What extent do you feel it is useful to distinguish between different “levels of analysis” (i.e. global, regional, national and organizational) in understanding IHRM? Provide examples as appropriate. With the ever-increasing economic activities and inter-connections with other countries, the international integration is obvious. (Coase, 1937)IHRM is now confronted with different issues toward the cross-cultural configuration which the political, economic, social and legal systems among different countries are involved.(Mendenhall, M, 2000) Different levels of analysis can provide a framework for analyze and evaluate the IHRM practice, resource allocation or leadership style in making response to the internationalization process.
For the global level analysis, it is based on the geocentric approach which is perceived as a worldwide stance which the best policies and the most qualified individuals to staff the operations.(Dowling and Schuler, 1990) Because of the increased complexity and operation scope with global operations, good understanding can benefit the multinational organizations in finding the most appropriate employees for the job. Nevertheless,lack of knowledge transfer and information flowmay be incurred from the complex global setting.
Market information, cultural-dimensions and demographic issues are hard to obtain, especially in predicting the data from universal trend.(Sparrow, 2009) For example, Disneyland isdifficult to assess the flow of customers as leisure industry is of great seasonal variation. (The Walt Disney Company, 2010) Regional level analysis is based on the regiocentric approach on a particular geographic region. IHRM mangers can have the right and independence on making decisions as well as developing regional staffs. (Dowling and Schuler, 1990) For instance, HSBC is likely to develop the regioncentric approach to recruit personnel within a specific region like Europe, Asia, and India. (HSBC, 2010) National level analysis is based on the polycentric approach which the subsidiaries are treated as different national entity which is involved with some degree of autonomy. (Dowling and Schuler, 1990)According to Hofstede’s research, different cultural distance may be incurred from the operation in host countries. (Hofstede, 2001)
This socio-cultural barrier is likely to fail the business. A polycentric approach is closely related to local responsiveness which brings advantages to the coordination between subsidiaries and increases cost efficiency.For example, the world’s largest furniture retailerIKEA adopts the polycentric approach in Chinawhich is managed by host-country national. Employing local Chinese as managers to avoid inter-cultural management is performed withinIKEA’s operations in China. (China Daily, 2010)
Organizational level analysis is based on ethnocentric approach which strategic decisions are made at the parent organization. (Dowling and Schuler, 1990) Managers can hence implement the strategy at a lower labour cost in favour the organizational goal. Overall, different level of analysis can be implied from operational requirement, strategic coordination or business systems. Distinguishing the level of analysis between one another cangreatly benefit the strategy formulation and implementation. (439words)
China Daily, 2010. ‘IKEA to double stores in China’, Available: http://www.chinadaily.com.cn/bizchina/2010-12/16/content_11711019.htm (Accessed: 2011, March 10).
Coase, R., 1937. The nature of the firm. Economica, 4, 386-405. Dowling, P. and Schuler, R., 1990. International Dimensions of Human Resource Management, PWS-Kent. Hofstede, G., 2001. Culture’s Consequences – Comparing Values, Behaviors. Institutions and Organizations across Nations. Second Edition. London: Sage Publications. HSBC, 2010. ‘HSBC Holdings plc: Annual Report and Accounts 2010’, Available:http://www.hsbc.com/1/PA_1_1_S5/content/assets/investor_relations/hsbc2010ara0.pdf (Accessed: 2011, March 5). Mendenhall, M, 2000. Mapping the terrain of IHRM: a call for ongoing dialogue, Paper presented at 15th Workshop on Strategic HRM, Fontainebleau, France, and 30 March-1 April. Sparrow, P., 2009. Handbook of international human resource management: integrating people, process and context. United Kingdom: John Wiley & Sons. The Walt Disney Company, 2010. ‘Fiscal Year 2009 Annual Financial Report and Shareholder Letter’, Available: http://amedia.disney.go.com/investorrelations/annual_reports/WDC-10kwrap-2009.pdf (Accessed: 2011, March 2).