“The primary cause of failure in multinational ventures stem from a lack of understanding of the essential differences in managing human resources in foreign environments“ (Desatnick & Bennett 1978).
The world has become more globalized, competitive, dynamic and uncertain than ever before. As more and more firms operate internationally, the search for the elements of global competitive advantage is a prominent theme in the management literature (Dickman & Müller-Camen, 2006: 580). There is a clear need to develop an understanding of how to compete successfully on the global playing field. A major component of this understanding appears to be the field of human resource management and, in particular, the field of international human resource management (IHRM) (Schuler, et al., 1993: 419).
The effective management of human resources in an international context is increasingly seen as a key source of competitive advantage in international business; and the quality of management seems to be even more critical in international than in domestic operations (e.g. Monks, et al., 2001). Due to the importance of the topic, there has been a significant amount of research on IHRM in recent years. Some of the major debates are concerned with the development of models and concepts of strategic international human resource management (SIHRM) (e.g. Schuler & Tariq 2007) and the question whether successful domestic HR strategies can be applied in a global context (e.g. Schuler & Jackson, 2007: 162).
The aim of this essay is to compare domestic human resource management (DHRM) with the concept of IHRM. After briefly defining the key terms, the author with outline both concepts and identify all major similarities and differences. At the end, some final conclusions will be drawn.
Table of Contents
1. Introduction
2. DHRM versus IHRM
2.1 Definitions
3. Similarities
4. Differences
5. Moderating Factors and Other Aspects
6. Conclusion
Objectives and Topics
The primary objective of this paper is to conduct a comparative analysis between domestic human resource management (DHRM) and international human resource management (IHRM). By defining core concepts and examining key literature, the work aims to identify the underlying similarities and critical differences that define the management of human resources within global versus local business environments.
- Theoretical definitions of DHRM and IHRM
- Core similarities regarding strategic HR objectives and environmental impacts
- Complexity factors distinguishing international from domestic operations
- Moderating variables such as culture, industry, and management mindset
- Strategic implications for multinational enterprises
Excerpt from the Book
Differences
The differences between DHRM and IHRM are more striking than their similarities. According to Dowling (1988), the key variable that differentiates domestic and international HRM is the complexity of operating in different countries and employing different nationals as employees. He argues that this complexity can be attributed to six factors as shown in the below illustration:
The above model has been cited frequently in current HRM literature (e.g. Aswathappa & Dash, 2007; Dowling, et al., 2008). In the following paragraphs the six factors of the model will be outlined.
More HR activities: Each function of HR has a new dimension in an international context and HR managers have to engage in a number of activities that would not be necessary in a domestic environment, such as international taxation, relocation and orientation services, administrative services for expatriates, host-government relations and language services (e.g. Monks, et al., 2001).
Broader perspective: Compared to DHRM, IHRM requires a much broader perspective for all HR activities. The various employee groups in a multinational company (HCN, PCN and TCN), each with their own cultural backgrounds, add to the complexity of the work of the HR manager. Training and development for example, the tasks involved here are, amongst others, to identify the types of overseas assignments for which training is required and specific cross-cultural training needs (Aswathappa & Dash, 2007: 68). Another crucial aspect is the company’s compensation policy. A uniform treatment of expatriates, for example, represents a broad, international perspective, it is still likely that equity issues will arise when employees of different nationalities work together.
Summary of Chapters
1. Introduction: Presents the globalized business context and defines the research aim of comparing domestic and international human resource management.
2. DHRM versus IHRM: Explores the definitions of human resource management and sets the theoretical framework for international HRM dimensions.
3. Similarities: Discusses how the core functions and strategic objectives of HR remain consistent regardless of whether operations are domestic or global.
4. Differences: Identifies six specific factors that increase the complexity of managing HR in an international versus a domestic context.
5. Moderating Factors and Other Aspects: Analyzes additional variables like cultural environment and industry type that influence IHRM strategies.
6. Conclusion: Summarizes the findings and emphasizes the increasing importance of strategic, dynamic HR approaches in a globalized world.
Keywords
International Human Resource Management, IHRM, Domestic Human Resource Management, DHRM, Multinational Enterprise, Global Competitive Advantage, Strategic HRM, Expatriates, Cultural Environment, Workforce Mix, Globalization, Business Strategy, Risk Exposure, Human Resource Functions
Frequently Asked Questions
What is the core focus of this publication?
The work provides a comparative analysis between domestic human resource management and international human resource management to understand the challenges of operating in a global environment.
What are the central themes discussed in the text?
Central themes include the definitions of HR, the similarities in strategic objectives, the added complexities of international operations, and moderating factors like culture and industry.
What is the primary research goal?
The goal is to identify and outline the major similarities and differences between DHRM and IHRM to help minimize failure in multinational ventures.
Which scientific methodology is applied?
The author uses a critical literature review and synthesis of established academic models from researchers such as Dowling, Schuler, and Shen.
What is covered in the main body of the paper?
The main body breaks down the theoretical definitions, identifies the "six factors of complexity" in IHRM, and evaluates how firm-specific and contextual variables influence HR strategy.
Which keywords define the work?
Key terms include IHRM, DHRM, Multinational Enterprise, Strategic HRM, cultural environment, and globalization.
How do 'best fit' and 'best practice' apply to HR strategy?
These are presented as two major approaches used to align human resource functions with organizational business strategies, applicable to both domestic and international contexts.
What role do 'moderating factors' play in IHRM?
Moderating factors, such as the cultural environment and industry characteristics, explain why IHRM strategies differ across various multinational companies.
Why does the author argue that IHRM is more complex than DHRM?
It is more complex due to factors such as broader HR activities, increased risk exposure, the need for a wider perspective, and the management of a diverse workforce mix (PCNs, HCNs, TCNs).
What is the significance of the 'five-forces model' mentioned?
The five-forces model, based on Dowling's work, helps explain how IHRM diverges from domestic practices by integrating variables like industry type and management mindset.
- Quote paper
- Timo Beck (Author), 2010, Differences and Similarities Between International and Domestic Human Resource Management, Munich, GRIN Verlag, https://www.grin.com/document/147718
