Labor Relations and Human Resource Management in China 2019004638, 9780367179779, 9780429058806

This book takes a strategic approach and provides a comprehensive review of books and papers about human resource manage

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Table of contents :
Cover
Half Title
Series Page
Title
Copyright
Dedication
Contents
List of illustrations
Preface
List of abbreviations
1 Development of strategic HRM in China: an overview
2 Review method and theoretical framework for evaluation
3 National economic growth and strategic HRM
4 Enterprise reform and strategic HRM
5 Individual creativity, firm innovation and HRM
6 Strategic HRM, labor relations and human rights
7 Managing labor relations in China
8 Enterprise culture, spirituality and the ‘Chinese Dream’
9 HRM towards the realization of the ‘Chinese Dream’?
10 Future development of HRM and labor management in China
Appendix 1
Appendix 2
Appendix 3
Index
Recommend Papers

Labor Relations and Human Resource Management in China
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Labor Relations and Human Resource Management in China

This book takes a strategic approach and provides a comprehensive review of books and papers about human resource management (HRM) and labor relations management in China, especially since China’s accession to the World Trade Organization (WTO) in 2001. In particular, the book evaluates the development of HRM under China’s changing institutional environment, particularly since President Xi Jinping has taken dominant control of the Chinese Community Party (CCP) from 2010 onwards. The book provides a historical snapshot of how HRM has been rooted in China and its rhetorical impact on China’s national economic development, continuing enterprise reform, and sustaining individual creativity and innovation. It discusses and analyzes HRM and spirituality in the context of a rising aspiration of achieving the ‘Chinese Dream’ as conceptualized by President Xi Jinping. Connie Zheng is Senior Lecturer in Human Resource Management at Deakin University, Australia.

Routledge Frontiers of Business Management

Entrepreneurship, Innovation and Smart Cities Vanessa Ratten Japanese Management in Evolution New directions, breaks and emerging practices Edited by Tsutomu Nakano Gender and Family Entrepreneurship Edited by Vanessa Ratten, Veland Ramadani, Leo-Paul Dana, Robert Hisrich and João J. Ferreira Human Resource Management and the Global Financial Crisis Evidence from India’s IT/BPO Industry Ashish Malik Women Entrepreneurship in Family Business Edited by Vanessa Ratten, Leo-Paul Dana and Veland Ramadani Innovation and Internationalisation Successful SMEs’ Ventures into China Stuart Orr, Jane Menzies, Connie Zheng and Sajeewa ‘Pat’ Maddumage Technological Substitution in Asia Ewa Lechman China and Global Value Chains Globalization and the Information and Communications Technology Sector Yutao Sun and Seamus Grimes Transformational Entrepreneurship Edited by Vanessa Ratten and Paul Jones Labor Relations and Human Resource Management in China Connie Zheng For more information about this series, please visit www.routledge.com/RoutledgeFrontiers-of-Business-Management/book-series/RFBM

Labor Relations and Human Resource Management in China

Connie Zheng

First published 2019 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2019 Connie Zheng The right of Connie Zheng to be identified as author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Zheng, Connie, author. Title: Labor relations and human resource management in China / by Connie Zheng. Description: Abingdon, Oxon ; New York, NY : Routledge, 2019. | Series: Routledge frontiers of business management | Includes bibliographical references and index. Identifiers: LCCN 2019004638 | ISBN 9780367179779 (hardback) | ISBN 9780429058806 (ebook) Subjects: LCSH: Personnel management—China. | Industrial relations—China. Classification: LCC HF5549.2.C6 Z44 2019 | DDC 658.300951—dc23 LC record available at https://lccn.loc.gov/2019004638 ISBN: 978-0-367-17977-9 (hbk) ISBN: 978-0-429-05880-6 (ebk) Typeset in Galliard by Apex CoVantage, LLC

This book is dedicated to the Emeritus Professor Malcolm Warner, who was the leading Cambridge scholar from Judge Business School, Cambridge University, UK, in the field of human resource management and labor relations in China, and whose years of devoted work and plethora of publications have much inspired me to pursue a similar line of research. Sadly, Professor Warner passed away suddenly in October 2018. We lost a fine scholar, a critical sinologist and a friend who would have helped write a preface for the book. Professor Warner – you will be fondly remembered and deeply missed!

Contents

List of illustrations Preface List of abbreviations 1 Development of strategic HRM in China: an overview

viii ix xiv 1

2 Review method and theoretical framework for evaluation

15

3 National economic growth and strategic HRM

37

4 Enterprise reform and strategic HRM

57

5 Individual creativity, firm innovation and HRM

83

6 Strategic HRM, labor relations and human rights

108

7 Managing labor relations in China

121

8 Enterprise culture, spirituality and the ‘Chinese Dream’

147

9 HRM towards the realization of the ‘Chinese Dream’?

163

10 Future development of HRM and labor management in China Appendix 1 Appendix 2 Appendix 3 Index

173 183 185 187 215

Illustrations

Figures 2.1 2.2 3.1 3.2 4.1 5.1

Integrating strategy with SHRM An analytical framework Comparison of GDP per capita growth between China, India, Japan, USA and EU Chinese state and private investment percent change year to year (2011–2016) China’s annual GDP growth rates (2005–2017) Trends of increasing number of R&D researchers in China (1996–2015)

27 33 39 42 62 88

Tables 2.1 2.2 3.1 3.2 3.3 4.1 4.2 4.3 4.4 4.5 4.6 5.1 5.2 7.1 7.2 7.3 8.1

Various theories used in empirical studies on SHRM in China Business strategy, relevant role behaviors and SHRM practices Strategic human capital/resource and its link to firm performance and economic growth Key points of selective books written in relation to labor and HRM in China A chronical of labor and employment laws in China Private firm formation by type and number Key focuses of China’s Five-Year plans and management implications Government control and SHRM of soft drink and electronics industries in China Empirical findings on SHRM among enterprise with different ownership Best employer of choice ranking in China (2005–2016) Industry and SHRM practices in China Comparison of differences between creativity and innovation Summary of empirical studies on SHRM and innovation Sample, method, issue of focus and theory used in the empirical studies on labor relations in China Empirical studies on the relationship between SHRM and labor relations in China Causes of labor conflict and resolution methods in China Comparison of the American Dream vs. the Chinese Dream

17 23 44 46 52 59 60 63 68 73 76 85 92 127 131 138 152

Preface

When contemplating the writing of this book, three incidents that happened 20 years ago came into my mind. By reflecting on these incidents, it helped to illuminate an understanding of how much the landscape of labor relations and strategic human resource management (HRM) as inter-linked fields of academic study as well as industry practices in China have changed over the past two decades. In 1998, I received the World Bank Fellowship to visit the China Centre for Economic Research (CCER) of Peking University founded by Professor Justine Yifu Lin (林毅夫), who was the Centre Director for 15 years before taking up the position of Chief Economist and the Senior Vice-President of the World Bank in 2008. As a part of the deal of being a CCER Research Fellow, I was asked to develop and deliver a new course on ‘Human Resource Management’. At the preparation stage there appeared to be a need to promote the course in English. So I was asked by, the then Centre’s Deputy Director, Professor Wen Hai (海闻), whether we should use the plural ‘resources’ or singular ‘resource’ in the course title of ‘Human Resource Management’. Without hesitation, and more or less naively as a young researcher and non-labor economist, I suggested that the singular ‘resource’ be used because the conventional textbook on HRM in the western world has commonly adopted such a term. It was still vividly remembered that Professor Hai reserved his view at the time (though subsequently he adopted my suggestion), that ‘the labor force consists of many people and it does not make sense why a singular “resource” could readily represent many labors inside the organization as well as in the overall labor market’. To manage the labors of the many people in China, which has a population of over 1.4 billion, was indeed as much of a challenging task 20 years ago as it is today. Despite focusing mainly on policy research in developing economies, the CCER leaders saw the importance of HRM in making significant contributions to the economic development of the nation. Thus, they were pioneers in the promotion of the education and teaching of HRM as a field of study in China. It is only years later that I have realized that I was in fact playing a small part in this pioneering project to introduce strategic HRM (SHRM) to one of the leading universities in China. During the course of my visit to Peking University between 1998–1999, I had been approached by several executives and managers from Chinese business and government sectors to discuss the concept of HRM as it related to the

x

Preface

then commonly used term ‘Personnel’ in China. The majority of these managers used the term ‘Personnel Administration’ (renshi xingzheng 人事行政) and were curious about the differences between ‘personnel management’ and ‘human resource management’ (人力资源管理), which were also heatedly debated in the west at the same period of time in the 1990s (e.g. Schuler and Huber, 1993; Sisson, 1994; Legge, 1995). The differences were somewhat clarified by John Storey (1992, p. 35) with a 27-points illustration (see Appendix 1). However, the dust of these debates had not quite settled because of the apparent lack of acceptable HRM theories at the time and the general misunderstanding of the nature, role and function of HRM within the organizations that were clearly differentiated from personnel administration. After several rounds of discussion at one of those many banquet tables, it was remembered that one of the managers simply said that regardless of the differences, the key was ‘to look after your subordinates (employees per se), because when they are happy, develop and grow, you will grow and be promoted too’. Often regarded as typically pragmatic, Chinese managers, despite lacking general SHRM knowledge in those days, seemed to have a good understanding of taking care of employees with better working conditions, more training and growth opportunities as strategic pathways to achieve their enterprise performance and subsequently help their own career development. At the turn of the twenty-first century, China was undergoing the deepening of both economic and enterprise reforms intensified by its entry into the World Trade Organization (WTO) in 2001 (Chow, 2001; Ahlstrom et al., 2005). Both domestic enterprises and foreign-invested firms faced evermore fierce competition, not only in the product markets, but also in the labor market for talents (Ahlstrom et al., 2005; Farrell and Grant, 2005; Wakasugi, 2015; Zhang, 2016). Talent attraction and retention as a part of SHRM within organizations has become a key agenda for achieving better enterprise outcomes ever since China’s accession to WTO. The third incident occurred when I was having a conversation with one of the CCER students who attended my class on HRM, and who happened to listen to one of the public lectures given by a visiting professor (the name of which I could not recall) from the Industrial and Labor Relations School of Cornell University (USA). The student put forward two intriguing questions to me: 1) Does China have industrial relations similar to that in the USA? 2) is HRM now replacing industrial relations in the workplace? Unable to completely answer the student’s questions, I took up the challenge to read and research on China’s labor and human resource management issues for most of my academic life. As a result, these two questions still linger on, waiting to be fully answered. Why? First, regarding the concept of ‘industrial relations’, in particular one of the industrial relations’ key parties, trade unions play a distinctive, if not completely different role in China from what is defined in textbooks and practiced at the firm, industry and national levels in the west (e.g. Lee, 2009; Chan, 2010; Friedman, 2014; Friedman and Kuruvilla, 2015). Second, major laws and regulations relating to industrial relations were only just starting to be introduced in the 1990s and came into effect recently in China. For example, the Trade Union

Preface

xi

Law (1992) was revised in 2001; the Labor Law was introduced in 1994, but the Labor Contract Law together with Employment Promotion Law and the Labor Disputes Mediation and Arbitration Law only came into effect in late 2008 (Lee, 2009). The words ‘industrial relations’ were rarely used in any official document except for the Shenzhen Municipal People’s Congress to adopt a new regulation on ‘Harmonious Industrial Relations’ as to echo the former President Hu Jintao’s call for building a harmonious society (Lee, 2009; Warner, 2014). Under the reign of current President Xi Jinping, China’s constitution has changed once again in early 2018 to fully recognize the supreme leadership of the Communist Party (CCP), with an unlimited presidential term (Birtles, 2018), which could have a lasting impact on how employment and industrial relations at the organizational level could be shaped and managed in years to come. The reflection of these three incidents has prompted me to revisit the issues of labor relations management in China and reexamine the concept of SHRM as it has been adopted and rooted in China, especially since its WTO entry in 2001. For HRM to be strategic, contexts truly matter, as also claimed by Cooke (2012, p. 48) who aptly argued that ‘HRM is highly context specific in which institutional and cultural factors have enduring influences’. In the past 20 years, it has been witnessed that enterprises operating in China have closely followed the advice given by the former Chinese paramount leader Deng Xiaoping, ‘touching stones to cross the river’. Business development and management strategies of any organizations in China are required not only to be in close alignment with the government’s economic and social policies, but also to achieve organizational objectives with their internally crafted HRM policies and practices that must also be in line with external contexts that include China’s culture, customs, constitutions and civilization history. There is no shortage of books, journal papers and leading organizations’ reports (e.g. McKinsey & Company; International Labor Organization – ILO) written to explore the development of labor management and organization issues in China. What would this new book be any different from all these volumes? Does the current book help create new knowledge or enhance an understanding of SHRM and labor management issues in the China context? What are some key research questions that have not been answered in the existing literature, which would signal a critical need for further review and analysis? I am compelled to argue that the value of this book lies in its unique presentation of the synthesized knowledge from a comprehensive review of relevant books and papers about labor relations and SHRM issues in China over the past 18 years (2000–2018). In particular, the key aim of the book is to provide a historical snapshot of how SHRM has been rooted in China and to debate about its rhetoric impact on national economic development, continuing enterprise reform and promoting individual creativity and firm innovation that has not been examined to some extent. It is also intended to discuss the impact of SHRM on managing rising labor disputes inside China and overseeing complex global labor relations with an (dis)engaging issue of upholding basic human rights around the world as China has been more and more recognized as a global powerhouse

xii

Preface

and a leader of new world order. Furthermore, this current book brings in the new stream of discussion and analysis on HRM and spirituality in the context of a rising aspiration of achieving the ‘Chinese Dream’ (zhongguomeng 中国梦), which has neither been rigorously examined in the existing literature. With the subsequent chapters in the book, I intend to address the remaining research questions that may pique those with a similar enduring quest, as I do, to develop a better understanding of new development of HRM and labor management issues in contemporary China. These important research questions are: 1 2 3 4

5 6

7

How has SHRM taken the root and transformed in China? Is there a relationship between SHRM and economic development? How has SHRM impacted on China’s national economic development? Is there a relationship between SHRM and enterprise reform? If so, how has SHRM impacted on China’s enterprise reform? The student’s questions asked in 1998 have not yet fully answered, which require further investigation. Does China have industrial relations (IR) system? If yes, what does the IR system look like? How would the unique IR system relate to SHRM? Does it help protect labor rights and uphold human values of dignity, equality and freedom of association? Is there a relationship between SHRM and innovation? How has SHRM impact on individual creativity and innovation at the firm level? Is there a relationship between SHRM and spirituality? In the context of China, would the ‘Chinese Dream’ be likely achieved via developing and implementing China’s specific HRM strategies? Or should we expect that SHRM would play an important role in achieving such a ‘Dream’? What would the future hold for labor relations and HRM issues for the contemporary China?

I hope you would enjoy reading of this book, which reflects much of my own observations as a native Chinese and scholarly understandings of the latest development of China’s labor and HR management philosophies, policies, programs and practices inside and outside. Your critiques and comments on the views presented in this volume are highly appreciated, and can be directed to connie.zheng@deakin.edu.au. Connie Zheng Melbourne, Australia 29 December 2018

References Ahlstrom, D., Foley, S., Young, M.N., and Chang, E.S. (2005). Human resource strategies in post-WTO China, Thunderbird International Business Review, 47(3), 263–285. Birtles, B. (2018). China to scrap presidential term limits, clearing way for Xi Jinping to rule indefinitely, ABC News, February, Retrieved on 18 December 2018

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xiii

from www.abc.net.au/news/2018-02-26/china-communist-party-proposesremoving-presidential-term-limits/9483266 Chan, C.K. (2010). The Challenge of Labor in China: Strikes and the Changing Labor Regime in Global Factories, London: Routledge. Chow, G.C. (2001). The impact of joining WTO on China’s economic, legal and political institutions, an invited speech at the International Conference on Greater China and the WTO, March 22–24, 2001, organized by the City University of Hong Kong, Retrieved on 18 December 2018 via www.princeton.edu/~gchow/ WTO.pdf Cooke, F.L. (2012). Human Resource Management in China: New Trends and Practices, London: Routledge. Farrell, D., and Grant, A. (2005). Addressing China’s looming talent shortage, McKinsey Global Institute, October, Retrieved on 18 December 2018 via www. mckinsey.com/~/media/McKinsey/Global%20Themes/China/Addressing%20 chinas%20looming%20talent%20shortage/MGI_Looming_talent_shortage_in_ China_full_report.ashx Friedman, E. (2014). Economic development and sectoral unions in China, Industrial and Labor Relations Review, 67(2), 481–503. Friedman, E., and Kuruvilla, S. (2015). Experimentation and decentralization in China’s labor relations, Human Relations, 68(2), 181–195. Lee, C.H. (2009). Industrial relations and collective bargaining in China, Working Paper No. 7, International Labor Organization, Geneva. Legge, K. (1995). Human Resource Management: Rhetoric and Realities, London: Macmillan Business. Schuler, R.S., and Huber, V.L. (1993). Personnel and Human Resource Management, 5th edition, St Paul, MN: West Publishing Co. Sisson, K. (1994). Personnel management: Paradigms, practices and prospects, in K. Sisson, ed., Personnel Management, 2nd edition, Oxford: Blackwell, pp. 3–50. Storey, J. (1992). Development in the Management of Human Resource, Oxford: Blackwell. Wakasugi, R. (2015). How did China’s WTO entry affect its companies? World Economic Forum, June, Retrieved on 18 December 2018 from www.weforum.org/ agenda/2015/06/how-did-chinas-wto-entry-affect-its-companies/ Warner, M. (2014). Understanding Management in China: Past, Present and Future, London: Routledge. Zhang, L.Y. (2016). Winning the war for talent in China’s ‘New Normal’, China Business Review, October, Retrieved on 18 December 2018 from www.china businessreview.com/winning-the-war-for-talent-in-chinas-new-normal/

Abbreviations

ACFTU AMO CCER CCP CEC CEDA CMT COEs DPEs ER FIEs GDP GFC HPWS HRM ICT ILO IR JVEs LMX LR MLP NGOs OFDI POEs R&D RBV SASAC SET SMEs SOEs TMX TVEs VRIO WFEs WTO

All-China Federation of Trade Unions Ability–Motivation–Opportunity Framework Centre for Economic Research Chinese Communist Party China Enterprise Confederation China Enterprise Directors’ Association Choseness–Myths–Trauma complex thesis Collectively Owned Enterprises Domestic–Private Enterprises Employment Relations or Employee Relations Foreign-Invested Enterprises Gross Domestic Product Global Financial Crisis High-Performance Work System Human Resource Management Information, Communication and Technology International Labor Organization Industrial Relations Joint-Ventured Enterprises Leader–Member Exchange Labor Relations Medium-to-Long Term Plan Non-Government Organizations Offshore Foreign Direct Investment Privately Owned Enterprises Research & Development Resource-Based View State-Owned Assets Supervision and Administration Commission Social Exchange Theory Small and Medium-Sized Enterprises State-Owned Enterprises Team-Member Exchange Town and Village Enterprises Valuable, Rare, Inimitable, and Organizational specific resources Wholly Foreign-Owned Enterprises World Trade Organization

1

Development of strategic HRM in China An overview

Introduction When speaking about the concept of strategic human resource management (HRM), most scholars in the field would trace its origin back to the first HRM model developed by Michael Beer and his colleagues at the Harvard Business School in 1984, as well as the Michigan model established by Devanna et al. (1984) in the same period of time. Both of these two HRM models signified the importance of linking HRM functions such as selection, appraisal, rewards and development to achieve organizational performance outcomes and individual as well as societal wellbeing (Beer et al., 1984). The specific term ‘Strategic Human Resource Management’ was not proposed till the publication of three important papers in the early 1990s by Randall S. Schuler (1992) for Organization Dynamics; Patrick M. Wright and Gary C. McMahan (1992) for Journal of Management; and Peter Boxall (1992) for Human Resource Management Journal. Schuler (1992) adopted a pragmatic industry view to define the term ‘strategic human resources management’ (Note: Schuler used the plural ‘resources’ here, coinciding with the view of Professor Wen Hai mentioned in the Preface) as ‘getting the strategy of the business implemented effectively’ through ‘getting everybody from the top of the human organization to the bottom doing things that make the business successful’ (Schuler, 1992, p. 18). In contrast, Wright and McMahan (1992) were more concerned about the appropriate theoretical development of HRM and identified a need to create a new discipline of ‘Strategic Human Resource Management’ as corresponding to the development of the field of strategic management. Consequently, strategy HRM was defined, in line with the caveat of strategic management, as ‘the pattern of planned human resource deployments and activities intended to enable an organization to achieve its goal’ (Wright and McMahan, 1992, p. 298; italics was added to emphasize THE planning aspect of HRM as it is related to China’s socialist regime). Despite using the term of ‘strategic human resource management’ in its title, Boxall (1992) was in fact reluctant to clearly define the term but critical of the proposal for establishing a new discipline of SHRM, because of the lack of sufficient empirical evidence to support the theoretical development of such discipline.

2

Development of strategic HRM in China

Nevertheless, the three leading papers just discussed had sparked further theoretical discussion (e.g. Kamoche, 1996; Delery and Doty, 1996; Delery, 1998; Lepak and Snell, 1998; Wright and Snell, 1998; Boxall and Purcell, 2000; Becker et al., 2001; Colbert, 2004; Lengnick-Hall et al., 2009, 2011; Guest, 2011; Wright and McMahan, 2011; Buller and McEvoy, 2012; Jackson et al., 2014; Boon et al., 2018) and empirical testing (e.g. Arthur, 1994; Huselid, 1995; Delaney and Huselid, 1996; Huselid et al., 1997; Collins and Clark, 2003; Combs et al., 2006; Khilji and Wang, 2007; Chen and Huang, 2009; Chung and Liao, 2010; Alfes et al., 2013) of the relationship between HRM and organizational performance from the 1990s till today. Although prior theory development and SHRM practices were predominantly USA-based, the scope of inquiry to examine the SHRM theory and practice has been extended to other nations, including China, especially since the beginning of the 2000s. Therefore, the main focus of this chapter is on addressing the key research question on ‘how has SHRM taken the root and transformed in China?’. Briefly, the evolution of SHRM in China will be discussed first. This is followed by an explanation of the China context to support the idea of contextualizing SHRM (Cooke, 2012) for subsequent analysis of its relationship to China’s national economic development, enterprise reform and individual creativity, innovation and spirituality.

Evolution of SHRM in China Key scholars (e.g. Zhu, 2005; Warner, 2009; Cooke, 2012) in the field of HRM in China would argue that a historical analysis is necessary to develop a good understanding of HRM in contexts (Chen et al., 2016). For this reason, Warner (2014) recounts China’s history and provides an exceptionally well-informed insight into the development of management in China in the context of political, cultural and economic changes in the past 30 years. Using a time division from prior to post-reform period, Warner (2014) outlines three significant stages of developing labor and human resource management ideas in China as follows: • •



Stage 1 (prior 1978) whereby a closed economy model with hard worker protection was adopted; Stage 2 from 1978 to 2010 during which time China used an open-door version with soft labor rights to allow organizations using more lenient approaches to manage labor conflict. In this period, there appeared a tendency to uphold company/state interests over worker/individual interests with the goal of adopting organizational human resource management to generate better outputs and achieve national economic growth objectives (see further discussion on this point in Chapter 3). Stage 3 from 2010 onwards that signifies the global outlook one whereby China has gradually emerged as a world leader and would like to be seen to manage their employee entitlements to suit China’s dream of building a harmonized society. Warner (2014) argued that the last stage should more

Development of strategic HRM in China 3 or less resemble the Confucian management model (see further discussion on this aspect in Chapter 8). Recently, Chen et al. (2016) sourced the idea of HRM from the pre-establishment of the People’s Republic of China in 1949. The authors argued that the abolishment of craftsmen registration system in the mid-seventeenth century transformed labor management from state control to private sectors in China till 1949. The use of terms such as ‘labor management’ and ‘personnel management’ was quite common even prior to 1949, but was replaced subsequently by ‘cadres’ management’ after the Communist Party, which took over power from the National People’s party, now resided in the island of Taiwan. The term ‘HRM’ was not used till in the 1990s. For readers interested in the historical root of HRM in China, both Chen et al.’s (2016) paper on ‘Path dependence and the evolution of HRM in China’ and Warner’s (2014) book on ‘Understanding Management in China: Past, Present and Future’ serve as excellent background readings on the historical analysis of HRM in China, in addition to five special issues on the topics on HRM in China published in journals such as Human Resource Management Review (2012, 22:2); Asia Pacific Business Review (2013, 19:4 and 2015, 21:1); Human Relations (2015, 68:2) and The International Journal of Human Resource Management (2016, 27:18). However, it is noted that these volumes do not particularly focus on the strategic aspects of HRM in China, which is the main focus of the current book. As the concept of HRM was largely absent in China prior to the return of foreign firms in the 1980s (Ahlstrom et al., 2005) and the term of SHRM was never specifically used in the study of HRM in China, high performance work systems (HPWS) linked to organizational performance were commonly treated as SHRM (Liang et al., 2012). Although many argued that the concept of SHRM has long been rooted in Chinese culture, especially from the writings of ancient Chinese sages, which reflect the Confucian idea of ‘taking and treating people as the foundation of everything’ (yiren weiben) (Warner, 2014; Zheng, 2015), the actual diffusion of SHRM idea was undoubtedly transmitted via management philosophy, policy and practice adopted by many joint-ventured and foreign-owned multinational companies operating in China (Björkman and Lu, 2001; Björkman and Fan, 2002; Zhu et al., 2005; Zhang, 2006; Sun et al., 2007; Liang et al., 2012; Chen et al., 2016; Xian et al., 2017). For instance, Björkman and Lu (2001) examined 63 Chinese-western jointventure companies operating in the manufacturing sector and found that ‘the HRM practices have changed from being rather “local” to being more “western MNC standardized”’ (p. 494) and that the traditional local Chinese practices of the personnel system ‘characterized by government-determined hiring quotas, egalitarian compensation practices, a narrow definition of employee training and the “iron rice bowl” policy of life-time employment’ (Björkman and Lu, 2001, p. 493) have been gradually phased out, though the system has not been entirely done away with, especially inside those state-owned enterprise (SOEs) and government institutions (Ahlstrom et al., 2005; Akhtar et al., 2008; Warner,

4

Development of strategic HRM in China

2009). In a similar vein, Zhu et al. (2005) revealed, from comparing two surveys in 1994/5 and 2001/2, an increase in adopting the western-style HRM practices in China across all ownership types. Furthermore, Sun et al. (2007) stated that ‘China’s economic reforms and the participation of foreign companies in the Chinese economy have led to the popularization of Western-style HRM practices’ (p. 572). Akhtar et al. (2008) revisited HRM in China and found that whereas many SOEs still adopt conventional norms to people management, including the cadre system, they were undergoing substantial changes with reference to SHRM practices introduced by foreign-invested enterprise (FIEs) or wholly owned foreign enterprises (p. 17). Qiao et al. (2009) further supported this line of argument and claimed that Chinese firms and their managerial employees must have taken the idea of western HRM practices into their organizational practices after receiving management education (including MBA education) offered through many business schools established since the late 1990s and HRM textbooks borrowed and translated from the west. Lastly, greater competition amongst enterprises with different types of ownership, especially since the 2000s, led to the inevitable transfer of western management practices including the adoption of SHRM to China in order to improve organizational performance and competitive advantage both in domestic and global markets (Xian et al., 2017; see further discussion on the relationship between SHRM and enterprise reform in Chapter 4). Despite the evidence showing Chinese firms’ adoption of western-style HRM practices, Liang et al. (2012) found examples of firms operating in China that have both adopted and adapted the western SHRM practices with some ‘Chinese characteristics’ (see also Warner, 2009). This variation of SHRM practices between China and the west is largely due to the contextual differences at the national (cultural and legal institutions) and organizational levels (ownership and business strategy) (Cooke, 2005; Kim and Wright, 2010). Recognizing the impact of contextual factors on HRM effectiveness is important for examining SHRM adoption and adaption in China (Sheldon and Sanders, 2016). Thus, the Chinese context is the subject of a brief discussion next, with attention being place on its role and likely impact on the development of SHRM and labor relations in China.

The China context For the past four decades (1978–2018), with its economic reforms and institutional transition, China has been transformed from a planned economy dominated by state-owned enterprises to a market socialist economy with a wide range of ownership forms, such as domestic privately owned, joint-ventured and foreign-invested firms, town and village as well as collectively owned enterprises (Zheng et al., 2006; Chen et al., 2016). Since the announcement of the ‘Going global’ policy by the Chinese government in 1999 and the WTO accession in 2001, China has become the most active global player among developing nations. It has been the world’s second largest recipient of inflow foreign direct

Development of strategic HRM in China 5 investment, just behind the USA (Arnett, 2014). Ninety-nine percent of Fortune Global 500 companies, of which an increasing number of Chinese firms have been on the list since 2010, are operating their businesses inside China (http:// fortune.com/global500/). China is also the world’s largest exporter amounting for more than 10 percent of the world’s total exports in 2013, and the value of offshore foreign direct investment (OFDI) has also surged, making China the fifth largest OFDI provider (UNCTAD, 2014). These facts have led to the rapid development of emerging Chinese multinational companies operating around the globe (Luo and Tung, 2007), and intensified the need to adopt a SHRM approach to manage the vast number of employees inside and outside China. In reviewing empirical studies on SHRM practices in China, Liang et al. (2012) surprisingly found that scholars studying SHRM in China appeared to take a biased view toward defining SHRM in terms of a universalistic model such as the high-performance work system (HPWS) model, instead of a contingency model that would consider the enormous environmental and institutional changes that occurred in China as a result of the 40-odd years of economic reforms. In the current review of major books and papers related to SHRM in China, it is also illustrated that a limited number of empirical studies have addressed the institutional contexts of China, though more discussion on social, economic and political contexts was found in the 16 books reviewed, and those papers published in the domain of sociology such as China Quarterly. This observation was echoed by Cooke et al.’s (2017) comment on ‘the dominance of quantitative research that is insufficiently sensitive to contextual effects in explaining organizational phenomena in China’ (p. 212). To help comprehend how SHRM has taken shape in organizations operating in China, changing social, economic, political and legal contexts of China must first be understood.

Changing cultural, social and economic contexts It is noted that Chinese culture has been characterized with collectivism imposed from the longtime influence of the Confucianism idea, which emphasizes ‘respect for hierarch, in-group harmony, reciprocity and loyalty’ (Ngo et al., 2008, p. 75). These culture values have governed social and workplace relationships for centuries in China. However, these social norms have been subject to changes because of the western influence as well as China’s internal changing political, economic and employment systems for the past four decades (Cooke et al., 2017). Some diversified sub-cultures exist across different demographic groups and geographic regions. For instance, from analyzing the dataset collecting in the 1990s, Chen and Francesco (2000) found that Chinese employees generally behaved quite differently from their western counterparts because of cultural differences. In particular, Chinese employee commitment and turnover intention was driven more by the strength of guanxi (network relationship) with their superiors than other organizational factors. Liu (2003) examined two generations of employees in Chinese state-owned enterprises and found that although all

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Development of strategic HRM in China

employees were oriented towards a common set of Chinese cultural themes with a sense of unity to maintain harmony and to reduce inequality, diversity was revealed by older employees’ higher ratings on loyalty, security and bureaucracy than the younger generation. Ralston et al. (2006) found that mainland Chinese managers have similar managerial values systems related to business ideology to those managers who reside in Hong Kong and the USA. But over a decade later, Elfstrom and Kuruvilla (2014) highlighted the growing awareness of rights and a strong sense of entitlement among China’s younger workers who were found to reject the traditional hierarchical role relationships prescribed by Confucian social ethics. Younger generations appear to demand more individual rights. This may be the cause of more labor unrest and disputes in recent times and this will be further discussed in Chapter 6. The previously-mentioned research evidence signifies some major changes that will further occur in the domain of labor-relation management when Generation Y and Z enter the workforce. Organizations operating in China should pay attention to this aspect of change in the design and development of appropriate HRM strategies to address the needs of different cohorts of employees. In addition, Cooke et al. (2017) contended that limited individual rights could be protected at the workplace level because of the limited role of Chinese trade unions, but the strong influences imposed by the Chinese Communist Party (CCP) on managing both private and public Chinese organizations. An increasing number of large private enterprise and foreign-invested firms have established CCP branches with the direct appointment of their CEOs by the CCP (Zheng and Hu, 2018). Thus, these changing cultural and social values together with tight bureaucratic control from the CCP have largely shaped the conventional personnel system especially among the state-owned enterprises (SOEs) and encouraged the enterprises to adopt SHRM that is more or less in line with the new economic environment, as China has deepened its reform process especially from the early 1990s onwards (Ngo et al., 2008). In the past, the attitude of common Chinese employees was heavily shaped both by the traditional ‘iron rice bowl’ policy whereby employees were entitled to lifetime employment, job security, seniority-based promotion and a range of social services (Ahlstrom et al., 2005; Warner, 2009). Consequently, employees developed a sense of their control of organizations instead of organizational control of their livelihood (Ahlstrom et al., 2005). Furthermore, the huge population growth in the period of 1950–1980 created overstaffing issues among many Chinese organizations prior to the reform time. In addition, individual Chinese tended to ‘associate their status and sense of self-worth with their role and standing in the government bureaucratic system’ (Liang et al., 2012, p. 56). The most-prominent bureaucratic system resembling that of an HRM system is the ‘cadre’ (employee) system that specifies job levels and unified salary standards as well as particular employment benefits, such as housing, transportation and health benefits according to the ranks. Under this system, young people were usually assigned jobs by the state. There were no standard selection criteria, nor was there any training and career development as people tended to move

Development of strategic HRM in China 7 within the set levels stipulated by the state. Thus, general employees, and managers in particular, at the time did not have much motivation and contributive effort towards achieving organizational performance objectives (Zheng et al., 2006). Neither were Chinese organizations/industries required to be competitive under the Soviet state-planning system with a closed-door policy during the Cold War period (Warner, 2014; Chen et al., 2016). Under the economic reforms, in particular after signing the WTO agreement in 2001, China has been exposed to unprecedented foreign competition in most industries (Ahlstrom et al., 2005), especially those formally restricted industries such as banking, telecommunications and retailing (Law et al., 2003). As a result, industries and organizations are required to allocate resources more efficiently. The former social values held by employees and managers were reshaped to take ‘a sharp departure from the taken-for-granted Communist norm of equality’ and to absorb a new ideology of letting ‘some people to get rich first’ as encouraged by the former Paramount Leader Deng Xiaoping (Liang et al., 2012, p. 56). Consequently, individual Chinese employees were found to prefer differential reward allocations rather than traditional quality reward systems (Chen, 1995). A new elite (managerial and professional) group has also been rapidly developed in China, resembling those upper classes in the western world, who focus on being entrepreneurial, developing businesses and investing in stock markets, with a greater desire for money-making and materialism (Qiao et al., 2009; Liang et al., 2012). This western view of wealth combined with Deng’s pragmatic ideology of ‘being rich is glorious’ has fostered a new set of social values for individual employees and managers that are quite different from the earlier socialist egalitarian values. Chinese employees, especially the younger ones, were found to be more economically oriented under the reform and tended to change jobs often with sometimes a small fraction of salary increase (Chen, 1995; Sun et al., 2007; Zheng and Lamond, 2010). At the organizational level, because of changing ownership of enterprises under the economic reform and a decentralization policy to allow the establishment of privately owned enterprises as well as foreign-owned firms, competition in the Chinese market intensified during the 2000s. Therefore, greater concerns over ‘soft’ issues, such as organizational flexibility, innovation, adaptability, employee development, motivation and retention, have emerged as an important agenda, which pushes the development of more proactive and innovative HRM practices at the firm level (Ahlstrom et al., 2005; Wang and Zang, 2005; Akhtar et al., 2008). In recent years, HRM challenges have increasingly taken the center stage in China, not only for those multinational companies operating inside China, but also for the growing number of Chinese-owned emerging multinational companies operating outside China (Cooke, 2014). These challenges are imposed naturally through the change of social values and cultural norms as a result of economic development in China and the rising influence of China on the global stage. In addition, WTO entry has required additional reforms in China, including the establishment of a modern enterprise system, commercial law, as well

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Development of strategic HRM in China

as labor and employment laws in line with China’s recent political, economic and social development. There have been many political and regulatory changes especially since the WTO entry, which are briefly outlined here.

Changing political and legal contexts The economic reform, which accompanied to some extent enterprise reform in the 1980s and 1990s, led to several changes in China’s personnel policies as a marketbased labor market was established. The Labor Law (1994) was passed to allow the administration of benefits such as medical care, incident insurance and pensions to be managed by the China Life Insurance Company, instead of by employers (Qiao et al., 2009). However, the Labor Law (1994) were mostly applied to privately owned, collective, town and village enterprises, not entirely to the state-owned enterprises (SOEs) that still held some elements of traditional practices such as the cadre system with associated distribute benefits (Liang et al., 2012). By the early 2000s, labor market reform had become the most important and protracted part of China’s reform programs (Zhang, 2006). One of the key reform outcomes is to shift the ideology from socialism to marketization and this allows free recruitment and selection of employees from the market instead of jobs being planned and allocated to individuals (Zheng et al., 2006), and greater reward for human capital development (Liang et al., 2012). Gore (2014) also contended that ‘the Chinese state’s approach . . . with all crafting institutions in labor management is part of the state’s effort at building up its strategic capacity in political, social and economic management. . . . Labor policy of the regime is tied to the entire enterprise of China’s rise’ (Gore, 2014, p. 303). According to Liang et al. (2012), the Chinese government provided organizations, especially multinational companies operating in China, with a great deal of freedom for managing their employment practices from the mid-1990s till mid-2000s (see also Björkman et al., 2008; Warner, 2014). Despite the fact that there were a few labor legislations (such as Labor Law 1994; Trade Union Law 2007), they were rarely enforced in China. The labor policy changed with the introduction of the Labor Contract Law 2007 (effective in 1 July 2008, with further amendments in 2013 and 2016). This piece of law encourages, and to some extent requires companies to respect employee rights and emphasized participative labor relations that would involve employees in major decisionmaking processes through company unions and employee councils. The new law especially compels companies to adopt more uniform and formalized HRM policies, processes and practices that would help avoid lawsuits and ensure compliance. However, whether Chinese firms actually build consistent HRM systems to link performance and HRM practices on quantifiable measures and to allow employment stability remains unclear. It is a general consensus that, as China moves into the twenty-first century, many organizations have discontinued the traditional personal practices in favor of more western-style HRM practices (Ahlstrom et al., 2005; Björkman et al., 2008). This preference of SHRM at the organizational level has been endorsed

Development of strategic HRM in China 9 by the central Chinese government. As argued by Gore (2014), China’s government approach to industrial relations and labor management issues is largely integrated with its national development strategy. The adoption and adaption of the western-style HRM practices have helped many Chinese organizations, especially those state-owned enterprises, to increase their operational effectiveness (i.e. productivity) and economic efficiency (i.e. profits), which in turn contribute to China’s national economic development. Thus, the intention for the Chinese government to introduce any new law relevant to labor and employment practices is to serve the key purpose of assisting China’s development (Gore, 2014, p. 302). This point of argument is embedded in the basic logic of the developmental state as phrased by Onis (1991), and the nature of state capitalism (Cooke et al., 2018) as being applied to the context of China and its firms operating both inside and outside China. With the characteristics of the development state, China’s national business systems are directed by the Communist Party as their key institutional arrangement to fulfill a policy of enterprise reform, to create favorable conditions for attracting foreign direct investment, accompanied by its product of the western-style management practices (Warner, 2014; Edwards and Rees, 2017), and to assist in achieving national economic growth objectives. Cooke (2014) also argued that China’s national business system and its associated institutions are the driving forces behind staffing practices and labor relations inside and outside China (see also Cooke et al., 2018). Gore (2014) went further to argue that ‘typically the development state partnered with big business (such as multinational companies and SOEs) to forge competitive advantages in the world market’ (p. 304; italics in the brackets were added as they are business entities particularly important to China). It has been witnessed that labor tranquility has been an integral part of many East Asian successful development stories of ‘governmentbusiness partnership’. However, Gore (2014) claimed that ‘beneath this tranquility often lies labor subjugation by capital closely allied with the state’ (p. 305). It is noted that since the beginning of the 2010s, China’s income gaps have widened, reaching the frightening Gini coefficient of >0.6 in 2015 (Hsu, 2016). Labor unrest has been manifested by an increasing number of strikes (2663 strikes and protests recorded in 2016 by the China Labour Bulletin) (Lockett, 2017). These figures show the bottleneck effect on China’s sustainable development and a serious issue of social justice. Thus, a series of income reform policies such as Minimum Wages Regulation (2014); Mandated Management Guidelines for Labor Funds (2015); New Amendment of Labor Contract Law (2016) and New Labor Protection Rules (2017) (Employment Law Alliance, 2017; Baker McKenzie, 2017) were introduced by the Chinese government. In particular at the 18th Congress of the Chinese Communist Party, a top policy objective of building an innovation nation was set in the 12th Five-year plan. To achieve this planning goal, China needs to change its developmental model from exportled growth to domestic consumption-driven innovation, which can only be built by a sizeable middle-income population with substantial increased wages and salaries. China’s Premier Li Keqiang defined the income issue as a nation’s strategic issue, as he says ‘expanding domestic consumption is the foundation

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Development of strategic HRM in China

of our country’s economic growth and the long-term strategic guide (for reforms); it is also the number one task of adjusting the economic structure’ (cited from Gore, 2014, p. 314). China’s new political agenda at the recent 19th CCP’s Congress also clearly shows that the Party now appears to have the desire to look after its vulnerable people with low-income and limited social net of protection. In the coming years, we may see a few more rules and regulations coming into being, which would have implications on SHRM and managing labor relations at the firm level in years to come.

