The Role of Culture in Shaping Contemporary IHRM Practices

This essay delves into the significant role of cultural factors in shaping contemporary International Human Resource Management (IHRM) practices. It begins by defining IHRM and highlighting the differences between national and global HR practices, emphasizing the need for cultural sensitivity and understanding of diverse business environments. The essay discusses contemporary trends in IHRM, such as the changing landscape of foreign direct investment (FDI) and the emergence of rapidly growing economies like China, which present unique challenges for Western multinational corporations (MNCs). It elaborates on how national culture affects various aspects of international business, including pay systems, management effectiveness, strategic dynamics, and readiness for international assignments. The essay also examines Hofstede's cultural dimensions—uncertainty avoidance, masculinity/femininity, power distance, and individualism/collectivism—and their implications for managing employees in different cultural contexts. Finally, it explores the relationship between IHRM and organizational culture, emphasizing how HR practices influence employee behavior and create values that shape the overall organizational culture, concluding that cultural values are integral external factors influencing HR practices and employee motivation.

Running head: INTERNATIONAL HUMAN RESOURCE MANAGEMENT
INTERNATIONAL HUMAN RESOURCE MANAGEMENT
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As opined by Jackson, Schuler and Jiang (2014), “a critical challenge for
organizations from both the public and private sectors in the twenty-first century is the need
to operate across national boundaries”. This operation of the companies across the national
boundaries is called Internationalisation and the processes that are involved in the successful
management of people in these international organisations is called IHRM (International
Human Resource Management). However, it is to note that successful management of such
enterprises needs a global mind-set that collaborates openness to the awareness about
diversity all over the markets and the cultures with an ability and propensity of synthesizing
across such diversity. Internationalisation of the companies maximizes the challenges that are
faced by the HR manager and the way he complies with diverse religious, cultural and social
beliefs. There are several studies that have proved that- “nationality of people affects the
ways in which they conduct, organize and operate their work.” This paper shall elaborate on
discussing about the roles that are played by the International Human Resource managers in
managing such situations and would also discuss about the changes in their duties that, in this
21st century, are triggered by the internationalisation or globalisation of the companies. The
main aim of this paper is to identify the role of cultural factors in shaping contemporary
IHRM practices.
International Human Resource Management (IHRM)
According to Dordevic (2016), IHRM refers to the process of management of people
across the international boundaries by the multinational enterprises. It includes a worldwide
management of the people and not only that of the expatriates. It is to mention that the
companies that function in global boundaries comprise of the multinational and international
firms. On one hand, the multinational companies are the firms in which different businesses
in different nations are managed as a whole, right from the centre and there is difference in
the level of autonomy that they have. On the other hand, the international firms are the firms

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in which the operations take place in the subsidiaries that are present overseas and that
depend on the capacity of manufacturing and business expertise of the parent company.
According to Nielsen, Asmussen and Weatherall (2017), the main difference in between the
national and global HR practice is the requirement of seeing the bigger picture. As per him
“the difference is the higher complexity and the need for sensitivity to different cultures and
different business environments.”
Contemporary IHRM practices managers need to know
The department of Human Resource today operates differently from that of the same a
decade ago. The change in the job market, the compliance issues and the regulatory demand
issues have compelled the HR managers worldwide to become agile partners in the strategic
development of the businesses. The managers need to know and understand the contemporary
issues and trends that they might face during and after the expansion of the businesses
internationally in order to understand the ways of utilising the valuable resource to the best
advantage. The first significant contemporary trend for IHRM practices is the changing
landscape of the international business. It can be explained in the part by the changing
contours of the FDI (Foreign Direct Investment) location in the global economy (Nielsen,
Asmussen and Weatherall 2017). Traditionally, the FDI flows have been focused in the
developed nations. But now, the recent years “have heralded a shift in FDI location towards
new destinations such as the EU accession countries, particularly those in Central and Eastern
European, while countries such India and China have also become ‘hot spots’ for inward
FDI.” For instance, China have recorded the record inflows of 79 billion dollars in the year
2005 that made it the key recipient of the FDI in the developing nations. Notwithstanding this
fact, the most significant single global shift of recent times “has been the emergence of East
Asia as a dynamic growth region, reflecting the spectacular recent growth rates achieved by

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the East Asian newly industrialising economies, as well as the rapid growth of the Chinese
economy.”
Culture on contemporary IHRM practice
The implications of the rapidly growing economies for the IHRM research are very
notable in different ways and their influence on the global business landscape far exceeds
their potential as the locations for the outsourced low-value aspects of the actions of MNC.
With the same, they also set forward some unique challenges for the foreign, particularly, the
Western MNCs, along with the ones that have faced through operating in institutionally and
culturally proximate contexts. For instance, according to Heim, Han and Ghobadian (2018), it
has been claimed that the execution of the cross-border transmission of knowledge among the
companies in same type of nations. China is one of the best example of a “distant” nation
from a western perspective. According to Kirton and Greene (2015), there are some areas that
might be affected by the national culture and they are- a) pay system and diverse concepts of
social justice, b) decisions of what makes the manager effective, c) approaches towards
strategic dynamics and organisational structuring, d) readiness for accepting international
assignments, and e) giving face to face feedbacks.
Culture has a very significant effect on the management process of international
Human Resource. It affects how the white and blue collar workers respond to both the pay
and non-pay incentives and how the international companies are organised, the success of the
multinational working teams and also how the executive and managers compose and
implement the business related strategies. The importance of cultural differences was one of
the most influential messages delivered by Hofstede. As per him, “culture is the collective
mental programming of people in an environment’, referred to cultural values as broad
tendencies ‘to prefer certain states of affairs over others’, and described organizations as

