Completing the Puzzle: Issues in the Development of the Field of International Human Resource

Management
Author(s): Peter J. Dowling
Source: MIR: Management International Review, Vol. 39, No. 3, Strategic Issues in International
Human Resource Management (1999), pp. 27-43
Published by: Springer
Stable URL: http://www.jstor.org/stable/40835829
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mir Special Issue 1999/3,pp. 27-43

mir
_^

#_^

Manoc|6ni6nt
International Review
Gabler Verlag 1999

Peter J. Dowling

Completingthe Puzzle:
Issues in the Development of the Field of
InternationalHuman Resource Management
Abstract
The aimofthispaperis to examinedevelopments
in thefieldof IHRM. Three
thevariousapproacheswhichhavebeentakento the
issuesareexamined:first,
betweendostudyofIHRM; second,thevariableswhichmoderatedifferences
recent
work
which
thetopic
and
examines
mesticandinternational
third,
HRM;
in multinational
humanresourcemanagement
ofstrategic
(MNEs).
enterprises

Key Results
It is essentialto identify
theapproachwhicha researcher
is takingto thesubwhat
defined
is
as
IHRM.
the
taken
influences
as
ject
approach
A modelis offered
whichsummarises
fivevariableswhichmoderate
differences
HRM.
betweendomesticandinternational
The modelofferedby De Cieri/Dowling
aims to assist in the
(forthcoming)
of ideas to further
cross-fertilization
developtheoryand empiricalresearchin
firms.
HRM
in
multinational
strategic

Author
Dr. PeterJ. Dowling,Professorof Management,University
of Tasmania,Launceston,Australia.
HumanResourceManagement
Conference,
Paderborn,
KeynoteAddressto theSixthInternational
June1998
Germany,

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27

PeterJ.Dowling

HumanResource
inthemid-1980sonthestateofthefieldofInternational
Writing
"the
concluded
that
Laurent
(1986)
(IHRM),
challengefacedbythe
Management
is to solve a multidihumanresourcemanagement
infantfieldof international
cultures"
mensionalpuzzlelocatedatthecrossroadofnationalandorganizational
the
field
of
IHRM
in
examine
The
aim
of
this
is
to
101).
developments
paper
(p.
thepuzzlenotedby
and to see ifanyprogresshas beenmadetowardscompleting
Laurent.In doingso thispaperwilldrawon workwhichhas beencompletedover
thelast tenyearswitha numberof colleagues- initiallywithRandallSchler
ofMelwithHelenDe Cieri(University
andmorerecently
(New YorkUniversity)
Marion
of
Welch
School
Denice
Festingand
bourne),
Management),
(Norwegian
are examthree
issues
ofPaderborn).1
Specifically,
WolfgangWeber(University
ined:first,
thevariousapproacheswhichhave been takento thestudyof IHRM;
betweendomesticand internasecond,thevariableswhichmoderatedifferences
human
recentworkwhichexaminesthetopicofstrategic
tionalHRM; andthird,
in multinational
resourcemanagement
(MNEs).
enterprises

Approaches to International HRM

HRM hasbeencharacterized
Thefieldofinternational
bythreebroadapproaches.2
a
cross-cultural
in
this
field
work
management
approachand
emphasized
Early
an
international
from
within
examineshumanbehavior
perspective
organizations
(Adler 1997,Phatak1997). A secondapproachdevelopedfromthecomparative
seeks to describe,compareand analyze
relationsand HRM literature
industrial
for
HRM systemsin variouscountries
1994).
(see
example,Brewster/Hegewisch
firms(see
A thirdapproachseeks to focuson aspectsof HRM in multinational
forexample,Dowling/Welch/Schuler
1999).
The approachtakenby theauthorand his colleaguesreflectsthethirdapthattheprocessof
proachand ourobjectivehas beento exploretheimplications
we
HRM.
In particular,
of
and
has fortheactivities policies
internationalization
in howHRM is practisedin multinationals.
areinterested
view of IHRM and in myview it
Each approachtakesa somewhatdifferent
is takingto thesubjectas
theapproachwhicha researcher
is essentialtoidentify
One onlyhas to look at
IHRM.
as
theapproachtakeninfluenceswhatis defined
to see
HRM conferences
at thevariousInternational
in theprogram
thediversity
HRM.
international
of whatconstitutes
thatthereare multipledefinitions
Defining International HRM fromthe Perspective of a Multinational Firm

ofinternational
a definition
HRM, we shouldfirstdefinethegenBeforeoffering
refers
to
thoseactivitiesundertaken
HRM
eralfieldofHRM. Typically,
byan or28