Conclusion This chapter discussed the evolution and development of SHRM and its application to organizations particularly operating inside China. The China context with an analysis of its social, political, economic and legal contexts was also outlined. It is noted that these contextual factors are still very much in transition in China. It is expected that changes would require organizations in China to align their SHRM and labor management approaches with not only their internal business strategies, but also in compliance with the external political and social environments, which are uniquely embedded in China’s institutional context.

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2

Review method and theoretical framework for evaluation

Introduction Acknowledging the importance of context as discussed in Chapter 1, the next step is to examine how the context matters to the adoption and adaption of SHRM and labor relations management in China. To conduct the elaborative and close examination, books and journal papers were extensively read and surveyed. Various theories explaining the purpose and meaning of SHRM were assessed to check their applicability and relevance to the China context. Thus, in this chapter, the review method used to survey books and papers is first outlined. This is followed by an explanation of three key theories guiding the understanding of SHRM, most relevant to China, they are industry-based, resource-based and institution-based views (Peng et al., 2009). Additional theories that are also applicable to China will also be discussed. The chapter concludes with the development of an analytical framework that helps guide the subsequent chapters of analysis on SHRM and labor relations management in China.

Review method To understand the evolution and development of SHRM and industrial/labor relations in China from 2000 till today, the best practice on how to conduct reviews (Short, 2009) was followed. Relevant books and papers published in the period of 2000–2018 by leading publishers (such as Harvard University Press, Routledge and Palgrave), and top-tiered business and management journals such as Academy of Management Journal and Review; Journal of International Business Studies; Human Resource Management (USA); Human Resource Management Journal (UK); Human Resource Management Review; International Journal of Human Resource Management; International Journal of Manpower and Management and Organization Review etc., as well as those published in the political science and sociology journal outlets, such as China Quarterly; China Journal; Human Relations; Industrial and Labor Review and Journal of Industrial Relations are extensively searched. The search procedure started with key words such as ‘China’ and ‘management’. As a result, 16 books and 10 industry reports published since 2000 (see

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Method and framework for evaluation

Appendix 2) were first found and indexed. In the second stage, the Web of Science, Google Scholar, ScienceDirect and other relevant databases were searched to collect peer-review articles published in the management top-tier journals (measured by Australian Business Deans Council [ABDC] ranked A and A* journals, as listed earlier). Additional key words such as human resource management, labor management, SHRM were included in the search. Since the application of SHRM to China was expected to have started in the early 2000s, the search period from 2000 onwards was controlled. As a result of these extensive efforts, a total of 65 papers published from 2000–2018 on labor and human resource management issues in China were found and included in the review, of which 8 were general review papers, 42 were quantitative studies and 15 were qualitative in nature (see Appendix 3). This literature helps serve as background data for an analysis of SHRM and labor management issues in China in this book. In alignment with the theoretical development of SHRM, we examined the particular theories applied in the empirical studies and the extent to which the contextual and institutional factors were tested as antecedents. How SHRM and labor relations were measured was also recorded. In particular, we also evaluated the outcomes such as national economic development, enterprise performance, innovation and individual wellbeing as a result of impacts derived from antecedents such as contextual factors and HRM policies and practices. These observations and meta-analyses were blended with the examination of the effects of SHRM on the societal level in order to create a better contemporary China’s society. Next, the foundational theories for HRM are explained to help develop an analytical framework for data analysis. Explanation of theories to guide the understanding of labor relations issues in China will be further conducted in the subsequent Chapter 7.

Theoretical foundations of SHRM In Wright and McMahan’s (1992) pioneering work on SHRM in the western context, six theoretical models (behavioral perspective, cybernetic models, agency/transaction cost theory, resource-based view (RBV) of the firm, power/ resource dependence models and institutional theory) were explained to help us understand both strategic and non-strategic determinants of HRM policies and practices. In reviewing empirical papers studying SHRM in China, it was found that only 25 studies applied some elements of the theories, of which the majority of studies used the institution theory, resource-based view and fit/ contingency theory (see Table 2.1). In the context of transitional economy, business strategies and management issues of emerging organizations must be understood within their national contexts, with support from three theoretical perspectives (i.e. industry-based, resource-based and institution-based views) (Peng et al., 2009). Therefore, Peng et al.’s (2009) approach of paying attention to contexts was adopted as a theoretical foundation to explain and understand SHRM in China.

Table 2.1 Various theories used in empirical studies on SHRM in China Authors

Types of theory used

Björkman and Lu (2001)

Institutional theory A bargaining power perspective Best-fit v. best practice

Application and brief explanatory note

Use of ‘the institutionalization perspective’ with reference to Scott (1987) and DiMaggio and Powell (1983); argue for organizations under pressure to adapt and be consistent with their institutional environment. Björkman and Argue that best practice of HPWPs may not be Fan (2002) fit for the China context; strategic fit between HRM and business strategy is important. Law et al. (2003) Resource-based Refer to RBV by Barney (1991) and Wright and view (RBV) McMahan (1992); argue that the firms’ goal and good human resource (HR) practices strategically aligned leads to continuous improvement of firm performance that help break through innovations; specific institutions in China were discussed in length, though no direct reference to the institutional theory was made. Li (2003) RBV, best-fit v. Take RBV as a comprehensive theory; argue best practice, that a firm’s HR practices or competence should the contingency be seen in terms of resources or capabilities perspective enabling it to exploit imperfect and incomplete factor markets and generate better outcomes; stress the link between the competitive environment and firm capabilities; consider the contingency theory as different firms may have a different set of best HR practices because of different business environments, thus fit between internal and external factors with crafted HR policy and practice is crucial. Examine the outcome-based or deliverables Ahlstrom et al. Ulrich (1997) (2005) HR competency of HRM with consideration of administrative efficiency, employee contribution, strategic model execution and capacity for change. Use of the concept of ‘legitimacy’ dwelled in Wei and Lau Institutional the institutional theory to argue that Chinese (2005) theory; firms should respond to institutional pressures Fit theory and adopt similar management practices with (Wright and mimetic intention when facing social, legal and Snell, 1998); economic factors; explore the fit perspective and competency argue that organizational success is attributed perspective by how well organization strategy, structure, (Ichniowskil technology and people fit with and support et al., 1997); each other; suggest that SHRM facilitate RBV organization change and development to fit with external environment; RBV is used to explain the competency perspective as firms with more valuable, rare, inimitable and immobile resources and capabilities would have superior competency to achieve market orientation. (Continued)

Table 2.1 (Continued) Authors

Types of theory used

Application and brief explanatory note

Li et al. (2006)

RBV + Innovation theory

Use of RBV to suggest that a firm’s resources are important for development and innovation; argue that two types of control: outcome v. process in the realm of technology innovation can only be achieved via suitable HRM policy and practices, such as incentive and motivation program, training and development to obtain skills and new knowledge; claim that technological innovation contribute to firm performance. Discuss RBV and control theory in conjunction; argue that RBV describes the extent to which a measure of practices taps the internal employee development, whilst the control-based approach describes the extent to which a measure of HPWPs to direct and monitor employee performance; the focus is on HPWPs. Adopt the best practice approach to examine SHRM, but when evaluating the validity of HRM in China, the contingency/fit approach was considered to take organizational strategy (e.g. cost, quality, innovation) as a moderator for the relationship between SHRM and performance; when considering the application of SHRM in China, the configurational approach was used to select an ultimate set of a high-order high-performance work system. Posit that HRM should be contingent upon and match the demand of the internal and external conditions; argue that HR systems should be configured to fit external environment and link to business strategy in order to enhance organization effectiveness; suggest that the configuration should be based on two approaches: resource-based v. control-based; claim that RBV is used for developing internal employee competencies that are unique and valuable human capital, whilst control-based approach focuses on monitoring employee behaviors and compliance with process-based standards that are further divided into processbased control v. outcome-based control accompanied with a different set of HR practices (fixed v. flexible; short v. long-term focused development and rewards programs etc.) Argue that RBV is instrumental in developing the notion of SHRM, and exploring HR’s role in supporting business strategy (Barney, 1991). Reference to Scott (1987) and DiMaggio and Powell (1983), with a similar argument presented in Wei and Lau (2005)

Sun et al. (2007) RBV + Control theory

Akhtar et al. (2008)

Best practice v. best-fit; Contingency v. configurational approach to SHRM

Chow et al. (2008)

Contingency v. configurational approach; fit theory; RBV + Control theory

Ngo et al. (2008)

RBV

Wei and Lau (2008)

Institutional theory

Authors

Types of theory used

Gong and Chang Institutional (2008) theory

Gong et al. (2009)

Commitment theory; RBV, social exchange theory (SET)

Qiao et al. (2009)

Best-fit theory;

Zhang and Li 2009

Universal v. contingency

Wang et al. (2011)

Expectancy theory & psychological contract theory

Wei et al. (2011) Contextual perspective of SHRM; Bestfit theory; Systematic agreement theory (SAT) (Semler (1997)

Application and brief explanatory note Consider the institutional ownership as an important factor to influence employment security and career advancement which subsequently impact on performance, though not specifically explaining the application of the institutional theory in the paper. Use of affective commitment to link the performance-oriented HR subsystem and continuance commitment to the maintenanceoriented HR system; apply the SET to argue that people follow the principles of reciprocity, by which different HR system exchange employees’ different types of commitment; suggest that RBV explains valuable and firm specific HR enhance firm performance; explicitly test the key tenets of RBV in the study. Argue that HR strategy will be more effective when integrated with specific org and environmental context. A brief discussion on the universal and contingence approach to HRM and test of the hypotheses derived from both perspectives. Use of expectancy theory as a behavioral model to understand the effects of HPWPs on positive employee’s attitudes and work behaviors that lead to better firm performance; apply the psychological contract theory to a particular context of China where SOE leadership behavior is much affected by the communist ideologies that emphasize organizations’ whole-hearted service to the people, and in return worker’s loyalty to the party and the leader for the greatest interests of the collective, hence the breach of such contract may lead to employee disempowerment in SOEs than in privately owned firms if HPWPs are equally implemented. Argue for the importance of examining the contextual variables to understand the SHRM process, which would help understand the impact of SHRM implementation on firm innovation; use of the ‘fit’ theory to test the link of the implementation of SHRM to various organizational and environmental conditions and to firm performance; SAT is also used to suggest the importance of the alignment of organization design, strategy, culture and SHRM process to elicit positive employee behaviors necessary to fulfill the organization goals. (Continued)

Table 2.1 (Continued) Authors

Types of theory used

Jiang J.W. et al. (2012)

Social exchange Argue that based on the SET, employees’ theory (SET) perceptions of a high-commitment HRM (Blau, 1964) system with in-built motivational practices have a positive impact on employee creativity, and would encourage employees to be more effective in problem solving; SET also explains employees’ perceptions of individual, group and organization factors that affect their innovation processes. Social network Argue that social network regarding two prototypes of social dynamics in breeding theory; AMO innovation: 1) the ‘bonding view’ emphasizes theory; RBV; internal social capital originated from the capability/ network closure theories that emphasize trust knowledgeand strong ties within organizations to build based theory a cohesive work environment with sharing knowledge and resources that are critical for innovation; 2) the outreaching view holds the proponents of structural holes bridging unconnected network, diverse network range, organization embeddedness and weak ties; use of both commitment v. collaborationbased HRM systems derived from AMO model; RBV, capability and knowledgebased theories to enable organizations for knowledge innovation which is regarded as a strategic imperative to gain competitive advantages. RBV; dynamic Apply the dynamic capability theory to explain how firms consistently develop innovation capability capabilities by exploring new resources or theory exploit new combinations of resources so as to develop both exploitative and exploratory capabilities to address the changing environment for innovation; with the RBV to propose the capability-based SHRM system for innovation Use of institutional theory to explain the Institutional unique China’s national business system with theory; its political, economic and labor elements Resource that would influence MNC’s subsidiary’s dependent theory (Oliver, decisions on HRM policies and practices; Argue with the resource dependency theory 1991) that MNCs could choose either positive strategies to ‘work within the system’ or negative systems to ‘fight the system’ for change.

Zhou et al. (2013)

Zhang et al. (2016)

Zhang et al. (2017)

Application and brief explanatory note

Authors

Types of theory used

Xian et al. (2017)

Institutional theory; fit theory

Application and brief explanatory note

Apply the institutional theory to argue that guanxi is a powerful institutional force that would influence employee perceptions of LMX within the organization, and affect on scare resource distribution esp. in SOEs. Guanxi is central to networks of mutual dependence and creating a sense of obligation within the danwei community crucial to obtaining resources and building long-term success; use of ‘fit’ theory to argue for a bundle of HR practices designed to be contextually appropriate – important to shift from HR content to HR process, to understand implementation and employee perceptions of HR practices. Critique on conventional best practice v. best-fit Kim et al. (2018) AMO model; approach and argue for defining narrowly but Social capital strategically targeted HRM systems towards and HR strength theory; achieving strategic objectives, which is called social network the HR-line-connecting HRM system; argue that such system helps a strong social network theory between HR and line managers; apply the HR strength theory to posit that the effectiveness of HRM system depends on the ‘strength’ of the organization climate in which employees receive clear, relevant and consistent messages through corporate HRM policies; argue that the HR-line connecting HRM system reduce the turnover rate by making line and HR managers collaborate effectively to build a strong HR climate. Shen et al. HR attribution Argue that the HR attributes (such as those required by law and regulations v. discretionary (2018) theory; POS practices) determine HRM effect on employees; theory; social apply the perceived organizational support exchange (POS) to suggest that high-commitment theory; social identity theory HRM focusing on employee performance development, participation, job security and WLB is positively related to POS; use of social exchange theory to argue that highcommitment HRM system would generate the social and psychological process to influence the willingness of HCNs to help expatriates, as well as their perception of relationship exchange with the organizations influenced by POS; use of social identity theory to argue that employee attitudes and behaviors toward the organization depend on how they identify with the organization and that org identification results from employee perception of POS. (Continued)

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Method and framework for evaluation

Table 2.1 (Continued) Authors

Types of theory used

Application and brief explanatory note

Su et al. (2018)

Social exchange theory (SET); Organization theory (OT)

Use of SET to argue that high-commitment work practices boost employees’ emotional attachment to the organization and their discretionary extra-role behavior and work effort; use of OT to acknowledge the importance of rules, regulations and procedures in building organization capabilities and competitive advantages, which provide mechanisms for control and bases for repetitions; two theories justify the commitment v. control-based HRM systems which are applicable to China to exert more positive effects on firm performance.

Industry-based view Porter’s (1980) book on Competitive Strategy introduced the industry-based view of strategic management, which posits that firm performance is largely determined by its degree of competitiveness in an industry, measured by the market size, niche, innovativeness and quality of its products and services. Accordingly, organizations can develop three business strategies, namely: innovation (or differentiation), quality enhancement and cost reduction, to help them achieve competitive advantage in the marketplace. Subsequently, Schuler and Jackson (1987) argued that for firms to be competitive and achieve ultimate performance outcomes, employees should have necessary role behaviors to correspond with the chosen business strategy. Once these role behaviors are identified, organizations can design and develop corresponding HRM policies and practices to obtain, maintain and sustain these role behaviors in order to realize their chosen business strategy and gain competitive advantage in the marketplace. Indeed, the recognition of industry-based competition is important to delineate appropriate role behaviors relevant to industry which help contextualize HRM practices (Jackson and Schuler, 1995). In the current review, several studies (e.g. Li, 2003; Wang and Zang, 2005; Wei and Lau, 2005; Akhtar et al., 2008; Chow et al., 2008; Jiang et al., 2012; Zhou et al., 2013; Su et al., 2018) used industry as a control variable, based on the argument from the ‘fit’ or contingency perspective, to test its different effect on the relationship between SHRM and firm performance. Although most study results from the quantitative research have not found significant effect of industry variable on the link between HRM and performance, Chow et al. (2008) illustrated that compared with the manufacturing sector, high-tech industry was more likely to have adopted commitment-based HRM configuration, which positively

Method and framework for evaluation

23

related to better firm outcomes with reference to sales and profit growth and turnover. This result suggests that a different industry may have different HRM configurations, which could impact on outcomes. The unanimous results have never been reached as a result of quantitative empirical research of SHRM in China. According to Schuler and Jackson (1987), the innovation strategy is often used by firms to develop products or services different from their competitors. The primary focus for implementing the innovation strategy is on differentiation. Correspondingly, employees need to be innovative, able to offer something new and different, with necessary role behaviors in order to carry out the innovation strategy. Strategic recruitment and selection of highly skilled employees with these role behaviors or provision of a strategic incentive or rewards program as well as skill training and long-term career development in order to obtain such desirable behaviors would be crucial to achieve the organization’s innovative objectives (see Table 2.2).

Table 2.2 Business strategy, relevant role behaviors and SHRM practices Choice of strategy

Desirable role behaviors of employees

Corresponding SHRM practices

Innovation

1) a high degree of creative behavior; 2) a longer-term focus; 3) a relatively high level of cooperative, interdependent behavior; 4) a moderate degree of concern for quality; 5) a moderate concern for quantity; 6) an equal degree of concern for process and results; 7) a greater degree of risktaking; and 8) a high tolerance of ambiguity and unpredictability

• Job design with close interaction and coordination among groups of individuals; • Focusing on long-term and group-based performance appraisal; • Developing employees’ skills to be used in other positions; • Compensation systems emphasizing internal equity rather than external or marketbased equity; • Initial pay rates tend to be low, but allow employees to be stockholders and have more freedom to choose the mix of components (salary, bonus, stock options) that make up their pay package; • Broad career paths to reinforce the development of a broad range of skills for the organization pursuing innovation strategy (Continued)

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Method and framework for evaluation

Table 2.1 (Continued) Choice of strategy

Desirable role behaviors of employees

Corresponding SHRM practices

• Relatively fixed and explicit job descriptions; • High levels of employee participation in decisions relevant to immediate work conditions and the job itself; • A mix of individual and group criteria for performance appraisal that is mostly shortterm and results-oriented; • Relatively egalitarian treatment of employees with similar page rates; • Some guarantees of job security; • Extensive and continuous training and development of employees • Relatively fixed (stable) and Cost leadership 1) relatively repetitive and explicit job descriptions predictable behaviors; that allow little room for 2) a rather short-term focus; ambiguity; 3) primarily autonomous or • Narrowly designed jobs and individual activity; narrowly defined career paths 4) modest concern for quality; that encourage specialization, 5) high concern for quantity of expertise and efficiency; output (goods or services); • Short-term, results-oriented 6) primary concern for results; performance appraisals; 7) low risk-taking activity; and • Close monitoring of market pay levels for use in making 8) a relatively high degree of compensation decisions, comfort with stability emphasizing on external equity; • Minimal levels of investment in employee training and development for cost-cutting. Quality enhancement

1) relatively repetitive and predictable behaviors; 2) a more long-term or intermediate focus; 3) a modest amount of cooperative, interdependent behavior; 4) a high concern for quality; 5) a modest concern for quantity of output; 6) high concern for process (how the goods or services are made or delivered); 7) low risk-taking activity; and 8) commitment to the goals of the organization

Source: Adapted from Schuler and Jackson (1987, pp. 209–213)

In contrast, firms pursuing the cost reduction strategy typically attempt to gain competitive advantage by being the lowest cost producer – gaining market size by offering lost cost products/services. The primary focus of this strategy is to increase productivity by increasing output with cutting cost per person, which means a reduction in the number of employees or a reduction in wage

Method and framework for evaluation

25

levels. If cutting the number and wage levels is not possible, firms with cost leadership strategy tend to hire more part-time employees, use of subcontractors to cut overhead expenditure, introduction of job flexibility, work simplification, automation and change of work rules. Firms pursuing the quality enhancement strategy would primarily focus on enhancing product and service quality, which demand a higher level of employee commitment and involvement. The necessary set of employee behaviors would contain somewhat repetitive and predictable behaviors but with a modest concern for cooperative and interdependent behavior. Employees are required to deliver good services and produce high quality goods, thus their commitment to the production process to deliver is vitally important. With reference to HRM practices, design of job with explicit job descriptions, guarantees of job security with continuous job training and career development as well as employee participative programs would help elicit employee commitment; but performance appraisal and rewards should be result-oriented to ensure the quality and quantity of products/services to be delivered just-in-time. From the domain of the qualitative approach, Cooke (2014) especially compared Chinese multinational companies’ HRM practices across different industries. For instance, Huawei as a high-tech company demonstrates strong evidence of adopting a high-performance model of HRM practices that would motivate highly skilled employees with long-term focused recruitment and development strategies, whilst Chinese firms in the manufacturing, construction and mining industries tended to have short-term focus of recruitment with a workforce largely made up of low-skills with low pay and little job security. This study’s findings appear to support Schuler and Jackson’s (1987) industry-based view of SHRM. However, the results from diverse empirical studies reviewed in the current study do not come to the consensus that industry matters. Furthermore, the industry-based view was criticized for its lack of concern about histories and institutions (Peng et al., 2009). In particular, the very first of Porter’s five forces, interfirm rivalry and its prescription for a cost leadership strategy seldom questions what is behind such rivalry. According to Peng et al. (2009), ‘formal government policies and informal media and consumer sentiments regarding the “dos and don’ts” play a significant role in shaping competition’ (p. 65). Huawei mentioned earlier might be encouraged largely by the Chinese government’s industry and foreign policy of developing the pillar industries such as telecommunications in its 12th five-year plan and by the ‘going-global’ foreign policy, and subsequently was able to access more resources and state support, so as to enable the firm to adopt more advanced HRM systems, instead of purely industry-based competition with its potential and existing rivalries. Moreover, the organization’s success may be largely internally driven, with its unique valuable, rare and hard-to-imitate resources and capabilities, which help the organization achieve its competitive advantage in the marketplace. This proposition is the key argument of a resource-based view (RBV) developed first by Wernerfelt (1984), and further modified by Barney (1991), which will be briefly discussed next.

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Method and framework for evaluation

Resource-based view Whilst Porter’s (1980) analysis of the firm’s competitiveness was based on the cost, quality and innovativeness of its products/services within the same industry, Wernerfelt (1984) believed that it is more useful to analyze and evaluate a firm’s competitiveness from the resource side rather than from the product side. The key reason is that products/services require the firm’s resources, which are made of physical capital resources (i.e. the firm’s plant, equipment and finances); organizational capital resources (i.e. the firm’s structure, planning, controlling, coordinating and HR systems); and human capital resources (i.e. employee skills, judgement and intelligence) to house, fund, support, produce and serve. It is believed that internal firm resources may be the key to gain competitive advantage in the marketplace (Wright et al., 2001). Since Barney (1991) developed the VRIO (valuable, rare, inimitable, organizational specific) framework as the foundation of the resource-based view (RBV) in the field of economics, many scholars (e.g. Wright and McMahan, 1992; Lado and Wilson, 1994; Snell et al., 1996) applied the RBV in other fields such as strategy and management to understand how a firm’s human resources can be a source of sustainable competitive advantage. Barney and Wright (1998) argue that sustainable competitive advantage stems from HRM systems that would help develop firm specific skills and knowledge, team-based learning and innovation more than from single person, single factor and single HR practice. The HRM systems that are derived from valuing people and their unique roles, differentiating HRM policies and practices from competitors and continuous improvement in creating organizational competency and capability would create sustained competitive advantage for firms to achieve superior performance outcomes (Barney and Wright, 1998). Wright et al. (2001) further explored the impact of the RBV on the theoretical development of SHRM and argued that ‘although debates about the RBV continue to wage . . . with its emphasis on internal firm resources as sources of competitive advantage, the popularity of the RBV in the SHRM literature has been no exception’ (p. 703). The RBV was argued to provide ‘a broader foundation to explore the impact of HR on strategic resources’ (Wright et al., 2001, p. 710). Strategic resources are complex, consisting of not only human capital (i.e. individual employee’s knowledge and skills), but also social capital (i.e. internal and external relationships and network exchanges) and organizational capital (i.e. processes, technologies and database and systems) (Snell et al., 1996). The central tenets of argument in RBV, which are highly relevant to SHRM are that organizations can develop core competencies, dynamic capabilities and create new knowledge via the appropriately set up people management system to achieve competitive advantage. Wright et al. (2001) developed a model (Figure 2.1) for integrating strategy to SHRM based on the concepts contained in the RBV, which is useful to observe as it has been applied in the empirical studies of SHRM in China. The current review found that nine studies (e.g. Law et al., 2003; Li, 2003; Wei and Lau, 2005; Li et al., 2006; Zhou et al., 2013 etc.) applied the RBV

Dynamic Capability Change

Processes to integrate, re-configure, gain, and release resources―to match and even create market change.

Renewal

Flow

Knowledge Creation

Knowledge Transfer

Knowledge Integration Valuable

Intellectual Capital Systems Stock

Inimitable Organized

People Human Capital

Rare

Social Capital

Organization Capital

Core Competence

Knowledge Management

27

...a bundle of skills and technologies that enables a company to provide a particular benefit to customers. It represents the sum of learning across these resources. (Hamel & Prahalad)

People Management Practices

Staffing training, work design, participation, rewards, appraisal, etc.

Method and framework for evaluation

Figure 2.1 Integrating strategy with SHRM Source: Wright et al., 2001, p. 715

in the study of SHRM issues in the context of China (see Table 2.1). Most of the studies examined some elements of HRM practices, with special attention on the application of high-performance, high-commitment work systems (reference to Huselid, 1995; Delery and Doty, 1996) and their impacts on performance outcomes (see Appendix 3). It is argued, based on the link between RBV and SHRM by Wright et al. (2001), that HRM practices do not directly lead to HR outcome such as core competency, which in turn would impact on the implementation of strategy and achieving desirable firm performance (Figure 2.1). Some mediators, or so-called SHRM ‘black-boxs’ should be explored to precisely identify the causal mechanism of how, when and where the strategic resources can be useful (Priem and Butler, 2001; Kim and Wright, 2010) and examine their effect on firm performance (Wright et al., 2005; Boxall et al., 2011). With these concerns in mind, there were four studies that explored the mediating effects of firm and technology innovation (Zhou et al., 2013; Li et al., 2006), affective and continuance commitment (Gong et al., 2009), serviceoriented citizenship behavior (Sun et al., 2007) on the relationship between SHRM and firm performance. Indeed, the application of the RBV in the SHRM research was criticized, especially by Barney (2001) himself for its lack of actual and direct tests of the theory developed in his 1991 article (Barney, 1991). Because most empirical studies, as in the case of articles reviewed in the current study, tend to focus

28

Method and framework for evaluation

on the performance implications of some internal firm’s attributes (Wright et al., 2001), in particular the prevalent use of high-performance work systems (HPWS) that was arguably capable of developing stock of human, social and organizational capital. However, use of HPWS fails to test whether the outcomes of HRM such as human, social and organizational capitals were necessarily rare, inimitable, valuable and organized to be different and competitive as compared with the firm’s rivalries in the marketplace. Furthermore, similar to the critique on the industry-based view, the RBV was perceived to have made little effort to establish appropriate contexts. As commented by Peng et al. (2009, p. 65), ‘valuable, rare, hard-to-imitate resources and capabilities in one context may become non-valuable, plentiful and easy to imitate in other contexts’. The authors further provided an example of Dell’s ‘flexible manufacturing capabilities’ to produce PCs that would added value towards competition in the domestic market, but which would not be suitable and flexible in China’s dynamic market. Dell ended up having to sell most of its PC factories. Barney (2001) himself also thinks that the value of a firm’s resources must be understood in the specific market context within which a firm is operating (p. 52). These findings led us to consider the importance of contexts in examining SHRM in China, which lies in the heart of the institutionbased view or institutional theory.

Institution-based view One of the fundamental aspects of the debate about the added value of HRM relates to the ‘best practice’ versus ‘best fit’ perspective. Best practice suggests the universal application of certain HRM practices, such as HPWS, whilst best-fit acknowledges the impact of contextual factors and suggests the contingency approach to identify a suitable set of HRM practices. In several studies (e.g. Björkman and Lu, 2002; Li, 2003; Wei and Lau, 2005; Chow et al., 2008; Qiao et al., 2009; Wei et al., 2011; Xian et al., 2017) reviewed in the current book, the ‘fit’/contingency perspective was applied. In some cases, the application of ‘fit’ was in conjunction with the RBV discussed earlier; in another, it was related to the institutional theory. The institutional theory was discussed by Scott (1987) and DiMaggio and Powell (1983), as it applied to the organizational analysis. The key argument is that organizations must conform to the rules and belief systems prevailing in the environment in order to gain legitimacy of their operation. DiMaggio and Powell (1983) defined three institutional isomorphic mechanisms as: coercive isomorphism branched from political influences and regulatory requirements; mimetic isomorphism resulting from following the best practices in response to uncertainty and reducing the potential risks; normative isomorphism associated with values and norms held by the society, community and relevant professional bodies. Paauwe and Boselie (2003) argued that countries with differences in embeddedness and in institutional settings affect the nature of HRM. To understand the institutions in different countries, the ‘rules of games’, national

Method and framework for evaluation

29

business systems and legal contexts are often referred to (Peng et al., 2009). In the previous discussion on changing social, economic, political and legal contexts of China, the influences of the Chinese Communist Party and national business systems as well as the change of laws were referenced as the institutional factors influencing on labor and human resource management practices in China (Gore, 2014; Cooke, 2014). In the context of organizations, Scott (1987) defined institutions as those regulative (coercive), normative and cognitive (mimetic) organizational structures and activities that would provide stability and meaning to the social behavior of employees and managers. According to Peng et al. (2009), institutions can be both formal and informal. Formal institutions such as laws, regulations and rules tend to wield coercive and regulative pressures onto the organization; whilst informal institutions such as norms, cultures and ethics may exert normative and mimetic/cognitive pressures. In the current review, a total of 13 studies applied the institutional theory to examine the impact of external environment on SHRM in China. Six studies (i.e. Björkman and Lu, 2001; Wei and Lau, 2005, 2008; Gong and Chang, 2008; Zhang et al., 2017; Xian et al., 2017) directly applied the institutional theory, whilst the other seven (i.e. Björkman and Lu, 2002; Li, 2003; Akhtar et al., 2008; Chow et al., 2008; Qiao et al., 2009; Zhang and Li, 2009; Wei et al., 2011) indirectly applied the theory by addressing the ‘fit’ and contingency on the contextual factors when evaluating the effectiveness of HRM in organizations operating in China. Most studies argue that organizations in China would be under pressure to adapt to the external institutional environment (Björkman and Lu, 2001). In order to gain the ‘legitimacy’, Chinese firms must respond to institutional pressures and adopt similar management practices with mimetic intention when dealing with China’s particular social, legal and economic factors (Wei and Lau, 2005, 2008). With reference to foreign firms operating in China, Zhang et al. (2017) contended that the unique China’s national business system with its political, economic and labor elements would influence the choice of HRM policies and practices of those multinational companies’ (MNCs) subsidiary in China. With the support of resource dependency theory, Zhang et al. (2017) further argue that if the subsidiary largely depends on the resources from MNCs’ headquarters, it may choose to ‘fight the system’ for change in line with the overall MNC’s global strategy; otherwise, it would have to ‘work within the system’ in the agreement with China’s special hukou (residential registration) system for managing their local employees’ benefits not in line with the MNC’s overall HRM policies and practices. China’s institutional factors were widely discussed in the various books reviewed, they appear to be important to determine organizational strategic choices of HRM policies and practices that would impact on the performance outcomes. However, the empirical studies tended to evaluate the contextual factors as general backgrounds for discussing SHRM issues in China. Rarely were the institutional factors taken as antecedents or mediating factors to evaluate the interactive effect of these factors on the relationship between HRM and

30

Method and framework for evaluation

firm performance, as advocated by Peng et al. (2009). That is why two subsequent chapters are devoted to further explore and establish the relationship between institutional factors (e.g. national economic and enterprise reform agenda) and SHRM (see Chapters 3 and 4). Moreover, it is found that only two studies in the current review attempted to test an identified institutional factor and its effect. For instance, Gong and Chang (2008) considered the institutional ownership as an important antecedent to influence employment job security and career advancement that would subsequently impact on performance. Although many studies used ownership as a control variable, Gong and Chang (2008) took the perspective of this important institutional factor in China and found that institutional ownership significantly impacted on the provision of job security whereby state-owned enterprises lagged behind domestic private firms, Sino-foreign joint ventures and the wholly foreign firms in the move away from the security model, despite no difference between career advancement opportunities provided by firms with different ownership being found. Xian et al. (2017) used guanxi (personal network) as a powerful institutional force that would influence employee perceptions of leader–member exchange and scare resource distributions, especially in state-owned enterprise and public institutions in China, and found that guanxi was positively and significantly associated with perceived HR practices leading to job satisfaction and a high level of trust in organizations, which would indirectly impact on performance outcomes. It is argued that more studies exploring the effect of actual institutional factors unique to China’s context on SHRM should be conducted in future. Whilst the arguments dwelling in both industry-based and resource-based views tend to focus on rational, logical and efficient outcomes, an institution-based view focuses on the contextual factors, of which some factors may look illogical and inefficient if measured directly by organizational performance index (e.g. establishment of CCP branches within enterprises). We have witnessed that resource-based theory led to a change in SHRM thinking from an ‘outside-in’ approach – with an emphasis on external, industry-based competitive issues (Porter, 1980) – to an ‘inside-out’ approach, in which internal resources would lead to organizational success (Paauwe and Boselie, 2003, p. 56). In the context of China, the institutional theory may again call for another ‘outside-in’ approach to evaluate the important public policy issues (e.g. unlimited term of Chinese Presidency; absolute party leadership in all sphere of life in China; economic and industry policies etc.), and how firms adapt to social, economic and political changes and regulatory shifts, so as to develop alternative yet better management approaches within a response to these external pressures. These are particularly important issues to address for future SHRM in China, which will be further outlined in Chapter 10.

Alternative theoretical perspectives Table 2.1 also shows some less commonly used theories that have been applied in the study of SHRM in China’s context, especially from an employee perspective, which has become a more common focus in recent years. For instance,

Method and framework for evaluation

31

Blau’s (1964) social exchange theory (SET) was used by Gong et al. (2009) to evaluate how the adoption of different HR systems could help exchange employees’ different types of commitment (i.e. affective vs. continuance commitment). Semler’s (1997) systematic agreement theory was used by Wei et al. (2011) to argue for the importance of aligning organizational design, strategy, culture and SHRM processes in order to effectively elicit positive employee behavior necessary to fulfill the organizational goals. More recently, several studies (such as Jiang J.W. et al., 2012; Su et al., 2018) also adopted SET to evaluate employees’ perceptions of a high-commitment HRM system (Jiang et al., 2012); and employees’ attachment to the organization and their exercises of discretionary extra-role behavior and work effort as a result of implementing the high-commitment work practices (Su et al., 2018). In conjunction with the HR attributions theory, Shen et al. (2018) applied the SET and argued that employees might be affected by those HR attributes (such as those required by law and regulations versus those discretionary practices determined by the organization itself). However, the high-commitment HRM with a focus on employee development, participation, job security and work-life balance would help generate positive social and psychological processes especially for those Chinese host country national (HCN) employees to increase a willingness to help others. Searching for alternative theories to explain SHRM within the changing context of China in transition will be a new trend for research in the field of SHRM in China. However, from the analysis of various theory applications in the context of SHRM research in China, it is concluded that there are predominantly three groups of theories, which serve to understand the individual, group and organizational levels of SHRM development and implementation. At the organizational level, commonly applied theories are those discussed in this section, as industry-based, resource-based and institutionbased views. At the group level, social exchange theory, psychological contract and perceived organizational support are useful to understand the interaction between subordinates and superiors and between employees and employers. Lastly, at the individual level, theories that help understand the individual motivation, expectation and aspiration are many, largely forming the behavioral perspective of SHRM (e.g. motivation theory, expectancy theory, role and identity theory). As the field of SHRM research requires more multi-level analysis (Boon et al., 2018), it is likely that in future multiple theories combining both individual, group and organizational level would be used – as shown in the three, recently published studies by Kim et al. (2018), Shen et al. (2018) and Su et al. (2018) – to develop a better understanding of SHRM issues in China. For this current review, a particular focus is on three views from the organizational level of analysis, as they are more commonly adopted by the existing empirical studies. Based on the industry, resource and institution views, an analytical framework is thus developed to help focus on the relevant discussion, and address the research questions raised earlier.

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Method and framework for evaluation

Conclusion – an analytical framework A review of a series of books written about the management issues in China, as well as empirical studies that were mostly grounded in the perspectives of industry-based, resource-based and institution-based views, has led to a conclusion in the chapter that context truly matters to SHRM in China. The contextual factors are very important to understand the evolution and development of SHRM in China. Within the changing political, legal, social and economic contexts, organizations in China were found to have been able to develop internal core competencies and capabilities to compete in the domestic and global markets. Because of China’s unique national business systems and its status as one of typical developmental states (Onis, 1991; Cooke, 2014), the design and development of firms’ structure, culture, strategy and process is subject to the changes of Chinese government’s industry, labor and foreign policies. Therefore, the very intention of adopting SHRM at the organizational level is closely related to the potential and positive role perceived by the Chinese government to serve the nation’s economic performance, to carry out enterprise reform agenda and to achieve the nation’s goal of modernization, innovation and harmony. From a preliminary review, it is shown that there exist relationships among SHRM, national economic development and enterprise reform in China, based on the evidence derived from the books and papers that are grounded in the institutional theory. The evidence also shows that the relationship between SHRM and innovation exists, especially from the findings generated from the application of the resource/knowledge-based view. In recent years, there has been an intensive focus on addressing China’s labor issues as well as a call for studying the employee perceptions of the HRM system and its effect on employee wellbeing. For China to realize the dream of building a harmonized society, individual rights and contributions are vitally important and must be fully acknowledged. Although the mainstream of the management literature does not focus on this issue, we see it as a fundamental part of SHRM that organizations in China must develop, and with its unique focus, organizations may help take the lead for positive and meaningful changes in China for future. Figure 2.2 outlines the main idea contained in this book and the logic of discussion sequences, which are derived from the analysis covered in this chapter. In the subsequent chapters, we organize the discussion of each theme with a focus on addressing the following five sub-research questions: 1 2 3 4 5

What has the existing literature said about the relevant theme? What is the main theory that can be used to support the relationship between strategic HR and the theme? What were the main findings from the reviewed books and papers that have addressed the relationship? Has the relationship been fully established? If not, What is the future direction for the research in the relevant theme?

Method and framework for evaluation

Theoretical guides

Outcomes

Industry based view (Behavioral perspective)

Resource based view (Knowledge based theory Competency/dynamic capability)

33

Economic development Chapter 3

Strategic HRM in China

Enterprise reform Chapter 4

Creativity & Innovation Chapter 5

Human rights & labor relations management Chapters 6 & 7

Institution based view (Political perspective Resource dependency theory)

“Chinese Dream” Chapter 8

Figure 2.2 An analytical framework

References Ahlstrom, D., Foley, S., Young, M.N., and Chang, E.S. (2005). Human resource strategies in post-WTO China, Thunderbird International Business Review, 47(3), 263–285. Akhtar, S., Ding, D.Z., and Ge, G.L. (2008). Strategic HRM practices and their impact on company performance in Chinese enterprises, Human Resource Management, 47(1), 15–32. Barney, J. (1991). Firm resources and sustained competitive advantage, Journal of Management, 17, 99–120. Barney, J. (2001). Is the resource-based view a useful perspective for strategic management research? Yes, Academy of Management Review, 26, 41–56. Barney, J., and Wright, P.M. (1998). On becoming a strategic partner: The role of human resources in gaining competitive advantage, Human Resource Management, 37, 31–46. Björkman, I., and Fan, X. (2002). Human resource management and the performance of Western firms in China, The International Journal of Human Resource Management, 13(6), 853–864.

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Björkman, I., and Lu, Y. (2001). Institutionalization and bargaining power explanations of HRM practices in international joint ventures – The case of Chinesewestern joint ventures, Organization Studies, 22(3), 491–512. Blau, P.M. (1964). Exchange and Power in Social Life, New York: Wiley. Boon, C., Eckardt, R., Lepak, D.P., and Boselie, P. (2018). Integrating strategic human capital and strategic human resource management, The International Journal of Human Resource Management, 29(1), 34–67. Boxall, P., Ang, S.H., and Bartram, T. (2011). Analysing the ‘black box’ of HRM: Uncovering HR goals, mediators, and outcomes in a standardized service environment, Journal of Management Studies, 48(7), 1504–1532. Chow, I.H., Huang, J., and Liu, S. (2008). Strategic HRM in China: Configurations and competitive advantage, Human Resource Management, 47(4), 687–706. Cooke, F.L. (2014). Chinese multinational firms in Asia and Africa: Relationships with institutional actors and patterns of HRM practices, Human Resource Management, 53(6), 877–896. Delery, J.E., and Doty, D.H. (1996). Modes of theorizing in strategic human resource management: Tests of universalistic, contingency and configurational performance predictions, Academy of Management Journal, 39(4), 802–835. DiMaggio, P.J., and Powell, W.W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields, American Sociological Review, 48, 147–160. Gong, Y., and Chang, S. (2008). Institutional antecedents and performance consequences of employment security and career advancement practices: Evidence from the People’s Republic of China, Human Resource Management, 47(1), 33–48. Gong, Y., Law, K.S., Chang, S., and Xin, K.R. (2009). Human resources management and firm performance: The differential role of managerial affective and continuance commitment, Journal of Applied Psychology, 94(1), 263–275. Gore, L.L.P. (2014). Labor management as development of the integrated developmental state in China, New Political Economy, 19(2), 302–327. Huselid, M.A. (1995). The impact of human resource management practices on turnover, productivity and corporate financial performance, Academy of Management Journal, 38(3), 635–670. Ichniowski, C., Shaw, K., and Prennushi, G. (1997). The effects of human resource management practices on productivity: A study of steel finishing lines, American Economic Review, 87(3), 291–313. Jackson, S.E., and Schuler, R.S. (1995). Understanding human resource management in the context of organizations and their environments, Annual Review of Psychology, 46, 237–264. Jiang, J.W., Wang, S., and Zhao, S.M. (2012). Does HRM facilitate employee creativity and organizational innovation? A study of Chinese firms, The International Journal of Human Resource Management, 23(19), 4025–4047. Kim, S.H., Su, Z.X., and Wright, P.M. (2018). The ‘HR-line-connecting HRM system’ and its effects on employee turnover, Human Resource Management, 57(5), 1219–1231. Kim, S.H., and Wright, P.M. (2010). Putting strategic human resource management in context: A contextualized model of high commitment work system and its implications in China, Management and Organization Review, 7(1), 153–174. Lado, A., and Wilson, M. (1994). Human resource systems and sustained competitive advantage: A competency-based perspective, Academy of Management Review, 19, 699–727.

