Chapter 04 IHRM

Chapter 4
For use with International Human Resource Management 6e

By Peter J. Dowling, Marion Festing, and Allen D. Engle. Sr.
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Chapter 4
IHRM in
cross-border M&As,
international alliances,
and SMEs
START
Chapter 4
Click on an item to
go to its section.
Vocabulary
Objectives
Cross-border alliances
Cross-border mergers & acquisitions
International equity joint ventures
International SMEs
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Chapter 4
IHRM in
cross-border M&As,
international alliances,
and SMEs
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cover below to
return to this table
of contents.
non-equity cross-border alliance

equity modes
TNCs, EEA
Greenfield investments, acquisitions, mergers, M&As
pre M&A, due diligence, integration planning, & implementation phases
resources, processes, values
knowledge transfer, embedded knowledge
performance-related pay
IJVs
recruitment, training, & development
partnership role, change facilitator, strategy implementer, innovator,
collaborator
multicultural teams
SMEs
internationalization process theory
experiential market knowledge
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Chapter 4
Vocabulary
Objectives
You want to understand how these relate to IHRM:
1. Cross-border alliances
2. Equity-based alliances (M&As, IJVs)

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Chapter 4
3. Globalizing SMEs

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Cross-border alliances
Figure 4.1

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Equity & non-equity modes of foreign operation

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Chapter 4
Cross-Border mergers & acquisitions
Figure 4.2

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The formation processes of M&As and HR challenges
Figure 4.3

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Mergers and acquisitions in US$ billions
Typical cross-border M&A problems

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Within the first year of a merger,

up to 20% of executives may be lost
The percentage lost gets worse over more
than one year after a merger
Personnel issues are often neglected
A large number of M&As fail or do not
produce the intended results
Figure 4.4

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Chapter 4
HR activities in the phases of a cross-border M&A
Firms should rely on three conceptual tools:

1. Resources
money, people, brands, relationships
2. Processes
activities used to convert resources into
goods & services
3. Values
the way employees think about
what they do & why they do it
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Strategic HRM in M&As
Comparing HRM in M&As

Performance-related pay is more popular in US
than in Japan or Germany
Recruitment in US is more short-term than in
Germany, France, & UK
Japan still has longest-term focus
US training & career planning is the most extensive
French still favor French managers

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Chapter 4
Germans are the most anxious to adopt

international practices for their M&As

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Chapter 4
International equity joint ventures
IJV challenges include

HR must manage relations at the interfaces
between IJV & parent companies
Different rules can create critical dualities
HR must recruit, develop, motivate,

retain human resources at IJV level
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HR must develop appropriate HRM

practices & strategies for the IJV itself.
Figure 4.5

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Formation of an international equity joint venture
The main reasons for an IJV

To gain knowledge & transfer that knowledge
The host government insists
Increased economies of scale
To gain local knowledge
To obtain vital raw materials

To share risks (e.g., financial)
To improve global competitive advantage

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Chapter 4
Provide an efficient & cost effective response

required by market globalization
IJV development stages

Partnership role
Change facilitator & strategy implementer
Innovator
Collaborator

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Chapter 4

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International SMEs
Table 4.1

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SME definition
In EEA & Sweden:

99+% of 16 million enterprises in EEA & Sweden
are SMEs
Two thirds of jobs are in SMEs
In Asia Pacific region:
SMEs are 90% of all enterprises
32-48% employment is by SMEs
In US:
80+% employment is by SMEs
with less than 20 employees
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SMEs are very important
Barriers to international markets by SMEs

TOP1.

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1. Not enough working capital to finance exports

10
2. 2. Inability to identify foreign business opportunities
3. Limited information to locate/analyze markets
4. Inability to contact potential overseas customers
5. Inability to obtain reliable foreign representation
6. Lack of managerial time to handle internationalization
7. Untrained or not enough personnel to go international
8. Difficulty in managing competitors prices
9. Lack of home government assistance & incentives
10. Excessive transportation & insurance costs
The founder or owner has large impact

Recruitment, selection, & retention:
SMEs struggle because of perceptions
Yet SME requirements are similar to those
of large organizations
Human resource development learning
Expatriate management
Limited HR dept resources
& outsourcing
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Chapter 4
IHRM features in SMEs

Chapter 04 IHRM

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Chapter 04 IHRM

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Chapter 4

For use with International Human Resource Management 6e

Click on the book

non-equity cross-border alliance

2. Equity-based alliances (M&As, IJVs)

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

Equity & non-equity modes of foreign operation

For use with International Human Resource Management 6e

Cross-Border mergers & acquisitions

For use with International Human Resource Management 6e

The formation processes of M&As and HR challenges

For use with International Human Resource Management 6e

Mergers and acquisitions in US$ billions

Typical cross-border M&A problems

For use with International Human Resource Management 6e

Within the first year of a merger,

For use with International Human Resource Management 6e

HR activities in the phases of a cross-border M&A

Firms should rely on three conceptual tools:

Strategic HRM in M&As

Comparing HRM in M&As

For use with International Human Resource Management 6e

Germans are the most anxious to adopt

For use with International Human Resource Management 6e

International equity joint ventures

IJV challenges include

HR must recruit, develop, motivate,

HR must develop appropriate HRM

For use with International Human Resource Management 6e

Formation of an international equity joint venture

The main reasons for an IJV

To obtain vital raw materials

For use with International Human Resource Management 6e

Provide an efficient & cost effective response

IJV development stages

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

For use with International Human Resource Management 6e

In EEA & Sweden:

SMEs are very important

Barriers to international markets by SMEs

For use with International Human Resource Management 6e

1. Not enough working capital to finance exports

The founder or owner has large impact

IHRM features in SMEs

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