Abstract
In this increasingly competitive era, internationalization strategy has adopted by firms and international human has been regarded as the essential factor that affects the operation of MNEs. Based on contingency theory and the induction method to analyze and collect data from the literature, this paper attempts to construct an International human strategies framework for different internationalization situations. Furthermore, we interviewed with related staffs in four Taiwan enterprises that adopted various International human strategies to correspond the four internationalization situations considered in this study. We hope this international human strategies framework will facilitate MNEs to create and maintain their competitive advantages.
Introduction
Internationalization has become the most crucial business strategy adopted by firms around the world to maintain advantages over competitors in an intensified competitive business environment. Enterprise internationalization has been a critical research topic in international business and strategic management [35, 48, 35, 48]. The characteristics of internationalization affect business operations in different environments. Scholars have believed that experience-based knowledge can reduce the risks involved in overseas operation, enhance firms’ exploitation of existing resources, and pursue production opportunities during the process of internationalization, providing substantial benefits [36].
Chen and Fu [15] indicated that competitive advantage also came from a varity of factors of organizations. In the past 10 years, human strategies has been regarded in academia and in practice as the source of a firm or an organization’s competitive advantage [23, 31, 53, 23, 31, 53], international human strategies has been regarded as the essential factor that affects the operation of international businesses [51]. However, internationalization can also affect the management orientations, operational strategies, and human strategies adopted by firms [14]. Dowling and Schuler [25] argued that human strategies plays different roles in the process of enterprise internationalization, and the effects of human strategies depend on the fit between the human strategies and the internationalization developmental process. Chiah-Liaw, Petzall, & Selvarajah [17] further indicated that outcomes of enterprise internationalization are highly related to human strategies. Additionally, the empirical results of Tung [55] demonstrated that the high expatriate failure rate of U.S. enterprises was primarily caused by the insufficient fit between the development of enterprise internationalization and human strategies. Accordingly, multinational enterprises (MNEs) must use global strategic tools that fit their industrial driving factors and resource positions, to ensure profit [59].
Based on these research motives and significance, this study used an exploratory design to review previous literature, and the characteristics of four enterprise internationalization situations were classified based on the two consideration of pressures for global integration and pressures for local responsiveness. Additionally, four enterprise internationalization situations offering the most satisfactory fit with international human strategies were determined, by investigating academic and practical strategies and ideas regarding international human strategies in MNEs. The results of this study can serve as a reference for MNEs to couple human strategies and business strategies, in various strategic internationalization contexts, to achieve business objectives through the deployment and functions of international human strategies, thereby creating and maintaining their competitive advantages.
Literature review
International situations and I-R model
International businesses are firms that engage in international activities and whose activities involve flow of resources, finance, labor, services, and skills between nations [42]. According to Punnett and Ricks [45], any firm involved in a commercial, individual, or professional activity in two or more nations can be viewed as an international business. Rugman and Verbeke [46] classified firms providing value-added activities in two or more countries as international enterprises. To firms, internationalization presents a number of opportunities and challenges. Firms can reposition overseas business activities and externally duplicate success models to pursue continuous business growth. To integrate and enhance the economic benefits of global resources, heterogeneity among investment environments forces firms to accept regional differences [6, 44]. Daniels, Radebaugh, and Sullivan [20] further contended that MNEs adopt international strategies to expand sales and reduce costs and risks. However, through international operations, firms can also accumulate management knowledge and experience to reduce operating risk and uncertainties, increase profits from an expanded market [56], and deepen their involvement in foreign markets to better react to global competitions, domestic market saturation, and the need for diversification. With the emergence of internationalization as a trend in nearly all nations, Perlmutter[40] introduced the concepts of “global strategy” and “international strategy.” Perlmutter proposed the EPG framework to define MNEs from the perspective of management or philosophically and emphasized that assessing the degree of business multinationalization based on the foreign employees, ideas, and resources of headquarters and subsidiaries in host countries and parent countries. Perlmutter further defined three perspectives on multinational enterprise operation: ethnocentrism, polycentrism, and geocentrism [41].
Later, Prahalad and Doz [43] proposed a more substantive typology of MNEs and developed the Global Integration–Local Responsiveness Framework (I-R Model). Global integration is a strategy that focuses on the similarity in preferences among customers around the world. Through global integration and enterprise-based transnational activities, MNEs reduce costs and accumulate transferable knowledge, thereby enhancing economies of scale. Local responsiveness is the degree to which multinational subsidiaries are responsive to local governments and consumer demands. Johnson [35] further defined integration as the coordination of transnational activities, by which efficient networks are established to maximize benefits from the similarity of various regions; on the other hand, local responsiveness was defined as the effort to respond to specific demands in different host countries. This I-R model, which became a prominent framework for later development of internationalization strategies, comprises two dimensions: pressures for global integration and pressures for local responsiveness [6]. However, the differences of pressure degree in this framework could develop different internationalization strategy contingences. These two dimensions were used in this study as the primary framework by which the internationalization situations of MNEs wereclassified.
