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 i

P R A I S E F O R I N T E R N AT I O N A L
H U MA N R E S O U R C E
MA N A G E M E N T

This fifth edition of International Human Resource Management, authored by a team of top
scholars in the field, provides an excellent reference point for those who are interested in
learning about managing the workforce in the international context. The volume offers
great insights into theories, practices, and a comprehensive range of issues related to
people management.
Fang Lee Cooke, Distinguished Professor, Monash University, Australia

The fifth edition by Brewster, Houldsworth, Sparrow and Vernon is organised into three
parts – institutional and cultural context, aspects of comparative HRM, and IHRM. It is
not only up to date with the latest research evidence, but also analyses post-pandemic
scenarios, technological advancement, and geo-political dynamics. An understanding of
such context-specific developments is critical for managers to develop relevant
international HRM practices and policies for their firms to successfully operate globally.
This volume should be of great use for both academics and practitioners.
Pawan Budhwar, Professor, 50th Anniversary Professor of International HRM, Aston
Business School, UK

This book impressively connects International Human Resources Management (IHRM) to

different internal and external contexts. It shows us that a rapidly changing world and its
most significant events are shaping a variety of activities within the IHRM, such as
managing international mobility, international talent management and reflections on the
role of both globalisation and deglobalisation in shaping the future HRM. This book can
be a useful tool for both managers trying to solve problems that hinder their decision-
making and students, for whom, according to the latest approach to acquiring knowledge
and its use in practice, critical thinking and situational and pragmatic approach are
necessary. Taking all these aspects into account I am convinced that this book will be one
of the most important that everyone consciously dealing with IHRM will reach for.
Łukasz Haromszeki, Assistant Professor, Head of NZZL and IHRM PS, Wroclaw
University of Economics and Business, Poland
ii

A must-read for everyone interested in the various facets of International HRM. Fully
up to date and highly accessible with a unique combination of comprehensiveness and
detailed insight.
Wolfgang Mayrhofer, Professor, Chair of Interdiscplinary Institute of Management
and Organisational Behavior, WU Vienna, Austria

This book should be in the library collection of anyone interested in IHRM. It covers all
the most important issues that determine the shape of IHRM both from the outside and
from the inside in a very accessible way. There are very precious considerations regarding
economic, political, legal, social, cultural, geographical and technological factors. The
most important events that have recently taken place in the world are taken into account
as well, such as the Great Recession of 2007–2009, Brexit, the Covid-19 pandemic,
Russia’s aggression against Ukraine, and the development of industry 4.0. It is shown
how all these factors and events shape various policies, functions, activities or systems of
IHRM and to what extent they should be taken into account when making managerial
decisions in this regard. I rate the book very highly in terms of content. It is not only a
valuable collection of very up-to-date knowledge in the field of IHRM, from the
perspective of management practitioners, but also has special didactic and pedagogical
values. The authors took care of its attractiveness from the perspective of students
acquiring knowledge on academic courses and equipped it with numerous tools for
assimilating new knowledge and strengthening it in practice.
Marzena Stor, Professor, Strategic International Human Resources Management, Head
of Human Resources Management Department, Wroclaw University of Economics and
Business, Poland

This fifth edition is a superb revision by four outstanding academics. Together they have
substantially revised and updated all the chapters to reflect the new post-Covid era that
has ushered in tremendous changes for many crucial IHRM topics, including new shapes
and forms of globalisation, more uncertainly, new forms of global work, more demands
for global talent management, and greater needs for MNE resiliency and rapid adaptation
in our growing multi-stakeholder world. Overall, this revision is one that academics and
practitioners alike will want to have at their fingertips!
Randall S Schuler, Distinguished Professor, Emeritus of Strategic International Human
Resource Management, Rutgers University, USA; Visiting Scholar, University of Lucerne,
Switzerland
 iii

Fifth Edition

International
Human Resource
Management

Chris Brewster, Elizabeth Houldsworth,

Paul Sparrow and Guy Vernon
iv

Publisher’s note
Every possible effort has been made to ensure that the information contained in this book is accurate
at the time of going to press, and the publishers and authors cannot accept responsibility for any errors
or omissions, however caused. No responsibility for loss or damage occasioned to any person acting,
or refraining from action, as a result of the material in this publication can be accepted by the editor,
the publisher or the author.

