The effects of labour costs and workplace constraints on foreign direct investment among highly industrialized countries

Drawing on economic propositions underlying theories of foreign direct investment and organizational propositions underlying international human resource management strategic decision making, the theoretical model developed herein integrates two distinct but interrelated strategic HRM assessments. In deciding where to invest, multinational companies (MNCs) assess both (1) the net comparative labour cost advantages associated with alternative host-country IR systems and (2) the comparative flexibility afforded them by alternative IR systems to either transfer or create preferred HRM strategies abroad. The results of the present study indicate that, on average, MNCs from the major investor countries of the world give substantial weight to differences in national IR systems in deciding how much to invest across alternative high-skill, highwage countries. In particular, the evidence indicates that MNCs have invested more in countries with higher skills, lower compensation costs and lesser government and collective bargaining constraints on MNCs' flexibility to set the terms and conditions of employment or otherwise deploy preferred HRM practices abroad.     

The take-up of human resource management by mainstream companies: key lessons from research

Drawing upon a major British study involving over 300 interviews in fifteen case organizations from the private and public sectors, this paper draws out the essential elements of recent changes in industrial relations. In particular, it examines the significance of human resource management initiatives for the practice of industrial relations. The main thrust of the paper examines the ways, and the extent to which, mainstream organizations have transposed and absorbed concepts and practices from the highly publicized ‘lead cases’ into their own routines.

The central argument has three component elements: a whole array of managerial initiatives was launched in the period covered by the research; many of the more far-reaching of these were devised and driven from outside personnel or industrial relations management; cumulatively, these initiatives have impacted on the conduct of industrial relations.

A key concept which is identified and explored is that of HRM/IR ‘dualism’. This is the attempted bolting-on of HRM techniques and language alongside prevailing, albeit to some extent diluted, IR proceduralism. Many of the significant changes in labour management practices stemmed from initiatives taken by general managers, manufacturing directors and line managers. Transformative initiatives in the guise of culture change and structural change often carried profound implications for industrial relations even though these initiatives would not traditionally be regarded as part of industrial relations proper.     

Host-country effects in coordinated,liberal and hybrid market economies: US subsidiaries in Switzerland,Germany and the UK

The paper addresses two as yet unexplored issues regarding the uptake of host-country employment relations practices, contributing to a better understanding of findings for hybrid host-market economies such as Switzerland. Host-country effects are differentiated by practices that belong to either industrial relations or education and training, as per the varieties of capitalism approach. There follows an investigation of the extent to which foreign subsidiaries' overall uptake of host-country employment relations practices is determined by the subsidiary incorporation type and size for practices related to industrial relations and education and training. Analyses of US subsidiaries in Switzerland, and, in contrast, those in Germany and the UK, on the whole support the propositions that distinguish between industrial relations and education and training-related host-country effects.     

Managerial mindset as the mechanism of the country-of-origin effect: evidence from Chinese multinational enterprises’ approach to employer associations

The country-of-origin effect (COE) on employment practices in multinational enterprises (MNEs) has become an important area of international human resource management research. However, research on the mechanisms of the COE, a fundamental and critical aspect of the country-of-origin phenomenon, is scant. This study seeks to empirically explore the mechanisms through which country-of-origin influences Chinese MNEs’ approach to host-country employer associations. Analysis of qualitative data from 13 Chinese MNEs revealed that country of origin affected the approach of Chinese MNEs to host-country employer associations in the form of transfer of managerial norms. It also revealed that it was the mindset of those home-country nationals who were key decision-makers at subsidiaries that enabled the COE in Chinese MNEs. This paper highlights the importance for future studies of international strategic human resources management to pay attention to micro-foundations of cross-border practice transfer and to incorporate analyses of managerial cognition in the investigation of MNEs’ management practices.     

The labour relations heritage and lean manufacturing at Fiat

The objective of the paper is interpreting, from an evolutionary perspective, recent developments of work organization and human resource management policies at Fiat Auto, one of the world's largest automobile manufacturers, which achieved a successful restructuring in the early 1990s. Building on a heritage of adversarial labour relations and ‘mass production’ organizational principles, Fiat developed an original and to some extent hybrid version of ‘lean’ human resource management practices (teamwork, flexible compensation, multi-skilling, etc.).

