Introduction
In the present day, businesses are no longer restricted by national borders. The bulk of the world’s largest companies carry out a considerable share of their operations outside their home countries (Berdrow and Lane, 2003, p. 16). As many companies continue to set up and fortify their presence overseas, they are also encountering numerous managerial challenges. The failed international mission represents a considerable cost to both the company and the individual expatriate. These costs include poor staffing decisions and costs associated with relocation, compensation, and termination of operations. Also, there are also several undisclosed costs such as loss of business opportunities, damaged reputation, and the diluted relationship between the company and its stakeholders (Scullion, 2000, pp. 3).
As a result, many companies have recognized the significance of efficient management of human resources. They have also recognized that in doing so, nonetheless, it can not be accomplished without acknowledging and integrating the global context. As businesses begin to operate on a global scale, managing people becomes increasingly difficult, more volatile and uncertain, and increasingly subject to rapid transformation and shock (Gooderham and Nordhaug, 2003, pp.12). International human resource describes employees of a company operating beyond national borders. On the other hand, international human resource management refers to the global management of human resources (Schuler, 2000, p. 239).
Human resources are very important for the success of companies and effective international human resource management can make a difference between the continued existence and extinction of many multinational corporations (Brewster, 2002, p.3). However, for several reasons, for instance, cost, time, and complexity, there are very limited studies related to this subject. The aim of this essay is to come up with a portfolio of three important subjects on international human resource management. They include Critical evaluation of the three approaches to international human resources, analysis of a culture in International Human Resource, and the concept of international human resource in the developing economies.
Approaches to International Human Resource
The subject of international human resource management has been characterized by three extensive approaches. Earlier studies focused on the cross-cultural aspect of HR and explored human behavior within organizations from a global viewpoint (Adler, 2002, p.743). The subsequent approach originated from the comparative industrial relations and compared and analyzed HR systems in several countries (Brewster and Hegewisch, 2001, p.8). The third approach emphasized aspects of Human resources in Multinational corporations (Dowling et al., 2003, p. 2).
According to Scullion (2000), the motives behind the three approaches are not mutually exclusive. He asserted that an expatriation is a significant tool for achieving a particular organizational objective and should be used as such. Some of the most recent studies have identified the link between motive for the international assignment and diverse scopes of success (Bolino, 2007, p. 820). In this regard, he tried to show that the motive of management development is positively correlated to employee’s transformation, while the control motive is linked directly to organizational transformation.
The comparative approach emphasizes how people work and explores the difference in HR systems and practices between nations (Brewster and Hegewisch, 2001, p. 5). The comparative approach focuses more on the institutional disparity, for instance, legislation, politics and government, and trade unions as opposed to cultural issues. The comparative approach also uses models and frameworks, for example, Brewster’s European Model or PEST analysis.
It should be noted that the convergence approach is significantly different from the divergent approach. According to the convergence approach, global business practices converge towards the most efficient technology or management systems, while the divergent approach posits that national culture is very influential and therefore HR systems and practices are not likely to become unitarist. Also, the convergent approach emphasizes similarity and HRM applications in different nations, whereas the divergent approach emphasizes the disparity in policies and applications across nations and regions (Brewster and Hegewisch, 2002, p. 24).
The first debate relating to the convergence and divergence approach was put forward by Kerr et al. (1973). He stressed that there is a global tendency among the capitalist industrialized economist to have a homogeneous HR system and practices. Industrial relations systems are specifically significant in this argument because of the contextual and legislative aspects of state interventions. The argument rotates around the degree and nature of the convergence among countries. The EU nations are likely to be under pressure to converge much more than any other countries in the world.
The multinational approach focuses on managing organizations to ensure global coherence. International human resource management under this approach closely relates to global and strategic human resource management as a method of structuring businesses (Edstrom and Galbraith, 1977, p. 240). Some experts argue that the U.S emphasis and application of the capitalist approach overlooks the NGO’s and the part they play in internationalization (Schneider and Tung, 2001, p. 347). Also, there have been tensions between the need for global coherence among the multinational companies and the local or national cultures. Multinational corporations are normally perceived as exporting/ ethnocentric as a result of this conflict. The multinational approach applies models and frameworks that are based upon strategic HRM (Bolino, 2007, p. 819).
