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Cross-Border Alliances Cross-border alliances are cooperative agreements between two or more firms from different national backgrounds, which are intended to benefit all partners. Non-equity cross-border alliance - investment vehicle in which profits and other responsibilities are assigned to each party o Ex: international tech alliances, R&D alliances Equity modes - foreign direct investors purchase of shares of an enterprise in a country other than its own o Involve long-term collaborative strategies, supported by HR practices. Equity as well as non-equity cross-border alliances post specific challenges to international human resources management Schular & Tarique states, HR issues critical to success of equity-based international or cross-border alliances arise in nonequity cross-border alliances, but less central to success of alliance. There is a research deficit with respect to HRM in non-equity cross border alliances

Cross-Border Mergers & Acquisitions A merger is the result of an agreement between two companies he joined operations together o Partners are equal And acquisition is one company buys another company intending to control the activities of the combined operations Cross-border mergers and acquisitions means that firms of headquarters located in two different countries are concerned

The United Nations conference on trade and development UNCTAD defines cross-border M&A as follows o Merging or take over of enterprise in one country by TNCs from another country Cross-border M&As have grown over the last two decades because of globalization o 2005 - $716 Billion (88%) and 6,134 (20%) o From a Canadian perspective between 1997 in 2002 Canadian firms acquire 447 foreign companies were $124 billion while foreign companies acquired 345 Canadian companies with 144 billion o In two dozen were cross-border mergers and acquisitions were worth $27,014 million while at the same time Canadian company spent $2,505 million an hour mergers and acquisitions For M&A it is hard to buy new practices sometimes lower level will earn more when buy new company Question such as whose infrastructure, pay, fire, timing, policies, and locations. One major reason to engage in mergers acquisitions is often to facilitate a rapid entry into new markets Mergers and acquisitions at a predominant feature of the international business system as companys attempt to strengthen their market positions and exploit new market opportunities Factors that affirm makes into consideration when deciding on its like country include the growth aspiration of the acquiring company, risk diversification, technological advantages, a response to government policies in a particular country, Exchange rate advantages, favorable political and economic conditions, or an effort to follow clients. It seems to be a gap between the expected added value and the benefits realize from M&A o Different phases have an impact on its performance, in intern on the added value created.

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The quality of employee relations, ranging from employees supported in play resistance, it's influenced by variables such a similarity between the management styles of the two organizations, the type of cross-border combinations, the combination potential in terms of efficiency gains, or the extent of organizational integration. There is evidence that employee resistance in dangers M&A performance, estimate hinders energy realization Birkinshaw states, The integration of tasks between two companies is interdependent with human integration. o Conclusion: human integration process is especially difficult to manage it takes time complexity of the length of the integration process increase even more indicates a cross-border alliances. o One reason for this is that both the firms undergoing acquisition processes are embedded with their international, institutional, and cultural settings. Task in human integration interacting different basis to foster value creation in acquisitions: 1. Task integration led to a satisfying solution that limited interaction between acquired inquiring units well him integration proceeded smoothly and let the cultural convergence and mutual respect. 2. There was renewed task integration built on the success of human integration that has been achieved, which led to the much greater interdependencies between acquired in acquiring units.

< Impact of Human and Task Integration on Acquisition Outcome>

Typical problems arising cross-border M&As involve the following: o Within the first year, it is not uncommon for a company top management level to lose up to 20% of its executives. Over a longer time frame, this percentage tends to increase even further. o Personnel issues are often neglected. o A high number of M&As fail or do not forget the intended results. Low integration (e.g., if the M&A is carried out mainly for portfolio reasons), both companies remain separate cultures. High Integration, crucial for M&A to meet HR requirements of different phases

M&A Phases and HR Implications Steps: o The pre-M&A phase including the screening of alternative partners based on analysis of the strengths and weaknesses. o A due diligence phase that focuses on more in depth of analyzing the potential benefits for the merger. Here, product market combinations, tax regulations, and also compatibility with respect to each are in cultural issues are of interest. o Integration planning phase, which is based on the results of the due diligence phase, planning for new company is carried out. o Implementation phase, plans that are put into action. The strongest involvement of the HR department took place in the last two phases of the M&A process. Pre M&A Phase Due Diligence Phase Integration Planning Phase Implementation and Assessment Phase Estimating people-related: Identification of people Developing employee Managing ongoing change, related issues Transactional costs culture sensitive especially cultural change communication strategies Energy employee Planning for due diligence Ongoing costs communications Designing T talent Assisting people Savings retention programs Advising management on Working out the Identifying and Planning and leading dealing with people issues organizational/cultural fit assessing cultural integration efforts issues Aligning HR policies, Forming M&A steering Developing a new strategy especially total rewards team for the new entity Monitoring the process of Educating the team on the Helping organization cope organizational and people HR implications with change related integration activities Defining organizational Ensuring the capture of blueprint and staffing plan synergies via incentives Initiating learning processes of future M&As Strategic HRM and the Role of the HR function in M&As

