This article aims to address Dunning’s call to include the “human environment” (HE) as a new trend and trajectory for research in international business (IB). Dunning argues that the most important driver for economic advancement is knowledge, which arises from the HE. We extend Dunning’s IB theory of the five stages of a country’s investment development path (IDP) to include the HE factor. Further, we use China as an example in which to examine the role of human resource management (HRM). We identify and analyze an important link between foreign direct investment, multinational enterprises, and both domestic and global HRM. © 2011 Wiley Periodicals, Inc. Published online in Wiley Online Library (wileyonlinelibrary.com) © 2011 Wiley Periodicals, Inc. • DOI: 10.1002/tie.20409 FEATURE ARTICLE Introduction I n the history of international business (IB) research and practice, numerous theories have been developed to either indicate or represent trends in this field. IB scholars and theories have focused largely on the study of the physical environment (Dunning, 2006; Griffith, Cavusgil, & Xu, 2008), which is defined as the “ways in which human and physical assets and capabilities are cre- ated and used to generate wealth” (Dunning, 2006, p. 3). By Cherrie Jiuhua Zhu S. Bruce Thomson Kate Hutchings Helen De Cieri 311 Extending the Investment Development Path Model to Include the Human Environment Factor Correspondence to: Cherrie Jiuhua Zhu, PhD, Department of Management, Faculty of Business and Economics, Monash University, PO Box 11E, Clayton, Victoria 3800, Australia, 61 3 9905 5465 (phone), 61 3 9905 5412 (fax), cherrie.zhu@monash.edu.au.