A303 Q01
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Question 1
IHRM Presented by Peter Ng, Daniel Koo & Daniel Lin
Compare and contrast Hofstede’s culturalist framework with Hall and Soskice’s institutionalist framework. Explain with examples which of the two frameworks is more useful for the purposes of understanding the dynamics of IHRM.
Agenda Brief overview of Hofstede’s cultural framework – Peter Brief overview of Hall & Soskice Varieties of Capitalism institutionalist framework – Daniel Koo Suggestions on answering the question – Daniel Lin
Hofstede's Framework for Assessing Culture - Small vs. Large Power Distance The extent to which the less powerful members of institutions and organizations expect and accept that power is distributed unequally. Small power distance (e.g. Austria, Denmark). Large power distance countries (e.g. China).
Hofstede's Framework for Assessing Culture - Individualism vs. collectivism
It refers to the preference for independent vs. team-based work. The extents to which individuals are integrated into groups. Cultures that are collectivist: East Asian and Latin American cultures. Cultures that are individualistic: USA and UK.
Hofstede's Framework for Assessing Culture - Masculinity vs. femininity It refers to the value placed on traditionally male or female values. It is also a measurement of the value society places on materialism (masculine) and relationships (feminine). “Masculine" culture (e.g. Japan). “Feminine” culture (e.g. Sweden).
Hofstede's Framework for Assessing Culture - Uncertainty avoidance Its reflects the extent to which members of a society can tolerate uncertainty. Cultures that scored high in uncertainty avoidance prefer rules (e.g. about religion and food).
Hofstede's Framework for Assessing Culture - Long vs. short term orientation It describes a society's "time horizon" to the future versus the past and present. In long term oriented societies, values include persistence. In short term oriented societies, values include protecting ones face.
Varieties of Capitalism – Peter Hall & David Soskice
Seeks to explain differences in developed political economies and political institutions across countries:
Anglo-American style liberal market economies with small welfare states, OR
Continental European ‘social model’, in which markets are more constrained by state intervention and welfare provisions are generous (Albert, Hall and Soskice).
Varieties of Capitalism – Peter Hall & David Soskice The approach is actor-centred and the key actor is the firm. We see firms as actors seeking to develop and exploit core competencies or dynamic capabilities, in producing and distributing goods/service profitably.
A Relational view of the Firm
The critical view is the quality of the relationships the firm is able to establish.
Both internally with it’s own employees and externally with a range of other actors: suppliers,
clients, collaborators, stakeholders, trade unions, business associations and governments
A Relational view of the Firm
In short the firms capabilities are ultimately relational, a firm encounters many coordination problems.
Its success depends substantially on its ability to coordinate effectively with a wide range of actors.
Assumptions of VoC
For this purpose, firms face problems in five spheres:
Industrial Relations:
How to Coordinate bargaining over wages and working conditions with their labour force.
Vocational training and education:
Firms face the problems of securing a workforce with suitable skills, while workers face problem of deciding how much to invest in what skills
Assumptions of VoC
Corporate Governance:
Inter-firm Relations:
Firms turn for access to finance and in which investors seek assurance of returns on their investment.
The relationships a company forms with other enterprises and notably it’s supplier and client, with a view to securing a stable demand for its products and access to technology.
Co-operation among employees:
To ensure that employees have the requisite competencies and cooperate well with others to advance the objectives of the firm.
Liberal Market Economies vs Co-ordinated Market Economies
Firms solve problems in these five spheres via either Liberal or Co-ordinated measures.
National Political Economies can be compared by the way in which firms resolve the coordination problems they face in these five spheres
Liberal Market Economies
In Liberal Market Economies, firms co-ordinated via hierarchies and competitive market arrangement.
Market Relationships are characterized by arm’s-length exchange of goods or services in a context of competition and formal contracting.
Operate along roughly laissez-faire principles.
Co-ordinated Market Economies
Firms depend more heavily on non-market relationships to coordinate their endeavours with other actors.
Entail more extensive relational or incomplete contracting, network monitoring based on the exchange of private information inside networks, and more reliance on collaborative, as opposed to competitive relationships.
