TITLE

INTERNATIONAL HUMAN RESOURCE DEVELOPMENT ASSIGNMENT STUDENT ID:

In an era of globalisation and dynamic change the role of culture is increasingly seen as important mediator in management behaviour. Assess the relative impacts of National Culture and Organisational Culture on management behaviour. What does this mean for Human Resource Development?

TABLE OF CONTENTS
ABSTRACT.i TITLE OF ASSIGNMENT.ii 1.0 1.1 1.2 1.2.1 1.3 1.3.1 1.3.2 1.3.3 1.3.4 1.3.5 1.3.6 1.3.7 1.3.8 2.0 2.1 2.1.1 2.2 2.2.1 2.3 2.3.1 2.3.2 2.4 2.4.1 Introduction..1 Globalization1 The Multinational Corporation1 The Management Pyramid...2 Evolution of Human Resource Development..3 From Personnel Management to Strategic International Human Resource Management and Development...3 Personnel Management to Human Resource Management.....................4 Training and Development..4 Human Resource Development...5 Strategic Human Resource Management.5 International Human Resource Management...5 Strategic Human Resource Development....6 Strategic International Human Resource Management...6 Entering into International Business....6 MNEs International Orientation.....7 Some Organizational Factors...8 The Strategic Development of Models....9 Porters Model Competition in Global Industries..10 Strategic Disposition..........................11 The Adaptive Model..12 Global Strategy..13 Strategic International Human Resource Management.13 The Phases of Internationalization. (Adler & Ghadar (1990)14

TABLE OF CONTENTS continued

3.0 3.1 3.1.2 3.2 3.2.1 3.2.2 3.3 4.0 5.0

Culture...16 National Culture.17 Organizational Culture...17 Differences Between Corporate and National Culture..18 Measuring the developments of Organizational culture....18 Hofstede Cultural Dimensions Theory (Hofstede, 1997)..18 The impacts of National Culture and Organizational behaviour...19 In Conclusion.20 REFERENCES21

LIST OF TABLES Table 1 Table 2 Table 3 Table 4 Table 5 Anthonys Triangle Evolution of HRM Internal Approach External Approach Measure of Corporate Culture Pg 18a pg 2. pg 3. pg 9. pg 10

LIST OF FIGURES

Figure 1. Figure 2 Figure 3.

Definitions of Level of Management Control pg 3. The Levels of Strategy pg 11. Cultural Differences at Organizational And National Level pg 18.

ABSTRACT

Globalization is the appreciation that is widely regarded as a prime mechanism for international human resource management (Strybosch and Fitzpatrick, 2007). This elimination of geographical borders, when attaining business, and the successive removal of cultural and distance barriers, have optimistic international business, and caused human resource practitioners to develop new concepts and skills to manage people outside their traditional boundaries. Globalization also refers to the: The growing integration of the economies around the world, particularly through trade and financial flows. It is the movement of people (labor) and knowledge (technology) across international borders.(IMF staff, 2002)

1.0 1.1

Introduction Globalization

The globalization of business has revealed a significant acceleration in business transactions, as more and more organizations invested outside their domestic borders. There is an increase in cross-border mergers and acquisitions, international joint ventures, and alliances which establishes a vast exchange of capital and people, growth of trade and rapid transfers of technology all around the world (Briscoe and Schuler, 2004). There is an un-considerable level of foreign competition both overseas and locally. Due to the internationalization of business, managers in organizations need not only deal with issues within the organization or in the region of the domestic market, but also with the challenges of global competition. On the basis of hybrid quality, service and management, also the possibilities of opportunities for growth; gaining and maintaining competitive advantage. 1.2 The Multinational Corporation

A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation /enterprise that manages production or delivers services in more than one country. Multinational corporations can have a powerful influence in local economies, They play an imperative role in international affairs and globalization. Whilst traditional MNCs are national companies with foreign subsidiaries, Transnational Corporation (TNC) spread out their operations in many countries sustaining high levels of local responsiveness. While MNEs invest across borders, they transfer HRM practices to their overseas subsidiaries which are not smooth processes (Ngo, Turban, Lau and Lui, 1998).