There are numerous theories of strategic HRM that are applied in the Multinational approach. These theories include six theoretical perspectives identified by De Ceri and Dowling (199) and numerous models of internationalizing HRM among others. De Cieri and his colleagues developed an influential framework for Strategic International HRM (De Cieri and Dowling, 1999, p. 420; Schuler, Dowling and De Cieri, 1993, p.23). The framework was specifically developed for multinational companies but has also been incorporated in International NGOs. The framework identified six factors that influence SIHRM (three external and three internal factors). External factors include industrial characteristics, national or regional characteristics, and inter-organizational corporation. Internal factors include organizational structure, culture, and size. Pitelis and Sugden (1991) came up with the theory of transnational firms and gave numerous explanations for the emergence and implications of multinational firms. Dunning’s eclectic theory argued that multinational corporations operate at a global level because they can develop advantages by operating more effectively via their internal structure in different locations rather than by market-mediated apparatus (Scullion, 2000, pp. 3).
The cross-cultural approach is based on the notion that each country or region has its exceptional array of values and beliefs which impacts HRM systems and practices (Schneider and Tung, 2001, p. 343). International HRM models on cross-cultural approaches advocate for the abolition of standardized HR practices and policies. In this case, psychological and sociological approaches are fundamental rather than management approaches. There have been a lot of arguments on the nature of culture and which elements impinge on the HRM arena. Most of the debates on cross-cultural approach have centered on key elements of culture, personality and cultural disparities, multicultural teams, and diversity, different positions of human value, and validity of research attempting to establish disparities among national/ regional cultures (Forster, 2000, p. 126).
The cross-cultural approach has been synonymous with three fundamental approaches to managing HR by multinational corporations. These are ethnocentric approach, polycentric, and geocentric or global approach. The ethnocentric approach is where the home country’s practices prevail. The headquarters make decisions on behalf of the affiliate companies and all the important jobs are held by the home country. The affiliate companies in different parts of the globe follow the HR systems and practices of the home country (Scullion, 2000, pp. 5). The polycentric approach is where affiliate companies are managed on a local basis. The affiliates are managed by local employees since the headquarter lacks sufficient knowledge of the local environment. In this case, affiliate companies develop their own HRM practices (Schneider and Tung, 2001, p. 344).
Lastly, the geocentric or global approach is where multinational corporations use globally integrated business strategies to manage their human resources on a global scale (Forster, 2000, p. 126). For instance, Unilever group has a new team of regional presidents drawn from different continents. The company has also been recruiting and developing the management team from different countries. This group of mobile managers can be deployed to any subsidiary whenever the need arises (Unilever, 2005, p.2; Schneider and Tung, 2001, p. 345).
Heenan and Perlmutter introduced the fourth orientation referred to as the region-centric approach. This is an intermediate approach between pure polycentric/ethnocentric approach and pure geocentric approach. In this case, managers are appointed on a regional basis, for instance, in Europe (Schuler, Budhwar, and Florkowski, 2002, p. 41). Recent studies have criticized the centric nature of these approaches. Regardless of the approach used by a multinational corporation decision-making process is usually initiated centrally by headquarter and then imposed on the affiliated companies (Forster, 2000, p. 127).
According to Hofstede (1991) countries with a national culture that is ranked high on uncertainty avoidance are more likely to export their HR systems/practices and directors to their foreign subsidiaries. Multinational corporations from these countries are usually suspicious of foreigners heading their affiliate companies and always try to control initiatives arising from the subordinates. As a result, these companies normally appoint trusted nationals as senior managers. Direct control of foreign affiliate companies is more significant if the degree of cultural or institutional distance between the parent country and the host country is high. Headquarter managers may trust the information they get from the local employees or may feel that they are not committed to the company (Black and Gregerson, 1999, p. 53).
A research carried out by Gong (2003) established that reliance on expatriates in a high cultural scenario is weakening with time. He asserted that the longer presence of multinational corporations in the foreign countries have resulted to the development of trust between the local managers and headquarter and therefore has minimized the need to deploy expatriates or parent country nationals. Also, communication between employees from diverse cultural backgrounds can become complicated and often results in cases of misunderstanding. For that reason, most multinational corporations normally prefer to have some host country managers in key positions to enhance the flow of information (Gong, 2003, p.730).