International human strategies
International human strategies have been a key concern since the 1980s [12]. With the development of enterprise internationalization, human strategies have increased in operational complexity in various countries [25]. Enterprises require the implementation of different International human strategies to satisfy diverse internationalization demands. The purpose of International human strategies is to integrate organizational strategic planning with various measures of human strategies, thereby enabling organizations to establish competitive advantages [4]. International human strategy refers to the application of human strategies in an international scale. MNEs might have employees from a number of countries, and face differences in national cultures, business cultures, and social systems in host countries. Therefore, MNEs must coordinate their human strategies with host countries [19], and international human strategies can build and manage enterprise-specific competence and transregional human strategies for MNEs [57].
Heenan and Perlmutter [33] and Chakravarthy and Perlmutter [14] used the EPG framework to propose the EPRG framework, including (a) Ethnocentric approach (b) Polycentric approach (c) Regiocentric approach (d) Geocentric approach. Enterprises with the geocentric approach focus on the cooperation between headquarters and subsidiaries, enabling them to build general standards and adapt themselves to local variability, thereby facilitating primary decision-making for new products, factories, and laboratories.
However, the primary challenge in international human strategies is resolving the dilemma between internal integration and local responsiveness. When international enterprises employ global integration to achieve economies of scale or full control, they face demands and political pressures in various countries. Therefore, MNEs must authorize local branches and organizations to cope with local pressures. Strategic international human strategy primarily focuses on the integration of human and business strategies [49]. Parent companies must determine whether their international management strategies are based on a global integration strategy or by local responsiveness. Bartlett and Ghoshal [6] indicated that the purpose of global integration is to increase efficiency, and the purpose of local responsiveness is to respond to the demands of local consumers. Pressures in host countries are also considered by MNEs in decision-making. Therefore, international human strategies can be explored based on two dimensions: global integration and local responsiveness.
The contingency theory and strategy fit
Doz and Prahalad [27] reviewed numerous studies on the application of organizational theories to international business management, and proposed four international business organizational theories. Of which, contingency theory suggests that there is no single best way to achieve expected performance, and the fit between external conditions and internal factors is the fundamental determinant of performance [37]. Contingency theory also argues that the planning and functions of organizational structures must fit context variables, including scales, environments, and technology. When organizational structures fit the characteristics of related variables, enterprises perform and survive relatively well [27]. Long-term organizational environments include internal and external environments. Internal environments are models to distribute organizational resources, and external environments refer to the position of enterprises in competitive markets [16]. The distribution of organizational resources and the competitive advantages that organizations have in competitive markets can change rapidly; therefore, organizations should adopt various strategies based on internal and external environments.
Enterprises conduct activities primarily according to organizational strategies. However, these strategies must be functional. Because all organizational activities must be completed by people, human strategies play a vital role. With appropriate organizational strategies, the human strategies of enterprises can align with business purposes and directions, thereby achieving their ultimate goals. In recent years, the academic and practical fields have regarded human strategies as the primary source of organizational advantages [7, 53]. To cope with environmental changes, enterprises should have well-designed human strategies to gain competitive advantages [53]. Therefore, international human strategies could affect the operation of international businesses [51]. Delery and Doty [22] argued that human strategies refer to the specific human strategies that organizations adopt to realize their organizational strategies. Baird and Meshoulam [5] proposed the implementation of human strategies that an enterprise’s organizational strategies improve organizational performance, thereby leading to internal fit. De Cieri and Dowing [21] also argued that human strategies in international enterprises should fit external and internal environments, thereby leading to operationalsynergy.
Recently, numerous scholars have highlighted these perspectives [8, 57]. Previous studies have confirmed that internal organization advantages are improved when organizations’ human systems fit with their organizational strategies, thereby assisting enterprises in achieving strategic goals [5]. Human strategies play different roles during the process of business internationalization. The efficiency of human strategies depends on the fit between human strategies and the development of internationalization [14]. Therefore, organizations should develop strategic human strategies to gain competitive advantages; in other words, human strategies should fit the goals, visions, cultures, and functional strategies of organizations, thereby creating competitive advantages [24].