1.

1.2.1

The Management Pyramid

In the effort to categorize how and where information is used in an organization to support decision making, it is useful to define a taxonomy of terms. One good initial point for building a framework is the Anthony Triangle ( shown in Table 1). , which states operational activities, management control, and strategic planning. (Kanter & Miserendino, 1987). These three levels of management operations are defined by Robert Anthony ( 1965) Planning and Control Systems: A Framework for Analysis. Richard Hackathorn (2002) and Turban, et. al (2004) summarize the three levels as Stated in Figure 1

Table 1. Anthonys Triangle

2.

Definitions of Level of Management Control Figure 1. Level Hackathorn (2002) Turban (2004 Defining long-range goals and policies for resource allocation

Strategic Planning

Definition of goals, policies ... Determination of organizational objectives.

Management and Tactical Control

Acquisition of resources, tactics ... Establishment and monitoring of budgets.

The acquisition and efficient use of resources in the accomplishment of organizational goals The efficient and effective execution of specific goals

Operational Planning and Control

Effective and efficient use of existing facilities and resources to carry out activities within budget activities within budget

1.3 1.3.1 Evolution of Human Resource Development (shown in table 2) From Personnel Management to Strategic International Human Resource Management and Development The personnel management function lacks strategic relevance because it is locked into a mainly administrative role. (Rowland and Summers, 1981)

3.

1.3.2

Personnel management to Human Resource Management

Guest (1987) classified six factors relating to the transition from personnel management to HRM : 1. The search for competitive advantage through better utilization of HR. 2. The models of excellence. 3. The failure of personnel management in promoting the potential benefits of effective management of people 4. The decline in trade union pressure. 5. The changes in the workforce and the nature of work with better education. 6. The demand of more flexible jobs and the availability of new models These six aspects, independently or collectively, have motivated researchers and practitioners to endorse and adopt new and better models for managing people. Personnel management transformed into human resource management, in 1970s, representing a change towards the integration of personnel functions, strategically focused on overall organizational competitive advantage. Distinctive in previous periods, this stage represents the integration of personnel management and industrial relations into a strategic approach to the management of an organizations human resources and this directed to the development of Strategic Human Resource Management (SHRM). 1.3.3 Training and Development

The fundament aim of training and development is to help the organization achieve its purpose by adding value to its key resources which are the people they employ. Training means investing in people to enable them to perform better and to empower them to make the best use of their abilities. Whereby Development means the learning opportunities are designed to help employees grow.

4. 1.3.4 Human Resource Development HRD refers to "organized learning activities arranged within an organization in order to improve performance and/or personal growth for the purpose of improving the job, the individual, and/or the organization" Also, HRD includes the areas of training and development, career development, and organization development. This is related to Human Resource Management. 1.3.5 Strategic Human Resource Management

SHRM can be professed as a macro perspective (e.g. strategies and policies), whereas Human Resources Management represents more of micro approach. Wright and McMahan (1992) define SHRM as the pattern of human resource development and activities intended to enable an organization to achieve its goals. 1.3.6 International Human Resource Management

International human resource management is the process of managing people across international boundaries by multinational companies. It involves the worldwide management of people, not just the management of expatriates.

Convergence and divergence According to Brewster et al (2002) the effectiveness of global HRM depends on the ability to (convergence) or adapt them to suit local conditions (divergence) in response to local requirements.

5. 1.3.7 Strategic Human Resource Development

Strategic human resource development involves introducing, eliminating, adapting and guiding processes in a way that individuals and teams are equipped with the skills, knowledge and competences that are required to undertake current and future tasks on behalf of the organization.

