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Human Resource Management
Jose Rodriguez

Global HRM Exam #2 Study Guide- 11/4 Chapter 5: International Human Resource Management and Culture  The Nature and Importance of Culture: An Introduction o Every country has at least some variances from all others  Ex. History, government and laws o The more countries with which an MNE interacts, the more complex and difficult conducting business becomes o One central cause of difficulties has to do with the critical nature of the differences between the national cultures of these various countries  A Definition and Description of Culture o Culture: the characteristic way of behaving and believing that a group of people have developed over time and share in common o A group’s culture:  Gives a sense of who they are, of belonging, of how they should behave  Provides the capacity to adapt to circumstances and to transmit this knowledge to succeeding generations  Affects every aspect of the management process  Understanding Culture as Layers of Meaning o Surface or explicit culture (the outside layer): things that can be readily observed, such as dress, food and ways of eating, architecture, and customs o Hidden Culture (the middle layer): values, religions, and philosophies about things like child rearing, views of what is right and wrong. o Invisible or implicit Culture (the core) the culture’s universal truths, the bases for all of a culture’s values and beliefs  Country and Regional Cultures o An increasing number of researchers are assessing whether or not the wide variety of cultures around the world can be reduced to a more limited set of cultures with similar characteristics  The Research of Geert Hofstede o Work-related factors (as Dimensions)  Acceptance of power distance between bosses and subordinates  Individualism or collectivism  Masculinity or femininity in social values  Uncertainty avoidance or tolerance for ambiguity o Research Findings  Countries consistently showed similarities and differences based on these characteristics  MNEs should not attempt to impose parent country managerial practices and organizational systems on their foreign subsidiaries  The Research of Fons Trompennars o Cultural Factors:  Emphasis on rule (universalism) vs. relationships (particularism)  Acting together (collectivism) vs. Individualism  Neutral vs. emotional- ranges of emotions expressed  Diffuse vs. specific involvement with other people  Achievement vs. ascription- according status to other people o Research Findings  Persons act and respond as their cultures have taught and influenced them to behave  The Observations of an Experienced Practitioner o Gesteland observed that variances in four general patterns of cross-cultural business behavior provide critical help in understanding international marketing, negotiating, and managing  Deal focus vs. relationship focus  Informal vs. formal cultures  Rigid-time (monochromic) vs. fluid-time (polychromic) cultures  Expressive vs. reserved cultures  Dangers of Oversimplification o Concern that the focus on country differences falls short on two levels:  It provides little explanation of within-group differences  Ex. Treats countries or cultures as homogeneous wholes, with everyone within the country or culture being alike  It provides little understanding of how cultures change  Ex. It tends to treat cultures as a given-impermeable and static  Country Culture vs. MNE culture o Countries develop unique patterns of  Values  Norms  Beliefs  Acceptable behavior o For many firms, these organizational values take precedence over country cultures, particularly when there is a conflict between the two  Cultural and Globalization o Convergence: adoption of similar “best practices” o Divergence: the strong influenced exerted by countries’ cultural values and practices on a MNE’s business and HR practices o Cross-vergence: the intermixing of cultural systems between different countries o Glocalization: the optimal trade-off between globalization and localization  Research in IHRM o Criticism of IHRM Research  Lacks analytical rigor  Relies too heavily on description or organizational practices and not critically evaluating such practices  Suffers from expediency in research design and planning  Lacks the sustained effort needed to develop case material and other types of longitudinal studies o Factors Limiting IHRM Research  Expense: multinational or cross-border or cross-cultural research is expensive  Time and travel: requires more time and travel than domestic research  Knowledge: requires skills in multiple languages and sensitivity to multiple cultures  Cooperation requires more cooperation among numerous individuals from different countries, companies, and governments. o Problems Frustrating IHRM Researchers:  Inconsistent/vague definitions of terms such as culture  Inaccurate translation of key terminology  Difficulties in obtaining representative or equivalent samples of research subjects  Difficulties in isolating variables of interest in different cultures  Difficulty in isolating cultural differences- vs. identifying cultural characteristics common across varying cultures- amid varying national economic and political realities  Forms of IHRM Research o Cross-cultural: the study of issues or practices, comparing one country to another  Universal: there exist some universal cultural characteristics; demonstrate that certain management and HR practices will work anywhere  Situational: maintains that there are different managerial practices for different situations  Convergent: countries with similar industrial and cultural backgrounds will converge to a common set of management practices as they approach similar levels of economic maturity. o Multicultural: the study of a practice or issue in a number of countries or cultures o Descriptive  Specific Difficulties