Hrm in a global economy

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Strategic International Human Resource Management involves with developing a strategic plan to hire, manage, and retain the best employees throughout the enterprise's international activities, as well as attracting and retaining HR managers with global HR expertise so that HR can contribute effectively to the firm's overall global strategic planning (Dennis, Schuler & Claus 2009). To get more understanding about strategic HRM, three articles were examined in this essay. It seems to be common to all three articles in terms of understanding of strategic international human resource management that SIHRM is one of the most popular and rapidly growing areas of HRM research. SHRM research tends to analysed at business units and organizations level and tend to highlight fit among HRM practices and fit between HRM and other organizational factors. Business strategy is one of the most common contingency. Moreover, most strategic HRM researches emphasis on organizational performance outcomes, including financial performance as HRM has become more involved with helping organizations be successful in their international endeavours.

From Takeuchi (2009) article, it has been found that they addressed that many manufacturers in the global market are currently experiencing serious economic problems, both domestic and overseas after the economy decline in the early 1990s. This economic recession has led to the inefficient in political and legal environment and also inefficient management. Since the previous research on strategic HRM (SHRM) has found that the firm performance can be predicted by both internal and external consistency, current work on research SHRM has moved to how the HRM policies and practices are influenced by organisational strategies and environmental contingency. Therefore, the major challenge of this study is to test the research evidence in which firms can fit their HRM practices and policies with business strategy among 312 Japanese manufacturing firm operating in the domestic environment, in response to the current debate around the contingency fit proposition in the field of SHRM.

The study has found that Japanese firms need three different competitive strategies which are cost reduction, differentiation and quality enhancement, in order to effectively compete in the Japanese market. This research has found that these three competitive strategies were found to reflect and valid the current strategic alignment of the sampled Japanese firms, with the quality enhancement strategy is widely adopted by Japanese manufacturers. However, in the Japanese market, there are increasing of complexity, competitiveness and global nature, future studies should explore new strategy specific to Japanese firms which specific to this cultural context. Moreover, the correlation analysis indicates that a firm which employed the individual-oriented HRM policies was significantly and positively related with performance.

Furthermore, many firms have been restrained by the traditional ways of management called ‘Japanese-style management', which has two basic principles including lifetime employment and seniority-based wage that were believed to well fit in the collectivism culture in the industrial society in Japan. From this issue, some firms have tried to change and transform their business and management practices by combining the Western concept with traditional Japanese ideas, therefore those firms which want to transform would have to understand that their existing HRM policies and practices can fit with the new HRM system in order to ensure their competitiveness in the global market. In this research, the findings appear to support the effectiveness of Western concept which determined by HR practices such as individual performance-based compensation and individual-based training and development. The reason of this finding is based on the current convergent theory which assuming that certain sets of high performance HRM policies and practices should be applied universally to any type of organization and firms will result in economic benefits in any location that adopt such best practices. However, some big Japanese firms still have a strong tied and belief in the Japanese employment system, such as Toyota Motor Corporation and Canon Inc. still place a strong emphasis on a long-term employment system, combined with performance-based HRM policies.

Furthermore, MMR analysis indicated that each of the three competitive strategies (cost reduction, differentiation and quality enhancement) determined the relationship between HRM policies and firm performance. These three strategies were found to be significant in predicting market growth, profitability and ROA. The cost reduction strategy positively relate with a short-term, flexible HRM policy, while the differentiation strategy need performance-based HRM to improve organizational performance. Moreover, the quality enhancement strategy needs the use of clear and standardized HRM procedures to enable firms to produce high quality standard products and improve performance. These findings are consistent with the prior research studies on SHRM which different types of HRM policies and different degree of emphasis are needed by firms to undertake each strategy. The findings of this research suggests that the ways in which firms proposing different strategies adopt specific sets of HRM policies and practices, so the results can help Japanese firms to make decisions about strategic decision in which HRM policies should be applied given the strategy that they are aiming overall. In addition, the role and types of employee' behaviors are important and can reinforce the strategy-HRM alignment. However, this study has limitations, such as this research used three measures of financial performance which these performance indicators may pick up the firm short-term performance outcomes, therefore care should be taken in interpreting the results.

In Morris, Wilkinson & Gamble (2009) article, the research examines whether the SIHRM was related and useful for the HRM practices of foreign-invested companies in China and their affiliate companies. They also studied the strategic international HRM literature generally, particularly in China, with expatriate managers and key personnel. Furthermore, they reviewed the SHRM literature that certain products and HRM strategies would be produced at different stages of the commodity chain and those stages would tend to be found in certain locations. The research suggests that there are two variables key, which are strategy and industry sector.

