INDEPENDENT STUDY
ANALYSIS OF IHRM APPROACH
AT WORLDBEST TEXTILE (THAILAND) CO.,LTD.
JIANDANG CHEN
Graduate School of Kasetsart University
2006
INDEPENDENT STUDY
ANALYSIS OF IHRM APPROACH
AT WORLDBEST TEXTILE (THAILAN) CO.,LTD.
JIANDANG
CHEN
An Independent Study Submitted in Partial Fulfillment of
The requirements for the Degree of Master Business Administration
Graduate School, Kasetsart University
2006
Jiandang Chen 2005: Analysis of IHRM approach at Worldbest Textile
(Thailand) Co., Ltd.: Master of business administration, Major Field:
Business Administration (International MBA Program). Independent Study
Chairman Advisor: Associate Professor Preeyanuch Aplibunyopas, Ph.D,
50 pages.
The objectives of the study were 1) to analyze international human resource
management approach at Worldbest Textile (Thailand) Co., Ltd 2) to explore
advantages and disadvantages of the approach that WBTT applied.
The method used for the study is descriptive method. Primary data were
collected from WBTT. Secondary data were collected from the relevant sources such
as literature, previous studies, thesis, text books, journal and web sites.
The result of study shows that ethnocentric approach was applied at WBTT.
Under ethnocentric HRM approach, both advantages and disadvantages exist. The
advantages are 1) Good communication, coordination and control links with
headquarter 2) Overcome a lack of qualified HCNs 3) assurance that subsidiary will
comply with company objectives policies. The disadvantages are 1) Poor
communication between expatriates and local staffs 2) less opportunities for local
staffs 3) High turn over rate of local staffs 4) High cost for expatriates. This study
recommended that, applying an ethnocentric approach will benefit company a lot in
the early stage of internationalization as mentioned above, but in long run, MNEs
should develop IHRM approach to be a mixed approach or a global approach to be
successful under environment of global competition.
/
Student’s Signature
Advisor’s Signature
/
ACKNOWLEDGEMENTS
This independent study was successfully completed with the help, suggestions,
recommendations and kind supports from Dr. Preeyanuch and Dr. Nirandon should
add their last name. I would like to convey my sincere appreciation and thanks for
their kind and continual availability when advice was needed. They also provided me
with the direction to gather information that was beneficial to this study. Furthermore,
thanks for advising me to adjust the scope of the study to be flexible and focus on a
certain study in order to reach the objective in time.
I am deeply grateful to my supervisor, Ms. Jun Jian, manager director of
Worldbest Textile (Thailand) Co., Ltd. (WBTT), for her detailed and constructive
comments, and for her important support throughout this work.
Also, thanks to family and friends for all support.
Jiandang Chen
MBA International Program
March 2006
TABLE OF CONTENTS
Page
LIST OF TABLES
(iii)
LIST OF FIGURES
(iv)
CHAPTER I INTRODUCTION
1
Background and Statement of Problem
1
Objectives of the study
3
Benefits of the study
3
Scope of the study
3
Abbreviation
4
CHAPTER II LITERATURE REVIEWS
6
International Human Resource Management
6
Related Research
18
Conceptual Framework
25
CHAPTER III METHODOLOGY
26
Data Collection
26
Data Analysis
27
CHAPTER IV DATA ANALYSIS AND RESULT OF THE STUDY
30
CHAPTER V CONCLUSION AND RECOMMENDATIONS
37
Conclusion
37
Recommendations
38
REFERENCES
40
APPENDIX
43
(ii)
LIST OF TABLES
Table
Table1
Page
China’s Outward FDI Flows in Comparative Perspective (in US $bn.)
2
Table2 Criteria 1 to check WBTTs IHRM approach
29
Table3 Criteria 2 to check WBTTs IHRM approach
29
Table4 Criteria 3 to check WBTTs IHRM approach
29
Table5 Characteristics of interviewees
30
Table6 Result of checking by Criteria 1
32
Table7 Result of checking by Criteria 2
32
Table8 Result of checking by Criteria 3
33
(iii)
LIST OF FIGURES
Table
Page
Figure1
International Human Resource Management Orientation
15
Figure2
Conceptual Framework
25
CHAPTER I
INTRODUCTION
Background and Problem Statement
Internationalization and the effective use of human resources are two major
issues facing firms in today’s global economy. As more and more firms operate
internationally, there is a clear need to develop understanding of how to manage
human resources that are located outside the domestic environment.
Staffing is a major strategic IHRM practice that MNEs has used to help
coordinate and control their global operations. Having the right people in the right
place at the right time emerges as the key to a company’s international growth. The
effectiveness of many other IHRM activities depends largely on the quality of new
employees attracted through the recruitment and selection process.
Owing to the rapid growth of internationalization of Chinese firms (see table
1), IHRM in the Chinese context has been one of the most important key issues for
them. However, Chinese enterprises aren’t mature enough in terms of multinational
management include IHRM. The reason is China’s investment abroad makes up only
0.15 percent of the world total by now. According to statistics, the ratio of absorbed
foreign investment and investment in other countries are as follows: in developed
countries it is 1:1.14, in developing countries is 1:0.13 and in China the figure is only
1:0.09, judging from this, China is still at the primary stage of investing abroad or still
2
in early stages of internationalization. Naturally, the approach of Chinese MNEs to
IHRM staffing has become an urgent and interesting area of management study.
As ethnocentrism is often found in companies which are in the early stage of
their internationalization (Heenan & Perlmutter, 1979), so, this study will focus on the
biggest investment project, Worldbest textile (Thailand) Co., Ltd. (WBTT) to analyze
IHRM approach (orientation) at WBTT and explore its advantages and disadvantages.
As WBTT is the biggest investment project of Chinese in Thailand, so, the study on
WBTT will be more representational and meaningful for other Chinese enterprises
who have operated business in Thailand and both who are planning to invest in
Thailand.
Table 1: China’s Outward FDI Flows in Comparative Perspective (in US $bn.)
Country
1980-90
1991-2000
2001-03
China
0.4
2.3
3.7
South Korea
0.5
3.3
2.8
Taiwan
1.6
3.6
5.3
Singapore
0.4
4.9
8.8
Malaysia
0.2
1.7
1.2
Thailand
0.0
0.4
0.3
Indonesia
0.0
0.7
0.1
India
0.0
0.1
0.1
Source: UNCTAD
3
Objectives of the study
The objectives of this study are
1. To analyze WBTTs IHRM approach.
2. To explore advantages and disadvantages of WBTTs IHRM approach .
Benefits of the study
1. WBTT or other Chinese funded enterprises in Thailand can apply this study
to adapt their IHRM policies for improving performance of implementation
multinational strategies.
