Размещено на http://www.allbest.ru/

Saint-Petersburg State University

Graduate School of management

HRM entry modes: how companies choose their HRM strategy while going on foreign market

Introduction

The international human resources management is extremely a vital topic now, as in a consequence of such factors as development of communications, transport system development, development of institutes (removal of trading barriers, creation of the international unions,) etc, accelerated globalization of business and the markets as a whole and process of internationalization of the companies are becoming of key factors of success, and there becomes more and more international companies. But important point here is that IHRM essentially differs from management of human resources within one domestic country. IHRM differs, for example, in more considerable influence of factors of environment, bigger heterogeneity of functions of management and the differentiated approach to preparation of the administrative personnel. The key here is the word “cross-cultural”. The attention of the companies is focused on national distinctions of the countries, such as the legislation and business factors, culture, motivation, distinctions of labor markets and the labor expenses, traditional ways of business dealing and HRM in particular, management style and practices. IHRM process in the multinational companies becomes extremely complicated because of the requirement of the adaptation of a policy and the procedures connected with the personnel, distinctions between the countries in which there is each of branches.

So this particular paper is focused on IHRM strategies HRM choice strategies during entry new market - how companies choose their HRM strategy while going on foreign market. The paper consists of three main parts. The first one is represented by some kind of literature review (analysis of articles on which further reflections are based). The second one is direct statement of main ideas, concerning the given theme with examples of the real-life companies. And the third part of the given paper is represented by my conclusions concerning problem of the given topic.

1. Literature review

Theme of the given essay - HRM entry modes: how companies choose their HRM strategy while going on foreign market, is enough actively studied now, and there exist set of sources (Russian and foreign), considering topic in particular or its separate aspects. Also we have debated about this topic during our studying. But as I understood we keep in mind some kind of mixture of basic idea of HRM choice of employee (PCN, HCN or TCN) and influencing factors, but we haven't consider some unified model. In my opinion the main reason for that was the fact that all models are too simplified and don't describe the all the conditions. The same situation I have met during finding the literature - different authors use different models, but all of them lack some particular conditions. So I have chosen a several sources that seemed to me as the most successful works and works that have different approaches (due to their dynamics of development), in order to write on their basis this essay. This paper is mainly based on basic concepts and ideas that are represented in the following articles and books:

· Rima Иesynienл article “Globalization and human resource management”; human resource management method competency

· Article of Schon Beechler and Allan Bird “Links between business strategy and human resource management strategy in US-based Japanese subsidiaries an empirical investigation”;

· Article of Dr.Shanmukha Rao Padala & Dr.N.V.S.Suryanarayana “Approaches to International Human Resource Management”;

· The 8^th chapter of student book “International business” written by Stuart Wall, Sonal Milocha and Bronwen Rees;

· Student book “International Human Resource Management” written by K. Aswathappa and Sadhna Dash;

· Article of Jose Paulo Esperanc, Manuela Magalha and Ana Claudia Valente “Entry mode and HRM strategies of emerging multinationals An empirical analysis of Portuguese firms entering the Spanish market”;

· Article “What Is Company Profiles: East Asia - Definition”;

· Book of Timothy Dean Keeley “International human resource management in Japanese firms: their greatest challenge”.

Now I'd like to stop on each of them in particular and to give an overview of basic content of this sources. The first article “Globalization and human resource management” was written in 2008, so we can assume that it shows rather contemporary view on situation. The article is kind of analysis of consequences of globalization for managing human resources in several cultures. The author assumes that ”in today's global economy, the extent to which HRM activities are successful across cultures will largely depend on the manager's abilities to understand and balance other cultures' values and practice as regards such things as the importance of work, how power and status are conferred, the perceived value and other fundamental differences in how people from different cultures view the world”. This article investigates global and national trends in HRM in such countries as Lithuania, Japan, USA, France and UK.

The second article called “Links between business strategy and human resource management strategy in US-based Japanese subsidiaries an empirical investigation” was written in 1994, it is not really very up-to-date, but is interesting for analyzing main differences in trends and basic ideas on the topic.This paper is focus on the relationship between business and HRM strategy and the impact on performance in U.S.-based Japanese subsidiaries. First part is the description of theoretical framework, the second one is empirical testing of model in a study of business strategy-HRM linkages in sixty-four U.S.-based Japanese subsidiaries. The interesting thing here is the specific approach to identifying the strategy - the authors adhere to Miles and Snow's typology of Prospector, Defender and Analyzer strategies (Accumulator, Facilitator and Utilizer strategies in HRM accordingly). Though the majority of modern papers use another approach (type of orientation). It is obvious that authors put in the main place the type of market penetration, so in their opinion main factors influencing HRM entry strategies are new market conditions (in terms of company competitive position and the company's internal focus).

The third article called “Approaches to International Human Resource Management” was written in 2010 and introduce the modern point of view on HRM market strategy with description of dependency of choice in recruitment on companies type of their management approach and corporate philosophy that can be ethnocentric, polycentric, regiocentric and geocentric.