The paper analyses this process of organizational change from an evolutionary perspective based on the concept of dynamic capabilities. From this standpoint, IR. HRM and work organization practices are the result of a learning process, based on original development, imitation, analogical replication, combination and selection of organizational capabilities; organizational capabilities have a cumulative and path-dependent nature; workplace innovations are also rooted in organizational absorptive capacities, that is, the ability of firms to exploit new (and often extramural) organizational and HRM developments; the existence of complementarities among organizational competencies, assets and choices in term of HRM are likely to push toward the adoption of a set or system of (rather than single and insulated) innovations in work organization, HRM practices and industrial relations policies.

The data provided in the paper show that the process of innovation of workplace practices at Fiat Auto (summarized by the concept of the Fabbrica Integrata) is curiously non-linear. The newly designed HRM policies have, on the one hand, been resisted by the unions (who have not been involved in the design process) and by segments of the work-force; on the other hand, they have been hindered by existing organizational features and personnel practices which, in turn, were key success factors during the 1980s. This inertia is significantly lower at the new greenfield plant of Melfi. On the whole, the restructuring process was successful from the competitive and financial standpoint, and represents the basis on which management and the unions can develop a new co-operative model of industrial relations.     

HRM practice in emerging economies: a long way to go in the Slovak hotel industry?

Using empirical data from interviews among leading hotels in Slovakia, this paper sets out to explore recent developments in human resource management (HRM) policies and practices and labour relations in an emerging Central European economy. The main areas explored are the HRM function, employee resourcing, employee development, employee relations and emerging HRM issues. The paper establishes that there has been a move away from the traditional rigid socialist type of personnel management, but it has not been fully replaced by HRM practices. The emergent 'model' is a hybrid of the traditional Western personnel management and basic HRM activities, alongside which some legacies of the socialist personnel function still exist.     

An industrial relations perspective on the high-performance paradigm

Recent studies have suggested that various human resource management (HRM) practices are associated with enhanced economic performance in organizations. This research has led to what we call the high-performance paradigm, a belief that firms can improve performance by adopting certain high-performance work practices (HPWP). We apply an industrial relations (IR) perspective to the high-performance paradigm to extend the insights of HRM studies. After identifying how the perspective typically adopted in IR research differs from that used by HRM researchers, we briefly review the literature on HPWPs, identify limitations in the existing research approach, and suggest issues and areas for future research. In general, we suggest that research on HPWPs has made a valuable contribution to the literature. We urge HRM researchers, however, to devote more attention to underlying conflicts at work, focus more explicitly on the implications of new forms of work for workers, and pay greater attention to the role that cultural forces, unions, and governments play in shaping the workplace.     

HRM professionals and their perceptions of HRM and firm performance in the Philippines

This paper reports the findings of a study conducted in the Philippines that examines the extent of adoption of human capital-enhancing human resource (HR) and industrial relations (IR) practices. Differences between locally owned and other organizations in these practices and their relationship to firm performance were also investigated. Questionnaire responses were obtained from managers and union representatives from 128 organizations located in the Philippines. The results indicated that there was, on average, a fairly high level of adoption of practices consistent with a strategic approach to human resource management (HRM), with foreign-owned firms tending to show a slightly higher level of adoption of such practices. A scale representing the adoption of a more conciliatory and union-friendly IR approach was found to be a significant predictor of perceived firm performance. Surprisingly, the level of strategic integration between HRM and business planning and most human capital-enhancing HR practices were not significant predictors of perceived firm performance. Research and practical implications in relation to the role of HRM in enhancing firm performance are discussed.     

Varieties and variability of employee relations approaches in US subsidiaries: country-of-origin effects and the level and type of industry internationalisation

This article investigates the relative importance and variability of the country-of-origin effect in employee relations approaches of US subsidiaries within the context of diversity of employee relations patterns in home- and host-country business systems and the influence of important industry forces. It is based on a representative survey of US subsidiaries and indigenous firms in the UK. The cross-sectional comparison with indigenous UK firms confirmed a distinct US country-of-origin imprint in employee relations patterns in US subsidiaries. However, the magnitude of such an effect cautions against assumptions of popular stereotypes and reflects, inter alia, the diversity of employee relations approaches among US parent companies as well as developments in the UK industrial relations landscape over the last decades. The intra-US analysis revealed the importance of both the level and type of industry internationalisation in shaping the strength and nature of the country-of-origin influence. On the basis of the findings, the article highlights lessons to be learned for the study of cross-border policy-transfer issues in MNCs.     