1.3.8

Strategic International Human Resource Management

Strategic international human resource management (SIHRM) is the process of managing people across international boundaries by multinational companies. The aims of SIHRM are to ensure that HR strategies, policies and practices are developed and implemented that will help the enterprise to operate worldwide coordination. Schuler et al (1999) 2.0 Entering into International Business

Management, in an international situation, is one of the most critical highlights for implementing a global business successfully. International businesses require strategic management approaches to execute its business because there are political, cultural and economic divergence among countries or regions whereby management policies and practices have to be adjusted to the local environment. Thomas (2002) argues that management of such international and global organizations would involve dealing with human resources, customers, suppliers, rooted in their own distinctive local culture, which would both be a barrier and a challenge to the organization. According to Welch and Schuler (1999) a highly essential part of international business is finding and developing the human resources to implement an international business strategy for which effective human resource management is crucial. World markets have now become competitive arenas where organizations strive for market share against local and foreign competitors (Dowling, et. al., 1999).

6. There is even a growing number of organizations that are setting out more than Mc Donalds, Nestle, Unilever, Coca-Cola, Nike and many others. As a result it becomes more complicated to clarify national identity of products and services. The world economy is becoming interdependent and global. This phenomenon has forced top management of firms to articulate structured international strategies. Internalization reveals a common process, the processes are not the same for all organizations. In each of the stage within this evolutionary process, there are different structural responses, control mechanisms (Dowling, et. al., 1999). The specific entry strategies for going international include exporting, wholly-owned sales subsidiary or local sales office, licensing, franchising, joint ventures or strategic alliances. (Briscoe and Schuler, 2004).

2.1

MNEs International Orientation

In the MNEs international orientation : There are two contradictory forces for global integration versus local responsiveness in MNEs. HR is one of the most crucial functions that are under the influence that usually deals with cultural differences and local regulations to a greater extent than other business functions. (Taylor et al 1996, Harzing and Roosevelt, 2004) has identified 3 orientations in the MNEs international IHRM system: Adaptive Orientation: MNEs with an adaptive orientation demonstrate high local responsiveness/isomorphism and low global integration. They design HRM systems for their subsidiaries that reflect their local environment. This orientation is similar to Perlmutters polycentric approach.

 Exportive Orientation: MNEs with an export orientation demonstrate low local responsiveness/isomorphism and high global integration. MNEs intention here is to transfer their HRM practices to their subsidiaries. This orientation is consistent with Perlmutters ethnocentric approach. Integrative Orientation: An integrative approach combines global integration and local responsiveness/isomorphism. The objective of the MNE is to use the best practices which can originate from both the MNE headquarters and the subsidiaries.

2.1.1 Some Organizational factors

Among many business practicesfinance, marketing, manufacturing, and HRM- the distinct pressures for global standardization and local responsiveness are evident. Ondrack (1985) have argued that for international transfers, as subsidiaries have less dependence on the MNE headquarters for resources, they exercise more autonomy and power. They can be given the autonomy through a series of management systems such as management of career paths and management development. The more an MNE headquarters pursues an ethnocentric orientation, the more likely that MNE subsidiaries will conform to the HRM practices of the Headquarters and the more an MNE headquarters pursues a polycentric orientation, the more the HRM practices of the MNE subsidiaries will be aligned with the host country. It was found that any MNE that was found polycentric was considered to pursue local responsiveness; and others that were found geocentric was considered to be transnational. Since orientation to headquarters and regional headquarters was considered together as part of an influence internal to the MNE organization in this research, any MNE with these attitudes would be regarded to follow standardization or ethnocentrisms. The term transnational used for companies meets the demands of both national reaction and global integration/efficiency. (Bartlett and Ghoshal, 1989):

2.2

The Strategic development of models

The changing evolutionary models of Westney and Zaheer (2001) for MNE organizations are were obtainable and known as Internal and External Methods shown in table 3 and table 4. This challenging balance force MNEs to shape their decision-making processes with reference to the strategic needs of the organization. Three distinct internal approaches have been found in the first studies on MNE organizations. Table 3 Internal Approach Approach Meaning Have focused on the channel by which MNE organizational structure evolved.

The structural evolution approach The evolution of MNE

Based on activities in terms of value-adding activities - Value adding activities range from export sales to sales offices to production facilities and to full value-chain subsidiary

The evolution of managerial mindsets

Which was proposed by (Heenan and Perlmutter,1979) This research identified three primary attitudes towards building an MNE: ethnocentric or, polycentric and geocentric.

