This shared outlook results, to a large extent, in common attitudes, codes of conduct, and expectations that subconsciously guide and control certain norms of behaviour.
Countries differ widely in their cultures. In other words, in the basic values their citizens adhere to, and in the ways these values manifest themselves in the nation’s arts, social programmes, politics, and ways of doing things. Cultural differences from country to country necessitate corresponding differences in management practices among a company’s subsidiaries. A manager assigned to a foreign subsidiary, for example, must expect to find large and small differences in the behaviour of individuals and groups within that organisation. National and socio-cultural variables thus provide the context for the development and perpetuation of cultural variables. These cultural variables, in turn, determine basic attitudes towards work, time, materialism, individualism and change. Such attitudes affect an individual’s motivation and expectations regarding work and group relations, and they ultimately affect the outcomes that can be expected from that individual.
For example, studies conducted by Randall Schulei;, Susan Jackson, Ellen Jackofsky and John Slocum Jr., show how cultural differences between U.S and Mexico can influence HR policies: 1. Compared to U.S employees, Mexican workers expect managers to keep their distance rather than be close, and to be formal rather than informal. 2 Unlike U.
S., in Mexican organisations formal rules and regulations are not adhered to unless someone of authority is present. 3. In Mexico, individualism is not valued as highly as it is in the US. Generally speaking, most westerners perceive India to be culturally distant. Hofstede classified India as high power-distance dimension (i.e., a society where less powerful members accept the unequal distribution of power).
A plausible picture of the average Indian’s resistance to change, his willingness to delegate but unwillingness to accept authority, his fear of taking an independent decision, his possessive attitude towards his inferiors and his abject surrender to his superiors, his strict observance of rituals and his disregard to them in practice, his preaching of high morals against personal immorality, and his near-desperate efforts at maintaining the status quo while talking of change. 2. Economic Risk:Every MNC operating overseas exposes itself to some level of economic risk, often affecting its everyday operational profitability. John Mathis, a professor of international economics has suggested four methods of analysing economic risk of a country’s creditworthiness. These methods are:
(a) The Quantitative Method:
This measure is arrived at by assigning different weights to economic variables in order to produce a composite index used to monitor the country’s creditworthiness over time and to make comparisons with other countries.
To quote Mathis, the quantitative method “attempts to measure statistically a country’s ability to honour
(b) The Qualitative Approach:
This approach evaluates a country’s economic risk by assessing the competence of its leaders and analysing the types of policies they are likely to implement. This method concentrates on the future direction of the economy.
(c) The Checklist Approach:
This approach relies on a few easily measurable and timely criteria believed to reflect or indicate changes in the creditworthiness of the country. This method categorises countries in terms of their ability to withstand economic volatility.
(d) Combination Approach:
Most companies recognise that no single approach can provide a comprehensive economictry to use a combination of approaches.
3. Economic Systems:Differences in economic systems also translate into differences in HR practices. Some countries are more wedded to the ideals of free enterprise than others. ‘Differences in labour costs are also substantial between developed and developing countries.
Several European countries require substantial severance pay to departing employees. There are also differences on the restrictions of employers’ rights to discharge workers. 4. Legal Environment and Industrial Relations:Legal as well as industrial relations factor varies from country to country. For example the US practice of employment at will does not exist in India. Therefore, we need to consider some factors about the field of international labour relations. (a) It is important to realise that it is difficult to compare industrial relations systems and behaviour across national boundaries; a labour relations concept may change considerably when translated from one industrial relations context to another.
(b) It is generally recognised in the international labour relations field that no industrial relations system can be understood without an appreciation of its historical origin. Poole has identified factors that underscore these historical differences: 1. The mode of technology and industrial organisation at critical stages of union development; 2 Methods of union regulation by government. 3.
Ideological divisions within the trade union movement; 4. The influence of religious organisations on trade union development; and 5. Managerial strategies for labor relations in large corporations. Firms opening subsidiaries abroad will find substantial differences in labour relations practices among the world’s countries and regions. Robert Saver and Keith Volker have illustrated some of these labour relations differences.