International Human Resource Management: Strategies for Global Firms

This report provides a comprehensive overview of International Human Resource Management (IHRM) in the context of globalization and multinational businesses. It explores the evolving nature of IHRM, emphasizing the increasing importance of diversity, employer branding, and eliminating bias. The report delves into the purpose of IHRM, including the procurement, allocation, and utilization of human resources, and examines the 3D definition of IHRM by Morgan, which includes HR functions, countries, and types of employees. It discusses the advantages and disadvantages of hiring parent country nationals (PCNs), host country nationals (HCNs), and third-country nationals (TCNs). The report further analyzes various IHRM models, such as the Open System Model, staffing approaches, convergence vs. divergence, and universalist vs. contextual approaches, providing insights into integrating market and corporate cultures. A case study on Hong Kong Disneyland is used to illustrate these concepts, highlighting the challenges and considerations for managing a diverse workforce in a global setting.

1
International Human Resource Management

2
Table of Contents
Introduction......................................................................................................................................3
Background......................................................................................................................................4
Evolving nature of IHRM................................................................................................................4
Purpose of IHRM.............................................................................................................................6
IHRM Models..................................................................................................................................8
Factors to Consider........................................................................................................................10
Designing IHRM...........................................................................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................15

3
Introduction
With globalization, the number of multinational businesses is increasing. Many
businesses nowadays show preference to enter the global market in order to tap into the larger
customer base and new talents. So, a successful attempt to the globalization can increase the
profitability of the organization to a significant level. However, in the global market,
multinational organizations operate in a diverse cultural environment. Operation in different
countries increases the need for hiring the workforce of different nations. As an effect,
individuals from a different culture are included in the organization. Each culture has own values
and beliefs. Inclusion of different cultures to the workforce increases diversity. In such cases, the
risk of conflict becomes higher, if the cultural differences between the employees are managed
effectively. Such conflicts affect collaboration among team members and reduce productivity.
The multinational businesses need to adjust with the different rules and regulations in the
market to operate smoothly in the global market. In addition, the organizations also require
ensuring that the employees are working in collaboration with each other and they are not
encountering any conflict or negative experience because of their culture. In other words, the
organizations need to offer the employees a fair and unbiased environment for working
irrespective of the cultural background and also need to improve the productivity by addressing
the conflicts. The multinational organizations, therefore, require considering the cultural
differences while managing the diverse workforce. The current research deals with discussion on
the issues faced by the multinational businesses to execute the human resource functions in the
global settings. The research includes the development of the appropriate interventions for the
organization expatriates (OE) in the global market. The research focuses on assessing the benefit

4
of involving an OE versus an SIE in the host nation as well as determining the most appropriate
selection criteria and methods in a foreign country.
Background
The current research focuses on Hong Kong Disneyland. It is one of the largest theme
parks in the global market. Being headquartered in, US, the inspired theme park is present in
Hong Kong as well (www.hongkongdisneyland.com, 2019). Due to its huge presence in the
global market, the organization deals with a highly diverse workforce. With the high level of
diversity among the employees, the management of the organization experience challenges to
manage the workforce and obtain the optimum output from them.
Hong Kong is one of the preferred destinations for many large global businesses. In
addition to being a business hub, Hong Kong is also known for its unique culture, which is
significantly different from the US or European countries. Disneyland operates in Hong Kong.
So, in this research, it is used as the host country for Disneyland. The culture of Hong Kong is
highly different from that of the US. So, it is necessary for the Disneyland management to
understand the cultural differences and address the challenges faced by an OE at work. In order
to integrate the OE with other parts of the workforce in the host destination, Disneyland
management requires emphasizing on identifying the cultural issues and determining the
appropriate interventions to reduce the risk of conflicts and ensure smooth execution.
Evolving nature of IHRM
Due to globalization, the mobility of the workforce is increasing. The globalization is
also changing the nature of societies. As an effect, the nature of the global labour market is also

