International Industrial Relations – Convergence and Divergence

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I. INTRODUCTION There has been a growing interest in the issue of globalization, internationalization, ‘best practices’ adoption and its impacts on the convergence of national employment relations system. Many scholars concludes that at the industry level, the needed changes to be more flexible and internationally competitive has led to several common patterns in term of employment relations. Meanwhile, others argue that cross-national variations such as culture, economic stage of development, institutions workers, behavioral mindset still exist and constitutes diversity within and between nations. This essay will review some of the most relevant literature, research and debates surrounding the topic as well as explore different viewpoints in order to make an insightful understanding of these processes. The paper will also compare and contrast two of three most dominant national models: Anglo-American and Japanese model (another is Rhineland-German model) as a case to reflect how convergence and divergence in term of employment relations system moving unstoppable. II. CONVERGENCE – COMING TOGETHER 1. Globalization Impact Convergence of employment relations system across national borders was predicted in the early days by many scholars. They stated that globalization and international trade may put pressure on firms to standardize practices and policies. Convergence theory was developed by American Harbison and Myers (1959) and Kerr et al. (1960). They view similar political and economic systems is the result of industrialization process and rapid growth of advanced technology. While the theory itself does not specify on industrial relations or human resource management, but its approach can be applied to gain understanding of the issue. Globalization’s impacts on HRM come via the opening and penetration of economies to external forces. This is two-way process, with both indigenous firms and multinational enterprise adopt each other’s HRM practice. For example, foreign direct investment (FDI) promote new HRM practice from home country to host country (home-country effect) or alliances/ mergers and acquisitions between organizations facilitate the personnel transfer/relocation, in turn lead to potential convergence. Kerr’s view in the 19060s received criticism due to the over-simplification of industrial development, too much emphasis to the technology impact. Nevertheless, Kerr and other scholars like MAcDuffie (1995) argued that the forces of convergence was more likely to overwhelm national differences. 2. Best Practice Effect Convergence theorists also debate the spread of ‘best practice’ effect and benchmarking. What is considered ‘best practice’ is subjective and variable between authors, sectors and time. To simplify, we can take Gennard and Judge (1993)’s defined best practice (in employee relations) as ‘managing by behaving in a fair and reasonable manner which help to add value to the business. They assumed that firm across nations would have to converge to best practice, otherwise losing the competitive advantages. From the industrial relations perspective, it means that HRM system need a more comprehensive and integrated mechanism, rather than a ‘pick and mix’ of few practices in order to gain their performance (Pfeffer, 1994). It is also important to notice that ‘best practice’ benchmarking occur in two different scales: internal or individual firm practice, for instance the use of particular technology,

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