9.

Table 4 External Approach Approach The theory of evolution of multinational organization Meaning which focused on focused on managerial processes rather than formal structures.

Integration-Responsiveness (I/R) Framework

which has been developed by C.K. Prahalad, Yves Doz and Chris Bartlett (1980) it portrayed emergence of conflicting demands confronting MNEs

The forces for global integration and forces for national differentiation

as proposed by Bartlett (1986)

The transnational

as proposed by Bartlett (1986)

According Bartlett and Ghoshal (1986) the researcher described four models of MNS as multi national to international, global and transnational. The multinational and international models transnational model is an integrated network of interdependent subsidiaries, the sub units of the transnational are linked to each other directly.
10.2.1

Porters Model Competition in Global Industries

Coordination involves various options. Coordination includes the degree of countries in order to improve competitive advantage (Taggart, 1997). Porter (1986) tightly coordinated by the same control systems, information systems, technologies Porters Model, the configuration and coordination dimensions are brought together for evaluating international strategy at the overall organizational level. The subsidiary level strategy in the figure 2
10.

Figure 2
Source: From Competition in Global Industries by M. E. Porter, 1986, Boston, Massachusetts: Hardvard Business School Press, p.28.

2.3

Strategic Disposition

According to Perlutter (1979) he has stated that there are two criterias that are practical for evaluating multinationalism but its not adequate enough to measure what is called the attitudinal criteria. Perlmutter named this criteria as attitudinal criteria. These attitudes were known as ethnocentric, polycentric, and geocentric. The theorist explained,the way decisions are made in an MNE are profoundly influenced by the way the home-country management think about doing business around globally and analyze overseas market opportunities. This means home country attitudes and beliefs are heavily important in positioning an MNE headquarters multinational direction.

11.

According to (Taylor et. al., 1996), Recent models of SIHRM have been provided with a macro perspective and highlighted the SIHRM system as a way for MNEs to successfully manage and control their operations across borders.

2.3.1 The Adaptive Model

Taylor, (1996) and other theorist have constructed their model on the resource-based view theory which distinctly shows how the theory can be integrated into Human Resource Management. This suggests that human resource systems can contribute to the sustained competitive advantage through maintaining the development of competencies that are specific to the organizations objectives; social relationships which are embedded in an organizations history and culture; the generation of tacit organizational knowledge. Taylor et al., 1996 As stated by Taylor et al. (1996); According to the model, the within the MNE, the resources are differentiated into three levels. Which are highlighted as follows: 1. The National level which includes the parent companys national resources with reference to the economic, cultural and human resource aspects. 2. The second level of resources is the Parent Company Level and includes all the tangible and intangible assets that the MNE has developed over its lifetime. 3. The Affiliate level which can provided as a benefit for the MNE at the local, regional or global level. It must be noted that these resources can be useful at the main location and or across countries.

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2.3.2 Global Strategy

Global integration or standardization is the solution for competitive advantage for organizations pursuing a global strategy. These companies integrate and produce standardized products in an efficient way (in a cost-effective manner). All value chain activities i.e. procurement, in-bound logistics, and operations are optimized on a worldwide scale (Bartlett and Ghoshal, 2004; Porter, 1986).

2.4

Strategic International Human Resource Management

Schuler et al. (1992) have discussed two main strategic dimensions that SIHRM is profoundly concerned with and influenced by inter-unit linkages. Accordingly, as MNEs operate as units or subsidiaries in various countries, there is a high need to manage, coordinate and control these units. How each unit is to be controlled, integrated or differentiated is of strategic importance for MNEs and the decision about whether to differentiate or to integrate the units is strategic for MNEs ensures high performance results from all units so as to produce triumphant business results. It must be noted that different constraints exist that influence the performance of MNEs. Units or subsidiaries of an MNE may operate in business environments with different levels of economic and political volatility; the physical distance and time-zone differences in legal contexts such as local labor laws. Whether to differentiate or to integrate the units is also strategic for SIHRM. With regards to strategic dimension refers to internal operations. Each unit or laws, politics, culture and economics must be strategic for MNEs. SIHRM is also influenced significantly by changeable internal operations. Therefore the position of HRM gives hand to the position of SIHRM; as the MNEs grow in the global environment.
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2.4.1 The Phases of Internationalization. (Adler and Ghadar (1990))