Of hats and cattle: or the limits of macro-survey research in industrial relations

Attempts to use WIRS 3 data to assess the impact of HRM and specialist personnel management have produced implausible, inconclusive and contradictory results–demonstrating the severe limitations of the new macro-survey approach to industrial relations research. Yet macro-surveys threaten to become the dominant methodology. Imaginative insights, with practical implications, will not be achieved in this way. A major reorientation of research effort is needed before it is too late. Given its long tradition, of attempting to be both original and useful, British IR research deserves something better.     

The making and remaking of HRM: the practice of managing people in the Eastern Cape Province,South Africa

This paper explores the nature of human resource management (HRM) practice in the Border region of the Eastern Cape Province, South Africa, located within contemporary local and international debates regarding the content and nature thereof. Four distinct patterns of practice were identified. The first represented a simple changing in nomenclature of the relevant personnel sections, with, in several cases, staff being seen not as managers, but rather as a distinct, and somewhat junior, category of employee. In the second category, the traditional personnel function was broadened to encompass clearly delineated areas such as training and development. In the third category, while HRM practitioners did play an important strategic role, this was more in terms of facilitating the adoption of progressive industrial relations policies, than in developing a vision for managing human resources across the organization. In all cases, what human resource practitioners did seemed somewhat removed from the 'conventional wisdom' definition of HRM. In part this was a result of the persistence of effective and militant trade unions, necessitating the adoption of hybrid HR-industrial relations practices. However, it also represented a product of particular managerial traditions, and the fact that HRM represents a complex package of concepts and practices, which, inevitably, are subject to adjustment in the light of prevailing realities. This study sheds further light on the diverse and multi-faceted area of HRM practice, and underscores the need for flexibility and pragmatism in both transitional, and, indeed, mature economic contexts.     

On the importance of a generalist conception of human resource management: A cross-national look

What is human resource management? The term risks becoming devalued if it is associated with particular approaches to the management of people, to labor relations, or to the development of the personnel function. These aspects of HRM have to be seen in context—indeed, HRM is best viewed as the management of organizational context, as “governance.” This is the challenge for general management, supported by personnel generalists.     

A comparative study of the contents of personnel and human resource management textbooks

The paper reports the results of a contents analysis performed on fifty personnel and HRM texts. It suggests that there is a common set of person-nel/HRM tasks across cultures. Within this common set there are differences in the priority accorded to particular tasks. British HRM texts give priority to organizational theory, American HRM texts prioritize corporate strategy, while personnel texts prioritize industrial relations and collective bargaining. The conclusion considers as possible explanations the divergence in the systems of industrial relations of the two countries and the markets towards which the texts are oriented. It argues that a more likely explanation derives from the differential cultural values which inform managerial research in Britain and America.     

Farewell to HRM? Personnel practices in Japanese manufacturing plants in the UK

While Japanese manufacturing investment burgeoned in the UK in the 1980s and 1990s, its relative size remained small. Nevertheless, its impact was greater than its size. At its extreme it was championed by the 'new right' as the way forward for industrial practices, while manufacturing organizations in the UK were quick to attempt to emulate Japanese management practices. Core to these practices was the management of human resources. Coincidentally in the 1980s a new model of personnel management was being championed, namely human resource management (HRM). This was eagerly embraced by UK academics and was translated into two distinct forms, 'hard and soft'. Despite appearing mutually incompatible, the hard and soft forms were forged into a unified model. This paper, drawing on an empirical analysis of personnel practices in Japanese manufacturing plants in the UK, searches for a conjuncture between the HRM model and 'Japanese' models. It concludes that, while there are similarities between the two, there are also distinct differences. Moreover, where similarities exist they are with the hard variety of HRM.     