Research methodologies and the process
By analyzing extant studies, we compiled the evolution of concepts involving enterprise internationalization and international human strategies, determined the contributions of previous studies regarding these concepts, summarized problems encountered in academic research and practical applications, and identified potential development directions. The results were then used to construct a framework for and to identify the implications of international human strategies based on the contingency theory, and concrete strategies for various dimensions were proposed. Consequently, in various internationalization situations, MNEs can employ human strategies that most conform to organizational strategies and develop effective human activities to achieve the goals of their overseas branches, thereby creating and maintaining the competitive advantages of MNEs.
It is important to understand what firms are doing in different international situation in the reality, and how that fits with the framework we proposed. The case discussion is a method of investigating a subject with specific attributes and whose important data can be reorganized into a past or an ongoing event for reflection by the researcher. Regarding the sampling of case companies, we focused on obtaining the most representative and valuable key information; therefore, this study reviewed the raw materials of MNEs in the 2012 list of the Outward Investment Directory (published by the Investment Commission, Ministry of Economic Affairs, Taiwan) and selected qualified MNEs.Furthermore, by using the method adopted by Meyer and Estrin [40] for measuring the degree of global integration and local responsiveness, we analyzed the operational information and white papers disclosed by the selected MNEs to preliminarily examine their internationalization situation. The global integration is based on two Likert scale items from the raw materials and disclosed information: ‘The parent company has centralized many functions such as R&D, finance, and procurement’ and ‘The parent company has, to a high extent, standardized products and services worldwide.’ We averaged the score over these two items to measure global integration. The local responsiveness is based on two Likert scale items: ‘The firm conducts many major functions locally’ and ‘the firm has adopted its products and services to a high degree to the local context.’ We averaged these, just as we did with local responsiveness.
Subsequently, telephone calls and e-mails were used to determine the willingness of the MNEs to be the case companies of this study and the willingness of the staff members to participate in the interviews. To ensure the representativeness of the research data and the applicability of the study results, we asked only MNEs that not only possess capitals exceeding NT$100 million, but are also known to the researchers of this study. However, not all the case companies were able to provide detailed, concrete company information during the interview process. Thus, we endeavored to find four highly representative case companies and obtain detailed information concerning four types of internationalization situations.
To understand the internationalization and human strategies implemented by each case company, top managers of case companies who understand the internationalization strategies and human strategies of their enterprises, human staff who plan and implement human activities, and employees who have participated in overseas affairs were interviewed in depth. The interviews conducted in this study were semi-structured interviews. Prior to conducting the interviews, we formulated interview guidelines to avoid generating biased or incomplete content in the interview framework. However, we did not strictly follow the guidelines during the actual interviews, nor did we predetermine specific perspectives or forcibly restricted and directed interviewees’ responses toward a specific direction. Instead, we allowed the interviewees to freely respond to questions by using their own words, logic, and structure, which enabled them to share everything they know. Nevertheless, we adequately probed the interviewees and adjusted interview questions according to the context of the conversation. To facilitate the interview process and obtain comprehensive data records, we obtained consent from the interviewees to tape record and transcribe the entire interview process. Each interview took approximately one to two hours. The interview questions were related to enterprise internationalization (re-checking the degree of lobal integration and local responsiveness), human strategies, and human activities. The researchers hoped to understand case companies’ strategies for enterprise internalization and their concrete methods for implementing human strategies, and thus hoped to receive suggestions and corrections regarding the research inferences in this study.
The international human strategy among different situations
Tung [55] confirmed that the high fail rate among expatriates in U.S. enterprises was primarily caused by the insufficient fit between the development of enterprise internationalization and human strategies. Many researchers contended that the efficiency of human strategies depends on organizational fit [5, 60]. With the growth and development of organizations, different human strategies approaches must be adopted to guide the behavior and performance of employees, thereby satisfying organizational demands for development. Adler and Bartholomew [2] also suggested that human strategies should fit the internationalization development of enterprises. The primary challenge of human strategies in international business is resolving the dilemma between global integration and local responsiveness [49]. Therefore, this study used the pressures for global integration and the pressures for local responsiveness of the I-R model to determine four internationalization situations. Thus, this study enabled existing concepts of internationalization strategies and the research results of international human strategies to be understood; moreover, academic and practical challenges and potential development directions were identified. This study can be used as a reference for international businesses, to enable international human strategies that fit with the characteristics of internationalization strategies to be proposed, to efficiently improve overseas operational performance and achieve business goals. The framework is shown in Fig. 1.
