International human resource management in the 21st century: emerging themes and contemporary debates

International human resource management

in the 21st century: emerging themes and

contemporary debates

 

INTRODUCTION

T

here is little doubt that the empirical and theoretical foundations of

international human resource management (IHRM), alongside their

application in practice, have developed significantly since the 1980s when

Laurent (1986) described the field as in its infancy. Indeed, in a recent review of the

field, Lazarova (2006: 43) optimistically argues: ‘As an area of research, IHRM is

vibrant and diverse and has grown even more so in the past decade’. In a similar

vein, Björkman and Stahl (2006) note that not only has the degree of research in the

field increased, but so too has the scope of the studies undertaken (see also Schuler

and Tarique, 2007). In this special issue, we hope to contribute to the vibrancy and

diversity of the field. While a thorough discussion of the state of the field of IHRM

at the beginning of the 21st century is beyond the scope of this introduction (cf.

Schuler et al., 2002; Scullion, 2004; Björkman and Stahl, 2006; Lazarova, 2006 for a

discussion in this regard), we instead focus on the future prospects for IHRM. We

also introduce the five articles in this special issue, each of which is written by

leading figures in the field and each considering a key contemporary IHRM debate.

IHRM IN PROSPECT

In this section, we highlight some key aspects of the changing landscape of

international business and the key emergent issues for IHRM at the beginning of the

21st century. This discussion is based on the notion that IHRM is ‘. . . a highly

dynamic and constantly evolving field, with new themes emerging that transcend

traditional approaches’ (Björkman and Stahl, 2006: 6). Thus, scholars in the field are

encouraged to continue to expand their research in the area through exploring new

ideas through innovative theoretical and methodological approaches (see also

Schuler and Tarique, 2007). While there is a wide range of influences that one could

discuss, we restrict ourselves to what we consider as the most significant in the

context of IHRM. In particular, we focus on the changing spatial landscape of

international business with the emergence of India, China and Central and Eastern

Europe (CEE) as increasingly important markets. Further, we point to the changing

security landscape that multinational corporations (MNCs) must consider in the

post-9/11 world. In terms of social trends, we identify the changing nature of careers

as a key factor impacting on managing HR on a global scale. Finally, at the

organisational level, we explore the changing nature of international assignments in

the global firm. All of the aforementioned changes are likely to have a profound

impact on the role of the international HR professional and thus merit consideration.

Changing nature of global economic landscape: India, China and CEE

The first key contemporary trend that we identify as significant for IHRM at the

beginning of the 21st century is the changing landscape of international business.

This can be explained in part by the changing contours of foreign direct investment

(FDI) location in the global economy. While traditionally FDI flows have been

concentrated in developed countries, recent years have heralded a shift in FDI

location towards new destinations such as the EU accession countries, particularly

those in CEE, while countries such India and China have also become ‘hot spots’ for

inward FDI (UNCTAD, 2004; see also Dicken, 2007). For example, China recorded

record inflows of US billion in 2005, making it the main recipient of FDI in

developing markets (Economic Intelligence Unit, 2006: 6). However, the most

important single global shift of recent times has been the emergence of East Asia as

a dynamic growth region, reflecting the spectacular recent growth rates achieved by

the East Asian newly industrialising economies, as well as the rapid growth of the

Chinese economy (Dicken, 2007).

The implications of the rapid growth of these emerging economies for IHRM

research are significant in various ways, and their impact on the landscape of global

business far exceeds their potential as locations for outsourced low-value aspects of

MNC activities. They also present unique challenges for Western MNCs, in addition

to those faced through operating in culturally and institutionally proximate contexts

(Morley and Collings, 2004). The distance between countries varies not only spatially

but also by culture. For example, it has been argued that the execution of crossborder

knowledge transmission between companies located in dissimilar cultural

contexts is more difficult than between companies in similar countries (Li and

Scullion, 2006). China is clearly an example of a ‘distant’ country from a Western

perspective (Tung and Worm, 2001).