Non-market actors: Governments, Trade Unions, Employers Association, etc
The Role of Institutions and Organisations
Institution is defined as a set of rules, formal or informal, that actors generally follow; whose rules also contribute to the political economy. Firms in LME, the competitive market is the key institution that facilities co-ordination. Firms in CME, other actors facilitate coordination. (Trade Unions, Gov, Legal regulations, etc)
Institutions and Corporate Strategy
Firms located in LMEs and firms in CMEs follow different corporate strategies.
It follows that institutions (ie., Trade Unions) are deeply conditioned by nationally specific processes of capitalist development.
Overview of key differences in the five spheres between LME and CME Corporate Governance and Financial Systems
LME
CME
Financial data/info is mainly obtained from publicly available information and finance is secured from the valuation of the firm.
Financial data/info is shared between different firms in the industries and info tends to be more reliable.
Overview of key differences in the five spheres between LME and CME
Corporate Governance and Financial Systems (Cont’)
LME
CME
Decision making is unilateral and has a top-down approach. Firms usually adopt short term orientation (ie., current profitability).
Decision making usually involves all levels of staff and firms usually adopt a long term orientation.
Overview of key differences in the five spheres between LME and CME Industrial Relations
LME
CME
Trade unions are weaker and wage differences tends to be quite high. As a result labour tends to move around freely than stick in one firm for a considerable period.
Trade unions are strong and usually work well with employer associations to fix and stabilise wage levels. Skilled labour will not defect or be poached easily.
Overview of key differences in the five spheres between LME and CME Training and Education
LME
CME
Firms tend not to invest heavily in training and education is more general and not as industry specific. However general skills also allow employees to pick up other skills easily.
T&E can be conducted by using apprenticeship and the industry as a whole determines training standards.
Overview of key differences in the five spheres between LME and CME LME Inter-firm Relations
Firms are more competitive and in instances that they collude, there might be regulations to prevent them from doing so.
CME Firms share strong networks and relationships and tend to share technologies or info easily.
In Summary
Essentially, these varieties boil down to the "liberal" and "coordinated" variants.
Liberal market economies -- the U.S., U.K., Australia, Canada -- operate along roughly laissez-faire principles.
Coordinated market economies -- Japan, Germany, France, Italy -- are more comfortable with non-market (i.e., governmental) forms of resource allocation.
Researchers who push this typology argue that both kinds of systems are equally valid providers of economic growth/social welfare.
How to answer the question
Introduction First
briefly discuss about the role of firms in an increasingly globalised world and how MNCs need to recruit/develop local workforces in different countries or to bring in other nationals to work in another country. Relate these recent developments and needs in IHRM and MNC firms to the two abovementioned frameworks.
Brief Overview and implications of Hofstede’s framework for IHRM
To make things simple, we shall use the examples of Germany(G) and Japan(J). Discuss
about culture framework and use G and J as examples (ie. Compare the differences between them in some of the aspects in the culture framework). Continue to discuss how these differences must be taken into consideration in order to understand the diversity and complexities of IHRM and how it will aid MNCs.
Brief Overview and implications of Hall and Soskice’s framework for IHRM We can use Germany(G) and USA(U) as examples. Discuss about the varieties of capitalism and again we can compare the differences between G(CME) and U(LME). Discuss about how the differences in these two forms of economy can affect how IHRM works.
Main similarities and differences between the two frameworks Similarities Types of values that different society/firm possess. Inter-relatedness of culture with capitalism Relationships between actors
Differences VoC seek to categorise economies whereas the latter seek to categorise nation cultures.
What it means for us and which framework is the best?
Basically no one framework is the best to aid us in our understanding of the workings of IHRM as the two frameworks can be used together in complement to further our understanding. Despite the apparent differences between these two frameworks, it has been shown from the above table that culture can affect and explain how firms and society behaves and how IHRM is ultimately influenced by the combined interaction of all these actors.
Conclusion
In this last section there will be no further points to be made and it is simply a short summary and a wrap up of the above stated discussions. Conclude with your viewpoint on which framework is the best or both.
Tips on answering Try to relate to the tripartite relationship between firms, societal culture and IHRM using each of the frameworks. Introduce new arguments and so not try to repackage 1 or 2 arguments into more arguments. Forget about the number of pages but what is in the pages.