Situation I: The undertaking human strategy
The Undertaking Human Strategy is a type of strategy supporting enterprises to act according to circumstances. Elasticity is its core concept. Situation I characterizes enterprises under low pressure for global integration and low pressure for local responsiveness. In this internationalization situation, the parent company has little centralized control over the integration and deployment of the overseas subsidiary and the overseas subsidiary requires low autonomy in local operations [18]. This situation highlights the fact that that many enterprises neither pursue consistency in markets around the world nor specifically respond to local differences. Therefore, the parent company has the primary authority to make decisions, and grants authority to subsidiaries to make decisions oriented toward their local markets. In other words, the parent company does not fully control its subsidiaries, and the overseas subsidiaries are not fully self-governed entities. The parent company transfers key resources to subsidiaries in host countries, and subsidiaries develop their local resources and competence [6]. In this situation, overseas subsidiaries (i.e., branches) execute special tasks, including expanding overseas markets and recruiting local labor at low cost. Moreover, the human strategies of organizations must be aligned with organizational goals, visions, and functional strategies [24]. Therefore, this study suggests that the ad hoc human strategy proposed by Sheth and Eshdhi [52] should serve as the principle for international businesses using this strategy to develop international human strategies, which highlights that the deployment of human strategies should depend on specific management need and special overseas conditions. Moreover, considering that overseas management problems can change rapidly, this study further suggests that the utilization strategy proposed by Schular [50] should be employed to develop human plans from a short-term perspective to recruit employees from local labor markets. Because enterprises establish employment relationships with employees based on their competence, enterprises are unable to focus on the training and development of employees within a short period [50]. This task-oriented human strategy enables parent companies to transfer key resources and competence to subsidiaries in host countries, thereby allowing subsidiaries to respond in a timely fashion to specific conditions and challenges during the process of internationalization.
Situation II: The live staking human strategy
The Live Staking Human Strategy emphasizes that can facilitate enterprises to involve and ground overseas markets well. Situation II is the strategy type used by enterprises with high local responsiveness and low global integration. This type of enterprise distributes resources to subsidiaries in host countries to respond to local demands. Connelly et al. [18] argued that the purpose of Situation II is to maximize local responsiveness. Therefore, business strategies and product designs advanced by these enterprises conform to the specific demands and preferences of local customers. Moreover, subsidiaries are relatively autonomous in proposing the details of organizational strategies and making overseas operational decisions. Harzing [32] contended that Situation II emphasizes the adaptation of local preferences and recognizes that local responsiveness is an essential strategic demand. To adapt to local markets, enterprises must develop highly localized output and R&D to satisfy the demands of local customers. Caligiuri and Colakoglu [13] suggested that this strategy type must endeavor to respond to customers’ preferences, industrial characteristics, and government regulations to satisfy various demands in host countries. As the old saying goes, “When in Rome, do as the Romans do”. According to Bonache, Trullen, and Sanchez [10], the culturalist position emphasizes human practices that are adapted to the local environment, so MNEs not only acknowledge differences in practices and values, but also argues that everything depends on the local context. This position also assumes that employees prefer practices that conform to local usages and that; as a result, such practices lead to higher performance. Therefore, this study suggests that international enterprises characterized by Situation II should adopt the Live Staking Human Strategy. Live staking is from the conception of mudflow prevention engineering. Live staking is the installation of live cuttings that have the ability to root and grow and can also serve as fence pillars; this is a common method used in land restoration and slope protection. The logic about live staking in mudflow prevention engineering is very close to the international Situation II in this research. Live stake cuttings must root deeply in the ground to grow upwards and international enterprises in Situation II must fully be rooted in local environments to ensure the expansion of their business. Regarding enterprises in Situation II, coupling human strategies to the team-oriented involvement strategy proposed by Dyer and Hoider decentralizes the authority of the enterprises, thereby facilitating the involvement, initiative, and creativity of employees, and empowering them to positively operate within and respond to local markets. Moreover, human strategies could be coupled to the adaptive strategy proposed by Taylor, Beechlar, and Napier and the local-oriented strategy by Festing [24, 54]. In Situation II, parent companies do not intervene in the human strategies of subsidiaries, attempt to establish internationalization-oriented corporate culture, or transfer human philosophies, policies, and practices to subsidiaries. Instead, parent companies build human systems that can reflect local environmental demands and hire local human experts and managers to implement appropriate human systems to enhance the efficiency of human in subsidiaries.