Larger multinational corporations have more expatriates in top positions because they have more HR resources and often have formal development programs that entail the global rotation of their managers (Scullion, 2000, pp. 6). According to Dowling et al. (2003) multinational corporations with research or technological intensive products have a high probability of transferring their HR systems are practiced by appointing parent country nationals and by training the locals. They established that most Japanese companies dealing in research-intensive products had a high number of parent company nationals, although this was not necessarily the managing director. This is because the knowledge required is mainly transferred through technical experts rather than the top management.
Culture in International Human Resource Management
There are numerous definitions of culture; however, the term culture is normally used to depict a decisive process. According to Schneider and Barsoux (2003) culture refers to shared values, attitudes, and behaviors that are passed on overtime in a steady, but vibrant process. Nobody is born with culture; rather it is acquired through interaction with the surrounding (De Cieri and Dowling, 1995, p. 127). The most significant aspect of culture is the fact that it is an ingenious process that is hard to comprehend its effect on values, attitudes, and behaviors. An individual has to be confronted with diverse cultures to completely appreciate its effect. Individuals who normally move across different cultures usually experience cultural shock. New environments necessitate numerous adjustments in a comparatively short time and this often challenges an individual’s frame of reference to an extent that their sense of self comes into question (Schneider and Barsoux, 2003, p. 4). Cultural shock, at times, may cause psychological disorientation because it may lead to misunderstanding. This may cause negative feelings about the foreign environment and a desire to return home (De Cieri and Dowling, 1995, p. 127).
Since international business entails contact and movement of individuals across national borders, appreciation of cultural diversity is very essential (Gerhart and Fang, 2005, p. 980). Most studies on international human resource management focused on how local cultures affect HRM practices in the host countries and the constraints culture creates relating to the ability of multinational corporations to export HRM systems and practices to the host countries (Dwyer, Richard, and Chadwick, 2003, p. 1009). Domestic cultures may be considered to be values, attitudes, norms, and perception orientations characteristic of the members of a specific society. Introduction of HR systems and practices that are inconsistent with the local culture can fail the system, not to mention conflicts between the company and its workers and possibly, the society at large.
Comparative studies of national cultures carried out across many countries are very few because of the high costs linked to the collection of data. Nonetheless, Hofstede’s research (carried out in 60 countries) remains the most influential study despite the controversies surrounding the methodology used and interpretation of the results. However, there are several studies that support Hofstede’s findings (for instance, Triandis, 1995). There are several dimension of culture that has been identified by numerous studies that are quantifiable across nationality (Hodgetts and Luthans, 2003, p. 3). Hofstede focused on the four dimensions of culture which are linked to work behaviors. These dimensions are individualism versus collectivism, a distance of power, masculinity versus femininity, and uncertainty avoidance (Hofstede, 1991, p. 3).
According to Ralston (2008), one way of examining the behavior of organizations across cultures and describing the diversity that exists is to look at the significant dimensions of culture. The two most important dimensions of national culture are Individualism and collectivism (Ramamoorthy and Carroll, 1998, p. 3). Individualism refers to the level by which people from one nation prefer to act individually than members of a group. Collectivism, on the other hand, is where individuals respect the group to where they belong and do not differentiate themselves from in-group and out-group members (Ishii-Kuntz, 1989, p. 174). This depicts the level at which individual versus group objectives govern an individual’s life. Most developed nations (such as the U.S and European nations) are dominated by individualistic cultures, while the rest of the world is predominantly collectivists, including nearly all the developing nations particularly in Asia (Ralston, 2008, p. 17).
Power distance relates to the level at which the lowly ranked individuals recognize and legitimize the power and influence of the highly ranked individuals (Ralston, 2008, p. 18). Power distance is closely related to individualism versus collectivism, in that individualist cultures are normally low in power distance (lesser hierarchical) while collectivist cultures are characteristically high on power distance (highly hierarchical). Similarly, developed economies are in general lower on power distance as compared to the developing economies (Ramamoorthy and Carroll, 1998, p. 3).
Masculinity versus femininity describes the level at which belligerence and material well-being is esteemed in society against excellent interpersonal relationships and the overall wellbeing of the people. The masculine culture expects men to be more assertive, aggressive, and concerned with material well-being. On the other hand, in feminine culture, women are expected to embrace the role of a nurturer and should be more concerned with family welfares. Masculine cultures encourage male dominance while femininity culture discriminates against women. Recent studies (Ralston, 2008) have established that this dimension of culture is not related to the economic advancement of a country or geographical location.