2. To provide knowledge and guidelines of IHRM to those Chinese enterprises
who want to invest in Thailand.
Scope of the study
The scope of this study focuses on WBTT. The data were collected from
interviewing the staffs of WBTT from 8 March, to 14 March 2006.
4
Terminology
Abbreviation
CWGC
=
China worldbest group company co., ltd.
EPRG
=
Ethnocentric, polycentric, regioncentric, and geocentric human
resource staffing policies.
HCNs
=
Host-country nationals
IHRM
=
International human resource management
MNC
=
Multinational corporate (company)
PCNs
=
Parent-country nationals
WBTT
=
Worldbest Industry (Thailand) Co., Ltd.
TCNs
=
Third-country nationals
Definition
1. International human resource management (IHRM): IHRM is concerned
with HRM issues, functions, policies and practices that result from the strategic
activities of multinational enterprises and impact the international concerns and goals
of enterprises (Schuler et al., 1993).
2. Ethnocentric: It implies the centralization of the management and power.
The research, development and other activities prefer to be tested in the country of
origin and then extended to other countries. The ethnocentric companies are home
5
country
oriented.
The
standard
international
company
faces
challenging
communicating in different languages and in accepting cultural difference.
3. Polycentric: It is on the contrary that local manager and workers formulate
policies and practice them to adapt local needs. The managerial power is
decentralization, and local site has autonomy.
4. Geocentric: It combines local and international strength. The top management
level not only considers local need and but also goes further to pursuit of corporate
goals and values. Such type is probable difficult to carry out, but it can be the most
successful.
5. Global approach orientations assign their best managers to international
assignments. Recruitment and selection take place worldwide, in any country where
the best-quality employees can be bound.
CHAPTER II
LITERATURE REVIEWS
In this chapter, the theoretical framework is presented. First, definition and
key concepts for IHRM and IHRM staffing is presented. A literature review of IHRM
staffing approaches involved typology of earlier scholars then follows. Further,
ethnocentric staffing approach will be present in more detail. Finally, related research
about advantage and disadvantage of ethnocentric staffing were reviewed and end
with a summary of IHRM staffing approach.
International Human Resource Management
International Human Resource Management (IHRM) is thus the aggregate of
the various HRM systems used to manage people overseas in the MNE. The following
are some definitions of IHRM in the literature:
IHRM is concerned with HRM issues, functions, policies and practices that
result from the strategic activities of multinational enterprises and impact the
international concerns and goals of enterprises (Schuler et al., 1993).
IHRM is the HRM issues and problems arising from the internationalization of
business, and the HRM strategies, policies and practices that firms pursue in response
to the internationalization process (Scullion, 1995).
7
An MNE’s IHRM system is the set of distinct activities, functions and
processes that are directed at attracting, developing, and maintaining an MNE’s
human resources and which is regarded as the aggregate of the various HRM systems
used to manage people in the MNE, both at home and overseas (Taylor et al., 1996).
The Importance of IHRM
Internationalization and the effective use of human resources are two major
issues facing firms in today’s global economy. As more and more firms operate
internationally, there is a clear need to develop understanding of how to manage
human resources that are located outside the domestic environment. IHRM seeks to
assist organizations to make the most effective use of their human resources in the
international context. As Schuler et al. (2002:42) state, ‘IHRM for many firms is
likely to be critical to their successes, and effective IHRM can make the difference
between survival and extinction for many MNEs’.
A number of reasons have been identified in the literature as to why IHRM is
of growing importance. These include the following:
Recent years have seen a rapid increase in global activity and global
competition that have resulted in an increase in the number and influence of MNEs so
that the role of IHRM grows in significance (Young and Hamill, 1992; Dowling et al.,
1994).
The effective management of human resources internationally is increasingly
being acknowledged as a key source of competitive advantage in international
business (Edwards et al., 1996). It is increasingly recognized that the effective
8
implementation of international business strategies will depend on the ability of
companies to develop appropriate human resource strategies for the recruitment and
development of their international managers (Bartlett and Ghoshal, 1992a, 1992b).
As MNEs continue to expand their businesses across borders, IHRM has been
given growing attention as a useful means of control (Kobrin, 1988). The
implementation of appropriate HRM practices can enhance MNEs’ control of
overseas operations and thereby improve overall performance (Paik et al., 2000).
There is growing evidence to suggest that the human and financial costs of
failure overseas are more severe than in domestic business and that many companies
underestimate the complex nature of the HRM problems involved in international
operations (Dowling and Schuler, 2004; Tung, 1984).
The shortage of international managers is a significant constraint on the
successful implementation of global strategies (Hamill, 1989, p.18; Scullion, 1994, p.
87, 1995).
International Staffing
Staffing is about who is going to run the various geographically dispersed
operations (Sparrow et al., 1994). Staffing can be divided into recruitment and
selection. Recruitment is defined as searching for and obtaining potential job
candidates in sufficient numbers and quality so that the organization can select the
most appropriate people to fill its job needs. Selection is the process of gathering
information for the purposes of evaluating and deciding who should be employed in
particular jobs (Dowling et al., 1994). In practice recruitment and selection are not
usually separated.
9
Staffing is a major strategic IHRM practice that MNEs have used to help
coordinate and control their global operations. Staffing foreign operations is important
because many MNEs are in difficulty because the parent firms are not able to
assemble international management teams combining knowledge of local market
conditions with local and organizational competence. Having the right people in the
right place at the right time emerges as the key to a company’s international growth.
The effectiveness of many other IHRM activities depends largely on the quality of
new employees attracted through the recruitment and selection process. The staffing
problems facing international firms are more complex than in domestic firms.
Inappropriate staffing policies may lead to difficulties in managing overseas
operations.
IHRM approaches
1. MNEs have several options for developing the appropriate IHRM policies
for the implementation of multinational strategies. One way to ascertain a company’s
approach to IHRM is to examine its IHRM approach orientation or philosophy. In the
earlier study about international staffing policies, experts concluded four general
approaches to international staffing policies (Dowling and Welch, 2004; Perlmutter,
1969; Perlmutter and Heenan, 1974, 1979):
The ethnocentric approach to staffing results in all key positions in a
multinational being filled by PCNs;
10
The polycentric approach is one in which HCNs are recruited to manage
subsidiaries in their own country and PCNs occupy positions at corporate
headquarters;
The geocentric approach utilizes the best people for the key jobs throughout
the organization, regardless of nationality;
The regiocentric approach to international staffing is that a multinational
divides its operations into geographical regions and transfers staff within these
regions.
Experts identify four IHRM orientations.