IHRM Presented by Peter Ng, Daniel Koo & Daniel Lin
Compare and contrast Hofstede’s culturalist framework with Hall and Soskice’s institutionalist framework. Explain with examples which of the two frameworks is more useful for the purposes of understanding the dynamics of IHRM.
Agenda Brief overview of Hofstede’s cultural framework – Peter Brief overview of Hall & Soskice Varieties of Capitalism institutionalist framework – Daniel Koo Suggestions on answering the question – Daniel Lin
Hofstede's Framework for Assessing Culture - Small vs. Large Power Distance The extent to which the less powerful members of institutions and organizations expect and accept that power is distributed unequally. Small power distance (e.g. Austria, Denmark). Large power distance countries (e.g. China).
Hofstede's Framework for Assessing Culture - Individualism vs. collectivism
It refers to the preference for independent vs. team-based work. The extents to which individuals are integrated into groups. Cultures that are collectivist: East Asian and Latin American cultures. Cultures that are individualistic: USA and UK.
Hofstede's Framework for Assessing Culture - Masculinity vs. femininity It refers to the value placed on traditionally male or female values. It is also a measurement of the value society places on materialism (masculine) and relationships (feminine). “Masculine" culture (e.g. Japan). “Feminine” culture (e.g. Sweden).
Hofstede's Framework for Assessing Culture - Uncertainty avoidance Its reflects the extent to which members of a society can tolerate uncertainty. Cultures that scored high in uncertainty avoidance prefer rules (e.g. about religion and food).
Hofstede's Framework for Assessing Culture - Long vs. short term orientation It describes a society's "time horizon" to the future versus the past and present. In long term oriented societies, values include persistence. In short term oriented societies, values include protecting ones face.
Varieties of Capitalism – Peter Hall & David Soskice
Seeks to explain differences in developed political economies and political institutions across countries:
Anglo-American style liberal market economies with small welfare states, OR
Continental European ‘social model’, in which markets are more constrained by state intervention and welfare provisions are generous (Albert, Hall and Soskice).
Varieties of Capitalism – Peter Hall & David Soskice The approach is actor-centred and the key actor is the firm. We see firms as actors seeking to develop and exploit core competencies or dynamic capabilities, in producing and distributing goods/service profitably.
A Relational view of the Firm
The critical view is the quality of the relationships the firm is able to establish.
Both internally with it’s own employees and externally with a range of other actors: suppliers,
clients, collaborators, stakeholders, trade unions, business associations and governments
A Relational view of the Firm
In short the firms capabilities are ultimately relational, a firm encounters many coordination problems.
Its success depends substantially on its ability to coordinate effectively with a wide range of actors.
Assumptions of VoC
For this purpose, firms face problems in five spheres:
Industrial Relations:
How to Coordinate bargaining over wages and working conditions with their labour force.
Vocational training and education:
Firms face the problems of securing a workforce with suitable skills, while workers face problem of deciding how much to invest in what skills
Assumptions of VoC
Corporate Governance:
Inter-firm Relations:
Firms turn for access to finance and in which investors seek assurance of returns on their investment.
The relationships a company forms with other enterprises and notably it’s supplier and client, with a view to securing a stable demand for its products and access to technology.
Co-operation among employees:
To ensure that employees have the requisite competencies and cooperate well with others to advance the objectives of the firm.
Liberal Market Economies vs Co-ordinated Market Economies
Firms solve problems in these five spheres via either Liberal or Co-ordinated measures.
National Political Economies can be compared by the way in which firms resolve the coordination problems they face in these five spheres
Liberal Market Economies
In Liberal Market Economies, firms co-ordinated via hierarchies and competitive market arrangement.
Market Relationships are characterized by arm’s-length exchange of goods or services in a context of competition and formal contracting.
Operate along roughly laissez-faire principles.
Co-ordinated Market Economies
Firms depend more heavily on non-market relationships to coordinate their endeavours with other actors.
Entail more extensive relational or incomplete contracting, network monitoring based on the exchange of private information inside networks, and more reliance on collaborative, as opposed to competitive relationships.