The Live Staking Human Strategy corresponds to the culturalist viewpoint: human strategies that are adapted to the local environment and the most sensible and effective management is always that best fit local values and norms. The most effective way to manage people in different cultural contexts is to adapt to dominant, local ways of managing, since human practices are at odds with the national culture, employees are likely to feel dissatisfied and uncommitted and, as a result are less able or less willing to perform well [10].
Situation III: The export human strategy
The Exporting Human Strategy involves exporting human policies to subsidiaries extensively. In Situation III, enterprises assume that market demands around the world are the same, and highlight the importance of global efficiency, thereby pursuing global uniformity to create competitive advantages. This strategy type is characterized by low local responsiveness and high global integration. Core resources and abilities are centralized in the parent company. With high global integration among subsidiaries, parent companies decide how functional activities in subsidiaries are deployed, and integrate overseas production activities to achieve economies of scale [6, 18]. Harzing [32] contended that the subsidiaries in Situation III were highly dependent on each other, and established cost advantages through economies of scale. Therefore, parent companies integrate the best corporate culture of the host country to develop global cooperation strategies. Accordingly, MNEs in Situation III highlighted the efficiency of integration and control. Based on the universalist position maintains that firms should ensure that their human practices conform to a set of principles. The universalist approach affirms universally effective management principles do exist and the existence of some general principles that have universal validity, regardless of cultural differences. All organizations have to face the same basic problem: the need to attract, motivate, and retain talent to attain theorganizations’ objectives and support the existence of a core set of human principles that improves organizational performance [10]. The research of this study suggests that MNEs in Situation III should refer to the export human strategy proposed by Taylor, Beechlar and Napier and the international involvement strategy proposed by Festing to establish consistent standards for international human strategy, which would insist that high-level management fully transfers the human systems of parent companies to overseas subsidiaries [29, 54], thereby enhancing the integration of human systems of parent companies and subsidiaries, including “careful and extensive systems of recruitment, selection and training; formal systems for sharing information with the individuals who work in the organization; clear job design; monitoring of attitudes; performance appraisals; and promotion and compensation schemes.” In doing so, MNEs can maintain their human capital and competitive advantages by implementing consistent human strategies.
The Exporting Human Strategy is consistent with the high global integration of MNEs in Situation III, in which core resources and abilities are centralized in parent companies. Thus, parent companies decide how resources in subsidiaries are deployed, and integrate and control related strategic activities in those subsidiaries. Therefore, the core human system that the universalist approach conceptualized. The implementation of core human practices can have synergic effects, as the joint effect of these practices is greater than the sum of the individual practices acting alone.
Situation IV: The grafting human strategy
In the Grafting Human Strategy, human strategies principles blend with new skills and flexible practices based on original integration forms. MNEs in Situation IV are characterized by both high integration and high local responsiveness. Connelly et al. [18] indicated that enterprises in Situation IV respond to local demands and pursue global integration to lower costs, thereby facilitating flexibility between local control and management. MNEs in this context can realize the global consistency of markets and responsiveness to regional differences, further establishing mutual-connection between business networks to share and create resources, knowledge, and abilities. Moreover, various regional and market characteristics could serve as the foundation for learning and innovation for MNEs, enabling them to transfer regional differences into resources and abilities that can be used globally. From the perspective of human strategies, the activities of human strategies must align with the environments and goals of enterprises. Therefore, this study suggests combine the Grafting Human Strategy with the accumulation strategy, the umbrella human resource strategy and integrative strategy for MNEs in Situation IV [41, 50, 52].
The concept of grafting originated in horticulture. In grafting, the tissues of two or more living plants are combined to form a single plant [3]. Yamakawa [58] indicated that grafting can help a plant resist pests, diseases, and adverse environments. Grafting can also produce chimeric plants, increase production, improve quality, and facilitate reproduction. This is consistent with the Grafting Human Strategy developed in this study. Based on global integration and local responses to internationalization strategies, the Grafting Human Strategy provides strategic advantages to enterprises, satisfies requirements for enterprise internationalization and achieves synergy between two strategic advantages.
As the Grafting Human Strategy indicates, MNEs must combine the characteristics of human strategies in parent companies and those in subsidiaries to develop optimal management practices to establish and introduce global systems to other MNE departments. By planning human planning in the long-term, MNEs could carefully recruit outstanding employees from home country and local labor markets, thereby facilitating the establishment of life-long employment relationships. Moreover, MNEs must focus on the education and training of employees, and expend resources on training employees and offering opportunities. This enables human strategies and procedures to be transferred among parent companies and subsidiaries. As from the culturally-animated approach views, the uniform core human system moves organizations towards the same goal, but given different local culture conditions, the outcome of these human systems will remain divergent [12]. The Grafting Human Strategy considered in this study contended that overseas organizations could determine related human activities based on local conditions. Moreover, even if a core human system of universal appeal exists, its effectiveness depends on its level of congruence with the cultural profile of the country where the firm implements it [10].
