Competition and Constraint. Economic Globalization and Human Resource Practices in 23 European Countries

Economic globalization is often considered to be one of the main causes of recent changes in the workplace and the way in which organizations manage their human resources. Nevertheless, an empirical study putting this claim to the test by relating the internationalization of the economy to the use of human resource practices has not been conducted to date. This article investigates the effects of economic globalization by examining how three central dimensions of human resource practices, namely (1) discretion, (2) skills, and (3) closeness of supervision are related to the level of trade openness of countries. We formulate three hypotheses. The first hypothesis argues that trade openness requires investments in human resource practices to remain competitive. The second hypothesis states that trade openness constrains the possibilities for investments in human resource practices. The third hypothesis combines hypotheses 1 and 2, leading to the prediction that there is a curvilinear relation (a reversed U) between trade openness and human resource practices. The hypotheses are tested using employee data from 26 European countries. The results from the multilevel analyses shows evidence for a negative and a curvilinear relation between trade openness and human resource practices and no positive relations was found