National culture and other institutions of the country in which an IJV is situated play a significant part in the actual form that the organization and management style of the joint venture will take. In other words, the host country forms the immediate external environment of the IJV with which it has to interact and to whose pressures and expectations it has to respond. Companies undertaking expansion through IJVs need to understand the significant elements of local country culture, especially in terms of initial negotiations and partner selection.

As far as human resource management is concerned, the IJV’s policies and practices are generally decided by its senior managers, with or without consultation with their employees. But these policies are adopted and implemented having regards to the national context within which the company operates. The political ideology of the government of the day (and the political regime as a whole), the economic conditions of the country (e.g. level of unemployment), the power of trade unions (or lack of it), and the socio-cultural characteristics of employees and managers (and the general public), are examples of a host country’s influences on an IJV’s HRM policies. Moreover, the host country's membership of global and regional pacts and agreements can also have a significant bearing on the organization's HRM strategies. The Social Chapter of the Maastricht Treaty of European Union is an example of this kind.

Major institutions which serve as the channels of influence on an IJV generally fall within six broad categories: legal system, political culture, industrial relation culture, level of economic advancement, membership of global and regional agreements, and the national culture as a whole.

In most countries influences of these institutions on a company’s human resource management are incorporated in the rules and regulations governing employee-management relations, some more explicitly than others. These rules and regulations can either be related to the employees' individual rights, such as equal opportunity, job security, wage levels, work schedules, work injuries and post-employment economic security. Or they can be related to the employees' collective rights, such as unionization, bargaining, the resolution of contract disputes, and participative decision making.

In some countries, there are further rules and regulations which apply specifically to foreign companies operating within their territories, over and above those which apply to all firms. For instance, foreign firms may be required to include local people in their top management teams, and to build or contribute to the construction of local amenities such as houses, hospitals, schools and similar facilities for their employees.

Because of these influences it is argued that the initial decisions taken by the partners in an IJV as to the location of the company would have significant implications for its subsequent management style and indeed its success and survival.

The figure below summarizes the relationship between an IJV and its host country.

Host country influences on an IJV’s human resource management

The Collapse of the USSR

The break up of the former USSR into independent republics illustrates another case of some potentially significant implications of macro-level factors for human resource management at the miro-level.

In Kazakhistan, for instance, under the USSR culture, women could and did achieve high positions in business. Now that the country is independent, its old predominantly patriarchal culture, which lay dormant under the Soviet rule, is enjoying a revival, replacing the 'Russian Communist' culture. As a result, the perception of the role of women in the society and at workplace is changing. In the short-term at least it is unlikely that women will have the same opportunities as they had before (Pollard, 1994). Furthermore, the reviving Kazakh culture places a great emphasis on age and seniority and prescribes 'proper' junior-senior relationships, stemming from its nomadic traditions (Rywkin, 1982). This could have repercussions for organizational hierarchy, authority structure, and promotion and compensation policies, among others.

In Conclusion,international joint ventures face additional challenges over and above those experienced by their single-culture owned counterparts because of their culturally mixed ownership. The tensions and dynamics caused by the mixed parentage manifest themselves at the negotiation stage for all types of cross-border alliances, but are specifically acute for human resource management in joint ventures. Management styles have their roots in different cultural assumptions of partners in a joint venture.

It was also pointed out that major cultural values and attitudes, such as attitude to power, tolerance of ambiguity, individualism, collectivism, and interpersonal trust, are relevant to HRM in IJVs.

The location of an IJV can also exert influences on its internal organization and management style through for example rules and regulations governing employment relations.