2281+edt+134-147 (1)

INTERNATIONAL JOURNAL OF RESEARCH IN BUSINESS AND SOCIAL SCIENCE 12(1)(2023) 134-147
Research in Business & Social Science

IJRBS VOL 12 NO 1 (2023) ISSN: 2147-4478
Available online at www.ssbfnet.com
Journal homepage: https://www.ssbfnet.com/ojs/index.php/ijrbs
Linking international human resource management with corporate social

responsibility and shared value
Cheng-Kun Wang (a)*
(a)
Assistant Professor, College of Management, Chang Jung Christian University, Tainan 71101, Taiwan (R.O.C.)
ARTICLEINFO ABSTRACT
Article history: Global pressures have urged organizations to incorporate sustainable international human resource
management (IHRM) systems with the aim to be socially responsible. This paper proposes that by
Received 18 October 2022 integrating IHRM with corporate social responsibility (CSR) and shared value may be the solution
Received in rev. form 17 Dec. 2022 This study analyzes sustainability within the IHRM field, including other sustainable concepts to
demonstrate the relevance of labor and employment relation within human resource management.
Accepted 11 January 2023
Employment relations and the importance to develop IHRM strategies involving workers and managers
to increase shared value is also explained in the study. In turn, this integration enhances organizational
Keywords: performance and competitive advantage. Accordingly, this paper proposes a model to unleash the
bridge between IHRM and employment relations in multinationals operating in emerging economies,
HRM, CSR, Shared Value and proposed some propositions. Implications for research and practice are also discussed in the
paper.
JEL Classification: © 2023 by the authors. Licensee SSBFNET, Istanbul, Turkey. This article is an open access article
M12, M14, M16, O15 distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license
(http://creativecommons.org/licenses/by/4.0/).
Introduction
With a rapid economic growth from pro-market reforms and institutional voids that increase the risk and uncertainty of doing business
there (Banalieva et al., 2015), emerging economies are not only a destination for capital. These economies are also a source of
emerging multinationals’ investing in other developing and developed countries (Noeth & Sengupta, 2012; Sauvant et al., 2010).
However, most global firms move their productions to developing countries due to their low labor wages, but with deadline pressures
affecting workers conditions and therefore, productivity (Jiang et al., 2009; Ross & Chan, 2002). Because contexts and values from
developed and developing countries are different, multinational enterprises’ (MNE) corporate social responsibility (CSR) initiatives
may need to address these varying needs and areas of concerns (D'Amato Herrera, 2013) to enable sustainable IHRM, and therefore,
sustainable business. Industries such as manufacturing operating in the US will have very different social consequences than those
operating in China (Porter & Kramer, 2006), or in most emerging economies (Jiang et al., 2009). Hence, it is prevalent to integrate
sustainability into the internal activities and decision-making of organizations to address these varying needs and areas of concerns
in emerging economies. To integrate sustainability within internal activities of organizations, academics have coined the concept of
social responsible international human resources management (IHRM). However, the applicability of theis concept at international
level is still scarce in the literature, in particular subsidiaries of MNEs in emerging economies is largely missing. The avail of
sustainable IHRM in emerging economies whereforeign buyers offer support and guidance for human resources management (HRM)
improvements, may benefits not only local factories but also foreign buying companies, through developing a longer-term supplier
relationship (Jiang et al., 2009).
Globalization deepens the MNE’s integration within both, at local and international levels. Dynamics from the global operating
environment have made the managing of human resources more strategically important to organizations than ever before. Hence,
global effects have pushed managers and policy makers to understand how human resources is managed in different geographical
locations (Budhwar & Sparrow, 2002), such as in emerging economies. More specifically, IHRM focuses on the way MNEs manage
their employees in different parts of their organizations and global locations (Stahl et al., 2012). As globalization is indubitably
increasing speed and spread (Dereli et al., 2014), there are internal and external factors that affect how organizations manage their
employees globally (Beamond et al., 2016). As a consequence, these factors influence relationships between employers and
* Corresponding author. ORCID ID: 0000-0002-3752-636X

© 2023 by the authors. Hosting by SSBFNET. Peer review under responsibility of Center for Strategic Studies in Business and Finance.
https://doi.org/10.20525/ijrbs.v12i1.2281
Wang, International Journal of Research in Business & Social Science 12(1) (2023), 134-147
employees, called in the literature as employment relations (Wilkinson & Townsend, 2011). Global pressures, (e.g., social inequity
and poverty, climate change, environmental problems and increasing population), have urged organizations to incorporate sustainable
IHRM systems with the aim to be socially responsible. Despite of the deep influence of globalization on corporations, there is scan
literature aligning sustainability, IHRM and employment relations especially with particular focus on emerging economies. This
article proposes that by integrating CSR and the shared value perspective may be the answer. This alignment permits to “foster the
proactive role of HRM in developing sustainable business organizations or to extend the understanding of HRM performance”
(Ehnert, 2014); hence, the creation of new solutions to unravel human resources and employment relations difficulties, such as skill
shortages, and employee health, risk and human resources development in these economies, assists in sustain businesses in a global
economy.
At internal level, industry sectors are questioning if the human resources function is ready to ride the imminent tsunami of change
(Cariss, 2017), and to gain sustainable business. Changes include the unbalance of power between employer and worker; the labor
market focus, meanly on mobility rather than stability (freelancers, contractors such as supply chains, and employees); the effect of
artificial intelligence leading to pressures on workers to update their skills; and millennials becoming a key demographic aspect in
the workforce (Cariss, 2017). As a result, scarcity of skilled talent is a key global issue (Ransbotham et al., 2015), principally in
emerging economies (Meyers & van Woerkom 2014; Vaiman et al., 2012). Turnover rates are raising from top executives of large
corporations (Davidson, & Sly, 2014), middle managers, line managers and subcontractors to the supply chain (Jiang et al., 2009).