According to Harzing and Roosevelt,( 2004) Adler and Ghadars Model can be traced back to Vernons life cycle theory where he give explanation about internationalization phases from a product life cycle viewpoint. As a result, there are three main phases: Phase 1 - (high tech) Research and development provides an important role for the firm. Phase II (growth and internationalization) Market development and Market Penetration both at home and abroad are important. Phase III (maturity) Having penetrated into the markets, the firm takes cost control measures in order to lower prices. As stated by Adler and Ghadar ( 2004). A fourth phase that has been identified as differentiation and integration for penetrating and partaking in different markets and achieving cost control respectively. Differentiation requires that two concerns have to be taken into consideration by organizations which are the cultural aspects of different markets and customer Preferences; and adaptation of the product and business methods towards local Markets. In order to necessitate more a receptive and accepting company with regards to local circumstances and cross-cultural compliance, HRD become one of the main focuses of attention. Having established the differentiation phase, Adler and Ghadar have linked Vernons model to culture and HRM. They have disputed that the influence of cultural concerns of a country or market, as essential HRM policies and instruments differentiates, the organization goes through the following phases:

14. Phase I (Domestic): The organization at this stage focuses on home market and

exporting. The influence of foreign cultures is however ignored and there is virtually no manifestation of international HRM. Phase II (International): The organization pursues a polycentric perspective emphasizing differentiation and local responsiveness. Therefore, the cultural differences, tastes, needs, preferences of each foreign market which should be highly dealt with. In this case, production, marketing and sales operations are usually performed in the host country. Excellent management of the Business Unit in the host country, financial control, technical expertise and cross-cultural sensitivity make international HRM more significant. Phase III (Multinational): The organization focuses on global strategy, low cost and price competition. Cultural sensitivity is not as important as in Phase II but still develops to suit to the cultural diversity. In view of the fact that the organization acts internationally, recruiting and developing a management team in which all members share the same organizational values and norms even though the organization operates in different geographical environment which is one of the most crucial tasks of HRM. Phase IV (Global): The organization focuses on both local receptiveness and global integration. The high quality concern is the key success factor which is expressed in the firms ability to adjust their products to different needs, wants and tastes in different markets. In this phase the success of International HRM depends on its recognition, rewarding and offering successful and talented managers the opportunity to grow and thrive throughout the organization.

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3.0

Culture

Culture and values are associated with the national culture of a country as boundaries that allow interaction and socialization within them. The researchers have analyzed the influence of these national cultural values, attitudes and behaviours on business and management styles (Hofstede, 1980; Trompenaars & Hampden-Turner, 1997). At the same time, the movement of people across national borders and the preservation of particular group with specific characteristic customs, together with differences in social and economic experiences, highlights that subcultures can coexist in many countries. The cultural approaches to HRM, examining how cultural values and norms shape managerial choices across national contexts and how these may, in turn, explain differences in HRM. In this regard, culture can be defined as the crystallisation of history in the thinking, feeling and acting of the present generation (Hofstede, 1993). Bartlett and Ghoshal (1998) also suggest that the history, infrastructure, resources and culture of a nation state permeate all aspects of life within a given country, including the behaviour of managers in its national organizations. It must be noted that the traditional national cultural values affect managerial processes and organizational behaviours, which, in turn, affect economic performance. It has been common to conceptualize and measure culture through various value dimensions (Hofstede, 1980; Schwartz, 1994; Trompenaars & Hampden-Turner, 1997).

16.