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Aguilera & Dencker argue firms should match their M&A strategy with the HR strategy while relying on 3 tools: o Research is certified in tangible assets of just money and people, and intangible assets, such as Branson relationships. o Process is referred to activities that firms used to convert the resources into valuable goods and services. o User in a way in which in please think about what they do and why do you do it. That way shape in place priorities indecision making. Challenging tasks: the HR manager must develop a set of integrated HR activities are not only one with the business strategy but with the M&A strategy as well. o Roles such as a strategic partner, and administrative expert, employee champion, or change agent.

Role of Expatriates in M&As Study made by Hebert et al., prior experience not have an impact on the performance of a acquired firm. o Germany: integration is dependent on managers industry experience, experience with similar projects, and particularly in the case across border alliances, level of intercultural competence. o Implications for staffing of the post merger integration team: suggest that acquiring companies should not completely rely on a placement expatriates within the top management scene of a quiet subsidiary. Suggest mix of expats & top management Villinger states, local language skills as well as sensitivity toward cultural differences are crucial for an apron success is especially important to note that my company from developing countries represent the acquired firm in the M&A process. o Western MNEs in Hungary, the Czech Republic, Slovakia, in Poland on acquisition post managerial learning. Comparative Approach to HRM in M&A Processes Sparrow and Budhwar develop a nine-factor empirical Framework to compare the national HRM patterns across to these countries o First five factors: Structural empowerment Accelerated Resource Development Employee Welfare Emphasis Efficiency Orientation Long Termism Child et al., highlight different policy characteristics in different countries (US, JP, DE, FR, UK) o Performance related pay is more popular in US and Japan or Germany. o Recruitment in United States tends to be rather short-term, I think I did Germany, France, in the United Kingdom. While in Japan a lifetime orientation is less than before, there is still a longer-term focus and any other countries. o Training career planning is most extensive in United States. Company called Charlie institutional differences and resulting impact on HR still seem to be important. This seems to also hold true when M&A processes are concerned and especially in the post integration phase. Child et al., results: o Convergence across nationalities and HRM policies was evident in post acquisition news toilet before I related pay, training, and team-based product development. o Most acquirers also made adjustments to suit the local culture. o American HRM reflected a short-term, individualistic national business culture. o Japanese HRM, although adopting some American methods, gently reflect the long-term, consensual, team base, collectivist national philosophies. o French companies have also been informed by international HRM best practice but still tend to display an ethnocentric approach that gives precedence to managers of French origin. o German companies were the most anxious to do until international practices and acquisitions, even when these conflicted with the national tendencies. International Equity Joint Ventures International joint venture legal entity representing holdings of parent firms okay outside the country of operation. o The second type of equity-based cross-border alliance o It will continue to represent a major means of global expansion of four MNEs o Can have to a more parent companies the equity division between the parent company of the joint venture may differ in some cases, the ratios 50:50; and others, the dominance of one partner becomes obvious, but the ratio of 51:49 or through various other combinations. o In contrast to M&As, the parent companies and IJV the chapter legal identity, and an additional legal entity representing the IJV is established. IJV Challenges:

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HR must manage relationships at the interfaces between the IJV and the parent companies. The different partners that make up the IJV may possibly fall different sets of rules, and escalates a crucial dualities within the HR function. o HR department must develop appropriate HRM practices and strategies for the IJV entity itself. HR has to recruit, develop, motivate, and retain human resources at the IJV level. These two challenges have to be taken into consideration during the different phases of establishing and managing the joint venture. < Formation of an International Equity Joint Venture> o

