Academic journal article International Journal of Business Studies

The Impact of Globalisation on Strategic Human Resources Management: The Mediating Role of CEO in Hr

Academic journal article International Journal of Business Studies

The Impact of Globalisation on Strategic Human Resources Management: The Mediating Role of CEO in Hr

Article excerpt

Globalisation and Strategic Human Resource Management (SHRM) are worldwide phenomena that have shaped the faces of the corporate world predominantly. Yet, the links between the two processes have not been researched extensively. This exploratory study seeks to investigate the relationship between the degree of globalisation and the degree of SHRM in a firm. It also examines to what extent the chief executive officers (CEOs) can make HRM practices more strategic. The results of this study show that the degree of globalisation is significantly and positively related to the degree of SHRM in a firm. In addition, CEO's role in HR is found to be a partial mediator. These results suggest that a firm's degree of globalisation should correspond to the degree of SHRM practiced in the firm, and the CEO plays a vital role in influencing the practice of SHRM.

Keywords: globalisation, Strategic Human Resource Management, chief executive officer, strategic

I. INTRODUCTION

"The world is your oyster. Do you have the right fork?"

Thomas A Stewart

Fortune, 15 March 1999

Today in a knowledge-based economy, the importance of human resource management is on the rise as the role of human capital plays a more significant contribution to the organisation's bottom-line. The belief that an organisation's human capital represents a key strategic resource is becoming widely accepted (Boudreau and Ramstad, 1998). The escalating amount of scientific evidence, which seems to suggest that certain "high performance" human resource (HR) practices (e.g. performancebased compensation and benefit, training and development, selective recruitment and hiring, etc) are associated with higher organisational financial performance (Arthur, 1992; Welbourne and Andrews, 1996; Becker and Huselid, 1998; Boudreau and Ramstad, 1998), provides another rising trend that must be addressed.

The recognition that globalisation was going to change their business outlook requires CEOs around the globe realise the need to integrate their HR strategy into the business strategy to bring about the best deployment and management of their human capital to achieve sustainable competitive advantage. As such, human resource management (HRM) has become an important focus of top management's attention, especially in multinational enterprises. Trans-national organisations require trans-national HRM systems for the development of trans-nationally competent managers to run their global business. In turn, the development of capable managers are dependent upon the organisation's ability to design and run trans-national human resource systems that recruit, develop, retain, and utilise such trans-national managers and executives (Adler and Bartholomew, 1992).

Very little research has been done on the inter-discipline between globalisation and SHRM. Hence, the objectives of our study is to examine the relationships between the independent variable, degree of globalisation in the company, and the dependent variable, degree of SHRM practiced in the company, and the mediator, the CEO's role in HR.

For our first objective, we would like to examine if the degree of globalisation is significantly related to the degree of SHRM in the company. Secondly, we would like to explore if the degree of globalisation in the company is significantly related to the CEO's role in HR. Furthermore, we would like to examine if the CEO's role in HR is significantly related to the degree of SHRM practiced in the company. Lastly, we would like to investigate if the CEO's role in HR plays a mediating effect in the relationship between the degree of globalisation and the degree of SHRM in the company.

II. LITERATURE REVIEW

Degree of Globalisation in the Company

The twin forces that contributed to the current wave of globalisation are ideological change and technological revolution which have accelerated this worldwide phenomenon (Govindarajan and Gupta, 2001). …

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