International Journal of Organisational Behavior - Assignment Example

International Human Resource Management Name Course Name and Code Instructor’s Name Date Question 1 a) Distinction of the convergence and divergence arguments Introduction In the past forty years, international management has been plagued by debate on convergence and divergence. Some authors argue that differences in culture are hard to diminish (Bjorkman, Smale, Sumelius & Lu, 2008). As a result, they argue that firms often employ divergence HRM model in their international subsidiaries (Carr, & Pudelko, 2006). However, practically this is possible especially with the advent of information technology, which can make it easy and speed up exchange of information between different subsidiaries and even departments (Khan, 2010). This implies that information technology can necessitate standardization and centralization of the process (Paik, Chow, & Vance, 2011). Therefore, business practice may converge. The convergence argument thus holds that cultural differences can diminish while divergence arguments hold that cultural differences are hard to diminish in spite the prevailing condition (Carmen, 2008). Convergence 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. 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 (Carr, & Pudelko, 2006). This implies that such universality could be applied to HRM. As a result, some authors have argued that there are some best ways of managing that could be applied universally. It is argued that forces of convergence are likely to overwhelm country differences (Khan, 2010). The resulting best practice makes firms to converge or be disadvantaged in terms of competition. It is thus assumed that the effects of best practice are universal and transferable instead of being firm specific. They also argue that these best practices traverse national culture or institutional context (Carmen, 2008). This debate that support convergence of HRM practices and policies has resulted in two types of convergence: structural and decisional convergence. Based on structural convergence argument, when all factors are held constant, HR systems would tend to look similar outwardly. 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 (Paik, Chow, & Vance, 2011). Thus if all managers of firms would buy this argument then HPWSs would be adopted across both locally owned companies (LOCs) and multinational companies (MNC) subsidiaries. This would result in structural convergence of HRM systems. Decisional convergence can also occur when MNC and LOCs adopt similar analytical decision and analytical frameworks rules. 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 (Rowley, 1998). 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 (Rowley, 1998). It is argued that globalization and related factors create environment in which firms are forced to be more flexible, agile and innovative in order to be competitive (Mayrhofer et al. 2011). Convergence hypothesis argues that cross border mergers and acquisitions is one of the mechanisms through which firms use to transmit knowledge of HR practices and policies cross nationally (Gooderham, & Nordhaug, 2011). It is also argued that firm managers often adopt the management practices within the firm in order to either gain legitimacy or because they are unsure on how to act (Carr, & Pudelko, 2006). Even though laws and administrative rules promote indigenous approaches they also serve to facilitate convergence toward universal best practice (Eaton, 2000). Divergence Unlike convergence theory, divergence theory scholars argue that national management methods are embedded in cultural and institutional context and that as such its is not easy to transfer and adopt the best practices (Domsch & Lidokhover, 2007). Proponents of divergence HRM have come up with two types of HRM divergence: cultural divergence and institutional divergence (Bjorkman et al. 2008). The cultural HRM divergence is based on Hofstede’s national cultural dimensions. According to Hofstede, culture is the collective programming of the mind of certain group members that is often reflected in certain beliefs, assumptions and norms that commonly held by the group (Carmen, 2008). Divergence views based on culture posits that national culture influences managerial practices as illustrated by individualistic culture in US and collectivism culture in Japan (Khan, 2010). On the other hand, the institutional HRM divergence argues that the business environment determines the characteristics of the firm (Paik, Chow, & Vance, 2011). The institutional approach is supported by the business systems approach, the analysis of varieties of capitalism and the societal effect approach (Carr, & Pudelko, 2006). They further argue that the traditional practices and values are embedded in the social and economic institutions of a country, which are involved in training, development and making available skilled workforce (Gooderham, & Nordhaug, 2011). Thus, the available workforce and the values, skills and knowledge instilled in them during training and development may determine the kind of HRM practices adopted by both LOCs and MNC subsidiaries. Proponents of divergence model