2. Perlmutter seems to be commonly cited author in terms of typologies for the
analysis of multi-nationals. He divides companies into three categories (1969):
2.1 Ethnocentric: it implies the centralization of the management and power.
The research, development and other activities prefer to be tested in the country of
origin and then extended to other countries. The ethnocentric companies are home
country
oriented.
The
standard
international
company
faces
challenging
communicating in different languages and in accepting cultural difference.
2.2 Polycentric: it is on the contrary that local manager and workers
formulate policies and practice them to adapt local needs. The managerial power is
decentralization, and local site has autonomy.
2.3 Geocentric: it combines local and international strength. The top
management level not only considers local need and but also goes further to pursuit of
corporate goals and values. Such type is probable difficult to carry out, but it can be the
most successful.
11
Many multinational companies have to face to the issue that combination of
highly differentiation; it requires a sufficient flexibility to respond to local conditions
(Hollinshead & Leat, 1995).
3. There are four general approaches to international staffing policies
(Dowling and Welch, 2004; Perlmutter, 1969; Perlmutter and Heenan, 1974, 1979):
- The ethnocentric approach to staffing results in all key positions in a
multinational being filled by PCNs;
- The polycentric approach is one in which HCNs are recruited to manage
subsidiaries in their own country and PCNs occupy positions at corporate
headquarters;
- The geocentric approach utilizes the best people for the key jobs
throughout the organization, regardless of nationality;
- The regiocentric approach to international staffing is that a multinational
divides its operations into geographical regions and transfers staff within these
regions.
But with rapid growth of globalization of the world, studies in this field have
upgraded typology as follows: the four IHRM orientations are ethnocentric,
polycentric, regiocentric, and global. These approaches reflect a company’s basic
tactics and philosophy for coordinating their IHRM activities for managerial and
technical workers. Figure 1 shows how the IHRM orientations relate to some of the
basic HRM functions.
12
1. Ethnocentric IHRM Orientation
An ethnocentric IHRM orientation means that all aspects of HRM for
managers and technical workers tend to follow the parent organization’s homecountry HRM practices. In recruitment, key managerial and technical personnel come
from the home-country. Local employees fill only lower-level and supporting jobs.
Past performance at home and technical expertise govern selection criteria for
overseas assignments in the ethnocentric IHRM Company.
2. Regioncentric and Polycentric IHRM Orientations
Firms with regioncentric or polycentric IHRM orientations have greater
responsiveness to the host-country differences in HRM practices. These orientations
are similar in that they emphasize adaptation to cultural and institutional differences
among countries. They differ only in that the polycentric company adapts IHRM
practices to countries and the regioncentric to regions.
Companies with polycentric IHRM orientations treat each country-level
organization separately for HRM purposes. The regioncentric organization tends to
adopt region wide HRM policies. Consistent with these orientations, companies
recruit and select their managers mostly from host countries or regions. Regiocentric
companies may also look for key people from the home company who has mastered
the cultures and languages of the countries in their regional locations. Qualifications
for managers from the host-country follow local or regional practices. To
communicate with the multinational’s headquarters, however, host-country managers
often need the ability to speak and write in the home company’s national language.
13
Polycentric and regioncentric multination usually place home-country
nationals in top-level management or technical positions. These home-country
managers are used to control overseas operations or transfer technology to hostcountry production sites. As with the ethnocentric IHRM companies, HRM policies
applied to home-country expatriates remain fixed at headquarters. In addition, unless
headquarters values country- or region-specific international experiences, there
remains a tendency for international assignments to have negative effects on the
managerial careers of home-country nationals.
Unlike the ethnocentric IHRM company, the polycentric IHRM company
favors local procedures and standards for evaluations and promotions of most hostcountry managers. Decentralization from headquarters allows country or regional
managers to assess their own human resource needs and develop local evaluation and
promotion criteria. Local organizational cultures that differ from that of the home
company also influence the procedures used by organizations to evaluate and promote
employees. Regiocentric IHRM companies act similarly to the polycentric companies
but develop regional standards for evaluation and promotion.
3. Global IHRM Orientations
Organizations with truly global IHRM orientations assign their best managers
to international assignments. Recruitment and selection take place worldwide, in any
country where the best-quality employees can be bound. The fit of the manager to the
requirements of the job assignment. Thus, capable managers adapt easily and well to
different cultures and are usually bilingual or multilingual. In addition, the
international assignment becomes a prerequisite for a successful managerial career in
companies with global orientations.
14
In companies with global orientations, managers are selected and trained to
manage cultural diversity inside and outside the company. Employees inside their
organization have culturally diverse backgrounds, and the company’s
multiple
country locations provide culturally diverse customers, suppliers, and so on. Besides
confronting issues of cultural diversity, global managers must meet the coordination
and control needs of corporate headquarters. To meet these challenges successfully,
managers need continual training for cultural adaptation and development of the skills
to balance local needs with overall company goals.
15
Figure 1 : International Human Resource Management Orientation
16
Further review in Ethnocentric international staffing approach
In ethnocentric IHRM approach (orientation), consistent with the use of homecountry nationals for management and technical positions, evaluations and
promotions use parent country standards. The company assesses managers’
performances using the same criteria and measures sued for home-country units.
Because of national context variations, companies may be forced to use different
approaches for the evaluation and promotion` of host-country managers. Such local
adaptations, however, often have little effect on the ethnocentric company’s
procedures for promotions beyond the lowest levels of management. As such, limited
by facilities and opportunities located in their country, host-country nationals usually
face a ceiling or barrier limiting how far they may progress in the company.
When an ethnocentric IHRM company uses expatriates, training for the
international assignment is often limited or nonexistent. Except for top country-level
or region-level positions, most international assignments last only a short time, often
only for marketing and sales contacts. The use of home company evaluation and
promotion standards, the lack of training, and the often-short periods of expatriate
assignments limit and discourage cultural adjustments for expatriates Seldom, for
example, do expatriate managers from the parent country know the host-country’s
language.
In the ethnocentric company, when international postings are available, they
often have negative effects on the careers of managers or technical specialists.
Ethnocentric organizations usually concentrate key decision making at home, so
expatriate managers often feel that they have little successes in communicating local
17
needs to headquarters. Expatriates also tend to feel isolated and “out of loop”, with
little opportunity to net work with higher-level management.
Benefits and costs of ethnocentric orientation
Benefits of ethnocentric
Little need to recruit qualified host-country nationals for higher management:
Local employees will hold only lower-level jobs or mid-level management jobs. Often
a “glass ceiling” limits the advancement of host-country nationals.