According to the study conducted by Ralston (2008), Japan has the greatest score on the masculinity dimension, although other Asian countries have intermediate scores. Egalitarian societies, for instance, the Scandinavian nations, are inclined towards feminine culture (Hodgetts and Luthans, 2003, p. 22). Lastly, uncertainty avoidance relates to the level at which the society members are not comfortable with indistinct, ambiguous, or unplanned situations. This is similar to the level of risk tolerance in society (Ralston, 2008, p. 18). This is normally common in cultures where individuals are troubled by change and risks. Individuals embracing such cultures are likely to express strong risk avoidance by resorting to aggressive, poignant, and intolerant conduct. They are characterized by a belief in absolute legitimacy. This is common in Greece and Portugal (Hofstede, 1991, p. 6).
Gender-related studies in the subject of international HRM are also limited. An article written by Adler (2002) discusses the level at which women have attained managerial positions in different countries all over the world and highlights how certain factors such as national cultures have promoted opportunities for women. More quantitative studies by Jayne and Dipboye (2004), using summative national data from the United Nations database on gender, compounded with Hofstede’s national culture norms, asserted that culture plays a distant, but possibly not a closer role in creating opportunities for women.
Paradoxically, the masculinity versus femininity dimension of culture appears unconnected to the proportion of managers in a country that is female; further significant is the level to which the national culture is individualist or collectivist. Individualist cultures tend to focus on individual accomplishment and advantage as a source of mobility, while collectivist cultures are extra ascriptive. Therefore, individualism positively correlated to job prospects for women in managerial positions (Adler, 2002, 750). Some studies claim that the gender composition of the workforce in affiliate companies of multinational corporations tends to conform to the norms of the host country (Chatman and Spataro, 2005, p. 325). However, other studies suggest that the national culture of the home country of some multinational corporations, which most probably influences the companies corporate culture, transfer policies relating to women employment opportunities especially in developing countries that have no laws barring gender-based job discrimination (Adler, 2002, 755).
Trompenaars (1997) conducted a survey of 15000 managers and administrative staff across 28 nations. He theoretically formulated cultural dimensions based on workplace relationships and values. He identified 7 dimensions of culture and grouped them under three general categories. The first category is the relationship with time which includes the past, present, and future aspects of culture. The second category is the relationship with the environment which focuses on the level of possible control. The last category is the relationship with people. This category emphasizes social identity and regard for individuals and the community. Relationship with other people can further be classified into universalism versus particularism, individualism versus collectivism, neutral versus emotional (objectiveness and friendliness), specific versus diffuse, and achievement versus ascription (Trompenaar, 1997, P. 18).
The recent studies on culture about human resource management have focused on the behavior of employees at the workplace. Very few studies have considered the cultural impact of the appraisal. Assessment of individuals from diverse cultures and nationalities is normally based on principles of culture, value, and systems of behavior. U.S and European companies emphasize individual workers’ personalities and characteristics as opposed to collectivist culture (Webber and Donahue, 200, p.149). In many organizations, performance standards are mainly determined through cultural beliefs, values, and norms of the designers of performance appraisal system (Jayne and Dipboye, 2004, p. 412).
In extreme cases, subjectivity and stereotypically oriented views can result in prejudice in the workplace. Such bigoted practices normally impact the evaluation process and workers’ development. Workers’ performance is usually pegged on the level of participation, respect for the authority, degree of formality, and the preferred appraisal methods. Collectivist culture focuses on informal approaches of appraisal (Becton and Schraeder, 2009, p.1). There are several issues that are considered when assessing the performance of workers from a cultural perspective. These include belief on the level of control in the working environment, feedback process, and intrinsic subjective nature of appraisal and acknowledgment of probable cultural explanations for workers performance (Deresky, 2002, p. 5).
The cultural concept of HRM is informed by diverse perceptions of culture. Societies attach special values relating to individuals working in an organization. Instrumentalism sees employees as resources used in the quest for shareholder value. Therefore, the concept of HRM is a product of an Anglo-American culture that viewed people as instruments of achieving organizational goals (Adler, 2002, 753). On the other hand, the humanistic views human beings as having a value in their right. Humanistic views are common in the developing /emerging economies and regard people as their own end and have intrinsic value for themselves and for the organization (Jackson, 1999, p. 232).
