This is MBA – International Human Resource Management course.This textbook you may need:Dowling, P. J., Festing, M., & Engle, Sr., A.D. (2013). International human resource management: Managing people in a multinational context (6th ed.). Mason, OH: Thomson/South-Western. ISBN-: 978-1-480-3209-1Deliver:1. Read the case “JUST ANOTHER MOVE TO CHINA? THE IMPACT OF INTERNATIONAL ASSIGNMENTS ON EXPATRIATE FAMILIES”2. Answer the 4 questions under the case. 3. 4 pages required. APA format. Case and questions are in the attachment below, please download and check it. Questions analysis must Be specific. Please write like questions and answers format.1. question: …..   answer: …..2. question: …..    answer: ……3. ……….4. ……This is MBA-International Human Resource Management course. Use ebook and ppt for references. Outside reference is ok, tooThis is graduate students level paper. Please write your answers professional. Be specific. Do not write too general. Thank you. Original work. NO Plagiarism. It must be upload to the Turnitin website.If you don’t follow the rules, I will withdraw it.This is MBA – International Human Resource Management course.
This textbook you may need:
Dowling, P. J., Festing, M., & Engle, Sr., A.D. (2013). International human
resource management: Managing people in a multinational context (6th
ed.). Mason, OH: Thomson/South-Western. ISBN-: 978-1-480-3209-1
Case Analysis
1 In what ways does the MacDougall family represent a rare and valuable resource to a
multinational firm?
2 Reflecting on Lisa’s dual-career trailing spouse journey, how would you have approached
the situation differently?
3 What problems do you foresee for Amelia and Emily if the MacDougall family undertakes another move after Shanghai?
4 Although not discussed, what impact do you think international mobility has had on the
MacDougall’s marriage?
By Yvonne McNulty
Lisa MacDougall looked at her desk calendar and real- ized it was the first year anniversary of her
employment at John Campbell College. ‘How ironic’, she thought, ‘that I might resign today, exactly one year after I started here’. As her colleagues dropped by her office through- out the morning to discuss a new research project that she was leading, Lisa felt both elated and sad. She was excited to be embarking on a new chapter in her career, but upset to be leaving behind her first fulltime job in nearly a decade. To ease her mind, she took a morning tea break at the campus cafeteria
and ordered a latte.
Then her cell phone beeped to alert an incoming message from her husband, Lachlan. As she nervously picked up the phone and read the four-word message – ‘it’s done, go ahead’ – she realized in
that instant that there was no going back now: Lachlan had just signed a two-year contract with his
employer to move their family to China, and it was happening in six weeks’ time.
Taking a deep breath as she walked back to her office, the first task was to write a resignation letter,
after which Lisa emailed her boss to request an immediate meeting to tell him she was leaving. Although he took the news in his stride, Lisa knew her boss was upset to be losing her after only a
year. The college was building up its research agenda and Lisa, along with a couple of other early
career researchers, had been employed as an integral part of that plan. Lisa knew that her leaving
would likely disrupt those plans a little but, she reminded herself, if her boss had ever really understood what made her tick, he perhaps could have seen it coming.
Although it had been roughly six months in the plan- ning to move to China, the decision to go had
not been an easy one to make for the MacDougalls. This sur- prised Lachlan and Lisa given that
they were seasoned expatriates who had moved internationally, as a mar- ried couple, at least twice
before – first, from Sydney to Chicago and then Philadelphia, and six years later a second international move to Singapore, their current
home. After 12 straight years ‘on the road’ and two successful international moves on two continents under their belt, the anticipation of a third move – to China no less – seemed simple enough,
and in many ways it was. Good for Lachlan’s career? Check – yes. Good for their two young
daughters? Check – yes. A wonderful, perhaps life-changing cultural experience for the whole family? Check – definitely, yes. Yet in many ways this move was anything but simple; there were so
many issues to consider, and so many impor- tant decisions to be made that would likely impact
their family for years to come, if not for the rest of their lives.
Foremost in Lisa’s mind was whether she could work in China. The mere thought of being a stayat- home ‘trailing spouse’ again was out of the question. Another concern was going back to the
transience of living in rented housing again; needing permission from a landlord to put up a picture
or paint the walls would be hard to get used to after having lived in their own home in Singapore for
the past four years. Then there was the children’s education and the change to a new school. This
would be the MacDougall’s first interna- tional move with school-aged children and Lisa had no
idea whether international schools in China offered the types of music and sports programs her children enjoyed. As she mulled over the China decision, Lisa also reflected on what had drawn their
family into the expatriate life to begin with. Doing so, she hoped, might help her to understand how
their past might now be drawing them to a new adventure in Shanghai.
All expatriate journeys start somewhere, and some even in
To many of their friends, Lachlan and Lisa seemed to be made for each other. That they married
quite soon
after they met, and very soon after that left on their first international assignment to Chicago, came
as no surprise to anyone. Lisa was born and raised in Melbourne as the daughter of European migrants and, after an eight-year commission in the Royal Australian Navy living and working on naval establish- ments all over Australia, she settled in Sydney at the age of 26 to pursue a career in
management consult- ing. She met Lachlan on a rather ordinary Saturday morning at a cafe ́ in
Mosman, when he politely asked if he could borrow the International Herald Tribune when she was
done reading it. Lachlan wasn’t born in Australia; he’d come to Sydney some seven years earlier as
a UK backpacker on a three-month holiday that turned into a year-long sojourn, then permanent residency, and finally citizenship. Born and raised mostly in Scotland as the eldest son of a secondgeneration property developer, Lachlan was an archi- tect by trade with a Bachelor’s degree and an
MBA from Heriot Watt University. He’d had an interesting childhood, having moved house (and
school) a dozen or more times around Scotland and Ireland as his father bought and sold various
properties to expand the family business. Although his father had hoped he would take over the
business one day, Lachlan had other ideas.
When exactly does a global career begin?
Their first move to Chicago was a completely out of the blue opportunity but one that Lisa and
Lachlan accepted immediately and without hesitation. They were newly married, had no family ties
in Sydney, and shared a mutual love of travel. Lachlan had changed careers a year earlier into the
IT industry and now worked for a large American technology company with offices around the
globe. Although the Chicago job was on local terms – no ‘expat package’ – the com- pany was willing to pay relocation expenses, and US salaries were much higher than those in Australia. With an
expensive mortgage and looking to kick-start a second career, Lachlan knew the opportunity was
too good to pass up. Lisa needed no convincing – moving to the US was the fulfillment of a lifelong ambition to live and work overseas and she didn’t really care where that was. So, they rented
out their house and waved goodbye to friends with the promise to ‘be back in two years’.
