A Firm’s Global Presence and the Implication of International Business and IHRM
International human resource management is a concept that is continually gaining popularity among business strategists who use it to recommend better organizational performance and establishment. This concept according to Shaffer, Kraimer, Chen & Bolino (2012) refers to the human resource performance strategies that are encouraged in organizations with the view of establishing international relations that are intended to realize greater profitability (Shaffer, Kraimer, Chen & Bolino, 2012).
Management is a broad topic that requires a lot of strategizing and conceptualization to ensure that all the important elements of business management are understood and articulated well in the organization to ensure profitability and business sustenance. This is particularly important for businesses that operate in the global market spanning their operational activities all over the world cutting across different cultures and business environments requiring better strategizing and assimilation into those cultures for better performance and relevance in the respective markets (Wageman, 2000).
To better discuss these concepts, it is important to discuss and analyze specific attributes of this concept and see how they apply in the real world experiences. It is the contention of the research question that global presence of a firm provides it with valuable opportunities to adapt to the local market, exploit global economies of scale, exploit economies of global scope, tap into the best locations for activities and resources, and maximize knowledge and experience transfer between locations.
In addition to this, multinational enterprises (MNEs) would therefore need to coordinate and balance the approaches of centralized integration and local adaptation in order to optimize these opportunities. This paper discusses these presuppositions and surmises in view of establishing their applicability in the global market and how effective their operation can be well understood.
In their article, Shaffer, Kraimer, Chen & Bolino (2012) review many forms of global work experience three of which are Corporate and Self-initiated expatriates, short-term assignees and international business travelers. These forms of global work experience according to the authors continue to gain international popularity where skills and expertise is mined from one part of the world to the other by organizations keen on ensuring profitability and maintaining a favourable comparative advantage over their competitors (Shaffer, Kraimer, Chen & Bolino, 2012).
Corporate and self-initiated expatriates refer to personnel that leave their countries of origin to export their expertise and skills elsewhere and this expatriation may be determined by organizations of interest (for corporate expatriates) or individually (for self-initiated expatriates). This form of global work experience according to Tyler & Wilkinson (2007) critically influences career as these expatriates usually have to undergo specific training in preparation for working in their destined workplaces. Short-time assignees refer to persons that work in a different organization (or country) for a short time after which they return to their places of origin or move elsewhere.
These personnel usually work on vocational basis and their career is characterized with constant movement from one workplace to another which limits their flexibility options especially as regards work retention and work permanence (Gully, Devine & Whitney, 1995). International business travelers on the other hand, refer to personnel that are constantly traveling to different destinations to represent their organizations and create work opportunities for them. Owing to the nature of this global work experience, someone that chooses it has to be interested in travelling and be able to work under tight schedules and pressure (Shaffer, Kraimer, Chen & Bolino, 2012). These elements of this experience are bound to be centrally important in its choice as a career preference for someone.
There are equally many challenges that face these global work experiences especially for practitioners when it comes to their performance. The continued movement and travelling for those that are involved in say short-time assignees and international business travelers is usually tiresome and time consuming. The continued repetitive change of venue and conditions of work further complicates things for these international personnel further straining their capacity to operate at their optimum to ensure maximum profitability. Whereas international business travelers and short-term assignees are in constant transit, corporate and self-initiated expatriates whose work has greater elements of permanence than the former do not move as often from one workplace to another. This means that inasmuch as these global work experiences influence career choices corporately, the extent of this influence varies depending on the nature of the experience and the specific work descriptions that define each specific experience.
International Human Resource Management (IHRM) as suggested in the introductory remarks of this paper is a concept that was preceded with the advent of globalization which encouraged organizations, whether big or small, to want to expand their operational spectrum to the international scale (Taneja, Pryor, Humpheries & Toombs, 2011). This inadvertently increases the workforce requirements of such organizations which comes with the need to diversify its management strategy and need for workforce strategies that are sensitive to cultural and regional dynamics which are business needs the led to the formulation and development of the concept of IHRM (Taneja, Pryor & Toombs, 2011).
Globalization of business operations transcends all forms of businesses such that even organizations that do not consider themselves global by the virtue of not transacting across geographical boundaries are usually connected to globalized community in one way or another. They are usually in one way or another usually dependent on other organizations operating globally creating a wide international network of interdependent organizations in different areas and functions (Stein, 1976). Such global operations for business firms present them with unique opportunities for expansion and sustainability from which success and profitability emanates.