Multinational corporations operating in the developing/emerging economies tend to develop hybrid values as a result of the interactions of diverse cultures; a phenomenon is known as convergence in HRM (Jackson, 1999, p. 236). The evolution of hybrid HRM systems and practices in developing countries is a result of globalization, external shocks, and impact from diverse cultural backgrounds, for instance, Western, Asian, and Indian culture among others (Chatman and Spataro, 2005, p. 326). The collectivist culture mostly in the emerging has various implications. First, it accommodates the interest of all the stakeholders in an organization. Second, it helps in improving work commitment and employee motivation. The collectivist culture also acts as a litmus test to a particular management technique in place. Lastly, it is the most suitable for managing the dynamics of diverse cultures (Hofstede, 1991, p. 8).
International HRM in Emerging Countries: Chile
Emerging countries are believed to be the economic engines for the expansion of multinational corporations (Richards, 2001, p. 2; Engardio Arndt and Geri, 2006, p. 40). These countries are fast-growing markets with the greatest potential in the 21st century. The merging countries are characterized by poor economic development but faster economic growth, the annual economic growth rate of between 5-10%, and satisfactory opportunity/risk quotient to draw external investment. The present top ten emerging countries include India, Brazil, China, South Korea, Poland, South Africa, Mexico, Turkey, Argentina, and ASEAN nations (Edward and Rothbard, 2000, p. 6). The global population is projected to be approximately 8 billion or 40% more than the current population of about 6 billion in the year 2025. The immense majority of this global growth in population is expected to take place in emerging countries. It is estimated that in 2025 about 85 percent of the global population will live in emerging countries (Thite, 2004, p. 12).
The global investment report from UNCTAD (2010) shows that although Multinational Corporation from the developed countries accounts for the vast amount of the global direct investment, emerging countries also have a considerable outward investment accounting for 25% of the global foreign direct investment, majority of it coming from Asia and Latin America. Similarly, the growth rates of multinational corporations from emerging countries over the last decade have exceeded developed countries (UNCTAD, 2010, p.3).
Chile is a South American country sandwiched between the Andes Mountains to the east and the Pacific Ocean to the west. The country borders Peru o the north, Bolivia to the North, and Argentina to the East. The country’s area is about 752500 km2 with a population of about 17.1 million. 18.2 percent of the population lives below the poverty line with an unemployment rate of about 9.6 percent. Chile is a multiparty democracy with a constitution that was approved in 1980. However, this constitution has undergone numerous amendments with the latest amendment done in 2005 (Rector, 2003, p. 2).
The country went back to democracy in 1990 following a coupon for General Pinochet’s government. The country became a full member of the Organization for Economic Co-operation and Development (OECD) in December 2009. The economy of Chile is market-oriented characterized by a high level of international trade and has a great reputation for financial institutions. The composition of the labor force by occupation is as follows: agricultural sector 13.2 percent, industrial sector 23 percent, and service sector 63.9 percent. Chile became the first Latin American country to embrace deregulation and privatization programs (Elvira and Davila, 2005, p. 2164).
The current president of Chile is a Harvard-trained economist by the name of Sebastian Pinera. He turned out to be the first conservative president since the end of military rule following a coup in 1990 and was voted in 2010 (Rector, 2003, p. 2). About Hofstede’s cultural dimension, Chile has a relatively high power distance. This means that the lowly ranked employees highly recognize and legitimize the power and influence of the top-ranked individuals (Ralston, 2008, p. 18). Power distance is closely related to individualism versus collectivism and therefore high power distance means domination of collectivist culture. The country is relatively moderate in terms of masculinity and femininity. Both males and females have equal opportunity in the country and the scenario of male dominance has significantly waned. This is attributed to the current constitution and pressure from civil society. Chile is relatively strong in uncertainty avoidance. This is partly attributed to politics of the day and natural calamities that have been witnessed over the recent years (Rector, 2003, p. 3).
According to recent studies, Chilean managers focus on doing business with people as opposed to other businesses. The country is dominated by a linked society and therefore is very significant to be part of the linked relationship. Customer loyalty is very vital to the business agenda and this is achieved through personalizing business transactions with the clients (Cortes, 2000, P. 140). Latin American countries are dominated by benevolent paternalism which is a leadership style where managers have a personal responsibility to protect junior employees and safeguard their personal needs (Cortes, 2000, P. 142).
