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IHRM Trends and Future Challenges


Chapter 10 IHRM Trends and Future Challenges IHRM, Dr. N. Yang * – PowerPoint PPT presentation

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Title: IHRM Trends and Future Challenges

Chapter 10
  • IHRM Trends and Future Challenges

Chapter Objectives
In this final chapter, we identify and analyze
some observed trends and future directions
  • International business ethics and the role of
  • Mode of operation and IHRM
  • Ownership issues relating to IHRM requirements of
    organizations other than large MNEs, such as SMEs
    and NGOs including not-for-profit organizations)
  • Safety, security, and terrorism issues
  • The evolving field of IHRM

  • In this course, we have explored the IHRM issues
    in a multinational context. To that end we have
    examined the HR functions and practices in the
    process of business internationalization and
    their implications.
  • We now turn our attention to some issues that
    have not been emphasized in the general IHRM
    literature but present challenges to IHRM, such
  • International business ethics
  • Safety, security, and dealing with terrorism
  • Contractual, off-shoring, and supply chain
  • These topics distinguish the role of HRM in MNEs
    and fall in the framework of strategic HRM.

A model of strategic HRM in multinational
Figure 10.1
External Factors International Business Ethics
and HRM
  • When business is conducted across borders, the
    ethics program takes on added layers of
  • Especially problematic when multinationals
    operate in the host countries that have
  • Different standards of business practice
  • Economically impoverished
  • Inadequate legal infrastructure
  • Government corruption
  • Human rights violations
  • Ethical questions arise not only in the context
    of different home- and host-country employment
    practices but also in the central operations and
    policies of MNEs.

Three Main Responses to Ethics Questions
  • Ethical relativism
  • No universal or international rights and wrongs,
    it all depends on a particular cultures values
    and beliefs when in Rome, do as the Romans
  • Ethical absolutism
  • When in Rome, one should do what one would do
    at home, regardless of what the Romans do. This
    view of ethics gives primacy to ones own
    cultural values.
  • Ethical universalism
  • There are fundamental principles of right and
    wrong which transcend cultural boundaries and
    multinationals must adhere to these fundamental
    principles or global values.

Studies on Ethical Universalism
  • Recognize there is a distinction between cultural
    difference and morally wrong
  • Core values are more agreeable
  • But value priority varies in different societies,
  • Individual freedom as most important in the U.S.
  • Unity with family or community in Asia
  • Fairness in Europe

Universal Ethical Principles
  • Universal ethical principles can be seen in the
    agreements among nations who are signatories to
  • The UN Declaration of Human Rights
  • The OECD Guidelines for Multinational Enterprises
  • The Caux Roundtable Principles of Business
  • They indicate the emergence of a trans-cultural
    corporate ethic and provide guidelines that have
    direct applicability to the central operations
    and policies of MNEs including the HRM activities
    of staffing, compensation, employee training, and
    occupational health and safety.
  • However, there are a wide range of situations
    where variations in business practice are

The US Foreign Corrupt Practices Act (FCPA)
  • Enacted in 1977, the US FCPA
  • Prohibits US-based firms and US nationals from
    making bribery payments to foreign government
  • Payments to agents violate the Act if it is known
    that the agent will use those payments to bribe a
    government official.
  • Amended in 1988, to permit facilitating
    payments but mandates record-keeping provisions
    to help ensure that illegal payments are not
    disguised as entertainment or business expenses.
  • The United States has lobbied other nation-states
    to enact uniform domestic government regulations,
    and has achieved some success.

Global Developments on the Criminalization of
  • Bribery corruption
  • Involving the payment of agents to do things that
    are inconsistent with the purpose of their
    position or office so as to obtain an unfair
  • Can be distinguished from so-called gifts,
    facilitating or grease payments, as to
    motivate agents to complete a task they would
    routinely do in the normal course of their duties
  • The British Bribery Act (2010)
  • The UN Declaration against Corruption and Bribery
    in International Commercial Transactions (1996)
  • OECD Convention on Combating Bribery of Foreign
    Public Officials in International Business
    Transactions (1997), ratified by 38 nations as of

OCED Members Tax Treatment of Bribes
Members Denying Tax Deductibility Members Allowing Tax Deductibility Members Repealed Tax Deductibility
Canada Czech Republic Finland Greece Hungary Ireland Italy Japan South Korea Mexico Poland Turkey U.K. U.S Australia Luxembourg New Zealand Sweden Switzerland Austria, 1998 Belgium, 1999 Denmark, 1998 France, 1997 Germany, 1997 Iceland, 1998 Netherlands, 1997 Norway, 1996 Portugal, 1997
Source OECD
Is bribery a business necessity?
  • It is now generally agreed that bribery
    undermines equity, efficiency and integrity in
    the public service, undercuts public confidence
    in markets and aid programs, adds to the cost of
    products and may affect the safety and economic
    well-being of the general public.
  • Bribery and corruption top the list of the most
    frequent ethical problems encountered by
    international managers.
  • The World Bank estimates that about 80 billion
    annually goes to corrupt government officials.