First published in Great Britain and the United States in 2023 by Kogan Page Limited

Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted
under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or
transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the
case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries
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addresses:

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© Kogan Page, 2023

The right of Chris Brewster, Elizabeth Houldsworth, Paul Sparrow and Guy Vernon to be identified as the
authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act
1988.

ISBNs

Hardback 978 1 3986 0355 4

Paperback 978 1 3986 0353 0
Ebook 978 1 3986 0354 7

British Library Cataloguing-in-Publication Data

A CIP record for this book is available from the British Library.

Library of Congress Cataloging-in-Publication Data

Names: Brewster, Christopher, author. | Houldsworth, Elizabeth, author. |

Sparrow, Paul, author. | Vernon, Guy, author.
Title: International human resource management / Christopher Brewster,
Elizabeth Houldsworth, Paul Sparrow, Guy Vernon.
Description: Fifth Edition. | New York, NY : Kogan Page Inc, [2023] |
Includes bibliographical references and index.
Identifiers: LCCN 2022054390 (print) | LCCN 2022054391 (ebook) | ISBN
9781398603530 (paperback) | ISBN 9781398603554 (hardback) | ISBN
9781398603547 (ebook)
Subjects: LCSH: International business enterprises–Personnel management. |
Personnel management.
Classification: LCC HF5549.5.E45 B734 2023 (print) | LCC HF5549.5.E45
(ebook) | DDC 658.3–dc23/eng/20221202
LC record available at https://lccn.loc.gov/2022054390
LC ebook record available at https://lccn.loc.gov/2022054391

Typeset by Integra Software Services, Pondicherry

Print production managed by Jellyfish
Printed and bound by CPI Group (UK) Ltd, Croydon CR0 4YY
 v

CO N T E N T S

List of figures and tables x

Walkthrough of textbook features xii
Online resources xv
Acknowledgements xvi

01 International HRM: an introduction 1

Introduction 2
The study of organisations that operate internationally 3
The changing context of globalisation 5
What is international human resource management? 8
Why study international human resource management? 11
Universalist versus contextual view 12
The value of the different paradigms 14
Convergence in HRM 15
Divergence in HRM 16
How is the field of international HRM evolving? 18
Structuring the field into three components – an outline of the book 20
What is new about this edition? 23

PA R T O N E Cross-national human resource management

02 Differing national contexts 31

Introduction: culture and institutions 31
Institutional approaches to comparative HRM 34
Comparative capitalisms 36
Business systems theory 37
Regulationalism 41
What do these theories mean for human resource management? 43
The USA and the rest of the world 44
Conclusion 48

03 The impact of national culture 56

Introduction 56
What is culture? 58
Cross-national comparisons 60
Hall’s research 62
Hofstede’s research 63
Schwartz’s research 68
vi Contents

The GLOBE project 69

Critical perspectives on work conducted at the national level: moving
towards a deeper understanding 71
Intercultural interactions: the impact of culture on organisational behaviour
and HRM 76
The multiple cultures perspective: multiculturalism and cultural
identities 78
The notion of cultural intelligence 82

PA R T T WO Comparative human resource management

04 Employee relations and collective voice 93

Introduction 93
What are unions? A cross-national comparative overview 95
Comparative structures of governance through joint regulation 99
Direct statutory regulation of the employment relationship 110
Unions, works councils and business performance 113
What influences comparative patterns of employee relations structures? 114
Best practice in employee relations 115

05 Non-standard employment: flexibility, precarity and work–life

balance 122
Introduction 123
Employer-centred flexibility 124
Employee-centred flexibility: work–life balance 131
Factors underlying comparative variation in flexibility and work–life
balance 137
International best practice in flexibility and work–life balance 148

06 Work organisation: direct communication and autonomy 155

Introduction 156
Taylorism and Fordism as a solution... and a problem 156
Direct communication: initiatives and rationales 158
Direct downward communication 159
Upward direct communication 160
Lateral communication 162
Reform beyond communication: employee discretion and autonomy 163
All teams against Taylorism? 163
Cross-national comparative employee autonomy 164
Emergent technologies and work organisation 168
Influences on comparative patterns of work organisation 169
One best way internationally in work organisation? 172
 Contents vii

