International Human Resource Management and Global Strategic Alliances

Posted on Apr 30, 2024 in Economy

International Human Resource Management (IHRM)

IHRM involves procuring, allocating, utilizing, and motivating human resources in the international arena. International managers face challenges like quality and conflict, dealing with multiculturalism, dispersion, international taxation, relocation, and foreign culture orientation when selecting and developing expatriate managers.

Strategic IHRM Orientations

  • The Adaptive System: Imitates local HRM practices.
  • The Exportive System: Replicates the home country’s HRM system in host countries.
  • The Integrative System: Emphasizes global integration with some local variation.

Firms seeking a global orientation often start with the Board to gain international insights. They typically begin with nationals who have international experience and then move on to foreign nationals.

Staffing the Multinational Enterprise

Firms go through different stages to staff their multinational enterprises:

  • Ethnocentric Staffing
  • Polycentric Staffing
  • Regiocentric Staffing
  • Geocentric Staffing
Staffing Issues
  • Adjustment to corporate policies
  • Variations in employment markets and labor policies
  • Host Country Nationals (HCNs) adjusting to higher productivity requirements
  • Finding skilled HCNs

The Expatriate Workforce

Pros

  • Locals may not be ready for certain responsibilities.
  • Expatriates contribute essential knowledge and corporate history.
  • Expatriates serve as a mechanism for performance control and transmit corporate culture and goals.

Cons

  • Disincentive to the local workforce due to blocked promotions and poor wages.
  • Expatriates can hinder skill development, insight development, and initiative of locals.
  • High risk of expatriate failure leading to huge costs.

Expatriate Skills and Preparation

Expatriates need personal, people, and perception skills to succeed. Preparation is crucial and involves several stages:

  • Practical Information
  • Area Studies
  • Cultural Awareness Information

Expatriate Compensation and Repatriation

Expatriate compensation includes salary, insurances, housing, service allowances and premiums, and tax equalization.

Repatriation presents a major adjustment for expatriates. Many firms don’t guarantee reassignment or provide information about the next assignment. Repatriated employees often feel their foreign experience is underutilized. Additionally, firms often lack spouse career counseling and family repatriation assistance, leading to many expatriates leaving within a year of repatriation.

Global Strategic Alliances (GSAs)

GSAs are cross-border partnerships between firms from different countries to pursue mutual interests by sharing resources and capabilities.

Types of GSAs

  • Equity Joint Ventures (EJVs): Separate organizations created by two or more parent organizations that invest financial and other resources.
  • Cooperative Joint Ventures (CJVs): Contractual arrangements where profits and responsibilities are assigned through agreements.

CJV Types

  • Joint Exploration
  • Joint R&D
  • Joint Production
  • Joint Marketing
  • Joint Supply
  • Joint Management

Challenges and Solutions

GSAs can face challenges like differing strategic interests, loss of autonomy, property leakage, and potential competition from partners. To prevent these issues, firms should:

  • Select local partners with compatible goals.
  • Negotiate alliance contracts and structure GSAs to ensure effective ownership, resource sharing, and equity distribution.

Selecting a Local Partner

Considerations include:

  • Compatibility of Goals
  • Complementarity of Resources
  • Cooperative Culture
  • Commitment
  • Capability

Management Issues of Global Strategic Alliances

  • Managing inter-partner learning and knowledge integration.
  • Exercising managerial control.
  • Building trust and cooperation.
  • Planning for potential exit strategies.

Country Competitiveness

Country competitiveness refers to a country’s ability to generate wealth in world markets compared to other countries. Governments must create and sustain a competitive environment that favors business operations and productivity.

Productivity and Competitiveness

Productivity is crucial for competitiveness and determines a country’s standard of living and national income. It depends on product quality, features, and production efficiency. Productivity stems from how a country utilizes its resources, not just what resources it possesses.

Country Competitiveness and Multinational Enterprises (MNEs)

Nations influence international business operations through government policies, national values, culture, economic structures, institutions, and history, all contributing to country competitiveness.