Development of multinational companiesEvolution of sophisticated technology is one of the factors that have led firms to develop international operations (Harris, Brewster and Sparrow, 2003). These technologies have enabled the world to be more interconnected, integrated and interdependent. As such the technologies have created enormous opportunities for firms to compete and thrive in global markets. Demographic factors have also influenced the need to go global. No single country can be able to provide markets for its locally produced products. Most of the world purchasing power is located outside the country (Dowling, Festing and Engle, 2008).
Thus firms interested in competing and growing have been lured to enter global markets (Harzing and van Ruysseveldt, 2004). Thus firms are able to increase their sales and profits. This seems to be one of the factors behind Coca Cola expansion. The deregulation of markets globally also contributed to multinational company development (Burke and Cooper, 2006). When laws aimed at protecting and nurturing local entrepreneurs and businesses were struck down, multinational firms were allowed to predate on local firms (Harris, Brewster and Sparrow, 2003). Both Coca Cola and Dow chemical expansion might have been influenced by the deregulation of markets (Rowley, and Benson, 2004). Corporations have also become major players in politics (Burke and Cooper, 2006).
Firm’s ability to place corporate money in politics has over the time taken over major political parties and politicians and as such able to influence legislations guiding their operations in such countries (Perkins and Shortland, 2006). Another fact that has aided in the development of international operations is the emerging markets. These markets offer lower costs of operation in addition to their rapid expansion that outweighs that seen in developed countries.
As such, firms are lured to expand their ventures into these markets. HR strategies used in international operationsFirms operating in international markets employ divergence or convergence HR strategies although some seem to employ both strategies. From the case Dow chemical seems to adopt a convergence strategy (Dowling, Festing and Engle, 2008). According to convergence theory, it is assumed that industrialization process and the spread of advanced technology ultimately results in different nations adopting similar economic and political systems (Harzing and van Ruysseveldt, 2004).
This seems to be the logic behind Dow transferring staff from one country to another (Harris, Brewster and Sparrow, 2003). This theory argues that international competitive pressure makes differences in a national management system to be overridden and results in a convergence management practices that are most successful. Based on structural convergence argument, when all factors are held constant, HR systems would tend to look similar outwardly (Burke and Cooper, 2006). Based on this argument, the universalistic strategic human resource management (SHRM) perspective argues that the high performance work systems (HPWSs) approach is the best practice and that implementation of some aspects of HPWS can enhance performance of any firm (Perkins and Shortland, 2006).
Decisional convergence can also occur when MNC and LOCs adopt similar analytical decision and analytical frameworks rules (Burke and Cooper, 2006). It is argued that decisional convergence can take place if both MNC subsidiaries’ and LOCs’ HR strategy decisions are based on business strategy and have similar weights attached to the development of their HR systems proponents of this hypothesis argue that if the business environment of both LOCs and MNC subsidiaries become alike, their HR practices and policies will converge followed by structural convergence.