5
changing significantly. The International Human Resource Management gives importance to
addressing the issues related to the management of culturally diverse workforce in a global
context. The changes in the IHRM are observed in the following areas--
1. Higher Diversity
2. Increased importance on employer branding ((Vaiman & Brewster, 2015)
3. Increased importance on eliminating bias
Higher diversity— The increased rate of globalization is giving the managers of the
multinational organizations with the opportunity to higher the workforce with a greater variety of
skills and abilities (Solomon & Steyn,2017). With the increased rate of diversity, the workforce
becomes able to drive innovation. However, the risk of conflicts also increases with a higher rate
of diversity. The conflicts within the workforce reduce productivity, affect the time-efficiency of
the team and causes interruption in the organizational practices.
Eliminating Bias and Employer Branding--As an effect, the higher diversity in the workforce
is also increasing the importance of paying attention to the inequality and discrimination related
issues. In a diverse workforce, every member needs to be treated equally irrespective of the
cultural background (Altındağ & Kösedağı, 2015). If an employee faces discrimination because
of the cultural background, the level of satisfaction reduces. Managing the inequality and
discrimination related issues is also essential to improve the image as an employer. The
employees of the modern age are more interested to get employed in the organizations which
work in an ethical manner. Retaining the staffs also becomes easier if they get equal treatment
from the employers. So, promoting diversity and eliminating inequality crucial in international
human resource management to enhance the attractiveness of the firm to the staffs.

6
Purpose of IHRM
The purpose of IHRM can be understood from the 3D definition of Morgan. The HR system
performs procurement, allocation and utilization of human resources in an organization. The
primary purpose of developing IHRM strategies in an organization is procuring suitable human
resources in the global market. Working in a culturally diverse team requires the development of
cultural competencies (Singh & Mahmood, 2017). So, while hiring the expatriates in the foreign
market, the managers in the modern multinational organizations need to ensure that the most
suitable talents are being recruited. Hiring individuals with cultural competency reduces the risk
of conflicts.
Allocation of the human resources to the right place is another purpose of development of the
IHRM strategies. The duties of an individual should match the skill sets. In the global context,
the managers also require considering that the tasks are getting done by the staffs with necessary
skill sets. The allocation strategies in IHRM ensure that the talents of the employees are being
used in a proper manner (Alizadeh & Chavan, 2016). International human resource managers
also require giving importance to ensuring that the staffs in the global market are getting
adequate opportunities to grow and develop new skills and abilities.
Appropriate utilization of human resources is one of the key purposes of developing IHRM
strategies. The multinational businesses need to ensure that they are giving obtaining the
optimum returns from the workforce. The IHRM strategies should focus on the development of
the right skills and abilities among the employees so that they become able to contribute more to
the organization.

7
Morgan’s 3D Definition also includes three components of IHRM system. The components are--
HR functions, countries and types of employees. The markets of operation of the multinational
businesses fall into the three categories such as the host, parent and third nations. The host nation
refers to the market where the subsidiary organizations are placed (Barakat et al., 2015). The
parent nation of the business indicates the market where the headquarter is present. The third
country indicates the market from where the staffs, as well as other resources, are being sourced.
The employees in a multinational organization can be categorized as the host country nationals
(HCN), parent country nationals (PCN) and third-country nationals (TCN). Cleary, the
multinational organizations need to deal with the staffs from the different cultural background.
The staffing from each market comes with some advantages.
Advantages and Disadvantages of HCN, PCN, and TCN: Hiring the parent country nationals
enables the organizations to obtain direct control over the subsidiary. It also ensures that the
organizational culture is established in the global market. However, the parent country expatriate
might have limited knowledge of the local culture. It can increase the risk of cultural conflict in
the organization.
Hiring the HCNs is effective to reduce the risk of cultural conflict in the host nations. The HCNs
are aware of the local culture. As an effect, they are able to conduct the organizational activities
in such a way so that the local norms are not being violated. It ensures the smooth operation of
the organization in the host country (Roux & Suzuki, 2017). Finally, hiring HCNs is a less
expensive option for doing business in the host nation. So, recruiting the local staffs help
organizations to increase their profitability. However, the dependence on HCNs reduces the

