In 21st century, we are seeing a big leap in the globalization of business and with this, the ability of management of an organization to work effectively across the cultural and national borders is playing a critical role in business success. Staffing management of multinational companies is a complex issue to the international human resource management (IHRM). With this stated, the statement, “Culture is a major variable for international management” is true in every sense.
Keywords: expatriate, ethnocentric, polycentric, regiocentric, geocentric
Culture generally refers to patterns of human activity and the symbolic structures that give such activity significance. Different definitions of “culture” reflect different theoretical orientations for understanding or criteria for valuing human activity. It refers to an ideal of individual human refinement, of "the best that has been thought and said in the world" (Wikipedia.org). In management, culture has a slightly different meaning. It can be explained as a set of policies, values, beliefs, and attitudes learnt and shared by the organizations member (Naylor, 2004). For this project, I will evaluate at how different kinds of management cultures in managing subsidiaries, which are located all over the world, can influence the development and growth of an organization in the modern era of globalization. International Business
In the past, when people talked about international business, it only means that they exported their products to other countries. Nowadays, because of the development of free trade, any countries reduce their trade barriers in order to attract foreign companies in, to invest to and drive their domestic economy. Whenever people think about international business, it is no longer only trading from one place to another – they are thinking in terms of globalization. This means not only having investments, offices and businesses in their own country, but having similarly offices in different parts of the world as well (Citehr.com). In today’s global world, most big companies have their offices or business in many different countries. Multinational enterprises often have their headquarters at their home countries and all their other offices, which may include offices in the same country but not at the headquarters and those located in other countries, need to report to them on a regular basis. Because culture is so different from one person to another and from one country to another, when an organization decides to open an office in a foreign country, they need to decide how they are going to manage their employees in the foreign country. Professionals sent a by their companies to work abroad and has been working and living in a foreign country is called an “expatriate” (Wikipedia.org). Company managers need to consider what kind of policies they should use within their subsidiaries. There are four main types of staffing for global operations: Ethnocentric, Polycentric, Regiocentric, and Geocentric approach. Ethnocentric Approach
The definition of ethnocentric is “characterized by or based on the attitude that one’s own group is superior”(Merriam-webster.com, n.d.). Companies following the ethnocentric approach assume the home country approach is best and that employees from other parts of the world can and should follow its policies (Treven, 2001). These types of enterprises make most of their decisions at their headquarters and then give instructions to their subsidiaries to follow. Managers apply the same standards and policies that are use in their home country throughout their branches. Most (if not all) of the positions in the subsidiaries are recruited from their home countries (Citehr.com) Advantages of ethnocentric approach are: ease of control, as decisions are made by headquarters, they only need to monitor...