Greater control and loyalty of home-country nationals: These employees know
that the home culture drives their careers. They seldom identify with the local country
subsidiaries
Little need to train home-country nationals: Managers look to headquarters for
staffing and evaluation and follow headquarters’ policies and procedures.
Key decisions centralized: Personnel decisions are made at headquarters.
Costs of ethnocentric
May limit career development for host-country nationals: High potential hostcountry nationals may never get beyond the glass ceiling, and talent is wasted.
Host-country nationals may never identify with the home company: Hostcountry nationals are governed by local HRM practices, and they often realize that the
glass ceiling exists. Therefore, they often have more allegiance to the local company
than to the home company.
Expatriate managers are often poorly trained for international assignments and
make mistakes: Training is not valued and assignments are often short.
Expatriates may have limited career development: International assignments
are often viewed as hurting one’s career and do not always attract the best people.
18
Related Researches
The related researches reviewed in this part are focus on advantages and
disadvantages of each IHRM approach.
Each approach has its advantages and disadvantages. The major advantages of
the ethnocentric approach are good communication, coordination and control links
with headquarters. There are many problems engendered by the ethnocentric
management approach, such as an inability to utilize fully the talents of non-homecountry nationals, discontent among local national managers, high costs of using
expatriates, higher turnover rate of local national managers, difficulty of adaptation to
the host environments and re-entry problems for expatriates returning to the home
country. Employing expatriates on foreign assignments is also expensive since the
process involves a range of costs. According to Brewster (1988: 22), these costs
include:
- Costs of transfer (recruitment and selection; home country relocation;
briefing, preparation and training; removals and storage; air fares for the family;
temporary hotel accommodation; overseas relocation);
- Continuing costs (expatriate salary; school fees or boarding school fee
assistance; medical costs; insurance; housing; pension at home; car or transport;
clothing allowances; family visits home);
- Overhead costs (the establishment and operation of a specialist expatriate
section; communications and flights; senior executive time). The advantages
associated with the use of host country nationals include familiarity with culture,
knowledge of language, reduced costs, good public relations, and low turnover of
19
HCN managers. Kopp (1994) pointed out that where there is a greater utilization of
local nationals in managerial posts, especially those at higher levels, firms are less
likely to experience problems involving friction and poor communication between
expatriates and local personnel and complaints by local nationals of lack of
opportunities for advancement. The main disadvantages of a polycentric policy are the
difficulty of bridging the gap between subsidiaries and headquarters and the limited
career paths of HCNs and TCNs.
There are two main advantages to the geocentric approach: it enables a
multinational firm to develop an international executive team, and it overcomes the
‘federation’ drawback of the polycentric approach. The major disadvantages of the
geocentric approach are the difficulty of obtaining work permits in host countries and
high costs of training and relocation.
The main advantages of the regiocentric approach include allowing manager
transfer between regional headquarters and subsidiaries as an MNE gradually adapts
its staffing policies. The disadvantages of this approach include causing federalism on
a regional basis and limiting career paths for managers to the region (see Perlmutter,
1969; Perlmutter and Heenan, 1974, 1979; McFarlin and Sweeney, 1998; Dowling
and Welch, 2004).
3. Heenan & Perlmutter (1979) studied an MNC is considered to have an
ethnocentric human resource staffing policy if the key positions abroad are filled with
parent-country nationals and a common perception of companies has been that the
transfer of corporate knowledge is best done by parent-country nationals.
20
4. Ethnocentrism is often found in companies which are in the early stage of
their internationalization ( Heenan & Perlmutter, 1979). Most of the key national
positions were to remain in the hand of parent-country nationals until the operation
and the market reached maturity (Carranza, Lqbal, Svensson & Svensson, 2001).
Heenan and Perlmutter (1979) stated that ethnocentrism is most common in the early
stages of the internationalization processes.
5. One of the key decisions that multinational companies must make is
whether to select local or expatriate personnel to manage and work in their foreign
subsidiaries. In spite of the alleged globalization of businesses, many MNEs continue
to be ethnocentric in their staffing policies (Mayrhofer and Brewster, 1996).
6. Studies have shown that the ethnocentric human resource staffing policy is
the predominant staffing policy in MNEs. According to Mayrhofer and Brewster
(1996) the general predominant trend in MNEs is ethnocentric, and research by Koop
(1994) showed that 75 percent of Japanese subsidiaries’ directors were expatriates
(Bonache Perez & Pla-Barber, 2005). Also, it has been established that out of the 81
largest transnationals only 29 had non-nationals on their boards ( Gillies &Dickenson,
1999).
7. A problem with the ethnocentric approach is the possible failure of
understanding host-country culture (Hill, 2005). The belief is that the ethnocentric
policy is not ideal for a MNEs that tries to achieve local responsiveness in its foreign
units.
21
Another problem with the ethnocentric human resource staffing policy is that
the salary cost is much higher when using parent-country nationals.
If an MNC mainly employs parent-country nationals abroad there is the
possibility of it not employing the best persons for the job (Hill, 2005). Therefore,
ethnocentrism has often been to describe managerial orientation in a negative manner,
often to explain management failure to penetrate new markets (Marlo & Hill, 1999).
Heenan and Perlmutter(1979) have argued that ethnocentrism of MNEs is not so
much the result of prejudice as it is inexperience or lack of knowledge about foreign
countries and nationalities.
8. The ethnocentric staffing policy refers to the strategy of a multinational
company to employ managers for key positions from the parent headquarters instead
of employing local staff ("Global Human Resource Management").
Many organizations have traditionally relied on parent country nationals
(PCNs) for staffing top management positions abroad for a number of reasons
("Global Human Resource Management"):
8.1 The expatriate’s technical and business expertise.
8.2 Ability to transfer the headquarters′ culture to the foreign operation
(infusing central beliefs throughout the organization).
8.3 Political understanding of the headquarters′ organization.
8.4 Effective communication between headquarters and the subsidiary.
8.5 Lack of qualified host country nationals (HCNs).
8.6 Greater ability of expatriates to transfer know-how from the parent to the
subsidiary.
22
8.7 Measure of control over the subsidiary.
8.8 Career and promotion opportunities for PCNs.
8.9 Personnel development.
8.10 No need of well-developed international internal labor market.
8.11 Rapid substitution of expatriates possible.
However, there are a number of major problems with this approach ("Global
Human Resource Management"):
1. Parent country nationals continue to experience difficulties to adjust to
international assignments.
2. The adaptation of expatriates is uncertain.
3. Complicated personnel planning procedures.
4. The private life of expatriates is severely affected.
5. Difficulties in constant mentoring during the stay abroad.
6. This approach to staffing limits the promotion and career opportunities of
local managers, which may lead to low moral and increased turnover.