Junior employees also have the obligation of avoiding all forms of conflicts and confrontations with their leaders. This means they have to avoid criticism that is regarded as offensive to the superiors and colleagues since it is regarded as disparagement (Schneider, 2000, P. 773). Social distance is also highly regarded. This refers to the leadership status and symbols of social differentiation. Societies in Latin American countries highly condemn behaviors and symbols that reduce power distance. Human resource management in Chile exhibits a considerable gap between intent and reality about the significance placed on human capital (Cortes, 2000, P. 142). It is characterized by limited HR planning and more attention to the management fads. Investment in Human resource training and development is also relatively low as compared with other Latin American countries. Also, HR training and development is not connected to organizational policies and strategies (Lovemen, 2001, P. 14).
Similar to Japan and the U.S., careers in Chile are measured by the speed of rising as opposed to development activities. Organizations in the country use sanctions instead of rewards to enhance performance. They employ the paternalistic approach where blame is paramount rather than a compliment (Lovemen, 2001, P. 10). There is a high preference for a task-oriented style of management. Discrimination is a socially acknowledged criterion where indigenous people have an upper hand over foreigners. Personal connection is also very significant in securing employment (Cortes, 2000, P. 142). Managers are familiar with effective HR systems and practices but chose to be stuck in traditional practices- a lag relative to other management functions. Despite the end of the military regime, there was little change in the social capital of the country.
The current labor policies in Chile are aiming at enhancing labor productivity and the quality of jobs. The government is striving to minimize the rate of unemployment, protection of employees’ rights, and enhancing their working conditions. The policies also aim at strengthening the social security system, increasing consultation among all the stakeholders, and promote all initiatives that are geared towards achieving gender equality in the work place (Elvira and Davila, 2005, P. 2166).
Chile has ratified 48 ILO (International Labor Organization) conventions into its constitution. Chilean law prohibits any form of discrimination particularly gender discrimination in the workplace. About 18 percent of the labor force in the country is unionized and over 90 percent belong are subsidiaries of the United Workers Federation. Recently, the Chilean government added new forms of employment- E-work and it targets youths of up to 24 years. The government also extended the rights of permanent employment to temporary employment. In 2009, the government set up the monthly minimum wage for all the public servants at $302 U.S dollars. The law only allows private workers to go on strike. Public and government workers are barred from any form of industrial unrest (Durdn-Palma, Wilkinson, and Korczyn, 2005, P. 65).
The law recognizes the rights of unionized workers and their freedom to join or withdraw from any Union. Employers are prohibited from victimizing/ discriminating or penalizing their employees for being a member or not being a member of any group. The law also recognizes shop unions, inter-shop unions, and independent unions among others. The dues for these unions are directly charged from the salary. Employers have the obligation of proving the unions with financial information regarding the cost of labor. Chilean embassies also have a department of political affairs and labor relations (Durdn-Palma, Wilkinson and Korczyn, 2005, P. 66).
Since 2005 working hours per week were reduced from 48 to 45 hours and distributed in five days. Work time arrangements must be approved by the labor office and it requires a consensus between the employees and the employers. There is a mandatory unemployment insurance system that is financed by employers and employees. Firms/ companies that have more than ten employees are required to have in-house regulations (Durdn-Palma, Wilkinson and Korczyn, 2005, P. 68; Elvira and Davila, 2005, P. 2166).
One of the main challenges facing multinational corporations in emerging countries like Chile is how to balance global integrations and local adaptations. Local environment and culture are viewed as key factors in determining this equilibrium (Ngo et al., 1998, p. 632; Lovemen, 2001, P. 15). In contrast to Ohmae’s (1990) perspective of a borderless world and country with fewer corporations, the parent country’s cultural and institutional determinants are viewed to be significant determinants from a company’s context (Guillen and Garcia-Canal, 2009, p. 3). A study conducted by Gamble (2003) concluded that the main influence on the multinational corporations’ effort to have a level of control over its affiliate companies in the developing countries is the country of origin.