thus stress on adoption of management practices, which are strongly influenced by national economic context (Khan, 2010). It is assumed that socio-cultural influence drives individuals in a society to hold onto specific values system of the culture of the society irrespective of other influences such as economic, technological and political change (Paik, Chow, & Vance, 2011). It is argued that the persistent cultural differences influence the management practices adopted by a firm. Studies have affirmed that culture and business environment influences managerial values of a country (Carmen, 2008). This implies that firms adopt divergence HRM in order to fit in the prevailing business environment and culture in the host country. Conclusion Thus, the main difference between convergence and divergence is best practice and best fit (Carr, & Pudelko, 2006). Whereas convergence HRM proponents argue that firms must adopt best practice HRM irrespective of prevailing culture, divergence proponents argue that the influence of culture on management is intense and thus firms need to adapt to cultural and business environment in the host country in order to succeed (Gooderham, & Nordhaug, 2011). b) Critical evaluation of the extent to which there is support for the convergence of human resource management practices Introduction Convergence theory argues that technologies and economic activities are developed to create a world, which is less differentiated. This approach argues that MNCs adopts and act as vehicles for transferring best practice across national and organizational borders. These arguments are technological and structural convergence of HRM systems (Carr, & Pudelko, 2006). Practically, cultural differences are likely to diminish and allow adoption of best practices in HRM. Theoretically, convergence is influenced by technological advances, which motivate individuals to develop a values system, which is consistent with technology of their society irrespective of the socio-cultural influences (Paik, Chow, & Vance, 2011). Support for convergence of HRM practices In practical terms, the advent of information technology is enabling faster and easier communication between different departments and MNC subsidiaries (Gooderham, & Nordhaug, 2011). Thus, information technology is aiding in centralization and standardization of communication process. This is argued to be capable of resulting in converged business practice (Carmen, 2008). In addition, information technology enables firms to employ similar set of tools during the process of recruitment (Khan, 2010). Even though, due to resource limitation, small firms may not carry out certain operations, information technology is enabling such firms to overcome such barriers and hence implement equal practices, which can be expanded from firm level to international level hence supporting convergence of HRM practice globally (Carr, & Pudelko, 2006). The rise of internet use has simplified communication globally in addition to data exchange. Thus, MNC subsidiaries are able to exchange data easily with their parent firms. This further enhances convergence of HRM practices. Moreover, increased deregulation of economic activities and travelling is enabling MNC subsidiaries to introduce HRM practices from parent country to host country hence enabling convergence of HRM practice. In spite the structural and technological convergence, opponents of divergence insists that cultural differences still remains. In fact, studies have shown that cultural diversity influences managerial practices of a country (Paik, Chow, & Vance, 2011). This implies that in spite changes in technology, the firms must adapt to host country culture in order for it to succeed (Khan, 2010). However, it is argued theoretically that possible differences and perceptions of recruitment via internet cannot be allocated to differences in organizational or national culture (Carmen, 2008). This is because internet represents a culture group that is global rather than one, which is limited by organizational or national boundaries (Gooderham, & Nordhaug, 2011). It is argued that the existence of internet culture ensures uniformity in the practice and perception of internet recruitment on international scope. Thus, this theory supports convergence theory. However, emergence of internet culture is argued not to be single and hence different virtual community culture exists which are influenced by national culture. Some studies have indicated that in spite cultural differences, there is some convergence in some HRM practices. Institutional factors such as labour organizations and labour legislations have been found to be barrier of MNC subsidiaries to implement HR policies and practices that are similar to parent firms (Carr, & Pudelko, 2006). However, studies have indicated that most MNC subsidiaries often meet these legislation requirements and are able to adopt practices, which ensure attainment of organizational goals and objectives (Carmen, 2008). This implies that convergence of HRM practice can still be entrenched in running of firms in spite the prevailing cultural and institutional factors (Gooderham, & Nordhaug, 2011). Convergence of international