HRM

How Is The HRM Function Of MNCs Organized And What Are The Specific Issues Of International HRM For MNCs Operating Across Borders?



How Is The HRM Function Of MNCs Organized And What Are The Specific Issues Of International HRM For MNCs Operating Across Borders?

Introduction

Debates about globalisation invariably evoke argument, debate, disagreement and, on occasions, violence as witnessed by demonstrations at recent World Trade Organisation gatherings in Seattle, Genoa and elsewhere. Indeed, the exact meaning and significance of the term, along with its intellectual ownership, are contested domains (Clark and Knowles, 2003; Lane, 2000). Proponents of the “radical” globalisation thesis (Hirst and Thompson, 1999) argue that national economies are being overrun by an emerging system of global economic organisation and control where decisions are made at the global level without reference to the nation state. It is argued that this is a reflection of the relatively limited ability of nation states to regulate the activities of these global conglomerates which will, in turn, lead to convergence of national economic policies, economic organisation and management practice towards a single “best” model. Indeed, some studies of large multinational corporations (MNCs) appear to support at least a modified version of this view. For instance, Royle (2000, pp. 210-11), based on his study of McDonald's in Europe, posits that “although national and EU regulation still have an impact on employment regulation in the fast-food industry, the full impact of such systems is being mediated and undermined by the strategic imperative of powerful company-based employment systems”. He goes on to note that while this suggests increasing divergences within national systems, this is concurrent with increasing convergence across national borders. Convergence which is driven by powerful MNCs which he argues set the agenda in certain sectors. This line of argument would suggest that powerful MNCs can implement standardised employment practices across the globe with little regard for the institutional constraints of the nation states which host their subsidiaries. Ultimately this school predicts convergence on a “lowest common denominator 'Bleak House'” model of employment relations where “companies fail to invest either in collective relationships or effective individual bases of employee relationships” (Ferner, 2003, p. 100).

On the other hand another group of commentators argue against the strong globalisation thesis and posit that the impact of MNCs and foreign direct investment (FDI) flows are overstated. Hirst and Thompson (1999) are key proponents of this school of thought. The kernel of their thesis is that “the present highly internationalized economy is not unprecedented”, rather it is “one of a number of distinct conjunctures or states of the international economy that have existed…from the 1860s” (1999, p. 2). They further argue that truly transnational companies are rare and that global trade is concentrated in the Triad of Europe, Japan and North America. The work of Alan Rugman and his colleagues is informative in this regard. He argues that the operations of multinational companies are concentrated within a small number of firms with the largest 500 multinational enterprises (MNEs) accounting for over 90 percent ...