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Law, K.S., Tse, D.K., and Zhou, N. (2003). Does human resource management matter in a transitional economy? China as an example, Journal of International Business Studies, 34, 255–265. Li, J. (2003). Strategic human resource management and MNEs’ performance in China, The International Journal of Human Resource Management, 4(2), 157–173. Li, Y., Zhao, Y.B., and Kiu, Y. (2006). The relationship between HRM, technology innovation and performance in China, International Journal of Manpower, 27(7), 679–697. Oliver, C. (1991). Strategic responses to institutional processes, The Academy of Management Review, 16(1), 145–179. Onis, Z. (1991). Review: The logic of the developmental state, Comparative Politics, 24(1), 109–126. Paauwe, J., and Boselie, P. (2003). Challenging ‘strategic HRM’ and the relevance of the institutional setting, Human Resource Management Journal, 13(3), 56–70. Peng, M.W., Sun, S.L., Pinkham, B., and Chen, H. (2009). The institution-based view as a third leg for a strategy tripod, Academy of Management Perspectives, 23(3), 63–81. Porter, M.E. (1980). Competitive Strategy, New York: Free Press. Priem, R.L., and Butler, J.E. (2001). Is the resource-based view a useful perspective for strategic management research? Academy of Management Review, 26(1), 22–40. Qiao, K., Khilji, S., and Wang, X.Y. (2009). High-performance work systems, organizational commitment, and the role of demographic features in the People’s Republic of China, The International Journal of Human Resource Management, 20(11), 2311–2330. Schuler, R.S., and Jackson, S.E. (1987). Linking competitive strategy and human resource management practices, Academy of Management Executive, 3, 207–219. Scott, W.R. (1987). The adolescence of institutional theory, Administrative Science Quarterly, 32(4), 493–511. Semler, S.W. (1997). Systematic agreement: A theory of organizational alignment, Human Resource Development Quarterly, 8(1), 23–40. Shen, J., Messersmith, J.G., and Jiang, K.F. (2018). Advancing human resource management scholarship through multilevel modelling, The International Journal of Human Resource Management, 29(2), 227–238. Short, J. (2009). The art of writing a review article, Journal of Management, 35(6), 1312–1317. Snell, S., Youndt, M., and Wright, P. (1996). Establishing a framework for research in strategic human resource management: Merging resource theory and organizational learning. In G. Ferris (Ed.), Research in Personnel and Human Resource Management, 14, 61–90. Su, Z.X., Wright, P.M., and Ulrich, M.D. (2018). Going beyond the SHRM paradigm: Examining four approaches to governing employees, Journal of Management, 44(4), 1598–1619. Sun, L.Y., Aryee, S., and Law, K.S. (2007). High-performance human resource practices, citizenship behaviour, and organizational performance: A relationship perspective, Academy of Management Journal, 50(3), 558–577. Ulrich, D. (1997). Human Resource Champions: The Next Agenda for Adding Value and Delivering Results. Cambridge: Harvard Business School Press. Wang, S., Yi, X., Lawler, J., & Zhang, M. (2011). Efficacy of high-performance work practices in Chinese companies. The International Journal of Human Resource Management, 22(11), 2419–2441.

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Wang, Z.M., and Zang, Z. (2005). Strategic human resources, innovation and entrepreneurship fit, International Journal of Manpower, 26(6), 544–559. Wei, L.Q., and Lau, C.M. (2005). Market orientation, HRM importance and competency: Determinants of strategic HRM in Chinese firms, The International Journal of Human Resource Management, 16(10), 1901–1918. Wei, L.Q., and Lau, C.M. (2008). The impact of market orientation and strategic HRM on firm performance: The case of Chinese enterprises, Journal of International Business Studies, 39, 980–995. Wei, L.Q., Liu, J., and Hemdon, N.C. (2011). SHRM and product innovation: Testing the moderating effects of organizational culture and structure in Chinese firms, The International Journal of Human Resource Management, 22(1), 19–33. Wernerfelt, B. (1984). A resource-based view of the firm, Strategic Management Journal, 5, 171–180. Wright, P.M., Dunford, B.B., and Snell, S.A. (2001). Human resources and the resource-based view of the firm, Journal of Management, 27, 701–721. Wright, P.M., Gardner, T.M., Moynihan, L.M., and Allen, M.R. (2005). The relationship between HR practices and firm performance: Examining causal order, Personnel Psychology, 58, 409–446. Wright, P.M., and McMahan, G.C. (1992). Theoretical perspective of strategic human resource management, Journal of Management, 18(2), 295–320. Wright, P.M. and Snell, S.A. (1998). Toward a unifying framework for exploring fit and flexibility in strategic human resource management. Academy of Management Review, 23(4), 756–772. Xian, H.P., Atkinson, C., and Meng-Lewis, Y. (2017). Guanxi and high performance work systems in China: Evidence from a state-owned enterprise, The International Journal of Human Resource Management. doi:10.1080/09585192.2017.1332670 Zhang, J.A., Edgar, F., Geare, A., & O’Kane, C. (2016). The interactive effects of entrepreneurial orientation and capability-based HRM on firm performance: The mediating role of innovation ambidexterity. Industrial Marketing Management, 59, 131–143. Zhang, M.Q., Zhu, C.J.H., Dowling, P., and Fan, D. (2017). Subsidiary responses to the institutional characteristics of the host country: Strategies of multinational enterprises towards hukou-based discriminatory HRM practices in China, Personnel Review, 46(5), 870–890. Zhang, Y.C., and Li, S.L. (2009). High performance work practices and firm performance: Evidence from the pharmaceutical industry in China, The International Journal of Human Resource Management, 20(11), 2331–2348. Zhou, Y., Hong, Y., and Liu, J. (2013). Internal commitment or external collaboration? The impact of human resource management systems on firm innovation and performance, Human Resource Management, 52(2), 263–288.

3

National economic growth and strategic HRM

Introduction The promotion of the idea of adopting and adapting SHRM in China has been largely endorsed by the Chinese government and its ruling Communist Party because it is seen as an effective strategic approach to achieve better firm performance, which in turn would contribute to the national goal of economic growth (Law et al., 2003). Based on the arguments developed in Chapter 2, it is thus believed that there may exist a relationship between contextual factors such as Chinese government’s economic development agenda and SHRM choices at the firm level. Similarly, Xing and Liu (2016) also argued for an important role played by the state in the development of HRM in China. In the existing literature, the contextual factors were often discussed in general terms as the background information to explain why organizations in China should or would have adopted SHRM policies and practices. Rarely, national economic development agendas, together with other institutional factors (e.g. educational system; regulated labor market with controlled wages level; limited role of trade union; social security provision), were taken either as antecedents or moderators or mediators to evaluate the effects of these factors on the relationship between HRM and firm performance (Peng et al., 2009). Nor was SHRM taken as an antecedent to a critical outcome such as societal wellbeing as first proposed in Beer et al.’s (1984) Harvard Model of SHRM. Societal wellbeing would be likely achieved by the higher level of national economic growth via GDP (gross domestic products) leading to not only wealth creation but also general welfare improvement for the population and an increased level of public funding for education, health and transport, which would have contributed to the further enhancement of societal wellbeing. In this chapter, the key aim is to examine what the existing literature says about the relationship between SHRM and national economic growth especially in the context of the developmental state such as China. This is aimed at addressing the research question: ‘Is there a relationship between SHRM and economic development? If so, how has SHRM impacted on China’s national economic development or vice versa?’ Relevant theories underpinning such a relationship are recapped and discussed to support the research proposition. Use of the data collected from the books and journal articles is reviewed and

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it is further argued that the relationship may exist, but the evidence to establish such a relationship appears not to be overtly strong so far. Several research paths are thus outlined in the conclusion to this chapter in a call for further investigation of China’s unique context and developmental policy, which may have impacted on the choices of SHRM policies and practices made by organizations, which in turn may have influenced sustainable economic and social development in China.

Developmental state and national objective for economic performance When discussing the relationship between Chinese multinational companies (MNCs) and institutional actors and their patterns of HRM practices, Cooke (2014, p. 880) clearly treated China as one of the development states. A distinct feature of state capitalism likely influences staff practices and labor relations of those Chinese firms operating within and outside China (Cooke et al., 2018). The earlier book on state capitalism written by Ziya Önis (1991) outlined several unique characteristics of a Developmental State as: 1

2 3

4 5 6

7 8

economic development defined in terms of growth, productivity and competitiveness is treated as the foremost and single-minded priority of state action; conflict of goals is avoided by the absence of any commitment to equality and social welfare; the market is guided with instruments formulated by a small-scale, elite economic bureaucracy, recruited from the best managerial talent available in the system; a pilot agency within the economic bureaucracy plays a key role in policy formulation and implementation; close institutionalized links are established between the economic bureaucracy and private business for consultation and cooperation; organizational and institutional links between the bureaucratic elites and major private sector firms are crucial in managing common goals of economic growth and exchanging information; a political system supports the economic bureaucracy to take initiatives and operate effectively, and the most importantly, strategic industrial policy forms a central component of the developmental state model (Önis, 1991, p. 111).

China’s economic and political systems precisely contain these characters. For the past 40 years, the goal of economic performance, such as increasing annual economic growth rate, has been the single-minded top priority of the nation. Only until recently has the Communist Party started to address the issues of rising social developmental problems such as income inequality and social welfare

National economic growth and strategic HRM

39

GDP Per Capita % change compared to 2007

90%

85.3%

70% 52.3%

50% 30% 10% -10%

China India US Japan EU

3.2% 1.6% 1.5%

2007 2008 2009 2010 2011 2012 2013 2014 2015

Figure 3.1 Comparison of GDP per capita growth between China, India, Japan, USA and EU Source: Ross (2017)

for a large number of low-income population (Hsu, 2016). Similar to Japan’s keiretsu and South Korea’s chaebol system, Chinese government agents and large SOEs have interlocked with large, publicly owned banks and financial institutions to create a huge network of informal and formal business relationships that have dominated the economy since the opening-up policy implementation in 1978. These lines of evidence show that China, similar to many East Asian economies (such as Japan, South Korea, Singapore, Taiwan) (see Deyo, 1987), is a strong developmental state, whose chief economic and political objective is to maintain a high level of economic growth rate. Figure 3.1 compares the growth of gross domestic product (GDP) per capita between China as a developmental economy and the USA and European Union that is either characterized as the liberalized market economy (LME) or as the coordinated market economies (CMEs) (Edwards and Rees, 2017). The growth rate in China was shown to be much higher from the baseline from year 2007 to 2015, than those other nations. It illustrates the positive outcome generated from the strong effort made by the Chinese government to further deepen the reform and to muster the resources for achieving the economic developmental objective.

Economic growth, labor market policies and practices The developmental state model also facilitates the development of a regulated or coordinated labor market with the unique system of organizing work and workers, supported by social welfare policies, if there are any (Edwards and

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Rees, 2017). Since the establishment of the People’s Republic of China in 1949, the industrial development and management of labor has been marked by extremely high levels of state intervention (Warner, 2014). As further recounted by several scholars (e.g. Eberhard, 2005; Warner, 2014; Chen et al., 2016), prior to 1978, China operated under an economic and social order that was greatly inspired by the Soviet-Union’s economic planning model, which epitomized the collectivized agricultural production, development of heavy industry and socialized production of large scale state-owned enterprises (SOEs). A major path-breaking event took place to reform and open-up ( gaige kaifang 改革开放) as the key industrial policy under the leadership of Deng Xiaoping in 1978, when the economic performance under the socialist regime prior to the 1980s was nearly bankrupt, driving many to poverty. Opening up to the marketization process has helped economic growth and improved living standards and was regarded as essential for a developing country such as China to move ahead. Therefore, Chinese government policies sought to break the ‘iron institutions’ in SOEs, to focus on an economic growth objective by transiting the country from a socialist planning economy to ‘a socialist market economy with Chinese characteristics’ (Chen et al., 2016, p. 2046), and to promote privatization that allowed the establishment of privately-owned enterprises, foreign-owned enterprises, as well as those collective and township-village enterprises, in addition to maintaining the SOE sector. As a result of this open-up industrial policy, economic growth took off in the 1980s and has truly transformed China’s society – lifting millions of people out of poverty. Living standards have been dramatically improved since the open-up economic reform. Wages levels have increased from the fixed ‘iron wage era’ whereby an average employee received roughly about 100 yuan per month in the 1980s to an average wage of over 2000 yuan (roughly US$300) per month in 2017 (Melnicoe, 2017). Thus, since 1978, China’s state government has adopted market-oriented measures to stimulate a strong level of performance. As the cornerstone of its industry modernization strategy, China has created many special economic zones (SEZs) and science and technology parks, as well as open coastal cities to extend preferential tax incentives and land rental for attracting both domestic and foreign firms’ investment. In corresponding to these measures, the government has also allowed these firms to autonomously recruit, reward and dismiss their workers (Law et al., 2003). Under economic reform, the wage system has also been reformed to tie bonus to profit and to introduce piece rate and performancebased pay (Zheng et al., 2006). The free labor market has been opened to replace the central allocation of workers in the former planning regime. Labor contracts have been introduced and new workers have been hired on fixed term contracts, except those otherwise specified by the government (Eberhard, 2005), especially in relation to the SOEs and government agencies. According to Zhao and Dickson (2001), from the 1990s further liberalizations occurred in China. Many SOEs were put up for private sale; they were also

National economic growth and strategic HRM

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allowed to conduct autonomous recruitment and given the right to retrench workers if they were having business difficulties or preparing for private sale. Millions of former SOE employees either lost their positions (xia gang 下岗) or quit to find work in the private sector or opened up their own businesses (xia hai 下海). The labor market has further opened up to float, accompanied by many migrant workers flooding in from the rural to urban areas for jobs with more income as agricultural productivity increased following the transfer of collective production to private cultivation, which resulted in a surplus of farmers, who nonetheless have limited earning due to the government’s price regulation on agriculture products. Over the past 40 years, China’s approach to economic reform and labor relations has been marked by a high degree of experimentation and decentralization (Friedman and Kuruvilla, 2015). According to Warner (2014), during the reform period from 1978 to early 2010, China used an open-door version of managing people to allow a softer approach with the intention of encouraging industries and organizations to take control of managing their own labor and human resources and to resolve labor conflicts internally if raised. The central government has been willing to relinquish a bit of control and provide autonomy to local governments and industry/enterprises as long as such autonomy is oriented towards achieving an increased economic growth rate year after year. As a result, China’s economy with its various labor and human resource management practices has become increasingly differentiated throughout the reform era (Li, 2003; Warner, 2009, 2014).

Human capital, HRM and economic performance It is argued that China’s remarkable economic growth for the past 40 years may be attributable to two factors: productivity growth and factor accumulation, of which both require the quality of human capital defined by Becker (1993) as the stock of skills, knowledge, creativity, habits, social and personality attributes possessed by individuals to be taken into consideration. In the econometric modeling, Wang and Yao (2003) incorporated human capital accumulation to examine the contribution of China’s economic growth in the period of 1952– 1999. The authors found that the accumulation of human capital stock measured by educational attainment contributed significantly to economic growth and welfare improvement. In particular, it was found that in the pre-reform period (prior to 1978), the growth of total factor productivity (TFP) was negative whilst in the reform period, TFP had played a positive role in GDP growth when incorporating human capital. Wang and Yao (2003) thus concluded that if China is to sustain its economic growth and welfare, it should set a high priority on developing its human capital at the national level and promote productivity growth at the firm level. However, Heckman (2005) contended that China’s industrial policies favor physical capital investment (building of science and technology parks and the

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opening of special economic zones) over schooling and pay more attention to urban human capital investment over rural human capital. In 1995, China, at all levels of government spent about 2.5% of its GDP on investment in schooling, whilst roughly 30% of its GDP was devoted to physical investment (Heckman, 2005). The figure has increased to 4% in 2012 reported by China’s official media – Xinhua News. Furthermore, Xinhua News (2017) recently reported that there has been an improvement of increased spending of 7.5% of China’s GDP devoted to education in 2016. Warner (2014) also confirmed that ‘the educational sector in China has grown enormously, with nine years of schooling for every Chinese child and it constitutes the largest system of its kind in the world’ (p. 9). It is nonetheless difficult to envisage how much the national level of spending on education and aggregate investment in human capital at the national level could trickle down to benefit the firm level of enhancing the quality of human capital, creativity and innovation, which could have a direct impact on performance outcomes. Currently there is no available data to record China’s private sector investment in human capital. Many OECD countries’ public expenditure on education are often complemented by the private sector investment (OECD, 2013). For example, in the USA, a further 2% of GDP was often contributed by the private sector to vocational education and skill development (OECD, 2013). In general, China’s state investment was reported to be much larger than the private investment as shown by Ross (2017, in Figure 3.2). In the field of economics, there has been an established thesis of a strong relationship between aggregate and accumulative human capital and national

Figure 3.2 Chinese state and private investment percent change year to year (2011–2016) Source: CEIBS (via Ross, 2017)

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economic growth (Mincer, 1984; Wang and Yao, 2003). For example, Mincer (1984) stated that: just as accumulation of personal human capital produces individual economic (income) growth, so do the corresponding social or national aggregates. At the national level, human capital can be viewed as a factor of production coordinate with physical capital. The framework of an aggregate production function shows that growth of human capital is both a condition and a consequence of economic growth. Human-capital activities involve not merely the transmission and embodiment in people of available knowledge, but also the production of new knowledge. Its diffusion generates worldwide economic growth, regardless of its initial geographic locus. (p. 195) Contrary to Mincer’s (1984) economic thesis on the relationship between human capital and economic growth, it is less clear in the strategy and human resource management fields that such a relationship needs to be tested, despite both resource-based view and institutional theory supporting the relationship between strategic human capital (resource) investment and economic performance/growth at the national and organizational level. Theoretical perspectives on these propositions are further discussed here.

Theories supporting the relationship between SHRM and economic growth Economist and Nobel Laureate Gary Becker first developed the human capital theory (see Becker, 1993). The theory argues that human capital is a compilation of traits and resources that individuals possess. These traits and resources include knowledge, talents, skills, abilities, experience, training, intelligence, interaction, judgment and wisdom, which are indeed the wealth that can be directed towards accomplishing the goals of a nation or the organization’s objectives. It is also believed that the total capacity of people can be further enriched by investment in education and skill training both at the firm and national levels, which in turn would help strong growth and national economic development. At the firm level, Edith Penrose argued, long before Gary Becker, that the growth of a firm is strongly connected with a particular group of human beings with unique sets of skills and knowledges and who are happy and willing to contribute to achieving the firm’s growth objectives (Penrose, 1959). Although Penrose (1959) did not use the term ‘human capital’, she argued for recruiting and utilizing more of these rare, unique and organizational specific human resources to assist the firm’s growth. This point of argument is closely associated with the resource-based view (RBV) of strategic human resource management (Barney, 1991; Wright et al., 2001) as presented earlier in Chapter 2. At the national level, the contribution of quality human capital to economic development, productivity growth and innovation has been frequently studied (see Mincer, 1984; Becker, 1993; Wang

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and Yao, 2003; Heckman, 2005; Hanushek and Woessmann, 2008) and cited as a justification for government’s spending on public education and state support with subsidiary or tax incentives for job skills training at the firm level. Despite all the studies and arguments presented so far, the pathway of testing the relationship between strategic human capital (resources) at the firm level and national economic growth has never been fully established in the existing literature. The most recent paper by Boon et al. (2018) attempts to integrate the macro-level analysis of strategic human capital with the micro-level scholarship of SHRM and argues that such integration would help us increase our knowledge about how human capital works in the organization. Ultimately this may lead to helping national economic development as well. We use Boon et al.’s (2018) analysis as a guide, with an attempt to establish a thesis on the relationship between strategic HR and economic growth. It is argued that there is a different orientation on how to define human capital at the micro and macro levels (see Table 3.1), which has largely caused the confusion in the existing studies with reference to the use of research methods and levels of analysis on strategic human capital (SHC) and strategic human resource management (Boon et al., 2018). Furthermore, to fully link SHC and strategic HR at the firm level to national economic development, the focus should be placed not only on the firm level of analysis but also on the collective industry and aggregate national level of analysis. In some cases, global comparison may be required to evaluate the effect of SHRM on the various outcomes in different countries as in the case of strategic international human resource management (Cooke, 2014; Edwards and Rees, 2017).

Table 3.1 Strategic human capital/resource and its link to firm performance and economic growth Micro-level

Macro-level

Orientation of Human capital

Firms’ building the SHRM system (with policies and practices) with anticipation of getting quality human capital; Individual employees relying on the system to improve skills and create new knowledge

Outcomes

Firm performance, innovation Individual motivation, job satisfaction personal growth and wellbeing

Individuals with assistance from the government policy to invest in education and skill development; Firms in the certain labor market, and with the government policy support being enabled and empowered to acquire, maintain and retain the quality of human capital Industry competitiveness National economic growth Societal wellbeing

Level of analysis

Individual Unit Firm level

Industry National Global comparison

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45

The central tenet of debates on the insufficient application of RBV in SHRM (see Wright et al., 2001) is that the majority of scholars who have studied the impact of HRM on firm performance in fact used the HRM system (e.g. highperformance work system; high-commitment work system; high involvement HR system etc.), not by measuring the quality of human capital per se, as originally intended by Barney (1991). As a matter of fact, interest in human capital as a strategic resource at the firm level has risen as a part of discussions on how to apply the resource-based view (RBV) in strategic management research. Barney (1991) argued that if firms can identify the resources with the basic criteria of value-added, rarity and imitability, these resources could help firms achieve a competitive advantage and ultimately superior firm-level performance. Compared to those physical, social and organizational capital resources (Wernerfelt, 1984; Wright et al., 2001) that organizations must have, human capital resources have the most potential to meet the basic criteria of RBV. Here are three reasons why human capital resources are important for firms to acquire, stock, develop and maintain to achieve the sustained competitiveness. First, the firms’ stock of human capital determines the quality of outputs and efficiency of operation. Second, human capital resources tend to be heterogeneously distributed among firms thus they are rare. Third, specific skills and knowledges of social interaction and teamwork among people at work create complexity and causal ambiguity that would hinder the flow of and replication of human capital resources, which are difficult for the firms’ rivalries/competitors to imitate. Thus, it is the strategic and quality human capital that is truly able to help firms be competitive and achieve better outcomes. However, how do firms access to strategic human capital? Grounded in both RBV and institutional theory, it is believed that firms can access strategic human capital internally as well as externally. Internally, firms build the SHRM system with appropriate policies and practices, accompanied by organizational structure, culture and process that would encourage employees to obtain, gain, maintain and further develop their skill and knowledge. Wright et al. (2001) contended that it is the establishment of an effective HR system that can help firms to create strategic resources (see also Boon et al., 2018, p. 9). Externally, firms would have to rely on the labor market and good educational system in the country that could facilitate the supply of quality human capital for firms to recruit and recycle their current and future employees. Here, the institutional theory can be used to explain why organizations operating under different national business and educational systems can legitimately access strategic human capital. Without the institutional support (i.e. government policy in educational spending, tax incentive on training and funding support for recruiting global talent for science and technology parks in China), any SHRM system built at the firm level may be forfeited and ineffective at securing quality human capital in the first place in order to achieve desirable organizational objectives. In conducting research, it is important to differentiate the level of analysis and to measure accurately the variables chosen to test the relationship between strategic HR and outcomes at the micro and macro levels. From reviewing the empirical studies on SHRM in China as shown in the next section, it is clear

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that the majority of the studies tend to focus on the micro level of analysis to evaluate the impact of the HRM system on firm performance. Except those studies in the economics field, the impact SHRM on the national level of economic development and societal level of wellbeing (Beer et al., 1984) was rarely evaluated in the empirical studies of SHRM in China so far.

Empirical evidence of SHRM and economic growth in China From the current review, it is found that several empirical studies applied the RVB in studying the SHRM in the context of China. Indeed, many of these empirical studies (e.g. Sun et al., 2007; Chow et al., 2008; Ngo et al., 2008; Gong et al., 2009) referred to Huselid’s (1995) high-performance work system (HPWS) and used the similar measurement of HRM policies and practices to test their impact on performance outcomes. None of the empirical studies actually examined how the HPWS helped create strategic resources or quality human capital that would most likely contribute to both the firm level of performance and national level of economic growth. In contrast, 13 studies applied the institutional theory to examine the impact of external environment on SHRM in China. These studies tended to discuss China’s institutional factors as more background information rather than actually testing the effect of these institutional factors on the relationship between SHRM and performance outcomes. The China’s institutional factors were better discussed in the various books reviewed. Table 3.2 provides a brief summary Table 3.2 Key points of selective books written in relation to labor and HRM in China Authors in a chronical order

Key contents

Notes

Li, Tsui and Weldon (2000), edited

Discussed management and organizational issues in the greater China region, including Hong Kong, Taiwan and some Chinese firms in Southeast Asia. Examined HR strategies among foreigninvested firms in China; Proposed a hybrid model of HRM that mixes the western and Chinese systems; Stressed the importance to understand the cultural and conventional norms and values influencing work behavior and organizational strategy. Provided a variety of cases that illustrate worsening working conditions of Chinese workers as a result of globalization. Economic reform and overseas expansion of Chinese firms were found to have no effect on improving working conditions and protecting workers’ rights.

Not specifically focused on HRM, but with OB relevant to HRM Emphasizing the importance to treat SHRM as evolving instead of as a static formula for firms operating in the changing environment

Whiteley et al. (2000)

Chan, A. (2001)

Ownership of different enterprises was examined

Authors in a chronical order

Key contents

Notes

Warner (2003)

Analyzed how culture impact on management strategies; Suggested that historical events and cultural values held by Chinese influences the formation of management strategies of those firms operating in China. Reviewed the HRM policy and practice, work and employment conditions in China at both macro and micro level; Provided a historical account of development of HRM over the past fifty years; Focused on addressing a number of thematic issues such as unequal employment, public sector reform, pay systems & vocational training. Explored the emerging role of HRM in Chinese industrial enterprises and addressed the differences in managing people among Chinese enterprises with different ownership; Argued that contexts such as global, national and enterprise environment matter to the choices HRM strategies by firms operating in China. Provided a broad political & economic analysis of labor struggle; Outlined the extent of labor protest in China since the 1990s; Described members of divergent classes who have built ideas shaping their worlds; Compared the different nature and approach of workers resistance in two regions in Liaoning (North) and Guangdong (South) of China. Examined work and community in the rural industry of China; Evaluated the exploitation and skill development of peasants-turned workers; Argued for replenishing the cohesiveness of workers’ values and town and village enterprises’ missions in order to assist rural enterprises with sustained economic performance.

Only one chapter address the issue of HRM in China

Cooke (2005)

Zhu (2005)

Lee (2007)

Chen (2008)

Cooke (2009)

Recognizing the government regulatory policies and legal framework impacting on management strategies at the firm level; Use of Porter’s (1985) typologies of four industry competition strategies to evaluate different management approaches adopted by four industries, namely: IT, automotive, pharmaceutical and retails.

Tied the link between HRM and reform in light of historical context, and economic and social transformation in China Very specifically emphasizing the contexts, it is clear that contexts determine SHRM policies and practices in China Presented an interesting idea of ‘decentralized accumulation and centralized legal authoritarianism’ intensified by uneven economic development HRM and labor management having particular implications to further enterprise reform, and create sustained economic values such as profits and productivity Not overtly focused on HRM, but implications of analyzing industry differences to developing HR strategies are worthy of note. (Continued)

Table 3.2 (Continued) Authors in a chronical order

Key contents

Notes

Warner (2009), edited

Compared HRM issues among Chinese domestic and foreign firms; developed a schema of market-driven HRM closely linked to national economic development and enterprise reform; argued that the Chinese government’s developmental strategy had both direct and indirect impact on management, labor market, employment and HRM. Addressed the changing context of management in China and elsewhere in Asia; A chapter written by Cooke especially comments on ‘HRM is highly context specific in which institutional and cultural factors have enduring influences’ (Cooke, 2010, p. 48). Collected a series of cases which explained the problems and solutions faced by a number of domestic and foreign companies operating in China; argued for taking a cultural approach to manage the integration of western HRM practices with Chinese approaches. Review of people management in the context of China between 1980–2010; emphasized the importance of relationship management in China; cover some underresearched areas of HRM such as diversity management, talent management, new pay and performance management.

The link of HRM to the developmental strategy is an important point to note

Rowley and Cooke (2010), edited

Davies et al. (2011)

Cooke (2012)

Warner (2014)

Recounts China’s history and provides an exceptionally well-informed insight into the development of management in China in the context of political, cultural and economic changes for the past 30 years.

Warner and Rowley (2014), edited

Highlights the significant changes as a result of China emerging as a global economic superpower, and their implications to business enterprises in China and overseas; points to the strategic challenges and issues in terms of realizing the managerial version of the ‘Chinese Dream’.

The context again matters, fully explained and emphasized in this book.

Strategic aspect of HRM is not overtly addressed

Linked HRM strongly to performance outcomes, also addressed the importance of paying attention to legal change and its impact on HRM China’s past, present and future aspects were discussed with a strong analysis of institutional factors. A strong implication to speculate future HRM in China as it may potentially tie to the realization of Chinese dream.

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outlining key points of focus to develop a good understanding of how SHRM and management and organization were perceived in China from 2000 onwards. Key points of arguments derived from reviewing the books are: 1

2

3

4

5

A dynamic model of blending western methods using the linear, rational and analytic and systems-based SHRM with Chinese holistic, relational, interactive adaptive systems is required to develop emergent HR strategies in China, given different types of enterprise ownerships (Whiteley et al., 2000; Zhu, 2005; Chen, 2008; Davies et al., 2011), and that SHRM would have unique ‘Chinese characteristics’ because of China’s specific political and changing institutional arrangements (Warner, 2009; Rowley and Cooke, 2010); Since the accession to WTO in 2001, working conditions and workers’ rights have been eroded despite the booming Chinese economy and China’s expansion into global markets. Addressing the labor management issues with different institutional factors is still important both in domestic setting and among overseas operation of Chinese firms as a part of delineating SHRM in China (Chan, 2001; Lee, 2007); Historical events experienced and cultural values held by the Chinese would have an enduring influence on the formation of labor and human resource management strategies within firms operating in China (Warner, 2003; Cooke, 2012; Warner, 2014); Taking the contextual factors into an analysis of SHRM in China has been the common theme in the study and research field of HRM in China (Cooke, 2005, 2009; Zhu, 2005); New development of HRM in China contains the strategic challenges and issues in terms of realizing the managerial version of the ‘Chinese Dream’ with its complexity in interpretation and application to the specific areas of developing human capital, corporate social responsibility and making international competitive strategy choices (Warner and Rowley, 2014).

Despite insufficient empirical studies to test and confirm the relationship between strategic human resources (quality of human capital) and economic growth, a conclusion drawn from reviewing a series of books looking at China’s HRM and organizational management issues from 2000 appears to be in general consensus that contexts matter. To understand the relationship between SHRM and economic growth, the particular context of China as a transitional economy, and its changing government’s economic and social policies should be understood. In addition, legal contexts should also be addressed to fully understand the adoption and adaption of SHRM among firm operation in China. This is in line with Wright and McMahan’s (1992) argument that ‘strategic HRM needs to explore the institutional and political determinants of HR practices to as great as extent as necessary to predict and understand the strategic HRM decision process. It is often these institutional and political forces that impede the coordination of the slate of HR practices toward some strategic end’ (p. 299). It is believed that business organizations operating in China have been the major engines driving the economic growth for the past 40 years. However,

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sustainable economic growth would be impossible without effective management systems such as SHRM systems that enable managers and professionals guiding and leading the enterprises (Tsui et al., 2006). Yet, it is unclear how effective SHRM systems are translated into producing strategic resources and quality human capital to help firms achieve sustainable performance, which in turn contribute to the national sustainable growth. Further research is required to identify those variables in the ‘black box’ inside the organization (Boxall et al., 2011) and institutional factors outside such as policy adjustment and change of law and regulations that could have influenced the strategic choice of HRM policies and practices at the firm level. Several paths that will take us further to examine the contribution of SHRM to China’s economic growth in future are outlined in the next section.

Conclusion – future research agenda This chapter attempted to answer the set of research inquiries on the possible relationship between SHRM and economic growth in the context of a developmental state such as China. The existing literature, especially in the field of economics, identifies the close link between quality human capital and rapid rate of economic growth at the macro-level. Based on both RBV and institutional theory, it was further argued that strategic human capital could be sought from effective SHRM systems to contribute to both firm performance and national economic development. However, it was found that empirical studies examining SHRM in China rarely took contexts into investigation. This review confirmed that it is important to examine China’s unique political and economic systems as well as changing legal and social contexts for a better understanding of management and organizational issues faced by those organizations operating in China. More work is nonetheless required to enrich the field study of the relationship between strategic HR and economic growth. Several research avenues would hopefully take this challenging and interesting work further down the track. First, there is a need to fully examine what and how the developmental policies, apart from the open-up industrial policy in 1978, which Chinese government had further implemented, could have affected on the firm’s level of choice of SHRM policies and practices. The existing literature, especially those empirical studies, usually provided rather vague and general statements about China’s transition from the planning economy to the socialist market economy, without getting into details on the key policy changes that might have affected the firm’s level of strategic choice. China’s major economic policy changes are mostly determined by the National Congress of the Communist Party of China. Since 1978, eight times the number of such meetings (once in every five years) had been held, corresponding closely with China’s Five-Year Economic Development Planning meeting (the last was the 13th Five-year Plan completed in 2015 and implemented from 1 January 2016 till 2020). To have a comprehensive understanding of the future HRM in China, a change of key industry policies from the Five-Year Plan as well as decisions from the National Congress should be

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noted, and their impact on the firm’s strategy should be assessed. For instance, as one of the outcomes from the recent 19th National Congress of Chinse Communist Party held in October 2017, a new guiding ideology of ‘Xi Jinping Thoughts on Socialism with Chinese Characteristics for a New Era’ was written into the Chinese Communist Party’s constitutions, in addition to emphasizing the socialist rule of law and a living party leadership. How and what impact would this new ideology and changes of the law with ‘socialist characteristics’ have on the organization? Focal points of the 13th Five-year plan, such as innovation, balancing, greening up, opening up and sharing with an interesting policy on promoting ‘everyone is an entrepreneur, the masses are for innovation’ (大众创业,万众创新) might also have a greater impact on the change of activities, behaviors and strategies at the individual and organizational levels. These policy impacts and institutional factors should be further assessed to understand the relationship between SHRM and future economic growth in China. Second, there have been several changes of labor and employment laws especially since the 1990s, more so in recent times with the changing social and cultural expectation of the Chinese population (see Table 3.3 for the chronical of labor and employment laws). These changes would have significant impact on SHRM in China, yet have not been overtly evaluated in the existing literature. A few papers published in the political sciences (e.g. China Quarterly) and sociology domain (e.g. Human Relations; Journal of Industrial Relations) were identified to address some of these changes on labor-relations management in China (Chan and Hui, 2012; Chung, 2015; Cooke et al., 2016), which will be further discussed in more detail in Chapter 7. Meanwhile, in the context of developmental state, the aim of changing labor and employment laws may be to retain and maintain sustainable economic development in China for years to come. Thus, there should be more investigation on matching the expectation of economic growth with the outcomes of implementing new laws, and on the extent to which organizations in China would respond to these changes with their strategic choices of HRM policies and practices to comply and control their employee behavior and performance. Third, when measuring the quality of human capital as part contribution to economic growth, education attainment (i.e. number of primary, secondary and higher education completion) was often used in the existing literature. The quality of human capital and strategic human resources are more complex than the mere educational attainment. Indeed, China’s improved educational system (Warner, 2014) and increased public spending on education may help enhance the quality of its human capital, which in turn contributes to maintaining the double-digit economic growth rate up until the point of being hit by the global financial crisis in 2008 (Yao, 2014). The slow-down of China’s economic growth may also be due to its decreased wellbeing index (Gallup Report, 2015), worry and stress and health problems caused by an increased level of pollution and food safety (Lyons and Liu, 2016). There is a need to evaluate the impact of strategic human capital and strategic HR on general population wellbeing at

Table 3.3 A chronical of labor and employment laws in China Year

Name of key activities and legislations related to labor and employment

1978 1978 1978 1983 1986 1992 1992 1994 1994 1999 2000

Open-up and economic reform started All-China Federation of Trade Union (ACFTU) revived Chinese Enterprise Management Association (CEMA) allowed to set up Resumed the involvement in the ILO (International Labor Organization) Regulations on Labor Contracts Three systems (economic, enterprise, ownership) reform Trade Union Law revised Labor Law (effective 1 January 1995) Minimum Wage System Unemployment Insurance Law Implementation decree on collective wage negotiation, issued by the MOLSS WTO entry; establishment of national tripartite consultation committee for coordination of industrial relations Revision of Trade Union Law, effective on 27 Oct; the National Tripartite Committee issued ‘Joint Notification for Promotion of Collective Bargaining and Collective Agreement’ Work Safety Regulation ACFTU announced its new policy of actively organizing rural migrant workers; also began its experiment in direct election of enterprise union leaders in some localities Minimum Wage Law Work-related Injuries Regulation Revision of Provision on Collective Contract Agreement by the MOLSS Company Law revised Enterprise Bankruptcy Law; National Tripartite Committee issued ‘Common Views on Promoting Regional/Sectoral Collective Bargaining’ ACFTU made a breakthrough in organizing Walmart branches Ratified the 25th ILO convention, with focus on occupational health and safety Employment Promotion Law, effective in 2008 Labor Contract Law and associated legislation; Employment Promotion Law Law on Mediation and Arbitration of Employment Disputes (also called Employment Disputes Law effective 1 May, 2008) Shenzhen Municipal People’s Congress adopted a new regulation on ‘Harmonious industrial relations’ that for the first time delineated official procedures for handling strikes, giving partial recognition to strikes. Employment Contract Law (further amended with effect from 1 July, 2013) Foxconn and Honda Strikes Regional Collective Bargaining Regulations ACFTU with 258 million memberships launched Collective Wage Bargaining Program; Social Insurance Law

2001 2001

2002 2003

2004 2004 2004 2005 2006 2006 2007 2007 2008 2008 2008

2008 2010 2010 2011

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53

Provisions on Employees’ Representative Congresses Law on Entry and Exit Control, effective 1 July 2013 Minimum Wages Regulation Mandated Management Guidelines for Labor Funds New Amendment of Labor Contract Law New Labor Protection Rules; Beijing’s New Employment Laws: Terminations based on changes in ‘objective circumstances’

Sources: from 1978–2012, adapted from Warner (2014, pp. 139–140) and Lee (2009, p. 7); from 2013–2017, collected by the author from various sources. The former Ministry of Personnel and Ministry of Labor and Social Security (MOLSS) changed to Ministry of Human Resources and Social Security (MHRSS)

the national level as well as employee wellbeing at the organizational level, in order to further determine the relationship between strategic HR and economic growth. To do so, multi-level models should be developed in any future research of SHRM in China, though methodological issues of operationalizing such research should be addressed (Shen, 2016; Shen et al., 2018). Developing multi-level models would be more fruitful in future research to evaluate the relationship between strategic HR and industry competitiveness, between strategic HR and national economic growth, and between strategic HR and societal wellbeing, as suggested by Boon et al. (2018). Most often, researchers on strategic human capital tend to look beyond a single organization and assess the contribution of human capital more on an industry and national level of analysis, whilst scholars in SHRM mainly focus on the contribution of human capital on the organizational and individual levels. As a result, conversations on these key issues tend to ‘talk past each other or are parallel’ (Boon et al., 2018, p. 2). Future research should bridge the gaps between strategic human capital and SHRM to focus on the human capital creation process from a multi-level perspective. A number of routes could be taken to conduct such research. For example, studies could bring individual and team levels into developing macro-oriented models (e.g. Shen, 2016). If we would like to know how aggregate human capital could emerge in the organizational setting, we need to know human capital and social capital among unit members first. Similarly, collaboration between people in an intra- and inter-organizational setting should be noted if we would like to understand the effectiveness of networks as a part of an organization’s or even industry’s strategic resources to create competitiveness. Above all, national human capital is aggregated from individuals, organizations and industries, which are key to drive sustainable economic and social development. The process by which each level of human capital is formatted and aggregated can only be understood by building a multi-level model. In addition, a single stream of research may not be able to achieve such research outcomes, a multi-disciplinary approach is required and would be highly recommended to accomplish this grand task.

