National Differences and Host Country Effects

This assignment was in answer to a question on national differences and host country effects. It received a mark of 70%. The feedback to the student praised the paper for being well-structured, evidencing wide reading, making good use of both corporate and country examples, and balancing consideration of cultural and institutional issues fairly well. The writing style lacked some fluidity in places, and parts of the answer were overly-reliant on Hofstede in an uncritical way, but overall this was considered a very solid and competent effort.

1 Introduction

With the deepening constantly of economic globalization, more and more enterprises go abroad and operate in the keen international market competition to achieve a predominance and the initiative which has being multinational companies, that they set the best resource configuration in the whole world. Meanwhile, the differences of the national characteristics have been attributed to variations and brought the human resources management forward to a new challenge. Therefore, international managers must be aware of how entities recognize and respond to faced commonly human resource issues and demands in different nations and regions in the process of expanding or linking their operations internationally (Budhwar & Sparrow, 2002).

That these MNCs are bound to confront with numerous conflicts as different national characteristics in different countries, especially for the organisations operating in Eastern and Western countries, moreover the differences in national factors make human resource management in MNCs to communicate and integrate in a greater scope, in more fields and at a higher level. So MNCs must be aware of the impact of national factors on the human resources practices when they do businesses in certain

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countries which are of paramount importance for development of MNCs, which issue is growing interest for among scholars. A number of human resource practices have national characteristics according to specific countries, some human resources policy has been applied successfully in certain countries, may not effectively been practiced in another country. For instance, in Japan it tends to take lifetime employment policy for core employees, however, it is not very popular in America. American companies spend less money for recreational facilities and social activities than that of Japanese companies in general (Pascale, R. T & Maguire, M. A. 1980). The same situation is in quality circle program, it has implemented successfully in Japan commonly, however this program has not successfully been practiced in the United States (Newman & Nollen, 1996).

In this paper, it divides into two parts; the first to be illustrated that the differences in national cultures and institutions between countries that could affect the HR policies or practices of MNCs. At the time that this study was planned to use the Hofstede model to understand the part of national culture and pick up main points of institutionalise perspective. A second discussion within the relevant literature address the influence of national differences on HR practices of MNCs and how these national differences affect HR practices.

2 Differences in national cultures and institutions

In an effort to describe the second issue about the influence of national differences on HR practices, this section select German, China and Japan to discuss as in some literatures (Brewster et al., 1996) they claimed developed and developing nations need for more cross-national HRM studies, especially, is concerned currently. This section includes an analysis of cultural value dimensions developed by Hofstede to analyze national cultures and institutions.

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2.1 Cultural Perspective

In order to explain national cultures, Hofstede (1993) proposes five dimensions which are power distance, uncertainty avoidance, Individualism/Collectivism, Masculinity-Femininity and time orientation.

Power distance

This refers to the extent to which the less powerful members in a particular culture tend to accept an unequal distribution of power in institutions and organizations. The future bases on the degree of human equality or inequality that depends on the functioning of each specific country.s society. According to Hofstede. research, it can be measured in a Power Distance Index (PDI) (Hofstede, 1991), high PDI reveals that power and wealth in the society have been accept to distribute unequally, but it was conversed for low PDI. Most of Asian countries are greater power distance than Western countries, for example, China and Japan compared to Germany allows a greater acceptance of inequality of power distribution, subordinates with less power are too afraid to participate in decision making. Contrarily, in low power distance cultures like Germany subordinates appreciate being promoted equality for them to show their idea or disagreements in the workplace.

Uncertainty avoidance

This factor measures the extent to which members in a particular culture have been socialised to feel nervous or threatened by the uncertainty and unfamiliar situations which they try to avoid them. Uncertainty avoidance in Germany and Japan is high;

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Germany has developed sophisticated systems of laws, rules or quality to control outcomes and results, while in Japan, people have being avoid to take risks and a powerful motivator is security. ¡oThese security-seeking countries seem to have been doing better economically in the past twenty years than the risk takers¡± (Hofstede, 1983). So they have a low tolerance for uncertainty and ambiguity. China is a country found to have low uncertainty avoidance, it can be explained by the fact that the cultural expectancy impact on people tend to control behaviours (Simon Kriss, 2006).

Individualism/Collectivism

This is extent to which people are supposed to look after themselves and their immediate family in an individualistic culture. In contrast, collectivism has a tighter social framework which people are integrated into strong; members of collectivist cultures receive protection and suppuration in exchange for absolute loyalty (Hofstede, 2001). According to Hofstede, that Japan and China are very low on individualism, Japanese and Chinese people expect to create harmonious relationships with their extended family based on the ancient tradition and organisational loyalty in a society. In contrast, western style individualism like Germany is a growing sense