7. Parent country nationals are not always sensitive to the needs and
expectations of their host country subordinates.
8. Tensions between the expatriate executives and the HCNs (caused by
philosophical issues such as the clash of cultures and also by some fairly hard issues
such as the often substantial income gap).
9. Expatriates are very expensive in relation to HCNs.
10. Legal regulations of the host country.
11. Government restrictions.
23
12. Repatriation.
13. High failure rate.
An MNE’s choice of approach to international staffing is determined by a
variety of internal and external factors. The lasted typology of IHRM staffing
approaches are ethnocentric, polycentric, regiocentric, and globe. Each approach has
its advantages and disadvantages. Basically speaking, if a firm places a high priority
on central control, then an ethnocentric approach is likely to be adopted. If a company
intends to localize its management, then the polycentric approach is likely to be
adopted. Transnational endeavor to internationalize management as well as products
and tend to select a regiocentric or geocentric approach (Bartlett and Ghoshal, 1988).
An MNE also could adopt more than one approach in it worldwide operations. For
example, an MNE may take the ethnocentric approach toward its operations in
developing countries, but the geocentric approach its operations in developed
countries.
Worldbest Textiles (Thailand) Co., Ltd:
Worldbest Textiles (Thailand) Co., Ltd (WBTT) is one of the subsidiaries of
China Worldbest Group Co., Ltd. (CWGC, company profile see appendix 1) WBTT
was founded in year 2001, with total investment of USD 100 million, which is the
biggest industry investment project of China in Thailand. WBTTs factory located in
Rojana Industrial Park, Rayong, Thailand, covering an area of 250mu. Total
production capacity of 113,000 spindles of cotton yard. Fifty percent of the products
exported to abroad.
24
Company Address: 90/8-9, 6F, Sathorn Thani Tower 1, North Sathorn Rd.,
Silom, Bangkok, 10500
Established date: 2001.10
Registered capital: 1,350,311,800.00 Baht
Area: 153100 ㎡
Number of Employees: 970
Products:
- All-cotton yarn: medium and fine count, combing and special fine yarn
above 60s;
- Various blending yarns;
- Special yarns: composite yarn, bunchy yarn and fibre dyed yarn;
- Various knitting or weaving face fabrics.
Revenue:
- 2003 Revenue
320.133.179.44 Baht
- 2004 Revenue
509481.732.36 Baht
- 2005 Revenue
730,206,519.63 Baht
Organization charge: (See Appendix 2)
25
Conceptual Framework
The objective of this study is to analyze IHRM approach at WBTT and to
explore its advantages and disadvantages. There are four staffing approaches to MNEs.
Usually most of companies in early stage of internationalization prefer to apply an
ethnocentric staffing approach. This study focus on analysis of ethnocentric staffing
approach, because the selected companies in the study is China’s MNEs, which was
considered in early stage of internationalization.
The conceptual framework of this study is provided in Figure 2.
International HRM
IHRM Approach
1.
2.
3.
4.
Ethnocentric approach
Polycentric approach
Regiocentric approach
Global approach
Advantages and disadvantages of IHRM approach
Figure 2 : Conceptual Framework
CHAPTER III
METHODOLOGY
Research Methodology
This chapter presents the methodological strategy and research approach of
this study.
The purpose of this study was to analyze WBTT’ IHRM approach and to
explore advantages and disadvantage of the approach WBTT applied. This is a
descriptive research.
Data Collection
1. Secondary Data
To be able to find theories about IHRM staffing approaches, the study started
with the collection of the necessary data. This concerned secondary data: data that has
already been collected and documented. This is the data we found in literature,
previous studies, thesis, text books, journal and web sites.
2. Primary Data
The primary data of the research was collected from WBTT and by in-depth
interview with the persons that are involved in the selected companies. The
27
interviewees consist with two parts, the first part is expatriates from home-country,
the second part is Thai staffs. Objects of in-depth interview include the companies’
key positions: CEO, HR manager, key position of middle levels, and six common
Thai staffs, there are total 12 in-depth interview objects, 1 MD, 5 in key position of
middle levels and 6 common Thai staffs.
Data Analysis
Data obtained from primary and secondary sources. Criteria used in analyzing
IHRM approach at WBTT were set up according the literature related:
1. According the definition “In recruitment of Ethnocentric IHRM approach,
key managerial and technical personnel come from the home-country. Local
employees fill only lower-level and supporting jobs”, checking the number of Key
position of Top management and middle level managements was set to be the first
criteria:
If percentage of key positions held by managers from home-country is morn
than 80%, it shows the company has an ethnocentric IHRM approach, if the
percentage is less than 50%, it indicates the other IHRM approach was used. (See
table 2)
2. According “in ethnocentric IHRM approach, training for Cross-cultural
adaptation is very limited or none and no language requirements”, checking times of
the training for cross-cultural adaptation and languages skills was set to be the second
criteria:
28
If times of the training for cross-cultural adaptation and languages skills are
less than 3 times in average, it indicates the company has an ethnocentric IHRM
approach, if more than or equal 3 times, it indicates the other IHRM approach was
used. (See table 3)
3. In literature and related research, decision-making by headquarter is
considered be one of the ethnocentric characteristic, so, the third criteria to check
WBTT has an ethnocentric approach or not is try to find some evidence in the
organization for decision-making in importance things, such as financing and
assignment of bonus etc.
If there are evidence showed: when WBTT decide to get loan from bank and
to assign bonus for staffs, they must report to headquarter for decision, it indicates
WBTT use an ethnocentric approach, if not, WBTT doesn’t use ethnocentric approach.
(See table 4)
If criteria above can prove WBTT’s IHRM staffing approach is an
ethnocentric approach, the next objective is to find out what advantages and
disadvantages of ethnocentric IHRM staffing approach applied in WBTT. To be able
to find out what advantages and disadvantages of ethnocentric staffing approach in
WBTT, the primary data was collected by in-depth interviewing key personnel who
were concerned (e.g. MD, HR manager, expatriates, Thai staffs etc.) In order to keep
the standard of reliability and validity, those interviewees were carefully chosen based
on their job tasks and positions.
In-depth interview questions was designed according advantages and
disadvantages of ethnocentric IHRM staffing approach mentioned in the literature and
related research reviewed before (See appendix 4).
