Friday, September 20, 2019
Management in Multinational Corporations (MNC)
Management in Multinational Corporations (MNC) The internationalization of business activity is getting progressively essential and inevitable. Of considerably significance is thus also theà globalization of human resource management. Nowadays, anà increasing and sufficient flexibility of companies is required as well asà the ability to react to local circumstances and market constraints. Hence, in order to facilitate the process of adaptation to global developments in corporations, and especially in the Human Resourceà vicinity, a set of typologies/approaches have been developed forà Multinational Corporations (MNCs). In that case, the approaches canà be used to illustrate the strategic intent and the situation in which theà MNC is in (Hollinshead, 2010, p. 51). Accordingly, there are differentà approaches to IHRM developed by several theorists. This paperà examines four approaches, which have been developed by the USà management theorist Howard Perlmutter (1969) and by Adler andà Ghadar, with the purpose of giving an understanding to the associationà between the multinational parent in the country of origin and theà subsidiary located elsewhere. The four approaches build up inà succession by describing a trend from immature dependency ofà international subsidiaries towards mature autonomy (Hollinshead,à 2010, p. 52). These approaches have b een created to be applied toà managing and staffing the subsidiaries and constitute certain policiesà and attitudes in managing IHRM activities. Consequently, are there anyà similarities and differences between these four approaches? Discussion MNCs have to decide upon one approach to apply to the HRà activities. The best suited one can be chosen among the ethnocentric,à polycentric, regiocentric, and geocentric style. Before starting toà outline parallels and divergences, it is key to get a short overview ofà the characteristics of each approach. Firstly, the ethnocentric (alsoà called domestic) method has its focus on home market and export. Approved management techniques from the country of origin areà transferred to the operating international subsidiaries. The aim here isà to maintain the power in the home country; thus a centralizedà managerial authority comes into its own (Hollinshead, 2010, p. 52). Another trait is that cultural factors do not play a role; the foreignà cultural influence is totally ignored. As outlined by Adler and Ghadarà ( 1990:242) it is more a matter of We allow you to buy our productsà (Hollinshead, 2010, p. 55). Consequently, routine activities are carriedà out by recruited host country nationals (HCNs), while parent countryà nationals (PCNs) are in charge for the management of the subsidiaryà (Hollinshead, 2010, p.52). In polycentric (international) orientedà companies, the focus lies on local receptiveness and transfer ofà learning. The overseas subsidiaries are regarded as self-governingà business units, which are controlled and managed by HCNs, whereasà key decision making (e.g. financial investments, etc.) is still in theà responsibility of PCNs (Hollinshead, 2010, p. 54). The third method isà the regiocentric (multinational) approach, where the focal point is theà global strategy, low cost and price competition. This metho d is aà midway between the culture and the global profile. In this case, theà most effective managers get recruited regardless of their country ofà origin, thus a sharing of common organizational culture across distinctà managerial alliances take place (Hollinshead, 2010, p.54-56). The lastà approach is a geocentric (global) cultural sensitive one, where it isà concentrated on both local responsiveness and global integration. Theà aim is to establish a collaboration between the parent and theà subsidiary and again between subsidiaries (Hollinshead, 2010, p. 54-56). Eventually, these approaches, when comparing, have similaritiesà and divergences in some aspects. In the polycentric method theà primary orientation is the market and in the geocentric one theà strategy, whereas ethnocentrism concentrates on the product orà service itself and regiocentrism on the price factor. Concerning theà worldwide strategy, the ethnocentric/domestic style permits overseasà clients to purchase the product/service, the polycentric/internationalà method focuses on augmenting the market internationally and toà transfer the technology abroad, whereas the regiocentric/ multinationalà approach is looking forward to supply, market and produce the goodsà globally, and the geocentric/global approach wants to gain globalà strategic competitive advantage. Regarding the staffing of expatriates,à the international and global approach assigns many expatriates, whileà the multinational method only allocates a few expatriates and theà domestic one even none. There are also differences referring to whomà gets send. In the domestic phase it doesnt matter whom to send toà the subsidiaries (regarding the fact that almost no one is sent abroad),à in contrast the international approach assembles OK performers and sales people, whilst multinational and global approaches give attentionà to employ only very good performers as well as high potential managers and top executives. The aspect purpose varies again for the four approaches: the domestic one rewards employees when expatriating, the international approach regards expatriates as people who get the job done, in the multinational method a project and career development takes place and in the global approach a career and organizational development occurs. Furthermore, with referenc e to the career impact, in the domestic attitude, there is a negative career impact for expatriates, the international method states a deficient impact for the domestic career, which is in contrast to the multinational and global approach, where it is considered important for the global career and essential for the executive suit. For the matter of a professional re-entry, the domestic and international approaches aggravate this particular process to a great extent, whereas in the multinational and global methods it is less difficult to re-entry even professionally easy. Another facet, is the training and development (language and cross-cultural management) one, where in the domestic method no training is required and in the international approach only a time-span of one week. Quite the opposite is necessary for theà multinational and global ones, where training and development can be carried out throughout the career. Expatriates need also certain necessary skills. The ethnocentr ic approach requires technical and managerial skills, the polycentric one the same as the ethnocentric one plus cultural adaptation, the multinational one plus recognizing cultural differences and the global one plus cross cultural interaction, influence and synergy (Scullion Linehan, 2005, p. 28-29).To conclude, the four approaches can be splitted up to two blocks of approaches, by putting the domestic and international ones together in one block and the multinational and global approaches to the other block, with regard to similarities and differences. Eventually, it gets obvious that the multinational and global approaches are best suited for the globalizing market, because a change in business activities require also a change in HR policies and activities to be most efficient and effective.
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