"**
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thePuzzle
Completing
HRM
Figure1. ModelofInternational

HumanResourceManagement:Fact of fiction,
Source: AdaptedfromP. V. Morgan,International
PersonnelAdministrator,
31,9, 1986,p. 44

utilizeits humanresources.These activitieswouldinganizationto effectively

cludeat leastthefollowing:

Humanresourceplanning
Staffing
Performance
management
Traininganddevelopment
andBenefits
Compensation
Laborrelations

We can now considerthequestionof whichactivitieschangewhenHRM goes

international.
A paperbyMorgan( 1986) onthedevelopment
ofinternational
HRM
a
is helpfulin considering
thisquestion.He presents modelofinternational
HRM
(shownin Figure1) thatconsistsof threedimensions:
1.The threebroadhumanresourceactivitiesofprocurement,
allocation,andutilization.(These threebroadactivitiescan be easily expandedintothesix HR
activitieslistedabove).
2. The threenationalor country
HRM activcategoriesinvolvedin international
ities:(1) thehost-country
wherea subsidiarymaybe located,(2) thehomeand (3) "other"countries
wherethefirmis headquartered,
thatmaybe
country
thesourceoflaboror finance.
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29

PeterJ.Dowling

firm:(1) host-country
nation3. The threetypesofemployeesofan international
nationnationals(PCNs), and(3) third-country
als (HCNs), (2) parent-country
als (TCNs).3 Thus,forexample,IBM employsAustraliancitizens(HCNs) in
oftensendsU.S. citizens(PCNs) toAsia-PacificcounitsAustralian
operations,
and maysendsome of its Singaporeanemployeeson an
trieson assignment,
to itsJapaneseoperations(as TCNs).
assignment
HRM as theinterplay
amongthesethreedimensions
Morgandefinesinternational
- humanresourceactivities,
and
of
types employees, countriesof operation.We
HRM involvesthesameactivitiesas docan see thatin broadtermsinternational
refers
to
HR planningand staffing).
mesticHRM: (e.g. procurement
However,
domesticHRM is involvedwithemployeeswithinonlyone nationalboundary.
counIn thispaperit is arguedthatthecomplexities
ofoperatingindifferent
that
a
variable
is
workers
national
triesand employing
key
categoriesof
different
differences
rather
than
differentiates
domesticandinternational
HRM,
anymajor
thecomplexbetweentheHRM activitiesperformed.
Manyfirmsunderestimate
evidence
to suggest
and
there
is
some
itiesinvolvedin international
operations,
arenamayoftenbe linkedto poormanthatbusinessfailuresin theinternational
1978).
agementofhumanresources(Desatnick/Bennett
domesticHRM is takingon some of theflavorof international
Increasingly,
workforce.
HRM as it deals moreand morewitha multicultural
Thus,some of
thecurrent
focusof domesticHRM on issues of managingworkforce
diversity
HRM. However,itmust
mayprovetobe beneficialtothepracticeofinternational
withina singlenationalcontextmay
ofdiversity
thatmanagement
be remembered
This
somemodification.
contextwithout
transfer
toa multinational
notnecessarily
leads to thesecondissueexaminedin thispaper,thevariablesthatmoderatedifHRM.
ferencesbetweendomesticandinternational

Variables that Moderate Differences between Domestic

and International HRM
involvedin operatIn ourdiscussionso far,we have arguedthatthecomplexity
nationalcategoriesofemploycountriesand employing
different
ingindifferent
domesticand international
ees is a keyvariablethatdifferentiates
HRM, rather
In additionto
betweentheHRM activitiesperformed.
thananymajordifferences
thereare fourothervariablesthatmoderate(thatis, eitherdiminish
complexity,
HRM. Thesevarbetweendomesticand international
or accentuate)differences
theindustry
iables (shownin Figure2) are theculturalenvironment',
(or indusreliance
extent
the
is
multinational
the
which
with
involved',
of
of
primarily
tries)
domesticmarket',
and theattitudesofsenon itshome-country
themultinational
30

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thePuzzle
Completing
HRM
BetweenDomesticandInternational
Figure2. VariablesthatModerateDifferences

The culturalenvironment.

/
(

The industry
(or industries)
whichthe
with|n
multinationalis primarily
involved.

Domestic& InternationalActivities
ofthe

Extentof relianceof the

multinational
on itshomeordomestic
country
market,

HRMFunction

'

involvedin
Complexity
in different
operating
countries
and employing
different
nationalcategories
I ofemployes.