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Penrose, E. (1959). The Theory of the Growth of the Firm, New York: John Wiley and Sons. Porter, M.E. (1980). Competitive Strategy, New York: Free Press. Ross, J. (2017). Why are China and India growing so fast? The World Post, Retrieved on 29 March 2018 from www.huffingtonpost.com/john_ross-/china-indiagrowth_b_11655472.html# Rowley, C., and Cooke, F.L. (Eds.). (2010). The Changing Face of Management in China, London: Routledge. Shen, J. (2016). Principles and applications of multilevel modelling in human resource management research, Human Resource Management, 55(6), 951–965. Shen, J., Messersmith, J.G., and Jiang, K.F. (2018). Advancing human resource management scholarship through multilevel modelling, The International Journal of Human Resource Management, 29(2), 227–238. Sun, L.Y., Aryee, S., and Law, K.S. (2007). High-performance human resource practices, citizenship behaviour, and organizational performance: A relationship perspective, Academy of Management Journal, 50(3), 558–577. Wang, Y., and Yao, Y.D. (2003). Sources of China’s economic growth 1952–1999: Incorporating human capital accumulation, China Economic Review, 14, 32–52. Warner, M. (Ed.). (2003). Culture and Management in Asia, London: Routledge. Warner, M. (Ed.). (2009). Human Resource Management ‘With Chinese Characteristics’, London: Routledge. Warner, M. (2014). Understanding Management in China: Past, Present and Future, London: Routledge. Warner, M., and Rowley, C. (Ed.). (2014). Demystifying Chinese Management: Issues and Challenges, London: Routledge. Wernerfelt, B. (1984). A resource-based view of the firm, Strategic Management Journal, 5, 171–180. Whiteley, A., Cheung, S., and Zhang, S.Q. (2000). Human Resource Strategies in China, Singapore: World Scientific Publishing Co. Wright, P.M., Dunford, B.B., and Snell, S.A. (2001). Human resources and the resource-based view of the firm, Journal of Management, 27, 701–721. Wright, P.M., and McMahan, G.C. (1992). Theoretical perspective of strategic human resource management, Journal of Management, 18(2), 295–320. Xing, Y.J., and Liu, Y.P. (2016). Linking leaders’ identity work and human resource management involvement: The case of sociocultural integration in Chinese mergers and acquisitions, The International Journal of Human Resource Management, 27(20), 2550–2577. Xinhua News. (2017). China increases education spending in 2016, 4 May, Retrieved on 28 March 2018 from www.xinhuanet.com/english/2017-05/04/c_136256484.htm Yao, Y. (2014). A new normal, but with robust growth: China’s growth prospects in the next 10 Years, Think Tank 20: Growth, Convergence and Income Distribution, pp. 77–82, Retrieved on 31 March, 2018 from www.brookings.edu/wp-content/ uploads/2016/07/tt20-china-growth-prospects-yao.pdf Zhao, J., and Dickson, B. (2001). Remaking the Chinese State: Strategies, Society, and Security, London: Routledge. Zheng, C., Morrison, M., and O’Neill, G. (2006). An empirical study of high performance work practices of Chinese SMEs, International Journal of Human Resource Management, 17(10), 1772–1803. Zhu, C.J.H. (2005). Human Resource Management in China: Past, Present and Future HR Practices in the Industrial Sector, London: RoutledgeCurzon.

4

Enterprise reform and strategic HRM

Introduction Nowhere in the world does firm ownership fascinate so many academics and practitioners alike when studying and addressing the enterprise management issues in China. The center piece of China’s economic reform beginning in 1978 is enterprise reform, of which the key is to address the issue of ownership, especially those of state-owned enterprises (SOEs) (Naughton, 2017). Very few studies on HRM in China have missed the examination of the ownership variable and its relevance to the relationship between SHRM and firm performance. This is also clearly evident in the current review of empirical studies. The majority of the studies were found to have examined ownership either as an antecedent or moderator or as a control variable (see Appendix 3). Without enterprise reform, it would be impossible to introduce the concept of SHRM to China. Thus, the role of different enterprise ownership as a result of enterprise reform impacting on the strategic choice of HRM policies and practices at the firm level in China cannot be undermined. In particular with the deepening reform of state-owned enterprises in recent times, there is a greater need to look at how the effort made by the Chinese government on enterprise reform would have impacted on corporate governance, ethics and social responsibility – the issues have become more and more an important part of SHRM discourse in the contemporary era (e.g. Beer et al., 2015; Jefferson, 2016; Martin et al., 2016; Shen and Benson, 2016; Petrovic et al., 2018). These issues are highly relevant to the subsequent chapters of this book, which discuss the employee perception of HRM as they are related to employee creativity, innovation, labor rights and humanized management in the path towards fulfilling the ‘Chinese dream’ (Warner, 2014; Choi and Peng, 2015). The aim for this chapter is nonetheless to address the important research question, that is, ‘is there a relationship between SHRM and enterprise reform? If so, how has SHRM impacted on China’s enterprise reform or vice versa?’ The chapter thus starts with an examination of the existing literature that analyzes the relationship between SHRM and enterprise reform, especially with reference to the reform’s core outcome on generating enterprises with different ownership in China since 1978. Whilst revisiting the literature, the evolution and

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development of China’s enterprise reform and how it has impacted on the organizational management system and HRM policy choices in China will also be delineated. Theories supporting the proposition on the relationship between outcome of enterprise reform (i.e. enterprises with different ownerships) and adoption of SHRM in China, are considered to test the empirical evidence. The chapter concludes with a possible future direction on examining SHRM and enterprise ownership reform in China.

Enterprise and industry reform, ownership and strategic HRM China’s enterprise reform was initiated in the early 1980s as a direct result of the successful experimental changes aimed at improving agricultural and rural industrial performance, different from those reforms conducted in Eastern Europe, which aimed at establishing a Western-style market system (Jefferson and Rawski, 1994). Consequently, the enterprise reform process has been comparatively slower and more complex. It was argued that China’s government seems to have taken a gradual and uneven approach, purposely leaving many features of the pre-reform system intact until today, especially for those stateowned enterprises (Liang et al., 2012; Jefferson, 2016; Naughton, 2017). However, industry stands at the core of China’s enterprise reform problem. To revitalize China’s industrial sector under the planned socialist system, several areas of enterprise reform including pricing, banking, public finance, ownership, social welfare and research and development were required, in addition to permitting the development of the private sector and the standard remedy of many public institutions (Jefferson and Rawski, 1994, pp. 47–48). Before the economic reform began in 1978, China’s industrial production was virtually dominated by state-owned enterprises (SOEs) with their operation and management largely influenced by traditional culture and communist ideology (Ngo et al., 2008). During the 1980s, the majority of these SOEs experienced difficulties in functioning effectively and efficiently, and certainly were not in good economic shape with many burdening the state with debts and low productivity (Law et al., 2003; Ngo et al., 2008). Since 1990, the Chinese government has found it increasingly difficult to cover the massive losses incurred by its ailing SOEs. By 1997, these losses accounted for 66 percent of China’s national debt: if allowed to continue to grow, they will severely damage China’s weak and protected financial systems (Law et al., 2003). Thus, reforming failing SOEs was in the minds of Chinese leaders. Subsequently, SOEs were allowed to reorganize, close down or be acquired by non-government businesses. In addition, China’s entry to the WTO in 2001 required that the country opened up its former restrictive sectors such as banking, telecommunications and retailing for open and global competition. Therefore, over the past two decades, China has experienced phenomenal reduction in the number of SOEs (Hassard et al., 2006), and rapid growth of private sectors (Lardy, 2016), as well as foreign

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Table 4.1 Private firm formation by type and number Year

Registered private companies

Privately controlled limited liability companies

2010 2011 2012 2013 2014

4,683,851 5,254,870 5,917,718 5,603,917 7,266,188

442,587 537,228 634,331 1,456,079 1,761,500

Source: Lardy (2016, p. 42)

foreign-invested enterprises (FIEs) (Akhtar et al., 2008). The private enterprises counted for 41 percent of the total industrial output in 2009 (Jefferson, 2016, p. 25). Table 4.1 further illustrates the rapid growth of the private firms in China from 2010 to 2014. In contrast, the total number of workers in SOEs has been shrunk from 76 million in 1992 to 44 million in 2008, but with an increase to 48 million in 2014, due to the important November 2013 Resolution of the Third Plenum of the 18th Chinese Communist Party’s (CCP) Congress to consolidate and develop SOEs as the Party’s ‘leading force’ and the ‘main body of the economy’ (Naughton, 2017, pp. 282–285). Despite the powerful influence of the Chinese Communist Party (CCP) on SOEs, the private sector’s performance with reference to return on assets was reported to be still much better than that of SOEs (Jefferson, 2016). It is argued that the private sector was more able to adopt a modern management system such as SHRM with high-performance work systems with a strong focus on firm performance outcomes rather than SOEs that may still hold conventional approach (Zheng et al., 2006; Akhtar et al., 2008). However, in recent years, with the ‘Going global’ policy stipulated by China’s government in 1999 to encourage many domestic privately owned companies as well as those SOEs to compete in the international market, internal and external competitive resources were considered by Chinese large and small firms alike to develop HR strategies with strong organizational values, high employee commitments and team cultures in order to compete more effectively (Law et al., 2003). Thus, it is reported that SHRM practices have also been introduced to SOEs when these firms are undergoing reform (Gong and Chang, 2008). For instance, Wei and Lau (2005) found that SOEs, similar to other types of ownership firms, tended to pay attention on HRM competency and the importance of building up SHRM functions, especially among the larger Chinese firms to achieve their strategic goals. Mixed findings were reported on the adoption of SHRM among enterprises with different ownership types in China, and this will be further discussed in the later part of this chapter. Here it is important to point out that the differences among management systems and business strategies taken by different

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sectors and industries in China were in line with the industry policy guidelines of a developmental state such as China. As argued in Chapter 3, for the past 40 years, China’s Five-Year plans have served to determine where the state and private resources should be directed to support the economic growth objectives. Table 4.2 outlines a total of nine Five-Year plans since 1976. These provide

Table 4.2 Key focuses of China’s Five-Year plans and management implications Period

Government’s Focus

5th Plan Starting major reforms on (1976–1980) economic and industry system

6th Plan Pursuing the principle of ‘adjust, (1981–1985) reform, rectify and improve’; protecting some industries such as energy, ICT industries; science and education emphasized. 7th Plan Further reform as the top (1986–1990) priority; further adjusting the industrial structure; improving economic efficiency and product quality; opening up the outside world 8th Plan Establishing China’s (1991–1995) competitiveness in coal, cement, TV, cotton, steel, chemical fiber and electronic goods; investment in large infrastructure projects on port, railway and roads 9th Plan Continuous building of the (1996–2000) socialist market economic system; eliminating poverty; speeding up the establishment of a modern enterprise system 10th Plan Optimizing and upgrading (2001–2005) the industrial structure for international competitiveness; Implementing the ‘Going out’ foreign and industry policy; promoting the employment growth for all primary, secondary and tertiary industries; more infrastructure development

Implications to enterprise management Double-digit GDP growth rate; quick improvement in enterprise efficiency and effectiveness; permitting the development of private sector Double-digit growth rate; Increasing export industry competitiveness; encourage joint-ventured projects aimed at upskilling labor force and management training Continuing growth; encouragement of foreign direct investment, esp. with value-added economic and technological exchange; western management ideas started to diffuse to Chinese organizations Double-digit growth; controlling foreign competition in industries whereby China has competitive advantages; industries started concerning some differentiation in choices of management strategies and practices GDP growth continued; seeking for new management system that facilitates competition, wealth creation and is still intended to be in line with the socialist values Growth rate reduced to 0.6) (see Hsu, 2016) and massive dislocation of migrant workers (Chan and Pun, 2009). It appears that China has now arrived at a historical juncture when an institutionalized solution to its mounting labor problems and human rights violation is needed (Lee, 2009). As concurred by the current Premier Li Keqiang, human rights and labor relations have become the key strategic issues to sustain the future economic and social development of China (Gore, 2014). To illustrate this point, it is necessary to review the emergence and development of the so-called industrial relations (IR) system in China since 1978.

Evolution of industrial relations in China It should be noted that the term ‘industrial relations’ does not appear in any China’s government’s official documents. The associated terms such as ‘laborcapital relations’ (laozi guanxi); employment relations (guyong guanxi); work relations (laodong guanxi); and ‘labor-capital contradiction’ (laozi maodun) are often used when discussing the relationship between employer and employee, and labor-capital conflict and labor unrest and disputes in China (Yi, 2013). The term ‘industrial relations’ (IR) has been largely used with an indirectly denotated translation technique, that is translation by meaning for assisting a better understanding of the western audience, than literally direct translation

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from terms such as labor-capital relations in Chinese. For instance, the Shenzhen Municipal People’s Congress adopted a new regulation on ‘harmonious industrial relations’ in 2008. This English term has appeared in the majority of western literature, but the first author, while writing this chapter, checked the Chinese version in all China’s websites and found that it was actually ‘harmonious laborcapital relations’ translated as hexie laozi guanxi. Thus, it is argued that the term IR has been conveniently adopted by western scholars (e.g. Taylor et al., 2003; Taylor and Li, 2007) who wrote about China’s recent development of legal framework for protecting workers’ rights. However, most researchers (e.g. Cooney et al., 2007; Warner and Zhu, 2010; Friedman and Kuruvilla, 2015; Huang et al., 2016; Lüthje and Butollo, 2017) examining the labor issues in China would more comfortably use the terms ‘labor relations’ or ‘labor management relations’ interchangeably with ‘industrial relations’. The reason is that China perhaps does not have the same kind of industrial relations system as that established in the west. This point is further elaborated as follows. Prior to 1978, China’s employment and labor relations had been administered without any national laws or controlled by any industrial relations system. Despite the All-China Federation of Trade Unions (ACFTU), which existed long before the reform period, it was suspended during the Cultural Revolution (1966–1976) and only rehabilitated by the former paramount leader Deng Xiaoping as a part of his economic reform programs in the late 1970s (Lee, 2009). The role of ACFTU was simply to act as the CCP’s speaker – an effective propaganda arm and the state instrument – to ensure the Party’s political control in the workplace (Friedman and Kuruvilla, 2015, p. 182); to promote China’s reform agenda; and to cooperate with employers in order to ensure industrial peace and encourage workers to increase productivity (Zheng et al., 2006). Not until the 1990s have the basic legal foundations for market-based employment relations and so-called industrial relations framework in China been laid with the introduction of the very first Trade Union Law (1992) and Labor Law (1994). However, the critiques (e.g. Cooney et al., 2007; Lee, 2009; Warner and Zhu, 2010) pointed to the superficial provision of these laws that have no actual meaningful protection of workers, but offer more convenience, especially to state-owned enterprise (SOE) employers to convert state sector’s ‘iron-bowl’ (lifelong employment) secured jobs into contract-based ones, leaving many unemployed instead, or with ongoing employment insecurity. This is understandable as in a developmental state such as China, the ruling Communist Party’s (CCP) key goal was set firmly on economic development at any cost, even allowing (if not actively encouraging) all provinces to have the ‘race-to-bottom’ approach of lowering labor standards to compete and attract foreign investment that enabled the provincial level of economic growth (Lee, 2009). During the early reform period in the 1980s, the ACFTU as the only legitimate trade unions in China were in fact not ready to cope with the reality of marketbased industrial relations. Because of the restructuring of SOEs during the period of 1995–1999, the ACFTU in fact lost 17 million members, in addition to its inability to recruit more members from the rapidly expanding non-state

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sectors. The ACFTU was tightly controlled by the CCP to set its priority on economic growth at whatever cost, so it did not have the political motive and organizational incentive to push for representation of workers (Lee, 2009). The turning point arrived with the implementation of the 9th Five-Year Economic and Social Development Plan (1996–2000) (see again Table 4.2 in Chapter 4), and especially after the WTO entry in 2001 and under the new leadership of former President Hu Jintao (in office from 2002–2012). The developmental state’s policy focus shifted to eliminating poverty, and ‘building a harmonious society’ with the socialist market economic system in line with socialist values. Thus, under the banner of ‘people-centered development’ in the 2000s, China’s ambitious goals were to redirect its economic and social development strategies towards more balanced development, especially balancing rural and urban development as well as economic efficiency and social equity. It was in this context that China’s state corporatist ‘industrial relations’ system emerged (Ma, 2011; Wen and Lin, 2015), and that the CCP discovered the new value of ACFTU acting ‘as a key pillar of social management in stabilizing core labor relations at the firm and industry level’ (Lee, 2009, p. 6). According to Ma (2009, 2011), in contrast to the western concept of IR grounded in Dunlop’s (1958) model, China’s Party-state corporatist system of labor relations (LR) contains six actors: the Party-government, the ACFTU, employers’ organizations, grass-roots unions, employers and employees. The Wenling experience reported by Wen and Lin (2015) in the context of a large number of household-based woolen sweaters manufacturing workshops in Xinhe country of Zhejiang province represented the involvement of grass-roots unions, which despite being approved and supported by local government and ACFTU branches, were in fact spontaneously organized by rural migrant workers. In this case, the collective action of rural workers to demand their unpaid wages and reduction in long working hours was subsequently successful. Thus, the Wenling model was hailed by the Party-State as an exemplary IR/LR model in China, despite the replication of such model remains rather limited due to the Party-state’s constitutional restriction to freedom of association (Wen and Lin, 2015). Therefore, in spite of the Party-state’s initiative to introduce several laws (e.g. Implementation Degree on Collective Wage Negotiation, 2000; Provisional Regulation on Collective Agreement, 2004) (see Table 3.3), most of the collective agreements had little relevance to real wage increase and distribution issues for the majority of employees (Lee, 2009). Furthermore, the ACFTU as an official monopoly of workers’ representation does not help develop genuine unions at the national and local levels to represent workers’ interests. Neither does it help put collective pressure on employers in the event of deadlocked negotiations because of the absence of workers’ freedom of association and right to strike under the current legal framework of China’s industrial relations. Chen (2010) argued that in the case of mitigating the labor dispute, a process of quadripartite interaction between government and employers, between the trade unions and workers as separate players in fact existed especially in the non-judicial resolution of interests-based conflict. It is found that labor strikes

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in China were always launched by unorganized workers (i.e. no freedom to form association) rather than by trade unions (e.g. ACFTU and its branches, whose main task is in fact to defuse the conflict situation). Thus, the quadripartite process of resolving labor conflict would be necessary. The quadripartite system is dominated by the Party-state, with the trade union playing the mediating role, not only between workers and the government, but also between workers and employers. Chen (2010) further claimed that this type of quadripartite interaction helped neutralize workers’ collective action, leading to a problematic low degree of institutionalization of industrial relations in China. Thus, as sensitively phrased by Lee (2009, p. 9): in the absence of those rights (i.e. freedom of association, collective bargaining and rights to strike), whether it wants to or not, the government will have to intervene every step of the way towards achieving social policy goals, as industrial relations without those rights is not likely to produce social equilibrium through a ‘voice mechanism’. Like any ruling government around the world, China’s Party-state also seeks legitimacy and popularity, it desires both peace and harmony, whilst maintaining its dominant political control over important social issues, apart from economic development objectives (Gore, 2014). Thus, why and how the Chinese government needs to address the issue of ‘voice mechanism’ at the national level and to encourage SHRM with a strong emphasis on grievance management via the high-commitment/performance work systems (HPWS) at the firm level is further elaborated next.

Labor unrest and disputes It can be clearly seen that the key reason for China’s Party-state to shift its social and economic policy focus and to develop the legal framework for managing labor relations in recent years was because of a dramatically increased number of strikes, protests and riots, as well as labor dispute cases reported. The legality of strikes remains ambiguous as the right to strike was unconstitutional and had been effectively removed from the Chinese Constitution in 1982 (Taylor et al., 2003). The earlier mentioned Shenzhen Municipal People’s Congress that adopted a new regulation on ‘harmonious industrial relations’ in 2008 actually coincided with the phrase used by the former President Hu Jintao’s call for building ‘a harmonious society’. However, this piece of regulation was the first time official procedures for handling strikes were delineated, giving partial recognition to strikes (Lee, 2009). Elfstrom and Kuruvilla (2014) found that ‘mass incidents’ including strikes, protests and riots had in fact surprisingly been officially recorded by the state, and that the number increased from 9,000 cases in 1994 to 127,000 in 2008. Liu (2014) lamented patchy statistics on workers’ industrial action in China, nonetheless collected 119 strikes being officially reported in March 2014 alone. Furthermore, Wang and Cooke (2017) reported

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an increase of 350,182 court cases in 2007 to 665,760 in 2014 that were accepted for labor dispute resolution after the enactment of the Labor Contract Law and the Labor Disputes Mediation and Arbitration Law in 2008. Worker turnover rate in South China’s manufacturing sector reached 100 percent annually (Liu, 2014). Such astonishingly high employee turnover rate, together with the statistics on labor strikes and disputes, would signify the notch of Chinese employee dissatisfaction with their jobs and working conditions. Workplace labor disputes have been further intensified with China’s transition from a labor surplus economy to one dominated by labor shortages during the decade of the 2000s, and still is the case nowadays. Friedman and Kuruvilla (2015) provided several reasons for China’s recent labor market instability, which is worthy of note as it is related to the choice of SHRM approaches to ‘voice mechanism’ and grievance management adopted at the firm level. First, labor shortages have been largely induced by many years of rapid economic growth. In particular, the seed of the shortage was planted earlier by China’s birth control policy. The birth control had led to one kid with four grandparents, inducing a large proportion of aging population. At the same time, a spoiled single child, when matured into becoming a part of a productive workforce in fact delays finding their first job, thus creating a bottleneck of productive new workforce flowing into the labor market. Second, the increased number of enrollments in higher education programs has left fewer young people who would like to enter into the factories on an apprenticeship. The manufacturing sector generally suffered from the slay of the double-edge sword of skill and labor shortage. This shortage has been further intensified by the stated preference of most employers in China for young migrant workers rather than older ones, which is another explanation of skilled labor shortage since the 2000s. The third important cause of the labor shortage is reflected in the differences between the younger generation of rural migrant workers and an earlier generation. More educated young migrant workers are no longer satisfied with menial labor work unlike the earlier generation, but are more motivated by the urban jobs with opportunities for career advancement. Therefore, Chinese younger migrant workers put more emphasis on social justice and fair treatment. Once confronted with the unsatisfactory work conditions, this cohort of young migrants is more inclined to raise dispute or engage in strike activity. Frenkel and Yu (2015) also confer that the new generation of young migrant workers in China cannot be treated as the ‘underclass’ and that their attitude and behavior are not significantly different from those urban regular workers with reference to their use of strategies for work-life improvement. Attraction and retention of this new generation of migrant workers are increasingly more difficult, which would require different management strategies and HR approaches to address their concerns on jobinduced physical stress, pay and working conditions. Limited work-related justice procedures and voice mechanisms cause this group of young migrant workers to leave jobs, increasing the employee turnover rate. We will examine this point further when addressing the relationship between strategic HR and IR later.

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The last reason for the recent labor shortage in China is related to institutionalized discrimination against migrant workers as a result of the hukou system, also reported earlier by Zhang et al. (2017) – the system introduced by the Communist Party in 1958 to regulate and restrict the movement of people from city to city, province to province, especially from rural to urban areas. Given that migrant workers working outside their hukou area cannot qualify for a range of social benefits, they tend to choose to work within their own provinces and move back to the rural areas. The system induced labor immobility leading to the issue of shortage. The outcomes of labor shortage are well phrased by Friedman and Kuruvilla (2015, p. 185) as follows: the labor shortage has created volatility in the labor market, and enlarge the economic and political space for Chinese workers. On the one hand, it has increased their bargaining power, and workers have increasingly resorted to strikes and protest. On the other hand, workers are more likely to move from company to company in search of better wages and working conditions, resulting in high attrition. And rising worker protests have motivated the state to enact more protective labor legislation. Indeed, it is argued that China state’s approach to industrial relations is an integral part of its national developmental strategy (Gore, 2014). Both labor unrest and labor shortage threaten China’s long-term sustainable social and economic development, the Party-state had to enact new rules and regulations (see Table 3.3) that ‘seek to strengthen individual worker rights, enhance employment security, reduce informal employment and widen access to social insurance’ (Friedman and Kuruvilla, 2015, p. 187). Gallagher et al. (2015) reported that China has now ranked as third among the Organization for Economic Co-operation and development (OECD) countries with its increasing amount of various laws and provisions of employment protection legislations ‘strictness’. However, it is noted that these legislative efforts have by and large endowed ‘workers with an increasing array of individual rights in the absence of collective rights’ (Friedman and Kuruvilla, 2015, p. 187). Without recognition of collective rights to bargaining, and rights to association and strikes, individual rights are often managed in an ad hoc manner (Wen and Lin, 2015) and rights to strikes are likely to be perceived as unconstitutional and hence illegal especially in court as ‘the majority of court decisions routinely uphold the employers’ decisions to dismiss strikes on the grounds that the individual strikers violated work rules against work stoppages’ (Wang and Cooke, 2017, p. 22).

Industrial relations outcomes and managerial implications Despite the extensive Party-state’s propaganda on ‘building a harmonious society’ with socialist values and on ‘eliminating poverty’, together with a legislative effort to increase employment security, China was reported in the recent World

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Employment and Social Outlook Trends 2018 (ILO, 2018) as the largest contributor to the high unemployment rate in the Asia-Pacific region, with a record high of total 38 million unemployed people. China has also contributed to the working poverty induced by a high level of informality in employment both in the manufacturing and service sectors, which affected half of all workers in China (ILO, 2018, p. 22). Both manufacturing and service sectors represented more labor unrest and disputes. TheChina Labour Bulletin (2009) argued that the development of rights-based regulation of industrial relations by China’s legislation alone is not compatible with the increase in interest-based labor disputes and protests around wages and working conditions not prescribed by legislation (see also Wen and Lin, 2015, p. 668). Elfstrom and Kuruvilla (2014) also concurred that ‘labor protests are increasingly interest-based rather than rights or social contract based’ (p. 457). Most labor unrest in China has largely taken the form of Polanyi-type movements (i.e. two-way movements on the pull of marketization and push for social protection against that marketization) against the disruption of established ways of life and livelihood. As long as China continues its focus on developing the market-based economy, the labor/class struggle may persist till genuine unions and collective bargaining can be allowed to establish. Labor issues such as unpaid wages, low wages, long working hours, excessive and forced overtime, workplace health and safety risks, lack of labor representation, high labor turnover and workers’ rising collective actions are common for millions of Chinese rural migrant workers especially in the manufacturing sector (Chung, 2015; Wen and Lin, 2015). However, China’s employment protection system is entirely complaint-based, meaning ‘no individual complaints, no enforcement’ (Chung, 2015). The Party-state corporatist industrial relation system is understood as ‘a hierarchically organized interest representation aimed to repress and exclude the independent articulation of class interests’ (Wen and Lin, 2015, p. 666). Any collective actions on the worker’s behalf would be largely prohibited under this state corporatist IR system. In contrast, it is much easier to form the industry/employer associations (e.g. China Enterprise Confederation-China Enterprise Directors’ Association – CEC-CEDA; China’s Small and Medium-sized Enterprise Association; Gongshanglian – Industry and Business Alliance) as top leaders of these employer-based organizations often ‘concurrently hold senior positions within the National People’s Congress and the National Political Consultative Body’ (Lee, 2009, p. 10). Friedman and Kuruvilla (2015) also argue that in China, capital (representing the employer group) has been granted meaningful autonomy, whilst labor at the local level continues to operate with constraint. Furthermore, the Party-state corporatist IR system tends to turn a blind eye towards employers (including those multinational companies operating in China) with discriminative behavior towards women and migrants without certain hukou registration (Zhang et al., 2017). For instance, Human Rights Watch (2018) analyzed over 36,000 job advertisements posted on websites of the Chinese government at all levels and of those companies operating in China (including

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big names such as Alibaba, Baidu, Tencent). It was found that gender discrimination in employment is widespread, especially during recruitment with the position requirements for terms related to gender preferences including ‘men only’, ‘men preferred’, ‘suitable for men’, ‘women only’, ‘women preferred’ and ‘suitable for women’ being excessively used (Human Rights Watch, 2018). Yet, the government’s stringent media censorship and hostility towards grass-roots campaigns for women’s rights pose a significant obstacle to create an awareness of human rights violation and advancement of building a civil and ‘harmonious society’. In summary, it is perceived that individual human rights, civil rights and employment rights would likely be violated continuously under the current problematic legal framework of industrial relations system in China. It is speculated that the Marxist-type labor unrest may emerge if there is no sufficient and effective ‘voice mechanism’ to help pacify the class struggle between employer and employee. Elfstrom and Kuruvilla (2014) presented some evidence of rising worker militancy in their two-case studies in Chengdu and Zhuzhou, in spite of the capital-intensive and highly skilled nature of production in both cases. From the analysis of these two cases, the author concluded that the industrial relations in China are no longer contained within the low-skilled manufacturing sector but have gone far beyond just addressing the minimum wages. Highly skilled workers appear to want more than just having rights, they look for both internal and external pay equity and welfare, job ‘details’ with promotion and career progression opportunities and ‘respect’ (Elfstrom and Kuruvilla, 2014, p. 474) – the issues are closely related to justice, fairness and ethical standards. In both cases, there were industrial relations directors appointed by the firms and served to address these workers’ concerns. Under the external conditions of repression, worker activism at the enterprise level seems ‘wild’ and effective in securing their rights to bargaining their working conditions. Therefore, enterprise unions, as argued by Gore (2014) may be in a position of genuine representation of workers, though they are still currently ill-equipped to do so, as concurred by Chen (2010), who sees the firm unions play the role of a go-between, mediating among the government, the employers and the employees. This new development of grassroot and enterprise unions, flawed as they are, may be the new hope for Chinese workers to switch to an increased reliance on the shop floor’s bargaining power in the absence of collective bargaining at the national level. Consequently, workers’ reliance on the shop floor’s bargaining and firm’s voice mechanism may have significant managerial implications, especially with reference to SHRM. In the next chapter, several theories explaining the relationship between HR and industrial relations (IR)/labor (employee) relations (LR/ ER) will be discussed to examine whether these theories are applicable to the management practices at the firm level in China, because of its overwhelming absence of genuine collective bargaining at the national level. Strategic approaches to managing IR and ER/LR in the workplace in the western context and its potential applicability to China will also be explained, supported by various findings from the empirical studies on labor issues in China.

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Conclusion This chapter aims to revisit the question raised by the Peking University student on ‘Does China have industrial relations equivalent to that exists in the west’? From the extensive discussion on the evolution and development of industrial relations system in China, blended with the statistics that illustrated the extent of labor unrest and increasing disputes between employers and employees, it is concluded that the industrial relations reform as pursued by the Chinese Communist Party seems not to reach such satisfying outcomes as those pursued by the western or the USA government. Thus, the answer to the student’s question would have to be resoundingly ‘No’, for two reasons. First, as mentioned earlier, the term ‘industrial relations’ does not appear in any official documents. When discussing the relationship between employer and employee, the term ‘labor-capital relations’ (laozi guanxi); employment relations (guyong guanxi) and ‘labor-capital contradiction’ (laozi maodun) were often used in the discussion of labor-capital conflict and labor unrest and disputes in China (Yi, 2013). With the absence of effective collective bargaining and still rampant evidence of abusive human and employment rights, the real industrial relations system appears to be less of a manifesto of either communist or socialist values of protecting the proletarian worker’s rights in China. Second, two important underlying assumptions of the tripartite model of industrial relations as outlined in Dunlop (1958) are: first, no one group of any bargaining parties should dominate another, signifying the equal power diffused among the main bargaining groups, such as government, industry (employers group) and union (workers/employees representative). Second, the state/government should act as an impartial guardian of public interests, to protect the weak and restrain the power of the strong (Ma, 2011, p. 146). However, as witnessed from the discussion in this chapter, the Party-state’s corporatist industrial relations system and its judicial courts provide the unequal and supreme power to state and show favoritism towards the employers’ associations rather than protecting the weaker party of workers. The proper industrial relations system as advocated in the Industrial Democracy by Sydney and Beatrice Webb over 100 years ago is the one with ‘a process of concession and compromise in which a body of rules restrains the abuse of power and enables all parties to achieve gain’ (cited from Ma, 2011, p. 146). So far the prerequisites of the tripartite model, such as free association and labor (and its trade unions) able to deal with employers on equal terms, and a democratically elected government acting as an impartial guardian of the public interests, are still not sufficiently found in the context of China. Therefore, it can be argued that China has an industrial relations system that is not entirely equivalent to those established in the democratic countries in the west, despite efforts devoted to establishing a range of labor laws and regulations in recent times. These laws and regulations should be more or less seen as the Party-state’s new strategy to maintain social control over a large group of working poverty and increase its administrative power over every sphere of business operation in China. Nonetheless, a close observation of the new development of China’s industrial relations laws is especially useful for multinational firms

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operating in China as every piece of IR law would have implications to doing business in China. Furthermore, research on the labor relations management by Chinese firms operating inside and outside China would not only be promising, but also help identify the gap between the Chinese IR system and the mainstream of labor relations as often understood in the west.

References Bray, M., Deery, S., Walsh, J., and Waring, P. (2005). Industrial Relations: A Contemporary Approach, 3rd edition, Sydney: McGraw Hill Education. Brewster, C. (1995). Industrial relations and human resource management: A subversive European model, German Journal of Industrial Relations, 2(4), 395–413. Chan, C.K.-C., and Pun, N. (2009). The making of a new working class? A study of collective action of migrant workers in South China, China Quarterly, 198, 287–303. Chen, F. (2010). Trade unions and the quadripartite interactions in strike settlement in China, China Quarterly, 201, 104–124. China Labour Bulletin. (2009). Going in Alone: The Workers’ Movement in China (2007–2008), July, Retrieved from www.clb.org.hk/sites/default/files/archive/ en/share/File/research_reports/workers_movement_07-08_print_final.pdf Chung, S.W. (2015). Explaining compliance: A multi-actor framework for understanding labour law compliance in China, Human Relations, 68(2), 237–260. Cooney, S., Biddulph, S., Li, K.G., and Zhy, Y. (2007). China’s new labour contract law: Responding to the growing complexity of labour relations in the PRC, The UNSW Law Journal, 30(3), 786–801. Dunlop, J.T. (1958). Industrial Relations System, New York: Henry Holt. Edwards, T., and Rees, C. (2017). International Human Resource Management: Globalization, National Systems and Multinational Companies, 3rd edition, Harlow: Pearson. Elfstrom, M., and Kuruvilla, S. (2014). The changing nature of labor unrest in China, Industrial and Labor Relations Review, 67(2), 453–480. Frenkel, S.J., and Yu, C. (2015). Chinese migrants’ work experience and city identification: Challenging the underclass thesis, Human Relations, 68(2), 261–285. Friedman, E., and Kuruvilla, S. (2015). Experimentation and decentralization in China’s labor relations, Human Relations, 68(2), 181–195. Gallagher, M., Giles, J., Park, A., and Wang, M. (2015). China’s 2008 labor contract law: Implementation and implications for China’s workers, Human Relations, 68(2), 197–235. Gore, L.L.P. (2014). Labor management as development of the integrated developmental state in China, New Political Economy, 19(2), 302–327. Greenwood, M.R. (2002). Ethics and HRM: A review and conceptual analysis, Journal of Business Ethics, 36(3), 261–278. Guest, D.E. (2002). Human resource management, corporate performance and employee wellbeing: Building the worker into HRM, Journal of Industrial Relations, 44(3), 335–358. Hsu, S. (2016). High income inequality still festering in China, Forbes, November, Retrieved on 21 March 2018 from www.forbes.com/sites/sarahsu/2016/11/18/ high-income-inequality-still-festering-in-china/#72ea7e3b1e50 Huang, W., Li, Y.H., Wang, S., and Weng, J.J. (2016). Can ‘democratic management’ improve labor relations in market-driven China? Asia-Pacific Journal of Human Resources, 54(2), 230–257.

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Human Rights Watch. (2018). ‘Only Men Need Apply’: Gender Discrimination in Job Advertisements in China. Retrieved on 25 April 2018 from www.hrw.org/ report/2018/04/23/only-men-need-apply/gender-discrimination-jobadvertisements-china International Labor Organization (ILO). (2018). World Employment and Social Outlook Trends 2018, Geneva: ILO Office. Lee, C.H. (2009). Industrial relations and collective bargaining in China, Working Paper No. 7, International Labour Organization, Geneva. Legge, K. (1995). Human Resource Management: Rhetoric and Realities, London: Macmillan Business. Liu, M.W. (2014). The future of Chinese labor relations, Perspective on Work, 76–79 and 116–119. Lüthje, B., and Butollo, F. (2017). Why the Foxconn model does not die: Production networks and labor relations in the IT Industry in South China, Globalizations, 14(2), 216–231. Ma, Z.N. (2009). The structure and role of China’s Party-state system in industrial relations: An updated review, China: An International Journal, 7(2), 370–384. Ma, Z.N. (2011). Industrial relations in China: A review based on a six-party model, International Labor Review, 150(1–2), 145–162. Marx, K., and Engles, F. (2013). The Communist Manifesto, New York: Sheba Blake Publishing. Nankervis, A., Baird, M., Coffey, J., and Shields, J. (2017). Human Resource Management: Strategy and Practice, 9th Asia-Pacific edition, South Melbourne: Cengage Learning Australia. Shaw, A., McPhail, R., and Ressia, S. (2018). Employment Relations, 2nd edition, South Melbourne: Cengage. Taylor, B., Chang, K., and Li, Q. (2003). Industrial Relations in China, Cheltenham: Edward Elgar. Taylor, B., and Li, Q. (2007). Is the ACFTU a union and does it matter? Journal of Industrial Relations, 49, 701–715. Wang, T.Y., and Cooke, F.L. (2017). Striking the balance in industrial relations in China? An analysis of court decisions of 897 strike cases (2008–2015), Journal of Industrial Relations, 59(1), 22–43. Warner, M., and Zhu, Y. (2010). Labor and management in the People’s Republic of China: Seeking the ‘harmonious society’, Asia Pacific Business Review, 16(3), 285–298. Webb, S., and Webb, B. (2003). Writings on Industrial Democracy, London: Palgrave Macmillan. Wen, X.Y., and Lin, K. (2015). Restructuring China’s state corporatist industrial relations system: The Wenling experience, Journal of Contemporary China, 24(94), 665–683. Yi, Z.H. (2013). The establishment and evolution of China’s labour-capital relations after the reform and open-up policy, Economic Research Guide, 19(201), 62–66 (in Chinese). Zhang, M.Q., Zhu, C.J.H., Dowling, P., and Fan, D. (2017). Subsidiary responses to the institutional characteristics of the host country: Strategies of multinational enterprises towards hukou-based discriminatory HRM practices in China, Personnel Review, 46(5), 870–890. Zheng, C., Morrison, M., and O’Neill, G. (2006). An empirical study of highperformance work practices of Chinese SMEs, International Journal of Human Resource Management, 17(10), 1772–1803.

7

Managing labor relations in China

Introduction With the acknowledgment of different institutionalizations of industrial relations in the context of China (Lee, 2009; Chen, 2010) as explained in the previous chapter, it is argued that the institutional theory is best positioned to help explain the phenomena of strategic management of labor relations among companies operating in China (Peng et al., 2008, 2009). The institutional theory helps better understand the extent to which SHRM and its approach to managing labor/employee relations (LR/ER) have been adopted at the firm level in China. Apart from the institutional theory, additional theoretical explanations are offered to provide a better understanding of several approaches adapted by firms towards managing labor relations in the context of China. Therefore, this chapter aims to discuss several theories that link IR with SHRM and present some discourses on its applicability in the context of China. The chapter starts with the explanation of four management approaches to deal with employee relations and their application to labor relations management in China. This is followed by additional theories – apart from the institutional theory to explain social and ethical issues of managing labor relations in the context of China. The findings from several empirical studies in the current review will be presented to discuss the relationship between labor relation management and HRM. The chapter concludes with some points for future research direction for this important area of managing HR, ethics and labor relations in the context of companies operating inside China and Chinese companies operating globally.

Labor management approaches There are four theoretical frameworks that explain different management approaches to deal with employee relations, employee voice and employee participation and involvement in managing workplace issues. These are: unitarism, pluralism and radicalism and corporatism (Shaw et al., 2018, pp. 18–19). The unitarist approach views employment as a contract between members in a group with a common purpose, similar to those in the marriage/family relationship;

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it perceives the organization as an integral and harmonious place where all members share similar interests and aim to achieve mutually benefitting goals. Trade unions (TU) would be treated as the third party, which is viewed by the unitarists as being quite unnecessary and in fact they believe that a third party such as TU may induce more conflicts between management and employees. Firms holding the unitarist view tend to adopt HRM policies and practices that emphasize flexible work practices, teamwork and employee participation and involvement, promote a harmonious relationship between employer and employee via effective employee communication, and enhance positive working conditions for soliciting employee motivation, engagement and commitment. The early stage of HRM emergence and development was in fact derived from this prevailing preference of using the unitarist approach to managing employment relations in order to avoid dealing with the challenges posed by trade unions in the western context (Legge, 1995; Guest, 2002). The pluralist approach views employment as a strategic relationship between ‘strangers’ such as those employers and employees coming together with no common goals and who definitely have different interests and values. The pluralists hold the view that an organization is made of a divergent group of people, inevitably leading to conflicts of interests and disagreements over the distribution of profits and benefits. Thus, it is necessary to find an effective way to resolve the conflict. Trade unions that have historically been regarded as a legitimate representation of workers are deemed to be the best entity to engage in the collective bargaining with employers (Kaufman, 2010; Ma, 2011). The pluralist approach is best illustrated by Webb’s idea of industrial democracy and proved to be effective if following the rules of the game as described by Dunlop’s (1958) industrial relations system discussed earlier. This approach takes conflict between employers and employees as a necessary means to foster positive change (Kaufman, 2010) and encourages organizations to develop a conflict resolution mechanism, such as voice and grievance channels to engage employees and use conflict management strategies (i.e. partnership with trade unions) to identify progressive direction for future change and growth. The radicalist approach is grounded in Marxism theory, which addresses the fundamental class inequity, and views that conflict cannot be successfully dealt with either via the unitarist or pluralist approach because of the existing capitalist society with inherent class division that has already caused inequality, poverty and injustice. Only via the means of radical transformation by the militant people power and their military machineries will this corrupted capitalist society be destroyed in order to build a new egalitarian society with the communist values of equality and egalitarian regime (Marx and Engels, 2013). Of course, we have seen this Marxist view of radicalism being marginalized since the Cold War period in the 1960–1970s as well as the rise of individualist employee relations and HRM strategies in the 1980–1990s, which has been supported by a range of industrial regulatory changes aimed at avoiding the radical activities and destructive behaviors, bypassing the role played by trade unions, and reducing collective bargaining coverage especially in the western world (see Shaw et al., 2018).

