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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