J
V
of senior
Attitudes
management

ior management.
Thesefouradditionalvariablesare discussedin thissectionof
thepaper.
The Cultural Environment

Therearemanydefinitions
of culture,butthetermis usuallyused to describea
That
members
of a groupor societysharea distinctway of
is,
shapingprocess.
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31

Peter J. Dowling

overtime
lifewithcommonvalues,attitudes,
and behaviorsthatare transmitted
in a gradual,yetdynamic,process.As Phatak(1995) explains:
A personis notbornwitha givenculture:rathershe or he acquiresit through
thesocializationprocessthatbeginsat birth:an Americanis notbornwitha
forbeer:thesebelikingforhotdogs,or a Germanwitha naturalpreference
transmitted,
are culturally
havioralattributes
(p. 48)
An important
ofcultureis thatitis so subtlea processthatone is not
characteristic
andbehaviors.One usuallyhas
its
effect
on values,attitudes,
conscious
of
always
culturein orderto fullyappreciatethiseffect.
to be confronted
witha different
or businessperson,
abroad,eitheras a tourist
experiencessituAnyonetravelling
in language,food,dress,hygiene,and
culturaldifferences
ationsthatdemonstrate
as novel,even
attitude
to time.Whilethetravelercan perceivethesedifferences
a
new
such
in
to
live
and
work
for
country, differences
enjoyable, peoplerequired
a
shock
can provedifficult.
experienced
phenomenon
Theyexperienceculture
requiresmanyadjustbypeoplewhomoveacrosscultures.The newenvironment
shortperiodoftime,challenging
mentsina relatively
people'sframesofreference
comes
to suchan extentthattheirsenseof self,especiallyin termsof nationality,
new
cultural
a
reaction
to
shock
intoquestion.People,in effect,
expeexperience
or do
becausetheymisunderstand
riencesthatcause psychologicaldisorientation
cues. Cultureshockcan lead to negativefeelingsabout
notrecognizeimportant
home(Harris/Moran
thehostcountry
anditspeopleanda longingtoreturn
1979).
andmovement
ofpeothe
interaction
businessinvolves
Because international
and when
of culturaldifferences
an appreciation
ple acrossnationalboundaries,
is essential.Researchintotheseaspectshasassisted
areimportant
thesedifferences
varias an important
of theculturalenvironment
in furthering
ourunderstanding
HowHRM.
and
international
betweendomestic
able thatmoderatesdifferences
to exploreand exresearchattempts
and comparative
ever,whilecross-cultural
with
suchresearch.
are
associated
there
and
similarities
differences,
problems
plain
of
on eitheran exactdefinition
A majorproblemis thatthereis littleagreement
culture
ofthisconcept.Formanyresearchers,
cultureoron theoperationalization
a rangeofsocial,historic,
hasbecomeanomnibusvariable,representing
economic,
or dissimilarandpoliticalfactorsthatareinvokedposthoc to explainsimilarity
ityin theresultsofa study.As BhagatandMcQuaid (1982) have noted,
fornationwithoutanyfurther
Culturehas oftenservedsimplyas a synonym
foundin thecharacterisnational
differences
In
conceptualgrounding. effect,
as culturaldifferor theirmembershavebeeninterpreted
ticsoforganizations
ences,(p. 653)
mustspecifytheirdefinition
ofculturea
researchers
To reducethesedifficulties,
careful
not
to
assume
that
national
differences
be
and
hoc
than
rather
post
priori
differences.
cultural
necessarily
represent
32

