Chapter 18 : Human Resource
1.What is human resource management? Why is HRM an important strategic component?
Human1resource management refers to the activities an organization carries out to use its human
resources effectively. These activities include determining the firm’s human resource strategy, staffing,
performance evaluation, management development, compensation, and labor relations. None of these
activities is performed in a vacuum; all are related to the strategy of the firm. HRM has an important
strategic component. Through its influence on the character, development, quality, and productivity of
the firm’s human resources, the HRM function can help the firm achieve its primary strategic goals of
reducing the costs of value creation and adding value by better serving customer.
2.What are the four strategies pursued by international companies, and what is the role of HRM in
these? The four strategies pursued by international businesses are localization, where value is created
by emphasizing local responsiveness; international, where value is created by transferring products
and competencies overseas; global standardization, where value is created by realizing experience
curve and location economies; and transnational, where value is created by doing all of these things
simultaneously. HRM policies must be congruent with the firm’s strategy
3.Discuss corporate culture. How is corporate culture related to a firm’s performance? Corporate
culture refers to the organization’s norms and value systems. A strong corporate culture can help a firm
to implement its strategy. If employees are predisposed toward the organization’s norms and value
systems by their personality type, the firm will be able to attain higher performance.
4.What are the three types of staffing policies in international business? Briefly describe each one.
Which is the most attractive approach and why? There are three types of staffing approaches in
international business. First, the ethnocentric approach is one in which all key management positions
are filled by parent-country nationals. Second, the polycentric approach involves recruiting host-
country nationals to manage subsidiaries while parent-country nationals occupy key positions at
corporate headquarters. Third, the geocentric policy seeks the best people for key jobs throughout the
organization, regardless of nationality. This approach is probably the most attractive because it enables
the firm to make the best use of its human resources, and it allows the firm to build a cadre of
international executives who feel at home working in a number of cultures.
5.Why should a firm pursue an ethnocentric approach to staffing? What are the disadvantages of this
approach? Firms pursue an ethnocentric staffing policy for three reasons. First, the firm may believe
there is a lack of qualified individuals in the host country to fill senior management positions. Second,
the firm may see an ethnocentric staffing policy as the best way to maintain a unified corporate
culture. Third, if the firm is trying to create value by transferring core competencies to a foreign
operation, it may feel that the best way to do this is to transfer parent-country nationals who have
knowledge of that competency to the foreign operation. The disadvantages of ethnocentric approach to
staffing is that the policy limits advancement opportunities for host-country nationals, which can lead
to resentment, lower productivity, and increased turnover among that group. The policy can also lead
to cultural myopia.
6.Discuss the advantages and disadvantages of a polycentric approach to staffing. A polycentric
staffing policy requires host-country nationals to be recruited to manage subsidiaries, while parent-
country nationals occupy key positions at corporate headquarters. One advantage of adopting a
polycentric approach is that the firm is less likely to suffer from cultural myopia. Host-country
managers are unlikely to make the mistakes arising from cultural misunderstandings that expatriate
managers are subject to. Another advantage of the polycentric approach is that it may be less
expensive than other approaches to implement. However, because host-country nationals have limited
opportunities for advancement, resentment may arise. Furthermore, a gap may form between host-
country managers and parent-country managers leading to a lack of integration between corporate
headquarters and foreign subsidiaries.
7.How can polycentric approach to staffing result in the creation of a “federation” within the firm?
Why is this a disadvantage for the firm? A polycentric approach can lead to a gap between host-
country managers and parent-country managers. Language barriers, national loyalties, and a range of
cultural differences may isolate the corporate headquarters staff from the various foreign subsidiaries.
The lack of management transfers from home to host countries, and vice versa, can exacerbate this
isolation and lead to a lack of integration between corporate headquarters and foreign subsidiaries. The
result can be a “federation” of largely independent national units with only nominal links to the
corporate headquarters. Within such a federation, the coordination required to transfer core
competencies or to pursue experience curve and location economies may be difficult to achieve. The
federation that may result from a polycentric approach can also be a force for inertia within the firm.