Another research stream focuses on the institutional dimension of distance and

examines its effect on the MNC’s strategic choice (Peng, 2002). A major challenge

facing MNCs in emerging markets is the difficulty in recruiting and retaining

managerial talent with the requisite skills to operate in these environments and

further to persuade qualified candidates to transfer to these locations (Björkman and

Xiucheng, 2002; Collings and Scullion, 2006). This is compounded by the fact that

countries such as India and China face shortages of suitably qualified and skilled

employees for MNCs and local enterprises alike (Budhwar, 2004; Gupta and Wang,

2007). Schuler and Tarique (2007) note the importance of employer branding and of

becoming an employer of global choice for MNCs in ensuring a supply of appropriate

talent in these countries (see also Sparrow, 2007). Likewise, with a few notable

exceptions, we have limited insights on the effectiveness of Western HR practices in

developing countries. IHRM professionals would benefit from an understanding of

the extent to which these locations can accommodate a range of specific HR practices

(Gamble, 2001; Schuler and Tarique, 2007). A relevant example is Li and Scullion’s

(2006) study on MNCs’ execution of knowledge management initiatives in China.

Similarly, Tung and Worm’s (2001) work has explored the importance of HR to

MNCs in penetrating the Chinese market.

As Meyer (2006) notes, a further theme is the key role of MNCs in transmitting

capital, knowledge, ideas, and value systems across borders and consequently

linking developed and developing economies in the global landscape. This impact is,

however, under-explored, and research in relation to IHRM practice would be useful

here. Exploring the impact of the MNC’s economic footprint on the communities in

which they operate has become a key concern of the International Labor

Organisation (Schuler and Tarique, 2007) and, given the potential implications of

negative publicity for the MNC, monitoring this economic footprint may represent

a key challenge for international HR professionals. Further, study on the IHRM

strategy, policy and practices of MNCs headquartered in these countries would

contribute to the diversity of research in the field. This would help to illuminate

some of the HR challenges faced by MNCs from less developed countries,

particularly those operating in developed countries.

Increasing global terrorism

A second key theme that has the potential to impact on IHRM is the increasing effect

of global terrorism. While this is most clearly evident in high-profile events such as

the 9/11 attacks in New York and the 7/7 London bombings, there are a number of

other trends in terrorism globally that have the potential to impact on the role and

functions of the IHR profession. These include recent events in oil-rich Nigeria where

high-profile companies such as Royal Dutch Shell, Italy’s Agip and France’s Total

have been targeted by militant groups. Specifically, Royal Dutch Shell was targeted

when a car bomb was placed in one of their compounds and one of Total’s oil

facilities was stormed by armed militants, resulting in the death of three police

officers. These events have resulted in Shell evacuating the some 400 dependants of

expatriate employees stationed in Nigeria (The Guardian, 2006). Not only do such

events have an impact on the immediate work experience of expatriate employees

but they may also make the recruitment of future expatriate employees for roles in

these countries more difficult. They will also increasingly challenge international HR

professionals to adequately assess the risks associated with sojourns in volatile

countries for assignees and their families. It may also herald a re-evaluation of

options with regard to staffing arrangements in these countries and the exploration

of alternatives to the traditional parent country national expatriate (a topic to which

we return below). The employment of locals in key positions in these high-profile

operations may emerge as a viable alternative.

On a wider scale, the impact of events such as 9/11 are likely to impact

significantly on the IHR profession. Most notably, Konopaske and Werner (2005)

argue, without empirical support, that US managers may be more reluctant to

accept international assignments in the wake of the 9/11 terrorist attacks. Likewise,

it is possible that nationals from other countries may be reluctant to accept

assignments in the UK and the US, countries which are most visibly associated

with the ‘war on terror’ and, as illustrated by the 9/11 and 7/7 attacks, vulnerable

to terrorist attacks. Linked to these developments, the landscape of international

travel has changed considerably in recent years. A SHRM survey in the USA

immediately following the 9/11 attacks found that over 75 per cent of firms there

allowed employees to cancel or curtail business trips, 45 per cent of firms cancelled

events or meetings, while 56 per cent tightened internal security measures,

including increased vetting of employees (SHRM, 2001). We know less, however,

about the long-term effects of these attacks on IHR policy and practice. However,

some practitioner research in the USA suggests that the long-term effects were

minimal, with the exception of attitudes towards travel and security (see Ryan

et al., 2003; Kondrasuk, 2004).