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CompletingthePuzzle

researchconcernsthe emic-eticdistinction
Anotherissue in cross-cultural
Glinow1997). Ernierefers
De
1995,Teagarden/Von
(Berry1980, Cieri/Dowling
toculture-specific
aspectsofconceptsorbehavior,andeticreferstoculture-commonaspects.These termshave been borrowedfromlinguistics:A phonemic
soundsspecificto a givenlanguage,and a phosystemdocumentsmeaningful
neticsystemorganizesall soundsthathave meaningin any language(Trianresearchordis/Brislin
1984). Boththeernieand eticapproachesare legitimate
ientations.
A majorproblemmayarise,however,if a researcher
imposesan etic
acrosscultures)whenthereis littleor no
approach(thatis, assumesuniversality
evidencefordoingso. A well-known
exampleofan imposedeticapproachis the
thatdominatedmuchof US and Europeanmanagement
convergence
hypothesis
researchin the1950s and 1960s.This approachwas based on twokeyassumpwasthattherewereprinciples
ofsound
tions(Hofstede1983). Thefirst
assumption
the
of
national
environments.
that
held
existence
Thus,
regardless
management
oflocal ornationalpracticesthatdeviatedfromtheseprinciplessimplyindicated
a needto changetheselocal practices.The secondassumptionwas thattheuniofsoundmanagement
versality
practiceswouldlead to societiesbecomingmore
andmorealikein thefuture.
GiventhattheUnitedStateswas theleadingindustrialeconomy,thepointof convergence
wouldbe towardtheUS model.Adophas led to someratherpoorpredictions
offutionoftheconvergence
hypothesis
in thelate 1950s,Harbison(1959) contureperformance.
For example,writing
cludedthefollowingwithregardto theJapanesemanagerialsystem:
Unlessbasicratherthantrivialortechnicalchangesin thebroadphilosophyof
organization
buildingare forthcoming,
Japanis destinedto fallbehindin the
ranksofmodernindustrialized
nations,(p. 254)
theconvergence
To use Kuhn's(1962) terminology,
becamean estabhypothesis
founddifficult
togiveup,despitea growlishedparadigmthatmanyresearchers
a divergencehypothesis.
In an important
ingbodyofevidencesupporting
paper
the
Child
made
the
debate,
(1981)
reviewing convergence/divergence
pointthat
thereis evidenceforbothconvergence
anddivergence.
The majorityof theconvergencestudies,however,focuson macrolevelvariables(forexample,structure
andtechnology
andthemajority
ofthedivergence
usedbyfirmsacrosscultures),
studiesfocuson microlevelvariables(forexample,thebehaviorofpeoplewithin
countriesare becomfirms).His conclusionwas thatalthoughfirmsin different
ing morealike (an etic or convergenceapproach),thebehaviorof individuals
withinthesefirmsis maintaining
its culturalspecificity
(an ernieor divergence
ernie
and
etic
As
noted
both
research
above,
approach).
approachesarelegitimate
but
difficulties
arise
if
the
distinction
between
orientations, methodological
may
thesetwoapproachesis ignoredor if unwarranted
universality
assumptionsare
made.4The debateon assumptions
is notlimitedto theliterature
of universality
ininternational
thisissuehas becomea topicofdebatein
management.
Recently,
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33

PeterJ.Dowling

thefieldofinternational
studieswhereresearchfrominterrelationsandstrategic
nationalmanagement
is cited(Huntington
1996).
The Importance of Cultural Awareness

itis nowgenconcernsaboutcross-cultural
research,
Despitethemethodological
erallyrecognizedthatculturallyinsensitiveattitudesand behaviorsstemming
fromignoranceor frommisguidedbeliefs("myway is best,"or "whatworksat
butoftencause international
homewill workhere")notonlyare inappropriate
is essentialfor
cultural
differences
an
awareness
of
failure.
business
Therefore,
as well as in thehostlocation(Tung
theHR managerat corporateheadquarters
anddismissalwillbe de1993). Activitiessuchas hiring,
rewarding,
promoting,
are
basedona valuesystem
and
often
the
host
the
of
termined
country
by practices
head
firm
decide
to
culture.
A
that
may
up a newoverseas
country's
peculiarto
generalmanagerbutappointas theHR department
operationwithan expatriate
a
a
who
is familiarwiththehostcountry'sHR practices.
local,
manager
person
Thispracticecan cause problems,
generalmanager,as
though,fortheexpatriate
a
new
who
was
in
of
miningventurein Indocharge
happenedto an Australian
could notunderstand
nesia. The local managerresponsibleforrecruitment
why
theAustralianwas upsetto findthathe had hiredmostof his extendedfamily
The Indonesianwas simrather
thanstaffwiththerequiredtechnicalcompetence.
he was in a position
fulfilled
since
plyensuringthathis dutyto his familywas
intertoemploymostofthem,hewas obligatedtodo so. The Australian,
however,
to
his
a
as
actions
the
Indonesian's
according
nepotism, negativepractice
preted
Cieri 1989).
ownvalue system(Dowling/Welch/De
Wyatt(1989, p. 5) recountsa goodexampleof thefallacyof assuming"what
in anotherculworksat homewillworkhere"whendealingwithworksituations
ture.HR department
staffof a largefirmin Papua New Guineawereconcerned
overa numberof accidentsinvolvingoperatorsof verylarge,expensive,earththeaccidentsfoundthat
managersinvestigating
movingvehicles.The expatriate
local driversinvolvedin theaccidentswerechewingbetelnut,a commonhabit
formostof thecoastalpeoplesof Papua New Guinea and otherPacificislands.
suchas alcohol,theexpatriate
managAssociatingthebetelnutwithdepressants
ers bannedthechewingof betelnutduringworkhours.In anothermoveto refreecoffeewas providedatloadingpoints,anddrivducethenumber
ofaccidents,
erswererequiredto alightfromtheirvehiclesat theselocations.Whatthemanacceptablecoffee,is,
agersdid notrealizewas thatbetelnut,liketheirculturally
were
the
drivers
of
in fact,a stimulant,
chewingit to coverup the
thoughsome
work.As Wyattpointsout,manyinfactthattheydrankbeerbeforecommencing
in muchthesamewayas theexa
as
nut
betel
used
workers
pick-me-up
digenous
used
coffee.
patriates
34

