International Human Resource Management

Managing people in a multinational context

Chapter Objectives
We learn about:
Global perspective on IHRM with external partners Cross-border alliances Equity-based alliances (M&As, IJVs) Globalizing SMEs

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Terms
M&A IJV

SME non-equity cross-border alliance equity modes UNCTAD merger TNC acquisition born globals boundary spanning positions
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pre-M&A due diligence integration planning implementation planning

resources processes values

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Figure 3-1

Equity and non-equity modes of foreign operation

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Figure 3-2

The formation processes of M&As and HR challenges

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Figure 3-3

Mergers and acquisitions in US billions

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Typical cross-border M&A problems

1. Within first year of merger, up to 20% of executives may be lost. Over a longer time frame, this tends to increase even further. 2. Personnel issues are often neglected. 3. A high number of M&As fail or do not produce the intended results.

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Figure 3-4

Impact of the human integration and task acquisition on acquisition outcome

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Figure 3-5

HR activities in the phases of a cross-border M&A

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Table 3-1

Post-acquisition trends in HRM practices

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Figure 3-6

Formation of an international equity joint venture

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The main reasons for engaging in an IJV

1. 2. 3. 4. 5. 6. 7. To gain knowledge and to transfer that knowledge Host government insistence Increased economies of scale To gain local knowledge To obtain vital raw materials To spread the risks (e.g. share financial risks) To improve competitive advantage in the face of increasing global competition 8. Provide a cost effective and efficient response forced by the globalization of markets
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Figure 3-7

IJV development stages and HR implications

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Table 3-2

SME definition

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Top 10 barriers to international markets by SMEs

1. Shortage of working capital to finance exports. 2. Identifying foreign business opportunities. 3. Limited information to locate/analyze markets. 4. Inability to contact potential overseas customers. 5. Obtaining reliable foreign representation. 6. Lack of managerial time to deal with internationalization. 7. Inadequate quantity of and/or untrained personnel for internationalization. 8. Difficulty in managing competitors prices. 9. Lack of home government assistance/incentives. 10. Excessive transportation/insurance costs.
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Figure 3-8

SME employer image and internationalization

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Figure 3-9

Learning in small organizations

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Discussion Questions
1. Describe the formation process of cross-border mergers, acquisitions and international joint ventures. What are the major differences? 2. Describe the development phases of an M&A and the respective HR implications. 3. Outline the development phases of an IJV and the respective HR implications. 4. In which ways do cultural and institutional differences impact the HR integration in M&As and in IJVs? 5. What are the barriers to internationalization for SMEs? 6. What are some of the typical challenges for HRM in internationalized SMEs?
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