8
control of the headquarters over the subsidiary. Extensive dependence on the HCNs might
restrict the organization from incorporating the organizational culture in the host nation.
Hiring TCNs is a neutral option for multinational businesses. By hiring the TCN, an
organization can be benefitted by greater recruitment pool. The TCNs are less expensive than the
PCNs. But, the organization can have more control over them. However, the level of engagement
of TCNs with the organization might be lower. The TCNs do not focus on ensuring long-term
success for the business. The work permit and legislation related issues can also restrict the
businesses from using the TCNs to the optimum level.
IHRM Models
While implementing the IHRM strategies, the businesses need to ensure that the market culture
is being integrated with the corporate culture. Different IHRM models can be used to secure
integration.
Open System Model: The open system model considers the effects of the larger environment on
the IHRM processes. The open system model indicates that an organization operates in three
types of environment which are Operating Environment, Host Country Environment and the
Mega Environment. Each environment is influenced by a number of factors. For instance, the
operating environment is shaped by the corporate culture, values, beliefs, ethics and corporate
social responsibilities (Worm & Clausen, 2016). The host country environment is influenced by
the rules and regulations of the market, the social, political, technological, environmental and
economic factors. The mega-environment is influenced by the competition level and the
demands of customers. Each environment impacts on the organization and influence the IHRM
policies.

9
Staffing Approach of Herbert Perlmutter- As indicated by the staffing approach, the
recruitment process in the global context is influenced by the general Staffing policy at the
organization, the rules and regulations of the host nation and availability of the staffs (Farndale et
al., 2017).
Convergence Vs Divergence-- The convergence indicates the degree of similarity an
organization should maintain between the host and the parent nation. The divergence indicates
the degree of differentiation between the units of the two countries (Bhakar et al., 2016).
While dealing with the US and Hong Kong team, Disneyland management requires balancing
between the two approaches. The organization needs to follow similar rules and regulations in
both the US and Hong Kong units to some extent. On the contrary, the working procedures and
environment in the Hong Kong market might be different from those in the US. So the
management needs to adopt a flexible approach to execute the tasks in the host nations.
Universalist Vs Contextual: The Universalist approach of IHRM indicates that multinational
organizations are able to solve the HR related issues in the global market using one best practice
strategy ((Bhatti & Ahsan, 2016)). In other words, the Universalist approach indicates that one
single strategy is effective for managing the HR issues in all organization irrespective of the
specific contexts (Reiche, Lee, & Allen, 2019). On the contrary, the use of Contextual approach
facilitates the organization to develop the IHRM strategies as per the own business requirement.
For being successful in the foreign market, the businesses need to maintain a balance between
the Universalist and Contextual approaches. In the case of Disneyland, the management requires
adopting the best practices for the management of the resources in Hong Kong. In addition, the

10
management also requires ensuring that the unique values and beliefs of the business are
incorporated in its HR practices of both the US and Hong Kong units.
Factors to Consider
While managing human resources in the international market, the businesses need to consider the
institutional culture as well as the national cultures. The institutional culture provides the
organization with competitive advantages. So, the core values and beliefs of the organization
should be implemented in different units across the globe. The expansion decisions in the global
market are often shaped by the sourcing efficiencies, economies of scale and the cost differences
with the parent countries (Garneau & Pepin, 2015). However, the culture of the nations also
varies and impact on organizational activities. The cultural differences can be understood using
Hofstede’s framework. The power distance index indicates the degree of equality in the culture.
The individualism indicates the importance of individual views in the nation. The masculinity
indicates the power distribution between genders. Uncertainty Avoidance Index indicates the
preference for planning in a country. The Long Term Orientation indicates the level of long term
and short term approach. The degree of indulgence indicates the level of personal independence
in a culture.
Designing IHRM
The current section focuses on developing the IHRM system for Disneyland in Hong Kong. The
benefit of OE versus SIE (Self-Initiated-Expatriate) and determining the appropriate selection
criteria are discussed in the section.

