motivate managerial behavior and the prominent factors that inXuence or
constrain managers as they act to achieve their primary objectives. We can begin
by assuming that companies are in business to optimize proWts. At a minimum,
companies must achieve proWtability levels suYcient to just satisfy owners
and shareholders, which at any point in time may equate to mere survival.
Optimization beyond this minimum threshold requires that companies create
competitive advantages, which translate into a range of superior and sustainable
proWtability outcomes. The ability of companies to optimize proWtability is
bounded, of course, by constraints placed on them by the broader economic
and socio-political environments within which they compete and which are
never static.
Within these constraints, we can further assume that in the pursuit of optimiz-
ing proWts, managementseeks to actrationally. That is, management is calculative
in weighing the beneWts and costs associated with the formulation and implemen-
tation of alternative strategies. Invariably bounded by imperfect information and
foresight, and facing persistent changes in the broader environment, management
adjusts strategies in response to observed or anticipated changes in the broader
environment, to unforeseen circumstances encountered, to trial-and-error activ-
ities that fall short of anticipated net beneWts, and to mistakes invariably made.
Successful companies, therefore, must beXexible and adaptable, as well as have
their eyes on continuously improving performance. Although managers may not
always act rationally in the pursuit of proWt optimization, companies that are better
able to formulate, implement, and adjust their strategies in economically rational
ways are rewarded by the market place and those that are less able to do so are
penalized by the market place. The socio-political contexts within which com-
panies compete can also mete out penalties and rewards for failing to act or for
acting in socially responsible ways.
With these assumptions of optimizing behavior and constraints in mind, I
have attempted to diagram in Fig. 24. 1 the broader context within which global
HR strategies are formulated and pursued. Central to this framework, MNCs face
the task of sorting through how best to formulate, implement, and adjust global
HR strategies that align eVectively with their more encompassing worldwide
business and investment strategies. Alignment of HR and business strategies
includes strategic assessments of human resource and technological capabilities
in regard to MNC choices about market positioning, about where to invest, and
about the diVusion of optimal HRM policies and practices; choices that neces-
sarily span host and home locations. These global HR strategies, moreover, are
inXuenced directly by both home and host country industrial relations
(IR) systems and union strategies, as well as indirectly by the market and
socio-political contexts within which MNCs compete globally and which they
attempt to inXuence in their favor (see Frenkel 2005 , for example, on this latter
point).
global human resource strategy 491