It didn’t take long once in Chicago for the MacDougall’s to realize that their ‘two year plan’ wasn’t
going to happen. Lachlan was an instant suc- cess in his new role, while Lisa relished in her newfound status as ‘trailing spouse’. Despite that Lisa was not permitted to work in the US (they had
not known – nor thought to ask – about the availability of work per- mits for accompanying partners
when they accepted the job), she nonetheless found herself loving the free- dom to explore a new
city without the constraints of a busy, all-consuming and demanding job. They didn’t need her salary anyway; Lachlan’s career was flourish- ing, so much so that within 18 months of arriving in
Chicago, he was promoted into a regional US role and offered the opportunity to move to Philadelphia. They gladly accepted the move even though, again, it was on local terms with only relocation
expenses paid by the company.
By the time they arrived in Philadelphia, Lisa knew that something had changed for her and Lachlan. Their expected return to Sydney in a few months time was no longer something they talked
about. Instead of renting an apartment they bought a house on the ‘main line’ in leafy, middle class
Montgomery County about 30 minutes drive from downtown Philly. They replaced their IKEA
household goods with more expensive, longer lasting pieces of furni- ture, bought two cars and
adopted a dog. Rather than seek out an expatriate community, they joined Bryn Mawr Country Club
where they made many American friends and became active in golf and sail- ing. Because Lachlan’s salary was on local terms, they lived and acted like locals, and immersed them- selves in the
local community with a mindset that they were ‘here to stay’. Of course, that would never be the
case, given that their H1B visa restricted them to a maximum of six years residency in the US. But
they had another four-and-a-half years until the visa expired, and they intended to stay in Philadelphia until the very last month.
Their move to Asia four years later was, of course, necessary as their US visa was about to expire
with no opportunity to renew. By now the MacDougall’s had an 11-month old daughter, Amelia,
who had been born in Philadelphia. Leaving the US was hard for Lisa; their family had put down so
many roots over the past six years and made so many American friends, and although they did have
the opportunity to apply for a green card which could provide permanent residency, to the surprise
of their friends the MacDougall’s
rejected this option in favor of another international move. They chose Asia because it would be
good for both their careers and yet still close enough to Australia to maintain family and professional ties with- out having to repatriate. Lachlan approached his com- pany about an internal transfer, and secured a new role in Singapore.
Singapore had been everything Lachlan and Lisa had hoped for and they had lived there – again, on
a local package – much like they had lived in the US: they bought a condo, secured permanent residency, sent their daughter to a local pre-school, hired a maid and joined a local sailing club. Work
permits for spouses were easy to get in Singapore so Lisa had been able to secure part-time employment. Because he had Permanent Resident status, Lachlan had been able to change employers three
years after moving there and was now a regional expert in his field, being routinely approached by
headhunters trying to poach him to accept other job offers. The expatriate commu- nity was very
well established, so the MacDougall’s enjoyed a thriving social life. And it was here, in Singapore,
that their second daughter, Emily, was born.
Now, a third move to China was looming, and as Lisa reflected on their expatriate life so far, she
knew that this move, more than any before, was a game changer – for her, for Lachlan, and most
importantly, for their family. They didn’t have to leave Singapore; they were permanent residents
and they owned their own home, so they could stay as long as they wished and life there was very
good. It became abundantly clear that moving to China was a choice unlike any other they had had
before. Lachlan’s employer had asked him to consider a transfer to Shanghai – on a local-plus package no less, with housing and schooling – but if he did not wish to go the company maintained there
would be no reper- cussions, as he was their most senior Asia executive and they didn’t want to lose
him. China was, none- theless, a key strategic market for the company and Lachlan was, by all accounts, perfect for the job. Lisa considered that her husband’s career would undoubtedly flourish if
they went to China, but she was struck by the fact that, his career aside, there was no other compelling reason to leave Singapore. With this in mind, she knew that if they were to move again, it
would need to benefit everyone in the family and not just one person.
Being a dual-career trailing spouse is harder than you think
In the months leading up to the China decision, Lisa spent a lot of time reflecting on her trailing
spouse jour- ney, trying to piece together what it all meant and what it could mean in a new city like
Shanghai. She knew now that without a doubt she was, and probably always would be, the trailing
spouse in their family, the person whose job would not take them to their next destination, and
whose career would require more compromises than Lachlan would need to make in his. After all,
he was now a Regional Vice President for an SME technology firm in Singapore and earning more
money than she could ever hope to even as a tenured Professor, and that was ok with both of them;
his ca- reer supported their lifestyle, and she supported their growing family. She was surprised that
her trailing spouse status didn’t seem to bother her anymore, whereas even a year earlier it had been
all she could think about.
Since marrying Lachlan and moving to Chicago, Lisa had not worked full-time for over a decade.
The first six years they had spent in the US had been chal- lenging. Chicago had been easy, almost
like a long holi- day, but that had changed once they moved to Philadelphia and committed to staying in the US for the full duration of their visa. The career she had put ‘on hold’ back in Sydney,
with the intention that she would return to it in a couple of years, was now a thing of the past. With
no prospects to legally work in Philly, a husband frequently away on regional business trips, and a
waning interest in charity work (which she stereotyped as something ‘old ladies’ did), Lisa found
herself increasingly frustrated and constrained by a trailing spouse life that she had once so willingly embraced. She was bored. Life seemed dull, meaning- less and oppressive – and she hadn’t
yet reached the age of 35! Without a business card and a job title, she felt invisible at the many
functions she attended as ‘Lachlan’s wife’. Instinctively she knew that their deci- sion to move to
Philadelphia had resulted in a major loss of her identity, much of which Lisa painfully realized had
been tied up in a career that was now impossible for her to continue. She had two choices – commit
to a life of resigned acceptance as ‘Mrs Nobody’ until they repatriated, or do something about it.