11
OE vs SIE: In order to execute the business activities in Hong Kong, Disneyland management
can take help from either the OEs or from the SIEs. In either case, the organization experience
some advantages and some drawbacks. For instance, use of the OEs is effective for incorporating
the corporate culture in Hong Kong unit. Use of the OEs also ensures better control over the
business activities at the subsidiary (Peng, Van Dyne & Oh, 2015). However, sending an OE to a
foreign nation is expensive. So, the profitability of the organization can be reduced due to
extensive reliance over them. Finally, the OEs may lack knowledge regarding the local culture.
As an effect, the risk of cultural conflict increases.
On the contrary, the SIEs visit host nations to execute the tasks on behalf of the organization
(Fisher-Borne, Cain & Martin, 2015). Hiring SIEs is less expensive for businesses. The SIEs also
have better knowledge regarding the culture of the host country. However, the organization
might not have strong control over the SIEs. So, incorporation of the organizational culture
might be difficult in the host nation.
Disneyland management should use OEs and SIEs both in order to mitigate the issue. The
management should emphasize on promoting the collaboration between OEs and SIEs in Hong
Kong for a short period at the initial stage. In the long term, the SIEs should work only in the
organization. Combination of the long –term and short-term approach will reduce the risk of
cultural conflict, reduce the cost and will ensure incorporation of the corporate culture in the
Hong Kong subsidiary.
Selection Criteria and Selection Method: The intercultural competence of an individual should
be high for working in a diverse environment. The high cultural competence leads to better

12
integration of the culturally diverse units. The management should focus on selecting the
candidates on the basis of the following criteria—
1. High tolerance for ambiguity-- The level of ambiguity differs along with the national culture
(Ang & Van Dyne,2015). In Hong Kong, the Uncertainty Avoidance Index is lower than that of
the US. So, the culture in Hong Kong allows more ambiguity than the US. The expatriate who is
going to work in Hong Kong should have a high tolerance of ambiguity to address the cultural
difference.
2. Better interpersonal skills—The interpersonal skill helps the professionals to communicate
effectively and get the optimum benefits from it (Root, 2019).
3. A higher level of empathy—The high level of empathy is necessary to understand the views of
the business partners (Chiu & Shi, 2019). As an effect, developing a strong relationship becomes
easier for expatriate.
4. Non-judgmental- In the current case, the cultures of the host and parent country differ from
each other to a significant level. Being non-judgmental is effective in avoiding cultural conflict.
It is also necessary to maintain a healthy and positive attitude towards the partners from other
culture.
5. Flexible-- The high flexibility helps an individual to adjust to the new process and the culture
easily (Rockstuhl & Ng, 2015). It leads to smooth integration between the units with two cultures
and also reduces the risk of conflicts.

13
6. Orientation for learning—in the host nation, the expatriate needs to learn several new things.
Having an orientation for learning ensures that the professional is able to adjust to the new
environment in the host nation.
The following selection methods should be used by the management to identify the appropriate
candidates –
1. Role Play in intercultural assessment centre-- The role play in an intercultural assessment
center gives an idea on the cultural competency of an individual. With a higher level of cultural
competency, maintaining collaboration between different business units becomes easier.
2. Formal Selection Process- The formal selection process ensures that the roles and
responsibilities of the expatriates are mentioned clearly. It also allows organizations to attract
candidates with open advertising. As an effect, the management becomes able to find out the
most suitable candidates from a larger pool.
3. Geocentric approach for selection—the geocentric approach of selection facilitates the
organization to choose the candidates on the basis of their abilities only. The cultural background
of the individual is not considered in the geocentric selection process. It will help Disneyland
management to choose professionals with a high level of cultural competency. It also enhances
the chance of success in Hong Kong.
Conclusion
The discussion in the report that the multinational organizations require considering the
corporate culture as well as the national culture of the parent and host nations to make the IHRM
strategies successful. The report also indicates that the Disneyland management needs to use

14
both the OEs and SIEs to execute the operations in Hong Kong to derive the optimum benefits
from the host nations. The organization also requires using the geocentric approach for the
selection of individuals with higher cultural competency.