For instance, scarcity of skilled talents in the supply chain has a deep impact on HRM, hence on business in general; from executives
at corporate level to workers in the manufacturing and supplier sourcing stage. Principally in emerging and developing economies,
suppliers’ labor issues are key risks in global supply chains including cost, operational, and reputational risks (Jiang et al., 2009).
At external level, moral obligations, license to operate, and reputation, aspects embedded within CSR (Porter & Kramer, 2006) are
also three social responsible factors that affect sustainability of corporations and their IHRM. Although CSR has become important
for MNE operations in developing countries, general knowledge about CSR and its practicability in these regions is limited (Li et al.,
2010; Jamali & Mirshak, 2007); except for research that has focused on the lack of CSR adoption by firms in developing countries
compared with those in developed nations (Baum, & Kabst, 2013; Kundu & Gahlawat, 2015). CSR initiatives in developing nations
are important as their low social economic development (e.g., Welford 2004; Baughn et al., 2007), and unbalance of power affect the
relationship between employer and employee, managers, and organizations. Contrarily to “the arguments of radical or conflict
theories of the employment relationship, both workers and managers can increasingly be beneficiaries of the new approaches to work
and employment”; where theory and research of both, human resources and employment relations, have some central commonalities
of purpose (Thompson & Harley, 2008: 149). This paper support this idea, as globalization requires the need to develop HRM global
strategies, to both managers and workers (Thompson & Harley, 2008).
This paper highlights the importance to recognize employers that are socially responsible to employees, and communities where they
operate. In this sense, this paper proposes that by creating IHRM strategies involving employees from all organizational levels (e.g.,
executives, senior managers, and middle managers, workers), global organizations shape a sustainable IHRM and therefore, a
sustainable business. This paper particularly focuses on workers who are largely voiceless, proposing effective, and verifiable
protection of human rights solutions, idea embedded in the worker-driven social responsible concept (WDSR). This notion integrates
IHRM strategies for internal and external stakeholders such as employees in the supply chain, insuring sustainability-related
principles such as safe working conditions and fair wages (Awaysheh & Klassen, 2010). For instance, corporate moral obligations
may include responsible programs to “emphasize detection of violations of minimal standards in the areas of wages, hours, and
occupational safety and health” (Anner, 2012). By focusing on these issues, corporations gain legitimacy in the global supply chain
(Anner, 2012), sustainability of their business, reputation, and license to operate.
Acknowledging the importance of integrating internal and external employees (managers, and workers), literature on employment
relations within the human resource management field has been largely absent (Thompson & Harley, 2008). This is particularly
important when some global firms are squeezing effort from employees, which today do not work in an environment where firms
must harness the skills and creativity of their workforces (Thompson, & Harley 2008). Hence, the aim of this study is to integrate
both fields, employments relations within the IHRM to boost sustainability at global level. The term employment relations and
industrial relations are used interchangeably in this paper. To elect a common area for this study, this study uses the term employment
relations. Kaufman (2011) defines employment relations system as a conceptual construct that shows the factors external and internal
to firms and other organizations in an industry, region or nation that shape the characteristics and tenor of their employer–employee
relationships, and this is the definition adopted in this study.
A part of being responsible with employees and society, organizations also need to have sustainable business, in other words, they
need to manage the triple bottom line, social, environmental and financial aspects (Slaper & Hall, 2011), at the same time.
Recognizing the importance of linking strategy, social, and societal goals, this paper uses the creating shared value (CSV) strategy
concept, which advances the notion of CSR (Porter & Kramer, 2006) to sustain businesses. CSV suggests that business models will
need to involve core businesses, socioeconomic issues in communities, and lifestyle of people (Porter & Kramer, 2011). Sustainability
is a term closely related to CSR (Voegtlin & Greenwood 2016), and the CSV (Porter & Kramer, 2011) literatures. Hence, this study
builds on both concepts to bridge the divide between IHRM and employment relations. By doing this, both managers and workers
135
may be recipients of a new IHRM sustainable model to work and employment, and firms may enhance performance and competitive
advantage.
In doing so, this study responds to four calls in the literature. Fist, the study uses the CSV and CSR concepts to integrate employment
relations within the IHRM field. to expand the scope of IHRM strategies by incorporating sustainability issues (Shen, 2011). Second,
this article introduces the concept of worker-driven corporate responsibly responsibility in emerging economies. Third, this study
analyses internal and external societal needs to bridge the gap between IHRM and employment relations. Four, this research presents
a framework. This study also aims to contribute to practice and encourage future research on this issue.
IHRM and CSR

An effective management of human resources is a key element of success or failure within the international business context (Kim
& Scullion, 2013). Hence, the IHRM field is a crucial concept for international operations, and has been important for organizational
performance, and competitive advantage (Dowling et al., 2008). Models of IHRM have been developed based on host-contextual
(e.g., political factors, for example political stability, and economic, socio-cultural legal factors including employment relations), and
firm-specific factors (e.g., international strategy, organizational structure, organizational culture, mode and stage of
internationalization, industry, organization size, reliance on international markets, international experience and senior managers’
attitudes) (Shen, 2011). However, the main objective of corporations is not only to achieve global coordination but importantly, to
attain local responsiveness simultaneously (Chung et al., 2011; Dowling et al., 2008; Shen & Edwards, 2006), to sustain global
business.
