Page 12 - DMGT548_GLOBAL_HRM

Unit 1: Introduction to Global HRM

work of Hofstede (1980a) demonstrated was that within IBM, there is wide cultural variation Notes
across nations.
Hofstede’s work focuses on ‘value systems’ of national cultures which are represented by
four dimensions:
1. Power distance: This is the extent to which inequalities among people are seen as
normal. This dimension stretches from equal relations being seen as normal to wide
inequalities being viewed as normal.
2. Uncertainty avoidance: This refers to a preference for structured situations versus
unstructured situations. This dimension runs from being comfortable with flexibility
and ambiguity to a need for extreme rigidity and situations with a high degree of
certainty.
3. Individualism: This looks at whether individuals are used to acting as individuals
or as part of cohesive groups, which may be based on the family or the corporation.
This dimension ranges from collectivism to individualism (Hui, 1990).

4. Masculinity: Hofstede (1980a) distinguishes ‘hard values’ such as assertiveness and
competition, and the ‘soft’ of ‘feminine’ values of personal relations, quality of life
and about caring about others, where in a masculine society gender role
differentiation is emphasised.

1.1.5 Approaches to IHRM

The HRM uses four terms to describe MNCs which approaches to managing and staffing their
subsidiaries: ethnocentric, polycentric, regiocentric, and geocentric. Perlmutter identified and
claimed that. It was possible to identify among international executive three primary attitudes-
ethnocentric, polycentric, and geocentric–toward building a multinational enterprise, based on
top management assumptions upon which key product, functional, an geographical decisions
were made. A fourth attitude, regiocentric was added later.
The four approaches are:
1. Ethnocentric: Few foreign subsidiaries have any autonomy; strategic decisions are made
at headquarters. Key positions at the domestic and foreign operations are held by
management personnel of headquarters. These subsidiaries are managed by expatriates
from the home country (PCNs).
2. Polycentric: The MNC treats each subsidiary as a distinct national entity with some decision-
making autonomy. Subsidiaries are usually managed by local nationals (HCNs) who are
seldom promoted to positions at headquarters. PCNs are rarely transferred to foreign
subsidiary operations.
3. Geocentric: The MNC takes a worldwide approach to its operations, recognising that each
part (subsidiaries and headquarters) makes a unique contribution with its unique
competence. Nationality is ignored in favour of ability.

Example: The Chief Executive Officer of the Swedish Multinationals Electrolux claims
that within this global company there is no tradition to hire managing directors from Sweden,
or locally, but to find the person best suited for the job.
4. Regiocentric: Reflects the geographic strategy and structure of the multinational. It utilises
a wider pool of managers but in a limited way. Personnel may move outside their countries
but only within the particular geographic region. Regional managers may not be promoted
to headquarter positions but enjoy a degree of regional autonomy in decision-making.

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