15
References
Alizadeh, S., & Chavan, M. (2016). Cultural competence dimensions and outcomes: a systematic
review of the literature. Health & social care in the community, 24(6), e117-e130.
Altındağ, E., & Kösedağı, Y. (2015). The relationship between emotional intelligence of
managers, innovative corporate culture and employee performance. Procedia-Social and
Behavioral Sciences, 210, 270-282.
Ang, S., & Van Dyne, L. (2015). Conceptualization of cultural intelligence: Definition,
distinctiveness, and nomological network. In Handbook of cultural intelligence (pp. 21-
33). Routledge.
Barakat, L. L., Lorenz, M. P., Ramsey, J. R., & Cretoiu, S. L. (2015). Global managers: An
analysis of the impact of cultural intelligence on job satisfaction and
performance. International Journal of Emerging Markets, 10(4), 781-800.
Bhakar, S. S., Gulati, C., Mathur, G., & Pathak, R. (2016). GLOBAL ADVANCEMENTS IN
HRM-INNOVATION AND PRACTICES.
Bhatti, M. W., & Ahsan, A. (2016). Global software development: an exploratory study of
challenges of globalization, HRM practices and process improvement. Review of
Managerial Science, 10(4), 649-682.
Chiu, C. Y., & Shi, Y. (2019). Cross‐Cultural Competence. Cross‐Cultural Psychology:
Contemporary Themes and Perspectives, 39-55.

16
Farndale, E., Raghuram, S., Gully, S., Liu, X., Phillips, J. M., & Vidović, M. (2017). A vision of
international HRM research. The International Journal of Human Resource
Management, 28(12), 1625-1639.
Fisher-Borne, M., Cain, J. M., & Martin, S. L. (2015). From mastery to accountability: Cultural
humility as an alternative to cultural competence. Social Work Education, 34(2), 165-
181.
Garneau, A. B., & Pepin, J. (2015). Cultural competence: A constructivist definition. Journal of
Transcultural Nursing, 26(1), 9-15.
Peng, A. C., Van Dyne, L., & Oh, K. (2015). The influence of motivational cultural intelligence
on cultural effectiveness based on study abroad: The moderating role of participant’s
cultural identity. Journal of Management Education, 39(5), 572-596.
Reiche, B. S., Lee, Y. T., & Allen, D. G. (2019). Actors, Structure, and Processes: A Review and
Conceptualization of Global Work Integrating IB and HRM Research. Journal of
Management, 45(2), 359-383.
Rockstuhl, T., & Ng, K. Y. (2015). The effects of cultural intelligence on interpersonal trust in
multicultural teams. In Handbook of cultural intelligence (pp. 224-238). Routledge.
Root, S. (2019). The Relationship Between Language, Emotional Intelligence, and Cultural
Sensitivity.
Roux, P. W., & Suzuki, K. (2017). Designing Online Instruction for Developing Cultural
Intelligence (CQ): A Report from a Classroom-Based Workshop. International Journal
for Educational Media and Technology, 11(1), 87-96.

17
Singh, J. S. K., & Mahmood, H. N. (2017). Emotional intelligence and expatriate job
performance in the ICT sector: The mediating role of cultural adjustment. Global
Business and Management Research, 9(1s), 230.
Solomon, A., & Steyn, R. (2017). Leadership style and leadership effectiveness: Does cultural
intelligence moderate the relationship?. Acta Commercii, 17(1), 1-13.
Vaiman, V., & Brewster, C. (2015). How far do cultural differences explain the differences
between nations? Implications for HRM. The International Journal of Human Resource
Management, 26(2), 151-164.
Worm, V. D., & Clausen, L. (2016). Transpatriate learning in multinational corporations:
Cultural Intelligence in context. In Academy of Management Proceedings (Vol. 2016,
No. 1, p. 10849). Briarcliff Manor, NY 10510: Academy of Management.
www.hongkongdisneyland.com. (2019). Hong Kong Disneyland Park. Retrieved from
https://www.hongkongdisneyland.com/destinations/theme-park/