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INTERNATIONAL HUMAN RESOURCE MANAGEMENT PETER. J. DOWLING, MARION FESTING AND ALLEN D. ENGLE, SR.

SIXTH EDITION

INTERNATIONAL HUMAN RESOURCE MANAGEMENT SIXTH EDITION

PETER J. DOWLING MARION FESTING

ALLEN D. ENGLE, SR.

International Human Resource Management, 6th Edition

Peter J. Dowling, Marion Festing and Allen D. Engle, Sr.

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BRIEF CONTENTS

Preface viii Acknowledgements x About the Authors xii Walk-Through Tour xiv

Chapter 1 Introduction 1 Chapter 2 The Cultural Context of IHRM 22 Chapter 3 The Organizational Context 46 Chapter 4 IHRM in Cross-Border Mergers & Acquisitions, International Alliances and

SMEs 82 Chapter 5 Sourcing Human Resources for Global Markets – Staffing, Recruitment and

Selection 109 Chapter 6 International Performance Management 150 Chapter 7 International Training, Development and Careers 174 Chapter 8 International Compensation 215 Chapter 9 International Industrial Relations and The Global Institutional Context 241 Chapter 10 IHRM Trends and Future Challenges 268 Case 1 Spanning the Globe 282 Case 2 Quality Compliance at the Hawthorn Arms 287 Case 3 Wolfgang’s Balancing Act: Rewarding Healthcare Executives in a Dispersed

Yet Integrated Firm 289 Case 4 Strategic Forecasts and Staffing Formulation: Executive and Managerial

Planning for Bosch-Kazakhstan 298 Case 5 Local and International? Managing Complex Employment Expectations 305 Case 6 Expatriate Compensation at Robert Bosch GmbH: Coping With Modern

Mobility Challenges 312 Case 7 Balancing Values – An Indian Perspective on Corporate Values from

Scandinavia 319 Case 8 Just Another Move to China? The Impact of International Assignments on

Expatriate Families 328

Glossary 334

Index 342

iii

CONTENTS

Preface viii Acknowledgements x About the Authors xii Walk-Through Tour xiv

Chapter 1 Introduction 1

Chapter Objectives 1

Scope of the Book 2

Defining International HRM 2

Differences between Domestic and International HRM 4

Variables that Moderate Differences between Domestic and International HRM 8

The Cultural Environment 9

Industry Type 11

Extent of Reliance of the Multinational on its Home-Country Domestic Market 12

Attitudes of Senior Management to International Operations 14

Applying a Strategic View of IHRM 15

The Changing Context of IHRM 17

Summary 17

Discussion Questions 19

Further Reading 19

Notes and References 19

Chapter 2 The Cultural Context of IHRM 22

Chapter Objectives 22

Introduction 23

The Development of Cultures 38

Summary 39

Discussion Questions 40

Further Reading 40

Notes and References 40

iv

Chapter 3 The Organizational Context 46

Chapter Objectives 46

Introduction 47

Standardization and Localization of HRM Practices 48

Factors Driving Standardization 49

Factors Driving Localization 50

The Path to Global Status 56

Control Mechanisms 69

Summary 73

Discussion Questions 75

Further Reading 75

Notes and References 75

Chapter 4 IHRM in Cross-Border Mergers & Acquisitions, International Alliances and SMEs 82

Chapter Objectives 82

Cross-Border Alliances 83

Cross-Border Mergers and Acquisitions 84

International Equity Joint Ventures 91

International SMEs 95

Summary 100

Discussion Questions 101

Further Reading 101

Notes and References 101

Chapter 5 Sourcing Human Resources for Global Markets – Staffing, Recruitment and Selection 109

Chapter Objectives 109

Introduction 110

Approaches to Staffing 110

Transferring Staff for International Business Activities 116

The Roles of an Expatriate 119

The Roles of Non-Expatriates 122

The Roles of Inpatriates 123

Recruitment and Selection of International Managers 124

Expatriate Failure and Success 126

Selection Criteria 129

Expatriate Selection Processes in Practice 134

Dual Career Couples 137

Summary 140

Discussion Questions 142

Further Reading 142

Notes and References 142

Chapter 6 International Performance Management 150

Chapter Objectives 150

CONTENTS v

Introduction 151

Multinational Performance Management 152

Control and Performance Management 154

Performance Management of International Employees 155

Performance Appraisal of International Employees 162

Summary 168

Discussion Questions 170

Further Reading 170

Notes and References 170

Chapter 7 International Training, Development and Careers 174

Chapter Objectives 174

Introduction 175

Components of Effective Pre-Departure Training Programs 177

The Effectiveness of Pre-Departure Training 185

Developing Staff Through International Assignments 186

Trends in International Training and Development 189

Re-Entry and Career Issues 189

The Repatriation Process 191

Individual Reactions to Re-Entry 194

Responses by the MNE 199

Designing a Repatriation Program 205

Summary 207

Discussion Questions 209

Further Reading 209

Notes and References 209

Chapter 8 International Compensation 215

Chapter Objectives 215

Introduction 216

Key Components of an International Compensation Program for Expatriates 217

Approaches to International Compensation of Expatriates 221

Tentative Conclusions: Patterns in Complexity, Challenges and Choices 232

Summary 235

Discussion Questions 236

Further Reading 236

Notes and References 236

Chapter 9 International Industrial Relations and the Global Institutional Context 241