Like many trailing spouses often do, Lisa resolved her boredom by turning a negative situation into
a life- affirming achievement: she went back to school and obtained a doctorate. On the advice of
her doctoral supervisor, she chose a field of research she knew something about – expatriates. As it
turned out, Lisa loved research and was quite good at it. Being an ‘insider’ to the expatriate community had many advan- tages – invitations to speak at international conferen- ces, opportunities to
write about her research for industry periodicals, and the chance to start a global mobility website.
Slowly, year by year, as her research progressed and her expatriate journey continued, Lisa built a
new career for herself and, as she would soon discover, a relatively portable one at that.
It was telling that when the move to Singapore arose she was the one pushing them to go, rather
than repatriating to Sydney as Lachlan had thought they would do. As a ‘global mobility academic’,
she perceived there would be few negatives – personally or professionally – if they undertook another interna- tional assignment, and she had been right: In Singapore she had easy access to a work
permit and so was able to do part-time consulting for major cor- porations as well as adjunct teaching. When she grad- uated with her PhD, Lisa took a tenure-track position at John Campbell College with the intention that she would spend between three and five years there before considering a
move elsewhere. It had been important that she re-enter the full-time workforce, not only professionally but also for her self-esteem and confidence. She felt a deep obligation to financially contribute to the family again, to regain some balance and equality in her marriage, and to be a strong
role model as a working mother for her two young daugh- ters. Like many trailing spouses before
her, Lisa believed that the longer she remained a ‘supportive non-working wife’, the harder it would
be for her to have a ‘voice’ in major family decisions where financial considerations would be an
over-riding concern.
Now all her thoughts turned to Shanghai. It seemed quite remarkable that in little more than a decade both she and Lachlan had somehow turned their ‘expatriate adventure’ into thriving global careers – and they weren’t done yet. She already had two job offers to consider at local Universities in
China, having inter- viewed with institutions when the family went on their familiarization trip a
couple of months earlier, but these were predominantly teaching jobs much like the one at John
Campbell had turned out to be. Getting a spouse
work permit in China would be relatively simple so she found out, but her passion was research
and, if she stood any chance of building an academic career, she needed to be in a job that allowed
her to publish in good journals. As a foreigner in China with only ‘hobby’ man- darin to get her by,
how quickly could she establish a new network of contacts to find such a job? And what employment stereotypes and barriers would she face as an ‘expat wife’? Although another international
move would certainly deepen Lisa’s mobility knowledge and experience, moving to China was a
career risk – and one that she wasn’t sure she needed to take.
Raising ‘third culture kids’
The children were also a major source of concern to Lisa. Their daughters, Amelia and Emily, were
now six and seven years of age and had been born overseas. Although they had dual-citizenship
(Australian and British), the girls had never really known a home other than Singapore and had
been attending ‘real’ school there for nearly two years. In fact, it had taken nearly two years on a
wait-list to get the girls into their school – United World College of South East Asia (UWCSEA) –
given it was the best international school in the region. As parents, Lisa and Lachlan were drawn to
UWC because it was well known for striking a balance between a ‘privileged childhood’ and a focus on service to the global community. UWC also paid special atten- tion to the needs and interests
of ‘third culture kids’ (TCKs). Although Lisa didn’t consider herself a school ‘snob’, the reality was
that there was only one UWC in Asia, and it wasn’t in Shanghai. Given her deep theoret- ical
knowledge about TCKs, along with the fact that she and Lachlan were raising two of their own,
Lisa knew that Singapore meant a lot to her children and that they had incorporated its culture into
their everyday life and sense of who they were. But Amelia and Emily had simultaneously developed a sense of relationship to all of the cultures they identified with – where they were born, where
their extended families lived and they fre- quently vacationed, where mum and dad came from –
and they didn’t really have full ownership in any. In reality, their sense of belonging was mostly in
relationship to others of an experience similar to theirs – mum and dad, each other, school friends,
teachers – a special kind of ‘in-group’. Was this a good or a bad thing?
On the one hand, Amelia and Emily were construct- ing and reconstructing their identity during the
formative ‘fragile’ years of their childhood and at the same time across various foreign cultures.
Lisa recog- nized that ‘home’ for her children would likely be an emotional place that couldn’t be
found on a map, and that the question ‘where am I from?’ would require a response from an atlas,
not an anatomy book! She also recognized that children don’t move by choice and they aren’t
trained for it; they experience the same losses as adults but very often cannot articulate their feelings. Having been a listening ear to a number of ex- patriate friends over the years whose own children had experienced unresolved issues of grief resulting from the relentlessness of frequent goodbyes, Lisa was keenly aware that her girls would likely have simi- lar experiences, and it was a distressing thought. Was it fair to impose these sorts of stressors on her children and at such a young
age? What long lasting impact would it have on their emotional and psychological well-being as
they moved into adulthood?
On the other hand, Amelia and Emily seemed to pos- sess more than a text-book understanding of
global cul- ture; they were living it every day. With frequent international travel, access to foreign
languages, and ex- posure to transition and change, they had a rare oppor- tunity to see the world in
a way that was closed to most people their age. Lisa was proud that her children inte- grated well in
their community, but she knew that they would never fully penetrate the local culture because it
would never be their ‘passport country’. She also knew that her children were likely developing a
deep sense of rootlessness and possibly a migratory instinct that would be exacerbated by each and
every subsequent international move. These weren’t negatives per se, as Lachlan had grown up
much the same in Scotland and Ireland, and it could well be that in these formative years, Lachlan
and Lisa were already setting up their children for their own global careers, which by all accounts
they perceived to be a positive outcome. Still, did they have the right to be making decisions for
their children that could impact their adult life in such unimaginable ways? Would their children’s
lives be better if the family lived in one neighbourhood, in one city, close to their relatives and
friends, and never moved?
Yes, Money Does Actually Matter
Lisa’s last remaining concern about moving to China centered on their financial situation. The relocation
package offered to Lachlan included a housing allow- ance, school fees, and tax equalization benefits as part of a ‘local-plus’ arrangement. For all intents and pur- poses the compensation package
for the China move was attractive given that for the past 12 years Lisa and Lachlan had been expatriates on local terms, with no additional benefits. Tax equalization was especially beneficial given
that China’s income tax rate was approximately 50 per cent compared to 20 per cent in Singapore;
for this reason Lachlan had nominated Singapore as his home-country and purposely retained his
and Lisa’s Singapore permanent resi- dency (PR) status. But, in doing so, the MacDougall’s soon
discovered that departing Singapore as PR’s was a more complicated process than they had anticipated. Because they were non-citizens of Singapore, the MacDougall’s would be required, by law,
to settle their tax bill with the Singapore government in advance of their temporary two-year
absence, including taxable income on stocks and shares offered as part of Lachlan’s pay-for-performance salary scheme that would be accrued over the ensuing two years. This included existing as
well as anticipated stocks and shares.