Although HRM research has two distinctive approach to managing the employment relationship, (one based on a high-skill, high
commitment workforce and a central role for strategic human capital; and the other focuses on a more contingent perspective seeking
to recognize that human resources practices are profit-rational in which contexts they operate (e.g., Boxall & Purcell, 2003; Guest
1987; Storey 1985), research also suggest that HRM is not a homogeneous body of scholarship (Thompson & Harley, 2008). In one
hand, to achieving global coordination and local responsiveness simultaneously, it is important to face global changes such as
strategic pressures for organizations to manage employees due to the different environments in which organizations operate; change
management practices from controlling employees to gain employee commitment and motivation; and realizing that both workers
and managers can increasingly be beneficiaries of the new approaches to work and employment (Thompson & Harley, 2008). In the
other hand, global organizations need to focus on moral obligations (Comera & Sekerkab, 2018), license to operate (Hall & Jeanneret
2015), reputation and community relations (Black & Hartel 2002) to sustain their business. Hence, to balance current global trends,
this study proposes integrating employment relations within the IHRM filed through sustainability concepts such as CSR and CSV.
CSR has spread broadly at global level. From practitioners (Waddock, 2008), to researchers (Aguinis, 2011; 2012; Pisani et al., 2017)
from different perspectives, including management, organization, international business and management (e.g., Aguinis & Glavas,
2012; Baum, & Kabst, 2013; Doh & Lucea, 2013; Egri & Ralston, 2008; Frynas & Yamahaki, 2016; Holtbrügge & Dögl, 2012; Kolk,
2016; Kolk & Van Tulder, 2010; Kundu & Gahlawat, 2015; Lockett et al., 2009). CRS has also evolved (Kim & Scullion, 2013).
CSR of firms aimed to increase profits (Friedman, 1970) and satisfy different stakeholders such as, employees, government, seeking
legitimacy and recognition (Freeman, 1984, 1990). Then, CRS was seen by organizations as a strategic value (Branco & Rodrigues
2006; Porter & Kramer 2006), an important aspect to competitive success (Porter & Kramer 2006; Reich 2007), and as a strategic
investment (McWilliams et al. 2006).
Some research has been oriented to charitable contributions, and as a role in non- profit organizations (Brammer & Millington 2004;
Ohreen & Petry 2011); advertising campaigns (Amazeen, 2010); debates between CSR, sustainability, and corporate citizen; and the
introduction of the term ‘strategic CSR’ to address aspects such as how measuring CSR, and effects of CSR on firm-performance
(Chandler, 2015). In addition, studies suggest that CSR is recently developing as sustainable business models aiming to achieve better
organizational economic, environmental and social performance (Evans et al., 2017). However, over 40 years there has been a
discrepancy between the academic and practice communities to understand and define the CSR concept (Isa, 2012). For example,
terms such as business ethics, stewardship, corporate social responsiveness and corporate sustainability have been used
interchangeably in the literature (Wójcik, 2016). Aguinis (2011) argues that CSR is defined as context-specific organizational actions
and policies that take into account stakeholders’ expectations and the triple bottom line of economic, social, and environmental
performance (Aguinis, 2011; Aguinis & Glavas 2012). CSR has also been defined as an essentially contested and multi-dimensional
concept, which encourages flexibility and diversity, through business, responsibilities, expectations, rights and regulated activities
(Isa, 2012). For the purpose of this paper, CSR is defined as “the organization’s commitment to minimizing or eliminating any
harmful effects and maximizing the long-run beneficial impact on society”; definition that involves the need to follow laws and
ethical norms, treating employees fairly, protecting the environment, and contributing to charities (Mohr et al., 2001). This definition
accord to the four prevailing justifications for CSR: moral obligation, sustainability, license to operate, and reputation (Porter &
Kramer, 2006).
Despite of the variety of meanings given to the CSR term, and various research efforts to address CSR aspects within the management
field, there are five aspects missing in the literature. First, the limited IHRM research on the host-contextual, principally on the legal
and socio-cultural factors (Shen, 2011), such as employment relations. Second, the interrelation of CSR and the shared value concept
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(Porter & Kramer, 2006) within the management of human resources at global level. Third, the constant corporate tensing between
addressing social needs, and the economic and competitive nature of the business environment (Molteni, 2006). Four, research on
CSR and HRM of global firms, particularly with operations in emerging economies, have been largely absent (Ehnert et al., 2014).
Five, related to the former, there is a scan research on CSR with focus on countries where the field is most prevalent due to poverty,
environmental degradation, and institutional governance issues (Egri & Ralston, 2008). For example, corporate initiatives may not
include the effect of climate changes on health and safety of employees in foreign locations, particularly those in emerging economies.
Research questions these issues to the point of enquiring if CSR research is actually global (Pisani et al., 2017). Consequently, a
shaped view of CSR is that organizations mostly sacrificing profits in the social interest, and questions the extent to which private
sector shares its profits to alleviate poverty. In addition, research suggests that investigating in CSR practices in developing countries
is characterized by persistent institutional voids (Pisani et al., 2017).
Within the HRM field, HRM functions within organizations that are CSR-minded (Cohen, 2010), including activities to address an
equitable treatment of employees, ethical concerns in employee relations, and building ethical culture and environmental sustainable
workplaces (Adetunji & Ogbonna, 2013; Bucčiūnienė & Kazlauskaite, 2012; Orlitzky & Swanson, 2006). In addition, there is
growing suggestion that CSR is “a legitimate, compelling and increasingly important way to attract and retain good employees”
(Bhattacharya et al., 2008). Empirical research suggest that the best global talent is interested to work in organizations with good
corporate citizenship reputation, emerging as a clear way to attract graduates and other high potential talents (World Economic
Forum, 2003). Within emerging economies, however, attracting and retain talent may need different HRM-CSR strategies than in
developed economies. In these regions, attraction and retention of employees are directly related to the way organizations respond to
social community matters where they operate (Beamond et al., 2016). Rights and interest of internal and external stakeholders, (such
as employees, consumers, communities and business partners), and business ethics have not been sufficiently considered within the
IHRM models (Shen, 2011). The link that engages stakeholders and business ethics in IHRM is CSR, a concept that in fact, was
established by activist organizations bringing public pressure on corporations (Porter & Kramer, 2006).