07 Extrinsic reward 178

Introduction 178
Reward and bases of pay 179
Attaching pay to post via job classification and evaluation: internal labour
markets 181
The incidence of pay for performance 184
The significance to employees of pay for performance 189
Culture and reward systems 189
Is cultural explanation of reward enough? 190
The state, unions, employers’ associations and collective bargaining 192
International evidence on best practice in reward 202
Space for strategy 205

08 Strategic workforce planning, recruitment and selection 211

Introduction 212
Strategic workforce planning 214
Recruitment methods 215
Recruitment in its institutional context 230
The scope of labour legislation 232
Internal and external labour markets 234
Putting recruitment and selection into cultural context 235
Conclusions 238

09 Performance management 243

Introduction 243
Definitions and background to performance management 245
Comparative literature on performance management 248
Context and performance management 249
National differences: culture 250
National differences: institutions 255
Conclusions 259

10 Training and development 265

Introduction 265
Training and development in context 267
The role of the state national systems: varieties of capitalism, education and
initial vocational education and training 271
Growth in the higher education market 274
Vocational education and training 275
What about the future of VET? 278
Considering cost-benefits of training 278
Summary 287
viii Contents

11 Global HRM departments 295

Introduction 296
Common ambitions for the HRM department? 296
Living up to new ambitions? 300
The strategic integration of HRM departments 301
The role of line management in HRM 305
Influences on cross-national comparative variations in the role of HRM
departments 307
Global HRM departments in MNCs 310
Towards a global HRM delivery model 312
The impact of shared services and the effects of electronic HRM 314
The pressure to outsource some transactional activities 314

PA R T T H R E E International human resource

management

12 International HRM: theory and practice 329

Introduction 329
Different ways of thinking about economic globalisation 331
The dominant global firm or global factory thesis 333
The counter thesis: MNEs and the surrounding business ecology 335
The key theories used to understand global businesses 337
Different levels of analysis for thinking about globalisation 353

13 Managing international mobility 361

Introduction 362
Different forms of international work experience 363
Human resource management of assigned expatriation 368
Human resource management of self-initiated expatriation 379
HRM of short-term expatriates, international business travellers and
international commuters 380
Human resource management of migrants and refugees 380
Managing the mix 382
The individual perspective: careers 383
Looking forward 384

14 International talent management 392

Introduction 393
Definition and philosophies 394
Talent management as a categorisation of people 399
Talent management as the presence of key HRM processes 400
Talent management as the identification of pivotal positions 403
Talent management as strategic pools of people 405
Talent management as global employer branding 407
 Contents ix

Understanding the corporate roles involved in managing talent

management 413
Managing the international labour force: from micro to macro talent
management 416

15 Globalising HRM 429

Introduction 430
Balancing global integration and local responsiveness 432
Global networking and teamwork 437
Global performance management 447
Looking to the future 449

Index 459
x

L I S T O F F I G U R E S A N D TA B L E S

Figures
FIGURE 4.1 Coverage of collective bargaining/union recognition
by organisations 100
FIGURE 4.2 Unionisation rates (density of union membership) across
organisations within countries 102
FIGURE 4.3 The incidence of works councils/joint consultative
­committees across enterprises 105
FIGURE 4.4 The extent to which managers communicate with ­employees
via the works council / joint consultative committee 106
FIGURE 4.5 Personnel/HRM directors’ views of the extent to which
unions influence their organisations 108
FIGURE 4.6 The ‘bite’ of legal pay minima: statutory minimum
wage as a percentage of median full-time employees
(2013–2015) 110
FIGURE 5.1 Organisations with more than 5 per cent of employees on
fixed-term contracts (compared with temporary or causal
contracts) 127
FIGURE 5.2 Organisations in which more than 10 per cent of employees
work part time 131
FIGURE 5.3 Organisations with more than half of their employees
on annual hours contracts 132
FIGURE 5.4 Organisations with more than half of their employees
on flexi-time 134
FIGURE 6.1 An overview of Taylorism 157
FIGURE 6.2 Strategic and financial briefing of different groups
of ­employees 161
FIGURE 6.3 A categorisation of models of the organisation of work 165
FIGURE 7.1 Gross earnings inequality, 2018–2020 183
FIGURE 7.2 Proportion of organisations using individualised incentives
(PRP) for clerical employees 184
FIGURE 7.3 The use of team- or department-based pay for clerical
­employees 185
FIGURE 7.4 The use of employee share ownership schemes for clerical
employees 186
FIGURE 7.5 The use of profit-sharing for clerical employees 187
FIGURE 8.1 Recruitment practices for managers in eight countries 216
FIGURE 8.2 Selection practices for managers in eight countries 227
FIGURE 9.1 Elements of the performance management process 246
FIGURE 9.2 Performance management process in context 250
 List of figures and tables xi

