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Implications of National Differences in Culture, Institutions and Traditions for International Human Resource Management

3865 words (15 pages) Business Assignment

4th Nov 2020 Business Assignment Reference this

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During the time of working for an organization, employees should have a proper relationship with their co-workers. In which, some may come from different backgrounds and culture that would affect employees’ behaviour. This also bring impacts on organizational performance as well. Therefore, it is essential for the Human Resource (HR) department to use a different approach (Cross-Cultural, Comparative HR and International Human Resource Management (IHRM)) to manage their staffs and their motivation level in a positive way so that they can improve their performance. Yet, comparing culture is a complex interaction as it consists analysing values, attitudes and behavioural assumption (Thomas & Lazarova, 2013). Thus, the aim of this study is to analyse how the two theoretical frameworks affect employee management in different nations.

In terms of institutional differences, it can be understood as the difference in structures, rules, norms and routines. (Richard, 2004). According to Vaiman and Brewster (2015), it can also be understood as a more practical and physically existing differences between countries. This includes, size; infrastructure; politics; formalization. All these differences lead to varieties of business system.

An establishment might be characterized as the official association with a significant job in a nation' or 'an association established for a strict, instructive, or social reason. In the period of globalisation, there has been concerns on the status and feasibility of existing institutional game plans, including country states (Singh et al. 2019). Giddens, for instance, contends that numerous establishments have become 'shell' like, also, 'have gotten insufficient to the undertakings they are called upon to perform'. Therefore, the typical arrangement of establishments can be found in many social orders, including opening new opportunities, private ventures, open utilities, money related foundations, instructive organizations, exchange associations and government or the semi administrative organizations. However, the companies can give some effects on society as they are providing opportunities to the people for earning a good amount of money.

In this manner, it might be contended that in certain social orders, due to the socio-political customs, foundations work in an interlocking, and strong design, while there is more noteworthy 'space' between key foundations, and accentuation on institutional independence and self-support (Linehan, 2019). For the motivation behind this investigation, different correlative institutional viewpoints are advertised. In the first place, wide arrangement solutions concerning the job of the state and related institutional courses of action are investigated. Second, varieties in 'business frameworks' from area to locale will varies base on the examples of possession will be analysed.

Meyer and Rowan (1977), suggested a new term under institution framework, which is institutionalisation. This can be seen as ‘a social process, obligation or actuality take place on a rule-like status n social thought and action’. Later on, Wood et al. (2012) commented that new institutionalism’s principle still remain consistent. During the early 1990s, Kidger (1991) and North (1990) believed that isomorphism, the process that an organisation resembling other organisation that are facing same set of environments, would appear in most of the world. However, recent accounts had profoundly shown national societies should be more influential than isomorphism (Vaiman and Brewster, 2015).

Undertakings installed in coordinated market economies (CME) are prone to organize longer-run execution and to seek after speculation procedures including item and procedure advancement and related aptitude improvement. Related highlights of work would incorporate by elevated levels of employer stability, including assuring employees in case of takeovers as well as merging, along with vigorous courses of action for representative interview and contribution so as to induce performance (Cho, 2019). In such frameworks administrative leadership is common and again compelled by incidental impacts, counting business laws and guidelines forced by government, and other partner motivation. In CMEs, worker inspiration and responsibility are likely to be high, this being related with high standard items and administrations, yet such economies may risk absence of worldwide aggressiveness because of significant expense and 'inflexible' business rehearses (Mendy & Rahman, 2019).

Different countries have different business system. According to Hollinshead, G. (2008), Hong Kong uses fragmented system where small owner-controlled firms would be facing high levels of competition. Meanwhile, in the United Kingdom (UK), compartmentalized system is being adopted where large enterprises integrates activities between sectors including the industrial chain and shareholdings with little cooperation between firms though. Last but not least, in Japan, highly coordinated system is used where large companies would adopt conglomerates as their business model. In this sense, foreign workers might find difficulties in adapting to a new style of business system.

Taking Hong Kong as an example, given that it is a free market with great flexibility and competition, most of the companies focus on short-term results and high ttKey Performance Indicator (KPI). In which, it results in a high-power distance index (PDI) where employees will only be promoted for achieving the goals imposed. In the UK, low PDI could be found as most of the leaders do co-ordinate due to the lack of status and recognised authority (Guttilla. R, p.20). Besides, individualism is very important to the UK as well. Employees are allowed to give opinions on many projects and are encouraged to be creative and innovative. While in Japan, a borderline hierarchical society, most of the companies focus on how workforce is ‘incorporated’ and loyal to them. In their culture, following the majority is essential. Therefore, the majority of employee only work for one company in their lifetime and obey the orders from their managers. In such sense, a relatively high KPI is identified.