The fourth resource that is the 8^th chapter of student book “International business” is the significant but rather general study of HRM in international environment. It contains such important concepts and ideas as definition, approaches, selection and recruitment in consistency with approaches, cross-cultural training and development programs for reaching the globally minded managers, performance evaluation and compensation, managing expatriates. To put it in a nutshell this book is also stick to a modern idea of interdependency of approach and choice of entry strategy, so it considers as main influencing factor the company main strategy and orientation in internationalization process.

The fifth resource - book “International Human Resource Management” was written in 2008 and present rather integral set of IHRM concepts and problems. Concerning the topic of this essay the book also stick to idea of interdependency of approach and choice of entry strategy, but also engage strategy with stage in company's life circle. Also the book pay attention to problems of female expatriates and host-country culture.

The sixth article “Entry mode and HRM strategies of emerging multinationals An empirical analysis of Portuguese firms entering the Spanish market” was written in 2006. Its ideas concerning the topic of essay is interesting because of the different point of view on it. The authors consider that there exist a set of the main factors influencing the HRM strategy.. So in accordance with this factors company creates the international personnel competences and with accordance with it choose the right person for the position.

The seventh article “What Is Company Profiles: East Asia - Definition” offer a good set of examples of real-life companies and their approaches to HRM during entry the new market.

And the last resource - book “International human resource management in Japanese firms: their greatest challenge” is rather good example of defining on practice cross-cultural management issues. For me it was particularly interesting in part there the author describes important competencies in accordance with which companies made a decision about choosing the person for the position.

In the next part of this essay the description of basic ideas is given.

2. Basic concepts and ideas

Thus, after the maintenance analysis of information sources, it is possible to draw an intermediate conclusion, that opinions of authors conditionally share on two types of models. The first defines strategy HRM and a choice of employees mainly depending on internal conditions of firm - its strategy of an exit on the market and orientations. Within the limits of the given opinion it is possible to consider two approaches. The first concerns dependence of strategy of human resource management in connection with company position in the new market (enough old theory). And the second approach considered by the majority of authors and manuals, consisting that the choice of strategy and employees is defined by the approach to firm orientation. Authors adhering models of the second type place emphasis not only on internal perception of firm, but also try to coordinate strategy to external characteristics as, for example culture of the new country, and suggest to choose employees on a method of construction of key competences model.

To begin with we will consider the basic ideas considering inner perception of the firm as the key factor.

The first type of opinion here is introduced in the article “Links between business strategy and human resource management strategy in US-based Japanese subsidiaries an empirical investigation”. Here the authors suggest that there exist three main strategies of the companies during new market entry - Prospector, Defender and Analyzer strategies, to which different HR strategies are corresponded to - Accumulator, Facilitator and Utilizer. The strategy of Prospector suggest that the company has rapid growth and continual resource deployment/redeployment, and the same situation should be for the personnel. Authors believe that main function of HRM here is an entrepreneurial role, helping to identify and quickly develop crucial human resources. Key human resources are brought in from outside as well as developed internally. This is the strategy of Utilizer. So we can consider in modern terms that company that is characterized as prospector will use PCNs or HCNs or TCNs in dependence of their skills and knowledge. Here company doesn't pay attention to commitment or other soft inner factors, but is focused on productiveness and results. The second type of the company can be called Defender. In case of that type company creates a secure market share with moderate, steady growth. Defenders are mainly focused on on internally developed human resources: employees are carefully selected, placed and trained. In modern Terms we can assume that defender companies (with accumulator strategy) are inclined to use PCN on new markets. And the last type of the company - Analyzer. Analyzer firms make accent not only on uniqueness of their product in the beginning of international operations , but later on efficient mass. The according HRM strategy called Facilitator emphasize the importance of training and accurate placement and appraisal devices. Rather good explanation of all of this strategies is given in the table 1 in appendix.

Another approach here give a view of dependency between company's orientation-approach and choice of HRM strategy. Here it is useful to discern basic definitions. Ethnocentric approach means home country approach, polycentric approach means local approach, regiocentric approach means regional approach and finally geocentric approach means global approach. Speaking about the companies peculiarities because of every approach we can conclude the following facts. Ethnocentric organization believe that practices that work in domestic country must also work in other countries. As a rule companies using this approach give all key management positions to PCNs. The prime examples here are Toyota, Matsushita, Samsung, Procter and Gamble, Philips, HSBC. Speaking about minus of such strategy we always should remember that adaptation managers to host countries often takes a long time during which they make mistakes and poor decisions. Also the costs are rather high. Speaking about other aspects of HRM (not only about recruitment), format of all practices (performance appraisal or reward system) is designed in home country. To give some concrete details, for example HSBC also use an ethnocentric approach in its rewards practices - grading structure, salary adjustment, and bonus scheme are inherited from its head offices.

