MANAGING THE IMPACT OF GLOBALIZATION

Managing The Impact of Globalization

Managing The Impact of Globalization

Globalisation and Strategic Internal 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.

Prelude

What is globalization? I use the general term as the process whereby a growing influx of goods, services, capital, people and social customs lead to greater integration of economies and societies worldwide. This phenomenon is not new, but the integration process has accelerated dramatically in recent decades. The world has experienced successive waves of globalization. The current phase is the second great wave of globalization of international trade and capital flows. The first took place from 1870 to 1914, when international trade grew to about 4% annually, from 10% of world output (measured by GDP) in 1870 to over 20% just before the outbreak of World War in 1914. The Great War (1914-1918) caused a sudden interruption of trade and capital flows between nations. Rajan and Zingales (2001) have aptly termed the collapse of this phase of globalization as the "Great Investment", which support culminated in the Second World War (1939-1945).

The creation of the Bretton Woods institutions (World Bank, International Monetary Fund and the General Agreement on Tariffs and Trade) after the war laid the groundwork for the current era of globalization. The contemporary phase was dubbed "globalization" in the mid 1980's when it became clear that the unprecedented advances in information technology with reduced transaction costs and rapid international flows of capital resulting, hand labor, and technology has made the world a much smaller and qualitatively different place. According to Keohane, Deardorff and Stern, and Mishkin, among others, which makes this current phase of globalization of the previous "partial" one is the rapid incorporation of most developing and post-communist countries-the so-called "new globalizing "or" emerging market "-in the global economic system. These analysts agree that the current process of global economic integration has been driven largely by dramatic cross-border trade and capital and investment flows. International trade has witnessed an expansion of 16 times in the last 50 years. Foreign direct investment and capital flows worth about $ 160 million in 1991 rose to more than $ 1.1 billion in 2000 and accelerated to $ 2 billion in 2005, while cross-border capital flows, including debt , portfolio investment and direct ...