Role of Cultural Factors in Shaping Human Resource Management

Topics: Human resource management, Geert Hofstede, Management Pages: 25 (6902 words) Published: June 21, 2013
Role of Cultural Factors in Shaping Human Resource Management Practices in the Multinational Corporations (MNCs) Operating in the Emerging Markets of South Asia

ABM Abdullah*, Stephen Boyle** and Carmen Joham***

A number of studies have been conducted for addressing the issues related to cultural diversity of employees working for Multinational Corporations (MNCs) operating in South Asian countries. However, only a few of the studies have looked into the issues related to how culture plays a role in shaping key Human Resource(HR) practices such as: compensation policy, job security, training and development, selection and recruitment, decentralization and teamwork, and information sharing in the South Asian context. In this paper, Hosftede’s (1980) culture dimensions are used as a lens to explore the relationship between critical HR practices and Bangladeshi employees. Identification of these critical practices should help the MNCs’ top management when managing their workforce in Bangladesh or other South Asian countries with a similar cultural orientation. Various propositions are made in this paper and it is suggested that they would be useful as a framework for future studies in similar settings.

Keywords: Cultural diversity, culture dimensions, workforce management


* ABM Abdullah, School of Management, City West Campus (EM -434), University of South Australia, PO Box – 2471, Adelaide, SA 5001, Australia Email:

** Stephen Boyle, School of Management, City West Campus (EM -235), University of South Australia, PO Box – 2471, Adelaide, SA 5001, Australia

*** Carmen Joham, School of Management, City West Campus (EM -427A), University of South Australia, PO Box – 2471, Adelaide, SA 5001, Australia

For the last two decades, tremendous developments in the field of telecommunications and transportation have made the world a “Global Village”. Globalization has opened the door of opportunities for an increasing number of corporations to cross their national boundaries and expand their market share, reduce costs and enhance efficiency. International movements of goods and services have grown exponentially to US$ 7.9 trillion (Ulrich & Brockbank, 2005). Trade Barriers have decreased significantly with the emergence of free trade zones in Asia, Europe and North America, which include the Asia Pacific Economic Forum (APEC), Association of Southeast Asian Nations (ASEAN), European Union (EU), North American Free Trade Agreement (NAFTA), and South Asian Association for Regional Cooperation (SAARC). At current growth rates, trade between nations will exceed total commerce withi n nations by 2015 (Daft, 1997).

Despite the reduction in trade barriers to entering new international markets there are stillnumerouscomplexities. International managers who manage Multinational Corporations (MNCs) today face an external environment that is fast changing, complex, uncertain and vigorously competitive (Thomas, 2002). Internationalization of a company‟s operations can result in developing a competitive advantage but only under certain conditions (Friedman, 2007). Gupta and Govindarajan (2001) for example, assert that a global presence will translate into competence only when a company integrates local market differences, realizes global economies of scale, and effectively transfers knowledge and technology across borders.However, issues involving managing diverse groups within the workforce are a complex and delicate matter. Without significant understanding of the different organizational and socio-economic and cultural factors, MNCs may not succeed in taking full advantage of available resources and opportunities. The major...

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