In this context, four important aspects prevail in emerging economies. First, most of these economies are collectivistic and
paternalistic cultures, where employees are embedded within their communities and extended families (Beamond et al., 2016; Davila
& Elvira, 2012; Jackson et al., 2008; Mooij, 2010; Tymon et al., 2010). Second, usually trust and commitment are based on complexed
implicit social contracts between employees and employers, where humanistic management views generate motivations to achieve
organizational performance (Beamond et al., 2016; Jackson et al., 2008). Third, MNEs’ operations in emerging economies related to
global supply networks involve operations in urban and rural regions with cultural and institutional differences between them
(Beamond et al., 2016). Hereafter, the labor market in relation with labor skills differ too. Studies show that workers in cities receive
higher wages, than workers with the same skills living in regional areas (Glaeser & Mare, 2001). For instance, when acquire and
develop talent highly educated employees is more likely to be found in urban locations, however, rural employee recruitment may
need to focus more on labor, training, communities, environmental regulations, workforce qualifications, and cultural aspects; all
affect positively or negatively labor productivity (Jara et al., 2010). Four, the distance between corporate and subsidiary, where labor
is disperse separated by institutional and cultural aspects (Anner, 2011). As a result, IHRM-CSR investments to attract and retain
talent in emerging economies may need to create strategies that involve external stakeholders to sustain local enterprise, which also
reduce poverty, and training or developing local people to create talent (Beamond et al., 2016). Thus, the paper proposes the following
propositions:
Proposition 1: Differentiating IHRM-CSR strategies for MNEs operating in emerging economies enhances organizational
competitive advantage.
Proposition 2: Developing HRM-CSR strategies that involve communities where organizations operate, training, environmental
regulations, and direct families, enhance retention and sustainability.
Defined as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the
economic and social conditions in the communities in which they operate” (Porter & Kramer, 2011), creating shared value (CSV)
has been globally used and applied within the academics and practitioners. In this way, corporate policies and practices enhance
competitiveness of companies, while at the same time, improving social and economic conditions of communities where they operate.
Organizations could create shared value by: (1) reconceiving products and markets (e.g., by identifying possible social consequences
of action); (2) redefining productivity in the value chain (to include societal issues such as natural resources and water use, health
and safety, working conditions, and equal treatment in the workplace); and (3) enabling local cluster development (e.g., infrastructure
around firms, productivity and innovation, and clusters or geographic concentration of firms, related business, suppliers, service
providers) (Porter & Kramer, 2011).
Although research has contested the value of creating shared value (Crane et al., 2014), the concept has gained momentum, and
reinforcing the new global business thinking. The concept has received increased interest by development organizations such as
UNDP, WBSCD, IFC, (Wójcik, 2016). Most of the research on CSV relates to innovation, growth, and sustainable social impact,
and have had a particular interest on undeveloped economies (e.g., Biswas et al., 2014; Blocker et al., 2011; Smith, 2016;
Wijayasuriya & De Soyza, 2012). While academic research on CSV has been mainly oriented to the study of the field in developing
countries, this is not the case of CSR were “only very limited mainstreaming of CSR, and this lack of attention was most salient
137
concerning developing countries and regions” (Pisani et al., 2017). Along the same line, although CSR has been study within the
HRM field, CSV has been mainly focused on external factors such as interdependence between social and business results, missing
its impact at internal level within global organizations such as on IHRM. This study proposes that the missing factors is the integration
of employment relations within the IHRM field.
Porter and Kramer, (2011) suggest that CSR appeared as an inevitable priority for business in all countries, yet, organizations have
not been productive in developing CSR initiatives because they have overlooked the real objective of this field. The authors suggest
that in most cases, MNEs has not been strategic or operational; their response on CSR has been focused on fulfilling the range of
corporate self-interests, including sustainability, license to operate, reputation, and executive reports demonstrating social and
environmental good actions. In other words, these responses aim to satisfy external audiences, (2011:81). The authors suggest that
CSR can also be a source of opportunity, innovation, and competitive advantage; where organizations can use their power to take
activities supporting both, values of communities where they operate, and achieve their business goals at the same time. The principle
of CSV fills CSR’s gaps as organizations should not focus only on profits; instead, firms may need to integrate social perspectives
into the core framework or business strategies (Porter & Kramer, 2006; 2011). Hence, CSV calls for the creation of economic value
(increasing profits), while also creating value for societies by addressing their needs and challenges.
While MNEs have largely used CSR, and lately CSV models, they have mainly focused on external shareholders, missing the internal
factors of organizations or their human capital, particularly those operating in developing economies. The IHRM field was created
in the 1990s, when CSR was not as important as it is today (Shen, 2011). Therefore, legal values such as labor regulations, the ban
on child labor and forced labor, equal opportunity, working hours, working environment and minimum wages (Dowling et al. 2008;
Shen, 2011), were not imbedded in the IHRM strategies of MNEs at its creation. Thus, while the study of CSR and CSV are related
to these values and to the sustainability of global firms, they are mostly missing within the IHRM literature with focus on emerging
economies.