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The corporatist approach is in essence similar to the pluralist approach, which recognizes the role of trade unions at the workplace. However, corporatism focuses the outcomes of the industrial relations system more on achieving the national interests instead of individuals or organizational interests (Shaw et al., 2018). Thus, with this approach, which originated in some Scandinavian countries, national governments, employer’s associations and union bodies would work together to develop a national industrial relations policy beyond just mere employee relations management at the firm level.

Application of management approaches to IR/LR/ER in China Several authors (e.g. Ma, 2011; Gore, 2014; Wen and Lin, 2015) discussed China’s IR model as one adopting the corporatist approach because the nature of China as a developmental state would hold the economic growth objective as in the highest national interests, rather than to protect the sectional interests of either trade unions or businesses. However, the evidence as presented earlier also shows that the Party-state appears to be holding the most power in determining the national developmental policy, with a cloning tripartite system (Lee, 2009), perfunctorily supported by the ACFTU and CEC-CEDA (China Enterprises Confederation – China Enterprise Directors Association), without much concern over human, civil and employment rights of weak and vulnerable groups such as women and rural migrant workers in society. Ma (2011) also argued that two important assumptions (i.e. equal power distribution; the state acts as an impartial guardian of the public interest) underlying the pluralist approach did not fit the reality in China either. Despite the fact that China’s Communist Party still holds the view of Marxism, in practice, neither the radicalist view of managing labor relations was evident, nor is there any evidence of the CCP working against the capitalist/employer. On the contrary, the reverse is clearly true. The CCP and Chinese government (Party-state) with its record number of state-owned enterprises in fact represents the strongest and most powerful capitalist. Consequently, as the Chinese government also ardently demonstrates its favor and support towards promoting the adoption of SHRM especially to the SOEs (see the discussion in Chapter 4), the unitarist approach to managing employee relations appears to be the prevalent methods applied among firms operating in China, including those foreign-owned enterprises who first introduced the concept of SHRM (Björkman and Fan, 2002; Zhu et al., 2005), and are often in the position of pro-management and anti-union (Chung, 2016). The use of the unitarist approach to managing the employment relationship is not only common in the Anglo-American context (e.g. USA, UK and Australia), but also increasingly found its popularity of adoption by firms in several Asian economies such as Malaysia, Singapore and Taiwan, and indeed has been quite widespread in modern China since 2000. Common assumptions of unitarism are mutual interests between employers and employees with mutual

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commitments, and this mutuality is expected to be gained via either inclusiveness of employees in management communication, consultation and joint decisionmaking in setting up HR system (Nankervis et al., 2017); or exclusive methods of discouraging union membership and top-down communication with a management control-based HR system. Depending on the assumptions about the nature of employment relationship, both ‘hard’ and ‘soft’ HRM approaches are also widely considered (Legge, 1995). Organizations with a ‘hard’ HRM approach would focus more on achieving strategic and managerial goals through effective utilization of human resources by strategic human resource planning, clear job description, management by objectives, training program evaluation etc., whilst organizations with a ‘soft’ HRM approach may consider more employee involvement through various joint decision-making channels, voice and grievance mechanisms, counseling and support, empowerment and communications (Nankervis et al., 2017). It is argued that SHRM requires taking a combination of both hard and soft approaches of managing employee/labor relations in order to achieve the organizational performance and market competitiveness, not just in terms of financial and economic outcomes, but also of employee choice and social outcome (Beer et al., 1984; Kramar, 2014). Especially in times of tight labor markets with skill and talent shortage acutely experienced by China in recent years (see earlier discussion in Chapter 6; also Friedman and Kuruvilla, 2015), organizational focus on social outcomes and employee wellbeing may help reduce labor unrest and high employee turnover rate and increase the organizational market reputation and chance of being ‘employer of choice’ for attracting and retaining talent employees (Alshathry et al., 2017). Companies operating in China have been catching up with this type of labor management approach to address employee wellbeing and employer branding (Gallup Report, 2015; Leclaire, 2015).

Theories addressing social and ethical issues of managing labor relations Addressing the social outcomes in the SHRM framework is not just about better managing labor/employee relations to achieve organizational objectives, but also an important part of fulfilling the organization’s social responsibility – the essence of corporate governance and business ethics. As suggested by Nankervis et al. (2017), ‘HRM is often seen as the most appropriate place for the “ethical conscience” of an organization’ (p. 41). Employers’ attitudes and actions – with a set of HRM philosophies, policies and practices – to manage labor/employee relations in order to achieve their organizational goals carry a weight of duty and responsibility. Here the twin theories of moral philosophy – deontology and teleology – introduced by Immanuel Kant (2009) are particularly relevant to support the evaluation of HRM ethical systems and processes (Nankervis et al., 2017). In the absence of a strong institutionalization of industrial relations to protect workers’ rights, enterprises in China may be required to consider

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ethics of duty to care for their fellow human beings and acknowledge the essential human rights of each individual (deontology), as well as a process of procedural justice and fairness (teleology) in recruiting, rewarding, developing and mobilizing employees. Not particularly pointing to China, the 2016 UN report on ‘labor rights are human rights’ argued that the growing concentration of corporate power has weakened labor rights, despite many governments being required under international law to protect workers’ rights, most workers are excluded from the legal framework, and have no collective bargaining cover or union protection (UN, 2016). Large corporations such as Foxconn (under Apple’s global supply chain), Honda and Walmart have been reported to abuse labor rights in China and this subsequently leads to labor unrest (Chan and Hui, 2012; Lüthje and Butollo, 2017; China Labor Bulletin, 2018). Mattera (2015) detailed the worst corporate crimes of 2015 with deceptive financial practices, wage theft, health and safety and workplace hazards topping the list. Furthermore, a series of spectacular global corporate collapses around the world especially reflected in the GFC (global financial crisis) in 2008 raised the question about serious unethical management practices and signaled a need for more integrity in corporate governance, not only for moral reasons, but to ensure the mutual sustainability of organizations, their employees and their communities. To address these issues, the stakeholder theory has been commonly used to emphasize the moral responsibility of organizations. The stakeholder theory emphasizes the balance of different interests and suggests that organizations have social responsibility to address the interests of all their associated stakeholders, including governments, owners, shareholders, managers, employees, suppliers and customers, communities, social and ecological environment (Nankervis et al., 2017, p. 40). The application of the stakeholder theory in the field of SHRM helps shift away from the previous emphasis on meeting only shareholder’s interests as a core corporate responsibility, to treating the employment relationship as a part of managing plural stakeholder relations instead of the unitarist approach inherent in HRM (Greenwood, 2007; Greenwood and Freeman, 2011). For example, the earlier study of high-performance work (HR) practices would measure the return on shareholder’s investment (see Huselid, 1995). The advocates for addressing other stakeholders’ interests by HR professionals, especially as employee champions have emerged since 2000 (Schulz and BrenderIlan, 2004; Lowry, 2006; Ulrich et al., 2007; Greenwood, 2013). The key argument is that to be strategic, HR professionals need to not only be the business partners of the organization to provide a conscience to business leaders (Ulrich and Beatty, 2001), but also be intentional partners with employee groups, trade unions and communities to guard the public interests of justice, fairness and societal wellbeing (Beer et al., 1984). Thus, ethical HRM under the stakeholder theory would be essentially changed from the unitarist focus to the pluralist engagement. How has China responded to this set of new development in the field of SHRM?

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Application of ethical and stakeholder theory to managing IR/ER/LR in China As discussed earlier, the focus of SHRM is on managing the direct relations between the individual employee and employer on unitarist terms, whilst the focus of industrial relations (IR) is on managing the relationship between trade unions and employer groups, and between trade unions and government institutions under the pluralist framework. There is an inherent incongruency between SHRM and IR. As argued by Nankervis et al. (2017), ‘the rules and regulations of industrial relations which are often set outside the organization, interfere with the organization’s internal HR policies and strategies’ (p. 92). However, based on the tenets that dwell in the institutional theory, the external laws and regulations pose both normative and coercive pressures on organizations to conform and comply with corresponding HRM policies and practices that should be strategically in line with the broader political, social, economic, cultural and legal environment of the country whereby the organization’s business is operating. Greenwood (2013) also proposed an ethical perspective of HRM and called for a greater involvement of various stakeholders in developing organizational HRM policies and practices that can best reflect the socio-political context. The idea of ethical HRM has been commonly adopted by an increasing number of socially responsible organizations, which likely impose the mimetic pressures on firms that are required to take a social stand in order to be regarded by various stakeholders as legitimate to effectively operate their businesses and compete both in domestic and international markets (Cooke and He, 2010; Shen and Zhu, 2011; Shen and Benson, 2016; Caramela, 2018). Under a fluid legislative environment such as China, knowledge, understanding and interpretation of various laws relating to employment and labor unions, and how these regulations help achieve various stakeholders’ interests, especially whether they are sufficient to help protect labor and human rights, it is particularly important to address the social and ethical issues of HRM. Therefore, the institutional theory, together with the stakeholder perspective, despite not being commonly applied in the existing empirical studies of the relationship between HR and IR/LR, are important theories to help build a greater understanding of how SHRM policies and practices for organizations operating in the dynamic institutional environment of China could be designed, developed and modified to have a positive impact on employee/labor relations. In examining 19 empirical studies collected for the analysis of the labor relations issues in China, it is also found that a diverse application of various theories in examining the relationship between HRM and LR exists (see Table 7.1). The majority of the studies published in the disciplinary areas of political sciences and sociology such as China Quarterly (CQ), Human Relations (HR) Journal of Industrial Relations (JIR) and Industrial & Labor Relations Review (ILRR) were found to have no specification of applying any theory. In contrast, studies published in journal outlets related to human resource management (IJHRM; HRM) were found to adopt conventional theories such as RBV (e.g. Ngo et al., 2008) or the contingency perspectives

Interviews of unions officials in Qualitative Guangdong & Zhejiang Interviews of 60 government and union Case study officials and LR scholars in 12 cities

ILRR

CJ

JIR

Chen and Xu (2012)

Chan and Hui (2012) Elfstrom and Kuruvilla, 2014 Friedman (2014) Liu and Li (2014)

Compliance datasets from 23 electronics companies; multiple interviews of 27 unions cadres, 24 lawyers, over 100 workers

Chung (2015)

HR

A large electronics factory in South China

Choi and Peng HR (2015)

BJIR

ILRR

CQ

Chen (2010)

CQ

Issues of focus in the study

Theory used in the study

Workplace trade union reform

Qualitative

Case study

Compliance to the labor law

Economic development model and sectoral union patterns Interaction between external environment & internal management ideologies on union’s role Managerial strategies in improving LR

(Continued)

Managerial control v. humanized approach No specified

Strategic choice theory

Defensive v. Reactive thesis Not specified

Not specified

The role of trade union and quadripartite Not specified interactions to resolve strike examination of effectiveness of workers’ Not specified collective action v. individual complaints

Quantitative Causes of strikes and protests

Case study

Case study

Case study

Quantitative How did SHRM and HR practices Resource-based impact on ER climate at the firm level? view (RBV) Case study Causes of the labor conflict Not specified

600 firms in China (FIEs, SOEs and POEs) A longitudinal fieldwork in Shenzhen (2003–2007); interaction of 150 workers, 20 interviews 577 workers in Dalian Development Area; interviews of 12 union cadres Interviews of individuals and groups with dozens of judges and court officials in Dongguan 1700 Honda workers in China, mostly migrant intern and young workers 763 strikes (2008–2012)

HRM

Ngo et al. (2008) Chan and Pun (2009)

Research Method

Journal outlet Sample

Author (s)

Table 7.1 Sample, method, issue of focus and theory used in the empirical studies on labor relations in China

Research Method

Issues of focus in the study

IJHRM

313 manufacture plants

Quantitative ER/LR environment facilitating HR flexibility

Institutional theory

Not specified

Partnership theory

Not specified

The unitarist approach Confrontational v. collaborative approach Social exchange theory

Corporatism

No specified

Theory used in the study

Note: APJHR = Asia-Pacific Journal of Human Resources; BJIR = British Journal of Industrial Relations; CJ = China Journal; CQ = China Quarterly; ER = Employee Relations: An International Journal; HR = Human Relations; HRM = Human Resource Management (USA); IJHRM = International Journal of HRM; ILRR = Industrial & Labor Relations Review; JCC = Journal of Contemporary China; JIR = Journal of Industrial Relations.

Huang and Verma (2018)

Household survey of five cities + Quantitative Workers’ satisfaction with labor law a representative survey of 1600 enforcement manufacturing firms Wen and Lin JCC Wenling woolen sweater workshops in Case study Nature of the state corporatism IR (2015) Zhejiang province system in regulating wage demands and labor conflict Chung (2016) ER Fieldwork in the China manufacturing Qualitative Employer’s LR strategies or reaction subsidiary of a foreign firm to the IR changes in China Cooke et al. IJHRM Interviews of 25 managers and Case study Workers’ grievances and HR resolution (2016) 24 frontline workers from four mechanism manufacturing companies Huang et al. APJHR 179 workers in coal-mining Quantitative Whether practice of democratic (2016) companies management (DM) would improve LR in coal-mining firms Lüthje and Globalization Interviews of 167 IT assemblyQualitative employment regimes, wage increase Butollo (2017) line workers (electronics contract manufacturing industry) Xi et al. (2017) ILRR 1265 employees and 190 HR Quantitative Emphasis on collaboration between managers from 190 enterprises management and employees as partners Wang and JIR An examination of court ruling of Quantitative Power balance of parties in industrial Cooke (2017) 897 strikes relations

Journal outlet Sample

Gallagher et al. HR (2015)

Author (s)

Table 7.1 (Continued)

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of SHRM choice (e.g. Liu and Li, 2014; Choi and Peng, 2015; Cooke et al., 2016; Huang and Verma, 2018). Nonetheless, despite common speculation of an overarching adoption of the unitarist approach to HRM among firms operating in China, only one study applied the unitarist approach in examining the effectiveness of employer’s labor relations management strategies in response to the regulatory changes of IR system in China (Chung, 2016). The evidence of empirical studies that applied the previously-mentioned theories to examine the relationship between SHRM and LR in China will be elaborated on next.

Empirical evidence There was no single study devoted to examining the relationship between SHRM and labor relations prior to 2008 when the Labor Contract Law (2008) was first stipulated in China. This suggests that the field is indeed in its infancy and represents a rich ground for further research. Based on Table 7.1, it is seen that the majority of studies on HR relevant to managing labor relations issues in China used the qualitative case study approach; only seven out of 19 studies reviewed for the purpose of this chapter applied the quantitative approach. More quantitative research on verifying the relationship between HR and LR, with valid constructs could also be warranted for future research. Most of the studies were in the context of various enterprises operating in China, except one study (Gallagher et al., 2015) based on the large scale of household survey; two on recorded strikes (Elfstrom and Kuruvilla, 2014; Wang and Cooke, 2017); and with an additional one based on interviews of judges and court officials (Chen and Xu, 2012). There has also been a growing interest to examine the employee’s perception of SHRM and labor relations issues (Guest, 2002) in the context of China (Qiao et al., 2009), with more than half (10/19) of the total empirical studies collecting data from either interviews or a survey of workers. Qiao et al. (2009) critiqued that ‘the western literature often devotes little attention to employees’ reaction to HR practices . . . with majority of studies in HRM focus on the opinions of HR managers or decision-markers, and ignore the voices of employees’ (p. 2312). By examining employees’ perceptions regarding the existence of SHRM such as high-performance work system (HPWS) and their views on the changing labor regulations at the workplace in China signifies the balanced approach of examining HR and ER matters, instead of overwhelmingly managerial focus on SHRM in the past. Common issues emerged from the empirical studies that examined the relationship between SHRM and labor relations are found to be as follows: 1

Impact of SHRM on enhancing employee relations climate, improving the labor relations and reducing worker grievance and labor conflict. (e.g. Ngo et al., 2008; Choi and Peng, 2015; Cooke et al., 2016; Huang et al., 2016; Xi et al., 2017);

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2

Managerial strategies to deal with the external industrial relations regulatory changes. (e.g. Chan and Hui, 2012; Liu and Li, 2014; Wen and Lin, 2015; Chung, 2015, 2016; Huang and Verma, 2018); and

3

Workers’ perception about the effectiveness of China’s newly developed industrial relations laws and regulations (e.g. Chen, 2010; Friedman, 2014; Gallagher et al., 2015; Lüthje and Butollo, 2017; Wang and Cooke, 2017); and their actions to respond that would help explain the causes of labor conflict. (Chan and Pun, 2009; Elfstrom and Kuruvilla, 2014)

These three common themes from the empirical studies are further discussed in detail, followed by an explanation of the extent to which SHRM policies and practices adopted by both domestic and foreign firms could positively impact on employees and improving future human, civil and employment rights in China.

Impact of SHRM on labor relations General review and discussion on the relationship between HRM and labor/ employee relations (LR/ER) appeared around 2010 (e.g. Warner et al., 1999; Warner and Zhu, 2010). An actual empirical study testing the relationship between HRM and LR/ER was first carried out by Ngo et al. (2008) with a sample of 600 firms operating in China. The authors particularly examined the strategic aspects of human resource functions (SHRM) of the surveyed firms as well as seven areas of specific HR practices (i.e. selective hiring, result/behaviorbased appraisal; job-rotation, extensive training, competitive pay, performancebased pay and turnover minimization) and evaluated their impact not only on financial and operational performance, but also on employee relations (ER) climate measured by items such as work atmosphere, human relations, worker participation and communication. The findings show that both SHRM and HR practices were positively related to enhancing ER climate. The fact that ownership (such as SOEs, POEs and FIEs) did not significantly moderate the relationship between HR and ER indicated that the greater emphasis on SHRM in any enterprise in China would achieve a better ER climate, leading to more desirable employee relations’ outcomes such as workers’ commitment, involvement, participation and strong royalty to the organization. In contrast, Choi and Peng (2015) investigated some so-called humanized management practices adopted by a large electronic factory in South China, which faced an increased worker turnover caused by the conjunction of a tight labor market and a new cohort of migrant workers. The authors found that there was a discrepancy between the rhetoric in management philosophies and practices. The humanized management practices contained six principles (see Table 7.2), which were meant to be applicable to both managers and employees, somewhat

7 areas of HR practices: selective hiring, result/behavior-based appraisal; jobrotation, extensive training, competitive pay, performance-based pay and turnover minimization Managerial IR philosophies such as perception of Chinese trade unions as threat of business, useless bureaucracy, political necessity or operational input; respect of labor laws; belief in the value of employee involvement

Ngo et al. (2008)

Compliance to written labor contract, minimum wages; social insurance payment; overtime hour restriction Union’s function as collective voice, monopoly role of union and external affairs

Chung (2015)

Chung (2016)

Six principles of humanized practices: lead by reason; act with moral character; touch with emotion; discipline with the heart, teach with skill, and rule by law

Choi and Peng (2015)

Liu and Li (2014)

How is SHRM/LR measured and discussed?

Author (s)

Employer responses to changing three union functions

Overall labor law compliance

Improved capital-labor relations, reduced worker turnover; increased productivity

(Continued)

Depending on the strength of external pressures and tolerance of management on external pressures (i.e. government, party, worker, actors for CSR improvement), management strategies towards unionization could be different. There was a discrepancy between rhetoric and practices, challenging the paternalist HR approach to manage and improve the capitallabor relationship. Individuals still rely on threats to quit, or collective action to win concessions from management. Thick compliance in written labor contract, but thin compliance to social insurance payment, and no compliance to overtime restriction Employer emphasized managing individual grievance procedures to counter against a growing concern about ‘bottom-up collective voice’; minimize and decollectivize the monopoly role of union at the firm level and maintain while reducing union chairman’s role in external affairs.

SHRM and HR practices were positively related to employee relations climate, but ownership types did not significantly moderate the relationship between HR and ER climate

Financial & operational performance; Employee Relation climate Unionization: setting up union and union functioning

Key findings of the study

Outcomes

Table 7.2 Empirical studies on the relationship between SHRM and labor relations in China

A set of grievance management practices in China as identified by both managers and employees as: voice mechanism such as employee survey, opinion box, consultation meeting, open door policy, Communist partypeople liaison etc.

Satisfaction with HRM practices by Hall et al. (2008) used to measure employees’ perception of performance appraisal, training & coaching, pay, information sharing; Democratic management (DM) measured by employee participation in decision-making

Use of selective partnership practices from various sources: training & development; employee participation (also with representatives), flexible compensation, benefit/risk sharing, two-way communication, job/employment security Measure of labor contract length, short v. long and duration; unionization; index of employee involvement programs as part of HRM practices: formal employee suggestion system, participatory teams, open communications, formal information sharing and complaint resolution system

Cooke et al. (2016)

Huang et al. (2016)

Xi et al. (2017)

Short-term contract signed; average labor contract duration; flexibility-inducing HR practices

Employee attitude with affective commitment, turnover intention and job satisfaction

Sources of grievances were identified as remuneration, pay inequality, unequal social security distribution, poor management competence; work practices (long working hours) and work allocation/pace; work autonomy, absence of voice mechanism

Comparison of two models: pluralist legalistic procedural justice-oriented HRM (West) v. unitarist paternalistic pragmatic problem-solvingoriented HRM (China) Employees perception of management behavior in response; trade union behavior; organizational commitment, trust in senior management

It was found that the positive effects of multilevel predictors such as key environmental (industry level factor) and org contingencies (internal competition) on manufacturers’ use of flexibility-inducing HR practices

A positive relationship between employees perceived efficacy of democratic management and org commitment was found, but the mediating effect of trust in senior management weakened the relationship; no significant result was found to verify the relationship between DM and employees-line managers relationship, despite the latter affect positively on organizational commitment. Partnership practices lead to better labor relations climate, which mediated effectively the relationship between HRM and employee attitudes.

Key findings of the study

Outcomes

Note: only empirical studies with measuring and testing the aspects of HRM policies and practices were included in this table, please refer to other details of all 19 empirical studies in Appendix 2 and labor conflicts and resolutions in Table 6.3.

Huang and Verma (2018)

How is SHRM/LR measured and discussed?

Author (s)

Table 7.2 (Continued)

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underlying the self-proclaimed human focus of the strategy with ‘a construction of workers as irresponsible, spoiled children who needed to be led, moved, touched, taught and ruled’ (Choi and Peng, 2015, p. 300). Instead, the managers in the factory were found to either use a cogent managerial control (hard) approach or a lucid human relations (soft) approach to supervise their subordinates with the intention of improving capital-labor relations, reduce worker turnover and increase productivity. However, the authors concluded that the use of the paternalist humanized HR approach might help managers increase control over employees, but individual employees still heavily relied on threats to quit, or collective action in order to win the concessions from management. Prior studies (e.g. Tsutsui, 1997; Lee, 2001; Li, 2007) on the development state model of HR (i.e. East Asian managerial paternalism) argue that the implementation of paternalist management would help reduce worker turnover and improve capital-labor relationships by having relative industrial peace and high worker commitment, leading to phenomenal economic success especially in Japan, and to some extent China as well. The key enabler of using the paternalist approach is the high profit margins that are able to help increase wages and provision of costly corporate welfare programs. However, when the profits of those at the bottom of the global supply chain are squeezed, it would be difficult to live up to its paternalist promises. Choi and Peng (2015) critique that ‘from the workers’ point of view, humanized management is largely irrelevant because it is not reflected in significant changes in pay or working conditions’ (p. 300). Thus, without substantial improvements in workers’ pay and conditions, paternalist rhetoric will not help to improve capital-labor relationships. This point of argument is concurred by Cooke et al. (2016) who conducted a multiple case study of four manufacturing companies in China, and found a set of strategic HR practices used to address workers’ grievances (on remuneration, pay inequality, unequal social security distribution, poor management competency, long working hours, lack of work autonomy etc.) are related to setting up certain voice mechanisms such as employee survey, opinion box, consultation meeting, open door policy and Communist party-people liaison. With the application of the institutional theory, Cooke et al. (2016) proposed an unitarist paternalistic pragmatic problem-solving-oriented HRM model that could be used to further manage workplace grievances and enhance better employee relations in the context of China’s business environment with ‘neither an institutional regulatory framework nor procedures for resolving milder forms of workplace grievances’ (p. 2119). It is pragmatic because despite various voices mechanism might be available, but the nature of the unitarist’s approach to employee relations means that managers can determine how they are used and that may not always favor the workers’ best interests. Cooke et al. (2016) compared China’s model with the western pluralist legalistic procedural justiceoriented HRM model, and argued that although the western model is not currently applicable to China the provision of some voice mechanism at the firm level, especially with procedural justice to handle grievances, would definitely be beneficial to the improvement of workplace relations.

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Huang et al. (2016) nonetheless applied the idea of the pluralist approach in their study of employees’ perception of SHRM and labor relations among 179 workers of coal-mining firms in China. The authors used the social exchange theory to argue for the possibility of adopting the western concept of ‘democratic management’ to exchange employees’ willingness to participate in decisionmaking so as to enhance organizational commitment. As a result of China’s new regulatory changes, coal-mining companies have been required to have an active role in the ACFTU to assist workers, and their line managers must provide opportunities for their subordinates to have a voice in decision-making under the new legal guidelines. It is anticipated that subordinates may become obligated to reciprocate with an improved attitude towards line managers and to show willingness to cooperate and build good employee-line-manager relations. However, the role of trade unions acting for workers’ interests was found to be limited, despite the government’s mandatory requirement of enterprises to implement a set of so-called ‘democratic management’ strategies at the enterprise level to encourage the arbitrary rights of ‘democratic decision-making, democratic participation and democratic supervision via various measures in line with the laws and regulations’ (Huang et al., 2016, p. 231). Therefore, the pluralist approach to effectively manage employee relations for the long term would be constrained by China’s specific institutional factors. The study concluded that no significant result was found to verify the relationship between democratic management practices and employee-line managers’ relations. But the fact that better employee-line managers’ relations would increase the level of organization commitment ought to trigger the enterprise’s attention to put more effort into developing suitable SHRM policies and practices in order to create a favorable ER climate (see earlier discussion by Ngo et al., 2008). The last empirical study of examining the relationship between HR and ER was conducted by Xi et al. (2017) with a sample of 1265 employees and 190 HR managers from 190 manufacturing and service firms in China. The authors advocated an idea of partnership-based HR practices, consisting of training and development, employee participation, flexible compensation, benefit/risk sharing, two-way communication, participation by employee representation and employment security, and evaluated the impact of these partnership practices on employee’s affective commitment, job satisfaction and quit intention. The findings show a positive relationship between partnership practices and better labor relations climate. Although not explicitly, the study is essentially based on the unitarist approach to managing employee relations, as it totally excluded the role of trade unions in the partnership and contained a managerial focus on building partnerships with individual employees.

Employer’s managerial strategies in response to IR regulatory changes In the event of a changing labor relations landscape accompanied by the stipulation of several labor law and regulations in China since the mid-1990s, employers

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were under pressure not only to deal with increasing labor unrest internally, but also to develop management strategies to cope with the compliance with IR legislative change. In our review, we identified several studies (e.g. Liu and Li, 2014; Wen and Lin, 2015; Chung, 2015, 2016; Huang and Verma, 2018) that focused on examining the effectiveness of management practices (including HRM) as applied among firms in China to deal with the external industrial relations regulatory changes and manage rising labor issues such as high turnover, and employee disengagement at work. Using a multiple case analysis approach, Liu and Li (2014) applied the idea of strategic choice theory to examine managerial ideologies and strategies toward union organizing and functioning under the external environmental pressures (defined as from the official trade unions, i.e. ACFTU, local government/labor bureau, the Party, workers and actors of global corporate social responsibility movement) and their impact on unionization at the firm level. Several managerial IR philosophies such as perception of Chinese trade union (i.e. ACFTU) as threat to business, useless bureaucracy, political necessary or operational input; respect of labor law and belief in the value of employee involvement were examined. It was found that depending on the strength of external pressure and tolerance of management on external pressure, management strategies towards unionization could be different. However, overall findings indicate that a fundamental problem of unionization in Chinese enterprise is the lack of workers’ voice and genuine participation in management decision-making and collective action. The Wenling case discussed earlier by Wen and Lin (2015) in the context of a large number of household-based woolen sweaters manufacturing workshops in Xinhe country of Zhejiang province illustrated a corporatist approach adopted by rural enterprises in China to manage employee relations. Despite the success as it was claimed and praised by the Party-state, Wen and Lin (2015) argued that the Wenling model could hardly be replicated in China. However, it is believed that without institutionalized collective bargaining, the reconstruction of the Wenling’s corporatist system of IR did help reduce serious labor conflicts, regulate wage growth, mitigate workers’ discontent. Furthermore, employers were more able to attract and retain skilled workers, solve labor shortage and promote regional economic growth and in some way maybe assist the Party-state to build a ‘harmonized’ society. It would be interesting to further investigate what HRM strategies, apart from partnering with spontaneously organized grassroot unions, adopted in the manufacturing workshops in Wenling help improve labor relations. Chung (2015) examined the outcomes of compliance to the labor law by firms operating in China that adopted the selective enforcement strategy. The HR components of this selective strategy cover law compliance, compliance with a written labor contract, implementation of using minimum wages in pay design, use of social insurance payment and overtime hour restriction. With an analysis of compliance datasets from 23 electronics companies together with interviewing 27 unions cadres, 24 lawyers and over 100 workers, Chung (2015) found two types of compliance: thick versus thin. Thick compliance was largely reflected in the extensive use of a written labor contract, whilst thin compliance was with

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social insurance payment, which was heavily monitored by the labor bureau at the time of implementing ‘Mandated Management Guidelines for Labour Funds’ (2015). However, minimum wages regulation (2014) and overtime restriction was not observed at all, despite these being stated in the laws. China’s labor bureaus appeared only to deal with new law enforcement for reporting purposes, but readily overlooked others that were not required to be reported. Using the unitarist approach, Chung (2016) examined a foreign-invested firm in China and found that the employer adopted a unique IR strategy in response to the legal changes in China. The investigated firm emphasized managing individual grievance procedures to counter against a growing concern about ‘bottom-up collective voice’; to minimize and decollectivize the monopoly role of union at the firm level; and to maintain the union’s administrative role as required by the Party-state while reducing the union chairman’s role in the external affairs. Although types of HR voice mechanism used in the firm is not specified, organizational strategy on grievance management of individual employees on a case-to-case basis was emphasized. Lastly, Huang and Verma (2018) supported the idea of the unitarist approach that had been widely adopted in the manufacturing plants in China as they examined the influences of international competition pressures and the implementation of Labor Contract Law on the firm’s signing of short-term contract and on the induction of flexibility-based HR practices. Flexibility-inducing HR practices were measured by labor contract length, short v. long and duration thereof; unionization; index of employee involvement programs as a part of HRM practices, which included a formal employee suggestion system, participatory teams, open communications, formal information sharing and complaint resolution system. The findings showed the positive effects of multi-level predictors such as key environmental (industry level factor) and organization contingencies (internal competition) on the manufacturers’ use of flexibility-inducing HR practices. However, to what extent the flexibility-inducing HR practices likely help improve the ER/LR climate was not specifically assessed in the study.

Employee response to IR regulatory changes, labor conflicts and HRM implications A few studies have provided empirical evidence of the employee response to the IR regulatory changes in China. Here we present five studies (e.g. Chan and Pun, 2009; Chen, 2010; Chan and Hui, 2012; Friedman, 2014; Lüthje and Butollo, 2017) that directly collected data from workers and union officials; and three studies (e.g. Elfstrom and Kuruvilla, 2014; Gallagher et al., 2015; Wang and Cooke, 2017) with a sample of official strikes’ datasets and court rulings to discuss the reasons for employees’ reaction to the regulatory changes and subsequently actions of strikes, protests and disputes. We also discuss the HRM implications as a result of the analysis of employee responses. Despite the vagueness of the labor laws in China on the right to strikes, there have been an increasing number of self-organized industrial actions spreading

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across China in recent times (Wang and Cooke, 2017). Nevertheless, the impact of the new labor regulations on workers has not been well-documented (Gallagher et al., 2015). The patchy research also has different focuses on the issues addressed according to the different researchers’ interests (see Table 7.1). To better understand the relationship between SHRM and IR, we organized the empirical findings according to the causes of labor conflict as raised by workers and union officials/cadres and resolutions discussed in the literature to address the conflict (see Table 7.3). According to Elfstrom and Kuruvilla (2014), China’s labor conflict was induced by several factors, which can be categorized as reactive, defensive and offensive. As a result of economic reform and large scale restructuring of SOEs, many workers were left without formally being promised ‘cradle to grave’ social welfare, housing, medical insurance, in addition to job security. Furthermore, dispatched workers from SOEs have often reacted to official corruption with ‘subsistence crises and a profound sense of betrayal’ and would launch the so-called ‘protests of desperation’ as a reactive strike strategy (Lee, 2007; Elfstrom and Kuruvilla, 2014). To address this type of worker’s strikes, SOEs have especially made an effort in recent times to recover and renew the cadre system with provision of standard social welfare and benefits extended to employees. Liang et al. (2012) claimed this approach as a typical Chinese SHRM to address the recent institutional changes and as enterprises’ smart tactics to attract talents under tight labor market conditions. The reactive strike strategy adopted especially by an increasing number of rural migrant workers in recent years was because of rampant grievance and injustice induced by the institutional discrimination via the hukou system whereby migrants were limited to access to urban social insurance and schools for their children. The resolution to these issues tends to take the form of wildcat strikes by rural migrants in the past. However, in more recent times, the legal route to justice has been used with assistance from labor non-governmental organizations (NGOs) (Elfstrom and Kuruvilla, 2014; Gallagher et al., 2015). Organizational grievance mechanisms may be able to resolve the issues; however, it would be rather limited without sufficient collective bargaining with genuine union representation of workers’ interests at the workplace (Chan and Pun, 2009; Friedman, 2014). The worker grievance as another reactive factor to strikes and labor dispute was caused by the large gap between wages paid to international expatriates and local workers, particularly in the case of foreign-invested firms, such as the Honda’s workers strike case presented by Chan and Hui (2012). The reactive strikes in the Honda case escalated to an offensive one as a new generation of relatively well-educated migrant workers also saw the puppy type of trade union representation at work that did not represent their interests, so they called for the democratic election of their own union officer. Offensive strategy signifies a Chinese worker’s high level of collective consciousness of association and rights to negotiation and collective bargaining at the enterprise level and demand for more from work (Chan and Hui, 2012; Elfstrom and Kuruvilla, 2014).

Working condition, living space, respect for migrant community

Worker grievance, strikes

Wages gap between expatriates and local workers (500:1) Democratic election of trade union to represent workers’ interest Reactive: corruption, betrayal; injustice discrimination Defensive: wage arrears; isolated dormitory system Offensive: demand for more, better work conditions, respect

Chan and Pun (2009)

Chen (2010)

Chan and Hui (2012)

Elfstrom and Kuruvilla (2014)

Causes of labor conflict

Author (s)

Offensive strikes to improve wages and working conditions

A quadripartite interaction; nonjudicial process v. legal proceedings for labor dispute Strike; workplace trade union reform

Strike patterns differ between Taiwanese and German factory

Resolution

Table 7.3 Causes of labor conflict and resolution methods in China

A holistic change in workers’ demand goes beyond wages, Chinese workers appear to want more of job details, increased respect of their input to workplace

A new generation of relatively well-educated migrant workers has developed a higher level of consciousness of associational rights through their participation in collective struggle.

Without strong leadership or formal organization, and collective bargaining, most of China’s labor conflicts are triggered off squarely at the point of production, with the living areas (hukou registration system) as bedrock for labor mobilization. No proper legal proceedings but non-judicial process of industrial conflict resolution is not effective to meet worker’s demand

Comments

Enforcement of labor contracts Employment regimes, wage increases

N/A

Friedman (2014) Lüthje and Butollo (2017)

Wang and Cooke (2017)

Sectoral level of bargaining Induced labor conflict- no resolution was discussed Court rulings: violation v. rule of reason; Balance of industrial relations parties

Unions suffer from a lack of credibility and capacity to enforce labor contracts. TU failed to address the issue of living standards and wage increases; call for more democratic workplace representation, the establishment of collective bargaining at factory and industry levels, and inclusion of labor standards Majority court rulings uphold the employers’ decision to dismiss strikes on the grounds of ‘violation’, instead of ‘rule of reason’; a dominance of a formalist approach to legal reasoning underpinned by the courts’ professional conservatism and political duty.

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The most common causes of labor conflict are the defensive methods of claiming wage arrears, the isolated dormitory system and depressive working conditions. This is where SHRM would perhaps play an important role in instigating a holistic change to provide a clear job description, opportunities for employee involvement and participation in decision-making and improvement of working conditions via addressing dormitory living space, leaving an allowance for rest and visiting family members in rural areas and occupational health and safety hazards rampant in the manufacturing plants and construction sites. This type of defensive strike was also reported among Chinese firms operating overseas. For example, Cooke (2014) stated that labor management practices in the construction industry whereby Chinese firms had imported workers from China instead of using local workers in Africa and Asia were akin to that of the dormitory labor system whereby the mass production manufacturing plants employed primarily rural migrant workers inside China. Exploitative management practices (e.g. wage arrears and unfulfilled promises of pay level) were also found among the Chinese subcontracting firms. This behavior had induced incidents of confrontational industrial disputes within the work camps. Zheng (2015) further argued that when facing local African employees, whereby workers had stronger consciences of their industrial rights, Chinese emerging multinational firms have found the task of managing labor relations in countries whereby industrial relations are more institutionalized to be particularly challenging. However, meanwhile, inside China, employers were perceived to be favored under the current legal changes, with many court rulings continuing to uphold the employers’ decisions to dismiss strikes on the grounds of workers’ violation of workplace rules and regulations, instead of applying the ‘rule of reason’ to identify the causes of strikes and justice resolution to the industrial conflict (Wang and Cooke, 2017). Under the current changing labor laws and regulations, together with a greater informalization of China’s urban labor market and use of a labor subcontracting system that is deliberately designed to evade the strictures of the new laws, workers’ interests may be further eroded if there exists an absence of improved remuneration and working conditions at the firm level (Gallagher et al., 2015). There is indeed lots of room for SHRM to play a flexible and influential role in changing the labor relations’ climate for both Chinese firms overseas and firms operating in China.

Conclusion – future research agenda This chapter outlined several theory development paths towards SHRM and labor relations management in the western context as well as their applications to the China context. From an analysis of the findings from 19 empirical studies examining the relationship between strategic HR and IR in China, it is found that China has been taking an experimental and decentralized approach to the development of new labor relations frameworks (Friedman and Kuruvilla, 2015), which has, to some extent understandably not entirely resembled those industrial relations systems in the western context, given China’s unique cultural and

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institutional context. The unitarist approach of SHRM prevalently used by Chinese firms overseas and firms operating in China to manage their labor relations was found in fact, to not be effective in protecting labor rights, upholding human values of dignity, equality and freedom of association. There is clear evidence of more labor conflicts and erosion of workers’ interests that have either been officially recorded (Elfstrom and Kuruvilla, 2014; Wang and Cooke, 2017), or empirically found in the existing studies (Choi and Peng, 2015; Chung, 2015, 2016; Cooke et al., 2016; Lüthje and Butollo, 2017). Because of the newness of implementation of labor laws and regulations that would influence workplace practices, in addition to the inclusive argument on the strategic HR-IR link (Nankervis et al., 2017), there appears to be more grounds to break for future innovative research in this field of strategic labor relations management in the context of China. In the remaining chapter, several paths for further research to build a better understanding of SHRM and labor relations management issues in China are proposed. First, there is an overwhelming claim to adopt a paternalist HRM approach to managing labor relations by firms operating in China (e.g. Friedman and Kuruvilla, 2015; Cooke et al., 2016; Sheldon and Sanders, 2016). Yet empirical studies testing the relationship between strategic HR and labor relations (see Table 7.2) tend to use a variety of measures on SHRM, posing the issue of inconsistency and non-generalization for testing in any future study. It would be useful to define what constitutes the paternalist HRM approach, how different it is as compared to more established high-performance/high-commitment work practice models commonly used to test SHRM in China. Indeed, the outcomes of SHRM on various dimensions of labor relations was not consistently studied in the existing literature. Employee relations climate (Ngo et al., 2008); level of unionization (Liu and Li, 2014); intensity in labor law compliance (Chung, 2015; Huang and Verma, 2018); and employee attitude, turnover intention and organizational commitment (Choi and Peng, 2015; Huang et al., 2016; Xi et al., 2017) were used, but there was no clear consensus on whether these dimensions clearly measured the outcomes of SHRM, or by and large, whether these constructs may be mediators/moderators with an effect on the relationship between SHRM and actual organizational performance and not just reflected in financial profits for the shareholders, but also in social outcomes such as employee wellbeing and improved human rights to collective action especially as China intends to build a harmonious society with industrial peace, as will be addressed in the next chapter. Second, to address social outcomes within the SHRM framework as it relates to managing labor relations is in fact a lie in the mindset of China’s current leaders’ political agenda (Gore, 2014). Thus, it is anticipated that there will be more calls for building additional socially responsible organizations in China to address rampant issues of human rights’ abuse (China Labor Bulletin, 2009; Human Rights Watch, 2018), pollution and environmental degradation and workplace health and safety hazards. Yet, we are not clear how the socially responsible organization with an ethical perspective of HRM could really help

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improve work conditions as well as societal levels of wellbeing with reference to clean air, water and environment. Although some patchy research (e.g. Cooke and He, 2010; Shen and Zhu, 2011; Hofman and Newman, 2014; Shen and Benson, 2016) have started to examine the issues of corporate social responsibility and its impact on employee work behavior, there is a greater need to further assess the aspects of ethical HRM system from a strategic point of view and evaluate its impact on improving social outcomes. Third, in order to sufficiently address the relationship between SHRM and labor relations in the context of China, the application of institutional theory in conjunction with the stakeholder perspective would deem to be fruitful in future empirical studies. Despite various theoretical approaches being adopted in the existing empirical studies (see Table 7.1), the use of institutional theory has been rather limited, only one study (i.e. Huang and Verma, 2018) applied it to explain the adoption of flexibility-induced SHRM practices by Chinese manufacturing firms under the changing international competitive environment and domestic legal framework. Given the inadequacy of the Chinese trade unions to represent the wider workers’ interest in the midst of resistance from private sector and small business employers (Cooke, 2012), how additional stakeholders (such as the Party-state, local government/labor bureau, employers and employer’s associations, workers and their communities, customers and suppliers in the global chain and global non-governmental organizations – NGOs) could be included for consideration in designing and developing the ethical HRM system for organizations in China might impose an interesting terrain for future research. In particular, use of the stakeholder theory, the various stakeholders’ ability and roles to either interfere or help to address the growing demand for defending workers’ human and civil rights and interests could be further studied. Under the banner of ‘building a harmonious society’ and ‘fulfilling the Chinese dream’, are these stakeholders capable of developing more socially responsible firms in China with the aim of achieving China’s national goals of social and economic development in the prevailing environment of eroded welfare benefits, job insecurity, health and safety risks, especially for rural migrant workers and general labor market flexibility and instability as has been witnessed in recent years? This is an important research question for future study in China, which will be elaborated a bit more in the next chapter.