3.1

National Culture

National culture is thought to shape its members basic assumptions (Hofstede, 1983). Second, the enduring character of culture helps continuously to socialize new generations of members and reinforce the predominant cultural values and norms (Child & Kiesser, 1979) which, in turn, influence the preference individuals have for particular HRM policies and practices (Sparrow & Wu, 1998) and the degree to which these policies and practices will function effectively within a given cultural system. Third, according to social cognition theory, individual cognition is strongly influenced by ones cultural background (Abramson, Keating, & Lane, 1996; Bandura, 2001). Specifically, culture may influence the way in which individuals scan, select, interpret and validate information from the environment in order to identify, prioritize and categorize issues (Budhwar & Sparrow, 2002b: 603). As a lens, cultural colour both the design and implementation of HRM in that specific socio-cultural context. Because ensuring fairness/justice is one of the key concerns of HRM, the culture-bounded appreciation of justice will, in turn, how key HRM practices such as recruitment, appraisal, compensation, and promotion are designed and implemented in a specific society.

3.1.2 Organizational Culture

A Organizational culture is a professional educated, shared, relatively enduring, interdependent system meaning that classify, code, prioritize, and justify activity within the organization and toward external environments that are relevant.

17.

3.2 DIFFERENCES BETWEEN CORPORATE AND NATIONAL CULTURES

An organizational culture is different from a national culture because of the different function they participate in; by the manifestations of culture. Culture at national level is manifest mostly in values and less in practices; culture at organizational level exist in mostly in practices and less in values. As shown in Figure 3.

Figure 3. Cultural Differences at Organizational and National Levels 3.2.1 Measuring the developments of organizational culture Measuring the development of organizational culture over time. This will show whether the attempted culture has materialized, as well as cultural effects of external changes which occurred after the previous study. (Hofstede, 1997). 3.2.1. Hoffstede Cultural Dimensions theory (Hoffstede, 1997). Geert Hofstede (1997) proposed a systematic framework for assessing and differentiating national cultures in relation to organizational culture known as the cultural dimensions theory. He gathered and analyzed extensive data on the world's values and cultures, in order to build a comprehensive model which argues that people differ across on the extent to which they endorse six dimensions of values.

18.

They are as follows: Power (equality versus inequality), collectivism (versus individualism), uncertainty avoidance (versus tolerance), masculinity (versus femininity), temporal orientation, and indulgence (versus restraint). Hofstede (1997) All the levels in communication are affected by cultural dimensions: verbals (words and language itself), non verbals (body language, gestures) and etiquette dos and donts (clothing, gift-giving, dining, customs and protocol). 3.3 The Impacts of National culture and Organizational behavior

In reviewing the tools in assessing the impacts of National culture and Organizational behaviour the researcher is of the view that International Human Resource Development needs to strategically be apart in the organizations reconfiguring process. This will facilitate in ways that create new organizational cultures which shaped not only by technologies and markets but also by the cultural preferences, the interaction of their employees as they respond to change. The driving purpose of these organizations is personal development. The culture provides a sounding board for revolutionary philosophy and inventive creativity; Galbraith (1997) recommended that, instead of simply responding to change, global organizations should be designed for change. As stated by Drucker (1997) reiterates this opinion and suggests that it is not about replacing the current organizational designs, but that new designs are being superimposed on them . He continues by noting that organizational design must incorporate different purposes, different people, and different cultures . It is this rapid response sequence that successful multinational organizations need to imitate in order to remain competitive and to succeed in todays invigorating international business environment.

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4.0

In Conclusion

When MNEs follow a multi-domestic strategy in executing their international operations, their Business Units were more likely to implement locally in a responsive manner. It was noted that the more MNEs pursued a pure polycentric orientation rather than ethnocentric or geocentric orientation, the more the Business Unit was likely to develop practices in a locally receptive approach. The MNE would of established a significant relationship between local responsiveness of IHRD practices in terms of recruitment/selection criteria, staffing process, management of performance appraisal, management of career planning and control orientation regarding strategic and investment decisions. Based on cultural adaptation values; which provide emphasis to the view that systems must change to survive in a dynamic environment thereby revealing the importance of adapting to the greater cultural diversity.

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