According to Shiozawa (2007), the main function of IHRM is to ensure that firms carry a local appeal in their host country (region) while at the same time maintaining a global feel which means that MNEs usually operate in such a way that they carry a local relevance tag while at the same time remaining with a domestic touch in their operations (Chipman, 2000; Hitt & Hoskisson, 2009). In this regard therefore, IHRM can be identified to have a number of primary functions that enable these MNEs to carry out their operations and businesses in the competitive global market. These objectives have been well captured by Samuelson’s (2001) summaries as presented in the following three points of interest (Samuelson, 2001, pp. 1205 1206):
Enable the MNEs create a local appeal without necessarily compromising their global identity
Enable the MNEs to generate awareness of cross cultural sensitivities among its global managers while at the same time hiring staff from different geographical boundaries
Enable the MNEs to train their personnel upon cultures and sensitivities of the host region of country in which they operate
To ensure that these objectives are met, IHRM ensures that traditional human resource management policies are strategically formulated to operate in tandem with the organization’s strategies, structure and controls (Sahdev, 2003). As regards structures and control in the global sense, the following concepts are important in ensuring that such an MNE maintains its global presence, dominance, and relevant in its niche market especially when they are well articulated to reflect the ideals of the firm and core values:
Decision Making MNEs operate with complex decision-making structures informed by an elaborate degree of centralization of operation which as just as much centralized as are international strategies and core competencies (Pettigrew & Tropp, 2006).
Coordination MNEs require a high profile coordination approach especially in managing cross cultural sensitivities and the sensitive need for cultural control. This is important since global presence cuts the operations of firms in different cultures and environments which have to be well understood and assimilated in a way that presents the firms in good light within these communities (Mroczkowski & Hanaoka, 1997).
Integrating Mechanisms MNEs require astute and deliberate integrating mechanism to forge the operational activities of the firms with their environment and peculiarities within their niche market. Usually, these mechanisms operate simultaneously which then makes them very vital and needing a lot of logistical organization and preparation (McKenzie, 2011).
From the preceding discussion, it is clear that international operations for businesses present them with unique opportunities to aid their operations and businesses. They are able to exploit local markets as well as international markets and exploit global economies and markets to determine the most profitable and business-friendly markets that would favour their operations (Levitt, 2010). This understanding presents such firms with unique opportunities to ultimately determine the important areas that need to be strategized on to give them comparative advantage in regard to their competitors within their niche market of operation (Leontief, 1999).
One of the areas where the concept of centralized integration and local adaptation comes into critical play for MNEs is in employment and recruitment. By the virtue that MNEs operate in different global scales cutting across different cultures and business environments some of which may be as differentiated as they are isolated and culturally driven, there has to be a balance in the coordination and organization that has to be reached by the MNEs to ensure success of their endeavours (Jones, 2000). In this regard, it is the contention of Isenberg (1986) that IHRM be applied especially as regards the formulations that it recommends for staffing policy and recruitment strategic approaches (Hoskisson, Duane & Hitt, 2008).
The challenge that these MNEs face when it comes to hiring personnel is the difficult of obtaining people with the exact skills required for the firm and ones that would carry forth the vision and implement the mission of the firm in their operation. In other words, the challenge here is usually defined by the difficult of developing tools that promote a corporate culture that is similar in all other areas where the MNE operates while at the same time being sensitive to local technicalities and cultural sensitivities as required by the business environment where the firm operates (Hornsey & Hogg, 2000).
In addition to this, challenge is also presented in deciding whether it is appropriate to settle for top management personnel from the host country or to prefer expatriates from other places which is further complicated by the pressure of whether to prefer a uniform hiring policy globally or to have one that is responsive to local peculiarities and personnel requirements in the context of the place of operation (Hitt & Hoskisson, 2009).
In light of these challenges, IHRM offers great insights that can be used to ease the burden for MNEs management as regards staffing policy which may be used within the organization. According to Hill & Garth (2009), staffing policies for these MNEs may be informed by the approaches enshrined in local proclivities while having regional and international appeal as suggested below (Fujimoto & Shiozawa, 2012, pp. 199 200):
Ethnocentric MNEs may prefer to have their staffing policies informed by this approach which suggests that key management policies be filled by personnel from the parent country of the MNE to ensure singularity of ideological leadership approach (Gully, Devine & Whitney, 1995).
Polycentric MNEs may prefer to have their staffing policies informed by this approach which suggests that the host country nationals are preferred to mange the subsidiaries of the MNEs and the headquarter positions are held by personnel from the parent country from where the MNE operates (Dion, 2000).