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8

Enterprise culture, spirituality and the ‘Chinese Dream’

Introduction Scholars in the field of SHRM have been calling for more research into examining the mediators and moderators that might be hidden in the ‘black-box’ of HRM-performance link (e.g. Purcell et al., 2003; Boxall et al., 2011; Jiang et al., 2013; Chowhan, 2016; Jiang and Messersmith, 2018). One such important mediators that might be able to assist in effectively addressing the increased tension of labor relations and human rights abuse widespread in China as discussed in the previous chapter is corporate culture of shared values. Edgar and Geare (2009) argue that organizational culture is reflected in strong values shared collectively by the corporates’ sectional groups. If every employee shares the same perceptions of the firm’s goals and the appropriateness of its HRM policies, practices and processes to achieve them, ‘feelings of inequity and dysfunctional behaviour associated with them’ would be less likely to arise, thus a positive employee relation climate can be reinforced to achieve organizational effectiveness (Edgar and Geare, 2009, p. 223). Furthermore, based on the normative isomorphism within the institutional perspective (DiMaggio and Powell, 1983), a corporate culture with ethical and spiritual values enables organizations to connect to a larger community and achieve not only a higher purpose (Driscoll and McKee, 2007), but also the legitimacy of business operation and subsequent competitive advantage in the marketplace (Paauwe and Boselie, 2003). Appropriate corporate culture is also argued to be useful to create positive employee’s work attitudes, better firm performance and innovation (Tsui et al., 2006; Wei et al., 2011). The ethical HRM system that is much needed among organizations operating in China and may be potentially developed by various stakeholders’ inputs, could help change organizational behaviors and align individual and organizational values closely to build a positive corporate culture (Luthans and Youssef, 2007; Hawes, 2008). A positive corporate culture is also often perceived as ‘organizational spirit’ that can help create a workplace to inspire employee creativity and innovation (Fawcett et al., 2008). However, it remains unknown to us how corporate culture of shared values is conceptualized under China’s unique cultural and institutional setting, and whether it is in fact

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a useful mediator of the relationship between HRM and firm performance? In particular, has the building of a positive corporate culture with its in-built spirituality helped inspire employee creativity, and better manage an employee relations climate that may help improve working conditions and sustain the firms in China? In an empirical test of whether a corporate culture of share values would make a difference to employees and society in the American context, Posner et al. (1985) concluded with the following statement: The HR function, because it is the people function in the firm, must above all be concerned about what people want, need, and value in their work life. And as stewards of the organization, they must also attend to its welfare. It is a constant vigil. By keeping watch on values, HR managers remain alert to the critical task of aligning individual and organizational hopes and dreams. (Posner et al., 1985, p. 308) Emphasizing the important role of strategic HR to align ‘individual and organizational hopes and dreams’ with corporate culture of shared values has been theoretically supported by the resource-based view (RBV) (see Snell et al., 1996; Ulrich and Ulrich, 2010; Harrison and Bazzy, 2017). As earlier discussed in Chapter 2, strategic resources such as human capital (i.e. individual employee’s knowledge and skills), social capital (i.e. internal and external relationships and network exchanges) and organizational capital (i.e. processes, technologies and database and systems) can be utilized not only to develop core competencies and dynamic capabilities, but also to build distinctive and non-imitable organizational cultural types such as social responsibility, harmony, customer orientation, development and innovation (Tsui et al., 2006) in order to achieve competitive advantage in the marketplace (Snell et al., 1996; Wright et al., 2001; Ulrich and Ulrich, 2010). However, in the context of China’s current arrangement of industrial relations (see Chapter 7), accompanied by a large proportion of population still in poverty and floating migrant workers around the country, maintaining better labor/employee relations climate at the firm level and general industrial peace (stability) at the national level has been set as the top priority in China’s recent political agenda. This is largely reflected in the Party-state’s propaganda call for ‘building a harmonious society’ by the former President Hu Jintao (Lee, 2009), and more recently by President Xi Jinping’s mandate for individuals’ pursuit of ‘happiness’ via ‘the great rejuvenation of the Chinese nation’, i.e. ‘Chinese Dream’ (Wang, 2014; Li, 2015; Sørensen, 2015). Thus, it can be perceived that corporate culture building among enterprises in China may also be subject to institutional influences such as political, social and economic factors unique to China together with its distinctive national culture. Therefore, HR managers in China may have another layer to consider when building a corporate culture to align individual and organizational values with China’s national dream.

Culture, spirituality and the ‘Chinese Dream’ 149 In this chapter, the central focus is on discussing various aspects of corporate culture of shared values as it relates to China’s context, especially within the concept and context of ‘Chinese Dream’ (Wang, 2014). In the following chapter, the RBV and institutional theory that are applicable to support the link of HRM to corporate cultures and workplace spirituality, together with additional theories (e.g. positive psychology, job-demand theory etc.) will be further discussed to underline corporate culture, meaning of work and workplace spirituality.

Contextualizing corporate culture and spirituality within the ‘Chinese Dream’ The concepts of corporate culture of shared values and workplace spirituality and how these would relate to the ‘Chinese Dream’ can only be better understood in context. Thus, the concept and context of the ‘Chinese Dream’ will need first to be analyzed in order to contextualize corporate culture and workplace spirituality.

‘Chinese Dream’ The concept of ‘Chinese Dream’ (zhongguo meng 中国梦) as in the original phrase of ‘To realize national rejuvenation is the greatest dream of the Chinese nation’ (实现中华民族伟大复兴就是中华民族近代以来最伟大的梦想) was first proposed by the current Chinese President Xi Jinping at the 18th National Congress of China’s Communist Party (CCP) in November 2012, and has since been promoted as a slogan (Su and Xiao, 2015). To the outside world, as argued by Li (2015), ‘the holistic nature of the Chinese Dream’ contains ‘an internal and external policy statement’ produced by the Chinese Communist Party as ‘a new vocabulary in international relations lexicon’ that has a flavor of ‘enlightening China’s developments and transformations’ in the new era (Li, 2015, p. 505). It is not our intention to analyze the implications of Chinese Dream for managing China’s complex international relations, especially with its troubling Asian neighbors such as Japan, Philippines and Vietnam in recent years. Readers who are interested in this aspect can refer to the papers written by Zheng Wang (2014) and Camilla Sørensen (2015) for further analysis of China’s foreign policy strategy under Xi’s ‘Chinese Dream’ narrative. For the purpose of this chapter, the main interest is to analyze how the ‘Chinese Dream’ is likely to be perceived by individuals and organizations in China and its relationship to building a corporate culture of shared values and workplace spirituality. To those Chinese residing inside and outside China, the perception of ‘Chinese Dream’ is often intertwined with the memory of a history of national glory and wealth as the center of the world in the past (prior to 1839’s First Opium War) and the century of humiliation by the western powers; and traumatic experiences of natural disasters, internal wars, class struggles and conflicts by Chinese who are eagerly hoping for peace, stability and a better life. Since 1949, almost every Chinese leader including Mao Zedong, Deng Xiaoping, Jiang Zemin and Hu

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Jintao had used the narrative of the ‘great rejuvenation of the Chinese nation’ in different ways, but with a unified message to seek the legitimacy of the Party’s autocratic leadership in the country. It is no exception for the current President Xi Jinping, who has also, with many rhetoric speeches, tried to convince the Chinese people that only under the leadership of the Party can the dream of having a better life and individual happiness be realized (Sebok, 2014; Wang, 2014). One may question why the Chinese people would buy into such a rhetoric, as no concrete plans were set to achieve such a dream that specifically advocates improved housing, education, public health and social welfare for individual Chinese in the near future? Three explanations may offer some enlightenment in understanding this elusive concept of Chinese dream seemingly accepted by Chinese people. First, the dream (or ‘The Road of Rejuvenation’) represents Chinese’s unique identity as an individual. Many outside China do not clearly understand ‘the deep-seated part of the Chinese psyche’ (Wang, 2014, p. 3). Each individual Chinese, whether educated or non-educated, often has a strong historical consciousness attached to their national experience of 5000 years of history, politics, philosophy, culture and literature that has been deeply ingrained in ‘Chinese thought, spirit and wisdom, embracing the economic, political, cultural, social and ecological aspects of China’s modern civilization’ (Li, 2015, p. 507). Different to an ideal or ideology that requires more specific description and could be understood more explicitly, a dream is oblique and only needs sensing by individuals. Thus, when the Chinese people took on this obscure concept of ‘dream’, they can personally identify it as ‘a rich, multifaceted, a complex, yet definite idea’ (Li, 2015, p. 507). Second, the dream represents the shared values of the Chinese people as a group. According to Galtung’s Choseness–Myths–Trauma (CMT) complex thesis (cited in Wang, 2014, p. 3), group identity is often shaped by chosen traumas and glories transferred from past to future generations through selective memories of traumatic and glorious events, as well as particular struggles that a group has endured. As aptly described by Wang (2014): As citizens of the ‘Central Kingdom’, the Chinese feel a strong sense of chosenness and pride at their ancient civilization and achievements. Chinese refer to the humiliating experience in the face of Western and Japanese incursion as national trauma. After suffering a great decline of national strength and status, this group has strong determination to revive its past glory and strength. That is the Chinese Dream. (pp. 3–4) Therefore, the realization of this elusive ‘Chinese Dream’ may be treated as the shared values and unified goals of the Chinese people as a group. Hence, when discussing the corporate culture of shared values in the context of China, it is important to demystify the actual shared values between individual employees and their work organizations, or the underlying shared values of the Chinese

Culture, spirituality and the ‘Chinese Dream’ 151 people as a national group, manipulated by the Party-state (Wielander, 2018). As many critiques on the ‘Chinese Dream’ have pointed to its rhetoric on using the Party’s power to control the production of discourse, the shared values of ‘Chinese Dream’ may be articulated to influence the less powerful to accept the discourse (Su and Xiao, 2015). It is also argued that the ‘Chinese Dream’ as frequently described and characterized by the officials and the Party is concerned primarily with national rejuvenation, rather than individual wellbeing (Su and Xiao, 2015). Wielander (2018) moved further to critique that this type of discourse is similar to those messages presented by Mao Zedong in the 1950s, calling for young people to adopt ‘correct spirit’ by putting collective happiness above individual happiness, and to embrace the individual sacrifices required to achieve the higher collective aim. Despite being aware of the likely sacrifices individuals need to offer to the altar of the collective goal of ‘National Rejuvenation’, the third reason why the Chinese people still resonate with the ‘Dream’ concept is that it embodies hope and dreams that are closely associated with the concept of ‘positive psychology’, which is not only much hailed by the Chinese Party leaders who are much afraid of a negative dissenting voice from both domestic and international societies, but also well received by the common Chinese people as one of the most effective life strategies to cope with traumas, adversities, setbacks and pressures from many externally oriented and unexpected changing environment. Luthans et al. (2005) attributed the Chinese way of being hopeful, resilient and optimistic as a set of positive psychological capital that was found to have contributed to improved performance, and China’s years of rapid economic growth. Cooke et al. (2017) also tested Chinese banking employees’ resilience (defined as ‘one’s ability to adapt effectively in the face of severe adversity’, pp. 1–2) that was used as an additional individual job resource and found that resilience positively enhanced job performance and work engagement. Therefore, it is possible that the ‘Chinese Dream’ that symbolizes hope and a better future would ring true to individual Chinese. For Chinese employees, having this added psyche of being positive, having positive energy (正能量) or a positive attitude towards life overall, they are aspired and hopeful to obtain individual happiness in the midst of navigating paradoxical institutions (e.g. a market-based state capitalist political and economic system with Chinese characteristics of socialism vs. Marxist ideology of proletarian totalitarianism), and rhetoric slogans such as the ‘Chinese Dream’ may be just helpful to face day-to-day life challenges. Wielander (2018) argued that this Chinese new-found psyche of being positive was in fact not new. Back in Mao’s era in the 1950s, ‘building a happy society, not “being” happy’ was emphasized with demands for the Chinese to have the right ‘spirit’ (jingshen 精神) and rejoice in ‘sacrifice for the greater good’. In recent years, constructing a ‘spiritual civilization’ (精神文明) was emphasized by the Party-state in addition to building the ‘material civilization’ through rapid economic growth and wealth creation. Thus, ‘spiritual messages’ such as promoting continuity, stability and happiness dominate the Chinese media. The key purpose of such propaganda, according to Wielander (2018), is to facilitate

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acceptance and seek consensus on the shared values of ‘Chinese Dream’, which was believed to have derived from ‘the socialist root, instead of the capitalist, and contain a strong sense of a socialist development path, a socialist theoretical system (Marxism) and a socialist political system with Chinese characteristics’ (Li, 2015). Further theoretical discussion on this aspect will be presented in Chapter 9. Now let’s turn to examine the differences between American and Chinese Dreams.

Differences of American and Chinese Dreams From this analysis, it can be argued that the Chinese dream is interpreted differently from the American dream. Table 7.1 outlines several differences of these two paradoxical dreams, which are relevant to the subsequent discussion of corporate culture and SHRM at the firm level. The fundamental differences lie in whether the state plays a role in fulfilling individual and organizational dreams. As contended by Li (2015), the Communist Party (representing the Chinese government) ‘should be the leader and driver of the realization of the Chinese Dream’, whilst it is clear that individuals are the dreamers who will fulfill their own life and professional goals in the American context. With a critical metaphor analysis of President Xi Jinping’s Chinese Dream rhetoric, Sebok (2014) also concluded the crucial role played by the CCP to achieve the Chinese Dream, ‘because the right path was only found under its guidance’ (p. 45). It is the CCP’s aspiration and mandatory mission to seek collective happiness for the Chinese people as a way to promote its continuity and stability in leadership (Wielander, 2018). However, according to Xi’s numerous speeches, the individual Chinese is obliged to make an effort to achieve it as this will give them a powerful sense of common purpose that will help increase national cohesion (Sebok, 2014).

Table 8.1 Comparison of the American Dream vs. the Chinese Dream Items for comparison

America Dream of Capitalism

Chinese Dream of Socialism

Corporate culture

Shared values/vision among stakeholders

SHRM Goal

Create meaning at work to promote individual wellbeing/wellness Individually focused Free, with varieties Constant change

Shared values/vision directed by the Party to secure individual & org’s consensus Encourage individual happiness and wellbeing via resilience and hard work Collectively driven Restricted, dominated by the state Reasonably stable, slow change

Positive psychology movement

Positive psychology mingled with Marxist spiritual civilization movement

Target Control types Frequency for change Theory guidance

Culture, spirituality and the ‘Chinese Dream’ 153 Thus, the ultimate target from realizing the dream is different. One is collectively driven by the Party for all Chinese people, the other is individually focused. Thus, a SHRM system that may help achieve American Dream needs to address the needs of individuals to search for meaning at work and find a fit between their values and those of their organizations. In contrast, the HRM system that organizations in China need to consider may be the one to better facilitate the development of employee resilience (Cooke et al., 2017; Huang et al., 2017; Meng et al., 2017) and an attitude of accepting hard work and paradoxical obstructions on the path to realize the Chinese Dream (Sebok, 2014). Despite the differences between American and Chinese Dreams, the concept of being a hopeful and optimistic dreamer at work and in life is closely in line with the burgeoning development of positive psychology theory, first developed by Martin Seligman and his colleagues in the special issue published in American Psychologist in 2000 (Seligman and Csikszentmihalyi, 2000), which will be elaborated further in the next chapter. For now, the positive psychology movement perhaps has a more profound impact on China than on America and elsewhere, as corporate leaders and politicians in China have been readily adopting the concept to encourage (if not totally manipulate) people to focus on ‘beautiful and positive things in life’ and promise that if individuals control their own mental attitude, happiness will eventually flow. According to Wielander (2018), positivity is now perceived by the CCP as equal to newfound ‘correct spirit’ in the path to realizing the ‘Chinese Dream’. In sum, understanding the perception of the ‘Chinese Dream’ lived as an individual and group identity of the Chinese people, as well as its symbolic nature with hope and positivity would enable us to contextualize the concept of corporate culture and workplace spirituality, and to reflectively examine the link of these variables to SHRM in contemporary China.

Corporate culture of shared values To understand the uniqueness of Chinese representations of corporate culture, also known as organizational or enterprise culture (translated as either qiye wenhua 企业文化 or gongsi wenhua 公司文化), we must first understand how the concept has been applied outside China, especially in the west (Hawes, 2008). The term ‘corporate culture’ appeared approximately at the same time as HRM emerged in the late 1970s and early 1980s. A vast amount of literature has since been devoted to examining the various aspects of corporate (organizational) culture. Google search for ‘corporate culture’ hits 26 million results within half a second, and ‘organizational culture’ hits 36 million results within 0.71 seconds. Nonetheless, a unified definition of ‘corporate culture’ or ‘organizational culture’ is not available (Watkins, 2013). But organizational culture is believed to be shaped by the main culture of society so it is important to contextualize corporate culture within China’s wider cultural, political, economic, social and legal environment.

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In the west, corporate culture is best understood by the comparison of ‘have’ and ‘have not’ of those successful and non-successful companies (Hawes, 2008). William Ouchi (1981) in his book Theory Z attributed the success of Japanese companies as compared to the American ones to their having a strong culture with shared values. Posner et al.’s (1985) testing results from 1498 managers showed that shared values would have a positive impact on 1) feelings of personal success or job and personal stress; 2) organizational commitment; 3) self confidence in understanding personal and organizational values; 4) ethical behavior; 5) achieving organizational goals and 6) building better relationship with various stakeholders. A strong sense of shared values among firm members is considered to be the driver of the development of a unified, motivated and committed workforce (Ulrich, 1984). Edgar and Geare’s (2009) study of 417 employees (including managers, supervisors and workers) of 27 New Zealand firms also concluded that employees’ perception of shared values was one of the positive intermediary outcomes that mediated the relationship between HRM and firm performance. Corporate culture is also treated as the organizational personality and group identity, which is made of values, collective consciousness and unconsciousness, coping and defense mechanism, decision strategies and self-imposed rules and regulations, goals and attributions (Ulrich, 1984). When discussing how HRM is related to organizational culture, Ulrich (1984) suggested using ‘symbols, rituals, ideologies, language, stories, myths, relationship and humor’ as effective cultural communication tools (p. 117; see also Pettigrew, 1979). We will briefly discuss how firms in China have also used symbols, rituals, ideologies and language as well as storytelling to conduct the corporate culture building exercises in line with the ‘Chinese Dream’ discourse. Symbols, such as slogans, often used in Chinese society, are sometimes also readily displayed on the corporate building walls, as well as through training materials, written communications and recruiting presentations that serve to communicate to workers at all levels about corporate values (Ulrich, 1984; Hawes, 2008). The ‘Chinese Dream’ discussed earlier embodied with the key contents of improving individuals’ income level (coincided with the organizational offer of reasonable and attractive pay), better education (relevant to organizational training and development opportunities), equity and fairness much reflected in effective employment relations management, and better healthcare and clean environment, has captured all the ingredients exemplified by a corporate culture of shared values between employees and employers. And it is indeed easily being promoted as a slogan, as it resonates with individual employees’ desire and hope for a better life. That is why any visitors could see the slogan displayed in the airport or on streets as well as in the corporate world. Rites and rituals are customary and repeated actions (e.g. staff meeting, company news, annual Christmas functions, reward ceremony, farewell parties etc.) that indicate the values espoused by the organization (Ulrich, 1984), and ‘give employees a sense of belonging and meaning to their work’ (Hawes, 2008, p. 37). Numerous examples could be cited to see the use of rites and rituals in

Culture, spirituality and the ‘Chinese Dream’ 155 corporate culture building and to instill firm performance (see Guenzi, 2013). Hawes (2008) provided an example of Huawei – the largest technology company in China – that produces three monthly magazines every Huawei employee must read. The magazine is not just a source of information but the frontline to spread Huawei’s culture. Every three months, Huawei’s different departments and divisions hold a so-called ‘democratic meeting’ whereby every employee (including managers) must engage in self-criticism in front of all the other workers and the subordinates. Although the approach reflects the Communist Party’s technique of ‘thought control’, which is still alive in the modern privately owned corporation in modern China, employees, via this type of regular cultural adaption process, were thought to have developed trust in each other and a sense of belonging that would help promote meaningful work, and of course, more importantly, generate profits via high performing and collaborative teams (Hawes, 2008). Ideologies defined by Geare et al. (2014, p. 2277) as ‘a connected set of beliefs, attitudes and values held by an identifiable social group which refer to a specific aspect of social reality’. To employees, a specific aspect of social reality may be created according to different approaches (i.e. unitarist v. pluralist) to managing employee relations as adopted by organizations that was earlier discussed in Chapter 7. For example, the unitarist paternalist approach to managing employee relations now commonly adopted by the majority of Chinese firms may represent the newly developed ideology as a result of China’s economic reform to open up to the outside world and provide extensive exposure of SHRM ideas from textbooks and business schools’ management education. In addition, ideologies can represent invisible beliefs, moral principles and values that undergird organization decision-making, and are reinforced by reward and recognition programs, punishment and sanction, and socialization procedures, and by storytelling of heroes and leaders/managers of the organizations who are the most important carriers of the values and beliefs (Ulrich, 1984). Sebok (2014) recounted Xi’s numerous speeches that have used past Chinese wellknown heroes and leaders as stories to solicit the consensus of Chinese people to share his ‘Chinese Dream’s values and beliefs’. It is also noted that in China, the fundamental ideology of corporate culture is best reflected in Article One of ‘Guiding Opinion’ issued by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) in 2005 (cited from Hawes, 2008, p. 40), as follows: Building a progressive corporate culture is a significant factor in strengthening the [Communist] Party’s hold on power, in forcefully developing a progressive socialist culture, and in building a harmonious socialist society. It is something that is urgently required to enable enterprises to deepen their reforms, accelerate their development and grow bigger and stronger; it is a necessary choice to allow the Party’s dominant political position to flourish, to build a high-quality workforce, and to encourage people to develop to their full potential; and it is a strategic move that will enable corporations to improve the quality of

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Similar to the ‘Chinese Dream’, here we read that the principle by which to build an enterprise culture of shared values was in fact also contributed predominantly by China’s Communist Party (CCP). Barley (1983) argued for using the repetitive language as a technique with which to analyze the organizational cultures. An advantage of this method is its emphasis on everyday occurrences and routines rather than on dramatic or overtly symbolic aspects of culture. Use of this technique most successfully in history is of course by those with the authoritarian regimes led by the tyrannies, such as Lenin, Hitler and Mao. According to Hawes (2008), two kinds of Chinese texts: official and academic, to describe corporate culture in policy documents, especially with ‘Guiding Opinion’ issued by the SASAC mentioned earlier, and in various textbooks on corporate culture used by academics for teaching. When viewing the ‘corporateculture building’ as a key transformational technique that could solve many of the managerial problems facing corporations and simultaneously ‘allow the government to exercise more supervision over the privately managed economy’ (Hawes, 2008, p. 40), the CCP has opted for it and since then has encouraged all corporations in China, especially those SOEs to build corporate culture. Consequently, 95 percent of top 100 Chinese corporations have their main websites linked to corporate culture pages. This phenomenon suggests the active usage of language to promote corporate culture, regardless whether corporations have actually transformed their cultures or not, particularly in the areas of management styles, corporate values, work environment and employee behavior. Hawes (2008) argued that the excessive interest in adopting the concept of corporate culture of shared values was in fact closely delved into China’s past history and in line with the CCP’s recent call for joint effort to renew and rejuvenate national and individual wellbeing via the ‘Chinese Dream’, as he states here. The emergence of a unique Chinese representation of ‘corporate culture’ should not be surprising in a society where ‘culture’ has for centuries been intimately associated with national renewal and moral cultivation, and where the ‘work unit’ has been viewed as a place where culture and work are united. I see the corporate culture phenomenon in China as a pragmatic process of adaptation and accommodation by various corporate stakeholders, including the CCP, corporate managers and employees, through which the non-Chinese concept of corporate culture has been reinterpreted to fit into the Chinese political, social and business context – a context that has itself undergone dramatic changes in the past three decades. In the process, a more traditional Chinese idea of the business corporation, as a hybrid economic-political-cultural organization dedicated to national and individual improvement and renewal, has reasserted itself. (Hawes, 2008, p. 61)

Culture, spirituality and the ‘Chinese Dream’ 157 So far, however, there have been rather limited empirical studies on examining the representation of corporate culture of shared values among firms operating in China and its link to SHRM. This is understandable as there has been a general lack of research to either conceptualize or test the relationship between corporate culture and SHRM (Harrison and Bazzy, 2017). The closest study to link organizational culture to firm performance came from Tsui et al. (2006), who provided a summary report of three-combined studies of organizational culture adopted by Chinese-owned firms, as compared to culture types and dimensions used by those foreign-owned companies. The findings showed that organizational culture in China, that was taxonomized into five dimensions with different focuses (i.e. employee development; harmony; customer service; social responsibility and innovation) had a meaningful impact on managerial attitude and firm performance similarly to those displayed in the extant (Western) literature (Tsui et al., 2006). Although the authors did not link organizational culture to a SHRM system, the significance of using organizational culture to motivate and manage employees to develop effective firms was clearly emphasized. In the absence of empirical evidence on the impact of corporate culture of shared values on employees and organizations in China, some insights could be gained from examining the concept of ‘meaning of work’ and workplace spirituality as a window to understand how Chinese employees are being motivated through the current climate of national cultural building of shared vision via the ‘Chinese Dream’, and to what extent organizations in China may offer meaningful work and sensemaking of their corporate culture of shared values in order to achieve their organizational objectives.

Meaning of work, workplace spirituality and corporate culture In the extant western literature, there appears to be a consensus on an inherent relationship between meaning of work, spirituality and corporate culture of shared values. As stated by Frankl (1959), ‘man’s main concern is not to gain pleasure or to avoid pain but rather to see a meaning in his life’ (p. 115). In the organizational context, employees seek to redefine their places at work, often with a faith in shared values that appropriate organizational culture may offer to satisfy them and motivate them to endure in the midst of all challenges because they see the organizational shared values have deeper meaning than appear on the surface (Whyte, 1956, p. 6). Therefore, as argued by Rosso et al. (2010), ‘perception of meaning and meaningfulness of work is much related to individual attitudes, organizational values connected to spirituality and beyond’ (p. 95). According to Rosso et al. (2010), ‘meaning of work’ can be constructed both individually (i.e. a person’s own perception) and socially (i.e. from norms or shared values). Therefore, a range of different definitions of ‘meaning of work’ from an individual and organizational psychological perspective have tended to be associated with general belief, values and attitude about work as well as

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personal experience and feeling significance about work. From a sociological perspective, individuals attribute meanings to things or come to see certain aspects of their work and lives as more or less meaningful in ways that reflect socially or culturally influenced worldview and value systems. For example, in the eastern cultural orientation, such as in China, an interdependent conception of the self as fundamentally interconnected with others, might suggest that achieving the collective goals through greater interdependence perhaps is more meaningful for people than the pursuit of individual goals (Rosso et al., 2010, p. 99). Here it can be understood why the Chinese Dream, predominantly designed as a national dream, can also be well received by individual Chinese. Culturally, it is quite possible and even common for the Chinese people to supersede the national collective goals over their own individual goals if they are convinced of the values of doing so. In discussing the meaning of work as it relates to others in the workplace, Rosso et al. (2010) further emphasize the important role of leaders who frame the mission, goals, purpose and identity of the organization for employees in a way that would shape and influence their followers’ conceptualization of the meaning of work. Earlier we discussed how organizations could use ‘symbols, rituals, ideologies, language and stories’ (Ulrich, 1984) as cultural communications tools to transmit cultural values across the organization. Similarly, these tools can be used by leaders and managers to interpret, communicate about and respond to various work events and circumstances that would have an important influence on the meaning people make of their work (Rosso et al., 2010, p. 101). When leaders describe work in ideological terms and focus on higher order values such as in the case of the Chinese Dream of ‘national rejuvenation’, they could instill work with meaningfulness by prompting employees ‘to transcend their personal needs or goals in favour of those tied to a broader mission or purpose’ (Rosso et al., 2010, p. 101). The meaning of work was found to have influenced some of the most important work outcomes, hidden in the ‘black-box’ of HR-performance link, such as work motivation, absenteeism, work behavior, employee engagement, job satisfaction, stress, organizational identification, career development, individual performance and personal fulfillment (Rosso et al., 2010). Since 2000, the study of the meaning of work has moved ‘beyond hedonic perspectives of work behavior to deeper consideration of purpose and significance of work and eudaimonic aspect of well-being’ (Rosso et al., 2010, p. 93). Different to hedonism that emphasizes pure maximization of pleasure and minimization of pain, eudaimonism, according to Aristotle, stresses the importance of finding true happiness via leading a virtuous, self-disciplined and prudent life and doing what is meaningful. Eudaimonism is mostly close to the idea of Confucianism, which is what many Chinese have followed as either a traditional spirit or religion till today. The basic belief and values system of Confucianism is centered around four words (zhong – loyalty; xiao – filial piety; ren – genteel; yi – righteous) for guiding the lives and behavior of human beings as they interact with their superiors, subordinates, family members and friends. It is argued that Asian

Culture, spirituality and the ‘Chinese Dream’ 159 people with the Confucianist values, similar to those with the Judeo-Christian values tend to treat suffering as meaningful and necessary learning or spiritual experiences for growth instead of pain. Because Confucianism is also treated as a religion, it is possible individual Chinese may also turn to spirituality or religion in their search for meaning of work and purpose in life. Spirituality is defined by Lewis and Geroy (2000) as ‘the inner experience of the individual when he or she senses a beyond, especially as evidenced by the effect of this experience on his or her behavior when he or she actively attempts to harmonize his or her life with the beyond’ (p. 684). Rosso et al. (2010) reckon that ‘spirituality is an aspiration toward connection to the sacred, including a higher power, guiding force or energy, or belief system’ (p. 106) that helps define the meaning of work and sense of connection employees make towards the others. Thus, workplace spirituality is referred to employees’ experience of this sense of ‘spirituality of meaning, community and transcendence’ (Pawar, 2009, p. 375). Findings from the studies of workplace spirituality show its close relationship with several positive organizational outcomes such as job satisfaction, enhanced employee creativity and commitment and greater organizational effectiveness (Vallabh and Singhal, 2014). Furthermore, Fawcett et al. (2008) found a link between organizational culture and workplace spirituality in a sample of 350 customer service officers of an American airline company. The study results show that organizations investing more in people-developing culture allow workers to find meaning and purpose in their work, subsequently workers are more ready to release their creativity, learning and passion of their work (Fawcett et al., 2008). Both the meaning of work and workplace spirituality may be subject to different interpretation as the official Chinese government prefers using the term ‘spiritual civilization’ in order to build a harmonious society. Constructing a ‘spiritual civilization’ requires ‘correct spirit’ of workers and employees (Wielander, 2018). Yet, in western literature, spiritual employees were treated as seeing their work as a response to the sacred calling from God and interpret their work activities with a higher purpose or meaning (Rosso et al., 2010). In contrast, in China, workers with ‘correct spirit’ may be the ones that respond to the Party’s calling as the Party is the sovereign power, the only leader – a secular God per se in China. Evaluating another well-known slogan of ‘remember the mission, never forget the first love’ (laoji shimin, buwan chuxin – 牢记使命, 不忘初心) associated with the ‘Chinese Dream’ made by Xi Jinping in the most recent time, it can be seen that the slogan was used as a demanding (not divine) calling from the Party/Leader to urge all Chinese people, especially those 80 millions’ CCP members to strive and help realize the Chinese Dream. Despite the fear that responding to such a call may involve personal costs and sacrifices, workers/employees with ‘correct spirit’ should be encouraged to do their work with a spiritual sense of service, and transcendence (Rosso et al., 2010). As such, heeding the Party’s calling may be thought to give purpose to otherwise hard and menial labors, because the labor done in service of the national interest may be much greater than the individual (Wielander, 2018).

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Conclusion This chapter searched for some elements missing in the ‘black box’ that may have contributed to the HRM-performance link. As a result of literature review, it is possible that corporate/organizational culture and meaningful work/meaning of work could add to the list inside the black box, which may mediate the relationship between HRM and firm performance. The concepts of corporate culture and meaning of work in the western context were discussed, intertwined with an extensive discussion of the meaning of ‘Chinese Dream’ as perceived by the Chinese people and organizations operating in China. It appears from the examination of the relevant literature that we are left to wonder whether Chinese employees would search for meaning of work and workplace spirituality similar to those in the western world as reviewed by Rosso et al. (2010), or whether Chinese employees have constructed new meaning of work based on the Party’s value statements embodied in the ‘Chinese Dream’. Either way, it is clear that employees with a sense of purpose, belongingness, hope and community would be more likely to have stronger self-efficacy, resilience, happiness and wellbeing. Ulrich and Ulrich (2010) in their Wall Street Journal Business #1 best-seller book ‘Why of Work?’ also suggest that organizational leaders especially HR managers should aim to build organizational cultures with shared values that would engage individual employees to find meaning of their work so as to achieve an abundant organization with a healthy and productive workforce. This line of advocating the relationships among meaning of work, spirituality, cultural values and positive employee outcomes leading to abundance, happiness and wellbeing has been supported by the emerging theory of positive psychology, which will be discussed further in the next chapter to explore the possibility of applying SHRM to realize the ‘Chinese Dream’.

References Barley, S.R. (1983). Semiotics and the study of occupational and organizational cultures, Administrative Science Quarterly, 28, 393–414. Boxall, P., Ang, S.H., and Bartram, T. (2011). Analyzing the ‘black box’ of HRM: Uncovering HR goals, mediators, and outcomes in a standardized service environment, Journal of Management Studies, 48(7), 1504–1532. Chowhan, J. (2016). Unpacking the black box: Understanding the relationship between strategy, HRM practices, innovation and organizational performance, Human Resource Management Journal, 26(2), 112–133. Cooke, F.L., Cooper, B., Bartram, T., Wang, J., and Mei, H. (2017). Mapping the relationships between high-performance work systems, employee resilience and engagement: A study of the banking industry in China, The International Journal of Human Resource Management. doi:10.1080/09585192.2015.1137618 DiMaggio, P.J., and Powell, W.W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields, American Sociological Review, 48, 147–160. Driscoll, C., and McKee, M. (2007). Restorying a cultural of ethical and spiritual values: A role for leader storytelling, Journal of Business Ethics, 73(2), 205–217.

Culture, spirituality and the ‘Chinese Dream’ 161 Edgar, F., and Geare, A. (2009). Inside the ‘black box’ and ‘HRM’, International Journal of Manpower, 30(3), 220–236. Fawcett, S.E., Brau, J.C., Rhoads, G.K., Whitlark, D., and Fawcett, A.M. (2008). Spirituality and organizational culture: Cultivating the ABCs of an inspiring workplace, International Journal of Public Administration, 31(4), 420–438. Frankl, V.E. (1959). Man’s Search for Meaning, Boston: Beacon Press. Geare, A., Edgar, F., McAndrew, I., Harney, B., Cafferkey, K., and Dundon, T. (2014). Exploring the ideological undercurrents of HRM: Workplace values and beliefs in Ireland and New Zealand, The International Journal of Human Resource Management, 25(16), 2275–2294. Guenzi, P. (2013). How ritual delivers performance, Harvard Business Review, 25 February, Retrieved on 9 May 2018 from https://hbr.org/2013/02/how-ritualdelivers-performance Harrison, T., and Bazzy, J.D. (2017). Aligning organizational culture and strategic human resource management, Journal of Management Development, 36(10),1260–1269. Hawes, C. (2008). Representing corporate culture in China: Official, academic and corporate perspective, The China Journal, 59, 33–61. Huang, W., Li, Y.H., Wang, S., and Weng, J.J. (2016). Can ‘democratic management’ improve labour relations in market-driven China? Asia-Pacific Journal of Human Resources, 54(2), 230–257. Jiang, K.F., and Messersmith, J. (2018). On the shoulders of giants: A meta-review of strategic human resource management, The International Journal of Human Resource Management, 29(1), 6–33. Jiang, K.F., Takeuchi, R., and Lepak, D. (2013). Where do we go from here? New perspectives on the black box in strategic human resource management research, Journal of Management Studies, 50(8), 1448–1480. Lee, C.H. (2009). Industrial relations and collective bargaining in China, Working Paper No. 7, International Labour Organization, Geneva. Lewis, J.S., and Geroy, G.D. (2000). Employee spirituality in the workplace: A crosscultural view for the management of spiritual employees, Journal of Management Education, 24(5), 682–694. Li, X. (2015). Interpreting and understanding ‘The Chinese Dream’ in a holistic nexus, Fudan Journal of Humanities and Social Science, 8(4), 505–520. Luthans, F., Avolio, B.J., Walumbwa, F.O., and Li, W.X. (2005). The psychological capital of Chinese workers: Exploring the relationship with performance, Management and Organization Review, 1(2), 249–271. Luthans, F., and Youssef, C.M. (2007). Emerging positive organizational behavior, Journal of Management, 33(3), 402–472. Meng, H., Luo, Y., Huang, L., Wen, J.B., Ma, J.Z., and Xi, J.Z. (2017). On the relationships of resilience with organizational commitment and burnout: A social exchange perspective, The International Journal of Human Resource Management. doi: 10.1080/09585192.2017.1381136 Ouchi, W.G. (1981). Theory Z, New York: Avon Books. Paauwe, J., and Boselie, P. (2003). Challenging ‘strategic HRM’ and the relevance of the institutional setting, Human Resource Management Journal, 13(3), 56–70. Pawar, B.S. (2009). Workplace spirituality facilitation: A comprehensive model, Journal of Business Ethics, 90, 375–386. Pettigrew, A.M. (1979). On studying organizational cultures, Administrative Science Quarterly, 24, 570–581.

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Posner, B.Z., Kouzes, J.M., and Schmidt, W.H. (1985). Shared values make a difference: An empirical test of corporate culture, Human Resource Management, 24(3), 293–309. Purcell, J., Kinnie, N., Hutchinson, S., Rayton, B., and Swart, J. (2003). Understanding the People and Performance Link: Unlocking the Black Box, London: CIPD. Rosso, B.D., Dekas, K.H., and Wrzesniewski, A. (2010). On the meaning of work: A theoretical integration and review, Research in Organizational Behavior, 30, 90–127. Sebok, F. (2014). Critical Metaphor Analysis of Xi Jinping’s Chinese Dream Rhetoric, Bachelor Thesis, Masaryk University. Seligman, M.E.P., and Csikszentmihalyi, M. (2000). Positive psychology: An introduction, American Psychologist, 55, 5–14. Snell, S., Youndt, M., and Wright, P. (1996). Establishing a framework for research in strategic human resource management: Merging resource theory and organizational learning. In G. Ferris (Ed.), Research in Personnel and Human Resource Management, 14, 61–90. Sørensen, C.T.N. (2015). The significance of Xi Jinping’s ‘Chinese Dream’ for Chinese foreign policy: From ‘tao guan yang hui’ to ‘fen fa you wei’, Journal of Contemporary International Relations, 3(1), 53–73. Su, H., and Xiao, Y. (2015). The discursive representation of Chinese dream: A corpus-based discourse analysis, International Journal of Linguistics and Communication, 3(1), 38–50. Tsui, A.S., Wang, H., and Xin, K.R. (2006). Organizational culture in China: An analysis of culture dimensions and culture types, Management and Organization Review, 2(3), 345–376. Ulrich, D., and Ulrich, W.L. (2010). The Why of Work: How Great Leaders Build Abundant Organizations that Win, New York: McGraw Hill. Ulrich, W.L. (1984). HRM and culture: History, rituals and myth, Human Resource Management, 23(2), 117–128. Vallabh, P., and Singhal, M. (2014). Workplace spirituality facilitation: A personorganization fit approach, Journal of Human Values, 20(2), 193–207. Wang, Z. (2014). The Chinese dream: Concept and context, Journal of Chinese Political Science, 19, 1–13. Watkins, M.D. (2013). What is organizational culture? And why should we care? Harvard Business Review, 15 May. Wei, L.Q., Liu, J., and Hemdon, N.C. (2011). SHRM and product innovation: Testing the moderating effects of organizational culture and structure in Chinese firms, The International Journal of Human Resource Management, 22(1), 19–33. Whyte, W. H. (1956). The Organization Man, New York: Simon & Schuster. Wielander, G. (2018). Happiness and Chinese dream, Lowy Institute’s Daily News, 23 March, Retrieved on 2 May 2018 from www.lowyinstitute.org/the-interpreter/ happiness-and-chinese-dream Wright, P.M., Dunford, B.B., and Snell, S.A. (2001). Human resources and the resource-based view of the firm, Journal of Management, 27, 701–721.