FIGURE 10.1 The impact of national and organisational characteristics on

training and development 270
FIGURE 10.2 Comparative distribution of average training days for
different categories of employees across six countries 279
FIGURE 11.1 Proportion of organisations with HRM on the board in
eight countries 302
FIGURE 11.2 Structure of a technology-enabled Global HRM
­department 319
FIGURE 13.1 The global assignment cycle 371
FIGURE 14.1 The array of core talent management practices that might
be managed on a global basis 402

Tables
TABLE 2.1 National business system archetypes 40
TABLE 3.1 Hofstede rankings for power distance, uncertainty
avoidance, individualism-collectivism and masculinity-
femininity 64
TABLE 5.1 Average annual hours, OECD countries, 2006 136
TABLE 6.1 All teams against Taylorism? 164
TABLE 9.1 Issues in the management of performance within the joint
venture 254
TABLE 10.1 Likely impact of type of economy upon company training
and development 271
xii

WA L K T H RO U G H
O F T E X T B O O K F E AT U R E S

To assist the reader, each chapter in the book has a number of recurring features,
which are listed below.

Learning outcomes

Learning outcomes
When they have read this chapter, students will be able to:

• be able to identify the distinct bases or aspects of extrinsic reward;

• appreciate that, despite much commonality in management rhetoric on pay
across countries, there remain very substantial differences in pay practice;
• be able to elaborate in detail cross-national variations in pay practice;
• be able to evaluate the extent to which reward practice is shaped by cross-
national variations in the cultural and institutional context;
• have a foundation for reflecting on international reward strategy in multinationals.

Key frameworks

KEY FRAMEWORKS
Definitions of HRM

IHRM encompasses:

• ‘the worldwide management of people in the multinational enterprise’ (Poole,

1990, p1);
• ‘how MNCs manage their geographically dispersed workforce in order to
leverage their HR resources for both local and global competitive advantage’
(Scullion, 2005, p5);
 Walkthrough of textbook features xiii

Case studies

CASE STUDY

Transfer of mass production activities to China

From the mid-1990s, and with gathering the production operations, with more complex and
momentum, manufacturing companies in Japan higher value-added activities, as well as most –
and South Korea have transferred substantial if not all – research and development activity
elements of their activities to China, sometimes maintained in the home country. The organisation
to wholly owned facilities, but more often via of work in the Chinese production operations was
joint ventures with local companies or by some typically very much more Taylorist than that in the
form of close subcontracting arrangement. production operations in the home country; the
Reflective activities
These developments are particularly apparent tasks more finely broken down and the employees
in clothing manufacture and in electronics, for more closely monitored in China.
example. Typically, the activity transferred has SOURCE: Gamble, Morris and Wilkinson, 2004
centred upon the more standardised element of

Reflective activity

Reflective Activity

• Why would adopting an integrated approach • Why might it be harmful?

to managing people be beneficial to an
Provide examples for each perspective.
internationally operating organisation?
xiv Walkthrough of textbook features

Learning questions

Learning Questions

1 Argue for or against the statement that we are 3 What is the role of individual national
seeing an increasing convergence of HRM governments in HRM policies? What arguments
practices within Europe and across the world. would you offer for the views that the role of the
2 In the light of the arguments produced in this state is increasing or decreasing?

Explore further
chapter, how do you assess the notion of
‘best practice’ in HRM?

Key learning points

KEY LEARNING POINTS

• Much of our initial understanding about international HRM was traditionally
based on the study of multinational corporations (MNCs).
• Definitions of IHRM have concentrated on examining the HRM issues,
problems, strategies, policies and practices that firms pursue in relation to the
internationalisation of their business.
• The additional complexities of managing an international workforce in
organisations that are internationalising call for a different mindset and different
skills for practitioners.

