Analysis of Localization and Standardization in IHRM

Debating This Issue

Viewpoints Supporting A Balance

Reference list:

• Ng, P. 2012, CEOs on the importance of human capital, Singapore
• Petison, P. & Johri, L.M. 2008, "Localization drivers in an emerging market: case studies from Thailand", Management Decision, vol. 46, no. 9, pp. 1399-1412.
• Morley, M.J. & Collings, D.G. 2004, "Contemporary debates and new directions in HRM in MNCs: introduction", International Journal of Manpower, vol. 25, no. 6, pp. 487-499
• Ferner, A 2000,'The embeddedness of US multinational companies in the US business system: implications for HR/IR' LEICESTER BUSINESS SCHOOL, November, vol.61, pp.
• Chen, S. & Wilson, M. 2003, "Standardization and localization of human resource management in Sino-foreign joint ventures", Asia Pacific Journal of Management, vol. 20, no. 3, pp. 397-408.

Thank you for listening :)

• A third Option in the debate is a balance
• Morley & Collins (2004) outline this idea as the most realistic option
• Each viewpoint in this debate can be utilized by a company

Reference list:

• Jeffrey J. Loyka, Nova Southeastern University, Ft. Lauderdale, FL Thomas L. Powers, University of Alabama at Birmingham, Birmingham, AL

• Dowling, Peter J. International Human Resource Management. 1st ed. Andover: Cengage Learning, 2013. Print.
• ISSUU, 2015, International human resource management case study Nike, ISSUU,

• Aaker DA, Joachimsthaler E (1999) The Lure of Global Branding. Harvard Business Review 77: 137-144
• Yuan Lu & Ingmar Bjorkman (1997) HRM practices in China-Western joint ventures: MNC standardization versus localization, The International Journal of Human Resource Management, 8:5, 614-628,
• Levitt T (1983) The globalization of markets. Harvard Business Review 61: 92- 102.

NIKE

• Outsourcing its operations internationally to countries in Asia.
• Nike’s head management and HR decided that they should localize their policies, adapting to the local environment
• Nike incorrect decisions resulted in cutting wages and living standards for workers, and the production of goods is moved to the place where the wages are lowest and the workers have the fewest rights.
• Shows the dangers of localizing to developing countries where they have much weaker government regulations.

Debating This Issue

Viewpoints Supporting Localization

Debating This Issue

• Localization is view positively as it allows for greater responsiveness
• Petison & Johri (2008) describe how multiple cultural and legal factors can demand localization
• Localization is viewed as a policy that utilities employees host country experience

Viewpoints Supporting Standardisation

• It is important to choose policies supporting development of human capital
• Fern (2004) states there can be friction when trying to localise
• It is cheaper and less time consuming to enforce already established policies
• Companies with previous experience internationalizing may already have policies they can utilize again
• Standardization brings more stability for head management

Factors driving localization

• Cultural environment
• The institutional environment
• Mode of operation aboard
• Subsidiary roles

Factors driving standardization

• Strategy
• Structure
• Corporate culture
• Size and maturity of firm

Analysis of Localization and Standardization in IHRM

Advantage V Disadvantage

Standardization

Localization

• Economics of sale:

Standardization VS Localization

• Increased income and market share

• Easier control, monitoring and coordination.

Debate

Disadvantage

• Differences in customer interest and response patterns

• Limited control

Definition

- The product and the price being made at a set level in the whole organization across the world.

- Adapting them to a particular language, culture, and desired local.