Although the technical details of Singapore’s tax laws were complicated and for the most part beyond Lisa’s basic understanding, the final outcome for the MacDougall’s was that their tax bill
prior to departure was significantly large, taking into account both their taxable earnings. Additionally, Singapore law dictated that Lachlan’s existing and anticipated company shares and stocks
would need to be frozen during their two-year absence (i.e. they could not sell them) in order to
mitigate any financial windfall he might other- wise accrue. In theory it sounded reasonable
enough, but the reality was that the MacDougall’s could emerge from their China assignment in two
years time with shares worth only half the value, without any op- portunity to stem the loss by selling them. As a senior vice president, Lachlan’s share portfolio was substan- tial; about 20 per cent
of the MacDougall’s overall net worth consisted of company shares. Given the ongoing economic
crises in Europe and the United States, and their impending retirement in 15 years time, Lisa wasn’t
sure it was worth the financial risk to lock in their company share portfolio at the existing share
price and to possibly suffer a loss that could be difficult to recover.
Coming Full Circle to Embrace Shanghai
As Lisa drove home from John Campbell College hav- ing resigned from her job earlier that day,
she turned on the car radio and listened to a BBC World Service program in which well-known author and publisher, Robin Pascoe, was being interviewed about her newly released book on ‘Global
Nomads’. As Ms. Pascoe recalled her life as a foreign service spouse, raising two children in four
Asian countries during the 1980s and 1990s, and spoke of the many times she had rein- vented her
career as a journalist, author, public speaker, and now publisher, Lisa was struck by how common
global careers had become, and by women no less. Although she herself had at times felt somewhat alone in her own journey as a trailing spouse, Lisa nonetheless knew that international mobility was inevitable for many employees as talent management became critical for multinational
firms. She and Lachlan were no exception to this phenomenon: they may not have intentionally set
out to pursue global careers a decade earlier, but once they had arrived on the international labor
market it made sense that they remain there. They had benefited immensely by doing so, despite the
many personal and professional hur- dles she had overcome, and even though repatriation to Australia had been an ongoing talking point for years over the dinner table, somehow it just never
seemed to factor into any of their plans.
Lisa now clearly saw for the first time that moving to China signaled an important change in their
family dynamic: the MacDougall’s had acquired the relatively rare skill of ‘family mobility’ and
she instinctively knew
that it was a skillset likely to be highly sought after by many global companies. Their ‘united nations’ global family was, in reality, a valuable commodity. Although she had always had the opportunity to return to a relatively comfortable and stable ‘north shore life’ in Sydney had she wanted to,
Lisa had never really seriously considered it an option; instead, she knew now that she and Lachlan
would probably pursue global careers in one form or another for the rest of their lives, as would
their children. As Ms Pascoe continued to tell her story on the radio, Lisa began to slowly let go of
her fears and to once and for all embrace the Shanghai opportunity. And then she began to wonder
… retaining their Singapore permanent resi- dency status might not have been necessary after all,
given that there were so many other cities they could move to when the Shanghai assignment was
1 In what ways does the MacDougall family represent a rare and valuable resource to a
multinational firm?
2 Reflecting on Lisa’s dual-career trailing spouse journey, how would you have approached
the situation differently?
3 What problems do you foresee for Amelia and Emily if the MacDougall family undertakes another move after Shanghai?
4 Although not discussed, what impact do you think international mobility has had on the
MacDougall’s marriage?
This is MBA-International Human Resource Management course.
Use ebook and ppt for references. Outside reference is ok, too
This is graduate students level paper. Please write your answers professional.
Thank you.
Chapter Objectives
In this final chapter, we identify and comment on observed trends and future directions regarding:
l International
l Mode
business ethics and HRM.
of operation and IHRM.
l Ownership
issues relating to IHRM requirements of organizations other than the large
multinational, such as non-government organizations (NGOs).
l Safety,
security and terrorism issues.
In this book, we have explored the IHRM issues relating to managing people globally. To
that end, we have focused on the implications that the process of internationalization has for
the activities and policies of HRM. We now turn our attention to developments that have not
previ- ously been emphasized in the general IHRM literature and the challenges they
present to IHRM: international business ethics, mode of operation, nongovernment
organizations (NGOs), and the developing role of IHRM in contributing to safety, security
and dealing with global terrorism. In a sense, a number of these topics reflect what some
Japanese MNEs refer to as the ‘general affairs’ aspect of IHRM – in Japan it is common to
use the term ‘Human Resources and General Affairs’ for the HR function1 because there is
an expectation that the human resource function will be the first line of defense in dealing
with unpredictable and emergent issues from the many and varied environments and
constituency groups that make up the complexity of MNEs.
In the sections that follow we return to a discussion of some issues that distinguish HRM in
MNEs and revisit the framework of strategic HRM in MNEs presented in Chapter 1 – see
Figure 10.1. These topics include issues associated with external factors and organizational
factors that impact on the HR function and practices as these issues relate to strategic HRM
in the MNE.
FIGURE 10.1 A model of strategic HRM in multinational enterprises
HR Function
• Global corporate HR role • HR practices
• Crisis management and
Source: De Cieri, H. and Dowling, P. .J. 2012. ’Strategic human resource management in multinational
enterprises: Developments and directions’, In G. Stahl, I. Bjo ̈ rkman and S. Morris (eds) Handbook of
Research in International Human Resource Management, 2nd Ed. (Cheltenham, UK: Edward Elgar).
Reproduced with permission from Helen De Cieri and Peter J Dowling.
External factors: International business ethics and HRM
Global business organizations face a key challenge: should they apply their own values
every- where they do business, irrespective of the cultural context and standard of local
practices? To appreciate the dilemma, take the situation of a multinational that has assigned
a PCN to manage its operations in a host country where bribery is commonly practiced,
child labor is used and workplace safety is inadequate by Western standards. Whose
standards should prevail? Should they be the standards of the MNE’s parent country or the
host country?