Explore Further

The following websites provide useful information: • The International Labour Organization publications
and reports can be found at: www.ilo.org/global/
• The United Nations Conference on Trade and about-the-ilo/lang--en/index.htm (archived at
Development (UNCTAD) website can provide https://perma.cc/9WY7-C3HS)
updated information on transnational organisations:
• CIPD International Research: www.cipd.co.uk/
http://unctad.org/en/pages/home.aspx (archived at
global/ (archived at https://perma.cc/5YWV-53RH)
https://perma.cc/K7H7-4DTZ)
• The World Federation of People Management
• OECD guidelines for multinational
Associations website: www.wfpma.com (archived
enterprises: www.oecd.org/daf/inv/mne/
at https://perma.cc/9J3J-6KTD)
oecdguidelinesformultinationalenterprises.htm
(archived at https://perma.cc/NB77-RQ2G)
 xv

O N L I N E R E S O U RC E S

This textbook is supplemented with:

• PowerPoint slides – design your programme around these ready-made
lectures.
• Lecturer’s guide – including guidance on the activities and questions in the
text.
• Additional case studies – these can be used as a classroom activity, for
personal reflection and individual learning, or as the basis for assignments.

These can be found at koganpage.com/ihrm

xvi

A C K N OW L E D G E M E N T S

The authors would like to thank Dr Karina Pavlisa for her help in the creation of the
Cranet tables used in this edition.

Cranet is a comparative HRM research network, now covering more than 40 coun-
tries, that has existed for more than 30 years. Responses to identical (translated)
questionnaires are collected every five years or so from the senior HRM specialists
of organisations with over 100 employees in samples representative of the indus-
trial mix of each country (or full-population surveys in the smaller countries). For
details see:

Parry, E., Farndale, E., Brewster, C. and Morley, M. (2020) Balancing rigour and
relevance: the case for methodological pragmatism in conducting large scale
multi-country comparative management studies, British Journal of Management,
32 (2): 257–272.

and https://cranet.la.psu.edu
 1

01
International HRM:
an introduction

LEARNING OUTCOMES

When they have read this chapter, students will:

• appreciate the growing internationalisation of the world in which human resource

management (HRM) is conducted;
• understand the additional complexity of HRM in an international context;
• understand the shape of globalisation in the near future;
• be able to describe the strengths and weaknesses of the universalist and
contextualist paradigms;
• be able to describe the key features of the three main approaches to international
human resource management (IHRM);
• be able to identify some of the key HRM challenges facing organisations working
internationally;
• know the format of the rest of the book.
2 International Human Resource Management

Introduction
This chapter is a general introduction to this new and substantially revised edition
of this book – it outlines the main objectives of the text and the rationale behind its
structure. We begin by briefly noting the changing context of international business
and the implications for human resource management (HRM). In explaining the
nature of international HRM (IHRM) we outline the importance of countries and
present the three main sections of the book: the institutional and cultural context;
aspects of comparative HRM; and international HRM – the way that internationally
operating organisations cope with working across national borders. At the end of
this chapter, we provide a guide to the other chapters.
This is now the fifth edition of the book. All the chapters in this edition have
been rewritten to a greater or lesser extent, some just to update our evidence and
some substantially, and are organised somewhat differently from previous editions.
In particular, throughout the book, in the immediate aftermath of the Covid-19
pandemic, we pay considerably more attention to the way that technology and crises
have changed the way that work, including international work, is being done. Until
recently, HRM was focused almost entirely on ‘employment’. The human resources
that scholars and specialists were concerned with were those employed by the organ-
isation, but increasingly work is now being done without employment and we need
to adapt our focus. Equally, the pandemic has emphasised the importance of the way
that organisations adapt, and adapt their HRM, to crises. The functional chapters in
Part Two of the book have been reorganised and updated to pick up developments
in both literature and practice since the previous edition. Part Three of the book on
international HRM has undergone a significant set of revisions.
Despite the restructuring of the book, and although every chapter has been rewrit-
ten, the aim remains the same: to help you explore the meaning and implications of
the concepts of contextual, comparative and international human resource manage-
ment. We do not assume that there is only one way of defining or understanding
the nature of HRM. On the contrary, we believe that HRM varies according to the
country in which it is conducted: the country that provides the institutional and
cultural environment for HRM. We address the issues raised by the fact that HRM
is different from country to country. The book will give you some flavour of the way
that HRM – and particularly what is seen as ‘good’ HRM – is defined differently
in different national cultures and is presented and operates differently in different
national institutional environments; some flavour too of the ways in which inter-
national organisations attempt to deal with the issues that these differences create.
These international organisations operate across country boundaries. Some,
though not all, differentiate their operations so that they are able to adapt to the
local environment and can take advantage of specific factors (such as cheaper labour
costs) that the country offers. Others try to integrate major elements of their HRM
policies so that they are coherent across the world: even so, they struggle with
the problems of establishing consistent policies when the local culture or institu-
tions make that difficult or impossible – in most cases the result is some degree of
hybridisation.
We believe that the text will be of value to anyone involved in, or interested in,
comparative and international human resource management.
 International HRM: an introduction 3

