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MA GLOBAL BUSINESS

CORE COURSE IN
HUMAN RESOURCE MANAGEMENT IN THE GLOBAL ENVIRONMENT
Academic year
2007 - 2008

International Human Resource Strategy


And Organizational Strategy

Objectives
After studying this unit, you should be able to:

1. Observe the human resources management from a strategic point of view


2. Consider the importance of the context in which the human resource
strategy is developed
3. Thinking about the peculiarities of human resource strategy
in the international context
4. Know the variables that affect to the degree of similarity of affiliate's human
resource management system to parent´s human resource management system

Copyright © 2003 by The McGraw

References

Taylor, S., Beechler, S. and Napier, N. (1996), Toward an


Integrative Model of Strategi International Human Resource
Management, Academy of Management Review, 21, 4, 959-985.

Noe, R., Hollenbeck, J., Gerhart, B., and Wright, P.(2002),


Human Resource Management, McGraw Hill

1
HR Strategy-
Strategy is the pattern of planned human
resource deployments and activities intended to
enable an organization to achieve its goals.

Strategic
System

Fit 1

HR Strategy

Fit 2 Fit 3

Organizational
Environment
Structure

Fit 1: Strategic Fit

Corporate Strategy

Type B
Business Strategy

Type A
HR Strategy

HR Practices (coherence)
Performance

Evaluation
Appraisal

Planning

Analysis
Training
Staffing

Reward
System
Career

Job
Job

2
Fit 1: Strategic Fit: Type A: HR Strategy-Corporate Strategy

Growth Corporate Strategies

International Concentration

Organizational
Growth

Diversification Vertical
• Related Integration
• Unrelated
• Backward
Horizontal • Forward
Integration

Fit 1: Strategic Fit: Type B: HR Strategy-Competitive Strategy

HRRole
HR Role Differentiation
Differentiation CostLeadership
Cost Leadership

Focus of firm - creative, risk-taking - efficiency

Employee role - broader tasks - specific & repetitive


creative risk-takers
Training - broad career paths - specific/short-term
skills
Staffing - recruit more from - promote internally
outside
Compensation - external pay equity - internal pay equity

Performance - results-oriented - behavior-oriented


management

Fit 1: Strategic Fit

Corporate Strategy

Business Strategy

HR Strategy MKStrat. …

3
Fit 2: Organizational Fit

Organizational Structure
Decentralization
Formalization
Specialization
Hierarchy
HR Strategy Culture

Downsizing
Outsourcing
Reingeniering

Fit 3: Environmental Fit

Environment
Exogenous factors
HR Strategy • industry characteristics
• country/regional characteristics

Strategic Human Resource Management

Strategic International Human Resource Management

4
Strategic International Human Resource Management

The fundamental issue users of SIHRM must address is the


tension between the need for interunit linkages (integration
of affiliate´s HRM System) and the challenges faced by each
affiliate in order to operate effectively in its local environment
(differentiation of affiliate´s HRM System).

So, we are going to focus in…

Fit 1: Strategic Fit: Type A:


HR Strategy International Corporate Strategy

Model of Strategic International Human Resource Management


(Adapted from Taylor et al., 1996)

Corporate SIHRM Affiliate´s HRM

Parent´s Affiliate´s Method of Parent- Affiliate´s


International Strategic Affiliate´s Cultural Distance
Strategy Role Establishment

SIHRM Degree of Similarity of


Affiliate´s HRM System to
Orientation
Parent´s HRM System

Top
Management´s
Beliefs

Model of Strategic International Human Resource Management


(Adapted from Taylor et al., 1996)

SIHRM has three main orientations:


„ The Adaptive System – that seeks to imitate local HRM
practices
„ The Exportive System – that seeks to replicate the HRM
system of the home country in host country, affiliates,
partners, and subsidiaries
„ The Integrative System – that seeks to emphasize global
integration while permitting some local variation

5
Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Parent´s
International
Strategy

Proposition 1: MNCs following a


multidomestic strategy will adopt an
adaptive SIHRM orientation rather than an
exportive or integrative SIHRM
orientation.

Proposition 2: MNCs following a global


strategy will adopt an integrative SIHRM
orientation rather than an adaptive or
exportive SIHRM orientation.

Model of Strategic International Human Resource Management


(Adapted from Taylor et al., 1996)

Top Top management may or may not believe


Management´s
Beliefs
that parent's HRM competence is useful
beyond its national borders

Proposition 3: If top management perceives that the MNC's HRM


competence is context specific, the MNC will adopt an adaptive SIHRM
orientation rather than an exportive or integrative SIHRM orientation.

Proposition 4: If top management perceives that the MNC's HRM


competence is context generalizable, and if the firm is following a
global strategy, the MNC will adopt either an exportive or integrative
SIHRM orientation rather than an adaptive SIHRM orientation.

Model of Strategic International Human Resource Management


(Adapted from Taylor et al., 1996)

Proposition 5: The highest degree of similarity


between the parent company's HRM system and
the affiliate's HRM system will be found in MNCs
following an exportive SIHRM orientation. A
moderate degree of similarity will be found in
Parent´s MNCs following an integrative SIHRM orientation.
International
Strategy The lowest degree of similarity will be found in
MNCs following an adaptive SIHRM orientation.

SIHRM Degree of Similarity of


Affiliate´s HRM System to
Orientation
Parent´s HRM System

Top
Management´s
Beliefs

6
Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

The greater the dependence of the affiliate on the parent


company, the more the affiliate's HRM system is controlled
Affiliate´s
bv HQs
Strategic • global innovator: with high outflow of knowledge to the
Role
parent company and low inflow to the affiliate.Kraft
• integrated player: with high outflow and high inflow.Motorola
• implementor: with low outflow and high inflow.Sony
• local innovator: with low outflow and low inflow.ABB

Proposition 6: There will be the highest degree of similarity between the


parent company's HRM system and the affiliate's HRM system in affiliates
that are integrated players.

Proposition 7: There will be the lowest degree of similarity between the


parent company's HRM system and the affiliate's HRM system in affiliates
that are local innovators.

Model of Strategic International Human Resource Management


(Adapted from Taylor et al., 1996)

Method of
Affiliate´s
Establishment

Proposition 8: The degree of similarity between a parent company's HRM


system and an affiliate's HRM system will be greater in affiliates established
as greenfield operations than in those acquired or established as shared
partnerships.

Model of Strategic International Human Resource Management


(Adapted from Taylor et al., 1996)

Proposition 9: The greater the cultural distance Parent- Affiliate´s


Cultural Distance
between the host country of the affiliate and the
home country of the MNC, the less similarity
between the parent company's HRM system and
the affiliate's HRM system.

7
Model of Strategic International Human Resource Management
(Adapted from Taylor et al., 1996)

Corporate SIHRM Affiliate´s HRM

Parent´s Affiliate´s Method of Parent- Affiliate´s


International Strategic Affiliate´s Cultural Distance
Strategy Role Establishment
Proposition 8
Proposition 1 and 2 Proposition 9
Proposition 6 and 7

SIHRM Proposition 5 Degree of Similarity of


Orientation Affiliate´s HRM System to
Parent´s HRM System

Proposition 3 and 4

Top
Management´s
Beliefs

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