Although CSR has become important for MNEs in developing countries due to their large foreign direct investments (FDIs), general
knowledge about CSR and its practicability in these regions is limited (Jamali & Mirshak 2007; Li et al., 2010;). As highlighted,
research has focused on, for example, the lack of CSR adoption by firms in developing countries compared with those in developed
nations due to the low economic development levels in the former nations (e.g., Baughn et at., 2007; Welford 2004;); and on corporate
communications about CSR (Li et al., 2010). However, literature has not considered such as topics as notions on how foreign and
non-foreign MNEs are socially responsible within their IHRM strategies, nor has it discussed how MNE’s can address local values
while respecting international ethical standards in emerging economies. This presents challenges to both international community
and academics. The applicability of the principle of CSV within the IHRM may help to integrate MNEs success in emerging
economies with social progress, and gain competitive advantage. Thus, this paper proposes the following proposition:
Proposition 3: The applicability of the shared value perspective within the IHRM strategies is likely to increase sustainability of the
business, and competitive advantage of MNEs.
Research acknowledges that location of business impacts on and shapes HRM policies and practices (Paulet, 2008). Organizations
operate in different contexts, in less favored regions, regional and metropolitan (Paulet, 2008). The term regional area is defined as
a geographical area located outside metropolitan centers or major cities (MacGregor & Vrazalic, 2005). Hence, place is an important
aspect to understanding IHRM, as organizations not only gain sustainable competitive advantage, but also develop innovative ways
to develop HRM strategies (Wang & Zang 2005). To succeed, subsidiaries of MNEs operating regionally need to create sustainable
value, particularly in acquired businesses, before making additional acquisitions (Martinez, De Souza, & Liu, 2003). For instance,
MNEs have invested in Latin America since the 1990’s, and lately they are competing with Latin’s owned corporations. There are
many subsidiary-business operations in regional areas; however, there is scant evidence on how the location of MNEs in regional
areas affects their CSR strategies to gain competitive advantage, and how unique regional values may produce effects on the shape
of their sustainable IHRM strategies.
Multinational firms need to invest in balancing the tension between demands for legitimacy concerns from the different institutional
players where they operate, and the need to gain local competitive advantage (Gardberg & Fombrun, 2006). Within the corporate
reputation research, legitimacy is one of the intangible corporate assets “which buffer and protect companies from negative actions”
(Gardberg & Fombrun, 2006), and also assist is gaining the social license to operate. Studies suggest that corporations can enhance
reputation by legitimizing their activities (Sridhar, 2012). However, legitimacy may vary due to the distinct institutional environment
where corporations operate, and the demands from local institute environments (Kostova & Zaheer, 1999). Nevertheless, what if
organizations enhance legitimacy by creating shared value for their own employees, and societies, including communities, where
they operate? Global and local factors (Shen, 2011) may influence the legitimacy of MNEs-IRHM sustainable strategies in emerging
economies, such as country of origin of MNEs, global labor standards, analyzing global influence on CSR, and orientating
shareholders on creating shared values. At the local level, IHRM sustainable strategies in these regions needs to also consider,
especially if the local labor standards are loose, supporting communities around firms’ operations, and providing training and
development to locals. This leads to the following proposition:
Proposition 4: Differentiating urban and rural employee and community needs in emerging economies, is required to create shared
value, and to gain legitimacy.
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Employment Relations in IHRM
To address the breach between sustainability and IHRM highlighted in the previous section, some studies have been analyzing the
emerging work on sustainability within the human resource management field, however, with scant research on the international
aspect. In their work, Ehnert et al., (2014) examined the academic roots of sustainable HRM, and its key research areas including:
corporate sustainability (e.g. Colbert & Kurucz, 2010; Müller- Christ & Remer, 1999); corporate social responsibility (e.g. Preuss et
al., 2009); sustainable works systems (e.g. Kira, 2003; Kira & Forslin, 2008); strategic HRM (e.g. Mariappanadar, 2003; Paauwe,
2004; Pfeffer, 2010); and ergonomics and human factors (e.g. Zink, 2008). Recent research has been labeled as sustainable HRM
(e.g. Guerci, 2011; Zaugg, 2009), socially responsible HRM (e.g. Cohen et al., 2012; Hartog et al., 2008), green HRM (Jackson et
al., 2011; Chiappetta-Jabbour & Santos, 2008); and few seminal work on social responsible IHRM (Shen, 2011). Yet, there is a lack
in research on systematic links between sustainability and HRM; and studies are widely dispersed across different HRM subfields
with diverse interpretation of sustainability, and hardly connected with each other or with the literature on HRM (Manzur, 2015).
With the attempt to integrating CSR and IHRM, Shen (2011) developed the socially responsible IHRM notion. When CSR focuses
on how firms embrace community development, and manage social environmental impacts that go beyond pure profit maximization
(Jamale & Neville, 2011), HRM is willing to be accountable for humanistic social concerns, (Mello 2011), and integrates internal
and external stakeholders. Ultimately, there three pillars form the bases of managing of people in a sustainable way; work-life
balance; personal autonomy in professional development; and employability of workers (Zaugg, Thom & Blum, 2001). Hereafter,
HRM can provide a promising managerial framework supporting organizational efforts to translate CSR strategies into practical
managerial actions and outcomes (Jamali, El Dirani, & Harwood, 2015:126) of MNEs. The integration of HRM and CSR creates
sustainable outcomes for the firm and its numerous stakeholders (Jamali et al., 2015). Socially responsible IHRM concentrates on
“the interests and rights of internal and external stakeholders in the international setting in order to achieve long-term sustainability”
(2011: 1354), including interests and rights of employees. The objective of the social responsible IHRM concept is therefore, to
enhance the effectiveness of MNE-organizational long-term sustainability rather than short-term success, by covering people working
in global organizations. The IHRM literature needs to take into account social concerns on sustainable development, personal needs
of employees from global firms, and external stakeholder (Shen, 2011). To this end, MNEs require to meet labor laws or regulations
that go beyond basic legal compliance, such as those from the International Labor Organization (ILO) (e.g., work and family balance,
health and safety, profit distribution, employee involvement, retirement benefit programme, union recognition, and workforce
reduction). “An evaluation of these factors will determine whether to either invest in companies that are deemed to have positive
employee relations or exclude those with poor labour management practices” (Shen, 2011). Still, research on the interconnectivity
between sustainability and IHRM is limited. For example, sustainable IHRM has been studied at the macro level only, missing key
aspects about addressing the divide between managers and workers, and sustainability issues in host countries. More specifically,
this breach in the literature is even wider into subsidiaries of MNEs operating in emerging economies (Beamond et al., 2016).
