The world has become a global village because of new technologies and the trend to globalisation, but retaining human resources in both local and international companies has become complicated and challenging (Edwards and Rees, 2011). Moreover, the rapid pace of internationalisation and global competition; the challenges of expatriate management; and the significance and challenges of HR transfer across and between nations have contributed to the urgent need to create a capability in international human resource management (IHRM). Furthermore, the shortage in many countries of international managers for multinational or large companies, the growth of micro-multinationals and the need for better management skills are also factors influencing the development of IHRM practices. To gain competitive advantage in the market, some companies create strategic alliances and cross-border mergers and acquisitions (Kim and Tung, 2013); they too need IHRM practices to keep their employees motivated in the long term.
In this part of the essay, the appropriateness of Western-style IHRM practices to emerging countries is evaluated, discussed and analysed through organisational examples and theoretical application. All the major findings are then summarised.
According to Edwards and Rees (2011), IHRM includes and deals with three categories: a parent country where the firm is usually headquartered; a host country where a subsidiary organisation is located; and other countries that are normally source of labour, research and development and finance.
Emerging countries are those whose economic activities and capabilities are stronger than the least developed countries but weaker than developed countries (IMF, 2012). They are rapidly growing and volatile economies, which have excellent potential for development and growth but also present some important risks in relation to society, politics and finance (Business Dictionary, 2014). Therefore, scholars insist on the need for effective human resource practices in organisations, not only to manage these complexities but also to maintain international standards.
Most management theories, literature and practices normally come from Western countries, because they have experienced more complicated and dynamic working circumstances and have developed ways to cope with them (Lowrie, 2014). Globalisation and excellent relationships with other countries have created the opportunity for companies to invest in various other nations, but especially in emerging countries because of the many advantages they offer, for example the availability of cheap labour, huge economic growth and increasing technological development (Edwards and Rees, 2011). However, most companies find it complex and difficult to manage their human resources in emerging countries because of differences between the management practices on the parent and host countries.
According to Kramar and Syed (2012), there are three types of employees in international organisations: host-country nationals, third-country nationals and parent-country nationals. They have different attitudes, expectations, knowledge and capabilities because they possess different degrees of experience, knowledge and academic background (Mullins, 2010). For example, multinational retailer Tesco has business operations in China, India and other countries; therefore its employees in different countries have different experience and capabilities (Tesco, 2014). It cannot manage all those employees in the same way because of differences in their expectations, demands, attitudes and cultures. Employees in the UK have different requirements and expectations to those in India because of their different locations. Even though companies such as Tesco would like to manage their employees according to their corporate culture, rules and headquarter location, Western-style IHRM may not be applicable to and effective in managing employees in emerging countries.
In particular, the regulations and employee management systems of host-country organisations may differ in many ways from those of Western countries (Kim and Tung, 2013). Therefore, if a Western company that has branches or business operations in an emerging country applies its own set of rules and regulations to managing employees there, it faces the possibility of both organisational failure and success. For example, Citigroup acquired a South Korean bank, Koram Bank, but it has been facing significant problems in remaining in the financial industry in South Korea because of poor integration with and adjustment to the local management processes and systems in order to keep its employees satisfied and devoted to their work (Hall et al., 2013).