The main reasons for engaging in an IJV are to: o Gained knowledge and transfer that knowledge o Comply with the requirements of the host government o Facilitate increase economies of scale o Game local knowledge o Obtain vital role materials o Spread the risks o Improve competitive advantage in the face of increasing global competition o Provide a cost-effective and efficient response for forced by globalization of markets IJV provide an excellent opportunity to learn from another company in two ways: o Each company has a chance to learn the other partner skills. Ex. Gaining know-how and process knowledge I specific functional areas (R&D) o Companies acquired a working experience in cooperating with other firms. There is evidence that many IJV bail or do not produce the expected results. Major reasons for failures can be traced back to the lack of interest in the HRM and cross-cultural management aspects of international joint ventures. HR Implications The more important learning is, the greater the role for HRM Knowledge needs to be managed Systematic partner selection is essential Be thorough for compatibility Insure extensive communications and use skilled negotiators Develop integrative strategies for learning Concerns on multiple sets of stakeholders need to be considered for long-term viability and acceptance The structural impact on the learning in knowledge management processes Recruiting, selecting and mentioning seniors that are critical Need to design policies and practices of localglobal considerations Developing HR practices and policies Stephanie managing the employees Partners me learning capacity HR systems need to be established to support knowledge flow to the parent

IJV Development Stages and HRM Implications IJV Development Stages Stage 1: Formation Identifying reasons Planning for utilization Selecting dedicated manager Finding potential partners Selecting likely partners Resolving critical issues Negotiating the arrangement Stage 2: Development Locating the IJV Establishing the right structure Getting the right senior managers

Stage 3: Implementation Establishing the vision, mission, values, strategy, and structure The people sharing this and learning from each other will provide direction to the IJV Stage 4: Advancement and beyond Learning from the partner Transferring new knowledge to the parents Transferring new knowledge to other locations

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The different stages of development are not independent from each other. Activities in the first agent impact on the activities in the second stage and so on. Furthermore, complexity can increase depending on number of parent companies and countries involving a joint venture. Compatibility between IJV partners is most important when it comes to mutual learning opportunities between the parent company and joint venture. Strategic approach requires not only a strong compatibility of the various HR activities and practices, but also strong compatibility with the IJV strategy. HR managers challenges of IJV: o In a partnership ball, HR manager should take all the stakeholders needs into account and demonstrate a thorough understanding of the business in the market. o Of the change facilitator and strategy implementer, HR managers should be able to conceptualize implement new strategies involving trust-based communication and cooperation with relevant partners. This also requires a creation of a stable learning environment. o As an innovator, the HR manager should be able to identify talent for executing IJV strategies and adapting to changes in the IJV stages. o As a collaborator, the HR manager strings should live in creating win-win situations characterized by sharing rather than competing between the different entities engaged in a joint venture.

The Importance of Cross-Cultural Management in IJV National, institutional, and cultural environments of the firm do indeed matter Example illustrates how cultural differences involved matter in collaboration, decision making, and loyalty in the Chinese German joint venture: the Beijing Lufthansa Centre Co. Limited. o Exaggerated identification with the parent firm can affect communication decision-making processes in the multicultural team and lead to lower commitment and, consequently, two calls and decision-making and unsatisfactory results. Top Management Team and the Role of Expatriates in IJVs Kabst states, she calls these IJV positions "functional gatekeepers" they try to protect their firms assets and specific functional areas suggest R&D, production, and marketing. The critical challenge is that they need to balance various management styles and strategic objectives of the different parent firm. Identification with both IJV in the parent firm can lead to significant role conflict and divided loyalty for IJV managers: top management teams members serving as control agents for the parent company often faced a crisis of loyal ty, commitment and organizational identity. To avoid intercultural conflicts, companies have started to recruit country express from outside a company rather than repositioning internal technical experts. o To address these problems and to increase IJV performance, suggest taking explicit measures for improving organizational identity and identification at the IJV level. International SMEs: Strategic Importance and Barriers to Internationalization Theres no common will white accepted definition of SMEs, and criteria as well as limits differ. Most countries use headcount, annual turnover, and your balance sheet total, or a combination of those criteria to define small and medium-size businesses. Sources such as kids statistics Canada employment dynamics, for example, provide information about businesses that are entities with employees excluding self employee people who have no employees into natural salaries from their businesses for themselves. Canadian small businesses are the finest companies look up to 49 employees in annual total revenues between $30,000 and $5 million o medium-size companies have between 50 and 500 employees in annual total revenues between $5 million and $50 million. o Canadian medium-sized firms experience the strongest growth among the different businesses categories a .9% increase. o In the European economic area (EEA) in Switzerland, there are more than 16 million enterprises. o SMEs cause to the backbone of the Asia Pacific region, accounting for 90% of enterprises, between 30 to 40% of employment A strong position up SME's international economies is not reflected to the same extent and international business environment. Access Barriers for SMEs: o Shortage of working capital to finance exports

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o Identifying foreign business opportunities o Limited information to locate/analyze market o Inability to contact potential overseas customers o Obtaining reliable form representation o Lack of managerial time to do with internationalization o In adequate quantity of and/or untrained personnel for internationalization o Difficulty managing competitors prices o Lack of home government assistance/incentives o Excessive transportation/insurance costs Policymakers need to support entrepreneurship and foster the creation of start up MNEs, especially in knowledge -based industries. o Countries make up for the lack of entrepreneurial talents and start of candidates through the promotion of new industries in the creation of seed companies.

