Chapter 1Introduction:

The enduring context of IHRM

Chapter objectivesIn this introductory chapter, we establish the

scope of the textbook. We:

define key terms in international human resource management (IHRM)

outline the differences between domestic and international human resource management and the variables that moderate these differences

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Chapter objectives (cont.)

discuss trends and challenges in the global work environment and the enduring context in which IHRM functions and activities are conducted – including the way in which forces for change affect the operations of the internationalizing firm and have consequences for the management of people in the multinational context.

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Figure 1-1: Inter-relationships between approaches in the field

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Figure 2-1: A model of IHRM

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HR activities slide 1Human resource planningStaffing

RecruitmentSelectionPlacement

Training and development

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HR activities slide 2

Compensation (remuneration) and benefits

Industrial relations

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What is an expatriate? An employee who is working and temporarily

residing in a foreign country Some firms prefer to use the term

‘international assignees’ Expatriates are PCNs from the parent country

operations, TCNs transferred to either HQ or another subsidiary, and HCNs transferred into the parent country

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Figure 1-3: International assignments create expatriates

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Differences between domestic and international HRM

More HR activities The need for a broader perspective More involvement in employees’ personal

lives Changes in emphasis as the workforce mix

of expatriates and locals varies Risk exposure Broader external influences

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Figure 1-4: Variables that moderate differences between domestic and international HRM

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The ‘top ten’ multinationals1. Rio Tinto (UK/Australia)

2. Thomson Corporation (Canada)

3. ABB (Switzerland)

4. Nestlé (Switzerland)

5. British American Tobacco (UK)

6. Electrolux (Sweden)

7. Interbrew (Belgium)

8. Anglo American (UK)

9. AstraZeneca (UK)

10. Philips Electronics (The Netherlands)UNCTAD Index of Transnationality

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Figure 1-5: Factors influencing the global work environment

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Forces for change Global competition Growth in mergers, acquisitions and alliances Organization restructuring Advances in technology and

telecommunication

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Impacts on multinational management

Need for flexibility Local responsiveness Knowledge sharing Transfer of competence

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Managerial responses Developing a global mindset More weighting on informal control

mechanisms Fostering horizontal communication Using cross-border and virtual teams Using international assignments

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Chapter summaryThis chapter has established the scope of this book.

We have: Defined international HRM and the term ‘expatriate’. Discussed the differences between domestic and

international HRM – looking at six factors: more HR activities, the need for a broader perspective, more involvement in employees’ personal lives, changes in emphasis as the workforce mix of expatriates and locals varies, risk exposure and more external influences.

(cont.)

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Chapter summary (cont.) Examined what we have called the enduring context of IHRM.

The focus is on the current global work environment, looking at the forces for change that have prompted managerial responses that have implications for the way in which people are being managed in multinationals at the turn of the 21st century. However, we have made a brief comparison with the situation that confronted a 14th-century merchant as a way of drawing out some of the constants in international business.

This treatment has enabled us to provide an overview of the field of IHRM and establish how the general environment affects IHRM. The next chapter examines the organizational context where we explore how IHRM activities are determined by, and influence, various internal changes as the firm internationalizes.

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