Therefore, from this point of view, parent companies are not the only source of competitive advantages. Each subsidiary company can develop its own unique competences to enhance its own competitive advantages. Accordingly, a strategic model that enables the sharing of resources, knowledge, and abilities, and the development of innovation, is required to establish interconnected corporate networks. Interconnected corporate networks should be multifaceted, nonprogrammable, knowledge-intensive, and local-innovation-related, and should develop knowledge- and technology-based enterprise cultures in information-sharing and resources-reliance aspects.
Case examples in corresponding situations of the framework
In Taiwan, companies have actively engaged in innovative research and development, resulting in an industrial cluster that ranks as number one worldwide. These companies have leveraged production resources and markets in the Asia-Pacific region to rapidly increase their production scales and achieve commercialization. Therefore, Taiwan is the optimal base for MNEs to establish their headquarters in the Asia-Pacific region. Furthermore, Taiwan’s technological industries are globally renowned for being the world’s second largest manufacturer of information hardware. According to the International Institute for Management Development (IMD) in Switzerland, Taiwan is ranked number 13 in the 2014 IMD World Competitiveness Yearbook. Moreover, between 2009 and 2013, the overall performance of Taiwanese enterprises was ranked in the top 10; specifically, various aspects of Taiwanese enterprises (e.g., productivity and efficiency, labor market, business management, behavioral attitudes, and values) have annually achieved top ranks in the world. Therefore, Taiwanese MNEs have earned a global leading status for their operational effectiveness, indicating that they possess methods for attaining success that are worthy for other MNEs toemulate.
After reviewed the raw materials of MNEs in the 2012 list of the Outward Investment Directory, we selected four MNEs, and each one were corresponded the different situation of the I-R framework [30]. Company M, a leading textile enterprise in Taiwan with low pressure for global integration and low pressure for local responsiveness was selected to represent Situation I. Company B, a plastics trading company which has operated in Taiwan and China, represented Situation II with high local responsiveness and low global integration. Company F, a large technology conglomerate in Taiwan with low local responsiveness and high global integration represented Situation III. Company G, a large multinational food-chain conglomerate with both high integration and high local responsiveness represented Situation IV. These four enterprises were the research targets in this study. To reinforce the inference results, the researchers of this study investigated how various types of enterprises implemented human strategies.
Regarding Situation I, this study investigated Company M, a leading textile enterprise in Taiwan. Company M has branches in China, the Philippines, Vietnam, and other countries. According to in-depth interviews with the interviewees of the target company who had substantial work experience overseas, people employed as directors and deputy directors at the overseas business operation units of the target company were mostly from Taiwan. Therefore, Company M did not adopt a complete localization strategy. In addition, the parent company also sent commissioners overseas to guide production and quality control processes. The parent company assumed responsibility for supervising overseas subsidiaries and helping them improve and manage themselves. The parent company did not adopt a strategy by which it completely controlled its overseas subsidiaries. One week before personnel are sent to serve in overseas subsidiaries, the company requests each department to introduce their work content and to report all matters that require attention in production areas. Company M tends to manage their human from a short-term perspective. To effectively manage overseas business affairs, Company M emphasizes the importance of overseas employees’ management ability and professional skills, and seeks talent mostly on the local labor market. The Company employs its employees based on their existing skills, and seldom provides training to employees at the beginning of employment. Company M only provides some information related to its overseas branches to help employees to quickly familiarize themselves with overseas work environments and enhance employees’ ability to respond to particular situations and problems arising from the internationalized operation of the enterprise. In this respect, the method used by the case company and its implications are in accordance with the Undertaking Human Strategy developed by this study for Situation I.