IHRM Features in SMEs The Importance of the Founder/Owner o Internationalization process theory, just arrived from the behavioral model of uncertainty avoidance, suggests that specific features of the owner or founder of an SME have an impact on the internationalization process of his particular enterprise. o The experimental market knowledge of the managers is assumed to have a direct impact on the choice of format this and that, this is seem to have a direct impact on the choice of foreign markets and thus, the internationalization process of the SME. o Research uncle start ups or born globals, which are characterized by an important international orientation and grow from inception, how confirmed this: the founders of international new ventures are more alert to the possibilities of combining resources from different national markets because of the companies they develop from there early activities. o Owner/founders or managers who have more positive perceptions of the international environment will also be more likely to internationalize their own small businesses. Recruitment, Selection, and Retention o Small firms they have more difficulty some lunch firms recruiting adequate international interest. o It has been argued that many less qualified employees are employed by SMEs because they do not meet the recruitment requirements of large organizations and workforce to work for SMEs as their second choice. o Recruitment, selection, and staffing have been shown to be problem money for SMEs because these firms are perceived to lack legitimacy as employers of the strong international orientation. o Kuhlmann states, Image advantages of SMEs as compared to large organizations include a good working atmosphere, less anonymity, degree of information, and low requirements for mobility. Disadvantages include career opportunities, employee benefits, progressiveness of the company, training programs, pay, and international working opportunities. o Potential job candidates think that I sent you do not have strong international operations and do not apply. Because the SMEs cannot recruit call financial managers, they're not successful international markets as they could be. In order to attract more applicants interested in international operations, suggest HR marketing activities for SMEs that clearly communicate that the firm has a strong position in international markets it offers international career opportunities. o Selection criteria of SMEs often include general fit with a small organization or technical capabilities battered and requirements that referred to a future position with international responsibility. Small firms often look for generalist knowledge rather than for specialist. The requirement for international managers and SATs are similar to those identified in large organizations.

HR Development: The Challenge of Learning

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o o o o o Cost border alliance, which is ranked third as preferred foreign market entry strategies of SMEs, after export activities and subsidiaries. Training and development activities and to be ready short-term oriented in SMEs and are not supposed to meet longterm strategic needs. Indicates an informal learning approach using local networks and socialization record and formalized training. Often, the focus is on acquiring tactic knowledge better then on gaining explicit knowledge. Brussig suggests that HRM should encourage staff in boundary standing positions, pay attention to aspects relevant to internationalization decisions. This involves improving the capacity for proceeding relevant environmental developments suggested to train programs that include stretching communication seminars. Those involved in human resources development in small organizations should resist the temptation to impose call "large firm thinking into a small organizational context. Small firms have a complex interaction between scars resources, reliance on the motivation and abilities of a few key individuals and unnecessary focus on short term priorities. There still a lack of knowledge about the "optimal" balance between formal and informal training and SME's and relationship between change and firm performance is still unresolved. Training is often perceived as an "unaffordable luxury" in SME, particularly with regard to the training of expatriates

Expatriate Management o After the challenge of recruiting people in foreign markets, the internal recruitment for employees for international jobs is perceived as the most important problem for investigated firms. o The most important activities of training where language courses, while cross-cultural training only played a minor role. o The cultural integration of foreign acquisitions remains a challenge for SMEs Limited Resources of the HR department and Outsourcing o Explains what's sophisticated management strategies are lacking in the appointment of age or specialist is not occur, on the grounds that the cost cannot be justified expect the size of SMEs. o The focus is usually on a Ministry of tasks and important major decisions made by the founder/owner of the enterprise. o According to Klaas, 1. The complexity of many HR activities is likely to result in them becoming a significant drain on manager of time and resources. 2. Any HR tasks involve substantial complexity and, thus, the quality of your decisions name may be affected that the general managers often lack significant training and expertise in HR o On a national level, professional employer organization has been discussed as possible providers for HR related services based on a contractual agreement with SME, the professional employer organization can become the outsource HR department for a respective firm. Can lead to improved managerial satisfaction and higher-quality HR decisions Outsourcing of HR practices represents a potentially valuable strategy to cope with the size related deficiencies of HRM and in SMEs.