issues with proper management of human resources and suffers investment

loss when international organizations experience challenges related to employees retention

(Chandraa & Coviello, 2010; Hayton, 2005). It is also identified that within international

entrepreneur organizations restricted investment also negatively influence overall employee

motivation practices (Bowen, 2004). It is argued that employee retention has turned out to be

crucial human capital aim for several entrepreneurial organizations with the aim to grow and

capture market share (Schuler, 1986). Motivation is identified as crucial factor for leading

employees towards attaining organizational objectives besides improving organizational

commitment.

According to research study conducted by Chew (2005), organizational attachment and

employees motivations may have implications for whether employees are interested to remain

with the organization or not (Hayton, 2005). While, human resource management model is

regarded as those individuals that are being inspired by complex collection of interconnected

factors including recognition, interpersonal relation as well as desire and intention to perform

meaningful work hence motivation model is relevant to be employed in human resource

management practices for improving employee motivation and retention (Ibrahim & McGuire,

2001; Vandermerwe & Birley, 1997). It is also identified from the findings of research study that

issues in the form of financial assistance, shortage of infrastructure facilities, lacking of

technological facilities as well as lacking of awareness in the entrepreneurial organizations may

also negatively influence employee motivations to meet organizational objectives (Ibrahim &

McGuire, 2001). It is also observed that most famous way of employee’s willingness to bear
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uncertainty is considered as significant attitude towards risk taking (Chandraa & Coviello, 2010).

Employees require knowledge to analyze the level of uncertainty and for improving motivation

as crucial willing factor to bear uncertainty (Rialp et al., 2005).

However, in order to overcome such employees’ motivation issues different levels of pay,

training and motivation methods can lead towards changing levels of employee satisfaction

(Schuler, 1986). It is identified that motivating employees can be considered as significant

managerial challenge for employers and it demands good capability to efficiently motivate

employees to work harder everyday which facilitates enhanced employee performance and

valuable teamwork. According to Bolman and Deal (1997), when employee motivation and

individual commitment are required results then organizations may consider proper human

resource management as symbolic tool which is strongly integrated with the requirements of

employee, alignment of individual and organizational requirement as well as interpersonal and

group dynamics along with efficient use of human resource management approaches (Bowen,

2004).

The contribution of highly skilled and motivated employees is also restricted when jobs

are organized and arranged a way that employees to seemingly aware of the fact that they can

work better in comparison to anyone else do not provide opportunity to utilize their skills and

capabilities to designing and structuring innovative and efficient ways of performing their roles

and responsibilities (Hayton & Kelley, 2006; Schuler, 1986). Hence, human resource

management practices may also influence organizational performance by means of provisions

organizational management that motivate participation among employees and permits them to

enhance those human resource practices and initiatives that in what way their jobs should be

performed while cross functional teams, job rotation and quality group environments are also
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most significant examples of such form of structures (Vandermerwe & Birley, 1997). Managers

of international entrepreneurial organizations lacking with knowledge of applying successful

motivational programs as well as enhancing production and developing positive work

environment (Hayton, 2005; Blooma & Reenenb, 2009). Furthermore, it is also observed that

those international entrepreneurial organization who are incapable to set clear expectations for

employees and providing inconsistent feedbacks for developing workplace conditions may

experience employees motivational issues (Dana et al., 2009). It is identified that in the

organization employees become incapable to work towards identifiable objectives when human

resource managers are incapable to provide examples of proper performance or correcting

mistakes through the implementation of consistent job evaluation (Hayton, 2005).

It is also identified that lacking of organizational infrastructure to request for required

equipments and materials may worsen the employee motivation issue and further damaging it

(Hayton & Kelley, 2006). However, providing essential tools to complete job tasks and

demonstrating employees that management understand the nature of such task and ensuring to

complete them with required organizational objectives and standards (Hayton & Kelley, 2006).

