Human Resource management in Cross Border Mergers
Uploaded by patrickgs on Oct 05, 2012
Introduction
Globalization of business in general and manufacturing in particular has increased greatly during the last decades as companies have internationalized their value-chains in a search of competitive advantage through scale and/or scope throughout the world. Combined with other developments, such as increased deregulation, technological change, privatization and corporate restructuring, globalization has spurred not only increased international orientation, but also an unprecedented surge in cross-border mergers and acquisitions (Aswathappa and Dash 2011).
A merger is the result of an agreement between two companies to join their operations together. Partners are often equals. An acquisition, on the other hand, occurs when one company buys another company with the interest of controlling the activities of the combined operations. Within the context of this international volume, the focus of this essay will be on cross-border mergers and acquisitions (M&As). Many of HRM challenges faced in mergers and in acquisitions are similar, and for this reason in the further discussion we will not differentiate between these two entities, but summarize them and use the abbreviation M&A. Cross border M&As involve partial or full takeover or the merging of capital, assets and liabilities of existing enterprises in a country by transnational corporations form other countries (Aguilera and Dencker 2005). M&A generally involve the purchase of existing assets and companies. One major reason to engage in mergers or acquisitions is often to facilitate the rapid entry into new markets. Thus mergers and acquisitions are a predominant feature of the international business system as companies attempt to strengthen their market positions and exploit new market opportunities. The issues, challenges and opportunities related with human resource in case of mergers and acquisitions have been discussed in the following sections of this essay.
Role of Human Resource Management
Human resource management (HRM) refers to all of the activities that are dedicated towards affecting the behaviors of people working for it. As the employee behaviour have a profound impact on profitability, satisfaction of customers and a variety of other important measures of effectiveness of the organization, it is a key strategic challenge for all companies to manage human resources and particularly those that are engaged in cross border alliances (Faulkner and Joseph 2012). All organizations are engaged with activities associated with human resource management. Such activities involve formal policies and everyday practices to manage people in the organization. HRM practices then play a significant role by providing specific statements on the...