Besides,  employee benefits are different in various countries as well. In terms of pension, companies in Hong Kong have to provide Mandatory Provident Fund (MPF) to its employee where they have to contribute 5% of the employees’ relevant income. This is similar to UK’s pension scheme, yet the range is from 2% to 5% as they can differ depending on the how much the employer contributes. While in Japan, the pension system is quite different from the above countries. It is mainly made up of national pension insurance and employees’ pension insurance. And the amount varies between 12.2% to 15.1% but it will reduce if he employee split half with the employer. In terms of statutory minimum holiday, employees in Hong Kong only have 12 days per year, while in the UK, employees are entitled to have 28 days per year and 10 days for employees in Japan. The above difference lead to different culture and traditions as well.

Geert Hofstede’s approach is initially dependent on review information acquired from two organization frame of mind studies led in 1968 and 1972 and including 116,000 IBM workers over more than 60 nations, has given compelling experiences into fluctuating social inclinations over national hindrances (Aguilera & Grøgaard, 2019). Five measurements; power instance, masculinity, uncertainty avoidance, individualism and long-term orientations were distinguished that had all-inclusive pertinence crosswise over societies. For each measurement, Hofstede exhibited potential origin just as consequences for the board conduct. Power separation mirrored the degree to individuals from society that are set up to acknowledge various levelled or inconsistent power structure.

English-talking nations are, in general, be profoundly individualistic, while higher degrees of cooperation can be found in mainland Europe, Asia, Latin America, the post-communist coalition and creating nations. In these countries, both sexes do not get the same qualities and they are not working equally in the companies in a good manner. Profoundly manly social orders incorporate Japan; Austria, as well as Latin nations, are focusing on the male workers, but in the Scandinavian nations as well as the Netherlands are generally female in direction.

Hofstede’s examination has been profoundly persuasive in scholastic as well as business hovers as it has featured the centrality of culture in universal business commitment and informing administrative practices crosswise over national limits. The examination, through its solid experimental direction, looked to make substantial and quantifiable the indistinct thought of culture.

In this case, Hong Kong, the UK and Japan had different strong representation of different dimensions. Hong Kong and Japan ranked high in terms of long-term orientation where these two countries are able to be pragmatic in adopting changes while aiming for the future. Also, the employee relationship in the both countries are ordered by status and the order is being observed (Hofstede, 2001). This is common in the far east commented by Taylor, S. as they are aware of time perspective and focus on preserving. In the UK, indulgence is very important to the employees. That means people are aiming for work-life balance that they would like to control their life as well as other freedoms and rights. As mentioned, Japan scores high in terms of uncertainty avoidance as they are very loyal to their employers as well as the hierarchy system. With a large control in operations by the managers, employees have to ask for permission to start or proceed a project.

However, Hofstede's theory might be not valid on various situations. The exact investigations completed in the late 1960s and mid-1970s happened before the increase of globalization and related improvements, which has affected on qualities and frames of mind on a worldwide scale (Rickley, 2019). Women equality was also not an important issue when the research was carried out. Social sub-groupings inside the country state, dividing its social solidarity, have become progressively evident; for instance, ethnic and strict minorities and financial vagrants. The hypothesis will in general present culture as a static wonder, accordingly, rendering its quantifiable, while homogeneity in culture may not be taken for allowed after a while. It is methodologically defective. Not exclusively may one disagree with the thought that parts of culture can be analysed and scored, yet in addition the elite example of IBM workers might be viewed as offering just an incomplete picture of national standards and values.

Trompenaars' observational examination happened in the mid-1990s and included the appropriation of surveys to more than 15,000 supervisors in 298 nations. He distinguished five 'relationship directions', as the followings.

Universalism versus particularism identifies with the degree to which people tend to apply all-inclusive standards or rules to social circumstances or occasions or whether they are prepared to alter those standards as indicated by every event. While formal ideas of decency and truth are viewed as critical in universalistic societies, particularism puts a more prominent accentuation on the structure and insurance of connections (Ren, Yang & Wood, 2019). In this way, as indicated by Trompenaars, in particularistic societies observers to a street mishap in which the driver was breaking as far as possible would feel obliged to affirm for that driver on the off chance that the person in question is a companion or relative. Western nations, for example, the United States, Australia and the UK positioned high on universalism, while China, Latin and creating nations were increasingly particularistic in direction.

Individualism versus communitarianism is intelligent of Hofstede's proportionate measurement and basically depends on whether the person's essential direction is towards oneself or to shared objectives and goals. In understanding deeper of country states in a later period, Trompenaars curiously uncovers national social inclinations that would appear to be disagreeing the push of Hofstede's examination. Therefore, following the ongoing initiation of showcase radicalism in their areas, Mexico and the Czech Republic tend towards independence. Japan, then again, remains unequivocally collectivist in direction.

Accomplishment versus credit refer to the degree to which economic wellbeing is accomplished either by what individuals have done, that is, the thing that they have accomplished through their very own efforts, or through what their identity is, as a result of birth, family, sex, age or religion. It is contended that the United States, the UK and western social orders will, in general, be accomplishment situated, while Asian societies and those in creating social orders place more prominent incentive on attributed qualities.

