Chapter 10

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CHAPTER 10
IHRM TRENDS AND
FUTURE CHALLENGES
Sonj Giri
Sujan Khatri
Suprem Adhikari
Objectives
 Introduction
 International Business Ethics
 Mode of Operation
 Ownership Issues related to IHRM other than large multinationals
 Safety and Security Issues
Introduction
 In this book, we have explored the IHRM issues relating to managing people globally.
 To that end, we have focused on the implications that the process of
internationalization has for the activities and policies of HRM.
 In this chapter 10:

 We now turn our attention to developments that have not previously been
emphasized in the general IHRM literature and the challenges they present to IHRM:
 International business ethics, mode of operation, nongovernment organizations
(NGOs), and the developing role of IHRM in contributing to safety, security and
dealing with global terrorism.
Model of Strategic HRM in Multinational Enterprises
Higher Complexities for International Managers
 Different Standards of Business Practices

 Economically Improvised
 Inadequate Legal Infrastructures
 Corruption of Government
 Violation of Human Rights
International Business Ethics And HRM
 Can business organization apply their

own values every where they do
busieness?
 Whose Standards should prevail, either
of MNE’s parent country or the host
country?
Three Main Responses
 Ethical Relativism
 Ethical Absolutism
 Ethical Universalism
Ethical Relativism
 The Ethical Relativism believes that, there are no universal or international rights
and wrongs, it all depends on a particular culture’s values and beliefs.
 For the ethical relativist, ‘when in Rome, one should do as the Romans do’
Ethical Absolutism
 The Ethical Absolutism: believes that, an MNC should only follow ‘what is accepted
as ethical in it’s home country, regardless of which country it operates in.
 For the ethical absolute, ‘when in Rome, one should do what one would do at home,
regardless of what the Romans do’
Ethical Universalism
 The Ethical Universalism believes that, there are certain fundamental principles of
right and wrong that are universal in nature and accepted by every culture
 It’s something that can be viewed on a general basis. For ex: Doing something that
brings about the greatest good for greatest number
Universal Ethical Principles
 Universal Ethical Principles
 Can be seen in the agreements among nations who are signatories to:-
 The United Nations Declaration of Human Rights
 The OECD guidelines for Multinationals Enterprises ( adopted by the Organization of

Economic Cooperation and Development)
Bribery and Corruption
 Most frequent ethical problems encountered by international managers are due to

high level of bribery and corruptions still existing in organizations
 Bribery involves the payment of agents to do things that are inconsistent with the
purpose of their position or office in order to gain an unfair advantage
 Bribery can be distinguished from so-called gifts and ‘facilitating’ or ‘grease’

payments
Reasons for Bribery being a Crime:-
 Adds cost to products
 Undermines equity, efficiency and integrity in the public service
 Affects safety and economic well being of general public
 Undercuts public confidence in markets and aid programs

New Global Developments on Criminalization of Bribery
 The United Nations adopted the UN Declaration Against Corruption and Bribery in
International Commercial Transactions in December 1996
 Committed UN members to criminalize bribery and deny tax deductibility for bribes
 The declaration was endorsed by 30 OECD members and 4 non-members with the
adoption of the Convention of combating bribery of Foreign Public officials in
International Business Transactions
Roles of HR in Operationalizing Corporate Ethics Program:-
 Special role in the formulation, communication, monitoring and enforcing an

enterprise’s ethics program
 When firms leave ethical considerations up to the individual employee
 Pressures of operating in a foreign environment allow internal inconsistencies that

affect total global performance
 When recruiting and selecting expatriates, the ability to manage with integrity could
be a job relevant criterion
 The pre departure training of expatriates and the orientation program must include
following components:
I. Formal studies in ethical theory and decision making
II. Interactive discussion and role playing around dilemmas which expatriates are
likely to encounter
Organizational factors: Structure, strategy and IHRM
 External parties are often involved in:-

 Contractual modes
 Joint ventures
 Strategic alliances
 More research needs to be done with regard to “arm’s length” operation

 Training is an important part towards contractual modes playing a key role in:-
 transferring of technology and systems
 inculcation of company culture
 acting as a screening process
 This results in short-term assignments to deliver the training

Non-Governmental Organizations (NGOs)
 The influence of NGO’s over the activities of wide range of industries around the
globe is increasing which is of great importance and support to the activities
conducted by the MNE’s
 NGOs that are less familiar such as BRAC (formerly known as the Bangladesh Rural
Advancement Committee) which is now a global organization with over 110 million
beneficiaries
External factors : Challenges in an uncertain world : Safety,
Security and Counterterrorism
 Legal compliances and training issues

 Unwilling to discuss the protocols, process, systems and structure in sensitive areas
: cyber-terrorism, political terrorist group, SARS, avian flu and airborne
contamination
Corporate risk assessment categories
 In-facility emergency and disaster preparedness : local safety laws and standard
 In-facility security : perimeter security, search protocols into and out of facilities ,
internal search protocols and threat to management
 Industrial espionage, theft and sabotage : secure internal communication, open
record protection, employee privacy regulations, clearly defined physical inspection
and search process
 Cyber-terrorism: hardware, software and human system
 Out-of-facility fire and travel risk : travel policies

The evolving field of IHRM
 Being slow to develop

 Two major reasons
1. Methodological problems involved in the area of international management and

IHRM
2. Many management and HR researchers have regarded the IHRM field as a
marginal academic area
Evolving role of the HRM function in MNEs
 Complexity in HR role
 Challenges continue
 McKinsey survey on forces shaping global economy
 Emerging maket:44%
 Developed marekt:41%
 Developed market deployed to emerging market:35%

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 In this chapter 10:

 Different Standards of Business Practices

 Can business organization apply their

 Universal Ethical Principles

 The United Nations Declaration of Human Rights

 The OECD guidelines for Multinationals Enterprises ( adopted by the Organization of

 Most frequent ethical problems encountered by international managers are due to

 Bribery can be distinguished from so-called gifts and ‘facilitating’ or ‘grease’

 Adds cost to products

 Undermines equity, efficiency and integrity in the public service

 Affects safety and economic well being of general public

 Undercuts public confidence in markets and aid programs

 Special role in the formulation, communication, monitoring and enforcing an

 When firms leave ethical considerations up to the individual employee

 Pressures of operating in a foreign environment allow internal inconsistencies that

 External parties are often involved in:-

 More research needs to be done with regard to “arm’s length” operation

 This results in short-term assignments to deliver the training

 Legal compliances and training issues

 Cyber-terrorism: hardware, software and human system

 Out-of-facility fire and travel risk : travel policies

 Being slow to develop

1. Methodological problems involved in the area of international management and

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