29
Table 2: Criteria 1 to check WBTTs IHRM approach
Percentage of key positions held by
Ethnocentric IHRM Orientation (Approach)
managers from home-country (%)
or not
>80
Yes
≤80
No
Table 3: Criteria 2 to check WBTTs IHRM approach
Time of training for Cross-Cultural
Ethnocentric IHRM Orientation (Approach)
adaptation and language skills
or not
>3
No
< 0-2
Yes
Table 4: Criteria 3 to check WBTTs IHRM approach
Evidences of decision-making by
head quarter
Ethnocentric IHRM Orientation (Approach)
or not
deciding to get loan from bank and
to assign bonus for staffs must get
Yes
permit from headquarter
deciding to get loan from bank and
to assign bonus for staffs do not need
to get permit from headquarter
No
CHAPTER IV
DATA ANALYSIS AND RESULT OF THE STUDY
In the fourth chapter, the collected data was analyzed and results of the indepth interview were presented.
1. Characteristics of interviewees
This study examines WBTT’ IHRM approach, based on twelve interviews that
were carried out in mid-march. The interviews were conducted around the following
themes: What IHRM approach was applied at WBTT? What are the advantages and
disadvantages of WBTT’ approach?
The basic characteristics interviewees were summarized as follows. (See table
5)
Table 5: characteristics of interviewees
Nationality
Gender
Chinese
6
Thai
6
Total
12
Male
8
Female
4
Total
12
31
Table 5: (cont.)
Level of Position
Top level of management
6
Middle level of management
6
Total
Age
12
Age between 21-30
3
Age between 31-40
3
Age between 41-50
6
Total
12
2. Analyzing IHRM approach at WBTT
As mentioned in chapter 3, criteria to has set up to analyze WBTT’ IHRM
approach.
For Criteria 1, by checking percentage of key positions held by managers
form Home-country of the company, we found the result is 98%, it means the key
positions of WBTT were held by home-country expatriates, so, WBTT applied
ethnocentric staffing approach. (See table 6)
For Criteria 2, by checking times of training for Cross-Cultural Adaptation
and language skills , the result is only one times, which means there are very limited
training for both cross-cultural adaptation and language skills, so, it showed WBTT
applied ethnocentric staffing approach. (See table 7)
For criteria 3, by checking evidence of decision-making for important
affairs by headquarter or not, there are evidences (See appendix 4) showed when
WBTT make decision for important affairs, they always apply for permit from
headquarter, such as, when WBTT decide to assign bonus to staffs, top managers will
32
report to headquarters to apply the standard in assigning bonus can approve or not.
Without headquarters permit, manager in subsidiaries can not make decision by
themselves.
An other example is about decision making factor is when WBTT want to
borrow extend loan from bank in Thailand, managers were asked to report to
headquarter too, in the report of asking for decision of borrowing loan, they must
explain the reason for why, how much and when in borrowing loans. They can do it
only after approved by headquarter of home country, which show signs of having an
ethnocentric approach according related research. (See table 8)
In analyzing WBTT’ IHRM approach, a question was design to ask
interviewees to answer what IHRM approach was applied at WBTT. In the question,
definitions of IHRM approach typology have given to respondents, all the respondents
answered WBTT’ approach was ethnocentric approach.
Table 6: Result of checking by Criteria 1
Percentage of key positions held by
Ethnocentric IHRM Orientation (Approach)
managers from home-country (%)
or not
98
Yes
Table 7: Result of checking by Criteria 2
Time of training for Cross-Cultural
adaptation and language skills
1
Ethnocentric IHRM Orientation (Approach)
or not
Yes
33
Table 8: Result of checking by Criteria 3
Evidences of decision-making by
Ethnocentric IHRM Orientation (Approach)
headquarter
or not
Reporting to HQ for deciding to borrow loan
from bank and assign bonus for staffs were
Yes
asked
3. Exploring advantages and disadvantages of ethnocentric staffing approach
according in-depth interview
From the interview, all of the persons involved in the interview considered
that ethnocentric IHRM staffing approach has both advantages and disadvantages.
The result of interview was presented as follows:
3.1Advantage of ethnocentric IHRM staffing approach
3.1.1
Good communication, coordination and control links with headquarters
From the interview, we noticed that the first advantage of ethnocentric IHRM
staffing approach is good communication, coordination and control links with
headquarters. Expatriates said in Chinese firms, most of the staffs are poor in foreign
language skills, if put host-country staffs in top position, it is very difficult to
communication with headquarters. Thai staffs agreed with this point, they added that
in the beginning of operating internationally, no one can do better than expatriates
who come form parent country.
3.1.2
Overcome a lack of qualified HCNs
The interview showed overcome a lack of qualified HCNs is one of the
advantages to ethnocentric staffing approach. For expatriates, they are very
34
confidence with home-country’s technology and know-how, because WBTT is one of
the biggest textile manufacturer in China. As most of the equipments of plant were
import from China, so they are in charge of the technology and know-how, applying
an ethnocentric staffing approach can help overcome a lack of qualified HCNs.
3.1.3 There is assurance that subsidiary will comply with company objectives
policies.
In the interview, other evidence showed that “there is assurance that
subsidiary will comply with company (headquarters) objectives policies” is another
important advantage of ethnocentric staffing approach. Because expatriate consider
they are owner of the company, to make the subsidiary comply with headquarter
objectives is their fist obligation. Another reason that they believe expatriates can
make subsidiary comply with headquarter objectives more better is because their
achievement was appraised by headquarters, so, they are more active in implementing
headquarters objectives.
Thai staffs also considered ethnocentric staffing approach can assure
subsidiary comply with headquarters especially in the beginning of operating business
in Thailand, as local staffs will need time to understand HQs policies, strategies and
also company culture etc.
3.2 Disadvantages of ethnocentric IHRM staffing approach
As the interview questions consist of two parts, one is for expatriate, the other
one is for host-country staffs, so the answer has a little difference in rank of
disadvantages of ethnocentric IHRM.
3.2.1 Poor communication between expatriates and local staffs.
35
The interview showed disadvantage or problems of ethnocentric staffing
approach actually serious. Expatriates said, before they were sent to Thailand, there is
no training for cross-cultural adaptation and language skills. When came to Thailand,
they need at least half year to adapt themselves to new environment and local culture.
They accept that their English skill is very poor, and have no knowledge about Thai
language at all. In communicating with local staff, they must depend on interpreter.
Expatriates felt it is very difficult to make the operation of organization be efficiency
because of poor communication. Also the relationship between expatriates and local
staffs exist a long distance, because they can’t speak to each other.
Thai staffs perceived it is a obvious disadvantage of ethnocentric staffing
approach: “We want to performance well, but sometimes we don’t understand how to
carry out the work, because we are not so clear about what objectives and requires
expatriate manager expected, and sometimes when they made mistakes, we just know
we do wrong, but no expatriate manager can tell more about how to improve in the
future”.
3.2.2 Lacking opportunities for local staff
There is clear evidence in the interview showed that lacking opportunities in
carrier path for local staff is also a serious disadvantage of ethnocentric staffing approach.