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thePuzzle
Completing

can cause problemsforboththeexAdjustingtoa newculturalenvironment

and
the
spouse and familymembers.Coping
accompanying
patriateemployee
arerelhowandwhenthesedifferences
andrecognizing
withcultural
differences,
evant,is a constant
employee.Helpingtoprepareexchallengefortheexpatriate
has now becomea key
patriatesand theirfamiliesfortheculturalenvironment
that
multinationals
for
HR
in
those
appreciate(orhavebeen
activity
departments
to appreciate)theimpactthattheculturalenvironforced,through
experience,
and well-being.
mentcan haveon staffperformance
IndustryType

ifthefirmis a conglomerPorter(1986) suggeststhattheindustry

(or industries
of
considerable
in
which
a
firm
is
involved
is
multinational
beate)
importance
ofinternational
to ancause patterns
varywidelyfromone industry
competition
of international
is themultidoother.At one endof thecontinuum
competition
in each country
is essentially
mesticindustry,
onein whichcompetition
independentofcompetition
inothercountries.
Traditional
disexamplesincluderetailing,
andinsurance.
is theglobal industry,
Attheotherendofthecontinuum
tribution,
is significantly
influone in whicha firm'scompetitive
positionin one country
encedby itspositionin othercountries.Examplesincludecommercialaircraft,
betweena multidomestic
indusandcopiers.Thekeydistinction
semiconductors,
is describedbyPorteras follows:
tryanda globalindustry
The globalindustry
buta series
is notmerelya collectionofdomesticindustries
in whichtherivalscompeteagainsteach otheron
oflinkeddomesticindustries
a truly
worldwide
basis... . In a multidomestic
stratthen,international
industry,
a
that
are
to
The
issues
interseries
of
domestic
egycollapses
strategies.
uniquely
nationalrevolvearoundhowtodo businessabroad,howtoselectgoodcountries
inwhichtocompete(orassesscountry
toachievetheonerisk),andmechanisms
timetransfer
welldeveloped
ofknow-how.
Thesearequestionsthatarerelatively
intheliterature.
In a globalindustry,
international
activities
however,
managing
likea portfolio
willundermine
thepossibility
of achievingcompetitive
advana firmmustin somewayintegrate
itsactivitieson a
tage.In a globalindustry,
worldwide
basistocapturethelinkagesamongcountries
(Porter1986,p. 23).
The roleoftheHRM function
in multidomestic
andglobalindustries
can be anavalue-chain
In
Porter's
model
Porter's
HRM is
model,
(Porter1985).
lyzedusing
seen as one of foursupportactivitiesforthefiveprimary
activitiesof thefirm.
Sincehumanresourcesareinvolvedin each oftheprimary
and supportactivities,
theHRM function
is seenas cutting
acrosstheentirevaluechainofan firm.Ifthe
firmis ina multidomestic
theroleoftheHR department
willmostlikely
industry,
be moredomesticinstructure
andorientation.
Attimestheremaybe considerable
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35

