11th International Human Resource Management Conference, Birmingham, UK, 9-12 June, 2010 Aston Business School., 2010
North's (1990) institution theory and based on qualitative data of 27 personal interviews from Fi... more North's (1990) institution theory and based on qualitative data of 27 personal interviews from Finnish companies, archive and official documents, and news and reports this study examines, with longitudinal perspective, the impact of the institutional transitions on international human resource management in China over the period of 1978-2008. It shows that the foreign firms' HRM practices are tightly embedded in the local institutional transition. Furthermore, the formal rules and informal rules have varying degree of constraints, in these three phases identified, in the HR areas of hiring, firing and reward, and on companies of different industrial sectors.
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Despite the contributions of existing literature, research on transfer of HRM practice with a configurational approach of institutional theory and power perspective remains rather limited. Further, less attention has been paid to the transfer from a small, coordinated market economy to a large, transition economy. This study sets out to investigate under what combinatorial conditions localization of headquarters (HQ)-transferred HRM practice may occur. The choice of Finland as the home country of MNCs and China as the host country of subsidiaries provides an ideal and timely context for the study. A total thirteen subsidiaries of Finnish MNCs were included in the study, out of which ten subsidiaries were examined in great details.
The study identified four alternative pathways to the localization of compensation practice. This indicates alternative pathways to achieve localization of HRM practice in foreign subsidiaries. Four conditions- labour market mobility, location, HQs monitoring, and strategic role of subsidiary, in their presence or absence, form the various configurations that lead to the localization. The findings demonstrate that subsidiaries that play a strategic role possess certain power capability, which in turn are likely to succeed in modifying HQ’s practice; however, strategic role alone is not deterministic to localization. The findings show that the high labour mobility in China was one main driving force for the localization of compensation practice and for adaptation of a wider range of other HRM practices. The study indicates that Finnish MNCs exhibit some particular Finnish characteristics; meanwhile, Finnish MNCs show some convergence towards prevailing models of international HRM in terms of high tendency of transferring corporate standardized compensation and performance management practices.
The study contributes to the literature on institutional analysis of practice transfer with a configurational approach of institutionalism and power perspective. It extends the extant research on international HRM by re-conceptualizing localization as modifying HQ-transferred practice to respond to the local institutional environment. This renewed conceptualization enabled this study to explore the process of localization and explain it with the interplay of institutional and organizational factors. The application of Qualitative Comparative Analysis approach into the multiple case study is innovative in methodology of international HRM study and advances use of alternative methods in International Business and Management research. A number of up-to-date managerial implications are provided to Finnish companies for better understanding the institutional and cultural differences between Finland and China and appropriate ways of people management in China.
Field of study: International Business and International Management
Key word: Qualitative Comparative Analysis (QCA), practice transfer, international human resource management (HRM), localization, subsidiary, multinational corporations (MNCs), China, Finland
Papers by Wei Lu
Despite the contributions of existing literature, research on transfer of HRM practice with a configurational approach of institutional theory and power perspective remains rather limited. Further, less attention has been paid to the transfer from a small, coordinated market economy to a large, transition economy. This study sets out to investigate under what combinatorial conditions localization of headquarters (HQ)-transferred HRM practice may occur. The choice of Finland as the home country of MNCs and China as the host country of subsidiaries provides an ideal and timely context for the study. A total thirteen subsidiaries of Finnish MNCs were included in the study, out of which ten subsidiaries were examined in great details.
The study identified four alternative pathways to the localization of compensation practice. This indicates alternative pathways to achieve localization of HRM practice in foreign subsidiaries. Four conditions- labour market mobility, location, HQs monitoring, and strategic role of subsidiary, in their presence or absence, form the various configurations that lead to the localization. The findings demonstrate that subsidiaries that play a strategic role possess certain power capability, which in turn are likely to succeed in modifying HQ’s practice; however, strategic role alone is not deterministic to localization. The findings show that the high labour mobility in China was one main driving force for the localization of compensation practice and for adaptation of a wider range of other HRM practices. The study indicates that Finnish MNCs exhibit some particular Finnish characteristics; meanwhile, Finnish MNCs show some convergence towards prevailing models of international HRM in terms of high tendency of transferring corporate standardized compensation and performance management practices.
The study contributes to the literature on institutional analysis of practice transfer with a configurational approach of institutionalism and power perspective. It extends the extant research on international HRM by re-conceptualizing localization as modifying HQ-transferred practice to respond to the local institutional environment. This renewed conceptualization enabled this study to explore the process of localization and explain it with the interplay of institutional and organizational factors. The application of Qualitative Comparative Analysis approach into the multiple case study is innovative in methodology of international HRM study and advances use of alternative methods in International Business and Management research. A number of up-to-date managerial implications are provided to Finnish companies for better understanding the institutional and cultural differences between Finland and China and appropriate ways of people management in China.
Field of study: International Business and International Management
Key word: Qualitative Comparative Analysis (QCA), practice transfer, international human resource management (HRM), localization, subsidiary, multinational corporations (MNCs), China, Finland