International Human Resource Management

Conceptual Overview

To understand what is meant by IHRM, it is useful to examine the field from a historical perspective. Although the coining and spread of the term international human resource management only happened around 1990, the history of what is today viewed as IHRM covers a time span of more than 30 years. Much of the early work focused on staffing decisions in MNCs and how to manage expatriate managers from the corporation's home country. Howard Perlmutter's seminal article “The Tortuous Evolution of the Multinational Corporation,” which was published in French in 1965 and in English in 1969, is arguably the first influential article published within IHRM. Perlmutter distinguishes among three different attitudes of MNC headquarters executives: ethnocentric (home country oriented), polycentric (host country oriented) and geocentric (world oriented). A fourth category was later added: regiocentric. In MNCs in which headquarters has an ethnocentric attitude, managers from the home country are seen as superior to those of the other countries in which the MNC has operations; therefore, top management positions in foreign subsidiaries are usually staffed with MNC home country nationals. This framework of MNC headquarters orientations has become a standard way to classify IHRM strategies, in particular staffing policies and practices, and the terms ethnocentric, polycentric, and geocentric are today widely used.

Research has identified different staffing patterns among MNCs from different regions, with Japanese MNCs consistently being most likely to use home country nationals in key positions overseas. U.S. MNCs seem less likely than European firms to staff foreign units with home country nationals. Other factors found to influence staffing decisions are the subsidiary host country, the age of the subsidiary, and the international strategy and experience of the MNC. Development of foreign country nationals through transfers to head-quarters—labeled inpatriation—appears to have increased in importance in many MNCs.

Subsequent to Perlmutter's important contributions, two streams of work soon began to emerge: one focusing on the management of expatriates (persons sent abroad on long-term assignments), where the emphasis was on the adjustment of the expatriate; the second on the roles that the transfer of people across units played in the management of the MNC. The focus in expatriate management was for a long time on how to select, prepare, train, and support expatriate managers and their families so that they would adjust well to conditions abroad. Most of this research asserted that lack of general, interaction, and/or work adjustment on the part of the expatriate increases the likelihood that he or she fails to complete the international assignment. Therefore, rather than select persons because of their technical skills or proven performance in the home country, they should be chosen based on their ability to adjust, with cultural intelligence recently having been suggested as an important predictor. Several studies also indicate that a well-adjusted spouse increases the likelihood that the expatriate will be well adjusted and complete his or her assignment abroad.

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