External Factors


Organizational links with other
MNEs and with national

Asymmetric events

Environmental dynamics
Organizational Factors

MNE balance of global integration and local responsiveness

MNE structure

Firm size and maturity

MNE Strategy

Corporate governance

Headquarter’s international

MNE culture
MNE Performance
• Financial performance • Social performance
• Enterprise resilience
There are three main responses to this question. The first involves ethical relativism, the
sec- ond ethical absolutism and the third, ethical universalism. For the ethical relativist,
there are no universal or international rights and wrongs, it all depends on a particular
culture’s values and beliefs. For the ethical relativist, ‘when in Rome, one should do as the
Romans do’. Unlike the relativist, the ethical absolutist believes that ‘when in Rome, one
should do what one would do at home, regardless of what the Romans do’. This view of
ethics gives primacy to one’s own cultural values. Opponents of this view argue that ethical
absolutists are intolerant individuals who confuse respect for local traditions with ethical
relativism. It must be noted that while some behaviors are wrong wherever they are
practiced (e.g. bribery of government officials), other behaviors may be tolerated in their
cultural context (e.g. the practice of routine gift giving between Japanese business people).
In contrast to the ethical relativist, the ethical universalist believes there are fundamental
principles of right and wrong which transcend cultural bounda- ries, and that MNEs must
adhere to these fundamental principles or global values.
The existence of universal ethical principles can also be seen in the agreements that exist
among nations that are signatories to the United Nations Declaration of Human Rights and a
number of international accords such as the Guidelines for Multinational Enterprises
adopted by the Organization of Economic Cooperation and Development (OECD). The
need for interna- tional accords and corporate codes of conduct has grown commensurately
with the spread of international business and the considerable growth of offshoring (as
noted in Chapter 9), but translating ethical principles and values into practice in the
international business domain is an enormous task in the absence of a supranational
legislative authority. Efforts to make progress in this area have centered on regulation, the
development of international accords and the use of education and training programs.
New global developments on the criminalization of bribery
Bribery and corruption tend to top the list of the most frequent ethical problems encountered
by international managers.2 Bribery involves the payment of agents to do things that are
inconsis- tent with the purpose of their position or office in order to gain an unfair
advantage. Bribery can be distinguished from so-called ‘gifts’ and ‘facilitating’ or ‘grease’
payments. The latter are payments to motivate agents to complete a task they would
routinely do in the normal course of their duties. While most people do not openly condone
bribery many argue for a lenient approach based on the view that bribery is necessary to do
business (the ethical relativist’s argu- ment). However, it is now generally agreed that
bribery undermines equity, efficiency and integ- rity in the public service; undercuts public
confidence in markets and aid programs; adds to the cost of products; and may affect the
safety and economic well-being of the general public.
For these reasons, there has been an international movement to criminalize the practice of
bribery. In 1977 the United States enacted the Foreign Corrupt Practices Act (FCPA) to
prohibit US-based firms and US nationals from making bribery payments to foreign
government offi- cials. In addition, payments to agents violate the Act if it is known that the
agent will use those payments to bribe a government official. The Act was amended in 1988
to permit ‘facilitating’ payments but mandates record-keeping provisions to help ensure that
illegal payments are not disguised as entertainment or business expenses. The FCPA has in
the past been criticized for placing US firms at a competitive disadvantage since European
and Asian firms did not face criminal prosecution for paying bribes to foreign officials3 but
the evidence on the competitive disadvantage of the FCPA is mixed. The FCPA has also
been criticized by some for being ethno- centric while others see this law as evidence of
moral leadership on the part of the USA.4
In the absence of adequate international self-regulation to control bribery and corruption,
the US has lobbied other nation-states over many years to enact uniform domestic
government regulation to provide a level playing field. These efforts met with some success
in December 1996 when the United Nations adopted the Declaration Against Corruption
and Bribery in International Commercial Transactions which committed UN members to
criminalize bribery
and deny tax deductibility for bribes. A year later, the Declaration was endorsed by 30
OECD member nations and four non-member nations with the adoption of the Convention
on Com- bating Bribery of Foreign Public Officials in International Business Transactions
(OECD Con- vention). Under the OECD Convention members agreed to establish domestic
legislation by the end of 1998 criminalizing the bribing of foreign public officials on an
extraterritorial basis. The OECD Convention came into force in February 1999 and as of
2009 had been ratified by 38 countries. Each member state is required to undergo a peer
review and to provide a report reviewing its implementation of the Convention. Country
reports are available on the OECD website. The OECD Convention requires sanctions to be
commensurate with domestic penalties applicable to bribery of public officials.
Given the seriousness of offences and penalties in the OECD Convention, it is imperative
that enterprises involved in global business take active steps to manage their potential
exposure. Also, although the OECD Convention currently addresses the supply side of
corruption in the public sector, it is likely that the scope of the Convention will be expanded
to include bribery in the private sector as well as the demand side of bribery. HR
professionals have an important role to play in instituting a strategic plan for legal
compliance and developing corporate codes for voluntary compliance. They can also
provide training in understanding the difference between corrupt bribery payments, gifts,
and allowable facilitation payments and the develop- ment of negotiation skills to handle
problem situations that may arise in sensitive geographical regions and industries. The
debate over payments to foreign officials is likely to continue for many years to come.5
The Berlin-based non-government lobby group, Transparency International (TI) publishes
an annual Corruption Perceptions Index. The index measures perceptions, not actual levels
of cor- ruption for over 50 countries and is based on international surveys of business
people and finan- cial journalists. Each country is scored from 10 (highly clean) to 0 (highly
corrupt). Table 10.1 shows the country rank of the top 20 least corrupt countries in
descending order from the 2010 index. Denmark, New Zealand and Singapore (all small
population advanced economies) are the top equal-ranked three least corrupt countries. The
countries perceived to be most corrupt are Guinea, Iraq, Myanmar and Haiti which are
ranked at the bottom of the list of 163 countries.6
The public and financial consequences of a bribery scandal can be significant for an MNE.