of IHR Research o Focus of research  Emic: identifying culture-specific aspects  Etic: identifying culture-common aspects o Language problems o Measurement/methodological problems o Equivalence problems  Metric (stimulus) equivalence  Conceptual equivalence  Functional equivalence  Subjectivity of the research topic and concept  Factors other than culture  Impact of Culture on IHRM o Situations in which particular cultural influences on IHRM are important include:  Recruiting and hiring practices  Building business relationships  The role and use of multiple languages and communication  Perceptions of organizational justice  Decision-making  Performance evaluations and feedback  Management and leadership development  Development of a global mindset  Varying perspectives on careers across cultures Chapter 6: International Employment Law, Labor Standards, and Ethics  The Institutional Legal Context of International Business o Common law  A constitution enunciates a few, long-standing, general principles to which everyone is subject. The law is based on tradition as states in the constitution o Civil code or law  Based on an all-inclusive system of written rules, of which there are three types:  Commercial  Civil  Criminal o Religious law  Most common of which is Islamic law, or Sharia, which refers to the “way” Muslims should live or the “path” they must follow  Establishment of Labor Standards by International Institutions o Labor standards that apply to many countries/firms that conduct international business  Freedom of association (the right to organize and to bargain collectively)  Equal employment opportunity and non-discrimination  Prohibitions against child labor and forced (prison or slave) labor  Basic principles concerning occupational safety and health  Consultation with worker’s groups prior to carrying out substantial changes such as workforce reductions and plant closures  Grievance or dispute resolution procedures  Use of monitors (internal or external) to audit employment practices  International Organizations o United Nations  Plays a relatively insignificant role in establishing employment laws or standards  Until recently, the UN only operated in this domain through agencies as the International Labor Organization o International Labor Organization (ILO)  Primary goal is to improve working conditions, living standards, and the fair and equitable treatment of workers in all countries o The Organization of Economic Cooperation and Development (OECD)  Focus in broader than that of the ILO  Coordinates economic policy to address globalization issues through the promotion of economic, environmental, and social policy among its members o World Bank and International Monetary Fund (IMF)  Research on the relation between trade policy reform and labor markets (wages, unemployment, etc.)  Protection of “social safety nets” during structural reforms of economies  International Trade Organizations and Treaties o World Trade Organization (WTO)  Replaced General Agreement on Tariffs and trade (GATT)  Defers to ILO for pursuit of global labor standards o European Union (EU)  Social charter sets out 12 principles of workers’ fundamental rights  Established the European Social Fund to promote worker mobility  Adoption of employment standards prevents locating of MNE in pursuit “softer” employment standards o North American Free Trade Agreement (NAFTA)  North American Agreement on Labor Cooperation (NAALC)  Bilateral agreements linking liberalization of trade and labor standards o Latin American and Asian trade agreements  A number of trade treaties have been organized and signed among countries in Latin American and Asia  Mercosur/Mercosul (e.g., Argentina)  The Andean Community (e.g., Bolivia)  The Association of South-East Asian Nations (ASEAN) (e.g., Cambodia)  Asia-Pacific Economic Cooperation (APEC) (e.g., Australia)  Commercial Diplomacy o An emerging interdisciplinary field that refers to the processes of influencing foreign government policy and regulatory decisions that affect global trade o Involves:  Trade negotiations  Impact of policy on decision-making  Government regulations  Legislation  Standards  Industrial subsidies  Corporate conduct  Global Legal/Regulatory Context of MNEs o MNEs’ approach:  Understanding international labor standards and regulations that apply to enterprises that operate in more than one country  Conducing an analysis of labor and employment laws and practices in each country in which it operates  Determining the extent to which extraterritorial laws apply  Analyzing labor and employment issues that are common to all MNEs o What IHR Managers must do:  Comply with the laws of the countries in which it operates  Requires knowledge of local laws and regulations  Comply with international standards and supranational regulations  Requires knowledge of international labor standards and supranational binding regulations  Comply with the extraterritorial laws of its own country  Requires knowledge of extraterritorial laws o National Laws and Regulations  Employment laws vary significantly among countries  IHR should use local HR practitioners when possible o Supranational Laws  Laws that are either directly binding on member states or indirectly binding on employers  Directives seek to harmonize legislation among member states o Extraterritorial Laws  Are laws that apply beyond the sovereign territory of the nation that enacted them  Apply only if they do not conflict with host county laws (foreign compulsion defense) o US Laws and Extraterritorial Intent  Title VII of the Civil Rights Act  Age Discrimination Act  Americans with Disabilities Act  Foreign Corrupt Practices Act  Sarbanes-Oxley Act o Integrated Enterprise Test  Factors Determining Integration  Interrelation of Operations  Common Management  Centralized Control of Labor Relations  Common ownership or