Transparency International Corruption Perceptions
Index 2010
Table 10.1
Rank Country Territory CPI Score 2010 Rank Country Territory CPI Score 2010
1 Denmark 9.3 11 Iceland 8.5
New Zealand 9.3 Luxemburg 8.5
Singapore 9.3 13 Hong Kong 8.4
4 Finland 9.2 14 Ireland 8.0
Sweden 9.2 15 Austria 7.9
6 Canada 8.9 Germany 7.9
7 Netherlands 8.8 17 Barbados 7.8
8 Australia 8.7 Japan 7.8
Switzerland 8.7 19 Qatar 7.7
10 Norway 8.6 20 United Kingdom 7.6
The index measures the perceived levels of public
sector corruption in 178 countries around the
world. 10 very clean 0 highly corrupt.
Ethics-related Challenges to MNEs and the HR
  • Business ethics stand out as both a domestic and
    an international issue of concern
  • More complex in the international arena and
    require MNEs self-regulation and ethical
  • Off-shoring activities
  • Supply chain management
  • Contracting and sub-contracting
  • Joint ventures, strategic alliances
  • The relentless low-cost strategy for competitive
  • A worldwide discussion of the economic, social,
    political, and environmental consequences of
    global business

The Role of HR in Operationalizing Corporate
Ethics and CSR Programs
  • HR is well positioned to make an important
    contribution to creating, implementing and
    sustaining ethical organizational behavior and
    CSR programs within a strategic HR paradigm.
  • HR has a special role to play in the formulation,
    communication, monitoring, and enforcing
    corporate codes of conduct both within and across
  • Responsibility for ethical leadership should cut
    across all functions and managerial levels,
    including line and senior managers.

Non-government Organizations (NGOs)
  • Globalization has increased the scale and
    importance of NGOs
  • Prominent examples of NGOs
  • The Red Cross Fred Hollows Foundation
  • The Red Crescent World Vision Oxfam
    Care International Transparency
    International Médecins Sans Frontieres
  • The Wikimedia Foundation
  • The impact and influence of NGOs will continue to
    be of importance to the activities of MNEs

  • NGOs are as active internationally as for-profit
    firms, yet receive less attention, e.g.
  • The Red Cross
  • Greenpeace International groups
  • BARC (Bangladesh Rural Advancement Committee)
  • These organizations are diverse and share similar
    management and HR concerns
  • Often operate in high risk areas of the globe
  • Anti-globalization rallies and protest
  • Global terrorism
  • Natural disasters and humanitarian crisis
  • Broadening our focus of IHRM is important.

Challenges in an Uncertain World
  • Safety, security and counterterrorism
  • Legal compliance and training related to safety
    in the workplace
  • Natural disaster protocols
  • Emergency and disaster preparedness
  • Workplace violence policy
  • Industrial theft and sabotage protocols
  • In-house security

Five Areas of Corporate Risk Assessment
  • In-facility emergency and disaster preparedness
  • In-facility security
  • Industrial espionage
  • Cyber-terrorism
  • Out-of-facility fire and travel risks

Human Costs Built Into an iPad
Source The New York Times, January 25, 2012, An
explosion at a Foxconn factory in Chengdu, China,
killed four people and injured 18. It built
iPads. Charles Duhigg and David Barboza,
Terrorism and Risk Management
External Environment Low Risk Firms High Risk Firms
Low Risk No need to invest as heavily in security system and protocols Security strategies focusing on hardening individual sites
High Risk Security strategies that disperse activities across the region and build redundant infrastructures, so that value chain activities in the high risk region can be provided by out of region units Must invest much more in quite elaborate risk management strategies
The Evolving Field of IHRM
  • HR has been identified as one of the five
    business functions that will have most influence
    on global business in the future.
  • Recruiting, developing, and competition for
    talented employees are often cited as a major
    concern by MNEs.
  • IHRM issues will remain high on the problem
    list of senior managers of MNEs.
  • IHRM philosophies, strategies, policies,
    practices and capabilities of an MNE, industry or
    nation remain as a rich area for future research.

Summary and Concluding Remarks
  • International business ethics and the role of
  • Mode of operations, IHRM activities that are
    required such as training and monitoring for
    contractual, supply chain and project operations
  • NGOs and IHRM challenges that are specific to
    these organizations but have remained relatively
  • Complex assessment and planning activities
    related to safety, security, and
    counter-terrorist efforts
  • Research issues in IHRM, and developments that
    are endeavoring to assist in understanding the
    intricacies and interrelationships between the
    IHRM function and IHRM activities, firm
    internationalization, strategic directions and
  • The ongoing process of discovery, a mapping of
    the IHRM complexities, the challenges, and the
    difficult choices

  • Ethics, workplace safety, child labor
  • external factors, organizational factors
  • ethical relativism, absolutism universalism
  • bribery
  • gifts, facilitating, grease payments
  • US Foreign Corrupt Practices Act
  • Transparency International, Corruption
    Perceptions Index
  • NGOs
  • disaster protocols, risk management, critical
  • workplace violence, industrial theft
  • in-house security, in-facility security
  • industrial espionage, cyber-terrorism
  • terrorist threats micro macro levels

Discussion Questions
  1. What is your view of internationally criminalize
    foreign bribery?
  2. Identify a number of HRM problems that typically
    rise with expatriate assignments. In what ways
    might the core ethical values and guidelines
    identified in this chapter apply to them?
  3. Outline and discuss the strategic role of IHRM in
    managing risks and corporate social
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