The 2006 terrorist threat in UK airports represented a further high-profile recent

example of the impact of global terrorism on international business. The cumulative

effect of these events means that international travel is now a more stressful

experience as a result of increased security restrictions and stricter hand baggage

restrictions, which mean that business travellers routinely have to check luggage in

and hence face further delays at the baggage belt. However, Collings et al. (2007) note

that despite continued uncertainties and anxieties prevailing in the current

international climate, MNCs must, more than ever before, encourage staff to work

abroad to better understand the global markets and to develop the skills required to

work effectively across cultures. Thus, IHRM professionals must come up with

innovative ways to staff strategic international positions, to encourage key staff to

accept vital international assignments and to facilitate international business travel

(for a summary of the key HR issues see Collings et al., 2007).

Changing careers

A number of recent contributions to the IHRM field have noted the significance of

the changing nature of careers for MNCs (see Stahl et al., 2002; Dickmann and Harris,

2005; Thomas et al., 2005; Collings et al., 2007). Key in this regard is the impact of

changing attitudes towards careers and their influence on the willingness of

candidates to accept international assignments, the conditions under which

assignments are accepted and retention after assignment (see Collings et al., 2007 for

a discussion). This observation is based on two important factors. First, in general

terms, we are witnessing a shift in how employees view their careers, with increasing

emphasis placed on career mobility and decreasing commitment to specific

organisations (DeFillippi and Arthur, 1996). Second, there is an emerging interest in

self-initiated international assignments or assignments initiated by individuals

without organisational support (cf. Inkson et al., 1997; Suutari and Brewster, 2000).

Both of these trends are likely to impact significantly on IHRM policy and practice

in the global firm and are likely to continue to represent key challenges for IHRM

professionals in the future.

In considering the former factor, there is a growing body of research that identifies

a disjuncture between international assignees’ perception of the value of

international assignments from a career perspective and the perceived value from the

organisational point of view. Specifically, it is becoming increasingly apparent that

individual assignees perceive the main value of the assignment as developing

individual competence that can be transferred across organisations and that is valued

in the external labour market (DeFillippi and Arthur, 1996; Stahl et al., 2002; Stahl and

Chua, 2006). As Dickmann and Harris (2005: 400) note: ‘[T]he link between an IA

[international assignment] and the organization’s benefits in career capital

augmentation is . . . tenuous’, which further reflects the fact that international

assignments may be more beneficial from an individual career perspective and in

building individual social capital than in building organisational capital. This is

perhaps reflected in the fact that a significant percentage (estimates suggest 20 per

cent in first year and a further 20 per cent in the second) of employees leave their

organisations within two years of their repatriation to the home country (see

Linehan, 2006 for a summary). Such turnover has obvious implications for both the

development of managerial competence in the MNC and global leadership

development.

Second, we point to the emergence of self-initiated international assignments as

illustrative of the changing nature of careers in a global context (Thomas et al., 2005).

By this we are referring to those whose international experience is not initiated by

an international transfer within an organisation but rather to those who relocate

abroad without organisational assistance and of their own accord (Inkson et al., 1997).

Suutari and Brewster (2000) label these experiences self-initiated foreign work

experience (SFE). The key implication of the increasing number of SFEs who are

joining the global labour market is that MNCs can make use of these employees to

fill key positions in subsidiary operations at a lower cost than expatriates. However,

there is a dearth of empirical research both on the individual issues faced by SFEs

and indeed issues around their re-entry to the home labour market and on the HR

issues facing organisations who seek to employ them.

Changing patterns of global staffing

The final contemporary theme that we explore in considering the changing

landscape of IHRM relates to emerging debates on the continued utility of the

traditional expatriate assignment in the face of a number of issues around increasing

demand for international assignees and a falling supply of qualified candidates

(Scullion and Collings, 2006; Collings et al., 2007). In relation to falling supply,

Collings et al. (2007) point to four key trends: dual career issues, whereby potential

international assignees are no longer necessarily males, who are the sole bread

winners with spouses who are willing and able to relocate to support their husband’s

careers; the limited participation of women in international assignments, which

means that potential female assignees often fail to apply or are overlooked for

international assignments despite their potential; issues around repatriation, which

mean that potential assignees are likely to resist assignments because of concerns

over their reintegration into the home organisation on return; and weaknesses of

talent management at an international level, which constrain organisational efforts to

identify and deploy high-potential international assignees.