The IHRM in Action Case 10.1 provides a sense of the actual and reputational costs of
unethi- cal conduct for a MNE. This case was first made public in late 2006 and in
December 2008 US authorities fined Siemens a record US$800 million and German
authorities issued a fine for 395 million Euros over the failure of its former board to fulfill
its supervisory duties. The total cost of this case for Siemens was 2.5 billion Euros. Action
was also taken against individual Siemens managers by German authorities in early 2010
when two former managers were given sus- pended prison sentences and large fines for
their roles in this corruption scandal.7 Recently, The Economist magazine entered into the
debate on international bribery and corruption, noting that ‘Firms are increasingly fed up
with the way America’s Foreign Corrupt Practices Act (FCPA) is written (confusingly) and
applied (vigorously)’.8 Comparing the FCPA to the recent British Bribery Act passed in
2010 which covers both domestic and international bribery cases, The Economist stated that
although the British law makes no allowance for ‘facilitation pay- ments’, it does allow a
‘compliance defense’ that allows a firm to avoid the harshest penalties if the wrongdoer is a
junior employee and the firm otherwise has a strict anti-bribery policy that is clearly
communicated to employees and effectively administered.
Ethics-related challenges for the HR function of the
multinational enterprise
Managers involved in international business activities face many of the same ethical issues
as those in domestic business, but the issues are made more complex because of the
different social, economic, political, cultural and legal environments in which MNEs
operate. Firms which opt
TABLE 10.1 Transparency international corruption perceptions index 2010
Country rank Country/territory 2010 CPI score*
1 Denmark 9.3
New Zealand 9.3
Singapore 9.3
4 Finland 9.2
Sweden 9.2
6 Canada 8.9
7 Netherlands 8.8
8 Australia 8.7
Switzerland 8.7
10 Norway 8.6
11 Iceland 8.5
Luxembourg 8.5
13 Hong Kong 8.4
14 Ireland 8.0
15 Austria 7.9
Germany 7.9
17 Barbados 7.8
Japan 7.8
19 Qatar 7.7
20 United Kingdom 7.6
*The 2010 Corruption Perceptions Index measures the perceived levels of public sector corruption in 178
countries around the world. It scores countries on a scale from 10 (very clean) to 0 (highly corrupt).
Source: Adapted from Corruptions Perceptions Index at
Copyright 2011 Transparency International: the global coalition against corruption. Used with permission.
For more information, visit
consciously or by default to leave ethical considerations up to individual employees not
only contribute to the pressures of operating in a foreign environment (and perhaps
contribute to poor performance or early recall of the expatriate), but also allow internal
inconsistencies that affect total global performance.
When MNEs select international assignees, their ability to manage with integrity could be a
job-relevant criterion and any pre-departure training or orientation program should include
an ethics component that includes discussion of ethical dilemmas that expatriates may
encounter. In designing training programs to meet the challenges of multinational business,
the HR function should not only raise the issue of cultural relativities but also the extent to
which moral impera- tives transcend national and cultural boundaries. To avoid the
temptation to cut ‘ethical corners’, expatriates should not be placed under unreasonable
pressure to deliver good financial results and they must be given feedback and
reinforcement. Performance appraisals, compensation programs and regular trips home are
important instruments in developing and maintaining ethical cultures.
The difficulties involved when massive, highly standardized firms attempt to be sensitive to
local customs and values while becoming more international, is personified by Wal-Mart,
the giant US retailer. The highly successful low-cost strategy (with its attendant
standardization, scale and scope economies) that characterizes this would-be MNE has
become a magnet for concerns, protests and social commentary all over the world. Issues
related to offshoring procurement (especially from China) are increasingly generating
problems in terms of highly publicized product recalls that indicate multi-faceted problems
that are not limited to one func- tional management area such as supply chain management.
For an excellent analysis of the interconnection of supply chain management issues with
other functional areas of management, see Lyles et al.9 The consequences of a relentless
low-cost strategy on direct employee and
contractor wages, health-care benefits, working conditions and job security, and the
competitive impact of Wal-Mart’s ‘super-stores’ on traditional local retail establishments,
city center infra- structure and small-population communities have initiated a worldwide
discussion of the eco- nomic, social and political consequences of global business.10
Little is presently known about the evolving roles and responsibilities for HRM in balancing
the economic imperatives of cost control and global standardization with the social and
institu- tional realities of citizenship in a widening range of diverse contexts – particularly in
terms of the development of labor sourcing, compensation and employee relations
strategies.11 However, it seems clear that these are likely to remain dominant issues in
international business in the twenty-first century – particularly with regard to the complex
issue of evaluating the overall per- formance of foreign subsidiaries and their senior
management team.12
Organizational factors: Structure, strategy and IHRM
We have stressed the need to broaden the scope of IHRM beyond that of subsidiary
operations. While not downplaying its importance, for many MNEs, managing and staffing
subsidiary units is only one aspect of international business operations, though the
weighting given to subsidiary management will vary significantly according to the nature of
international activities and the size of the internationalizing firm (see Chapters 1 and 3). The
fact that external parties are involved in contractual modes, joint ventures and strategic
alliances imposes management and HR constraints that are not usually present in wholly
owned operations. While the HR implica- tions of international joint ventures have received
considerable attention in the literature,13 there remains a need for studies that consider the
HR implications of contractual modes where the firm is operating at arm’s-length. Training,
for instance, is often an important part of con- tractual modes, playing a key role in the
transfer of technology and systems, inculcation of com- pany culture, and acting as a
screening process (for example, in selecting suitable franchisees). As a result, staff may be
primarily involved in short-term assignments to deliver training in for- eign locations, rather
than as traditional expatriates.14
Non-government organizations (NGOs)
We have already identified the importance of NGOs in Chapter 9 when discussing the
impor- tance of the institutional context in influencing the strategies and decisions of MNEs.
We noted that the globalization of trade and business has provoked a vigorous debate within
national states with events such as anti-globalization rallies and protests. The activities of
environmental groups illustrate how these organizations have also become internationalized
and interact with the key MNEs in a range of global industries. For example, a visit to the
home page of Green- peace International illustrates the range of issues and industries that
this NGO is focusing on and the key MNEs in various global industries that Greenpeace is
seeking to influence. Recently, the importance of NGOs was recognized by The Global
Journal ( which released its inaugural ‘‘Top 100 NGOs’’ list. The
top 10 NGOs in this list contain some well-known NGOs such as The Wikimedia
Foundation (#1), Oxfam (#3) and Care Interna- tional (#7) but it also contains NGOs that
are less familiar such as BRAC (formerly known as the Bangladesh Rural Advancement
Committee) which is now a global organization with over 110 million beneficiaries. This
diversity of activities and focus across a range of industries fur- ther illustrates the impact
and influence of NGOs which will continue to be of importance to the activities of MNEs.
