Introduction Economic convergence refers to the integration


Economic convergence is a process of rapprochement that stands for the emergence of the converging sides of the similar features. It stands for the convergence of different economic systems under the influence of the social-economical factors or in the result of the economical development. The result of such convergence is the purpose of reaching the compromise, stabilization, balance and united development.

The economic convergence also goes for acquisition of the similar features of economic systems of the different countries under the condition of the preservation of some determined national characteristics. Economic convergence refers to the integration between traditional economic models that are largely geographically constrained, with newer models that take advantage of recent technological and globalization trends. Convergence is increasingly impacting the way organizations are structured and operated (Zivnuska et al).

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This report analyzes the impact of the Converging Economy on the role and function of human resource management (HRM) practice and research. Several promising new ways, concepts, methodologies and theoretical perspectives required to apply in order to conduct future HRM researches will also be analyzed, finally it offers an opinion about the topic and the lessons learned.

E-commerce is one of the major technological factors of convergence and may be defined as a process by which business transactions are conducted through electronic networks (Boudreau, Loch, Robey and Straud,1998). These electronic networks extend to various organizations, linking them to customers ,employees, suppliers and partners.

The rapid technology driven transformation has resulted in increased competitive threats as well as huge opportunities for growth in both new and existing markets (Boudreau et al,1998). HRM activities are changing considerably in the evolving e-business environment. For example, in many firms, traditional HRM tasks such as recruiting, selecting and training employees are now heavily reliant on technology and the internet (Cascio 1998).

The role that HR specialists play in developing and fulfilling strategic objective is affected by internal organizational changes such as increased partnering, accelerating rates of innovation and learning of new organizational structures. Labor market changes and increased emphasis on flexibility and responsiveness are impacting the way the HR role is performed (Snell and wright,1998).

Drivers of the converging economy

There are three major drivers of converging economy and the first one is Information Technology. Increased use of powerful software systems has led to efficient operations in companies (Schmitz, 2000 Westland and Clark 1999). The second driver is globalization, whereby, in several countries, globalization has led to changes and reforms to more open markets for goods, capital, labor, technology and ideas. There is also increase of convergence among economic and political systems around the world (ohmae 1999).

The third feature of converging economy is the increasing importance of intangible assets and especially human assets compared to physical assets such as land, equipment and money. In today’s economy, many companies view intangible assets as primary source of value, growth, and sustained competitive advantage (Itami,1987, Pfeffer,1994). The above three mentioned forces have an impact on how companies obtain, develop and manage their human resources.

Information technology and human resource management practices

Information technology influences employees willingness to be mobile; consequently, turnover costs may also increase as technology savvy employees seek more flexible work hours. In order to stem these costs and increase retention, employers will need to make the work place as attractive as possible. Addressing these challenges involves creativity, innovation, incubators, knowledge markets, workplace attractiveness and blending of work and home.

IT Enabled and Self-Service HR Systems

Like outsourcing, the topic of self-service and IT-enabled HR systems has broader implications for the role and strategic effectiveness of HR. Potential benefits from these systems including cost-savings, speed, convenience, control, flexibility, increased productivity, better reporting, greater accuracy and consistency, and empowering and expanding the capacity of employees, managers, and HR staff.

Globalization and human resource management

This is the second major force, as companies compete in global workplace diversity of clients and employees will increase, Multinational companies are becoming increasingly important players in the global economy, and their HR practices are increasingly influenced by diverse cultures. Management practices that are congruent with the national culture have been associated with enhanced firm financial performance (P Wright, HR strategy, adapting to age of globalization(Alexandria; society for HRM foundation).

Intangible assets and human resource management practices

In today’s economy, there is a strong interest in intangible assets. As organizations come to value soft resources like people and knowledge as assets, they will find themselves competing for the very best employees in the market. Firms will be forced to rely on HRM practices in order to strategically attract and manage employees; more so, HR managers will need to help organizations in management of the process of identifying, obtaining, developing and retaining best employees to increase firms competitive advantage.

Implications for future research

There are two directions that future research might take. The first direction shows the concept of employees as valuable resources, strategic human resource management has adopted this perspective asserting that employees can be unique assets to develop sustained competitive advantage(Snell et al,1999).

The second research concerns management of HR functions which will be performed by employees organized by market for human capital, existing HR department acting in partnership and outsourcing. Strategic human resource management could benefit from incorporating ideas from theoretical perspectives, these theories are organized into four categories; evolutionary, economic, sociological and critical.

The concepts advocated by these theories range from those that advocate holistic organization-wide approaches to those that focus on niche approaches such as people driven, organization driven, response driven, relationship driven, hierarchy driven, philosophical, social psychology and creativity driven.

While each of the theories has its own merits, the applicability will be constrained by the prevailing situation. Thus, different organizations at different times may or may not be the best candidates for a particular approach. Thus, the concept of “SHRM best practices” is dependent on particular situations and there can not be a set of best practices that are applicable to all situations.


Due to convergence, the HRM function in both traditional as well as e-commerce firms is undergoing considerable change. For example, in many firms, traditional HRM practices such as recruiting, selecting and training employees are being performed differently and more efficiently than in the past, with technology taking center stage. Globalization presents new and unique challenges such as those experienced by multicultural teams.

HR managers have to be more culturally aware and emotionally sensitive in order to develop a culture that helps the organization to achieve its core mission. On the other hand, globalization does create a vast pool of talent that was previously beyond reach of traditional companies. This presents an opportunity that can be harnessed for competitive advantage. Finally, in order to fully exploit convergence, organizations need to develop and harness their intangible Human Resource assets.


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Wright, P 2008, HR strategy: adapting to the age globalization, Alexandria VA, society for HRM foundation.

Westland C, & Clark O 1999, Business & Economics, MIT Press, USA.

Zivnuska, S et al. Strategic Human Resource Management, Blackwell publishing, UK.