How institutional and cultural issues impact International HRM Essay

How institutional and cultural issues impact International HRM - Essay Example This essay will provide an analysis on the literature available on International Human Resource Management and how companies deal with the challenges of globalisation and of managing employees of different culture. International human resource management is an important emerging phenomenon in international business. There is a sudden growth of interest over this due to the rapid growth of industrialisation and globalisation. Globalisation has revolutionized the way organisations function; it has been enhanced by continuous technological advancement, the Internet and Information Technology. Organisations have to expand both as an organisation and as a business. Businesses, which have been internationalized because of intense globalisation, have to introduce more new products and services. Competition dictates these companies to be always changing and innovative. The importance of borders between different countries is reduced, and similar events and phenomena in countries throughout t he world are more easily linked. The identities of cross-border structures are strengthened, and the power of organisations operating only within the nation state is weakened. International human resource management has its origin in the 1980s, as a reaction against the more functional approach embodied in personnel management. McKern stated that during the early years of the post-war development of the modern international corporation, organisational structures evolved slowly in response to geographical and market diversity. It was easy for management to change structures incrementally. But now changes in the organisation are based on complex environmental factors. International HRM was born. Guest (1990 as cited in Cray and Mallory, 1998) says that ‘the apparent novelty of HRM lies in the claim that by making full use of its human resources a firm will gain competitive advantage’. HRM Paradigms Human resource management is the strategic and coherent approach to the ma nagement of an organisation’s most valued asset – the people. Due to the emergence of various forces in globalisation, organisations and businesses have become global as a result of technological innovations, and the introduction of more development in communications and transportation. There are two paradigms focusing on HRM. The universalist paradigm, which is dominant in the United States and widely used elsewhere, assumes that the purpose of the study of HRM is to improve the way human resources are managed strategically within organisations (Harris et al., 2003). In contrast, the contextual paradigm searches for an overall understanding of what is contextually unique and why. Many management researchers find the universalist paradigm ironically excluding much of the work of HR specialists in such areas as compliance, equal opportunities, trade union relationships and dealing with local government. This paradigm is not helpful in regions like Europe, where signific ant HR legislation and policy is enacted at European Union level (e.g. freedom of movement, employment and remuneration, equal treatment) as well as those of particular countries or sectors (Brewster et al, 1996, qtd. in Harris et al, 2003). HRM is now considered the determinant factor in the success or failure of international business. The success of global business depends most importantly on the quality of management in an organisation. There is a shortage of international management talent that constrains implementation of global strategies (Scullion and Paauwe, 2004). There is a lot of challenge placed on the manager in managing an organisation of different culture. Along this line of thought is the concept on comparative human resource mana