Peter J. Dowling

demandforinternational
servicesfromtheHRM function
(forexample,whena
locationand theneedforexpatriate
newplantor officeis establishedin a foreign
wouldnotbe pivotal-indeed,
manyofthese
employeesarises),buttheseactivities
and/or
servicesmaybe providedvia consultants
employees.The main
temporary
activitiesof thefirm
rolefortheHRM function
wouldbe to supporttheprimary
eithercost/
in each domesticmarketto achievea competitive
advantagethrough
differentiation
or
1984). If the
(Schuler/MacMillan
efficiency product/service
forcoordination"
multinational
is in a globalindustry,
however,the"imperative
to delivertheinterstructured
describedbyPorterwouldrequirea HRM function
activitiesof themultinational.
nationalsupportrequiredby theprimary
raisescomplexproblemsforanymultinaThe needto developcoordination
tional.As Laurent(1986) has noted:
multinational
and developtheircorporateidentity,
In orderto build,maintain,
in
their
of
for
needto strive consistency
ways managingpeople
organizations
on a worldwidebasis. Yet,and in orderto be effective
locally,theyalso need
ofdifferent
societies.
to adaptthosewaysto thespecificculturalrequirements
the
Whiletheglobalnatureofthebusinessmaycall forincreasedconsistency,
differentiation
for
(p. 97).
maybe calling
varietyofculturalenvironments
Laurentproposesthata trulyinternational
conceptionof humanresourcemanthe
would
agement
require followingsteps:
thatits own peculiarways
1. An explicitrecognition
by theparentorganization
andvaluesofitshome
ofmanaginghumanresourcesreflectsomeassumptions
culture.
thatitspeculiarwaysarenei2. Anexplicitrecognition
bytheparentorganization
and likelyto extheruniversally
betternorworsethanothersbutare different
abroad.
and weaknesses,particularly
hibitstrengths
thatitsforeignsubsidiaries
3. An explicitrecognition
bytheparentorganization
intrinsically
waysofmanaging
peoplethatareneither
mayhaveotherpreferred
betternorworse,butcouldpossiblybe moreeffective
locally.
but
cultural
tonotonlyacknowledge
4. A willingness
fromheadquarters
differences,
and
usable.
therefore
them
discussible
to
make
also totakeactivestepsinorder
5. The buildingof a genuinebeliefbyall partiesinvolvedthatmorecreativeand
effective
waysofmanagingpeoplecouldbe developedas a resultofcross-culturallearning.
In offering
thisproposal,Laurentacknowledgesthattheseare difficult
stepsthat
fewfirmshavetaken:
Theyhave moreto do withstatesof mindand mindsetsthanwithbehaviors.
a priand thismayrepresent
As such,theseprocessescan onlybe facilitated
manof
international
human
resource
in
executives
for
mission
charge
mary
agement(Laurent1986,p. 100).
36

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CompletingthePuzzle

Implicitin Laurent'sanalysisis theidea thatby takingthestepshe describes,a

a global strategy
via coordination
of acmultinational
to implement
attempting
the
and
work
difficulties
be
better
able
to
would
tivities
through
complextradeare takinga more
multinationals
in such a strategy.
offsinherent
Increasingly,
are
and training
HRM
and
staff
transfers
of
to
the
role
using
strategic
approach
activities.
of
in
coordination
to
assist
programs
Reliance of the Multinationalon its Home-country Domestic Market

A pervasivebutoftenignoredfactorwhichinfluencesthebehaviorof multinaon
HR practicesis theextentofrelianceofthemultinational
tionalsandresultant
domesticmarket.Whenforexample,we look throughlistsof
itshome-country
verylargefirms(suchas thosethatappearin Fortuneand otherbusinessmagawouldbe domiassumedthata globalmarketperspective
zines),itis frequently
nantinthefirm'scultureandthinking.
However,size is nottheonlykeyvariable
- theextentof relianceof themultinational
on
whenlookingat a multinational
In fact,formanyfirms,
domesticmarketis also veryimportant.
itshome-country
a smallhomemarket
is one of themajormotivesfor"goinginternational".
on TradeandDevelopment
The UnitedNationsConference
(UNCTAD) inits
calculateswhatit refersto as an "inannualsurveyof foreigndirectinvestment
whichis an averageofratiosofforeignassetstototalasdexoftransnationality"
to totalemployment.5
to
total
sales
sales; and foreignemployment
sets;foreign
multinational
themostforeign-oriented
Based on thisindexof transnationality,
is Nestl,with87% of assets,98% of sales and 97% of employeeslocatedoutare as follows:
The "topten"multinationals
sideofSwitzerland.
1. Nestl(Switzerland)
2. Thomson(Canada)
Finacire(Switzerland)
3. Holderbank
4. Seagram(Canada)
5. Solvay(Belgium)
6. Asea BrownBoveri(Sweden/Switzerland)
7. Electrolux(Sweden)
8. Unilever(Britain/Netherlands)
9. Philips(Netherlands)
10. Roche(Switzerland)
listedand Coca-Cola
Thereis nota US firmin thefirstfifteenmultinationals
The reasonforthisis as
andMcDonald'sareranked31stand 42ndrespectively.
- thesize ofthedomesticmarket
obviousas itis important
for USfirms.A very
all aspectsofhowa multinational
influences
organizesits
largedomesticmarket
activities.Forexample,it will be morelikelyto use an international
divisionas
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37

