Human Resources Management Issues, Challenges and Trends: “Now and Around the Corner”, pages 31–52. Copyright © 2019 by Information Age Publishing All rights of reproduction in any form reserved. 31
CHAPTER 2
GLOBALIZATION AND HUMAN RESOURCE MANAGEMENT
Ronald R. Sims
The environment in which today’s organizations find themselves continues to be more globalized as the world is becoming a “global village.” This globalization is driven in part by continued growth in multinational investment to include more and more companies entering into alliances with foreign companies, exporting their products overseas, and building plants in other countries. All of the human resource management (HRM) challenges, issues and opportunities discussed in previous chapters in this book are interrelated conceptually and operationally in the international context.
This chapter discusses a number of the HRM challenges, issues and opportuni- ties HRM professionals and their organizations will need to address in today’s and tomorrow’s global world of work. The chapter first takes a look at today’s global organization and some HRM issues. Next, the discussion turns to the globaliza- tion of business and factors affecting HRM in global markets before focusing on an analysis of levels of global or international and HRM operations. Finally, the chapter discusses globalization and implications and impacts on HRM in the future.
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32 • RONALD R. SIMS
TODAY’S GLOBAL ORGANIZATION AND HUMAN RESOURCE MANAGEMENT ISSUES
For the past decades, there have been profound changes in the international busi- ness scene. With geographic national borders being almost replaced by multi- national firms, and a heightened level of labor mobility around the globe, the implication of HRM to design and develop firms’ global business strategy, and to direct individuals (i.e. managers and professional staff alike) for working in different countries, is undoubtedly significant. Rosalie Tung (2016) has recently suggested that in the past three decades or so, globalization/regionalization, mi- gration and reverse migration (also referred to as “brain circulation”), the ascen- dancy of emerging markets, the demand for people with a global mindset, and the worldwide war for talent have brought about fundamental changes to the na- ture, magnitude, and raison d’etre for HRM in a global context. And, that these changes require HRM professionals and their organizations to adopt new lenses to fully understand the dynamics that impact global or international human resource management policies and practices.
Organizations are attempting to gain competitive advantage, which can be pro- vided by international expansion as these countries are new markets with large numbers of potential customers. For example, organizations that are producing below their capacity can use expansion to possibly increase sales and profits. Still other organizations are building production facilities in other countries as a means of capitalizing on those countries’ lower labor costs for relatively unskilled jobs.
Importing and exporting goods and services is the easiest way to “go global.” India has the world’s second-largest population (1.2 billion people) and a grow- ing middle class, so businesses are increasingly trying to expand their exports to that country (U.S. News & World Report, 2016). According to Snell and Morris (2019), Apple is one of those companies. Although the iPhone dominates the U.S. market, only 5 percent of smartphones in India are iPhone. Partnerships, mergers and takeovers are other ways companies are addressing globalization.
The reality is that most organizations now function in the global economy. For example, U.S. businesses are entering international markets at the same time that foreign companies are entering the U.S. market. Consider the reality that many American and foreign firms have partnered with Chinese firms to expand in China, which is the world’s most populous country, with 1.3 billion people. In turn, cross-border mergers continue to increase (Noe, Hollenbeck, Gerhart & Wright, 2019; Shen, 2016) as Chinese and other foreign companies are merging with American firms (Sheng, 2016). Consider also that it has been suggested that globalization is the dominant driving force in the world economy, reshaping soci- eties and politics as it changes lives (Cascio, 2019).
Globalization has also resulted in the blurring of national identities of prod- ucts. Many may think of Budweiser as an American beer, but its maker (Anheus- er-Busch) is owned by a Belgian company called InBev. Like many other compa- nies, Anheuser-Busch InBev has been purchasing or partnering with factories and
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Globalization and Human Resource Management • 33
brands in other countries such as China and Mexico to expand its sales. Similarly, BMW is a German brand, but the automaker builds cars in the United States, Chi- na and elsewhere (Choi & Schreiner, 2014; Duprey, 2013; Snell & Morris, 2019).
Giant multinational corporations such as Nestlé, Unilever, and AstraZeneca, began to lose their national identities as they integrated and coordinated product design, manufacturing, sales, and services on a worldwide basis. Further, many other U.S. firms, for example, generate a substantial portion of their sales and profits from other countries; companies such as Coca-Cola, Exxon/Mobil, and Microsoft derive a significant portion of total sales and profits from outside the United States (Dewhurst, Harris & Heywood, 2012). In 1982 GE, for example, generated 20 percent of its sales outside the United States and 70 percent in 2017 (Mann & Spegele, 2017). Many foreign organizations have taken advantage of growth opportunities in the United States. For example, Toyota, based in Japan, has grown its market share and increased its number of jobs in the United States and elsewhere in North America. Also, Toyota, Honda, Nissan, and other Japa- nese automobile manufacturers, electronic firms, and suppliers have maintained operations in the United States (Mathis, Jackson, Valentine, & Meglich, 2017).
Higginbottom (2017) has recently argued that these are indeed “uncertain times” (i.e., for global (and local) organizations and HRM professionals). The last several years have played host to seismic political events such as Brexit and the election of Donald Trump as the U.S. president in 2016. The acronym VUCA which stands for volatility, uncertainty, complexity and ambiguity is a trendy management term that perfectly encapsulates the conditions that many multina- tionals are operating under.
Brexit, for example, which stemmed from a slim majority of U.K. voters de- ciding in a June 23, 2016 referendum, that they no longer wanted to be governed largely from a bureaucracy located in Brussels, Belgium, continues to pose a seri- ous threat to the European Union. The EU and Britain are currently negotiating the terms of their separation which will have major implications for global busi- nesses and many observers predict that, at least in the short term, this exit will have a negative impact on the British economy (see, Amadeo, 2018a; Partington, 2018; Romei, 2018).
