Assignment On International human resource management strategies in multinational corporations

Theoretical assumptions and empirical evidence from German firms

Globalization is becoming more and more important to companies all over the world. A major component of the globalization of business is the field of human resource management. A trend over the past few years has been to identify the linkage of human resource management with strategy not only on the national level but also on the international level. Thus, Strategic International Human Resource Management (SIHRM) is a growing field of research for academics and an important field of concern for practitioners in multinational corporations.

In this paper, I will first analyze the state of academic research in the field of international human resource management (IHRM). Then, considering research deficits, a theory-based model of SIHRM is developed. The main reasoning of the model is that the corporate strategy of the multinational corporation has a significant influence on the qualification needs and behaviors of the managers. These qualifications and behaviors can be managed efficiently by the use of specific international human resource management strategies. The model's relevance for practitioners will be outlined when describing and interpreting the results of case studies that have been conducted in ten German multinational corporations.

The analysis of the publications in the area of IHRM since 1980 reveals an interesting trend. In the 1980s, the interest was very much focused on the improvement of HRM measures such as international staffing, repatriation, international compensation, or cross-cultural training.(1) The only concept that has been used to address the strategic orientation of IHRM was the EPRG-profile developed by Heenan and Perlmutter (1979).(2) Then, since the beginning of this decade, the focus of IHRM research has become more comprehensive and more context oriented.(3) The result has been a growing number of papers which address SIHRM issues.

The most important conceptualizations on SIHRM include the following: Adler/Ghadar (1991), Milliman/Von Glinow/Nathan (1991), Wunderer (1992), Adler/Bartholomew (1992), Kumar (1992), Schuler/Dowling/De Cieri (1993), Beechler/Bird/Raghuram (1993), and Taylor/Beechler/Napier (1996).(4) All of the above mentioned conceptualizations have a similar understanding of SIHRM. They have developed explanations or guidelines for the HRM function in the multinational corporation.(5) A very comprehensive definition of SIHRM is the following by Schuler, Dowling, and De Cieri:

"Human resource management issues, functions and policies and practices

that result from the strategic activities of multinational corporations

and that impact the international concerns and goals of those corporations"

(Schuler/Dowling/De Cieri, 1993, p. 422).

Following the idea of strategic human resource management first mentioned by Tichy/Fombrun/Devanna a further aspect -- the organization structure -- should be included in the definition (Tichy/Fombrun/Devanna 1982). Consequently, in this paper I define

SIHRM as human resource management activities, which result from the

strategic activities and the organization structure of the multinational

corporation, and which impact its goals.

Having outlined some important conceptualizations of strategic international HRM, research issues can now be derived. It has often been criticized that there is a lack of theoretical foundation in human resource management research.(6) This critique can also be attributed to many publications on international human resource management.(7) Most of the above mentioned conceptualizations pursue a contingency perspective. Failure to recognize contingency assumptions can lead researchers to ignore some of the complexities inherent in managing the multinational corporation. However, the use of a contingency perspective does not explain the reasons for systematic variation between certain variables.

This is the point of departure of this paper. The first aim is to develop a theory-based model for SIHRM. For the construction of the model the contingency perspective is supplemented by another theoretical concept. The second aim is to give empirical evidence for the stated assumptions. The model follows one of the propositions about theoretical perspectives on strategic human resource management outlined by Wright and McMahan (1992). According to these authors potential theoretical perspectives for strategic HRM include the resource-based view of the firm, the behavioral perspective, cybernetic systems, agency and transaction cost theory, resource dependence/power models, and institutionalism.

Costs are a very important factor when deciding about assigning people to foreign subsidiaries and about the management of the human resources function in a multinational corporation.(8) However, they are often neglected in HRM research. Therefore, the arguments in this paper will mainly follow an economic perspective. Based on the concept of transaction cost theory by Williamson (1975, 1985, 1991) a model of strategic international human resource management is developed.