Reflective Activity

• Why would adopting an integrated approach • Why might it be harmful?

to managing people be beneficial to an
Provide examples for each perspective.
internationally operating organisation?

The introductory paragraphs will already have raised issues for many of you. What
is the culture of Spain, with its Castilians, Catalans, Andalucians and Basques, for
example? Or of Singapore, with its Malay, Indian and Chinese populations? What
is the institutional and labour market position of the European Union, where many
laws apply across national boundaries and there are few institutional limitations to
cross-border labour markets? Do our findings apply to emerging-market countries
and underdeveloped countries in the same way that they apply to the rich countries of
the world? Inevitably, basing the text on national differences blurs important ‘within
nation’ and ‘beyond country’ issues. These are critical matters – but outside the scope
of this text. We have chosen here to concentrate on the national differences partly
because they are so powerful (institutional differences like employment laws, labour
markets, trade unions and so on tend to operate at national level, even where the
cultural boundaries are blurred) and partly as an introduction to an often-neglected
element of human resource management – the fact that it does vary considerably
around the world. Our consideration of these issues is focused on Europe, but we
will take the opportunity to draw on examples from other continents whenever that
is appropriate.
The number of books and articles on international and comparative human
resource management has expanded almost exponentially since the first edition of
this text two decades ago. Whereas in many organisations IHRM used to be the
concern of a rather separate department arranging terms and conditions for expatri-
ate employees, it is increasingly becoming a more significant part of organisations’
attempts to manage their entire workforce across the world in the most cost-effective
manner possible. As such, it is becoming a key contributor to organisational success.
Scholars are now well aware of how international the world has become. This
applies to our technology, our travel, our economies, our communications and, as has
been brought home to us vividly while we have been writing this text, to our health.
It is not always obvious that our understanding has become equally international.

The study of organisations that operate

internationally
Traditionally, much of our understanding of international HRM has been based
on the study of multinational corporations (MNCs). A multinational corporation
is defined as an enterprise that operates in several countries but is managed from
4 International Human Resource Management