Regarding Situation II (i.e., localization), Company B, which has long engaged in selling plastics in Taiwan and operates in Kunshan and Shenzhen in China, where it has successfully adapted to local regulations and business culture, was researched as a study case. According to an in-depth interview with the assistant business manager of the subsidiary in Kunshan, the employees at the overseas branch of the case company are tasked with acquiring new customers and retaining existing customer orders. New employees overseas are provided with short-term business training before taking office. Local assistant business managers are invited to lecture on the company’s products (including how to use various products and how to manage unexpected situations and customer services) and help employees familiarize themselves with the company’s products and the local market. Subsequently, senior employees guide new employees and demonstrate how they work with local customers. This is in accordance with the human strategy developed by this study for Situation II. This strategy stresses the importance of localization, fulfilling customer demands, building a solid foundation, actively and fully understanding local markets, and enabling employees to take the initiative in developing local markets and innovating to respond to local requirements. Furthermore, Company B provides new employees with on-the-job training. Local suppliers and subsidiaries continue to provide training to new employees overseas. During training, the development of new products is introduced, product news is announced, and information related to local competitors is updated. This is also coincides with the Live-Staking Human Strategy developed in this study. Company B did not transfer its philosophy, policies, and practical experience in human strategies to its subsidiaries, but established an human system in response to local requirements. Company B employs local human experts or managers to maximize its local responsiveness and to undertake human strategies in subsidiaries to help the enterprise build a solid foundation in local areas.
To understand how enterprises in Situation III implement their human strategies, Company F, a large technology conglomerate in Taiwan, was researched as a study case. According to in-depth interviews with senior commissioners with extensive overseas work experience in the quality department of the case company, the commissioners are responsible for the Six Sigma quality management plan developed by the parent company, and have frequently gone to overseas subsidiaries to promote technological development and technology transfers considered important by the parent company, and to develop special projects to help subsidiaries improve product quality. This strategy, in which the parent company sent out commissioners to help enhance product quality standards globally, is consistent with the Export Human Strategy in Situation III, which aims to achieve effective integration and consistency. In other words, the strategy that parent companies lead and integrate human activities achieves the strategic objectives of MNEs in Situation III (i.e., effective integration and management).
Finally, to effectively understand the human strategies strategy adopted by enterprises in Situation IV, Company G, a large multinational food-chain conglomerate, was researched as a study case. The case company constructed an effective online knowledge management (KM) education system for new employees to use. This is in accordance with the Grafting Human Strategy in this study, which promotes the sharing of resources, knowledge, competence, and encourages innovation, establishing interconnected corporate networks, and developing corporate cultures that stress the importance of knowledge and technological development. In addition, according to interviews with marketing managers with substantial work experience in overseas branches, the case company stresses the importance of employees’ work experience in overseas markets and provides distance on-the-job training to employees through the implemented online KM education system. Thus, Company G implements an human strategy from a long-term perspective; the human strategy adopted by Company G is knowledge-intensive and local-innovation-related. The costly online KM education system echoes the Grafting Human Strategy developed in this study. Company G stresses the importance of employees’ on-the-job training, and offers employees considerable funding for training and further development opportunities. Through human policies and practices, Company G also transfers internal knowledge between the parent and subsidiary companies, as well as between subsidiary companies. These approaches (i.e., establishing a knowledge database and sharing knowledge) demonstrate the characteristics of Situation IV (i.e., a high reliance on knowledge circulation). Using information technology to achieve knowledge circulation and innovation can create a superior graftingeffect.
Discussion and conclusion
When enterprises attempt to become international, expand their business territories, enter global markets through developing overseas business plans, and gain substantial profits, they face various strategic situations, in which they must pursue enterprise internationalization, endeavor to achieve their strategic purposes, and manage their operational behavior. In addition, when an enterprise internationalizes itself, the enterprise must internationalize its human strategy, quickly develop superior human capital, and enhance work performance. Therefore, human strategies are considered a source of competitive advantage for an enterprise both in academia and in practice. Moreover, international human strategy is considered a critical factor that determines whether an international enterprise succeeds [23, 53]. According to contingency theory, there is no the best strategy for all the organizations, and must modify its business strategy according to the environment in which the organization is situated. Therefore, human strategies and organizational environments must be complementary to each other to enhance an organization’s competitive advantage [9]. Therefore, this study is based on contingency theory, and considers that different organizations possess different resources and face different situations. The resources an organization possesses and the situations an organization faces play a crucial role in developing organizational strategies, especially human strategies [11, 40]. An human strategy is the main source of an organization’s competitive advantage [28]. Based on the four enterprise internationalization situations proposed by Bartlett and Ghoshal [6] in consideration of the strategic factors (i.e., pressure for global integration and pressure for local responsiveness), this study adopted contingency theory and the induction method to analyze and collect data from the literature, and derive a theoretical framework. In addition, this study used four enterprises that adopted various internationalization models to represent the four internationalization situations considered in this study. In-depth interviews were conducted with employees of the four enterprises to verify the theoretical framework constructed in this study and the four international human strategies for the four enterprise internationalization situations. The Undertaking Human Strategy is ideal when facing low pressure for both local responsiveness and global integration. The Undertaking Human Strategy plays a role in helping an enterprise execute special tasks for the enterprise’s overseas business operation. The Live Staking Human Strategy, with a need for high thorough local responsiveness and low global integration pressures, helps an enterprise build a solid foundation and operate business in local areas. The Export Human Strategy faces the situation of lower responsiveness to regional differences, higher global integration, and even higher centralization of power. With the Export Human Strategy, the human system of a parent company can be completely transferred overseas, and a globally consistent human strategy can be used to sustain the exclusive human capital and competitive advantage of an enterprise. The Grafting Human Strategy is best in a situation of both global uniformity and regional differences. This study recommends the Grafting Human Strategy to develop a human strategy from a long-term perspective and to construct interconnected corporate networks that share resources, knowledge, and competencies, and pursue innovation.