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HRM towards the realization of the ‘Chinese Dream’?

Introduction It was argued in the preceding chapter that positive employee’s work attitudes created through building the right corporate culture and providing a meaningful workplace blended with spirituality (Fawcett et al., 2008; Pawar, 2009; Vallabh and Singhal, 2014) may result in better firm performance and innovation (Tsui et al., 2006; Wei et al., 2011). In recent years, companies operating in China have also emphasized the need to build positive corporate/organizational culture and develop positive employees through some measures of SHRM policies and practices (Luthans and Youssef, 2007; Hawes, 2008; Wei et al., 2011). The queried question arising from the discussion would be ‘Will the “Chinese Dream” be likely achieved via addressing corporate culture, spirituality and their associated strategic HRM policies and practices?’ Thus, this chapter is devoted to answering this research question by discussing several theories addressing the link between HRM and corporate culture and workplace spirituality. The findings from several empirical studies that examined the relationships among employee resilience, HRM practices and organizational performance and employee wellbeing (e.g. Cooper et al., 2014) will also be presented. The chapter concludes with discussion of the various paths that individuals and firms in China may pursue and moves forward to achieving their ‘dreams’ (goals per se).

Theories on the link of HRM to corporate culture and spirituality Both RBV and institutional theory would lend support for developing SHRM policies and practices that would facilitate corporate culture building of shared values and promote workplace spirituality, especially in China, as Chinese enterprises are likely to be both internally driven to develop more strategic resources (i.e. human, social and organizational capitals) and externally demanded, especially by the CCP to instill the concept of corporate culture and ‘correct spirit’ as addressed in the previous chapter (see also Hawes, 2008; Wielander, 2018) in order to survive and sustain their business operation in China. HR managers

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in China may be required to develop another strategic resource such as positive psychological capital (Luthans et al., 2005) in order to drive the alignment of ‘individual and organizational hopes and dreams’ (Posner et al., 1985) with the national ‘Chinese dream’. The idea of developing positive psychological capital is sourced from the positive psychology theory that has been applied in the field of organizational behavior and human resource management since the beginning of the 2000s (Luthans and Youssef, 2007). The positive psychology theory was in fact first mentioned in a chapter entitled ‘Toward a Positive Psychology’ in Abraham Maslow’s (1954) well-known book Motivation and Personality. The actual discussion of positive psychology as a theory has only reemerged since the special issue of American Psychologist edited by Seligman and Csikszentmihalyi (2000). The concept of positive psychology as humanistic psychology focuses on addressing the healthy human being’s function and modes of living. Maslow (1954) argued that humans have an intrinsic desire to pursue happiness and self-realize and actualize by connecting positively and prosocially with others in the world, thus it is important to study topics such as happiness, flow, courage, hope and optimism, responsibility and civility. According to Seligman and Csikszentmihalyi (2000), positive psychology is the study of the factors contributing to the most well-lived and fulfilling life, it is especially concerned more with eudaimonia, in addition to hedonism – the good and happy life reflected in finding meaning, purpose and values of life. To unpack the idea of positive psychology and critique of the rise of positive scholarship, Fineman (2006, p. 271) defines ‘positivity’ as a three-layer paradigm, whereby it first involves individuals’ positive subjective experiences of past, present and future feelings of happiness, joy, pleasure, fulfillment, wellbeing, optimism, hope and faith; second it has some individual traits especially capacity for love, vocation, courage, perseverance, forgiveness, self-determination and wisdom; and third is about institutions and organizations that enable individuals’ positive experiences and traits in the service of organizational ‘virtues’ such as responsibility, self-sacrifice, civility, temperance, forbearance and the work ethic. These three layers of ‘positive psychology’ support our earlier arguments on why the ‘Chinese Dream’ has been perceived positively by most Chinese, because it embodies the hope and dreams as the Chinese people connect it with the past, present and future of China’s development and transformation (Wang, 2014; Li, 2015). Furthermore, a positive portrait of the ‘Chinese Dream’ offers an appealing vision to direct people toward morally well-defined ends that embrace the feelings and needs of the common people. Positivity is a particularly attractive prospect for those disenchanted with the growing materialism of the market-based capitalism (Fineman, 2006). This is especially relevant to China’s context, because many organizations with different ownerships under the marketized economy with Chinese socialist characteristics (Warner and Rowley, 2014) were found in fact to focus only on money-making, with a devastating lack of compassion or sensitivity toward their employees (with wage arears, as discussed in Chapter 7), lack of care for customers’ needs for quality product and services (e.g. the 2008

HRM and the ‘Chinese Dream’? 165 Chinese milk scandal is one of many cases in point to demonstrate such lack of care for customers’ lives and welfare); and through a huge lack of social responsibility for members of the wider society as polluted air and waterways have been contributed to predominantly by both domestically and foreign-owned manufacturing and mining firms. Instead of addressing these issues upfront and taking up the responsibility, organizations are encouraged to apply positive psychology as well as to encourage their employees to look for the brighter side of life and work, with the hope of finding an alternative way out of an entrapped system and paradoxical institution especially as a result of promoting marketization with the communist values in China. Warner and Rowley’s (2014) edited book attempted to, with a collection of papers addressing Chinese current issues, especially with reference to corporate social responsibility, demystify Chinese management, pointing to the strategic challenges in terms of realizing the managerial version of the ‘Chinese Dream’. In particular, the issues of inequality and increasing labor unrests in China’s society would require organizations in China to develop SHRM that not only integrates the aspects of ethical and responsible practices, but also with a corporate culture of genuine shared values that may motivate employees to search for a new meaning of work and spirituality when coping with day-to-day paradoxes and work challenges. Therefore, it is possible that organizations in China, similarly to the enthusiastic response made by the Chinese government (Wielander, 2018), would likely adopt the idea of positive psychology to design their SHRM policies and practices in instilling hope and optimism among their employees in the midst of corporate scandals (Lüthje and Butollo, 2017). Hope as a part of positive psychological capital is said to consist of both willpower and waypower, which is conceptualized by Luthans and Jensen (2002) as a disposition or trait that employees can either have it or be trained and developed to have it. It is argued that employees with hope, optimism and self-efficacy tend to develop a higher level of resilience that would enable them to effectively cope with job challenges and demands and adapt to severe adversities or dramatic changes (Cooke et al., 2017). Although this line of argument about resilience is initially developed from the positive psychology theory, the other theories, such as job-demand-resource (JDR) model (Cooke et al., 2017) and social dilemma theory (Sung and Choi, 2018) were also applied to suggest that positivity, willingness and wisdom to sacrifice personal goals for greater public good can be used as potentially unlimited resources to help organizations achieve competitive advantage (Luthans et al., 2008) and create abundant organizations (Ulrich and Ulrich, 2010). Furthermore, Lengnick-Hall et al. (2011) with the theory of strategic flexibility (i.e., the ability to change direction at short notice and low cost), argued that in fact organizations with many resilient individuals can be identified as resilient organizations that are able to maintain positive adjustments under challenging conditions. Similar to a firm’s efforts to encourage strategic flexibility, building a capacity for resilience presumes that change and surprise can be sources of opportunity as well as signs of potential threat – resonating with the Chinese

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concept of crisis ‘weiji’, which literally means ‘getting opportunity from dangerous situations’. To capitalize on these opportunities often requires organizational transformation through developing a capacity for resilience. SHRM is believed to play an important role in both developing and using a firm’s capacity for resilience (Lengnick-Hall et al., 2011), and assisting employees in their search for meaning of work via corporate cultural building of shared values in order for all to flourish abundantly (Ulrich and Ulrich, 2010). This positive message about personal happiness, organizational flourishing and national abundance is well echoed by the tenets in the ‘Chinese Dream’. Thus, positive psychology has been readily applied to promise higher employee commitment and better performance outcomes derived from positive organizational behavior (Luthans et al., 2005) and harmonized management-labor relations (or better leader– member exchange) (Wang and Zang, 2005; Meng et al., 2017; Xi et al., 2017). However, it is not explicit that the findings of empirical studies in the context of China that are examined next would support the arguments residing in the previously-mentioned theories.

Empirical evidence The empirical evidence on linking corporate culture, meaning of work and workplace spirituality to HRM in the context of China is rather scanty. By and large, the link has often been reported either as a news item or in a case study. For example, Wong (2016) reported that the successful taxi company Diamond Cab in Hong Kong (China) with tens and thousands of passengers and hundreds of fleets had the strong team spirit of sharing the same mission and vision that had set the company apart from its competitors and contributed to its continuing growth. A descriptive case study by Zhang and Han (2016) had superficially discussed the relationships among spirituality, corporate culture and HRM in the context of the Guangxi Institute of Public Administration of China that had adopted the so-called spirituality-based HRM practices. The authors illustrated some aspects of a corporate culture of shared values, such as the use of a recognition program; repeated physical and spiritual wellness exercise programs; and the University’s executives creating feelings of egalitarianism with no VIP rooms and special parking permits allocated to them. The so-called spirituality-based HRM practices included promoting equality and fairness, designing attractive jobs and a peaceful workplace with a lake inside the campus; exercising the role of trade unions to build informal teams with the aim of connecting employees with similar hobbies and interests so as to develop a socially cohesive organization; and encouraging a work-life balance to allow employees pursuing different interests outside work, with the walls of the main office building decorated with employees’ artworks, including paintings, Chinese hand-writings and photographs. Zhang and Han (2016) concluded that the outcomes of having applied this set of spirituality-based HRM practices helped employees develop a strong sense of wellbeing and community belonging. Because of the study being based on the Chinese University environment,

HRM and the ‘Chinese Dream’? 167 performance outcomes might be hard to assess. Therefore, the link of corporate shared values to SHRM is vague. Similarly, in testing the link of SHRM to performance, Wang and Zang (2005) simply treated corporate cultural development as one of SHRM practices (see Appendix 3 again). Corporate cultural development was measured by four items (i.e. regular inter-departmental coordination meetings, conflict resolution meetings, and regular cultural activities and meetings to discuss company vision). The findings show that no difference of corporate cultural development among firms with different ownerships, except the western and Japanese joint ventures had more emphasis on company vision (Wang and Zang, 2005, p. 553). Although the study concluded that SHRM was closely linked to innovation performance, employee satisfaction and job commitment, it is not clear how much corporate cultural development effort contributed to these outcomes. The authors did, however, provide an example of adopting a cross-regional corporate culture strategy by the Wahaha Group – the largest beverage company with 10,000 employees working in 40 subsidiary companies across 16 provinces or cities in China (Wang and Zang, 2005, p. 334). But it would be useful if more specific details were provided to help understand what constituted the cross-regional corporate culture strategy and whether it is possible to apply this cultural strategy to organizations in other industries and contexts. Using corporate culture as a moderator, Wei et al. (2011) tests its effect on the relationship between SHRM and product innovation (see our earlier discussion in Chapter 5). Corporate culture, as a fluid concept (Watkins, 2013), was nonetheless defined by Wei et al. (2011) as ‘the particular set of values and orientations that guide employees’ behaviors’ (p. 22), instead of ‘shared values’ between employees and organizations as discussed earlier. Thus, Wei et al. (2011) suggested that the values and orientations implied by the corporate culture were likely infused by the high-performance work system (HPWS) of policies and practices (Huselid, 1995). Corporate culture was therefore measured by only those values and managerial orientation to employee development because the developmental culture was better aligned with the HPWS, which in turn could help implement ‘strategic HRM by molding the mindset and shaping the behavior of employees’ (Wei et al., 2011, p. 22). With reference to the meaning of work, no studies were found to evaluate its link to HRM or corporate culture and workplace spirituality in the context of China. Only a comparative study by Westwood and Lok (2003) was found to explore the differences of perceptions by working populations in Hong Kong and Beijing on the meaning of work. The authors concluded that both cohorts of Chinese displayed ‘a high work centrality orientation and a highly pragmatic and instrumental view of work’ (p. 139). The authors were puzzled that despite the nature of the political economy, the ideology of work, the operation of labor markets, the organizational context for working and the kind of managerial regime under which people work are different between Hong Kong and Beijing, the interpretation of the meaning of work from both groups was strikingly the same.

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China has dramatically changed since 2003 when Westwood and Lok (2003) conducted the study. Would the perceptions of meaning of work have also changed between two polarized groups of Chinese: one being wealthy Chinese with basic needs met and the other still struggling to make ends meet? Would the emerging new ideology of ‘Chinese Dream’ likely impact on Chinese to define the meaning of work? These are the questions that require more research in the future. Despite a strong advocate of applying positive psychology via building corporate culture and encouraging employee resilience among Chinese enterprises, only one study (Cooke et al., 2017) was recently conducted to test the relationship between HPWS and employee resilience. In this study, four dimensions (rewards, training and development, performance appraisal and employee participations) were used to measure HPWS and resilience defined as ‘one’s ability to adapt effectively in the face of severe adversity’ (Cooke et al., 2017, pp. 1–2) was measured by a multi-dimensional scale, which focused on a skill-oriented construct on flexibility, problem-solving skills and interpersonal/social relationship as core dimensions with additional dimensions such as vision, determination, interaction and flexibility/adaptability. To treat resilience as a skill-based construct is similar to Luthans and Jensen’s (2002) treatment of ‘hope’ as a skill that can be trained and developed. Thus, as a result of empirical testing, based on the sample of 2040 banking employees, Cooke et al. (2017) in fact found that the set of HPWS adopted by the banking industry in China positively increased the level of resilience. Resilience was regarded as additional job resources that helped increase work engagement. The impact of resilience on firm performance in the study was nonetheless found to have a weak link to SHRM. Employee resilience was also investigated by Meng et al. (2017) to test its effect on organizational commitment and burnout with a sample of 236 Chinese civil servants, based on the social exchange theory (SET). The definition and measurement of ‘resilience’ in this study is quite different from Cooke et al. (2017). Here the authors adopted the psychometric scale developed by Wang et al. (2010) for testing Chinese earthquake victims’ mental ability to cope with the misfortune and treated ‘resilience’ as a trait-like, innate ability instead of a skill that can be developed. The findings show that employees with a higher-level resilience score related better with their leader (i.e. a higher score of leader– member exchange – LMX), as well as with their team members (TMX). Both LMX and TMX mediated the relationship between employee resilience and organizational commitment, with LMX showing much stronger effect than TMX. This finding suggests that the hardship employees endure perhaps gains more favor and support from their supervisors and managers, which in turn helps increase organizational commitment. However, no mediating effect was found to have LMX and TMX to reduce the level of burnout. Although no direct relationship between resilience and HRM was assessed in this study, interestingly, the results show that employee resilience (coefficient = −0.17, p < 0.05) did not help as much as job security (coefficient = −0.20, p < 0.05) and long-term employment (coefficient = −0.31, p < 0.01) to reduce burnout.

HRM and the ‘Chinese Dream’? 169 Practical implications to HRM managers would be to not only help develop employee resilience, but also design job tenure with stable employment conditions to increase organizational commitment and employee wellbeing.

Conclusion – future research agenda This chapter was set out to investigate whether spirituality as in the Chinese term of ‘correct spirit’ or ‘spiritual civilization’ embodied in the ‘Chinese Dream’ would play a role in developing SHRM policies and practices in China, or vice versa, whether the implementation of HRM strategies was likely to assist in realizing the ‘Chinese Dream’. The concept and context of ‘Chinese Dream’ was discussed as it relates to the western concepts of building organizational culture, providing meaningful work and workplace spirituality. Several associated theories, such as RBV, institutional theory, positive psychology, job-demand resource, social exchange theory, social dilemma theory and strategic flexibility were also briefly explained to support the interrelationship and strategic link of HRM to corporate culture, meaning of work and workplace spirituality. Anecdotal evidence and sparse empirical studies that test these relationships were presented. It is concluded that the concepts of positive psychology, corporate culture, meaning of work and workplace spirituality may be interpreted differently in China because they were first conceptualized in the west. More rigorous research is warranted to make meaningful contribution to the future discussion of the relationship between SHRM and spirituality in China. Several suggestions of such future research paths are described in the following paragraphs. First, it was found that a different representation of corporate culture (Hawes, 2008) and limited empirical studies on the link of corporate culture and SHRM would indeed require more rigorous investigation of different types of corporate culture in China as was done earlier by Tsui et al. (2006). The further work should focus on examining whether different HRM systems would be required for developing different types of corporate culture. For example, it is possible that the commitment-based HRM system may be linked to developmental and innovative cultures, whilst the control-based HRM system may be more or less related to performance-focused and customer-oriented organizational cultures. Prior studies tended to focus on the belief in a high-performance work system to produce good organizational culture (e.g. Wei et al., 2011; Cooke et al., 2017) without particularly addressing the issue of ‘shared values’ by various stakeholders in China. With various mounting social and environmental issues facing organizations in China, it is important to explore further what constitute the genuine ‘shared values’, which would likely motivate employees and community to engage in developing SHRM policies and practices that are helpful to build sustaining and truly abundant firms. Second, there is a general lack of investigation into the meaning of work perceived by Chinese (Westwood and Lok, 2003) as a part of an important contribution to work outcomes hidden in the ‘black-box’ of SHRM-performance link. This is indeed a vacuum required for immediate research to explore what

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particular sources and mechanisms are required to determine meaning and meaningfulness of work in China as those reviewed by Rosso et al. (2010). To link the meaning of work to SHRM as promoted by Ulrich and Ulrich (2010), it is possible to adopt the idea of Guest’s (2002) ‘building the worker into HRM’ by examining employees’ reaction to the organizational HRM policies and practices with their interpretation of nature of job, work patterns, job design, employment status and job tenure as they are potentially related to employees’ aspiration and personal growth goals. This aspect could also serve as a starting point to explore Chinese employees’ sense of spirituality as compared to their response to the Party-state’s calling of constructing national ‘spiritual civilization’ via attempting to achieve the ‘Chinese Dream’. Third, the clear evidence has already pointed to the dominate role of the Chinese Communist Party in sharing the responsibility of corporate culture building and instilling the ‘correct spirit’ via the ‘Chinese Dream’ (Hawes, 2008; Li, 2015; Wielander, 2018). Furthermore, a new law of having the CCP party branch in any enterprise (including the foreign-owned ones) with over 30 employees has just been recently issued after the 19th National Congress in October 2017 (Fang, 2017). How the CCP influence the overall employee attitude and organizational behavior and management decision-making with reference to recruitment, selection and promotion of leaders and managers would be highly relevant to SHRM. The role of changing work context to determine the direction of individual and organizational dreams, that is to achieve individual and organizational goals in China should be further examined. There appears to be a real vacuum and perhaps a great future in this area of scholarship.

References Cooke, F.L., Cooper, B., Bartram, T., Wang, J., and Mei, H. (2017). Mapping the relationships between high-performance work systems, employee resilience and engagement: A study of the banking industry in China, The International Journal of Human Resource Management. doi:10.1080/09585192.2015.1137618 Cooper, C.L., Liu, Y.P., and Tarba, S.Y. (2014). Resilience, HRM practices and impact on organizational performance and employee well-being, The International Journal of Human Resource Management, 25(17), 2466–2471. Fang, F. (2017). China tightens control on foreign companies with Party apparatus, The Epoch Times, October, Retrieved on 12 May 2018 from www.theepochtimes.com/ china-tightens-control-on-foreign-companies-with-party-apparatus_2343482.html Fawcett, S.E., Brau, J.C., Rhoads, G.K., Whitlark, D., and Fawcett, A.M. (2008). Spirituality and organizational culture: Cultivating the ABCs of an inspiring workplace, International Journal of Public Administration, 31(4), 420–438. Fineman, S. (2006). On being positive: Concerns and counterpoints, Academy of Management Review, 31(2), 270–291. Guest, D.E. (2002). Human resource management, corporate performance and employee wellbeing: Building the worker into HRM, Journal of Industrial Relations, 44(3), 335–358.

HRM and the ‘Chinese Dream’? 171 Hawes, C. (2008). Representing corporate culture in China: Official, academic and corporate perspective, The China Journal, 59, 33–61. Huselid, M.A. (1995). The impact of human resource management practices on turnover, productivity and corporate financial performance, Academy of Management Journal, 38(3), 635–670. Lengnick-Hall, C.A., Beck, T.E., and Lengnick-Hall, M.L. (2011). Developing a capacity for organizational resilience through strategic human resource management, Human Resource Management Review, 21(3), 243–255. Li, X. (2015). Interpreting and understanding ‘The Chinese Dream’ in a holistic nexus, Fudan Journal of Humanities and Social Science, 8(4), 505–520. Luthans, F., Avey, J.B., Clapp-Smith, R., and Weixing, Li (2008). More evidence on the value of Chinese workers’ psychological capital: A potentially unlimited competitive resource? The International Journal of Human Resource Management, 19(5), 818–827. Luthans, F., Avolio, B.J., Walumbwa, F.O., and Li, W.X. (2005). The psychological capital of Chinese workers: Exploring the relationship with performance, Management and Organization Review, 1(2), 249–271. Luthans, F., and Jensen, S.M. (2002). Hope: A new positive strength for human resource development, Human Resource Development Review, 1(3), 304–322. Luthans, F., and Youssef, C.M. (2007). Emerging positive organizational behavior, Journal of Management, 33(3), 402–472. Lüthje, B., and Butollo, F. (2017). Why the Foxconn model does not die: Production networks and labour relations in the IT Industry in South China, Globalizations, 14(2), 216–231. Maslow, A.H. (1954). Motivation and Personality, New York: Harper and Brothers. Meng, H., Luo, Y., Huang, L., Wen, J.B., Ma, J.Z., and Xi, J.Z. (2017). On the relationships of resilience with organizational commitment and burnout: A social exchange perspective, The International Journal of Human Resource Management. doi:10.1080/09585192.2017.1381136 Pawar, B.S. (2009). Workplace spirituality facilitation: A comprehensive model, Journal of Business Ethics, 90, 375–386. Posner, B.Z., Kouzes, J.M., and Schmidt, W.H. (1985). Shared values make a difference: An empirical test of corporate culture, Human Resource Management, 24(3), 293–309. Rosso, B.D., Dekas, K.H., and Wrzesniewski, A. (2010). On the meaning of work: A theoretical integration and review, Research in Organizational Behavior, 30, 90–127. Seligman, M.E.P., and Csikszentmihalyi, M. (2000). Positive psychology: An introduction, American Psychologist, 55, 5–14. Sung, S.Y., and Choi, J.N. (2018). Building knowledge stock and facilitating knowledge flow through human resource management practices toward firm innovation, Human Resource Management, 57(6), 1429–1442. Tsui, A.S., Wang, H., and Xin, K.R. (2006). Organizational culture in China: An analysis of culture dimensions and culture types, Management and Organization Review, 2(3), 345–376. Ulrich, D., and Ulrich, W.L. (2010). The Why of Work: How Great Leaders Build Abundant Organizations that Win, New York: McGraw Hill. Vallabh, P., and Singhal, M. (2014). Workplace spirituality facilitation: A personorganization fit approach, Journal of Human Values, 20(2), 193–207. Wang, S., Guidice, R.M., Tansky, J.W., and Wang, Z.M. (2010). When R&D spending is not enough: The critical role of culture when you really want to innovate, Human Resource Management, 49(4), 767–792.

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Wang, Z.M. (2014). The Chinese dream: Concept and context, Journal of Chinese Political Science, 19, 1–13. Wang, Z.M., and Zang, Z. (2005). Strategic human resources, innovation and entrepreneurship fit, International Journal of Manpower, 26(6), 544–559. Warner, M., and Rowley, C. (Eds.). (2014). Demystifying Chinese Management: Issues and Challenges, London: Routledge (this book was compiled from the SI from Asia Pacific Business Review, 19(3), 435–624). Watkins, M.D. (2013). What is organizational culture? And why should we care? Harvard Business Review, 15 May. Wei, L.Q., Liu, J., and Hemdon, N.C. (2011). SHRM and product innovation: Testing the moderating effects of organizational culture and structure in Chinese firms, The International Journal of Human Resource Management, 22(1), 19–33. Westwood, R., and Lok, P. (2003). The meaning of work in Chinese contexts: A comparative study, International Journal of Cross-Cultural Management, 3(2), 139–165. Wielander, G. (2018). Happiness and Chinese dream, Lowy Institute’s Daily News, 23 March, Retrieved on 2 May 2018 from www.lowyinstitute.org/the-interpreter/ happiness-and-chinese-dream Wong, A. (2016). Team spirit sustains shared values. HR Online, Retrieved on 2 May 2018 from www.humanresourcesonline.net/team-spirit-sustains-sharedvalues/ Xi, M., Xu, Q., Wang, X.Y., and Zhao, S.M. (2017). Partnership practices, labor relations climate, and employee attitudes: Evidence from China, Industrial and Labor Relations Review, 70(5), 1196–1218. Zhang, Z.Q., and Han, Y. (2016). Establishing spirituality in the workplace: The case of Guangxi Institute of Public Administration, P.R. China, Human Resource Management International Digest, 24(4), 5–7.

10 Future development of HRM and labor management in China

Introduction The key aim of this book is to explain the evolution and development of SHRM and labor relations management in China. Seven research questions centered on what and how SHRM has been rooted in China since 2000 and on the discourse of its link to China’s national economic development and continuing enterprise reform at the country level, and its impact on individual creativity and innovation, human rights and labor relations at the individual and firm levels were proposed. The potential influence of SHRM on corporate culture of shared values, meaning of work and spirituality within the parameter of the grandiloquence ‘Chinese Dream’ debate was also discussed. Three main theoretical perspectives (i.e. industry-based, institution-based and resource-based views) were applied to explain the adoption and adaption of SHRM among organizations operating in China and its relationships with the five important topics (i.e. economic growth, enterprise reform, innovation, labor relations and corporate culture) particularly relevant in contemporary China. With a comprehensive literature review from 16 books, 8 review papers and 57 empirical studies on labor and human resource management issues in China in the period between 2000–2018, it is found that the concept of SHRM has been broadly understood by firms in China as in the form of high-performance work system (HPWS) (e.g., Liang et al., 2012). The practices of SHRM tend to be diffused predominantly from the western-owned firms operating in China to local Chinese-owned firms (e.g., Zhu et al., 2005; Sun et al., 2007; Xian et al., 2017); blended with some ‘Chinese characteristics’ especially among those state-owned enterprises (Warner, 2009, 2014); and favorably endorsed by the Chinese Communist Party’s ruling government whose key intention is to encourage the adoption of SHRM among organizations in China in order to achieve enterprise efficiency, productivity increase and national economic growth. Despite the existence of unique economic, social, political and legal factors in China (see Chapters 2 and 3), the influence of these institutional factors on the organizational strategic decisions when choosing specific human resource management policies and practices has not been examined fully from reviewing the existing literature. The ‘black-box’ of the SHRM-performance link remains

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an under-researched area especially in the China context. In particular, the examination of antecedents that may explain why firms operating in China would prefer one HRM system (e.g. high-performance work system) over the others (e.g. high-involvement, high-commitment work systems) remains apparently lacking. This lack of research on the antecedents is, in fact, quite common within the field of SHRM as a whole, as recently stated by Jiang and Messersmith (2018, p. 23): while the field (of strategic HRM) has significantly benefited from the progress made in understanding the relationships between HRM systems and outcomes, considerably less effort has been spent on theorizing and examining the relationships between HRM systems and other factors of organizations. In particular, the field lacks a body of work examining the antecedents of HRM systems. To further understand SHRM in China, we need to go back to basics and follow the early models of SHRM (e.g. Wright and McMahan, 1992; Jackson and Schuler, 1995; Brewster, 1995) who argued for examining both internal (e.g. firm characteristics) and external environment (e.g. government regulations and community bodies etc.) that would have shaped the adoption and adaption of HRM systems in particular nations. Within the context of a developmental state such as China, organizational choice of SHRM may be chiefly conditioned by China’s unique choice of its economic and political systems. Thus, it would be interesting to understand the decision-making process of organizational leaders and entrepreneurs in China to get a better sense of why they choose to implement certain HRM systems. We could ask similar questions as recently posed by Jiang and Messersmith (2018) in their review of SHRM as a developing field: have firms in China implemented the chosen HRM system ‘to meet regulatory demands, to drive performance, to better divide labor, or simply as an isomorphic response to industrial forces’ (Jiang and Messersmith, 2018, p. 23) or even to the Chinese Communist Party’s call? In addition, the findings from the current review show the substantial amount of work devoted to examine SHRM and its positive link to enterprise ownership, innovation and firm performance (see Chapters 4 and 5). More work is nonetheless required to develop a clear understanding of employee outcomes as a result of implementing SHRM system, especially with reference to enhancing employee wellbeing under the current climate of excessive labor unrest and human rights abuses that have been reported in China (see Chapter 6). It is conventionally believed that firm performance outcomes and employee wellbeing tend to be the conflicting goals pursued by organizations (Boxall and Macky, 2009). That is, firms that seek for better performance tend to sacrifice the protection of their employees’ wellbeing. Intuitively this argument sounds logical; and there has been some evidence from investigating firms operating in China that were illustrated to some extent in Chapter 7. Firms in China appeared to be struggling to meet the contradictory goals of seeking firms’ profits versus supporting people welfares. On the contrary, the most recent review by Van De Voorde et al.

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(2012) found that employee wellbeing could be treated as a positive outcome generated from the relational-based HRM system that focuses on building employee resilience, self-efficacy, happiness, hope and optimism (see Chapter 8), which in turn could lead to better organizational performance (see also Jiang and Messersmith, 2018, pp. 20–21). Nonetheless, the process to which the relational-based, happiness-focused HRM system leads to better employee wellbeing is not particularly clear so far in the China’s context. Despite there being a strong advocate for applying positive psychology to managing Chinese employees and organizations (Luthans et al., 2005, 2008), direct links between positivity and employee wellbeing, and how these variables would mediate or moderate the relationship between HRM and firm performance indeed require further investigation (see Chapter 9). In each of the preceding chapters, I have attempted to offer several avenues to conduct further research within the specific themes related to the development of SHRM in China. In this concluding chapter, key areas with some novel ideas for further interesting research in the field of HRM in China are summarized as follows.

SHRM and firm performance In line with the argument on the importance of understanding the external environment (Wright and McMahan, 1992; Jackson and Schuler, 1995) in order to develop rich knowledge about the relationship between SHRM and firm performance in the context of China, there is a need to explore variables related to the particular context of China as a transitional economy, and its changing government’s economic and social policies as well as the altering legal and regulatory framework of labor relations in recent years. The key research question that can be asked to explore these variables in the ‘black box’ outside the organization could be ‘what institutional factors such as policy adjustment and change of labor laws and regulations could have influenced the strategic choice of HRM policies and practices at the firm level?’ It is well-known that apart from the open-up industrial policy in 1978, Chinese government had also implemented several economic, industry and foreign policies via its consecutive nine sets of five-year plans (referring to Table 4.2), which could have affected the firm’s level of choice of SHRM policies and practices. The existing literature, especially those empirical studies, usually provided rather vague and general statements about China’s transition from the planning economy to the socialist market economy, without getting into detail on the key policy changes that might have affected on the firm’s level of strategic choice. To have a comprehensive understanding of the future theoretical and practical implications of HRM and labor relations management in China, any change of key industry policies from the Five-Year Plans as well as decisions from the National Congress of Chinese Communist Party should be noted, and their impacts on the choice of firm’s business strategy should be further assessed. As these are the unique features of contemporary China, which are rather

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uncommon in the mainstream of discussion of SHRM and employee relations in the West. Furthermore, there have been several changes of labor and employment laws especially since the 1990s (see Table 3.3). These changes would have significant impact on the focus of firms when choosing either compliance-based or performance-based HRM systems. However, there is a general lack of evaluation of the legal impact on the changes of labor-relations management in China. Have the new labor employment laws helped improve working conditions and effectively addressed the labor unrest and human rights issues in China? As argued by Jiang and Messersmith (2018), ‘finding avenues to promote both organizational success and employee wellbeing simultaneously will place the field (of SHRM and labor relations in China) on a sustainable path’ (p. 21; italics added). To seek the sustainable path of scholarship in SHRM in China, we need to put the improvement of individual and societal wellbeing at the heart of future SHRM discussion, in addition to addressing the organizational wellbeing (Beer et al., 1984, 2015; Guest, 2002).

SHRM and enterprise ownership China’s enterprise reform is likely to continue, possibly with broadening the state-owned enterprise (SOE) reform (Naughton, 2017). Our review findings show that most attention had been paid to either analyzing SHRM among those joint-ventured or foreign-invested enterprises (e.g. Goodall and Warner, 1999; Björkman and Fan, 2002); or town-village enterprises (TVEs) (e.g. Chow, 2004); or comparing HRM practices with a bundle of enterprises with different ownerships in the prior studies. Rare studies focus on evaluating SHRM in Chinese SOEs, which are now regarded as the leading force of Chinese economy (Naughton, 2017). Under President Xi Jinping’s unlimited term of leadership announced in the recent 19th National Congress of Chinese CCP, it is expected that more resources may be channeled towards developing the SOE sector. The institutional factors influencing the strategic choice of SOEs’ HRM policies and practices may be more profound than ever before. Thus, the SOE sector would present a unique and enriching context for investing SHRM in China for the future. SOEs are also predominant among those Chinese-owned multinational companies (MNCs) operating now around the globe. Yet a relative few studies have devoted themselves to examining strategic issues of HRM among these emerging Chinese MNCs. Our review showed only three qualitative studies (Shen, 2004; Fan et al., 2013; Cooke, 2014) that had investigated some aspects of SHRM policies and practices among Chinese MNCs operating in Australia, Asia and Africa. No empirical studies have so far used a quantitative method to effectively investigate the HR-performance link that is at the core of SHRM. Further research should also examine how Chinese MNCs effectively manage global labor relations when encountering different institutional settings in the global marketplace.

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China’s prolonged enterprise reforms have transformed its industry landscape. In particular, China has shifted its industry policy focus from developing exportoriented industries such as the massive manufacture of textiles, clothing, footwear, electronic goods and accessories to building the seven pillar industries (i.e. energy, materials, nanotechnology and environmental protection, automobiles, medicine and ICT) with innovation in mind. Very limited studies (e.g. Li et al., 2006; Zhang and Li, 2009; Kim et al., 2018) so far have been devoted to examining the relationship between HRM and innovation among these pillar industries. Further investigation of HRM issues in these industries would be warranted to develop a deeper understanding of how SHRM is being implemented to achieve both enterprise performance outcomes and Chinese government’s political objectives.

SHRM and innovation The findings from our review show there exists a relationship between HRM and innovation among firms operating in China, yet the process to which the HRM system created impact on innovation, and how innovation dwelled inside the ‘black-box’ to mediate and moderate the relationship between SHRM and firm performance was found to be inconsistent because of inconclusive results generated from different empirical studies. More work is indeed required to take a step further in studying the relationship between SHRM and innovation in China. In particular, given strong institutional influences in China, it is necessary to bring institutional theory to the center stage of any future inquiry of HRM and innovation (Shipton et al., 2017), as none of the existing empirical studies have taken this perspective into examining the relationship between HRM and innovation. Furthermore, it is found that there are many opportunities for further research to enhance a better understanding of determinants of HRM and innovation in China (Wei and Lau, 2005; Sun and Du, 2010). In particular, future research could focus on addressing the research gaps in addressing the process to which developing innovation capabilities and employee creativity would be likely to lead to better firm performance, as well as examining the mediating effect of innovation business strategy adopted by the strategic pillar industries espoused by the Chinese government on the relationship between HRM and firm performance. We speculate that additional variables may exist in the ‘black-box’ stage between HRM and innovation because of the multiple levels of effects likely to be derived from SHRM practices on firm innovation. With the application of the AMO (ability, motivation and opportunity) framework, these multiple levels of effects could be better understood, and the process to which HRM may influence innovation at different levels may be explained. For example, we argued that HRM practices such as selection, training and development are mostly linked to individual ability, whilst job content, performance appraisal, incentive rewards and organizational justice and fairness would be related to motivation;

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and opportunity provided for career development and job enlargement and enrichment enabling autonomy that could germinate creativity, can be further enhanced by an effective HRM system with a higher level of employee participation, teamwork and flexible working arrangements. It would be useful to apply the AMO framework and to identify the sources of Chinese employees’ creativity and innovation. It is also believed that organizational HRM and innovation in China is very much context-bound, subject to normative, coercive and mimetic pressures (DiMaggio and Powell, 1983). Thus, innovation at the individual and collective levels is inextricably linked. To further understand the HRM-innovation link in China, we suggest the application of Shipton et al.’s (2017) multi-level model of HRM and innovation in order to test how HRM systems institutionally influenced by the external environment (e.g. Chinese government’s 12th and 13th five-year plans on building an innovative nation) may generate different types of innovation behavior of individuals and collective innovation outcomes of organizations. Testing this multi-level model of HRM and innovation in the context of China would help identify which industry and sector truly implement the entrepreneurial HRM that help Chinese firms in frontier science discovery and technology advancement. More work on this front could be promising and meaningful for future research in examining the HRM-innovation link in China.

SHRM and labor relations China has been taking an experimental and decentralized approach to the development of new labor relations frameworks (Friedman and Kuruvilla, 2015), which is understandably not entirely the same as those industrial relations systems in the western context, given China’s unique cultural and institutional contexts. The findings from our review show an overwhelming use of the unitarist and paternalist approach of SHRM to manage labor relations among Chinese firms overseas and firms operating in China. Yet, there appears an inconsistency in defining what actually constitutes the paternalist HRM approach, how different it is as compared to more established high-performance/high-commitment work practice models commonly used to test SHRM in China. Thus, there is a greater need for future studies to clarify the paternalist approach of labor relations management in China. The outcomes of SHRM on various dimensions of labor relations were also found to be inconsistent from examining the existing literature. We have identified several outcomes such as employee relations climate; level of unionization; intensity in labor law compliance; and employee attitude, turnover intention and organizational commitment that were supposedly induced by the adoption of a SHRM system. To assist China in building a harmonious society, it may be useful to further examine how SHRM helps generate these outcomes, given social outcomes such as employee wellbeing and improved human rights and collective action tend to be largely ignored in addressing labor relation issues under the current China’s political and social environment.

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Managing harmonious labor relations is in fact linked in the mindsets of China’s leaders and set clearly in the CCP’s political agenda (Gore, 2014). Thus, it is anticipated that there will be more calls for building additional socially responsible organizations in China to address rampant issues of human rights’ abuse, pollution and environmental degradation and workplace health and safety hazards. Yet, we are not clear how the socially responsible organizations with ethical perspective of HRM could really help improve working conditions as well as the societal level of wellbeing with reference to clean air, water and environment. Although some patchy research (e.g. Cooke and He, 2010; Shen and Zhu, 2011; Hofman and Newman, 2014; Shen and Benson, 2016) have started to examine the issues of corporate social responsibility and its impact on employee work behavior in the context of China, there is a greater need to further assess the aspects of ethical HRM system from a strategic point of view and evaluate its impact on improving social outcomes.

SHRM and the ‘Chinese Dream’ Improving both economic and social outcomes in China is an important goal that resides in the rhetoric of ‘Chinese Dream’. Although largely driven by the CCP, the achievement of Chinese Dream requires a joint effort by multiple stakeholders such as the Party-state, local government/labor bureau, employers and employer’s associations, workers and their communities, customers and suppliers in the global chain and global non-governmental organizations – NGOs. How these multiple stakeholders could be included for consideration in designing and developing a SHRM system for organizations in China and assist in achieving the Chinese Dream might present an interesting terrain for future research. Under the banner of ‘building a harmonious society’ and ‘fulfilling the Chinese Dream’, are these multiple stakeholders capable of developing more socially responsible firms in China with the aim of achieving the national goals of social and economic development? In the prevailing environment of eroded welfare benefits, job insecurity, health and safety risks and general labor market flexibility and instability, how could organizations in China apply positive psychology and establish relational-based HRM systems in order to help employees craft their meaning of work and be spiritual and resilient, and develop a corporate culture of shared values with hope, optimism and efficacy? These are just some important and interesting research questions for any future study of SHRM in China. The current review showed a different representation of corporate culture in China (Hawes, 2008) and limited empirical studies on the link of corporate culture and SHRM in the existing literature that would require more rigorous investigation in future research. Furthermore, it was found that prior studies tended to focus on the belief in a high-performance work system to produce good organizational culture (e.g. Wei et al., 2011; Cooke et al., 2017) without particularly addressing the issue of ‘shared values’ by various stakeholders in China. With mounting social and environmental issues facing organizations in China, it is important to further explore what constitutes the genuine ‘shared

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values’, which would likely motivate employees and community to engage in developing SHRM policies and practices that are helpful to build and develop sustainable and socially responsible firms. Last, but not least, it is evident that the Chinese Communist Party holds the dominate role of sharing the responsibility of corporate culture building and instilling the ‘correct spirit’ via the ‘Chinese Dream’. How the CCP influence overall employee attitude and organizational behavior and management decisionmaking with reference to recruitment, selection and promotion of leaders and managers would be highly relevant to SHRM. The role of changing work context under China’s new politics to determine the direction of individual and organizational dreams could be another interesting area to explore in future research on the field of SHRM in China.

Conclusion This book takes a strategic approach and provides a comprehensive review of relevant books and papers about SHRM and labor relations management in China especially in the period of 2000–2018 since China’s accession to the World Trade Organization (WTO) in 2001. In particular, the development of SHRM under China’s changing institutional environment has been closely examined, especially since President Xi Jinping has taken dominant control of the Chinese Community Party (CPP) from 2010 onwards. The book offers a comprehensive review of historical development of how SHRM has been rooted in China and its rhetoric impact on supporting China’s national economic development, continuing enterprise reform and sustaining individual creativity and innovation. It discusses and analyzes the link between SHRM and spirituality in the context of a rising aspiration of achieving the ‘Chinese Dream’ as conceptualized by President Xi Jinping in recent times. The book is driven by addressing seven key research questions and proposes several routes for future research endeavor in the promising field of SHRM and labor relations management in China.

