978-1473758438 Chapter 16

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Instructor Manual

Chapter 16: People in the MNE

(Prepared by Klaus E. Meyer, March 2019)

Introduction to the Topic

Learning Objectives

1. Distinguish ethnocentric, polycentric and geocentric management practices

2. Explain how MNEs manage expatriates

3. Explain how MNEs manage their employees in subsidiaries abroad

4. Discuss how the institution-based views shed additional light on HRM

5. Discuss how the resource-based views shed additional light on HRM

6. Participate in two leading debates concerning people in the MNE

7. Draw implications for action

General Teaching Suggestions

This chapter is about human resource management from the perspective of both the company

and of potential expatriates (a role that many students in your class may aspire to).

To launch your discussion of this chapter, you could ask a student who has lived abroad (or

originates from another country) to describe life in the country and what a person should

know about its culture and other aspects of its environment before leaving this country so as

to survive and be successful. On this basis, ask them whom they would select for an expat

job in that country, what would they look for in determining whether that person would be

ideal?

Opening Case Discussion Guide

The opening case describes human resource challenges faced by EADS, a company with a

mixed French-German-Spanish ownership and workforce. The case outlines some of the

challenges identified by two scholars who interviewed French and German employees in the

company. To stimulate a discussion, you may ask, “what would it be like to work in a team

of French/Germans?” and after gathering some ideas, you might ask, “do you think you could

lead a French/German team?” If you are an expat, you will need to lead people who are

different than your mates back home!

Chapter Outline, Section by Section

Section 1: Approaches to Managing People

Key Ideas

This short section introduces the traditional distinction based on Perlmutter of ethnocentric,

polycentric and geocentric management, and relates these concepts to the provenance of

nationals from different countries in subsidiaries’ top management team.

Key Concepts

human resource management (HRM)

Activities that attract, select, and manage employees.

ethnocentric approach

An emphasis on the norms and practices of the parent company (and the parent country of the MNE)

by relying on PCNs.

expatriate (expat)

A non-native employee who works in a foreign country.

parent (home) country national (PCN)

An employee who comes from the parent country of the MNE and works at its local subsidiary.

host country national (HCN)

An individual from the host country who works for an MNE.

polycentric approach

An emphasis on the norms and practices of the host country.

geocentric approach

A focus on finding the most suitable managers, who can be PCNs, HCNs, or TCNs.

third country national (TCN)

An employee who comes from neither the parent country nor the host country.

global talent management

The attraction, selection, development and retention of talented employees in the most strategic roles

within an MNE

global talent pool

Employees that are systematically prepared to assume leadership.

Section 2: Expatriates

Key Ideas

Expatriates play an important role in multinational enterprises, and many students may have

the ambition to work as an expatriate – either because they are attracted by the financial

perks, or because they love the engagement with foreign cultures.

Teaching this subject is often a great joy because students (at least the ones I meet in my own

class) can engage with the subject on a very personal level. Exchange students may be going

through the culture shock experience as they are taking this class, while other students can

relate their own experiences, or learn to better understand their foreign classmates. Building

on this personal experience, usually generates very attentive and engaged course participants.

This section has been substantially revised in the second edition, notably by including a

discussion of expatriate spouses (In Focus 16.1), of the culture shock phenomenon (p. p. 459–

461), and returnee expatriate experiences.

Key Concepts

training

The specific preparation to do a particular job.

full immersion training

Intensive exposure to a foreign culture and language by living within that culture.

culture shock

An expatriate’s reaction to a new, unpredictable, and therefore uncertain environment

expatriate stress

stress caused by an imbalance between expectations and abilities affected by culture shock

returnee

Returning expatriate.

repatriation

For use with Peng and Meyer, International Business 3e, 9781473758438, © Cengage Learning

EMEA 2019

The process of facilitating the return of expatriates.

psychological contract

An informal understanding of expected delivery of benefits in the future for current services.

reverse culture shock

Culture shock experience by persons returning to their country of origin

Section 3: Managing People Abroad

Key Ideas

This section takes the perspective of the MNE and its management of local employees around

the world. It introduces some of the basic concepts that students are likely to encounter and

further deepen in an HR class.