Probably one of the most relevant aspect in relation to sustainable IHRM is how to obtain sustainable workforces when scarce talent
is becoming a popular topic in MNEs. To sustain its competitive advantage, organizations needs to create, extend, and retain its
unique talent resource base (Eisenhardt & Martin, 2000; Teece 2007), at all organizational levels. Such talent remains scarce
(Ransbotham et al., 2015), particularly in emerging economies (Meyers & van Woerkom 2014; Vaiman et al., 2012). The reason of
the last is because emerging economies is the recipient of more than 40% of foreign direct investments (UNCTAD, 2017). In spite
of macroeconomic issues in these economies, such as exchange rate volatility, lower commodity prices and debt concerns, eight of
the top prospective host countries for foreign investments are developing economies in Asia and in Latin America and the Caribbean,
reflecting the longer-term prospects of these two regions (UNCTAD, 2016).
Turnover is forecasted to rise across industries and organizational levels at high-cost for MNEs. Here some examples: (1) the CEO
turnover had the high record globally in 2016 (PWC, 2016); or the negative impact of organizational changes that squeeze out middle
management positions affecting their work-life (Hassard et al., 2011); (2) the U.S. retail industry has lost about $9 billion dollars to
voluntary entry-level turnover in 2016 (Gilsdorf & Hanleybrown, 2017); (3) the Global supply chain in developing economies are at
risk due to high labor turnover rates, resulting in a poor quality, low productivity, and unfilled orders in supply chains (Jiang, Baker,
& Frazier, 2009). However, turnover has different faces according to the context. In the first example, turnover relates to the lack of
CEOs’ skills of or candidates needed to lead disruptive market-related changes that organizations are facing today (PWC, 2016),
including artificial intelligence; or when middle managers are exposed to frantic work, and organizational errors, inefficiencies and
failures (Hassard et al., 2011). In the second example, one of the main reasons of turnover is the difficulty to sustain retention. While
firms try to support and retain their senior executives and managers, strategies for entry-level employees need more attention. Meanly
dominated by millennials, who do not expect to spend their entire professional lives at a single workplace, entry-level employees are
becoming vital for business successes (Gilsdorf & Hanleybrown, 2017). The third example relates to the dearth of mechanisms to
establish international labour standards, resulting in low wages and labor conditions in the production of labor-intensive supplies in
developing countries, pushing to a substantial shortage, and therefore, to the race- to-the-bottom (Jiang et al., 2009; Ross & Chan,
2002). Generally, the quality of working conditions has declined, and this applies to employees from all organizational levels, from
white- collar, middle class occupations such as professionals and managers, and blue-collar work, (Hassard et al., 2011). Hence, this
paper proposes the following proposition:
139
Proposition 5: Integrating employment relations within IHRM is likely to increase sustainability of the business and competitive
advantage of MNEs.
Because MNCs outsource manufacturing to developing countries to take advantage of inexpensive labor, skill shortages delay at the
downstream end of the global supply chain generate cost, operational, and reputational risks (Jiang et al., 2009). Voice, or “the
expression of dissatisfaction by employees”, is an important mechanism to decrease turnover rates, and to improve organizational
performance (Batt et al., 2002). For instance, team- based work systems that provide opportunities for collective voice or direct
participation in decisions, and fair nonunion dispute resolution procedures, offer opportunities for individual voice to solve employee
discontent. (Batt et al., 2002). Due to the global impact on MNEs, this paper analyses employment relations from the international
business field, which is related to the IHRM literature (Stahl et al., 2012).
Employment relations has changed over time, and those changes are mostly associated with globalization (Locke et al., 1995).
Townsend and Wilkinson (2011) highlighted important globalization effects on employment relations, including the lack of research
on the state and its responsibility for the labor market, and the impact of the global financial crises (Heyes & Clark, 2011); the lack
of genuineness seen in most union behavior (Gall, 2011); the need to lengthen the reach of employment relations, recognizing a
diverse range of other actors (or internal and external shareholders), and interests such as the civil society organizations such as
community unions, quasi- unions, non- bargaining actors, labor NGOs, non- member organizations and even non- worker
organizations (Williams et al., 2011). Crisis at the top business is also investigated within the field, which has been harmonized by
pressure at the bottom (Hassard, et al., 2011). For instance, “new organizational forms have involved flatter hierarchies, which
squeeze out middle management positions” (Hassard, et al., 2011). Globalization also force organizations to rethink about the concept
of skills and labor, in reference to politics and social class, advancement of automation and technology, and gender (Fearfull &
Dowling, 2011); the importance to focus on work–life balance, arguing the need to look for solutions against negative effects on
employees for working more hours than they want (Golden et al., 2011); the effect of labor migration in employment relations (Lusis
& Bauder, 2011), and the need to focus on child labor, as one of the employment relation’s shadows (Lyon & Rosati. 2011). As a
consequence, there is also a necessity to revise the interrelation between CSR and employment relations, in which most of the aspects
highlighted including diversity, pay equity, and child labour are variables related to both fields (Brammer, 2011). This interrelation
also requires to examine the different labour legislations between develop countries and emerging economies (McDermott, 2011);
and the importance to integrate social philosophies within employment relations where equity, and diversity variables are key aspects
in employment relations, as well as anti-discrimination (Strachan et al., 2011), and dignity (Bolton, 2011). The last, and in the line
of those large study, is about justice at work, or organizational justice (Coyle-Shapiro, & Dhensa, 2011).