Financial Control o National Laws  Apply to local foreign-owned commercial enterprises  Friendship, commerce, and navigation (FCN) treaties make exceptions for key parent-country personnel of commercial entities  Foreign government-owned are exempted from national laws and civil claims  Comparative Law o Major Issues for IHRM  Immigration and Visas  Data Privacy and Protection  Anti-discrimination and harassment  Termination and reduction in force  Protection of intellectual property  The International Framework of Ethics and Labor Standards o What is right and wrong in business conduct across borders and the impact of cultural variances on ethical conduct of MNEs o International ethics deals with issues of corruption and bribery, and the various ethical dilemmas that MNEs face in the conduct of their international activities  International Ethics and Culture o Difficulties in understanding and working with another country’s practices are unavoidable o Differing country cultures view various employment and business conduct issues, such as bribery, gifts or favors, tax evasion, or child labor, differently o In the area of global ethics, even the best-informed, best-intentioned executives often have to rethink their assumptions o Ethical Relativism  Suggests that what is right is whatever a society defines as right  This definition may be at the individual (individual relativism) or at the societal (cultural relativism) level o Ethical Absolutism  Takes the view there is a single set of universal ethical standards or principles, which apply at all times, in all circumstances, in all cultures  Ethical Dilemmas in IHRM o Tolerating cultural diversity which avoiding moral recklessness:  Why is the practice acceptable in the host country but not at home?  Is it possible to conduct business successfully in the host country without undertaking the practice o Assurance of Ethical Behavior and Conduct  Develop a clear set of core values as the basis for global policies and decision making  Train international employees to ask questions that will help them make business decisions that are both culturally sensitive and flexible within the context of those core values  Balance the need for policy with the need for flexibility or imagination o Implementation of Global Ethical Standards  Be clear about the reasons for developing a global ethics program  Treat corporate values/formal standards of conduct as absolutes  Consult the stakeholders  Choose your words carefully  Translate the ethics code carefully  Translate the “ethics code” training materials  Designate an ethics officer for overseas operations  Speak of international law, not just parent country law  Recognize the business case  Recognize the common threads o Principles for Shaping Ethical Behaviors in International Operations  Show respect for core human values, which determine the absolute moral threshold for all business activities  Show respect for local traditions  Maintain the belief that context matters when deciding what is right and what is wrong  Corporate Social Responsibility, Corporate Governance, and Sustainability o Is the continuing commitment by business to:  Behave ethically and to contribute to the economic development of their communities  To improve the quality of life of their work forces, their families, as well as society at large o Makes MNEs aware that they produce both benefits and harm when operating globally o Can be viewed on a continuum of providing value from stockholder to external stakeholder o Umbrella of CSR Programs  Business ethics  Corporate structure and governance  Human resources  Labor and human rights  Environmental management  Community involvement and economic development  Accountability o Implementing a CSR Program  Develop a global CSR policy  Obtain a high level of support  Communicate CSR activities and policy  Create a CSR culture  Provide adequate training  Install reporting and advice mechanisms  Include CSR in management’s performance management  Lead by example o Corporate Governance  Refers to the basis upon which decisions are made in organizations  Involves the structure and relationships that determine how corporate objectives are met and regulated by the different performance monitoring mechanisms- the management team, board of directors, investors, and shareholders o Corporate Sustainability  Meeting the needs of the present without compromising the ability of future generations to meet their own o Determining Sustainability  Is the decision fair to employees?  Is the decision sustainable in the long run?  Is the decision green in terms of the carbon footprint?  Is the decision-making process transparent and open for scrutiny? o Development of a Strategic Global Code of Conduct Policy  MNEs need to develop strategic policies to establish a code of conduct that defines acceptable behavior in terms of employment relations  Codes of conduct should be defended as the “company culture”  Remove the possibility of managers disagreeing with certain practices because they perceive them to go against local or national cultural practices  The decision to abide by certain labor standards is based on the defined company culture and policies, not on any given individual biases or preferences Chapter 7: International Employee Relations  International Union Membership o Comparing union membership in different countries around the world is difficult o The strength of trade unions is usually measured by the size of union membership relative to the number of people eligible to join o In some countries where unions are strong, actual membership is small o In other countries where unions may not be so strong, membership may actually be quite large o Absolute union membership is largest in countries like Sweden while absolute membership is lowest in countries
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