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Handbook of Research in International Human Resource Management

Edited by Günter K. Stahl and Ingmar Björkman

In providing an insightful overview of a wide range of global human resource issues facing MNCs, this pathbreaking Handbook highlights emergent topics and new research findings that could shape the field of future IHRM research. Theoretical discussion of the variables and processes that affect IHRM policies and practices is provided by renowned contributors with widely differing academic backgrounds, paradigmatic orientations, and theoretical and methodological approaches.
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Chapter 23: International Human Resource Management and Economic Theories of the Firm

Marion Festing


23 International human resource management and economic theories of the firm Marion Festing International human resource management (IHRM) is a discipline characterized by a variety of perspectives. Three main research areas will be described in the first section of the chapter: human resource management (HRM) in multinational enterprises (MNEs), cross-cultural HRM and comparative international HRM (Dowling & Welch, 2004). The three perspectives are characterized by different paradigms: the universalist and the contextual paradigm. The universalist paradigm suggests that rules derived from theoretical approaches can be applied independently of contextual considerations in order to improve HRM. In contrast, the contextual paradigm suggests that there are different views on HRM and implies that it is more important to explain differences than to focus on firm performance (Brewster, 1999). Economic theory largely reflects the basic assumptions of the universalist paradigm. It is characterized by cost/benefit arguments and may include a variety of theoretical perspectives. Consistent with other chapters in this volume, the focus of this chapter is on new institutional economics, that is, transaction cost theory, agency theory and property rights. Proponents implicitly assume that the reasoning of the new institutional economic perspectives is valid in all contexts and that local uniqueness (for example, a particular legal or cultural environment) either can be included in the respective frameworks or is inconsequential. Economic approaches may include contextual factors but, nevertheless, the universalist perspective dominates. The basic reasoning of the new institutional economic approaches is outlined in the second section of...

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