one home country. MNCs may be of four forms: a decentralised corporation that
has a strong home-country presence; a global and centralised corporation that can
acquire a cost advantage through centralised production; an international company
that builds on the parent company’s technology or research and development; or
a transnational enterprise that combines all three of these approaches. In general,
an MNC may not have coordinated product offerings in each country because it is
more focused on adapting its products and services to each individual local market.
Even some famously international brands (McDonald’s, Coca Cola) vary in different
markets. Some people prefer to use the term multinational enterprise (MNE) because
‘corporation’ implies a business organisation, whereas many other forms of organ-
isation, such as non-governmental bodies or charities, might be deemed to have
multinational characteristics. The term transnational corporation (TNC) is typically
used to describe much more complex organisations that have invested in foreign
operations, have a central corporate facility, but have decision-making, research and
development and marketing powers in a variety of foreign markets. Although we
will discuss them where appropriate, we do not here focus on governments’ interna-
tional operations (Leisink et al, 2016), intergovernmental organisations (Brewster,
Boselie and Purpura, 2016) or international charities or religious groups (Brewster
and Lee, 2006), and we shall generally use the abbreviation MNCs throughout the
book for the sake of convenience and simplicity.
MNCs are presented as being economically dominant – the world’s 1000 largest
companies produce 80 per cent of the world’s industrial output. They are seen as
being crucial to the vitality, health and level of innovation of a geographic location,
notably because they help to connect it to other and distant international sources of
complementary specialised knowledge and expertise. In the process, MNCs build
and discover new opportunities for themselves as well as for others (Cantwell, 2014).
Each year, the United Nations Conference on Trade and Development (UNCTAD)
issues a World Investment Report focused on trends in foreign direct investment
(FDI) worldwide and at the regional and country levels. As of publication, the latest
data (UNCTAD, 2021) shows that global flows of foreign direct investment were
hit severely by the Covid-19 pandemic. They fell by 35 per cent to US $1 trillion
in 2020 – 20 per cent below the low point reached after the global financial crisis
a decade ago. All elements of foreign direct investment fell: new project activity,
cross-border mergers and acquisitions, and equity-investment flows. The decline was
skewed towards the developed economies – a 58 per cent fall there, rising to 80 per
cent in Europe. Developing countries, particularly in Asia, therefore took a larger
slice of what was a smaller pie. The fall was short – concentrated on the first half of
2020. The rebound was sharp. The context, however, has changed.
In 2003, economists at Goldman Sachs bracketed Brazil with Russia, India and
China as the BRIC economies that would come to dominate the world. Developing
economies extended their lead in global inflows of FDI, with China becoming the
world’s largest recipient. Developing economies are now among the top ten FDI
recipients in the world. However, interpreting trends in international HRM that
might result from shifts in economic power is never easy and complex factors are
always at play. Although the Chinese economy has continued to grow, though less
rapidly, and so has the Indian economy, the performance of emerging markets is still
very volatile. Brazil seems to have stalled and at the time of writing it is difficult to
know what is happening in Russia, where a combination of sanctions and falling
oil prices seem to be leading to a recession there. Doubts begin to be expressed even
 International HRM: an introduction 5

about growth in China, with stock market crashes and worries about unsustainable
levels of debt featuring in the business press.
We see a number of traditional regional strategies, often reflecting past cultural
and institutional linkages. These create new patterns of mobility and trade. Much
is also spoken about relative levels of productivity around the world driving invest-
ment and growth and the role of labour arbitrage, with MNCs being able to take
advantage of lower wages abroad. In reality, MNCs consider many factors when
they think about locating activities in various markets. The behaviour of MNCs is
driven by issues such as complex supply chains at risk of disruption, energy prices
and inventory costs associated with importing. We also witness different responses
internationally within the labour force. These shifts are not always as easy or rapid
as is made out in the business press. We have witnessed the global transfer of work –
either in terms of the creation of new jobs or through the global sourcing of certain
parts of an individual’s or unit’s work. This has already had a major impact on the
type of organisations and nature of work that remain viable in different parts of the
world. In the first wave of globalisation two decades ago, low-level manufacturing
work began to transfer to low-cost locations. In the second wave, simple service
work, such as credit card processing, began to relocate. In the third wave, more high-
er-skill white-collar work has been transferred. However, the nature of globalisation
to date has been a complex process and it seems that it is going to become even more
nuanced.

The changing context of globalisation

When we wrote the previous edition of this book, we were able to discuss with confi-
dence the continuing growth of globalisation, though we did point to high rates of
economic change, increasing complexity and greater uncertainty. Since then, devel-
opments have reminded us that, while increasing globalisation was taken for granted
in earlier editions of this book, we should no longer assume this is the case. We build
on the topic of globalisation in different ways throughout the book. In Chapter 12,
we explain the different ways of thinking about economic globalisation in advance
of laying out key elements of international HRM practice. Then in Chapter 15, as
we summarise the challenges of globalising HRM, we make some final observations
on the implications that our current global environment has for international HRM.
At this point, however, it seems appropriate to briefly lay out the challenges of
globalisation and the challenges to globalisation in today’s world. Global business
has always been fraught with huge challenges. What the business press claims is
tomorrow’s certainty all too often becomes yesterday’s fad and foolish belief within
very short order. The recent period of globalisation took off in the 1990s. By 2015,
annual global flows of foreign direct investment had risen by a factor of six. From
1985 to 2015, Chinese exports to the USA increased by a factor of 125. The level of
integration, despite recent trends, remains deep. By 2022, investors from democratic
countries held over a third of the stock of FDI into autocracies. These autocra-
cies had huge foreign reserves worth more than US $7 trillion often denominated
in dollars and euros. American MNCs employed 3 million people beyond liberal
market democracies, a rise of 90 per cent within a decade. Across all countries, US
total foreign employment has increased by a third in the same period.
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