The Relative Importance of Cultural Differences and National Business Systems on the Development of Hrm. What Are the Implications of Your Conclusions for Convergence and Divergence?”

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Comparative and International Human Resource Management
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Module 26336

Assignment 2
15/04/2012

“Debate and critique the relative importance of cultural differences and national business systems on the development of HRM. What are the implications of your conclusions for convergence and divergence?”

Student number: 200915768
Turnitin ID: 16185553
Words (excluding references): 3512

Introduction

Speaking about the human resource management adaptation as a need for companies, Newman and Nollen (1996) argued, “When in Rome, do as Romans do”. This quote raises the question of the adaptation of HRM practices and theories to cross-cultural differences and national business system. The development of multinational corporations (MNCs), the foreign direct-investments (FDI) and the cross-border mergers and acquisitions (M&A) are increasing and can only success with a deep understanding of the local context and an integration of the home country value, practices and systems.

This process is directly linked to the development and choices made in the human resource systems and practices. To face the increasing local and global competition, companies have developed an increasing interest in HRM to understand the importance of the culture and national business system in running and managing a new business. Studying these elements will allow understand the factors influencing the HR practice and systems on a specific context. (Budhwar and Sparrow, 2002) A firm can hold three positions: a culturist (based on new country culture and national business system (NBS)), a universalist or a hybrid position (mixing both). Other studies demonstrated the importance of the national business environment (except culture) is also a main factor to take in account when developing HRM. Many studies showed a convergence in HR practices worldwide, even if divergences remain. (Brewster et al., 1996)

For example, European and Asian population are very different in terms of values, background and culture. From 1980 to 2005, China had attracted important foreign direct investments (US$ 560 billions) coming with new products, equipment, technology, and also new ways of management and HRM systems and practices (Child, 1991). Despite China is trying to convert its practices to western ones, limits arose on the setting of new HRM systems because of the strong NBS (Ding, Goodall and Warner 2000; Goodall and Warner 1997). European and American practices seem not appropriated in a Chinese context. Managing local employees and interactions between local and international employees is one of the main challenges for the foreign-invested companies in China. (Ahlstrom, Bruton and Chan (2001); Bjorkman and Lu (1999))

This assignment is analysing the degree of importance of both culture differences and NBS on the development of HR systems, practices and theories to establish if HRM are converging or diverging around the world. First, I will compare different countries HR systems and practices evaluating the degree of culture and NBS implications. Then, I will discuss on the pros and cons arguments for a convergence of HR practices and systems.

Comparison of Asian and European culture and NBS on prevailing HR systems

Schein (1992) define culture as common patterns of beliefs, assumptions, values and norms of behaviour of human groups (represented by societies, institutions and organizations). In other words, cultural variables that may influence HRM practices can happen at three levels. At the most basic level, organisational culture or internal work culture operating within the organizational, is construed as a pattern of shared managerial beliefs and assumptions that impacts HRM.

To evaluate the importance of the culture and NBS in the development of HR practices and systems, I will study the HR practices and systems differences between two different world continents: Asia and Western Europe with a...
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