Command, Mixed, and Emerging Economies: HR Management

Economic Systems and Their Characteristics

Command Economy

Comparable to a monopoly, in a command economy, the government has explicit control over the price and supply of a good or service.

Mixed Economy

The main characteristic of a mixed economy is that while some sectors reflect private ownership and freedom, and the flexibility of the law of demand, other sectors are subject to government planning.

Established Economies

Examples of established economies include:

• North America
• European Union
• Japan

Emerging Economies

Emerging economies typically face relatively low GDP per capita and a workforce that is either unskilled or semi-skilled, but they exhibit sustained economic reform and growth.

Free Trade Agreements

The creation of free trade agreements has helped to trigger economic gains in many developing nations.

International Human Resource Management

Human Resources

Human resources are an essential part of any organization because they provide the human capital that keeps operations running. Their management is also key to an efficient, productive workplace.

Types of International Managers

• Home-country nationals: Expatriate managers who are citizens of the country where the multinational corporation (MNC) is headquartered.
• Expatriates: Managers who live and work outside their home country. They are citizens of the country where the MNC is headquartered.
• Host-country nationals: Local managers hired by the MNC.
• Third-country nationals (TCNs): Managers who are citizens of countries other than the country in which the MNC is headquartered or the one in which they are assigned to work by the MNC.

International Human Resource Selection Procedure

Theoretical models containing the variables that are important for adjusting to an overseas assignment have been developed. These help contribute to a more effective selection of expatriates and examine traditional testing and interviewing procedures, presenting an adjustment model.

The Adjustment Process

Models have been created to help explain the factors involved in effectively adjusting to overseas assignments. These adjustment models help to identify the underpinnings of the effective selection of expatriates.

Compensation in Global Organizations

Compensation programs implemented in a global organization will not mirror an organization’s domestic plan because of differences in legally mandated benefits, tax laws, cultures, and employee expectations based on local practices.

Balance Sheet Approach

The balance sheet approach is an approach to developing an expatriate compensation package that ensures the expatriate is “made whole” and does not lose money by taking the assignment.

Repatriation of Expatriates

Repatriation is the return to one’s home country from an overseas management assignment.

Common Topics in Cultural Training

The most common topics covered in cultural training are social etiquette, customs, economics, history, politics, and business etiquette.

Ethnocentric MNC

An ethnocentric MNC puts home-office people in charge of key international management positions.

Geocentric MNC

A geocentric MNC seeks to integrate diverse regions of the world through a global approach to decision-making.