Furthermore, lacking of reward system in the form of sales bonus and recognition can develop a

motivation issue in the workplace as employees believed that management is taking higher

worker productivity for granted (Schuler, 1986). However, when employees in international

entrepreneurial organizations believed that pay scales are below the industry average and not in

accordance with the level of work and performance then such issues may discourage employees

to decrease their motivational level and reduce productivity to compensate for the perceived

lacking in the competitive pay scale (Bowen, 2004; Blooma & Reenenb, 2009). It is also

observed that weak employee organizational relationships may also considered as phenomenon
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of employees turnover where individuals are predictable towards job hop to attain better

monetary rewards and career development opportunities (Banerjee et al., 2013). While,

conventional methods that depend heavily on competitive monetary rewards and usually have

restricted success in the employee staff retention and job motivation in the long run (KOCH &

McGRATH, 1996).

Technology Advancement and Compatibility

The advancement in the information and communication technologies have permanently

motivated employees within the workplace by modifying the way the information is developed,

stored, utilized and stored (Banerjee et al., 2013; Dubey, 2011). According to Johnson, Gatz and

Hicks (1997) entrepreneurial organizations try to evaluate technology transfer by means of

holistic perspective which comprised of both movement of technology from one location of

origin to the location of use and issues regarding ultimate acceptance and use of technology by

employees. It is identified that identifying employees’ requirements and the context where the

technology will be utilized is significant for the successful transfer of technology (Dubey, 2011).

It is also observed from the findings of research study conducted by Mahajan & Peterson

that dispersion of innovative technologies is comprised of four major aspects including

innovation, communication channels, time and social systems (Dubey, 2011). It is also argued

that issues of diffusion can also be evaluated on the basis of main elements in the diffusion.

Furthermore, according to the research study conducted by Rogers (2003) innovations in

entrepreneurial organizations are comprised of five major characteristics including rates of

adoption, technology compatibility, complexity, trialability and observability while organization

reducing complexity may improve the perceptions of innovation (Hayton & Kelley, 2006;

Chandraa & Coviello, 2010). While, modifying the change agents require to increase the rate of
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diffusion and making potential adopters to identify the requirement for technological changes in

the organization (Dana et al., 2009). The major challenges faced by most of international

entrepreneurial organization in the global economy is that in what way it is appropriate to

manage rapid and radical technological change in the organization (Chandraa & Coviello, 2010).

Since, technological innovations to a large level evaluate organizational competitiveness

in which technology of the organization is comprised of body of knowledge, skills, procedures

and physical infrastructure including tools and machines (Chandraa & Coviello, 2010; Hayton &

Kelley, 2006). Technology innovation influences rapid changing technology and has essential

requirement for the employment of skilled and knowledgeable employees for motivating them to

cope up with technological changes (Bowen, 2004). Employees’ resistance towards

technological change also causes major challenge to implement technological advancement

successfully which is incorporated with employees capability to generate quality goods and

services as well as creating wealth and enhancing employees and organizational performance and

well-being (Ibrahim & McGuire, 2001).

It is also a complex task of organization to monitor technological variations as well as

providing training and motivating employees to innovate different products and services using

latest technologies and making it compatible with organizational requirements (Chandraa &

Coviello, 2010; Blooma & Reenenb, 2009). Technological advancements in recent times are on

increased level in comparison to past century while for an organization to provide services with

relevant costs as well as efficient and compatible with organizational requirements it is essential

for international organizations to utilize modern technologies (Blooma & Reenenb, 2009). It is

also identified from the findings of research study that maintaining and running operations

within international organizations get worsened due to short lifespan of most technological
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innovation which negatively influence the organization through reinvest the current technology

in order to maintain its relevancy with organizational existing technological equipments

(Vandermerwe & Birley, 1997). Because of variations in internal and external environment,

rapid changes in the organization are required to be flexible with organizational existing tools

and technologies (Schuler, 1986).