Regarding the academic contributions of this study, this study was an exploratory study that proposed four significant enterprise internationalization situations according to “pressure for global integration” and “pressure for local responsiveness,” derived corresponding strategic characteristics and implications in the literature review, and integrated enterprise internationalization situations and international human strategies. In addition, this study presents breakthrough research regarding international human strategies. Based on contingency theory, this study comprehensively reviewed theoretical and practical human strategies and ideas of MNEs, constructed the most suitable international human strategies for four enterprise internationalization situations, and compared and discussed the practical strategies of four large, representative MNEs. The four international human strategies proposed in this study probably are not the only strategies suitable for the four corresponding internationalization situations. However, according to the careful literature analysis and theoretical derivation, and subsequent interviews with sample enterprises and comparisons, this study considered that these international human strategies are the most suitable strategies for corresponding internationalization situations. Past researches have considered the linkage between the organizations’ internationalization and human strategies, but did not design human strategies for specific internationalization situations based on the perspective of contingency theory. This study intended to address a contingent human strategy framework in different internationalization situations. Furthermore, we hoped the proposed framework favorably combines the merits and contributions of various relevant studies.
This study also made the following practical contributions. First, unlike other studies regarding human strategies, this study proposes a framework of human strategy for various internationalization situations. The framework provides a reference for international enterprises in the current era, in which enterprise international human strategies are developing vigorously. Second, employees of four sample MNEs in Taiwan that operated successfully in large territories were interviewed. This study examined the practical human strategy adopted by these MNEs and recorded these methods as definite examples that other enterprises in international markets can emulate. Third, this study was conducted to enable enterprises that are initiating the internationalization process or are modifying their internationalization path to understand the importance of human strategies. Effective human strategies should be considered from a strategic perspective. Developing human strategies and objectives and complementary relationships among vision, culture, and various functions of the organization is crucial for enterprises to create competitive advantages [24].
However, this study is limited by research variables and methods and therefore has the following limitations. First, this was an exploratory study which qualitatively and logically derived the conceptual framework and strategic content regarding enterprise internationalization situations and international human strategies. This study did not perform quantitative analysis regarding enterprises’ practical operation and did not comprehensively investigate enterprises. Therefore, the subsequent research should conduct statistical analysis regarding international enterprises’ practical operation and give scientific meaning to the research results. Second, this study focused on the corporate level of international enterprises to explore related issues. This study explored the meaning of neither internationalization strategies, nor the framework of human strategies at the business levels. Therefore, subsequent research should investigate in-depth whether more subtle strategic thinking and objectives regarding enterprise internationalization strategies exist at the organizational and business levels to develop superior human strategies that fulfill actual requirements. Third, based on contingency theory, this study proposed an exclusive framework of international human strategies under various internationalization international Although human strategies are the main source of an organization’s competitive advantage, human strategies include numerous functional strategies, e.g., recruitment and selection strategies, performance assessment strategies, payment strategies, and training and development strategies. Strategic human also emphasizes the importance of integrating various human activities into organizations. Therefore, the subsequent research should, based on contingency theory, further investigate functional human strategies (e.g., recruitment and selection strategies and training strategies) for various internationalization situations. Finally, this study suggests that future studies should consider the processes of enterprise internationalization, the influence of the maturity of enterprise internationalization development on international human strategies, and whether the entry models of enterprises into international markets require the international human strategies adopted by enterprises to be altered. Although this study endeavored to comply with the spirit of scientific management, the framework of international human strategies developed in this study is insufficient to interpret and be widely applied in mutable international business situations. Therefore, this study suggests that subsequent research should consider enterprise internationalization processes and the entry models of enterprises into internationalization.
Footnotes
Acknowledgments
The authors wish to appreciate the referees who have provided valuable recommendations for improving the presentation of this paper.