Despite the local culture and legislation, studies show that some foreign companies in Chile have a trace of their parent country within them. This could be subliminal choices that are driven by the cultural and institutional aspects of the home country and could be transmitted through the employees working in the company (Harzing and Sorge, 2003, p. 15; Elvira and Davila, 2005, P. 2168). Most of these companies’ economies characteristically differ from the local companies about the style of HRM employed (Ferner, 1997, p. 8). Local companies tend towards being strong but with informal centralized systems and greater reliance on established global networks (Harzing and Sorge, 2003, p. 15). On the other hand, foreign companies in Chile tend to possess sophisticated systems of control and homogeneous global systems (Ferner, 1997, p. 8; Elvira and Davila, 2005, P. 2169).
Personal reflection
Despite the rising trend towards globalization, international trade, and cross-country convergence resulting from it, considerable differences remain in how different countries manage their business operations, particularly, the management of human resources (Brewster and Hegewisch, 2001, p.9). The cultural values structure founded by Hofstede (1991) shows the constraints of universalistic models of IHRM that focus on the single best way. Although some experts have challenged the focus placed on national culture in IHRM at the expense of organizational disparities and the home country is a consistent subject in this study. The field of international human resource has been typified by three extensive approaches. Earlier studies focused on the cross-cultural aspect of HR and explored human behavior within organizations from a global viewpoint (Adler, 2002, p.743).
The subsequent approach originated from the comparative industrial relations and compared and analyzed HR systems in several countries (Brewster and Hegewisch, 2001, p.8). The third approach emphasized aspects of Human resources in Multinational corporations (Dowling et al., 2003, p. 2). Most studies on international human resource management have focused on developed countries giving less attention to the emerging and developing countries. This reflects the ethnocentric bias of western scholars (Guillen and Garcia-Canal, 2009, p. 3). Most models used in western nations do not apply to the rest of the world. Nevertheless, multinational corporations from different parts of the world are striving to incorporate the best HR systems and practices and most of them are now moving away from ethnocentric approach and polycentric approach to global or hybrid approach (Chang, Wilkinson and Mellahi, 2007, p. 3).
The study highlights demonstrate cultural disparities between developed economies and emerging economies. Most developed nations (such as the U.S and European nations) are dominated by individualistic cultures, while the rest of the world is predominantly collectivists, including nearly all the developing nations particularly in Asia (Ralston, 2008, p. 17). Similarly, developed economies are in general lower on power distance as compared to the developing economies (Ramamoorthy and Carroll, 1998, p. 3). Emerging and developing countries have a higher masculinity score than in developed countries. This means the means these countries favor patriarchal society. However, from the module, we learn that the majority of the multinational corporations from the developed countries usually influence the corporate culture of their affiliate companies and transfer policies relating to women employment opportunities particularly in the developing countries that have no laws barring gender-based job discrimination (Ralston, 2008, p. 18).
Organizational culture has an unswerving relationship with the performance of the organization. There might be cases whereby diversity in the workplace is not correlated with institutional performance. However, this can be achieved through an organizational culture that promotes higher involvement (Jayne and Dipboye, 2004, p. 412). Understanding cultural diversity is very crucial since conflict can emanate when cultural sensitivities and differences are overlooked, leading to poor results in an organization (Adler, 2002, 754). Excellent management of diversity in the organization creates a sense of ownership among the employees and this enhances job satisfaction and organizational commitment (Hofstede, 1991, p. 8). Sound organizational culture, diversity management, and corporate social responsibility normally lead to sustainable human resources (Webber and Donahue, 200, p.155).
This study provides an interesting insight into how multinational corporations from different economies, particularly emerging countries strategize and manage their human resources globally (Forster, 2000, p. 126). While most multinational corporations from the western countries focus on exporting their HR systems and practices to the rest of the world, multinational corporations from the emerging economies have adopted an exceptional approach; they have established a global offshoring service delivery model through a combination of onshore, off shore and localized strategies (Chang, Mellahi and Wilkinson, 2009, p. 39). Multinational corporations from these countries have grown exponentially mainly by setting up affiliate companies and through acquisitions (Edward and Rothbard, 2000, p. 4). Unlike multinational corporations from the developed economies which engage in exporting their superior practices to their affiliate companies in less developed countries, multinational corporations in emerging economies use the knowledge acquired in operating in developed economies to convey the best HRM systems and practices across the whole corporations (Zhang et al., 2008, p.15).
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