Firstly, by studied in 27 China-based companies in garments and consumer electronics industries, in China both of these industries firms tended to follow closely Schuler's HRM model of a cost-reduction strategy. Firms in China were large and gained benefit from mass production and economies of scale and organizational power is centralized. The production output and quality in foreign-owned companies and in subcontractors were closely monitored, materials and production equipment were supplied by the parent company and were staffed by expatriates, which it can be said that work processes were carefully planned by the parent company, especially in electronics which were closely monitored and measured by engineer. Job design was narrow and recruitment, selection, induction and training and development were limited. Wage levels were very low in comparison to those in parent company. Centralized organizational power was expressed by low levels of communications, consultation and worker involvement. As the total-quality-control system of the Japanese and Korean parent companies exist in electronics, and the demands of western and Japanese retail customers in clothing, quality of demand were high. However, the HRM practices did not align with Schuler's quality enhancement strategy because there is intense in global price competitiveness. In contrary, the Japanese, Korean and Hong Kong-based enterprises adopted a set of HRM strategies which were similar and closer to quality enhancement such as high participation, job security and better training and development. Therefore, the same organization achieves different HRM strategies at different points in the commodity chain and at different locations. Secondly, the industry sector which studied in this research (garments and consumer electronics, are mature where innovation is increasing and it occurs in home country rather than in China. As a result, the innovation and the production process is developed elsewhere and exported to China. Since the business strategies directs commodity chain configuration and also important for HRM practices, this is not the only important factor, other factors are important too, for example, the institutional capacity for a developing, transitional, economy such as China is part of a broader cultural influence and government interference.

In Lepak & Shaw (2008) article, the research is in the area strategic HRM which they review the existing research on strategic HRM research in the North American context. Three aspects of strategic HRM were reviewed including universalistic, contingency and configurational perspectives. For universalistic aspects, particular practices should be more effective universally than others, for example, employment security, high wages and training and skill development, whereas from the configurational aspect, it is unlikely to get significant benefits at the organizational level unless it is combined with other effective policies and practices or it emphasis the focus on alignment among multiple HRM practices. Under the contingency aspect argue that the universalistic and configurational aspects put a focus on the relationships between HRM practices and performance outcomes and will be effective only under certain situational conditions, so the contingency aspect assumes that the effectiveness of HRM systems should be depend on existing organizational contingencies.

The study also outline the conceptual view of HRM systems which are a bundle of practices, also some emerging issues that HRM systems must encounter with in the future including technology, workforce trend and changing worker values. The concern of technology management both within and outside organization is critical and has created different work environments, so researchers tend to pay attention to technology and HRM initiatives. There are debate and concern about the future of labour pool, such as shortages of labour from the retiring baby boom generation; this could be the reason to be concerned with how these demographic changes may have an effect on the ability of HRM systems. Perception of career and organizational loyalty has been change and HRM systems are currently often made without loyalty and commitment considerations. To handle with HRM systems in a more dynamic employment environment and in a work with low loyalty levels is a challenge for organizations. Based on this study, HRM systems refers to measures of work force and organizational performance and the HRM systems effectiveness appear to be influenced by organizational contingencies. Finally, they reviewed the choosing of performance metrics and emphasize the importance of managing HRM systems for multiple employee groups as the study suggests that organizations tend to go on with multiple HRM systems for different groups of employees.

To conclude, in my personal view, strategic international human resource management cannot be applied with the same degree of success across all 3 business environments as not only SHRM that is important but there are many impacts of an MNE's international activity on HR and vice versa including the stage of internationalization, the global nature of the particular industry, and the particular choices the firm makes to structure its international operations (Dennis, Schuler & Claus 2009). As these three articles have shown that local culture and national managerial orientation influences the nature of HR practice, that the degree of global set influences the nature of an MNE's global strategy, and that influences the degree of global focus in the HR strategy.


Briscoe, DR, Schuler, RS & Claus, L 2009, International human resource management: policies and practices for multinational enterprises, 3rd edn, Routledge Taylor & Francis Group, New York.

Lepak, DP & Shaw, JD 2008, ‘Strategic HRM in North America: looking to the future', The International Journal of Human Resource Management, Vol. 19:8, pp. 1486-1499.

Morris, J, Wilkinson, B & Gamble, J 2009, ‘Strategic international human resource management or the ‘bottomline'? The cases of electronics and garments commodity chanins in China', The International Journal of Human Resource Management, Vol. 20:2, pp. 348-371.

Takeuchi, N 2009, ‘How Japanese manufacturing firms align their human resource policies with business strategies: testing a contingency performance prediction in a Japanese context', The International Journal of Human Resource Management, Vol. 20:1, pp. 34-56.