In ethnocentric staffing approach, top management and middle level management were
occupied by home-country expatriates, which make Thai staff feel there are no future in
carrier path. What ever they make efforts, the key positions are always held by
expatriates, they are less opportunities. Thai interviewees said “the disadvantage of
lacking opportunities for local staff can lead to low productivities too, when there are no
opportunities, that mean there are no motivates, so, why we must work hard?”
36
Expatriates considered lacking opportunities for local staff in their carrier path
is very serious in long-run, because it will be no attracting for local talent.
3.2.3 High turn over rate of local staffs
The interview showed the most disadvantage of ethnocentric staffing approach
is leading to high turn over rate of local staffs. The reasons lead to high turn over rate
are, one is because problems of communication, as expatriates lack of language skills,
they can’t talk with local staff directly, local staff feel very discomfort working with
expatriates, when there are problems, it seems difficult to clear it, as time goes by,
problems accumulated more and more until they can stand it, so they decide to quit
the job. An other reason is come form less opportunities in carrier path, as mentioned
above, local staff can’t see their future, what ever efforts they make, they have no
chance to improvement in their position, when there are opportunities in other
companies, they select to quit too. Now, the company’s turn-over rate is still rank
from 20%-40%, which is very high when compare to others in same industry.
3.2.4 High cost for expatriates.
In the interview, high cost for expatriates was mentioned as one of serious
disadvantage to ethnocentric staffing approach too. In average, salary for expatriates
is higher about 3-4 times than local staffs, and there is a lot continues cost for
expatriates. Manager director said, “it is a very serious problem for the company,
because it make direct cost much higher than local companies in same industry, which
may be make the company stand in a disadvantage situation of competition”.
CHAPTER V
CONCLUSION AND RECOMMENDATIONS
Conclusion
This paper attempts to explore the major areas of international staffing
approaches of MNEs. Four different approaches available to managing and staffing
company’s subsidiaries include an ethnocentric approach, which will tend to use
expatriates in key positions abroad; a polycentric approach with the use of local
nationals wherever possible, and a geocentric approach with a mixture of nationals,
expatriates and third country nationals. (Briscoe D.R.,1995; Treven S., 2001;
Datamonitor, 2004)
In the ethnocentric approach, the cultural values and business practices of the
home country are predominant. All the standards for evaluation and control are
determined centrally gtom the headquarters in the form of orders and commands.
(Miles, 1965; Malkani, 2004) The polycentric approach is in direct opposition. The
subsidiaries in each country are developed locally under the supervision of local
managers. It results in little communication between headquarters and subsidiary.
With the geocentric approach, organisations try to combine the best from headquarters
and the subsidiaries to develop consistent world-wide practices.
An ethnocentric staffing is often found in companies which are in the early
stage of their internationalization (Heenan & Perlmutter, 1979), the purpose of the
38
study was to explore whether an ethnocentric staffing was adapted in an Chinese
MNEs, and if it was, what the advantages and disadvantages under the staffing
approach.
In this study, we investigated the biggest investment of Chinese in Thailand,
Worldbest textile (Thailand) Co., Ltd. (WBTT). The findings indicate that WBTT
adapts an ethnocentric staffing approach, and there are both advantages and
disadvantages exists under ethnocentric approach, they can conclusion as follows:
Advantages:
1. Good communication, coordination and control links with headquarters
2. There is assurance that subsidiary will comply with company objectives
and policies.
3. Overcome a lack of qualified HCNs.
Disadvantages:
1. Difficulty of communication between expatriates and host staffs.
2. less opportunities for local staffs
3. High turn over rate
4. High cost for expatriates.
Recommendations
1. Ethnocentric approach has both advantages and disadvantages. Its
advantages are obvious, it can help keep good communication, coordination and
control links with headquarters, assurance subsidiary to comply with company
objectives and policies, and overcome a lack of qualified HCNs. An MNEs should
39
develop its advantages especially in the earlier of multinational operating to make
good foundation for future.
2. In recruiting for oversea positions, HR department should try to recruit
people who has both professional knowledge and foreign language skills. Especially
language skills, it is very necessary to help themselves to suit to new environment and
do carry out their work efficiency. There also should be arrange training of cross
cultural and languages for expatriates before the go to held positions aboard, which
can help expatriates overcoming difficulty in communication with local staffs.
3. Transfer the know-how as soon as possible to local staff. When local staffs
master the know-how of technology, the company will not need use too much
expatriates to overcome the problem of lacking qualified local staffs. And this a nature
way for providing opportunities to local staffs. As same time, with reducing of
expatriates, costs of expatriates were reduced.
4. Giving local staff opportunities on their career path, at least in the middle
level, should use local talent to hold the positions. The company should advocate Thai
manage Thai, because it can avoid problems from communication and cultural
deference. It is the only way to solve the problem of high turnover rate of local staffs
in long-run.
5. It is nature that in the early stage of internationalization, companies often
would like to apply ethnocentric approach, but with the trend of globalization, it
should not apply it for long times (more than one year). After the business of
subsidiary was well established, MNEs should try to find a way to mix ethnocentric
staffing approach with other approaches, such as polycentric or others, in this way, the
problem of disadvantages can be solved thoroughly in future.
References
Dowling, P. J., Schuler, R. S. and Welch, D. (1994) International Dimensions of
Human Resources Management, New York: Wadsworth, 2nd ed.
Dowling, P. J., Welch, D. E. and Schuler, R. S. (1999) International Human Resource
Management:Managing People in a Multinational Context, Cincinnati, OH.,
South-Western College Publishing.
Harzing, A. W. (1999) ‘MNEs Staffing Policies for the Managing Director Position in
Foreign Subsidiaries’, in Brewster, C. and Harris, H. (eds) International
Human Resource Management: Contemporary Issues in Europe, Routledge,
pp. 67-88.
John B. Cullen, K. Praveen Parboteeah, (2005) Multinational management: A strategic
approach, 3rd ed. United States, QuebecorWorld; Versailles, KY
Linnea Lvinger, Lisa Lindvetter, (2005) Is Theory Applied in Practice? A Study of
Linkage between Swedish MNEs’ Strategies and Human Resource Staffing
Policies
McFarlin, D. and Sweeney, P. D. (1998) International Management: Trends,
Challenges and Opportunities,Cincinnati, OH., South Western College
Publishing.
41
Mercer (2003) International Assignments Survey 2002. Geneva, Mercer Human
Resource Consulting.
Nina Dolinska, Dzenita Hrlovic, Katarina Swane, (2005) The Staffing Policies of
Swedish Companies at their Chinese Production Units
Nurney, S.P. (2001) ‘When to stop negotiating individual packages for international
assignments’, Compensation and Benefits Review, 33(4): 62-67.
