Human resource management (HRM) refers to the activities an organization carries out to use its human resources effectively (Hill, p. 564). This can include staffing, recruiting, performance evaluations, labor relations, management training and compensation. HRM influences the character, development, quality and productivity of the firm's human resources. The HRM can help achieve the goals of reducing costs of value creation and adding value by better serving the customer's needs, as well as the goals of the company.
The function of an international HRM is more complicated than that of a domestic HRM. What makes it more complicated? The differences between countries in the labor markets, culture, legal systems, and economic systems often complicate matters. An expatriate manager can be added into the HRM functions. The expatriate manager is a citizen of one country who is working abroad in one of the firm's subsidiaries (Hill, p. 564).
There are always legal risks involved in any company whether it is domestic or international firm. Legal risks may include in adequate contracts, lack of protection on property and employment issues. Legal risks might be defined as the likelihood that a trading partner will opportunistically break a contract or expropriate property rights (Hill, p. 86). Sometimes when there are great legal risks in a certain country, companies might hesitate to do business there. .
Companies are interested in doing international business if the overall picture is attractive. Companies often consider benefits, costs, and risks associated with doing business in a particular country. It is generally more cost effective to do business in a country that is economically advanced and politically stable. There is a greater opportunity in countries less developed and politically unstable.
Firms that partake in international business must also think about the ethical issues involved.