Globalization, or external effects, on employment relations coincide with a key aspect highlighted by researchers: the importance of
integrating managerial strategy within employment relations, idea closely related to theories in the field of strategic HRM (Boxall &
Purcell, 2008; Hall & Wailes, 2010; Kaufman, 2011; Locke et al., 1995). Their argument is that by integrating both fields,
employment relations find “their source in the external environment of the firm”, as at any time employment relations is embedded
in legal, socio cultural, and economic contexts (Kaufman, 2011). Within the field of international business, some researchers studied
the power of MNEs, and modern slavery (Rottig & Mezias, 2018). Some of the studies include the power of organizations observing
that “the dynamic processes through which MNEs take political initiatives remain obscure” (Child, 2018). Modern slavery in
international business suggests that about 40 million people worldwide are labour-forced workers, bonded labour, involuntary
servitude, human trafficking, and have other type of exploitation (Michailova, & Stringer, 2018). Hence, there is also a need to a
better understanding of the influences of leadership theories across different cultures (Pathak, & Muralidharan, 2018), and the
influences of cultural leadership on cultures of voice and cultures of silence (Bogosian, 2018).
Studies on employment relations and international business can mostly be clearly elucidated in two contexts: supply chains and the
voice of employees. A study done by Awaysheh and Klassen (2010) in relation to supply chain and supplier socially responsible
practices in developing countries, suggest three major areas of research on social issues in the international supply chain. The first is
international labor practice standards that include areas such as child labor; forced labor; health and safety; freedom of association
and collective bargaining; discrimination; disciplinary practices; working hours; compensation; and related management systems.
The second is socially responsible purchasing, based on the deployment of firm- or industry-specific codes of conduct; and parallels
between environmental and social auditing focuses on social auditing, and uses research on environmental management. The research
also suggests that the three areas of research advocates for four broad categories of supplier socially responsible practices. The first
is international standards, seeking to ensure supplier human rights are being protected; extended frameworks, capturing supplier labor
practices. The second relates to how supplier codes of conduct structure the way firms should interact with its supply chain partners.
The last advances on the supplier social audit concept, seeking to ensure human rights and labour practices (Awaysheh & Klassen,
2010). In the last, after inspections and auditing, a firm may need to create new skills and capabilities in collaboration with supply
chain partners (Awaysheh & Klassen, 2010; Klassen & Vachon, 2003). In addition, because location of suppliers (headquarters,
subsidiaries, and subcontractors), and ways of communication between supply chain members have social implications, researchers
have investigated three dimensions relating to the structure of the supply chain: transparency of information and itis available to end-
users; dependency which related to firm reliability on other members of the supply chain on resources, components, or capabilities;
and distance (geographical, cultural, and organizational), which generate issues related to managers on data gathering, assessment,
140
and implementation (Klassen & Vachon, 2003). This study proposes that all these aspects within supply chains and the voice of
employees can be manageable within the IHRM field, and proposes the following hypothesis:
Proposition 6: Integrating employment relations aspects such as the use of responsible international standards, codes of conduct,
social audit within IHRM is likely to increase sustainability of the business and competitive advantage of MNEs.
In spite of the importance of employment relations within the IHRM field, the global economy has made the integration of these
approaches much more difficult. For example, labor laws generally may cover businesses located within the country where they are
accepted. This means that there are no legally enforceable international labor standards, despite the significance of the International
Labor Organization of the United Nations (Gordon, 2017). In addition, employment laws usually may apply only to direct employees
in MNEs, “exempting it from liability for what happens to its subcontracted workforce” (Gordon, 2017: 1). Beyond this, brands from
MNEs move their “production from subcontractor to subcontractor and from country to country (mainly in emerging economies),
seeking out locales with low wages”, and where employee voice is weak and there are low enforced labor standards. (Gordon, 2017).
Hence, this study proposes the following propositions:
Proposition 7: Integrating IHRM and employment relations that involve HRM strategies for internal and external stakeholders is
likely to reduce turnover, and increase retention and sustainability of the global workforces of MNEs in emerging economies
Proposition 8: Integrating IHRM and employment relations that create HRM strategies meeting labor laws or regulations from the
ILO is likely to reduce turnover, and increase retention and sustainability of MNEs in emerging economies.
In the light of the need to integrate employment relations within IHRM, and to be moral responsible, this paper introduces the concept
of worker-driven social responsibly (WDSR). This concept was coined by The Worker-driven Social Responsibility Network, a not-
for- profit organization, that created this concept to fill the gap of CSR leading to the creation of mechanisms to enforcing human
rights standards, including human rights protections and improvements in corporate supply chains (Gordon, 2017). This paper
proposes that WDSR is a concept that may integrate the importance of transparency and accountability as part of the social
responsibility, and moral obligations, which in turn generates license to operate and reputation. WDSR brings all stakeholders to the
table, and includes workers in CSR (Gordon, 2017). There are many examples where by implementing the WDSR, organizations
have improve working conditions and at the same time, have generated sustainability of the HRM strategies and profitability of
business. One example is The Fair Food Program where MNEs such as McDonalds and Walmart have participated with positive
results for both parts. Another example is the 2013 Accord on Fire and Building Safety in Bangladesh, where the WDSR model was
implemented and recently renewed and extended to 2021, due to the collapse of the building at Rana Plaza (Gordon, 2017). Results
of implementing the WDSR accord to those organizations that implement shared value strategies. For example, Walmart is not only
member of The Fair Food Program but also develop strategies to deal with climate change disasters, including effects of Hurricane
Katrina in 2005. In this occasion, Walmart provided food, clothing and housing-relief to workers and communities affected, and
make extensive cash donations (Porter & Ramirez-Vallejo, 2017). Hence, this study proposes the following propositions:
Proposition 9: Integrating the WDSR model within IHRM is likely to increase sustainability of the business, in MNEs, and competitive
advantage of MNEs.
