- (2 points) Why do people get paid differing wages? What compensating differentials may occur? Give examples.
- (2 points) How do unions change the labor market? Give the pros and cons of unions. Do you think they are necessary? Why or why not? Remember to consider unions in conjunction with monopsonies.
- (4 points) Watch the following videos: Wealth inequality in motion and How inequality hurts countries. What causes wealth and income inequality? Do you think it is a problem in our current economy? What, if anything should be done about inequality?
- (2 points) When would a firm pay higher than equilibrium wages? What might cause a firm to make this decision? What is this wage called?
Sample Solution
There are three main theories that exist with regards to HR practice transfers in MNCs (1) MNCs will follow their common practices despite the country they are in due to global homogeneity or ethnocentricity, (2) that they will adjust their policies to the local country (local isomorphism), or as duality theories suggest, the MNC faces conflicting pressures and therefore (3) mix their own practices with that of local practices (Brewster, Wood & Brookes 2008, p. 320) which follows more closely to the contingency model, or model of âbest fitâ (Khan 2011, p.78). Research suggests that MNCs that incorporate some local responsiveness tend to have more success (Caligiuri & Stroh 1995, p. 494). Often, there are many issues that result in the attempt to transfer a HR practice from headquarters to subsidiary branches (Kostova 1999, p. 308). These issues can be categorized as being either intrinsic (ie. structure of the company) or extrinsic (ie. country, culture, legal framework) to the firm (Gamble 2003, p. 370). However, as stated by Ahvik and Björkman (2015, p. 497), âthe ability to transfer organizational practices across multiple locations is a potential source of competitive advantages for multinational corporations (MNCs),â further reiterating the importance of understanding what factors affect HR practice transfers from headquarters to subsidiaries, and to understand the multiple institutional contexts that play a role in the factors that affect HR practice transfers. As stated by Chung, Bozkurt and Sparrow (2012, p. 2333), âthe organizational domain of MNCs is characterized by the contestation between actors with competing rationalities from multiple institutional contexts such as transnational, home and host national institutions.â In order to expand on these institutional factors and to expand on central debates in the international management literature, convergence vs. divergence theory and home country vs. host-country effect will be discussed next. Convergence vs. Divergence>
There are three main theories that exist with regards to HR practice transfers in MNCs (1) MNCs will follow their common practices despite the country they are in due to global homogeneity or ethnocentricity, (2) that they will adjust their policies to the local country (local isomorphism), or as duality theories suggest, the MNC faces conflicting pressures and therefore (3) mix their own practices with that of local practices (Brewster, Wood & Brookes 2008, p. 320) which follows more closely to the contingency model, or model of âbest fitâ (Khan 2011, p.78). Research suggests that MNCs that incorporate some local responsiveness tend to have more success (Caligiuri & Stroh 1995, p. 494). Often, there are many issues that result in the attempt to transfer a HR practice from headquarters to subsidiary branches (Kostova 1999, p. 308). These issues can be categorized as being either intrinsic (ie. structure of the company) or extrinsic (ie. country, culture, legal framework) to the firm (Gamble 2003, p. 370). However, as stated by Ahvik and Björkman (2015, p. 497), âthe ability to transfer organizational practices across multiple locations is a potential source of competitive advantages for multinational corporations (MNCs),â further reiterating the importance of understanding what factors affect HR practice transfers from headquarters to subsidiaries, and to understand the multiple institutional contexts that play a role in the factors that affect HR practice transfers. As stated by Chung, Bozkurt and Sparrow (2012, p. 2333), âthe organizational domain of MNCs is characterized by the contestation between actors with competing rationalities from multiple institutional contexts such as transnational, home and host national institutions.â In order to expand on these institutional factors and to expand on central debates in the international management literature, convergence vs. divergence theory and home country vs. host-country effect will be discussed next. Convergence vs. Divergence>