Geocentric MNEs may prefer to have their staffing policies informed by this approach which suggests that positions are accorded to individuals with the best skills and high competencies regardless of their countries of origin and nationalities (Deaux, Reid, Mizrahi & Ethier, 1995).
According to Cohen (1998), Geocentric staffing policy is the most attractive in many IHRM strategic models employed by different MNEs around the world where the human resources are deployed productively to help build a strong culture and informal management network (Chipman, 2000). The only challenge that faces this staffing policy is the fact that hiring of such staff is more often than not usually expensive and national immigration policies may also limit full implementation of the policy to a varying degree depending on the country of operation (Bruce & Nylan, 2011).
After recruitment policies, strategic planning also forms a central attribute of any business operation as it clearly defines the objectives and assesses with great detail both the internal and the external situations of a company. This according to Chipman (2000) is important for the company’s formulation of the strategy, implementation of the strategy as well as evaluation of the progress and adjustments made where necessary (Cohen, 1998). The exact process of strategic planning includes explanation and re-assessing the missions and objectives of the company, strategy formulation, Environmental scanning, evaluation, strategy implementation, and control all of which are important for global operation of businesses and companies (Deaux, Reid, Mizrahi & Ethier, 1995).
There are different attributes of human resource management and international business conduct that determines the success of MNEs in the marketplace. These attributes according to Dion (2000) are quite instrumental in establishing a basis of understanding and strategic formulation determining the success of the firms’ operation in the marketplace. First of all, there has to be a clearly outlined mission and vision statement that defines and charts the way that the business has to follow in its endeavours. Mission statement describes the company’s vision, goals and purpose of the firm which has to encompass complex attributes of the corporate culture of the firm as well as the cultural sensitivities of the environment in which it operates (Fujimoto & Shiozawa, (2012). This helps to come up financial objectives like the sales target and earnings growth and also helps in guiding the management and its workforce in making critical decisions that affect the direction of the company (Gully, Devine & Whitney, 1995).
Secondly, environmental scanning involves internal analysis of the firm in which the firm’s strengths and weaknesses are established. The external macro-environment reveals opportunities for market present and also the threats likely to be encountered in the market (Hill & Garth, 2009). In the formulation of the strategy, it is required that the firm matches its strength to the opportunities that are identified during environmental scanning. It should also come up with ways of addressing its weaknesses and external threats. A company should seek to have competitive advantage over other companies in the market which can be based on cost or differentiation (Hitt & Hoskisson, 2009).
Thirdly, strategy implementation involves the actual execution of the strategy which can be in the form of budgets, programs and procedures. The implementation process involves the organization of the firm’s resources and motivation of the staff to achieve the objectives formulated (Hornsey & Hogg, 2000). It is imperative to ensure that implementation of the strategy of a program is monitored carefully so that adjustments can be made to it as need may arise. In the evaluation and control process, we define the parameters to be measured and their target values defined. Measurements are also carried out and compared to the pre-defined standards and necessary changes made (Hoskisson, Duane & Hitt, 2008).
In conclusion therefore, the preceding discussion has clearly indicated that indeed a firm’s global presence provides it with valuable opportunities to adapt to the local market differences, exploit global economies of scale, exploit economies of global scope, tap into the best locations for activities and resources, and maximize knowledge and experience transfer between locations (Isenberg, 1986). The discussion has also made reference to different challenges that MNEs face in their business endeavours operating a global scale especially as regards cultural and ethnic sensitivities which require astute structures and controls to ensure business success (Jones, 2000).
In this view it has been presented that it is imperative that these firms balance their strategic approach to business to ensure centralized integration and local adaptation of their firms in their niche markets (Leontief, 1999). The authentic management concept that enables managements of these MNEs is IHRM which is a management concept specializing in international business operations and global business management. Its insights have been shown to provide helpful strategies and formulations that sustain business development and operations in the global market while still having a local appeal within their regional and cultural environments where they are stationed. This in totality ensures success of business endeavours and profitability for its shareholders while at the same time ensuring comfort and convenience for MNEs’ workforce (Levitt, 2010).
References
Bruce, K. & Nylan, C. (2011). Elton Mayo and the Deification of Human Relations. Organization Studies, 32(3): 383-405.
Chipman, J. S. (2000). A Survey of the Theory of International Trade: Part 1, The Classical Theory. Econometrica, 33 (3): 477519.