Key Concepts

recruitment

The identification, selection and hiring of staff

headhunter company

A company specializing on finding suitable people for senior positions

compensation

The determination of salary and benefits.

migrant workers

Workers from rural areas temporarily working in factories in the cities.

performance appraisal

The evaluation of employee performance for promotion, retention, or termination purposes.

Section 4: Institutions and Human Resource Management

This section discusses how formal and informal institutions in host countries influence the

HR practices that MNEs can implement, and how effective they are in achieving the desired

organizational outcomes.

Key Concepts

No new concepts

Section 5: People as Resources

Key Ideas

This section briefly discusses how HR management contributes to the development and

exploitation of broader categories of resources and capabilities.

Key Concepts

No new concepts

Section 6: Debates and Extensions

Key Ideas

The first debate concerns multi-cultural teams, which are an important reality not only in

MNEs, but in many business classrooms around the world.

The second debate focuses on non-traditional assignments that would take employees to

workplaces outside their own country, yet without the traditional commitment to stay at that

place for three to five years.

Key Concepts

multi-cultural teams

A work team with members representing multiple cultures

contract work

A short assignment for a specific project or contract

commuter assignment

Assignments that involve regular stays abroad but with the main base remaining back home

virtual teams

Teams that are geographically dispersed and interact primarily through electronic communication

inpatriation

Relocating employees of a foreign subsidiary to the MNE’s headquarters for the purposes of (1) filling

skill shortages at headquarters and (2) developing a global mindset for such inpatriates.

Section 7: Implications for Practice

Key Ideas

This concluding section draws on Susan Meisinger’s work to summarize the challenges for

both HR managers, and for individual employees seeking a career in an internationally

oriented company (Table 16.5). HR managers need to have the four Cs: being curious,

competent, courageous, and caring about people. Non-HR managers need to proactively

develop an international career mind-set.

Key Concepts

No new concepts.

Review Questions

Review questions are provided to students on the website accompanying the book. They

directly ask to summarize the material provided in the text. Instructors may also use the

questions to structure their lectures or review sessions.

Review Questions

(as provided to students on the website)

Material in the Book

1. What are the three main approaches to managing

people in multinational enterprises?

2. Why do many MNEs consider global talent

management an important part of their long-term

strategy?

3. What is the role of expatriates in MNE

subsidiaries?

4. How do MNEs select individuals for expatriate

assignments?

5. How should MNEs prepare expatriates for their

assignments?

Page 447-478

Page 449

Page 449-450

Page 450-452

Page 452

6. What is culture shock and how can expatriates (and

exchange students) manage it?

7. What challenges do expatriates face when returning

to their country of origin?

8. How does an expatriate experience contribute or

not to an individual’s career development?

9. What are the key challenges for MNEs in

managing their local workforces?

10. How do formal and informal institutions shape

human resource management practices in

subsidiaries abroad?

11. How do human resources contribute to an

organization’s resource and capability profile?

12. What challenges arise when working in

multicultural team, and how can team members

best handle a multicultural context?

13. How effective are non-traditional international

assignments in substituting for the use of

expatriates?

14. What challenges arise for MNEs when assigning

human resource manager?

Page 453-454, incl Fig. 16.3

& 16.4, Table 16.2

Page 456-457 incl Table 16.3

Page 456-460

Page 458-460

Page 460-462

Page 462-463

Page 463

Page 464

Page 464-465

Critical Discussion Questions

At the end the chapter, we provide discussion questions that aim to stimulate students

thinking beyond memorizing the material learned in the chapter. They are designed to be

used at a basis for in-class discussions, group work, or individual assignments. Below,

provide some indicative answers of issues that may be raised in response to these questions.