Proposition 10: Integrating WDSR model within employment relations and IHRM is likely to increase global reputation, and license
to operate of MNEs in emerging economies.
Implications
This paper has presented a model integrating employment relations within IHRM by focusing on CSR and CSV perspectives, and
identify internal and external factors important to this integration. In particular, the model explains internal aspects such as the global
issue of scarcity of talent, unbalance of power between employer and worker, and overview aspects such as update their skills
pressures, millennials and their interest on mobility rather than stability, and artificial intelligence. The model also describes external
factors such as moral obligations, license to operate, and reputation. In addition, the concept of worker-driven social responsibly is
introduced within the integration of the IHRM and employment relations concepts.
Research Implications
Given the high level of interest in the concept of global economy and its influences on IHRM, CSR, and employment relations, it is
somewhat paradoxical that their interconnectivity remains relatively poorly defined and deficient in theoretical underpinning
(Thompson & Harley, 2008). Particularly, sustainable IHRM strategies for operations in emerging economies (Welford 2004;
Baughn, Bodie, & Mcintosh, 2007). This review of the literature on the IHRM, CSR, and employment relations fields, under the
shared value principle, advises that from a theoretical point of view, the interconnected areas of CSR-CSV, and employment relations
approaches within IHRM is in its infancy (Thompson & Harley, 2008), and a significant degree of theoretical advancement is required
(Shen, 2011; Thompson & Harley, 2008). The contribution of this paper can be described in four points: first, the use of the shared
value perspective and CSR (Porter & Kramer, 2011) to explain interconnectedness of employment relations within IHRM,
acknowledging local cultural and institutional environments, which in turn, unleashes the effectiveness of employment relations and
IHRM in emerging economies. Second, the use of the concept ‘worker-driven corporate responsibly responsibility’ in emerging
141
economies, advocating for the application of global labor standards (Anner, 2012; Awaysheh & Klassen, 2010; Slaper & Hall, 2011)
to balance global orientation and local responsiveness at urban and regional contexts; supporting communities, and providing local
training. Third, the identification of key societal needs, in relation to a moral and sustainable IHRM of subsidiary in emerging
economies, which in turn organizations gain license to operate, reputation, and competitive advantage. Four, the introduction of a
framework highlighting a sustainable IHRM model in emerging economies.
This paper presents important number of limitations. Although propositions may be generalized to most emerging markets, still
analysis of CSR-SCV societal needs to be done individually in each country. The societal needs in Latin America may be different
as those in Arabic countries, or in Central and Eastern Europe. Further, research needs to be done to test the theoretical framework
introduced in this paper in different global regions. It may be interesting to find out sustainable IHRM differences between emerging
market countries, under the shared value principle. Future research can also explore additional internal or external factors that might
enhance the integrations of employment relations within the IHRM field.
Practical Implications
This study understands how globalization affects businesses operating in different regions, and how businesses affects the rapid speed
of globalization (Dowling et al., 2008; Kim & Scullion, 2013;). As a cause and effect, the framework proposed in this paper has a
circular effect depicting that internal and external forces (that could change at any time), influencing the different propositions
suggested to leash employment relations and IHRM (Thompson & Harley, 2008), and that are embedded in the approaches used to
develop them. Hence, the model presented in this study may be the answer that practitioners look for when operating in different
environments; when trying to integrate profitability with moral obligations, and management with labor; and when trying to balance
global integrations and local responsiveness (Chung et al., 2011; Dowling et al., 2008; Shen & Edwards, 2006). The power of distance
between subsidiaries and headquarters or between them, generates IHRM and employment relations issues. Hence, the importance
to develop moral obligations (Comera, & Sekerkab, 2018) when developing sustainable IHRM strategies that fit corporate and needs
of all employees and communities (Black & Hartel 2002; Hall & Jeanneret 2015) where organizations operate, while at the same
time, generating profits for sustainable economic business.
Conclusions
While pressures from the global economy affecting multinational businesses, this paper attempts to compel academics to re-think
about the importance to investigate the social responsible aspects of the management field to gain reputation, license to operate, and
to be responsible with all employees in the organizational levels. The study hopes to generate attention within the IHRM community
of researchers to consider how global forces moving towards the integration of employment relations within the IHRM field. In
particular to workers and different subcontractors in the supply chain or other type of business where labor is voiceless. At the same
time, through the shared value proposition, this study suggests ways to not only be social responsible, but also generate profits when
developing IHRM responsible strategies for societies when organizations operate.
Acknowledgement
All authors have read and agreed to the published version of the manuscript.
Author Contributions: Conceptualization, C.K.W.; methodology, C.K.W.; validation, C.K.W.; formal analysis, C.K.W.; resources, C.K.W.;
writing—original draft preparation, C.K.W.; writing—review and editing, C.K.W.
Funding: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: The data presented in this study are available on request from the corresponding author.
Conflicts of Interest: The authors declare no conflict of interest.
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INTERNATIONAL JOURNAL OF RESEARCH IN BUSINESS AND SOCIAL SCIENCE 12(1)(2023) 134-147

Research in Business & Social Science

Linking international human resource management with corporate social

* Corresponding author. ORCID ID: 0000-0002-3752-636X

IHRM and CSR

Employment Relations in IHRM

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