PeterJ.Dowling

thewayit organizesitsinternational
activitiesand evenif it uses a globalproduct structure,
theimportance
of thedomesticmarketwill be pervasive.A large
domesticmarketwill also influencetheattitudesof seniormanagers(discussed
in moredetailin thenextsection)and will generatea largenumberofmanagers
or even exclusivelydomesticmarket
withan experiencebase of predominantly
advancedeconomieslike Switzermultinationals
from
small
experience.Thus,
land (population7 million),Belgium(10 million),Sweden(9 million)and The
Netherlands
(15 million)are in a quite different
positionto US multinationals
intheworldwithover250 millionpeobasedinthelargestsinglenationalmarket
ple. The demandsof a largedomesticmarketpresenta challengeto theglobalof manyUS firms.As Cavusgil(1993) has notedin an important
izationefforts
busibusinesseducation,thetaskofinternationalizing
bookon internationalizing
nesseducationin theUnitedStatesis a largeone. So too,is thetaskfacingmany
US firmsin termsof developingglobalmanagers.
Attitudes of Senior Management to International Operations

The pointmadebyLaurentthatsomeofthechangesrequiredtotrulyinternation"have moreto do withstatesof mindand mindsetsthan

alize theHR function
of a finalvariablethatmaymoderate
theimportance
withbehaviors"illustrates
anddomesticHRM: theattitudes
ofseniormanbetweeninternational
differences
operations.
agementto international
does nothave a stronginternational
It is likelythatif seniormanagement
theimportance
ofinternational
orientation,
operationsmaybe underemphasized
in
terms
of
even
(or possibly
corporategoals and objectives.In such
ignored)
situations,
managersmaytendto focuson domesticissues and minimizedifferand domesticenvironments.
ences betweeninternational
Theymayassumethat
HRM
betweendomesticand international
thereis a greatdeal of transferability
in
human
resources
in
differences
to
This
failure
managing
recognize
practices.
in-regardlessof whetherit is because of ethnocentrism,
foreignenvironments
results
of
international
a
lack
or
information,
-frequently
perspective
adequate
in international
in majordifficulties
1978). The
operations(Desatnick/Bennett
in foswith
work
is
to
HR
topmanagement
challengeforthecorporate manager
teringthedesired"globalmindset."This goal requires,ofcourse,a HR manager
HR policiesthat
and implement
who is able to thinkgloballyand to formulate
facilitatethe developmentof globallyorientedstaff(Bartlett/Ghoshal
1992,
Pucik 1997).

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thePuzzle
Completing

Theoretical Developments: A Framework of Strategic HRM

in Multinational Firms
international
HRM has beenpresented
An integrative
framework
of strategic
by
Schler,Dowlingand De Cieri(1993). Since thepublicationof Schuleret al.'s
theneedtoconsiderrevisionoftheframehavebrought
framework,
developments
have developeda revisedframeworkand De Cieri & Dowling(forthcoming)
firmswhichis shownin Figure3.
workof SHRM in multinational
As depictedin Figure3, multinationals
operatein thecontextof worldwide
conditions,
nation,region,andinincludingtheexogenouscontextsof industry,
and
networks
alliances.
For
the
ter-organizational
example, removalof internal
tradebarriersand integration
of nationalmarketsin the EuropeanUnion has
a newrangeof inter-organizational
In addition,theintrobrought
relationships.
ductionoftheEuropeanMonetary
UnionfromJanuary1999 has thepotentialto
hold significant
implicationsforinter-organizational
relationships.
Exogenous
factorsexertdirectinfluenceon endogenousfactors,SHRM strategy
and pracconcernsandgoals. If we wereto examinetheimpactof
tices,and multinational

Figure3. A Modelof StrategicHRM in Multinational

Enterprises
Exogenous Factors

Industry
characteristics
Country/regional
characteristics
Inter-organizational
networks

EndogenousFactors
.MNEstructure

- Structure
ofinternational
operations
- Intra-organizational
networks

.
.
w
r
j- Mechanisms
ofco-ordination
_
.
. . . ,
...
Organizational
lifecycle
& industry
6
. .
.
.International
mode
entry
%,VT_
MNE strategy
. .