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‘culture-bound’.” Making use of the worldwide data on the employees working in IBM,
Hofstede have identified a total of four national cultural dimensions and they are- a)
uncertainty avoidance, b) masculinity/femininity, c) power distance and, d)
individualism/collectivism. One of the conclusions that he reached was that- “cultural values
within a nation are substantially more similar than the values of individuals from different
nations.” It has also been taken up by several subsequent commentators like Deephouse,
Newburry and Soleimani (2016) who have claimed that the study of Hofstede have explained
about 50% of the differences among the nations in the behaviours and attitudes of the
employees. On the other hand, as per Pulzl and Reib (2017), the cross-country cultural
differences have always been overestimated and might well pale in the vitality when they are
compared with the other different characteristics of the nation when it comes the question of
explaining the HR practices’ effectiveness.
The Hofstede Six dimensions of Culture
As mentioned above, as per there are six dimensions of Hofstede culture and they are
namely the 1) uncertainty avoidance, 2) masculinity 3) femininity, 4) power distance, 5)
individualism and 6) collectivism. It is to note that in the societies that score high for the
Uncertainty Avoidance, people in that society tend to make the life as controllable and
predictable as possible. If they find that they are unable to control their lives, they tempt to
stop trying. Such people usually put their fate at in the hands of God. According to Slawinski
et al. (2017), people with high uncertainty avoidance have many societal conventions and
they are expressive in nature and at the same time, they are also allowed to show emotions
and anger, whenever required. Hence, in order to manage these kind of individuals, the
international human resource managers need to recognise that the anger, vigorous hand
gestures and emotions are significant part of the conversation. On the other hand, people with
low uncertainty avoidance tend show openness to change and are innovative. With the same,

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they are inclusive and are more inclined towards decision making and open-ended learning.
Secondly, masculinity versus femininity is regarded as the role distribution among men and
women. In the societies that are masculine, the roles of women and men overlap less and
also, their men are expected to behave in assertive manner. On the other hand, in the feminist
societies, there is a good deal of overlapping among the roles of males and females and with
the same, modesty is perceived as a virtue. With the same, in this kind of societies, high
importance is given to the good relationships with the direct supervisors. It is to note that this
gap in between the values of men and women is the largest in Austria and Japan, with the
Masculinity versus femininity scores of 79 and 95 respectively. In both the nations, men
score the highest for exhibiting “tough” masculine behaviours and values. According to Light
(2016), “Japan is a culture where all children (male and female) learn the value of competition
and winning as part of a team from a young age. Therefore, female team members are just as
likely to display these notionally masculine traits as their male colleagues.” On the other
hand, Sweden is a very feminine society as per Hofstede. In such society people focus on
managing through discussing, compromising, and negotiating. People with high masculinity
versus femininity scores have strong egos and for them, achievement and money are
important. On the contrary, people with low masculinity versus femininity scores are more
focused on the quality of their life and are highly relationship-oriented.
Thirdly, power distance is regarded as the level of inequality that prevails and is
accepted among the people who have or who do not have power. The society with high
Power Distance Index (PDI) scores accepts hierarchical and unequal distribution of power
and they are well aware of their place in the system (Tang and Wang 2017). On the other
hand, the society with low PDI scores have their power shared and are widely widespread.
With the same, the society members also do not accept the situation where the power is
unequally distributed. People with high PDI prefer centralised organisations and also more

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complex hierarchies to work. They acknowledge the status of their leaders and there is a
significant gap in respect, compensation and authority. Lastly, individualism versus
collectivism (IDV) is regarded as the strength of the ties that people have with other present
within their communities (Kitirattarkarn, Araujo and Neijens 2019). It is to note that high
IDV scores indicates that there is very weak interpersonal connection among the ones who
are not a part of the family. Here, people take very less responsibility for the actions and
outcomes of others. On the other hand, in collectivist society, people are supposed to be very
loyal to the group to which they belong to and in an exchange, the group has to defend their
interests.
Relation between IHRM and Organisational Culture
It is to note that IHRM practices aims towards developing strategies that provide a fit
between the management style and the overall business strategy while maintaining increased
performance and employee wellbeing at the workplace. Some of the basic HRM practices
comprise of recruitment and selection, training and development etc. (Naeem et al. 2019) All
these affect the stability and performance of a company. Hence, these practices have the
potential of influencing the employee behaviour and creating values that develop the
organisational culture. It is also to mention that cultural values are a part of external factors
that influence the practices of HR (Bezzina et al. 2017). There are number of cultural values
that influence the behaviour of employees. In a culture, where the involvement of employees
is common, it is more possibly to have high employee motivation and satisfaction as
compared to the ones that do not favour involvement of the employees.
Hence, from the above analysis it is to conclude that culture plays a significant role in
shaping contemporary IHRM practices. Cultural differences can be very critical and
insensitivity to the international businesses and can result in business failure. The change in

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the job market, the compliance issues and the regulatory demand issues in the contemporary
world have compelled the HR managers worldwide to become agile partners in the strategic
development of the businesses and taking into consideration the cultural difference and
accepting them is very important to ensure long term business growth and success in the
international border.

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