External factors: Challenges in an uncertain world: Safety,
and counterterrorism15
Traditionally, many domestic and international human resource managers have been
responsible for legal compliance and training issues related to safety in the workplace.16 As
national and inter- national regulations related to workplace safety expanded, specific
professional standards of prac- tice, reporting mechanisms and roles were specified in the
area of corporate risk management.17 Risk categories associated with natural disaster
protocols, emergency and disaster preparedness plans for MNE plant and facilities,
workplace violence policies, industrial theft and sabotage pro- tocols, and ‘hardening’
individual facilities to enhance in-house security have emerged and a grow- ing body of
professional and academic literature exists. Less clear are the particular roles, expectations
and portfolios of responsibilities that IHRM managers and directors have been called upon
to incorporate into their existing responsibilities. Intuitively, in smaller MNEs – operating in
less sensitive industries and less turbulent markets – the IHRM generalists will be called on
to incorporate these protocols by outsourcing technical security systems and personnel as
required.18 In larger organizations, particularly MNEs operating in more public and sensitive
industries and/ or more socially and politically turbulent regions of the world, significant
investment in develop- ing integrated, coordinated and specialized risk management
practices within the HR function is warranted. Many MNEs have developed their own
idiosyncratic systems and processes in response to a history of ‘critical incidents’ which the
firm has experienced over years or even deca- des – e.g. the kidnapping of an executive, a
natural disaster impacting a key facility, or an airline or private aircraft disaster that
decimated the executive cadre of the MNE.
Not surprisingly, executives in most MNEs are unwilling to discuss the protocols,
processes, sys- tems and structures in place in this sensitive area. More recently emerging
risk categories relate to cyber-terrorism, political terrorist groups targeting specific firms
and industries and the risks inherent in pandemics, such as SARS, avian flu and airborne
contaminants (as discussed in Chapter 1). For a recent overview of the area of conflict,
security and political risk in international business, see the Spe- cial Issue of Journal of
International Business Studies edited by Henisz, Mansfield and Von Glinow.19
As a working set of corporate risk assessment categories, a starting point for a MNEspecific audit, would include the following five areas:
l In-facility
emergency and disaster preparedness – including being in compliance with local safety
laws and standards (e.g. occupational safety and health administration rules in the USA), creating a
command center and triage area, protocols for transport-evacuation and the systematic location of
employees, liaison with public-sector emergency workers and media relations.
l In-facility
security – comprised of perimeter security, search protocols into and out of facilities
(truck inspections, deliveries, etc.), internal search protocols (lockers, etc.), bomb threat procedures,
risk control for violence in the facility and threats to management (including training on warning
signs, protection of property and equipment and safeguarding executives), protection and lighting in
parking areas and the use of cameras in the workplace.
l Industrial
espionage, theft and sabotage – activities to secure internal communications (emails,
telephones, etc.), open records protection, employee privacy regulations, clearly defined physical
inspections and search processes.
l Cyber-terrorism
– hardware, software and human systems to deal with hacking, information theft,
internal sabotage, the sabotage of software systems and the development and maintenance of an
architecture of back-up systems and multiple independent operations for information systems.
l Out-of-facility
fire and travel risks – providing traveling managers with portable five-minute air
packs, travel policies prohibiting employees staying in hotel rooms above the seventh floor (most
aerial ladders on fire trucks only reach to the sixth floor), policies prohibiting top-level managers
from traveling on the same airline flight/private aircraft, hotel evacuation training if traveling teams
of employees are staying at the same hotel.20
According to Czinkota et al., analytically, IHRM managers may be able to assess the
potential risk from terrorist threats at three levels of analysis: primary – ‘at the level of the
individual per- son and firm’; at the micro level – ‘specific regions, industries or levels in
international value chains’; and at the macro level – ‘the effect of a terrorist attack on the
global environment . . . the world economy, consumer demand for goods and services, and
reactions by supranational organizations such as the United Nations’.21 As an example of
micro-level risk analysis, the travel/hospitality industry is particularly sensitive to terrorist
events or natural disasters that may inhibit travel in general, travel to a certain region or
country, or to specific travel destina- tions.22 On the primary and micro levels:
It is useful to distinguish the most vulnerable links in firm’s value chains. From the individual
[firm’s] perspective, it is more useful to view terrorism at the micro level wherein input sourcing,
manufactur- ing, distribution, and shipping and logistics are likely to be the most vulnerable areas.23
There is little doubt that terrorism is perceived to be a significant threat by MNEs. The
World Economic Forum Global Risks Landscape 2011 report rated the perceived likelihood
of terror- ism as ‘Very likely’ and the perceived financial impact was approximately US200
Billion.24 A Delphi study in 2008 by Czinkota and Ronkainen found that the five business
functions within MNEs that will have the most influence on global business in the future
will be: 1. Logistics; 2. Marketing; 3. Human Resources; 4. Finance; 5. Communications.25
By systematically analyz- ing people and processes, IHRM professionals may contribute to
‘stabilizing risk’26 through rec- ommendations that ‘harden’ processes in the value chain,
recruit people with capabilities and skills relevant for these kinds of processes and train
employees in these processes and systems.
In a similar vein, Gillingham presents risk analysis in terms of partitioning security risk into
an external environmental dimension (geographic region of operation) and an internal firm
dimension (industry, firm media profile, national affiliation associated with the MNE).
Low-risk firms in low-risk environments do not need to invest as heavily in security systems
and proto- cols. High-risk firms in low-risk environments should follow security strategies
that focus on hardening individual sites. Low-risk firms in high-risk environments can
follow security strat- egies that disperse activities across the region and build redundant
infrastructure, so that value chain activities in the high-risk region can be provided by out of
region units. High-risk firms in high-risk environments must invest much more in quite
elaborate risk management strategies.27 Much remains to be understood in this rapidly
evolving area, and the expectations, standards and practices of IHRM executives and
professionals as they relate to safety and security are in flux. According to Czinkota et al.:
In depth case studies on firms directly affected by terrorism will also serve to provide grounded
infor- mation as to the nature of the relationships between types of terrorism and their specific
effects, and facilitate the development of models and theory.28
A similar conclusion can be reached in terms of the need for a better understanding of these
challenges facing IHRM in MNEs.