Discussion Questions

(as provided in the book)

Indicative Responses

1. You have been offered a

reasonably lucrative

opportunity for an expatriate

assignment for the next three

years, and your boss will have

a meeting with you next

go to work in Iraq. However,

you are personally concerned

about their safety there. How

engineers has been poached

by one of your competitors.

prevent further departures of

key people?

1. This is a question in which the answer is

not as important as the thought process and

the ability to clearly articulate. However,

students’ answers should probably include

such issues as preparation, support during

the assignment, support for the family,

benefits to attract such volunteers. To deal

with safety, firms that provide safety

training for contractors working in Iraq

may be hired to provide similar training for

3. Different answers are possible here. The

first step has to focus on clarifying the

through exit interviews, or discussion with

current and former employees. The

company may then want to change its

a report on environmental

pollution in the Mekong river

delta in Southeast Asia.

Experts joining the team are

based in the Stockholm, Paris,

Singapore and Sydney offices

of your company. How are

you going to make this team

work effectively?

of belonging and focus on individual’s

career development.

4. Different answers are possible here. My

own experience suggests that an initial

meeting involving all the key players (and

at least one person from each location)

should be present, and such a meeting

should best be conducted where

participants can get a first-hand impression

of the challenges they have to address, here

in the Mekong River Delta.

Closing Case

The closing case provides further opportunities to apply ideas and concepts learned in this

chapter in a real world setting. The Closing Case for this Chapter is “Dallas versus Delhi” and

focuses on remuneration packages for in-patriates. Below are some indicative responses to the

case discussion questions.

Case Discussion Questions

(as provided in the book)

Indicative Responses

1. Going from Dallas to New Delhi, Sarkar,

with his Indian passport, would be an

HCN. With his green card, he could also

be considered a US national and thus an

expatriate. Now if he goes from New

Delhi to Dallas, would he be an expatriate

These question concern decision of a

very personal nature, where personal

values play an important role. Thus,

different conclusions are likely.

However, essential here is for students

to demonstrate their ability to

this move? Why?

4. Should Sarkar accept or decline this

opportunity? Why?

Further Learning Activities

In addition to the cases and discussion questions provided in the book, instructors may want

to use any of the following activities to further engage students with the material.

1. The Integrative Case ‘Just Another Move to China?’ has been written to discuss the

challenges faced by expatriates and their families as they cope with unfamiliar

environments, and have to make decisions over their international careers (Chapter

16). It also allows to further deepen the discussion on how and why differences in

formal and informal institutions (Chapters 2 and 3) matter for international business.

2. The Opening Case to Chapter 3 (Parties in Saudi Arabia and China) also provides a

very vivid illustration of the cross-cultural challenges of expatriate life (especially

project managers). If you have not discussed the case earlier, you may want to

introduce it now.

2. You work at a large MNE that operates in every one of the top 100 metropolitan areas

worldwide. One of the most pressing concerns in your firm at the moment is to control costs.

Therefore, you have been asked to develop a forecast for the coming year that identifies the

markets in which the firm can expect an increase in the cost of living and, as a result, general

salary expenditures. After the report needed for your evaluation is secured, classify the cities

that have experienced cost increases into their respective countries. Which countries have more

than one city that meets the criteria for your forecast? What are the salary increase traits

associated with each city identified?

One resource which can be used is “Mercer: Worldwide Cost of Living Survey”. This website can

be found by entering the search term “cost of living” at the globalEDGE™ Resource Desk search

EMEA 2019

3. Currently, your European company is evaluating its standing in the fast growing emerging

economies known as BRIC (Brazil, Russia, India, and China). Based on your evaluation of the

cost of living in each country, the company may reconfigure some of its operations to increase

profitability. Your company’s manufacturing facilities are located in Beijing, China; Mumbai,

India; Sao Paulo, Brazil; and St. Petersburg, Russia. How much could be saved if the company

consolidated into one BRIC location that has the lowest cost of living? One resource which can be

used is “United States: U.S. Department of State – Quarterly Reports for Living Costs Abroad”.