Only enhanced technology can enable and maintain development costs of human

resource for providing proper training to them (Chandraa & Coviello, 2010; Hayton, 2005). The

resultant influence of these assumptions were lacking of innovation of human resource and

organizational incapability to survive under continuous changing and challenging environment

which is only the human resource capability to analyze , use and manage the technology

efficiently (Hayton, 2005). It is observed that technological innovation and employees are

considered as crucial element of organizational productivity while entrepreneurial organizations

are facing technological advancement issues because of lacking of investment opportunities and

resources (Ibrahim & McGuire, 2001).

Economic Issues

According to Satow & Wang (1994), the outcome of development of global economy is

the international dimension of human resource practices in order to become more and more

importance part for successful organizational business operations. The emphasis of human

resource practices has shifted from conventional approach including internal selection and

rewards to innovative concepts including globalization and international competition which

demanded extensive investments (Satow & Wang, 1994). Furthermore, recent challenges caused

by globalization pressure in the realm of global economics in order to review their personal

training and management practices where organizations are required to develop a customer
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oriented workforce for delivering service quality that are required to be fulfilled through training

which demanded extensive investment (Hayton & Kelley, 2006). However, due to global

financial crisis entrepreneurial organizations are facing difficulties to implement different

training programs as significant investment opportunities for future success (Dubey, 2011;

Chandraa & Coviello, 2010). Human resource management is considered as integration of

economic reform in which entrepreneurial organizations are required to attain understanding of

overall economics before applying outcomes of people management (Hayton, 2005).

It is observed that recent developing economies are more influenced by unemployment, low

productivity and social inequalities issues within recent entrepreneurial organization (Bowen,

2004; Dubey, 2011). Major economic concerns of international entrepreneurial organizations

after economic crisis is to decrease number of employees with the selection and retaining of only

those employees having different capabilities (Banerjee et al., 2013). Different economic

variations were happened that have modified employment and occupational patterns through

adapting advance human resource management practices as well as enhancing productivity and

reducing labor costs so as to be more competitive which demanded extensive level of financial

investment which is a major cause of concern for recent international entrepreneurial

organizations (Ibrahim & McGuire, 2001; Hayton & Kelley, 2006). Furthermore, extensive

requirement of advance information technology equipments that are associated with performing

human resource management activities require economic shift to utilize in most appropriate

human resource management practices (Bowen, 2004; Blooma & Reenenb, 2009). It is also

argued that occupational shifts projections of the growth and reduction in the jobs demonstrate

the economic and employment shift currently faced by recent international organization

(Banerjee et al., 2013; Dubey, 2011).

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It is also observed from the findings of research study conducted by Dana et al. (2009) , because

of fluctuating economy along with local and global improvements, several different variations

are occurring rapidly that are negatively influencing human resource practices of international

entrepreneur organizations (Dana et al., 2009; Banerjee et al., 2013). According to the survey of

global Human resource challenges, yesterday, today and tomorrow conducted by pricewater

housecoopers on the behalf of the world federation of personal management association that

numerous economic issues for human resource management in recent entrepreneurial

organization have been identified (Chandraa & Coviello, 2010). Because of recent economic

challenges, international organizations are required to consider the prospect of job stability,

health benefits and their employment initiatives within existing unstable economic circumstance

(Banerjee et al., 2013).

Conceptual Framework

Legal challenges

Technological advancement and compatibility issues

Impact Performance and productivity of international entrepreneurial org

Economic al issues

Cultural Diversity issues

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Conclusion

It is concluded from the findings of previous literature that limited numbers of researches have

been conducted to identify the influence of employee motivation on the performance of

international entrepreneurial organizations. Moreover, fewer researches have been conducted to

analyze the impact of legal challenges, cultural diversity, technology advancements and

compatibility and economic issues on human resource practices of international entrepreneurial

organizations. Therefore, this research study the influence of major human resource management

issues on overall performance and productivity of international entrepreneurial organizations to

reduce existing research gaps. This research study aims to analyze that what are significant

legal, economical, technological, cultural, and social concerns within international

entrepreneurial organizations that are negatively impacting overall presentation and efficiency of

international entrepreneurial organizations.

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