Neutral versus emotional identifies with the degree to which sentiments and feeling, or indifference and sanity, are communicated in relational experiences. As per Trompenaars, and Hampden-Turner (1997), Japan has an exceptionally impartial culture, while Mexico is emphatically full of feeling or passionate.

Explicitness versus diffuseness identifies with the qualification drawn between the person's private and open spaces. In explicit societies, compartmentalization happens between work, private life, while in increasingly diffuse social orders different circles of life are firmly incorporated, the 'entire individual' is associated with business connections (Aguilera & Grøgaard, 2019). Similarly, as with different measurements, an expansive detachment is evident between western social orders and others, with western nations tending towards explicitness. Successive versus synchronic recognizes societies based on their impression of time.

A few nationalities and locales are generally arranged towards monochrome, which accepts that time is direct and consecutive, while others are polychromic, where time is numerous and diffuse. In the previous, exercises will, in general, be isolated into arrangements, while in the last mentioned, people are tempted to attempt a few exercises simultaneously. This measurement moreover identifies with the degree social orders are arranged towards the past, present or future. Inward versus external directedness reflects major thoughts with respect to whether people and gatherings can control their very own predetermination, or whether outside elements and karma play a conclusive part. In internal coordinated social orders, it is accepted that vital decisions and arranging are significant in forming associations and their condition, while external directedness underscores the power of political conditions and 'demonstrations of God'. Individual systems administration has a high premium in external coordinated social orders.

While both Hofstede and Trompenaars have given profoundly persuasive experiences on social assorted variety, it might be contended that other, maybe less vaunted, works give similarly substantial bits of knowledge for understanding the social complexities of global business. Specifically, Lewis (1999) draws qualifications between 'groups of nations' Linear-Active-Multi-Active (LAMAS) and Dialog-Orientated - Data-Orientated (DODOS) scales. As indicated by these orders, societies that pursue multi-dynamic (DODOS) time frameworks, for example, Mediterranean and Latin American societies, will, in general, take part in different exercises at the same time, are progressively adaptable and have less unbending the board conversational standards. Conversely, Swedes, Swiss, Dutch or Germans, in general, 'straight' (LAMAS) social orders, show successive activity designs, centre around single acts, time cognizance and reliability (Aguilera & Grøgaard, 2019).

Lewis (1999) proposes that DODOS nations will, in general, have all the more intently weave interpersonal organizations, which empower them to assemble data about business accomplices through casual systems of loved ones. Interestingly, Germans, Swiss, North Americans and New Zealanders 'love to assemble strong data and move relentlessly forward from that database'.

Some had some argued some behaviour of the societal practices of the cultural dimensions. In which, Romani (2010), he developed some new dimension, such as performance orientation, gender egalitarianism, in-group collectivism etc. Performance orientation is that the employer focus on results more than people and believe schooling and education will be crucial for gaining success. Yet,  age is not important in terms of considering promotions. This could be found in Singapore and Taiwan. These countries expect employees would demand for targets, which is proactive, and would be eager to gain more training and development. For gender egalitarianism, which means not taking gender identity as a consider in recruiting and assigning tasks. This is more common in countries that already passed the LGBT rights law, including Canada, Norway and Sweden. Women are more involved in the authority roles as well as decision making. The traditional occupational sex segregations are less likely to appear in these countries. Last but not least, in-group collectivism is a dimension that individuals are willing to sacrifice their own benefits in order to fulfil organisations’ obligations. It is more common in the developing economies such as Philippines, Zimbabwe etc.

Schwartz (1999), also promoted new concepts on representative behaviour which was developed  based on basic human values. For example, mastery; intellectual autonomy; affective autonomy etc. For mastery, employers encourage employees to be self-assertive, where they would change and exploit obstacles in the environment to achieve the goal. This is common in South Korea, the United States and Japan. It was commented that the relationship to the “power” work value is positive. For intellectual autonomy, it can be seen as encouraging individuals to be intellectual and autonomous. Under this dimension, the organisation is more open to change and diversity where employees are valued with their own interests, abilities and preferences. Competencies such as creativity, flexibility will be important to this type of organisation which can be found in France, Switzerland and Denmark etc. Lastly, affective autonomy is also about open to change and diversity, yet it usually does not consider the societal norm ‘entitlement’ which can be found in intellectual autonomy. Also, they encourage employees to follow positive experiences for themselves.

After analysing the study, it is important to say that, in a company, the HRM always has an important role. With proper HRM activities, the employees of different culture and individualism can be handled in a proper way. However, there are countries like Germany, USA, Japan as well as China where the companies have been facing challenges to handle the employees. Measuring culture and institutional differences between countries consists of using numerous framework and angle, so to be more all-rounded. Being more critical to frameworks help to see the full image as framework might have blind spot that might not cover all the characteristic of a country’s institution and culture. So, by examining numerous studies on the both theoretical frameworks could benefit in understanding national differences in culture, institutions and traditions for International Human Resource Management.

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