The companies with polycentric approach have the motto `when in Rome do as the Romans do'. So in their staffing policies they prefer to hire HCNs to manage subsidiaries, while PCNs stay at key positions at corporate headquarters. Main reason for such decision is the perception that local people know what is best forthis particular market and people. Also some authors put an accent on governmental pressure as key factor encouraging choice of such strategy (this is about the situation when local government is a major customer).

Regiocentric companies are regionally oriented organizations. The main idea of staffing here is that “the international staff is transferred with in the same region they work, example, for a global firm having a number Asia-Pacific, European and US, a manager working in Asia-Pacific region will be moving within the same region only”. So this approach is a bit relative to previous one, but in my opinion it is more flexible. In terms of employees it is possible to say that local subsidiaries are staffed almost totally by HCNs.

And finally, the geocentric companies have opinion that while defining the best people we needn't to think about their position to organization or nationality, but we should think about this person skills and abilities. So the company can hire PCNs, HCNs or TCNs onle because of their competencies. Good example of geocentric company is KPMG. The company hire professionals from all over the world focusing on such factors as understanding of local culture, and international talent.

The second type of approaches toward HRM practices during new market entry in my opinion are a bit similar to geocentric approach but with added internal factors. This approach also relies on system of key competencies. But different authors add different additional factors of influence. For example, Jose Paulo Esperanc, Manuela Magalha and Ana Claudia Valente put an accent on entry model (FDI, exporting, franchising etc), functional area (market and job peculiarities), nationality (culture, political risks) and hierarchic system of organization. And Rima Иesynienл in her article consider as most important such factors as globalization effects, local law system, compensation system, labor market, type of working, career development and training systems, traditional practices. In my opinion her study even closer to polycentric approach. But in reality very wide set of factors should be taken into consideration, not only inner but also outer toward firm and its domestic market. The next important step in that type of model - building the system of competences. Different authors suggest different criteria for choosing the right candidate for international position, but most general and often used requirements are technical expertise, familiarity with culture, knowledge and ability to learn languages. But important thing here is that every company develop its own system of competencies in accordance with its position, needs, corporate culture.

In the next part of the paper the concluding remarks and annotation of the real proximity of all these models are given.

Conclusions

Thus, after more detailed consideration of the basic sights at firm strategy in personnel selection at an exit on the new market there could be an impression that sights of all authors are very strongly crossed. Actually indeed. Here the question is more in the theory formulation, instead of its essence. So, as to the first view at the problem, concerning internal strategy of firm as defining factor, the fact is that basically internal strategy is already meant that the company has somehow estimated external factor. So, for example, at an approach choice, the company considers such factors, as corporate international strategy, political and legal concerns, level of development in foreign locations, technology and the nature of the product, organizational life cycle, age and history of the subsidiary, organizational and national cultural differences.

As to the second point of view at the problem, in my opinion it is the broadened version of the geocentric approach with some variation. As a whole, it is possible to draw a conclusion that there wasn't, and can't be developed any uniform strategy, how firms should choose and operate the personnel during exit on the new market. And the main reason for that is quite clear uniqueness of a situation of any company. A number of factors on which it will be necessary to lean will differ or each company. In my opinion, there is a certain danger to miss something from factors, especially if using exclusively narrow ethnocentric or polycentric approach. It is necessary to watch closely very much to any subtlety. So, on one of our subjects we were given an example of the American company which have entered the Italian market. Using a method of competencies they have found the excellent local manager, but as a result the company has refused him a place only because he has asked such schedule of work, that days off was three in order to stay more with a family. The American manager who has spent interview has considered it as an indicator of low motivation, however in a consequence was found out that it is the characteristic of the relation to work-life balance. As consequence for some time in the company there were complexities with hiring and motivation of local personnel.

The companies need to consider features of the company and its product, and how the company enters the market and as how it is influenced basically by internationalization process, and features of local consumption and labor market, and features of culture and mentality, and political/economic features of region, and also local HR practices. And only after that making a decision.

References

1. Rima Иesynienл. 2008. Globalization and human resource management.

2. Schon Beechler, Allan Bird. 1994. Links between business strategy and human resource management strategy in US-based Japanese subsidiaries an empirical investigation

3. Shanmukha Rao Padala, Dr.N.V.S.Suryanarayana. 2010. Approaches to International Human Resource Management.

4. Stuart Wall, Sonal Milocha and Bronwen Rees. International business.

5. K. Aswathappa and Sadhna Dash. 2007. International Human Resource Management

6. Jose Paulo Esperanc, Manuela Magalha and Ana Claudia Valente. 2006. Entry mode and HRM strategies of emerging multinationals An empirical analysis of Portuguese firms entering the Spanish market.

7. What Is Company Profiles: East Asia - Definition.

8. Dean Keeley.2001. International human resource management in Japanese firms: their greatest challenge.

Размещено на Allbest.ru