HRM may be supported or inhibited by labour force characteristics. Labour force characteristics have a potential to influence the HRM decisions and implementation of HRM best practice at national level (Paik, Chow, & Vance, 2011). The education and training also influences the recruitment and retention practices. However, the characteristic of the labour force influence on diffusion of HRM best practice is often manifested through age composition of the labour force (Khan, 2010). This implies that there is interplay between institutional factors and national cultural in the creation of labour force characteristics. Adoption of convergence HRM is also influenced by availability of expatriates within subsidiary firm. Studies have indicated that expatriates help in maintaining or increasing similarities between MNC subsidiaries and their parent company (Carmen, 2008). The expatriates aid in training and spread of explicit knowledge, which tacitly demonstrates a preferred way of working to local employees. Such initiatives support adoption of best practice and alleviate reliance on national culture as a determinant of HRM approach adopted (Khan, 2010). In addition, regular and close communication between local HRM expatriates and parent company HRM has been found to reduce differences between MNC subsidiaries and their parent company (Paik, Chow, & Vance, 2011). Thus such practices aid in application of global HRM practice that is less influenced by the host country culture and hence supporting convergence of HRM (Gooderham, & Nordhaug, 2011). Convergence HRM model is also supported by the success of HRM systems. Study indicates that strong performance in one country gives rise to interest from firms in other nations to adopt elements of that business system. This results in firms trying to ape practices of successful companies (Carmen, 2008). In addition, firms whose parent company is situated in economically successful countries are more likely to easily and credibly transfer their HRM practices and policies to their foreign subsidiaries (Khan, 2010). This implies that the MNC subsidiary’s country of origin and the success of the parent company are key determinants of convergence or adoption of best practice in foreign country. Conclusion The convergence theory in HRM practice is supported by increased innovation in technology and reduced economic regulations by various countries, and history of success of the systems being employed. innovations in technology has resulted in internet communication and faster travelling that makes it easier to communicate best HRM practice to be adopted (Carr, & Pudelko, 2006). The technologies also enable easier training and adoption of such practices through expatriates. Deregulation of economic legislations is enabling firms to transfer home HRM practices, which are deemed successful to their subsidiaries operating in foreign countries. The labour force characteristics also determine whether a firm is likely to adopt best practices or not. In spite technological and structural convergence, culture still plays a vital role in determining the HRM system of a certain firm. Local culture influences MNC subsidiary firms HRM (Paik, Chow, & Vance, 2011). Thus, even though structural and technological factors encourage convergence of HRM practices and policies, national culture encourage divergence of HRM practices and policies. This implies that firms operation in international markets must note the impact of local culture on their operations and be able to adopt both best practice and best fit in an integrated form. Reference Bjorkman, I., Smale, A., Sumelius, J., & Lu, Y. (2008). Changes in institutional context and MNC operations in China: Subsidiary HRM practices in 1996 versus 2006. International Business Review, 17(2), 146-158 Carmen, G. (2008). Best Practices in HRM: Convergence in Beliefs across Nine Countries? International Journal of Organisational Behaviour, 13(1), 1-15 Carr, C., & Pudelko, M. (2006). Convergence of Management Practices in Strategy, Finance and HRM between the USA, Japan and Germany. International Journal of Cross Cultural Management, 6(1), 75-100 Domsch, M., & Lidokhover, T. (2007). Human resource management in Russia. London: Ashgate Publishing, Ltd. Eaton, J. (2000). Comparative employment relations: An introduction. London: Wiley-Blackwell Gooderham, P., & Nordhaug, O. (2011). One European model of HRM? Cranet empirical contributions. Human Resource Management Review, 21(1), 27-36 Khan, S. (2010). Convergence, Divergence or Middle of the Path: HRM Model for Oman. Journal of Management Policy and Practice, 12(1), 64 – 75 Mayrhofer, W., Brewster, C., Morley, M., & Ledolter, J. (2011). Hearing a different drummer? Convergence of human resource management in Europe — A longitudinal analysis. Human Resource Management Review, 21(1), 50-67 Paik, Y., Chow, I., & Vance, C. (2011). Interaction effects of globalization and institutional forces on international HRM practice: Illuminating the convergence-divergence debate. Thunderbird International Business Review, 53(5), 647-659 Rowley, C. (1998). Human resource management in the Asia Pacific region: Convergence questioned. London: Routledge. Read More