Cohen, D. (1998). Culture, Social Organization, and Patterns of Violence. Journal of Personality and Social Psychology, 75 (2): 408419.
Deaux, K., Reid, A., Mizrahi, K. & Ethier, K. A. (1995). Parameters of Social Identity. Journal of Personality and Social Psychology, 68 (2): 280.
Dion, K. L. (2000). Group Cohesion: From “Field of Forces” to Multidimensional Construct. Group Dynamics: Theory, Research, and Practice, 4: 72.
Fujimoto, T. & Shiozawa, Y. (2012). Inter and Intra Company Competition in the Age of Global Competition: A Micro and Macro Interpretation of Ricardian Trade Theory, Evolutionary and Institutional Economics Review, 8(2): 193-231.
Gully, S. M., Devine, D. J. & Whitney, D. J. (1995). A Meta-Analysis of Cohesion and Performance: Effects of Level of Analysis and Task Interdependence. Small Group Research, 26 (4): 497 501.
Hill, C. & Garth, J. (2009). Strategic Management Theory. Public Administrative Review, 2 (3): 23 78.
Hitt, M. A. & Hoskisson, R. E. (2009). Strategic Management Competitiveness and Globalization Concept. Harvard Graduate School of Business Review, 2 (5): 298 310.
Hornsey, M. J. & Hogg, M. A. (2000). Subgroup Relations: A Comparison of Mutual Intergroup Differentiation and Common In-Group Identity Models of Prejudice Reduction. Personality and Social Psychology Bulletin, 26 (2): 242 247.
Hoskisson, E., Duane, I. & Hitt, A. (2008). Understanding Business Strategy. Harvard Graduate School of Business Review, 3 (4): 58 90.
Isenberg, D. (1986). Strategic Opportunism: Managing Under Uncertainty, Harvard Graduate School of Business Review, 3 (4): 186-210.
Jones, R.W. (2000). Comparative Advantage and the Theory of Tariffs. The Review of Economic Studies, 28 (3): 161175.
Leontief, W. W. (1999). Domestic Production and Foreign Trade: The American Capital Position Re-examined. Proceedings American Philosophical Society, 97: 332349.
Levitt, T. (2010). The Globalization of Markets. Harvard Business Review, 61: 92-10.
McKenzie, L.W. (2011). Specialization and Efficiency in World Production. The Review of Economic Studies, 21 (3): 165180.
Mroczkowski, T. & Hanaoka, M. (1997). Effective Downsizing Strategies in Japan and America: Is There a Convergence of Employment Practices? Academy of Management Review, 22 (1): 226256.
Pettigrew, T. F. & Tropp, L. R. (2006). A Meta-Analytic Test of Intergroup Contact Theory. Journal of Personality and Social Psychology, 90 (5): 751783.
Sahdev, K. (2003). Survivors’ Reactions to Downsizing. The Importance Human Resource Management Journal, 13 (4): 5674.
Samuelson, P. (2001). A Ricardo-Sraffa Paradigm Comparing the Gains from Trade in Inputs and Finished Goods. Journal of Economic Literature, 39 (4): 12041214.
Shaffer, M. A., Kraimer, M.L., Chen, Y.P. & Bolino, M.C. (2012). Choices, Challenges, and Career Consequences of Global Work Experiences: A Review and Future Agenda. Journal of Management, 38(4): 1282-1327.
Shiozawa, Y. (2007). A New Construction of Ricardian Trade TheoryA Many-country, Many- Commodity Case with Intermediate Goods and Choice of Production Techniques. Evolutionary and Institutional Economics Review, 3 (2): 141187.
Stein, A. A. (1976). Conflict and Cohesion: A Review of the Literature. Journal of Conflict Resolution, 20: 143.
Taneja, S., Pryor, M.G. & Toombs, L.A. (2011). Frederick W. Taylor’s Scientific Management Principles: Relevance and Validity. Journal of Applied Management and Entrepreneurship, 16(3): 60-78.
Taneja, S., Pryor, M.G., Humpheries, J.H. & Toombs, L.A. (2011). Where Are the New Organization Theories? Evolution, Development and Theoretical Debate. International Journal of Management, 28(3): 959-978.
Tyler, M. & Wilkinson, A. (2007). The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.
Wageman, R. (2000). Interdependence and Group Effectiveness. Administrative Science Quarterly, 40 (1): 145180.
A FIRM’S GLOBAL PRESENCE AND THE IMPLICATION OF IHRM 3