Paauwe, J. and Dewe, P. (1995) ‘Human Resource Management in Multinational
Corporations: Theories and Models’ in A. Harzing, and J. Ruysseveldt (eds)
International Human Resource Management, London: Sage Publication, pp.
75-98.
Perlmutter, H. V. (1969) ‘The Tortuous Evolution of the Multinational Corporation’,
Columbia Journal of World Business, Vol. 4, No. 1, pp. 9-18.
Perlmutter, H. V. and Heenan, D. (1974) ‘How Multinational Should Your Top
Managers Be?’ Harvard Business Review, November-December, Vol. 52, No.
6, pp. 121-32.
__________(1979) Multinational Organisation Development, Reading, MA.,
Addison-Wesley. PricewaterhouseCoopers. (1999) International Assignments
1999/2000, London, UK, PWC.
42
PricewaterhouseCoopers. (2000) Managing a Virtual World, London, UK, PWC.
PricewaterhouseCoopers. (2002) Managing Mobility Matters – A European
Perspective, London, UK,
Scullion, H. (1994) ‘Staffing Policies and Strategic Control in British Multinationals’,
International Studies of Management and Organisation Vol. 3, No. 4, pp. 86104.
Shen, et al. (2005) ‘Developing an Integrative IHRM Model: The Contribution of
Chinese MNEs’, Asia Pacific Business Review, 11(3): 365-385.
Shenyi Fu, Hang Liu (2005) Corporate Culture vs. National Culture – The Role of
Human Resource in Managing Cultural Differences in International Hotel
Companies
Stone, Raymond J. (2005) Human resource management, 5td ed. Australia, John
Wiley & Sons Australia, Ltd.
Appendix
44
Appendix 1
Profile of CWGC
CWGC
Established in July, 1992, China Worldbest Group Co.. Ltd. (CWGC) was
registered in the new Shanghai Pudong New Area. CWGC’s development strategy is
“High-tech, Export-oriented, Diversified & Internationalize”.
CWGC holds 34 subsidiaries and affiliates in China and overseas, including
four publicly listed companies.
Over all, CWGC ranks fourth among the largest Industrial groups in Shanghai.
It is also the fourth largest company in the region in terms of foreign exchange
earnings. CWGC has won first prize in the Shanghai Export Contribution Award in
consecutive years. CWGC has also become China’s largest pharmaceutical group, as
well as the largest textile group.
Core businesses and main Industry of CWGC
-Textile Industry
The textile Industry is CWGC’s core businesses. The company has put in
place world class equipment, technology and management.
CWGC’s textile R&D, production, and marketing system, focuses on three
main categories of fabrics: clothing, decorative, and Industrial.
With the establishment of its overseas textile investment in Mexico, Canada,
Thailand, and Niger, CWGC as become the most competitive textile enterprise in
China with multinational operations.
- Life Science Industry
45
CWGC considers the life science Industry its core businesses for the twentyfirst century. CWGC has five manufacturing sectors: chemical medicine, Chinese
patent medicine, natural medicine, biopharmaceuticals and health care food.
Both at home and aboard, CWGC has state-level research institutions and
world-class bio-engineering laboratories. A postdoctoral workstation has been set up,
pooling together a number of scientists and senior experts.
- Distribution Industry
International
trade
and
pharmaceutical
distribution
are
significant
components of CWGC’s distribution Industry.
-Functional Industry
Supported by its abundant capital, CWGC has maintained good cooperation
with foreign and domestic investment banks and venture capital funds. It has achieved
outstanding results in securities investment, venture capital investment, asset
management, asset restructuring, project intermediary services, and financial
consultation.
CWGC has enjoyed good reputation both domestically and internationally in
areas such as overseas projects contracting, labor force provision, technology &
management output.
45
Appendix 2
Organization chart of WORLDBEST TEXTILE (THAILAND) CO., LTD
Directorate
Board of supervisors
Managing Director
Deputy MD
Chief Accountant
General Engineer &
Deputy Factory Director
Assistant of MD
Factory Director
General Base Center
Dpt. Of Logistic
Dpt. Of Equipment
Third Shop
Second Shop
First Shop
Testing Center
Dpt. Of production & Technology
Dpt. Of HR & Admin
Dpt. Of International Trading
Dpt. Of Finance
Dpt. Of Marketing
Deputy Factory
Director
4647
Appendix 3
Planning of training for Expatriates
(Abstract of interpretation)
In order to make expatriates can speak some easy Thai languages in
working with local staffs to improve efficiency in communication with them,
HR department plan to held short-term language training during 8 October,
2005 to 5 November 2005, from time 1:30 PM-3:30 PM.
48
47
Appendix 4
In-depth Interview questions A
Points to consider:
- Factors for being an ethnocentric approach
- Problems engendered from ethnocentric IHRM approach
Questions:
1. Name and Title?
2. What’s your position and assignment in the company?
3. Are the key positions of WBTT ‘s management mostly selected by Home-country
nationals?
□Yes
□No
4. Are their some training for Cross-cultural adaptation and language before come to
current position?
5. According definition
- The ethnocentric approach to staffing results in all key positions in a multi
national being filled by PCNs;
- The polycentric approach is one in which HCNs are recruited to manage
subsidiaries in their own country and PCNs occupy positions at corporate
headquarters;
- The regiocentric approach to international staffing is that a multinational divides
its operations into geographical regions and transfers staff within these regions.
4849
-The global approach to internationall staffing is company assign their best
managers to internationall assignments. Recruitment and selection take place
worldwide, in any country where the best-quality employees can be found.
Which staffing approach applied in your organization do you think?
ethnocentric approach
□Yes
□No
polycentric approach
□Yes
□No
regiocentric approach
□Yes
□No
global approach
□Yes
□No
6. If your answer to question 3 is ethnocentric approach, what’s the advantage is in
applying ethnocentric approach?
Advantages of ethnocentric approach
Good communication, coordination and control links
with headquarters
Promising PCN managers are given international
experience
PCNs are favored due to their prior knowledge/
experience of the company
Overcome a lack of qualified HCNs
There is assurance that subsidiary will comply with
company objectives policies.
Yes/No
4950
7. If your answer to question 3 is ethnocentric approach, what’s the disadvantage is in
applying ethnocentric approach? If your answer is not in the list, add it below.
Disadvantages of ethnocentric approach
The promotional opportunities of HCNs are limited
Adaptation to host country may take a long time,
where many major mistakes can be made
Compensation for PCNs are more expensive
Expatriates are very expensive in relation to HCNs
Yes/No