The increasing demand for international assignees reflects the growth of emerging

markets in countries such as those in Eastern Europe, India and China. This results

in a growing demand for expatriate employees who possess both the desire and the

specific competences needed to manage in these markets. Further, there is an

increasing demand for expatriate employees in a far wider range of organisations

than the traditional large MNC, partly because of the rapid growth of small and

medium enterprise internationalisation and international joint ventures (Scullion and

Brewster, 2001).

Organisations are currently re-evaluating their policies in relation to staffing

international organisations because of a number of factors, including those discussed

above. Further influences include the high costs associated with traditional

international assignments, combined with continued concerns over expatriate

adjustment and failure and the difficulty of managing the performance of such

assignees. As a result of these factors, we are witnessing the emergence of a portfolio

of international assignments including short-term assignments, international

business travellers, rotational assignments and international commuter assignments,

and virtual assignments (Fenwick, 2004; Hertel et al., 2005; Tahvanainen et al., 2005;

Welch and Worm, 2006; Collings et al., 2007). The emergence of these alternative,

more flexible forms of global staffing and issues around their management and

administration are likely to represent a key challenge for IHRM professionals and

academics in the 21st century.

As should be clear from the preceding discussion, we agree with Lazarova’s

(2006) assessment of the field of IHRM as being vibrant and diverse, and we predict

a very sanguine future for IHRM research in the early decades of the 21st century.

In contributing to this field, we feel that the five articles in this special issue represent

important contributions, and we now summarily review them.

CONTENT OF THE SPECIAL ISSUE

Our first article, by Ingmar Björkman and Jon Lervik, addresses key issues in the

IHRM literature, namely the transfer of HR policies and practices in MNCs. Their

contribution is grounded in recent debates around why there are differences between

MNC subsidiaries in the extent to which they adopt HR practices that MNC

headquarters attempt to diffuse worldwide. The article draws on related research on

social capital, knowledge transfer, and change management and develops a model of

factors influencing the transfer of HR practices to MNC units abroad. A main

contribution of the article is to develop a more comprehensive and holistic

understanding of the outcome of HR practice transfer as encompassing three

dimensions: implementation, internalisation and integration. This is significant as

previous research has focused mainly on implementation in terms of surface

adoption of particular practices or comparisons of the extent to which local practices

are similar to HQ practices.

A second contribution of the article is the development of current explanations of

the process of transfer of HR practices to foreign units. Previous research on this

question has paid much attention to cultural and institutional differences. While the

article recognises the importance of these factors, it is argued that the transfer of

HR practices is a social process where organisation-internal factors deserve more

attention. It is suggested that the governance mechanisms used by the MNC,

characteristics of subsidiary HR systems, the social relationship between the

subsidiary and MNC headquarters, and the transfer approach adopted by HQ

management will all influence the outcome of the process. Finally, the article

highlights a fruitful agenda for future research regarding the transfer of HR practices

in MNCs through an approach integrating social capital, knowledge transfer and

change management.

Our second article, by Sully Taylor, highlights the critical role played by social

capital in the successful implementation of global strategy for MNCs, and in

particular adds to our knowledge of the ways in which the international HR

system influences the creation and utilisation of social capital in MNCs. The article

provides a framework that is useful for both researchers and practitioners on

how to approach the cultural influences on the definitions and behavioural

expressions of social capital, and draws on this analysis to critically assess

the recommendations that have been made regarding developing social capital

in MNCs. In addition, the article examines what competencies are most critical

in managers with the ability to develop social capital in multiple cultural

settings.

The article argues that while the development of social capital in MNCs is seen

as a key task of IHRM, less attention has been paid to the diverse ways in which

social capital is perceived and operationalised in different cultures. Recognising that

previous research has not attended to the question of how developing social capital

differs across cultures, Taylor seeks to address this research gap by creating a

theoretical framework to help understand how the IHRM function can help build

social capital in the complex global network economy. Finally, the article recognises

the growing importance of IHRM to the effective implementation of MNC strategy

and the challenge of how to effectively manage the cultural and institutional

diversity facing the MNC.