Non-market actors: Governments, Trade Unions, Employers Association, etc
The Role of Institutions and Organisations
Institution is defined as a set of rules, formal or informal, that actors generally follow; whose rules also contribute to the political economy. Firms in LME, the competitive market is the key institution that facilities co-ordination. Firms in CME, other actors facilitate coordination. (Trade Unions, Gov, Legal regulations, etc)
Institutions and Corporate Strategy
Firms located in LMEs and firms in CMEs follow different corporate strategies.
It follows that institutions (ie., Trade Unions) are deeply conditioned by nationally specific processes of capitalist development.
Overview of key differences in the five spheres between LME and CME Corporate Governance and Financial Systems
LME
CME
Financial data/info is mainly obtained from publicly available information and finance is secured from the valuation of the firm.
Financial data/info is shared between different firms in the industries and info tends to be more reliable.
Overview of key differences in the five spheres between LME and CME
Corporate Governance and Financial Systems (Cont’)
LME
CME
Decision making is unilateral and has a top-down approach. Firms usually adopt short term orientation (ie., current profitability).
Decision making usually involves all levels of staff and firms usually adopt a long term orientation.
Overview of key differences in the five spheres between LME and CME Industrial Relations
LME
CME
Trade unions are weaker and wage differences tends to be quite high. As a result labour tends to move around freely than stick in one firm for a considerable period.
Trade unions are strong and usually work well with employer associations to fix and stabilise wage levels. Skilled labour will not defect or be poached easily.
Overview of key differences in the five spheres between LME and CME Training and Education
LME
CME
Firms tend not to invest heavily in training and education is more general and not as industry specific. However general skills also allow employees to pick up other skills easily.
T&E can be conducted by using apprenticeship and the industry as a whole determines training standards.
Overview of key differences in the five spheres between LME and CME LME Inter-firm Relations
Firms are more competitive and in instances that they collude, there might be regulations to prevent them from doing so.
CME Firms share strong networks and relationships and tend to share technologies or info easily.
In Summary
Essentially, these varieties boil down to the "liberal" and "coordinated" variants.
Liberal market economies -- the U.S., U.K., Australia, Canada -- operate along roughly laissez-faire principles.
Coordinated market economies -- Japan, Germany, France, Italy -- are more comfortable with non-market (i.e., governmental) forms of resource allocation.
Researchers who push this typology argue that both kinds of systems are equally valid providers of economic growth/social welfare.
How to answer the question
Introduction First
briefly discuss about the role of firms in an increasingly globalised world and how MNCs need to recruit/develop local workforces in different countries or to bring in other nationals to work in another country. Relate these recent developments and needs in IHRM and MNC firms to the two abovementioned frameworks.
Brief Overview and implications of Hofstede’s framework for IHRM
To make things simple, we shall use the examples of Germany(G) and Japan(J). Discuss
about culture framework and use G and J as examples (ie. Compare the differences between them in some of the aspects in the culture framework). Continue to discuss how these differences must be taken into consideration in order to understand the diversity and complexities of IHRM and how it will aid MNCs.
Brief Overview and implications of Hall and Soskice’s framework for IHRM We can use Germany(G) and USA(U) as examples. Discuss about the varieties of capitalism and again we can compare the differences between G(CME) and U(LME). Discuss about how the differences in these two forms of economy can affect how IHRM works.
Main similarities and differences between the two frameworks Similarities Types of values that different society/firm possess. Inter-relatedness of culture with capitalism Relationships between actors
Differences VoC seek to categorise economies whereas the latter seek to categorise nation cultures.
What it means for us and which framework is the best?
Basically no one framework is the best to aid us in our understanding of the workings of IHRM as the two frameworks can be used together in complement to further our understanding. Despite the apparent differences between these two frameworks, it has been shown from the above table that culture can affect and explain how firms and society behaves and how IHRM is ultimately influenced by the combined interaction of all these actors.
Conclusion
In this last section there will be no further points to be made and it is simply a short summary and a wrap up of the above stated discussions. Conclude with your viewpoint on which framework is the best or both.
Tips on answering Try to relate to the tripartite relationship between firms, societal culture and IHRM using each of the frameworks. Introduce new arguments and so not try to repackage 1 or 2 arguments into more arguments. Forget about the number of pages but what is in the pages.