HR research in the Netherlands: imitation and innovation

In this paper we present an overview of Dutch HRM Research in the last decade, based on a content analysis of academic journals in this area. Also included is a comparison between UK and USA research, on the one hand, and Dutch research, on the other. Looking back, we conclude that HRM research in the Netherlands has had a relatively institutional character and has been less focused on HRM activities in a narrow sense. Dutch HRM researchers have paid less attention to the strategic positioning of HRM, to the redesign of HRM tools in the area of through-flow and performance management (appraisal, reward systems, feedback mechanisms) and to the monitoring of the effects of HRM. In this way HRM research has not reflected the key HRM issues occupying the attention of practitioners. From more recent patterns, however, we expect Dutch HRM research increasingly to reflect managerial concerns. This does not imply full convergence with US patterns, especially given the Dutch traditions in industrial relations and personnel management. The challenge for Dutch research on HRM is to find the right balance between market forces and institutional arrangements, including a fair position for the workers; this will have to do justice to the long established tradition of industrial democracy and consultation practices among the various stakeholders.     

Convergence divergence thesis through sectoral lens: A study of India and China

Does the evolution of distinct practices influence the sectoral dominance of nations? In this review paper, we take an in-depth look at the convergence and divergence debate about HR practices in Asia. We extend the conversation to address specific competitive advantage of nations, such as China, in manufacturing and India, in information technology (IT) sectors. Drawing on the relevant literature and utilizing the lens of firm specificity, HR value creation, and competitive uncertainty, we try to explore the collective implementation of a bundle of HRM (human resource management) and IR (industrial relations) practices that have converged or diverged from western practices leading to such dominance.     

Revitalizing social dialogue in the workplace: the impact of a cooperative industrial relations climate and sustainable HR practices on reducing employee harm

Abstract

The purpose of the present study is to unravel the relationship between current forms and realities of social dialogue in the workplace, the industrial relations climate, HRM, and employee harm. We tested a model specifying associations between (1) indicators of revitalized social dialogue, (2) perceived cooperation within the industrial relations climate, (3) perceived sustainability in HR practices, and (4) management perceptions regarding employee harm. The test was based on a survey conducted among 356 (HR-)managers and CEOs in Belgium. The results support the idea that a cooperative industrial relations climate and sustainable HR practices can reduce employee harm. More specifically, efficiency in social dialogue fully mediated the relationship between cooperative industrial climate and employee harm. In turn, industrial relations climate partially mediated the relationship between sustainable HR practices and employee harm. Finally, sustainable HR practices correlated positively with a cooperative industrial relations climate, suggesting that HR and employee relations reinforce rather than weaken each other.     

The psychologisation of employment relations?

This article argues that HRM is by nature a multidisciplinary subject area, and that it has traditionally been closely associated with the field of industrial relations (IR). However, it appears to have increasingly been taken over by industrial and organisational (I‐O) psychology, and in the process increasingly associated with organisational behaviour, which has also been taken over by I‐O psychology. Coupled with the narrowing and marginalisation of IR, this has meant an increasing ‘psychologisation’ not only of the study of HRM, but of the study of employment relations in general. This article discusses why this appears to have been happening, what its implications might be and what (if anything) might be done about it. Focus is on developments within North America, although the issues raised apply, perhaps, to different degrees, across liberal market countries and possibly beyond.     

BARGAINING WITHIN THE ENTERPRISE: CENTRALIZED OR DECENTRALIZED?

Decisions on bargaining structure are at the heart of the management of industrial relations. Within the multi-plant company these decisions are influenced by competing centrifugal and centrepetal pressures. Bargaining structure, alongside a series of other techniques, is used by managers at the head office and the plant to achieve a balance between centralization and decentralization. Head office managers exercise central control over some major industrial relations issues, while the extent of their influence is masked by decentralized bargaining structure and other techniques which create an illusion of plant autonomy. These centrifugal and centrepetal pressures emerge not just from industrial relations considerations but are also part and parcel of wider business strategy concerns. Empirical evidence suggests that these countervailing pressures have intensified in recent years.     

The Americanisation of the European business system?

This article examines the impact of contemporary business practices within the American business system on established patterns of industrial relations (IR) management in European subsidiaries of US multinationals, specifically how established firm‐level settlements for the management of IR may or may not combine with host‐country effects to constrain such innovations. The empirical material leads us to evaluate subsidiaries of US multinationals as a contingent factor indicating that institutional effects at the level of the national business system are likely to be more embedded than the effects of ownership on employment and IR at firm level.