- Corporate-level
strategy
-Business-level
strategy
Experiencein managing
international
operations
Headquarters
international
orientation

*-*

Strategic HRM

-+-+

mne Concerns

HR function
strategy
HR practices

Goals
_
Competitiveness
:
_
Efficiency
_ ,
, . . .
Balance
of
global
.
,local
integration
6 .
responsiveness
r
.Flexibility

Source: De Cieri,H/Dowling,
P. J.,StrategicHumanResourceManagementin Multinational
Enterprises:Theoreticaland EmpiricalDevelopments,in Wrightet al. (eds.), Research
and Theoryin SHRM: AnAgendafor the21st Century,
CT: JAIPressforthGreenwich,
coming.

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39

PeterJ.Dowling

economicdifficulties
in theAsia Pacificregionsince 1997, we wouldbe likely
to see examplesof thisinfluence.
Endogenousfactorsareshowninorderofmost'tangible'tomost'intangible'.
and
ofinternational
Multinational
referstoboththestructure
structure
operations
The lifecycle
networksand mechanismsof co-ordination.
intra-organizational
in whichit operatesare important
influences
stageof thefirmand theindustry
and
modes
levels
of firm
forSHRM in multinationals
as are international
entry
The mostintangible
strategy.
endogenousfactorsare experiencein international
in
international
orientation.
businessandheadquarters'
Followingdevelopments
ofresourcedetheliterature
andTaylor,BeechlerandNapier's(1996) integration
themodelsuggeststhatthereare rependenceand resource-based
perspectives,
conbetweenendogenousfactors,
SHRM, andmultinational
ciprocalrelationships
cernsand goals.
between
and practices,reciprocalrelationships
Withregardto HR strategy
have
been
and
and
SHRM strategy practices
by rehighlighted
strategicissues
searchtakinga resource-based
(Tayloret al. 1996,Kamoche1997).
perspective
manIn addition,severalstudieshaveshownthatHR activitiessuchas expatriate
factors.
Effective
and
are
influenced
both
exogenous
by
endogenous
agement
SHRM is expectedto assistthefirmin achievingits goals and objectives.This
thatexaminesthe
view is influencedby theemergingbodyof SHRM literature
andpractices,
SHRM
between
characteristics,
strategy
endogenous
relationships
and firmperformance
or competitiveadvantage(Becker/Gerhart
1996, Dyer/
will gain
Reeves 1995). Whilesome researchhas suggestedthatmultinationals
andpractices,toenhance
SHRM strategy
byutilizingandintegrating
appropriate
firmperformance
(Festing1997,Kobrin1994), thereremainsinconclusiveevidence and important
(Caligiuri/
questionsaboutthenatureof thisrelationship
Stroh 1995, Peterson/Sargent/Napier/Shim
1996, Sparrow/Schuler/Jackson
aims to assistin
1994). The modelofferedby De Cieri/Dowling
(forthcoming)
and
ofideas tofurther
thecross-fertilization
developtheory empiricalresearchin
firms.
HRM
in
multinational
strategic
To summarize,thispaperhas endeavoredto meetthreeobjectives:First,to
outlinethevariousapproacheswhichhavebeentakento thestudyofIHRM; secbetweendomesticand
ond,to discussthevariableswhichmoderatedifferences
whichexaminesthe
recent
work
outline
to
and
international
HRM;
third, briefly
Atin multinational
enterprises.
topicof strategichumanresourcemanagement
the
tentionto thesethreepointswill,I believe,takeus some way to completing
which
Laurent
has
described.
HRM
International
of
puzzle

40

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thePuzzle
Completing

Endnotes
1 A summary
ofthisworkappearsinDowling/Welch/Schuler
(1999).
2 This sectionis based uponvariouspresentations
by thefirstauthorand thefollowingpaper:De
Cieri/Dowline
(forthcoming).
itis oftenoverlookedthatTCNs
thatPCNs arealwaysexpatriates,
3 Whileitis clearintheliterature
discussionof this
are also expatriates.
See De Cieri/McGaughey/Dowling
(1996), forfurther
point.
4 See Ricks(1993) fora comprehensive
collectionof mistakesmadebymultinational
firmswhich
intheirinternational
attention
totheirculturalenvironment
businessoperations.
paidinsufficient
and Tang(1994), Tayeb(1994),
For further
literature
on thistopicsee thefollowing:Kirkbride
Sparrow,SchlerandJackson(1994), Morishima(1995), DeleryandDoty(1996).
whichappearedinTheEconomist( 1997).
5 Thissectionis basedona shortarticleon Multinationals
The UNCTAD indexuses 1995data.

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43