Our next contribution, by Elaine Farndale and Japp Paauwe, revisits some of the

themes explored in the first contribution. However, Farndale and Paauwe focus on

the drivers behind the similarities and differences in IHRM practice. Specifically, the

study seeks to examine the influence of both competitive and institutional drivers on

the adoption of HR practices in MNCs using Paauwe’s (2004) contextually based HR

theory as a theoretical framework.

Based on a worldwide sample of 14 high-profile and high-performing MNCs, the

study explored the ways in which different firms react to both institutional and

competitive pressures in deciding their approach to HRM. The study found that at

the global level, similarities are largely driven by external competitive factors (such

as the adoption of universal ‘best’ practices and benchmarking) and by the

availability of ICT systems and tools. The article suggests that similarities in

approach at the national level largely come from external institutional sources (e.g.

legislation, national culture and local expectations).

In contrast, differences in approach between MNCs at both global and national

levels are mainly influenced by internal competitive processes (e.g. corporate strategy

and corporate culture). The authors conclude that external institutional and

competitive drivers are likely to lead to isomorphism, while internal drivers are more

likely to lead to differentiation. Finally, the study suggested that MNCs face all three

drivers of HRM at the same time, leading to different patterns of practice adoption,

adaptation and innovation.

Our fourth article, by Majid Ghorbani and Rosalie Tung, considers the role of

women in the labour market in amajor Islamic country (Iran). This article is significant

as, while there has been a considerable growth in research about women in the labour

market and about women in management in the western world, very little is known

about the position and role of women in the labour market in Islamic countries. The

general perception in theWest is that in Islamic societies, women’s participation in the

labour market is marginal and that their career prospects are limited.

Starting from this base, the authors highlight some of the myths and realities

relating to women in the labour market in a major Islamic country through

qualitative research with Iranian women. The research shows that attitudes towards

women in the workplace have undergone considerable changes and are still

evolving. Currently, women in Iran can work in most occupations of choice and

appear to be fairly well represented in the workplace in managerial and professional

positions compared to other Islamic nations. This reality appears to run contrary to

the popular perception that women in these countries are fully veiled and are

prevented from active participation in society.

Because of talent shortages, women in Iran have been induced to return to the

workforce, and in order to do this, some of the benefits and status they enjoyed in

the pre-revolutionary era had to be restored, highlighting the importance of human

capital development in Islamic as well as Western countries. A key implication of the

study for IHRM relates to Iran’s success in attracting FDI from a wide variety of

countries and the recognition that as part of the government’s efforts to attract

foreign investment, the climate for foreign women working there is becoming more

favourable. Also, more generally, the article highlights the importance for Western

MNCs operating in Islamic countries to have an accurate understanding of the role

of women in the workplace and also a good understanding of society’s attitude

towards women in these countries.

Our final article, by Paula Caligiuri and Saba Colakoglu, engages with expatriate

assignment management, a topic that remains central to the IHRM literature despite

a significant degree of study. However, while many models have examined the

contingencies between the stage of a firm’s internationalisation and corresponding

expatriate management practices, few empirical studies have examined the

contingencies between international management strategy of the MNCs and their

expatriation policies. This exploratory article seeks to begin to bridge this gap by

examining the congruence between MNCs’ strategies, categories of expatriate

assignments used and expatriate management practices (selection, performance

management and repatriation).

The authors’ exploratory study looks at how expatriate management practices

differ with respect to local, centralised or global international strategies. A particular

focus of the study, which draws on evidence from 27 MNCs, is the categories of

expatriate assignments, the strategic integration of expatriate assignments into

leadership development and the types of HR practices firms use to manage

expatriates.

The results of the study increase our understanding of expatriate assignments as

they relate to MNC international strategy. The empirical findings indicate that

organisations differentially assign expatriates based on the firm’s respective

international management strategy and partially support the contingency approach.

Firms adopting a global management strategy made more use of developmental

assignments and had a stronger focus on leadership development through

expatriation. Also, such firms tended to have a greater number of senior managers

with expatriate experience.

Finally, the authors argue that despite the previous theoretical arguments

proposing that management strategies and expatriate strategies should be aligned,

their study found no evidence for such an alignment among the firms participating

in the study and points to the need for both theoretical refinement and further

empirical research in order to more fully understand the nature of alignment in the

international HRM context.

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