Chapter Objectives 241

Introduction 242

Key Issues in International Industrial Relations 243

Trade Unions and International Industrial Relations 246

The Response of Trade Unions to MNEs 248

Regional Integration: The European Union (EU) 251

Codes of Conduct – Monitoring HRM Practices Around the World 252

vi CONTENTS

Managing Human Resources in ‘Offshoring Countries’ 253

Summary 259

Discussion Questions 261

Further Reading 261

Notes and References 261

Chapter 10 IHRM Trends and Future Challenges 268

Chapter Objectives 268

Introduction 269

Summary and Concluding Remarks 277

Discussion Questions 279

Further Reading 279

Notes and References 279

Case 1 Spanning the Globe 282

Case 2 Quality Compliance at the Hawthorn Arms 287

Case 3 Wolfgang’s Balancing Act: Rewarding Healthcare Executives in a Dispersed Yet Integrated Firm 289

Case 4 Strategic Forecasts and Staffing Formulation: Executive and Managerial Planning for Bosch-Kazakhstan 298

Case 5 Local and International? Managing Complex Employment Expectations 305

Case 6 Expatriate Compensation at Robert Bosch GmbH: Coping With Modern Mobility Challenges 312

Case 7 Balancing Values – An Indian Perspective on Corporate Values from Scandinavia 319

Case 8 Just Another Move to China? The Impact of International Assignments on Expatriate Families 328

Glossary 334

Index 342

CONTENTS vii

PREFACE

According to the 2012 World Investment Report issued by the United Nations the foreign affiliates of MNEs employed an estimated 69 million workers, who generated $28 trillion in sales and $7 trillion in value-added, some 9% up from 2010. In 1990, when the first edition of this textbook was published, a total of 24 million workers were employed. This is merely one of many metrics that demonstrate the extent of the globalization of business. With this increase in scale, the role of human resource management in sus- taining this increase in international business activity is a central theme of this Sixth Edition of our text- book. In writing this new edition we have responded to feedback from users of previous editions and reorganized the format for the Sixth Edition into 10 chapters instead of 12 chapters. In carefully revising and updating the chapter Endnotes for this new edition we have been very careful to avoid the common trap of multiple editions – simply piling on more and more endnotes and leaving the reader to wade through the growing lists. By carefully culling Endnotes and the Further Reading sections at the end of each chapter our intention is to provide a reader just being introduced to the fascinating topic of HRM in a mul- tinational context with a reasonable set of critical references as a starting point for their studies. At the same time, our more advanced readers will be able to evaluate our assessment of the most recent significant cita- tions along with what we consider ‘classic’ empirical or conceptual articles and books.

The more significant changes to the Sixth Edition include the following:

l In response to feedback from teaching and professional colleagues, we have included a new chapter (Chapter 2) on The Cultural Context of IHRM. We decided to place this new chapter early in the book so that we now cover Culture in Chapter 2 and the Organizational Context in Chapter 3.

l Chapter 4 is now titled IHRM in Cross-Border Mergers & Acquisitions, International Alliances and SMEs to provide specific contextual information on these important developments in international management.

l Chapter 6 International Performance Management has been moved from later in the book to earlier to better reflect the importance of Performance Management in the IHRM process.

l Chapter 7 International Training, Development and Careers has been moved from later in the book to earlier to better fit with Chapter 6. The important issue of career planning has also been moved to this chapter to better fit with contemporary IHR practice to link career development more systematically with training and development.

l Chapter 9 International Industrial Relations and the Global Institutional Context has been extensively revised and updated and replaces two (Chapters 9 and 10) in the previous edition.

Several of the IHRM in Action cases embedded throughout the chapters have been replaced or significantly updated. These changes will help students grasp the principles and models in the chapter and better apply these ideas to a range of settings or contexts. The eight in-depth cases at the end of the text have been writ- ten by the co-authors or solicited from global experts to provide a range of in-depth applications for all of the major functional areas of IHRM. Extensive teaching notes are provided for adopters of the text. Long time users of the text will find a more systematic and extensive set of cases, but hopefully our loyal adopters will still find some of their favorite cases remain as well. Our feedback on these end-of-text cases was out- standingly positive in the fifth Edition and we feel this new edition builds on that strength.