Week 2

Globalization and
IHRM
Discussion Topics
 Nature of globalization
 Drivers of globalization
 Ripple effects of globalization
 Impact of globalization on HRM & MNCs
 HRM integration mechanisms in MNCs
What is Globalization & What are
it’s Nature?
 What is Globalization?
 G is attracting foreign investment, while foreign increasing
exports and developing international alliances to penetrate
new markets – Perkins and Shortland

 G is a worldwide pressure for change – Granell, 2000

 G refers to the process of integrating world economy.

 However G does not necessarily mean eliminating

differences, imitating others or allowing more developed
nations to impose their models
 Instead it means, integrating differences putting together our
strengths, building from the differences and being able to join
efforts for a win-win process (Granell, 2000)
What is Globalization? Contd….

 Evidences - increased levels of trade, investment flows,

mobility of people across globe.

 A truly global economy is claimed to have emerged, or in

the process of emerging, in which distinct national
economies and therefore strategies of national economic
mgt, are increasingly irrelevant’ – .Edward & Rees (2006)

 The HR practices must have global perspective of business

because:
 G has revolutionized the way HR policies have evolved & have
been implemented.
 Policies relating to Y hiring, training, compensating are formulated
keeping global needs in mind
Drivers of Globalization
Drivers of Globalization?
 First, rapidly developing economies with huge mkt –offers
huge opportunities to boost sales
 Second, MNCs are opening their subsidiaries in low wage
& low cost countries
 Third, changing demographic
 Fourth, regional trade blocks are adding to the pace of
globalization (through effective control ensure profit)
 Fifth, declining trade and investment barriers
 Sixth, Technology
Drivers of Globalization?

 Boston consulting group has identified 5 currents of G:

 The growth of rapidly growing developing economies (RDE)

 The continuing cost of capital advantage

 The development of talent and capabilities in RDEs

 The migration of customers to RDEs

 The emergence of RDE based global competitors.

Ripple Effects of Globalization
Ripple Effects of Globalization?
 Globalization & Management:
 Shift from
 Theory X to Theory Y
 Hierarchical structure to flat
 Centralized to Decentralized decision making and problem solving
 Individual performance to team-based performance
 Leadership – life-cycle based on a hired basis.
 Globalization & Jobs:
 G has resulted in both creation n loss of jobs
 Globalization & Wages:
 Reducing discrimination from country to country
Ripple Effects of Globalization?

 Globalization & Child Labor:

 Four main approaches to Child Labor Policies are:
 1st Stresses the need for eliminating poverty as that is the main cause of
child labor
 2nd – approach emphasizes on strategies to get more children to school
– incentive for that like free text book, uniform, meal
 3rd approach – considers child labor is inevitable and stresses the
palliative measures such as regulating it to prevent abuse and to provide
support services (UNICEF).
 4TH approach is advocated by ILO – favors banning child labor
altogether. If this is not possible, child labor in the most abusive form
should be banned
Ripple Effects of Globalization?
 Impact of G on Child Labor
 Creation of job will reduce the child labor dependency of parents
 G will create pressure on the concerned parties to create policies in
favor of child
Ripple Effects of Globalization?

 Globalization & Women at the Work Place:

 Some positive impact:
 Enhanced employment opportunity for women
 Promoted migration of women has helped in reducing poverty
 Created new association of women
 Some negative impact:
 Challenging hostile work environment with discrimination.
 Worsened situation of violence against women
 Increasingly commoditizing feminity
 Increasing rate of divorce
Impact of Globalization on HRM
& in MNCs
Impact of Globalization on HRM
 Does ‘going global’ imply harmonization of HR
System internationally’? (IDS, 2000)
 Globalization have set in motion a convergence process
of employment relations patterns in MNCs.
 Normatively, a deep analysis of the set of values, beliefs
and behavior patterns that govern day to day
organizational performance is called for…hence of course
it calls for some kind of integration
 G makes culture an increasingly strategic issue that has
to be faced and properly managed – hence it asks
companies especially MNCs to think about HR policies
strategically – how SIHRM analysts determine whether
culture represent Opportunity, a challenge or a threat
becomes a significant issue therefore.
HRM integration mechanisms in
MNCs
HRM integration mechanisms in MNCs
 The arena for policy choice making may be focused as
follows:
 Strategic choices surrounding management of
employment relationships may be influenced primarily by
‘home country; values and practices – but for MNCs need
to integrate the other aspects of external representatives
 For win-win situation MNCs can develop a hybrid system
– considering the international standards and other local
systems to align the common interest