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Chapter 2 International human resource management
Review and reflect question 1 and HRM in practice 2.1
What are some of the likely advantages and disadvantages of companies
pursuing an ethnocentric, polycentric or geocentric approach to
Perlmutter’s EPG profile is a neat way to categorize the approaches adopted to
internationalization by multinational companies (MNCs). There are likely to be a
number of advantages and disadvantages to each of the approaches and as suggested
by HRM in practice 2.1 these can vary significantly between MNCs. For those
companies adopting an ethnocentric approach the obvious advantage is the ability to
retain tight control over overseas subsidiaries, especially in terms of attempting to
transfer organizational culture or HRM practices, something which was apparent in
Swedco. This strategy also potentially allows for managers to develop their skills in
an overseas posting, a process that is part of a broader management development
approach. On the other hand there are several disadvantages. The use of home country
expatriate managers could cause a good deal of resentment in the host country and
may be seen as a very imperialistic device, especially where the home country has
previously had a colonial relationship with the host country, something illustrated in
the Frenco example. More pragmatically, host country employees and managers may
also feel very strongly about the lack of local career development opportunities. A
number of these concerns are clearly alleviated by a polycentric approach, which
allows local employees and managers a good deal of autonomy in operationalizing
MNC strategies in local subsidiaries. This approach also allows for career
advancement for local nationals. The obvious disadvantage of a polycentric approach
is the potential loss of control over the subsidiaries operation. In an increasingly
globalized world following a predominately polycentric approach may also deny
home country managers invaluable international experience, which may be
detrimental to their own career progression. The final approach of geocentrism
appears to be the most advantageous. Its proponents would point to the potential to
create a supra organizational culture which draws on many diverse though potentially
synergistic cultures. In selecting the best person for the job the geocentric
organization is also drawing from a vast array of global talent, many of whom may be
experienced and competent global managers, well versed in operating in a number of
diverse national environments. All of these aspects are apparent in Frenco. The one
obvious drawback of geocentrism is its cost and the need to move beyond
platitudinous talk of being a ‘global’ company, something which Americo was
struggling with.
Review and reflect question 2
What are some of key skills needed to be a successful expatriate manager in the
international tourism and hospitality industry?
This question picks up on the theme that too often the selection criteria for expatriate
managers in premised on the simple notion that good domestic performance is likely
to equate to good overseas performance. In that sense technical expertize and good
domestic performance are the most often used criteria and there is much less concern
with issues such as language skills and international adaptability. Yet it is those things
which are suggested as being key if the expatriate is going to have a positive
experience. It would seem sensible then in selecting an expatriate manager for
organizations to also take account of the psychological, mental and emotional
capabilities of a manager and their dependants, to decide whether they will be able to
adjust to their new surroundings. Consequently, selection should not be based solely
on technical competence. Rather, organizations should attempt to ascertain whether
individuals have certain other traits or characteristics to ensure a successful
experience. In that sense, successful expatriate managers are likely to have an active
desire to adjust to living in the local culture. They will also have sufficient emotional
maturity to tolerate ambiguity and uncertainty. Being adaptable and learning from
experience in a flexible manner, which is also sensitive to local cultures, is also
crucial. This should allow the expatriate to judge the local culture within its own
particular context. In that sense there are no ‘right’ or ‘wrong’ cultures, merely
different cultures and the expatriate should aim to refrain from being too judgemental.
Lastly, the expatriate should perceive the experience as not only a major part of their
career development but also a significant opportunity for personal growth.
Review and reflect question 3 and HRM in practice 2.2
Does the American dominance of the globalization process mean that we are all
increasingly ‘Americanized’?
At times it might seem that we are bombarded with lots of ‘izations’, with
Americanization, taking place alongside other terms such as globalization,
Disneyization and Mcdonaldization. These various izations are attempts to offer a
comprehensive view of what is happening in modern society, particularly at a global
level. In many respects the answer to the question would be, it depends on your world
view! Thus although many people may well find themselves consuming American
products, they may do so in a relatively unconscious manner and not really think
about any related cultural baggage. What HRM in practice 2.2 points to is that the
question may also be very contingent on time and place. In that sense there is a need
to place Americanization within a broader historical context, which is what HRM in
practice 2.2 aims to do. Equally, institutions such as Disney and McDonald’s may
simply be seen at one level as theme park or entertainment company or fast food
vendor; or much more in terms of representing ‘Americaness’, being either a benign
representatives of American capitalism or the worst excesses of American culture
Review and reflect question 4
What are some of potential challenges facing tourism and hospitality MNCs in
attempting to transfer their HRM practices across national boundaries?
At the heart of this question lies the recognition that there are likely to be a number of
challenges facing a MNC which attempts to transfer their HRM practices overseas. As
the text suggests many of these will be due to legislative constraints and others more
concerned with cultural blockages. Thus, MNCs may view the issue of whether they
need to conform to local circumstances in a number of ways. The first is what is
considered ‘acceptable’, where the MNC will make a judgement as to how certain
policies or practices may be perceived; for example the use of performance related
pay may not be appropriate in all countries. Second, there is the legalistic notion of
what is ‘legitimate’, where MNCs have to yield and comply with local statutes; for
example, does the organization have to pay overtime for work on Saturday and
Sunday? The final element is what may be ‘feasible’. This again involves the MNC
making a qualitative judgement as to the operationalization of certain policies or
practices; for example, in a society which is hierarchal, authoritarian and paternalistic,
can the organization empower the workforce to make workplace decisions in order to
facilitate their quality strategy? Arguably the notions of acceptability and feasibility
exemplify a culturalist view of MNC adaptation, whilst the MNCs rationale for
seeking legitimacy is more likely to be driven by a need for legislative compliance
with institutional arrangements. It is the combination of these aspects then which will
determine what the ‘permissiveness’ or ‘permeability’ of a host country’s institutional
and cultural framework, such that certain host countries will be more open to the
transfer of the MNCs home country policies and practices than others.