The evolving field of IHRM
The field of IHRM has been criticized as being slow to develop as a rigorous body of
theory. There are a number of reasons for this. One reason is that compared to studies in one
national context, there are major methodological problems involved in the area of
international manage- ment and IHRM. These problems greatly increase the complexity of
doing international research and, as Adler29 noted some years ago, it is often quite difficult
to solve these problems with the rigor usually required of within-culture studies by journal
editors and reviewers.
A second reason why IHRM has developed rather slowly as a field of study is that until
rela- tively recently, many management and HR researchers have regarded the IHRM field
as a mar- ginal academic area. This attitude was reflected in the relatively small number of
courses in IHRM in business school curricula – a situation which is now changing,
particularly in business schools in Europe and the Asia-Pacific. A strong positive
development was the establishment of a dedicated journal in the field (International Journal
of Human Resource Management) in 1990 by the late Professor Michael Poole at Cardiff
University in the United Kingdom. This journal has had a significant impact on the
development of research in the field of IHRM. A more recent very positive development has
been the decision of the Human Resources Division of the Academy of Management to
offer an International HRM Scholarly Research Award.30 An increasing number of books
which have focused on HRM in particular regions such as Latin America,31 Central and
Eastern Europe,32 the Middle-East,33 Europe,34 Africa35 and the Asia Pacific region36 have
also made a valuable contribution to the IHRM literature.
The evolving role of the HRM function in MNEs
As presented in Chapter 1, the sheer complexity of the HRM function in MNEs has led to a
fundamental re-examination of the purposes, actors, roles and relationships between line
man- agers and staff HR specialists, between subsidiary HR staff and corporate HR
specialists, between MNE employees and outsourced contractors, and between the various
HR actors within the MNE hierarchy (e.g. HR managers on the Board of Directors, at Vice
President level or reporting directly to a board member).37 Clearly, disentangling the
complex relation- ships between those institutional, industrial and historical contingencies
that may contribute to the pattern of IHRM philosophies, strategies, policies, practices and
capabilities of an MNE, industry or nation remains a rich area for future research. It does
appear very likely that the challenges of international business will continue and IHRM
issues will remain high on the ‘problems list’ of senior managers of MNEs. A recent
McKinsey survey of forces reshaping the global economy noted that sourcing talented
employees was a major concern. Asked where they would find the talent they need,
respondents most often mentioned recruit- ing talent from emerging markets to work there
(44 per cent), new talent entering developed labor markets (41 per cent) and talent from
developed markets deployed to emerging markets (35 per cent). More than all other
respondents, North American respondents were counting on sourcing talent in developed
Throughout this book, we have endeavored to highlight the challenges faced by firms as
they confront human resource management concerns related to international business
operations. This chapter has been concerned with identified trends and future challenges –
both managerial and academic – that are likely to have an impact on IHRM, as a function
and as a scientific field of study. We specifically addressed:
l International
business ethics and HRM.
of operation other than wholly owned subsidiaries, and the IHRM activities that are
l Modes
such as training for contractual and project operations.
l Ownership
issues relating to family-owned firms, and non-government organizations (NGOs) and
the IHRM challenges specific to these organizations as they grow internationally that have
remained relatively under-identified, despite their continuing importance in international business
and global activities.
l The
complex assessment and planning activities related to safety, security and counterterrorist
l Research
issues in IHRM, and developments that are endeavoring to assist in understanding the
intricacies and interrelationships between the IHRM function and IHRM activities, firm
internationalization and strategic directions and goals.
A consistent theme throughout this book has been the way in which IHRM requires a
broader perspective of what operating internationally involves, and a clear recognition of
the range of issues pertaining to all categories of staff operating in different functional, task,
and managerial capacities is essential. As Poole39 stated in his editorial in the first issue of
the International Jour- nal of Human Resource Management in 1990: ‘international human
resource management archetypically involves the world-wide management of people in the
multinational enterprise’.
This sixth edition marks over 20 years since the publication of the first edition of this textbook in 1990. Since such a period of time is often recognized as a milestone into adulthood
in Western societies, IHRM researchers and academics should indeed celebrate the ‘coming
of age’ of this discipline area. People issues in MNEs have never been as strategically,
economically, socially and environmentally critical as they are today. Practitioners – both
specialists and executives – have a vast array of technical, conceptual and programmatic
resources at their fingertips. Massive governmental and consulting systems may be tapped.
Academics may pur- sue in their research and teaching activities any one of a number of
functionalities in IHRM, across cultures, regions, institutional contexts, levels of economic
development and industries. The number of choices is indeed daunting.
Given this period of time we should both celebrate the success of the discipline area and be
wary of the dangers of prematurely deciding that we have uncovered the last word on what
IHRM is or presume we have discovered the ultimate model of IHRM. It may be that for
now an open, systematic, comprehensive, curious and engaged state of mind (those qualities
many researchers have associated with successful international careers in industry) is more
critical to the continued effective development of the discipline area of IHRM than any
single model, research stream or perspective.40
In Chapter One we stated that IHRM came out of three areas – cross cultural manage- ment,
comparative industrial relations and HRM and HRM in multinational firms. Just as all rivers
have one or more headwaters – streams or creeks that begin the river – so IHRM has a
number of potential points of origin. In the nineteenth century there was a great rush to
discover the source of the Nile River. What the scientists, explorers and adventurers did at
the end of their search was to come to grips with a vast, complex and changing ecosystem.
What started out as a journey to a specific, unknown destination became an increasingly
sophisticated geo- graphical odyssey that continues in Africa to this day. The ongoing
process of discovery, a map- ping of the complexities of IHRM, the challenges to our
existing corporate and academic systems and models of people processes resulting from
international activities, and the difficult choices practitioners must make every day in order
to pursue MNE goals make up the only rea- sonable conclusions we can draw about this
fascinating and compelling academic field after over 20 years of observation.

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