References Beer, M., Boselie, P., and Brewster, C. (2015). Back to the future: Implications for the field of HRM of the multi-stakeholder perspective proposed 30 years ago, Human Resource Management, 54(3), 427–438. Beer, M., Spector, B., Lawrence, P.R., and Mills, D.Q. (1984). Managing Human Assets: The Groundbreaking Harvard Business School Program, New York: Free Press. Björkman, I., and Fan, X. (2002). Human resource management and the performance of Western firms in China, The International Journal of Human Resource Management, 13(6), 853–864. Boxall, P., and Macky, K. (2009). Research and theory on high-performance work systems: Progressing the high-involvement stream, Human Resource Management Journal, 19, 3–23.

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Brewster, C. (1995). Industrial relations and human resource management: A subversive European model, German Journal of Industrial Relations, 2(4), 395–413. Chow, I.H. (2004). Human Resource management in China’s township and village enterprises: Change and development during the economic reform era, Asia Pacific Journal of Human Resources, 42(3), 318–335. Cooke, F.L. (2014). Chinese multinational firms in Asia and Africa: Relationships with institutional actors and patterns of HRM practices, Human Resource Management, 53(6), 877–896. Cooke, F.L., Cooper, B., Bartram, T., Wang, J., and Mei, H. (2017). Mapping the relationships between high-performance work systems, employee resilience and engagement: A study of the banking industry in China, The International Journal of Human Resource Management. doi:10.1080/09585192.2015.1137618 Cooke, F.L., and He, Q.L. (2010). Corporate social responsibility and HRM in China: A study of textile and apparel enterprises, Asia Pacific Business Review, 16(3), 355–376. DiMaggio, P.J., and Powell, W.W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields, American Sociological Review, 48, 147–160. Fan, D., Zhang, M.Q., and Zhu, C.J.H. (2013). International human resource management strategies of Chinese multinationals operating abroad, Asia Pacific Business Review, 19(4), 526–541. Friedman, E., and Kuruvilla, S. (2015). Experimentation and decentralization in China’s labor relations, Human Relations, 68(2), 181–195. Goodall, K., and Warner, M. (1999). Enterprise reform, labor-management relation and human resource management in a multinational context: Empirical evidence from Sino-foreign joint ventures, International Studies of Management and Organization, 29(3), 21–36. Gore, L.L.P. (2014). Labour management as development of the integrated developmental state in China, New Political Economy, 19(2), 302–327. Guest, D.E. (2002). Human resource management, corporate performance and employee wellbeing: Building the worker into HRM, Journal of Industrial Relations, 44(3), 335–358. Hawes, C. (2008). Representing corporate culture in China: Official, academic and corporate perspective, The China Journal, 59, 33–61. Hofman, P.S., and Newman, A. (2014). The impact of perceived corporate social responsibility on organizational commitment and the moderating role of collectivism and masculinity: Evidence from China, The International Journal of Human Resource Management, 25(5), 631–652. Jackson, S.E., and Schuler, R.S. (1995). Understanding human resource management in the context of organizations and their environments, Annual Review of Psychology, 46, 237–264. Jiang, K.F., and Messersmith, J. (2018). On the shoulders of giants: A meta-review of strategic human resource management, The International Journal of Human Resource Management, 29(1), 6–33. Kim, S.H., Su, Z.X., and Wright, P.M. (2018). The ‘HR-line-connecting HRM system’ and its effects on employee turnover, Human Resource Management, 57(5), 1219–1231. Li, Y., Zhao, Y.B., and Liu, Y. (2006). The relationship between HRM, technology innovation and performance in China, International Journal of Manpower, 27(7), 679–697. Liang, X.Y., Marler, J.H., and Cui, Z.Y. (2012). Strategic human resource management in China: East meets west, Academy of Management Perspectives, 26(2), 55–70.

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Luthans, F., Avey, J.B., Clapp-Smith, R., and Weixing, Li (2008). More evidence on the value of Chinese workers’ psychological capital: A potentially unlimited competitive resource? The International Journal of Human Resource Management, 19(5), 818–827. Luthans, F., Avolio, B.J., Walumbwa, F.O., and Li, W.X. (2005). The psychological capital of Chinese workers: Exploring the relationship with performance, Management and Organization Review, 1(2), 249–271. Naughton, B. (2017). The current wave of state enterprise reform in China: A preliminary appraisal, Asia Economic Policy Review, 12, 282–298. Shen, J. (2004). International performance appraisals: Policies, practices and determinants in the case of Chinese multinational companies, International Journal of Manpower, 25(6), 547–563. Shen, J., and Benson, J. (2016). When CSR is a social norm: How socially responsible human resource management affects employee work behavior, Journal of Management, 42(6), 1723–1746. Shen, J., and Zhu, C.J.H. (2011). Effects of socially responsible human resource management on employee organizational commitment, The International Journal of Human Resource Management, 22(15), 3020–3035. Shipton, H., Sparrow, P., Budhwar, P., and Brown, A. (2017). HRM and innovation: Looking across levels, Human Resource Management Journal, 27(2), 246–263. Sun, L.Y., Aryee, S., and Law, K.S. (2007). High-performance human resource practices, citizenship behaviour, and organizational performance: A relationship perspective, Academy of Management Journal, 50(3), 558–577. Sun, Y.F., and Du, D.B. (2010). Determinants of industrial innovation in China: Evidence from its recent economic census, Technovation, 30, 540–550. Van De Voorde, K., Paauwe, J., and Van Veldhoven, M. (2012). Employee well-being and the HRM – Organizational performance relationship: A review of quantitative studies, International Journal of Management Reviews, 14, 391–407. Warner, M. (Ed.). (2009). Human Resource Management ‘With Chinese Characteristics’, London: Routledge. Warner, M. (2014). Understanding Management in China: Past, Present and Future, London: Routledge. Wei, L.Q., and Lau, C.M. (2005). Market orientation, HRM importance and competency: Determinants of strategic HRM in Chinese firms, The International Journal of Human Resource Management, 16(10), 1901–1918. Wei, L.Q., Liu, J., and Hemdon, N.C. (2011). SHRM and product innovation: Testing the moderating effects of organizational culture and structure in Chinese firms, The International Journal of Human Resource Management, 22(1), 19–33. Wright, P.M., and McMahan, G.C. (1992). Theoretical perspective of strategic human resource management, Journal of Management, 18(2), 295–320. Xian, H.P., Atkinson, C., and Meng-Lewis, Y. (2017). Guanxi and high-performance work systems in China: Evidence from a state-owned enterprise, The International Journal of Human Resource Management. doi:10.1080/09585192.2017.1332670 Zhang, Y.C., and Li, S.L. (2009). High performance work practices and firm performance: Evidence from the pharmaceutical industry in China, The International Journal of Human Resource Management, 20(11), 2331–2348. Zhu, C.J.H., Cooper, B., de Cieri, H., and Dowling, P. (2005). A problematic transition to a strategic role: Human resource management in industrial enterprise in China, The International Journal of Human Resource Management, 16(4), 513–531.

Appendix 1 27-points of differences between personnel management and human resource management

Dimensions

Personnel and IR

HRM

Careful delineation of written contracts Importance of devising clear rules/mutually Procedures

Aim to go beyond contract ‘Can-do’ outlook; Impatience with ‘rule’ Business-need’

Norms/custom and practice Monitoring

Values/mission Nurturing

Pluralist Institutionalized

Unitarist De-emphasized

Strategic aspects 8. Key relations 9. Initiatives 10. Corporate plan 11. Speed of decision

Labor management Piecemeal Marginal Slow

Customer Integrated Central Fast

Line management 12. Management role

Transactional

13. Key managers

Personnel/ IR specialists

14. Communication 15. Standardization

Indirect High (e.g. ‘parity’ an issue)

16. Prized management skills

Negotiation

Transformational leadership General/business/line managers Direct Low (e.g. ‘parity’ not seen as relevant) Facilitation

Beliefs and assumptions 1. Contract 2. Rules 3. Guide to management action 4. Behavior referent 5. Managerial task vis-a-vis labor 6. Nature of relations 7. Conflict

Key levers 17. Selection 18. Pay 19. Conditions

Integrated, key task Separate, marginal task Job evaluation (fixed grades) Performance-related Separately negotiated Harmonization (Continued)

(Continued) Dimensions

Personnel and IR

20. Labor-management

Collective bargaining contracts 21. Thrust of relations with Regularized through facilities stewards and training

22. Job categories and grades 23. Communication 24. Job design 25. Conflict handling

Many

26. Training and development 27. Foci of attention for interventions

Controlled access to courses

Source: Storey (1992, p. 35)

Restricted flow Division of labor Reach temporary truces

Personnel procedures

HRM Towards individual contracts Marginalized (with exception of some bargaining for change models) Few Increased flow Teamwork Manage climate and culture Learning companies Wide ranging cultural, structural and personnel strategies

Appendix 2 A list of books and industry reports related to HRM/labor relations in China published since 2000

Chan, A. (2001). China’s Workers Under Assault: The Exploitation of Labor in a Globalizing Economy, Armonk, NY: M.E. Sharpe. Chan, C.K. (2010). The Challenge of Labour in China: Strikes and the Changing Labour Regime in Global Factories, London: Routledge. Chen, C. (2008). Some Assembly Required: Work, Community, and Politics in China’s Rural Enterprises, Cambridge, MA: Harvard University Press. Cooke, F.L. (2005). HRM, Work and Employment, London: Routledge. Cooke, F.L. (2009). Competition, Strategy and Management in China, Basingstoke: Palgrave Macmillan. Cooke, F.L. (2012). Human Resource Management in China: New Trends & Practices, London: Routledge. Davies, D., Wei, L., Xie, Y.H., and Zhang, X.Y. (2011). Human Resources Management in China: Cases in HR Practice, Oxford: Chandos Publishing. Lee, C.K. (2007). Against the Law: Labor Protests in China’s Rustbelt and Sunbelt, Berkeley, CA: University of California Press. Li, J.T., Tsui, A.S., and Weldon, E. (2000). Eds., Management and Organizations in the Chinese Context, New York: St. Martin’s Press, Inc. Nankervis, A., Cooke, F.L., Chatterjee, S.R., and Warner, M. (2013). New Models of Human Resource Management in China and India, London: Routledge. Rowley, C., and Cooke, F.L. (Eds.). (2010). The Changing Face of Management in China, London: Routledge. Warner, M. (Ed.). (2003). Culture and Management in Asia, London: Routledge. Warner, M. (Ed.). (2009). Human Resource Management ‘With Chinese Characteristics’, London: Routledge. Warner, M. (2014). Understanding Management in China: Past, Present and Future, London: Routledge. Warner, M., and Rowley, C. (Eds.). (2014). Demystifying Chinese Management: Issues and Challenges, London: Routledge. (this book was compiled from the SI from Asia Pacific Business Review, 19(3), 435–624). Whiteley, A., Cheung, S., and Zhang, S.Q. (2000). Human Resource Strategies in China, Singapore: World Scientific Publishing Co. Zhu, C.J.H. (2005). Human Resource Management in China: Past, Present and Future HR Practices in the Industrial Sector, London: RoutledgeCurzon.

186

Appendix 2

McKinsey’s reports on China that are related to labor and HRM (2005–2018) Chen, L.K., Mourshed, M., and Grant, A. (2013). The $250 billion question: Can China close the skills gap? McKinsey Quarterly, Retrieved on 8 March 2018 via www.mckinsey.com/~/media/mckinsey/industries/social%20sector/our%20 insights/chinas%20next%20chapter%20the%20human%20capital%20puzzle/chinaskills-gap.ashx Eloot, K., Strube, G., and Wang, A. (2013). Capability building in China, McKinsey Quarterly, Retrieved on 8 March 2018 via www.mckinsey.com/global-themes/ asia-pacific/capability-building-in-china Farrell, D., and Grant, A. (2005). Addressing China’s looming talent shortage, McKinsey Global Institute, October, Retrieved on 8 March 2018 via www.mckinsey. com/~/media/McKinsey/Global%20Themes/China/Addressing%20chinas%20 looming%20talent%20shortage/MGI_Looming_talent_shortage_in_China_full_ report.ashx Farrell, D., Laboissiere, M., Pascal, R., de Segundo, C., Rosenfeld, J., Sturze, S., and Umesawa, F. (2005a). The Emerging global labor market, McKinsey Global Institute, June, Retrieved on 8 March 2018 via www.mckinsey.com/globalthemes/employment-and-growth/the-emerging-global-labor-market Farrell, D., Puron, A., and Remes, J.K. (2005b). Beyond cheap labor: Lessons for developing economies, McKinsey Quarterly, February, Retrieved on 8 March 2018 via www.mckinsey.com/global-themes/employment-and-growth/beyond-cheaplabor Lynton, N. (2013). Managing the Chinese way, McKinsey Quarterly, July, Retrieved on 8 March 2018 via www.mckinsey.com/~/media/McKinsey/Global%20 Themes/Asia%20Pacific/Managing%20the%20Chinese%20way/Managing%20 the%20Chinese%20way.ashx McKinsey (2012). Three snapshots of Chinese innovation, Retrieved via www.mckinsey. com/featured-insights/asia-pacific/three-snapshots-of-chinese-innovation Ngai, J. (2018). What you need to know about working for a Chinese company, McKinsey & Company, Retrieved on 8 March 2018 via www.mckinsey.com/ global-themes/china/what-you-need-to-know-about-working-for-achinese-company Orr, G., and Roth, E. (2012). A CEO’s guide to innovation in China, McKinsey Quarterly, February, www.mckinsey.com/featured-insights/asia-pacific/a-ceosguide-to-innovation-in-china Orr, G., and Roth, E. (2013). China’s innovation engine picks up speed, McKinsey Quarterly, June: 1–5, www.mckinsey.com/business-functions/strategy-and-corporatefinance/our-insights/chinas-innovation-engine-picks-up-speed

Journal Outlet

OS

Empriical studies on SHRM in China

Björkman & Lu 2001

Research method

Industry

63 Chinese-Western mixed method manufacturing JVEs with qual + quantitative

Sample

Appendix 3

Institutional theory (Scott, 1987) + a barganining power perspective

Theory

IHRM strategies (standardization v. localization) measured by Prahalad & Doz (1987), Rosenzweig & Nohria (1994) and Hannon et al. (1995)

how is SHRM measured?

at the beginning of the reform, JVEs were only allowed to operate in China, with many restriction; but these contexts were not tested but briefly discussed in the study. Three organs (i.e. The Community Party, the labor union and the govt bureaucracy) were mentioned to have influenced the operation of JVEs.

Antecedents (contexts)

1. HRM methods; 2. the criteria used to recruit local managers and professional; 3. the amount, and 4. the content of manamgnet and professional training; 5. the relative importance of financial bonuses as a percentage of total compensation, 6. the criteria employed to determine the bonus; 7. the criteria used to select people for promotion

HR practices

(di)similarity of HRM practices bw American and Chinese

Outcomes

the mode of establishment, the nationality of foreign parent org, and the number of expatriates, in addition to the equity share held by the foreign parent org and the noncapital resources provided by the MNCs moderate the extent to which local HRM practices resemble with those in the home country.

(Continued)

the HRM practices were found to be similar to those of the MNC than to those of local manufacturing Chinese companies; the result is attributed to a lack of strong local instutionalizaton pressures concerning personnel/HRM practices in China at the time, and to Western executives’ perception that the intro of Wesetrn policies and practices were needed to make the JVEs competitive

Mediators/ Results Moderators/ Control variables

Journal Outlet

IJHRM

JIBS

Empriical studies on SHRM in China

Björkman & Fan 2002

Law et al., 2003

(Continued)

Research method

180 firms from nine quantitative cities in China

62 Chinese-Western quantitative JVEs

Sample

strategic HRM with HPWS; best-fit v. best practice argument

Theory

various but institutional focused on theory + RBV growing firms with SOEs, TVEs and JVEs

manufacturing

Industry

Antecedents (contexts)

HR practices

5-item to measure suggest that the strategic role powerful of HRM Chinese institutions such as social norms and rules +

strategic role of HRM and employee attitude

use of Becker & no discussion of 3 items on Huselid’s (1998) such contexts selective hiring 11-items (prior selective assessment; selection tests; # of persons interviewing new hires); 2 items on training (training for new recruits; training for old employees; and trai; 2-items on merit-based promotion; 8. performance appraisal; 9. job analysis; 10. attitude survey; and 11 information sharing

how is SHRM measured?

firm profitability; productivity

subsidiary performance measured by firm’s profitability and overall performance benchmarked by the same industry

Outcomes

not mentioned about mediators/ moderation; use of location, ownership as control variables

not speciified and proposed to take the culturalinstitutional context to moderate the relationship between HRM and org performance; 2nd hypothesis appears to test straetgic fit between HR, strategy and performance. Here business strategy may be a mediator, but not clear; use of subsidiary age, no of employees as control variables

the strategic role of HRM contributed to enhance firm’s financial and operational

a positive relationship between HRM and org performance was found

Mediators/ Results Moderators/ Control variables

Chow 2003

APJHR

244 TVEs

quantitative

lower and no specifically middle mentioned manangers from marnufacturing firms Von Glinow’s (1993) survey instrument some discussion on context of TVEs and HRM in China; various HRM practices taken as antecedents

social, political and economic bodis would govern the way indivisuals and firms behave; SHRM and ee attitude as antecedents

hiring practice; training philosophy and activites provided; purposes of performance evaluation, commonly used reward systems

perceived not specified effectiveness of HR; satisfaction with job, supervisor, organization, pay, promotion, job security and career opportunities

(Continued)

different training emphasis significantly related to overall effectivenss and satisfaction; a strong benefit policy and hiring based on value congruence negatively effected on effectiveness; the developmental purpose of performance appraisal positively impacted on effectivenss but negatively on employee satisfaction. no relationship was found in other HR practices with outcomes.

performance; employee positive attitudes towards top leaders are important, but employees with ‘iron-rice bowl’ were not motivated to perform, causing deteriated performance outcomes.

358 managers from mix-method 75 companies (JVEs, with 2 studies SOEs & TVEs)+ interviews of 45 HR managers/ supervisors

IJM

qualitative

quantitative

Wang & Zang, 2005

296 Chinese firms

Research method

16 interviews of MNC managers in China

IJHRM

Li 2003

Sample

Ahlstrom et al. TIBR 2005

Journal Outlet

Empriical studies on SHRM in China

(Continued)

various industries with SOEs, FIEs, POEs, JVEs

various industries

soft drinks and electronic industries

Industry

self-generated items on educaitonal level; average pay and employment term etc.

how is SHRM measured?

no theory ground was discussed

10 areas of HR practices generated from interviewing 22 HR managers

Ulrich (1997)’s no measure HR competency model

RBV, best-fit, the contingency perspective, and best practice

Theory

objective HR policy measure: labor-intensive v. technologybased; portions of recruiting local managers; short v. long-term employment; low v. high pay, education level v. training

HR practices

contexts were 1. selection and briefly discussed; placement; 2. training and development; 3. performance appraisal & mgt; 4.

contexts were discussed

extensive discussion of the Chinese context esp. on how important strategic industry may impact on the strategic choice of HRM

Antecedents (contexts)

market performance, profitability; competitiveness; task

profitability, turnover rate; productivity -sales per employees

Outcomes

not mentioned of mediator/ moderator; use of different industries:

not mentioned about mediators/ moderation; use of industry as a control

10 areas of HR practices are factored into functional v. strategic HRM. Whilst

suggest that culture and environmental context be considered in anticipating how employees may interpret and react to HR practices

long-term employment and higher level of education reduce turnover rate; high pay +education positively increased productivity and more income is positively related to profitability

Mediators/ Results Moderators/ Control variables

IJHRM

IJHRM

Wei & Lau 2005

Zhu et al., 2005

quantitative

317 responses in quantitative 1995; 328 responses in 2002

600 firms in China with SOEs, COEs, FIEs & DPEs

managers from SOEs, DPEs, COEs & FIEs

various industries with SOEs, FIEs, POEs, JVEs (manufacturing v. nonmanufacturing) use of Porter’s (1985) generic strategy framework; RBV; best practice v. best fit

fit theory (Wright & Snell, 1998); RBV; competency perspective (Ichniowskil et al., 1997) not quite discussed. Market orientation, HR importance and competency as antecedents

BPIHRM Project Contexts were questionaire was well discussed used

12-items from Huselid (1995) and Zhao (2001, in Chinese)

accomplishment, personnel turnover, employee satisfaction; innovation performance

3-item measure the status of HR function with a single item on strategic HR participation and 2-item on perceived importance and effectivenss of the HR function; four HR practices: hiring,

firm size and ownership types as moderators; firm age, industry and region as control variables

IT (Lenova), whitegood (Haier); softdrinks (Wahaha); textile (Hengdian) to illustrate different HRM and entrepreneurship/ innovation

This is a use of different comparative ownership for study - no comparison outcomes shown

looking at the firm’s 12-items adoption of strategic HRM; strategic HRM 12-item HR competency and 4-item HR importance

career development & promotion; 5. pay and bonus systems; 6. employee participation program; 7. quality control program; 8. mgt by objective; 9. team mgt; 10. corproate culture development.

(Continued)

higher market orientation, HR impotance and competency were more likely to adopt strategic HRM

functional HRM practices related to all 7 areas of performance outcomes, strategic HRM are partcularly useful to enhance innovation performance, task accomplishment and employee satisfaction and retention

IJHRM

quantitative

74 Chinese SMEs

Research method

Zheng et al. 2006

Sample

194 high-tech firms quantitative in China

Journal Outlet

Li et al., 2006 IJM

Empriical studies on SHRM in China

(Continued) how is SHRM measured?

7-items of HRM practices

RBV, innovation various measures theory of training, incentive etc.

Theory

SMEs in various no specifically industries with mentioned SOEs, FIEs, POEs, JVEs

high-tech industry

Industry

contexts leading to the selection of seven innovative HR practices were discussed

differences between market and management mechanisms in the West and China were mentioned briefly, but not used as antecedents

Antecedents (contexts)

Outcomes

free-market selection; performance-based pay, social security provision, training and development, performance evaluation, employee invovlement, a role for trade unions

increased production & sales; market competitiveenss and expected growth

3-item ee firm training; 3-item performance for material and non-material incentive each; 3-item process appraisal & control; 3-item outcome-based appraisal and control; 5-item technology innovation; 4-item firm performance

compensation, training and performance appraisal were tested.

HR practices

employee outcomes of competency, commitment and congruence used as mediator; control by industry, years of establishment, ownership

technology innovation used as a mediator; no control variable was included

Use of HRM practices strongly help improved employee outcomes, but not all HRM practices help improve firm performance

training, nonmaterial incentive, process appraisal and control instead of outcome-focused appraisal help contribute to technological innovation, which help enhance firm performance

Mediators/ Results Moderators/ Control variables

AMJ

HRM

IBR

Sun et al., 2007

Akhtar et al. 2008

Björkman et al., 2008

57 European companies in China (1996); 87 European firms in China (2006)

quantitative

465 firms in China quantitative with SOEs and FIEs

81 Hotel HR quantitative managers & 405 supervisors from public (SOEs & COEs), and private (FIEs & DFEs, share-holding) firms

not specified

various in electronics, garment, engineering, service etc.

Hospitality/ hotel

institutional theory

contingency v. configurational approach to SHRM

RBV and control theory

32 items by Hannon et al (1995) and Rosenzweig & Nohria (1994)

Delery and Doty’s (1996) multi-item survey instrument was used

27-items by Bamberger & Meshoulam (2000)

institutional context was discussed.

discuss how valid of SHRM is in China, and how can it be applied in the context of China; institutional factors were discussed in length to verify the choice of 7 aspects of strategic HRM

negligible

Recruitment methods; mgt and professional training; performance-based pay; performance apprails

7 areas of strategic HRM were identified from scaling multi-item survey: training, participation, employment security, job descriptions, results-oriented appraisal, internal career opportunities, stocks/profit sharing

This is a comparative study - no outcomes shown

product/service quality, customer satisfaction & technological innovation to measure product/service performance; profitability, sales growth and ROI to measure financial performance

derived 8 factors turnover; for HPWPs as productivity participation; mobility; training; staffing; job description; appraisal; job security; incentive rewards not specified of mediator/ moderation; use of ownership, location, industry, size and year of operation as control

service-oriented citizenship behaviour as mediator; unemployment rate and business strategy as moderators; use of hotel size, age of operation, and ownership as control variables

(Continued)

HRM practices are similar (converged) with European MNCs and local China units.

except for profitsharing, all other strategic HRM practices had significant effects on product/service performance; except for employment security and job descriptions, all other HRM practices have sginficantly positive effects on financial performance

HPWS related to org performance in terms of reducing turnover and increase productivity. Mediation and moderation effects also exist

Journal Outlet

HRM

Empriical studies on SHRM in China

Chow et al. 2008

(Continued)

241 firms (SOEs, COEs JVEs & FIEsin China

Sample

quantitative

Research method

manufacturing, technology and electronic and service

Industry

contingency theory of HRM & configurational HRM with two approaches: RBV and control theory

Theory

25-items to form 4-HR configuratino of ‘commitment’; ‘market’; ‘compliance’ and ‘collaboration’

how is SHRM measured?

spoke a bit on different institutional environment of the socialist market and rapid growth of China

Antecedents (contexts)

commitmentbased HR practices with (7-items on training, promotion, career development & performance evaluation); market-based (5-items on salary, incentive pay, flexible compensation, performancebased pay); compliancebased with 7-items on performance appraisal standard and criteria; formal employee participation, employee empowerment, employee survey, communication and feedback from employee) and collaborationbased HR

HR practices

employee turnover, sales growth and financial profit

Outcomes

business strategies such costreduction, quality enhancement and innovation were used to moderate the relationship between strategic HRM and performance; controlled by amount of resources; firm size, ownership; industry, location

commitmentbased HR has a positive significant effect on overall performance outcome, and compliance HR marginally efect negatively on profit, and postive effect on turnover. Market & collaborationbased HR have no effects on overall performance outcomes. the moderating effect of business strategies was significant as they created synergestic effects on performance. for a particular note, innovation business strategy moderates positvely the relationship between commitment HR and sales and profit growth

Mediators/ Results Moderators/ Control variables

HRM

JIBS

Ngo et al. 2008

Wei & Lau 2008

600 firms in China with SOEs, COEs, FIEs & POEs

600 firms in China (FIEs, SOEs and POEs)

quantitative

quantitative

various industries

various industries

institutional theory

RBV

the changing context of HRM in China was discussed

12-items from Market Huselid (1995) + orientation as Zhao (2001) antecedent; also discuss the issue of ‘globalization’ that forced Chinese firms to be more marketoriented

Huselid (1995) scale of SHRM

similar to Ngo et al. 2008 with one factor of SHRM

7 areas of HR practices: selective hiring, result/ behaviourbased appraisal; job-rotation, extensive training, competitive pay, performancebased pay and turnover minimization

practices with 6-items of training and job rotation, teambased incentives, stock-ownership, profit-sharing, information sharing)

Firm performance with net profits & return on sales & ROA

financial & operational performance; ER climate

ownership & autonomy in staffing as moderators, SHRM as mediator; controlled by firm size, age of operation, region, industry

ownership as a moderator on the relationship between strategic HRM and performance/ER climate; use of industry, location and firm size as control variables

(Continued)

market orientation positively associated with the adoption of strategic HRM; and SHRM linked to firm performance; the relationship bw market orientation & firm performance is weakened by SHRM as a mediator, signifying the importance of SHRM to firm performance

SHRM and HR pratices were not employeed uniformly among different ownership types. Owership moderate the relationship of HR and performance

Journal Outlet

HRM

JAP

Empriical studies on SHRM in China

Gong & Chang 2008

Gong et al. 2009

(Continued)

Research method

2148 managers quantitative from 463 firms (SOEs,POEs, JVEs, FIEs etc.) operating in China

2061 managers quantitative (478 CEOs, 478 HR managers and 1105 line managers) from POEs, WFOs, SOEs, JVEs and FIEs

Sample

Theory

exectuives RBV attending training course; consulting firms

exectuives institutional attending theory training course; consulting firms

Industry

use of institutional ownership cleary as antecedent in testing

Antecedents (contexts)

48 studies to no discussion of come up with such contexts 48-item of HR practices, divided into two HR systems

Delery and Doty’s (1996) employment security+2-item

how is SHRM measured?

review of 48 studies on strategic HR comes up with 9 major HR practices: employment security, reduction of status distinctions, seelctive hiring, team participation in decision making; performance appraisal, performancebased high pay, extensive training, career planning and advancement, and information sharing

employment security and caeer advancement

HR practices

firm performance in 7 aspects: profit, sales growht, market share, asset growth, ROA, ROS and labor productivity

org’ commitment; OCB and firm performance

Outcomes

affective and continuance commitment used to mediate the relationship between strategic HR and performance; use of firm size, industry, ownership and unionization as control variables.

not mentioned of mediator/ moderator; use of firm size, industry, ownership and unionization as control variables.

performanceoriented HR significantly increased affective commitment, and in return positively affect on firm performance; maintenanceHR affects on continuance commitment, but this has no contribution to performance.

no difference was found to provide career advancement among SOEs and WFOs; the tension of employee security and career mobility were tested and discussed.

Mediators/ Results Moderators/ Control variables

IJHRM

IJHRM

IJHM

Qiao et al. 2009

Zhang & Li 2009

Chang et al. 2011

quantitative

quantitative

196 hotels & quantitative restaurants in China

136 managers in China from SOEs, POEs, FIEs

1176 responses from one SOE and 5 JVEs in China

hospitality

Pharmaceutical

manufacturing 18-item HPWPs by Guthrie (2001) and Datta et al. (2005) a brief discussion of the cotnext of adopting HPWPs in China

no theory ground was discussed various measures of multi-skilled & training, and incremental & radial innovaiton

HRM practices were treated as antecedents

universal v. 7 best practices by no discussion contingency Delery and Doty of such context, approach of HR (1996) except a brief mention of pharmaceutical industry in China

best-fit theory; employee attitudes

firm performance measured by sales growth, market share, competiive position and overall performance

org’ commitment

multi-skilled incremental core employees; & radical training innovation

training; participation; job definition; performance appraisal; internal career opporutnities, profit sharing, employment security

not specified what HPWPs but use of measurement of existence of HPWPs as a result of onefactor solution

not specified of mediator/ moderation; use of firm size, age and type (restaurant v. hotel) as control

innovation strategy used to moderate the relationship between HR and performance; use of firm size, age of operation, ownership as control variables

age, gender, marital status, educational moderate the relationship bw HPWs and employee commitment; use of ownership and employee position as manager or workers as control variables.

(Continued)

hring of multiskiiled employees and training predicted significantly both incrementa/ radicall inovation among firms; if both practices used interactively, it may jeopadise the innovation outcomes

HRM index explained a significnat incremental amount of variance of market performance; but moderating effects were negative

from the employee perspective, it is showned that the existence of HPWPs as perceived by employees is associated with org commitment. Older, married people more committed, higher educated people less committed, gender is no difference

Journal Outlet

IJHRM

IJHRM

IJHRM

Empriical studies on SHRM in China

Li et al. 2011

Wang et al. 2011

Wei et al. 2011

(Continued)

quantitative

Research method

223 enterprises quantitative (SOEs, POEs, FIEs) in China

630 employees of quantitative Chinese firms (SOEs v. POEs) in two industries

810 employees of three- 5* Chinese hotels

Sample

not specified

not specified, but production employees mentioned

hospitality

Industry

fit theory

HPWP & expectancy & psychological contract theory

no theory ground was discussed

Theory

Antecedents (contexts)

8-item HRM practices

15-item measuring empowerment (Arnold et al. 2000); 8-item for training (Robert et al., 2000), 7-item teamwork (no reference)

Employee attitudes: work satisfaction & vigor and intention to quit

Outcomes

empowerment, work training, withdrawal, teamwork turnover intention

training, internal promotion, employee participation, results-oriented pay, and job security; HR distinctiveness perceived by employees

HR practices

no discussion of not specified product such contexts what SHRM innovation was but factored 8-items adopted from Huselid (1995) and Wang & Zhang (2005) into one variable

a bit discussion but argue that with an agreeable set of HR, cultural factors can be eliminated

17-item by Sun et HRM systems al. (2007) features: distinctiveness, consistency and consensus

how is SHRM measured?

org culture and structure as moderators; controlled by ownership

ownership and org culture as a moderator for managerial pracrices and work attitutude; org commitment as a mediator between mangerial practices and work withdrawal

HPWS climate strength moderates the relationship bw HRM and work satisfaction; no control variable

the effect of SHRM was significant on product innovation, culture is more important than structure to moderate the effect of SHRM and innovation

this study contains some flaws in analysis, so not worth mentioning perhaps.

employee perceptions of the distinctiveness, consistency and consensus is significantly associated with employees’ work satisfaction, vigor and intention to quit

Mediators/ Results Moderators/ Control variables

IJHRM

HRM

Jiang J.W. et al., 2012

Zhou et al. 2013

179 firms in China quantitative (SOEs, POEs, JVEs & WFOs)

754 responses from quantitative 125 firms (SOEs, POEs, FIEs & JVEs)

manufacturing & service

focused on industries with innovation

social network theory bonding v. outreaching views 15-item for commitment HR; 6-item for collaboration HR not discussed to the satisfied extent; commitment v. collaboration HR as antecedent

social exchange 21-items into yes a brief theory 6-scale by Youndt discussion (1998) on why it is important to study HRinnovation link

HR outsourcing. (see 15-item in the comment box)

building extensive social networks, and professional

alliance with external academic institutions,

external professionals, long-term personnel

buy-in, flexible partnership with autonomous

service

6-item as formal bottom-line firm external learning performance market position; program productivity with business growth, profit partners, growth consulting

hiring & adminstrative v. selection, technological training, innovation performance appraisal, reward, job design and team work

firm innovation as mediator; use of industry, age, size, publicly listed, unionized, ownership and high-techn as control variables.

employee creativity as a mediator; use of firm size, firm age, firm ownership, the industry and firm profitability as control variables

(Continued)

both commitment and collaboration HR predict firm innovation, but together they did not predict bottom-line performance. Comitment contributed to firm performance, whilst collaboration was not - two sets interacted did not help innovation, neither help achieving the bottom-line performance results.

Hiring& selection, job design, reward, teamwork was found to be related to employee creativity, and EC is related to admin and technological innovation. It is argued that the four HRM

1051 teachers from quantitative 63 Chinese schools

205 responses from quantitative SOEs, POEs, FIEs)

HRM

Shen et al., 2014

Lu et al., 2015 IMDS

4 studies on Chinese qualitative MNCs in Asia & Africa

HRM

Research method

Cooke 2014

Sample

Journal Outlet

Empriical studies on SHRM in China

(Continued)

manufacturing

education, school

Industry

how is SHRM measured?

no specifically mentioned

6-scale by Delery and Doty (1995) to measure HPWPs

no specifically 19-items from mentioned but Sun et al (2007) use of QWL, job satisfaction; and social process theory

Theory

not discussed at all, but argue that innovation ability is regarded as playing the intermediary role between HR and performance

not discussed at all.

Antecedents (contexts)

training, employee participation, job analysis, performance evaluation, employee deveopment, profit sharing

8 dimensions of HPWS include: selctive staffing, extensive training, internal mobility, employment security, job description, results-oriented appraisal, incentive rewards and participation.

HR practices

total sales, market share, sales grwoth, market positive and overall performance

teacher’s in-role performance; teachers’ extrarole behavior

Outcomes

innovation as mediator; no control

quality of working life (QWL) as mediator; controlled by gender, age, education, position and tenure.

industry specific analysis

Strategic HRM positively correlated with innovation but innovation as a mediator weakened the relationship between strategic HRM and firm performance. However, innovation also significant predicted firm performance.

QWL serves as an important intrinsic and extrinsic motivator to mediate the relationship between HPWS and performance and behaviour

Mediators/ Results Moderators/ Control variables

IJHRM

quantitative

2020 employees

qualitative

Cooke et al., 2017

23 Chinese managers from 3 M&A cases

264 industrial firms quantitative in China with SOEs, DPEs and IVEs

IJHRM

Zhang J. et al. IMM 2016

Xing & Liu 2016

banking industry

job-demandresources model; SHRM theory various measures for HPWS

a range of RBV and various measures industries such dynamic for different as chemicals, capability theory constructs ICT, electronics and ffo and beverage

collecting stories from business leaders

to some extent on the work situation in the banking industry

not discussed at all, China is used to collect verified data; entrepreneurial orientation and capabilitybased HR as antecedents operational efficiency; market share growth, ROI, ROS, sales & profit grwoth, ROA

16-items employee consist of 4 engagement dimensions of HPWS: rewards, training and development, performance appraisal, employee participation

4-items used to measure capability-based HRM: slection, training, participation and flexible management

resilience is measured by a multidimensional scale which focused on a skill-oriented construct on flexibility, problem-solving skills and interpersonal/ social relationship as core dimension; 8 dimensions include: vision, determination, interaction, problem-solving, flexibility/ adaptability

innovation ambidexterity - exploratory v exploitation capability as a mediator, controlled by industyr, business types, location, ownership, firm size, age

(Continued)

HPWS posiitvely related with employee resilence, which in turn increase the level of employee engagement. Resilence positively mediate the relationship between HPWS and ee engagement. Personal qualities such as resilence help employees to become more engaged because of their ability to control their work environment. Use of HPWA as a job resource and resilience as an individual resource.

Journal Outlet

PR

IJHRM

Empriical studies on SHRM in China

Zhang M. et al., 2017

Xian et al., 2017

(Continued)

Research method

226 employees from quantitative a Chinese SOE

181 firms (MNCs & mix-method Chinese firms) and with 2 studies 669 rural migrants workers

Sample

railway/ transport

various industries with SOEs, FIEs, POEs, JVEs

Industry

Antecedents (contexts)

guanxi was discussed in the context of China, and used as an antecedent for testing

9-item to measure a unique hukou-based HR institutional system environmenthukou-based HR M in the Chinese workplace was discussed

how is SHRM measured?

institutional 7-item of PHRP theory with by Macky&Boxall ‘guanxi’ as an (2007) insitutional factor; fit theory

institutional theory+ resource dependent theory

Theory

Outcomes

perception of job satisfaction, HR practices trust incl. teamwork; regular performance appraisal on job, fair performance appraisal, feedback, informationsharing, a formal policy, job description.

different policies and practices for urban and rural employees in recruitment, rewards, insurance, traning and promotion as HRM discrimination scale

HR practices

perception of HR guanxi has ‘ER’ as a mediator; no connotation control

not mentioned of mediator/ moderator; use of firm size, industry, ownership and age as control variables.

Mediators/ Results Moderators/ Control variables

HRM

HRM

Kim et al., 2018

Shen et al. 2018

475 employees of a Korean firm operating in China

quantitative

123 HR managers quantitative from 123 companies, 263 line managers and 602 employees from 83 companies in China.

not specified, but nonmangerial employees mentioned HR attribution theory; POS theory 8-item high commitment HR by Collins & Smith (2006); 6-item social responsible HR by Shen & Benson (2016)

IT (private = 1; use of AMO 14-item of HR all =0) model; social practices network theory

highcommitment/ socially responsible HR

collaborative relations bw HR professional and line managers as an antecedent

8-item include: employees’ training, willingness to feedback, help mentoring, career and mangerial development, employee participation & invovlement, job secutiry, WLB, OHS; 6-item incl: emphasising CSR in R&S; providing CSR training; taking account of social performance in promotion, appraisal and reward process

specific training turnover rate to enhance ability to build relationship; financial rewards linked to performance; promotion based on good HR skills; informationsharing; workprocess

perceived org support (POS) and organizational identity (OI) as mediators for the relationships bw high commitment/ socially responsible HR and HCNs’ willingness to help expatriates; use of social categorization and HCN personality, as well as gender, age, education, position as control variables

shared language bw HR and line as mediater; use of size, age and ownership as control

(Continued)

high-commitment HRM had a significant direct impact on HCNs’ willingness to help expatriates, and significantly related to POS, indirect of HCHRM is also significant via POS; Socially responsible HRM is positively realted to OI, which in turn related to willingness to help

the HR_lineconnecting system influence a shared language bw HR and line managers, and in turn reduced turnover rate. Size and frequency of HR_ line social network do not count but closeness of social network help create positive shared language bw HR and line, in turn affect on employee retention

Journal Outlet

HRM

CQ

Ngo et al. 2008

Chan & Pun 2009

Research method

longitudianl field work in Shenzhen (2003-2007)

600 firms in China (FIEs, SOEs and POEs)

social exchange theory; behavioural perspective; RBV, role theory

Theory

no specified

how SHRM and RBV HR practices impact on ER climate

alumini from executive education programs

Industry

2 case analsysis causes of the with interaction labour conflict of 150 workers, 20 interviews

quantitative

337 HR managers quantitative & CEOs from SOE, WFEs, DPEs

Sample

Studies of Labour Issues in China

Su et al., 2018 JOM

Empriical studies on SHRM in China

(Continued)

n/a

Huselid (1995) scale of SHRM

how is SHRM measured?

n/a

the changing context of HRM in China was discussed

not discussed at all, China is used to collect verified data

Antecedents (contexts)

n/a

7 areas of HR practices: selective hiring, result/ behaviourbased appraisal; job-rotation, extensive training, competitive pay, performancebased pay and turnover minimization

HR practices

ownership as a moderator on the relationship between strategic HRM and performance/ER climate; use of industry, location and firm size as control variables

controlled by sector/industry (manufacturing v. service), firm size, age and ownership.

labor protests are largely interestsbased, aimed to improve working conditions, living space and respect for migrant communities. Without strong leadership or formal organization, most of China’s labour conflicts

SHRM and HR pratices were positively related to employee relations climate, but ownership types did not significantly moderate the relationship between HR and ER climate

Mediators/ Results Moderators/ Control variables

Taiwanese v. n/a German factory strike patterns

financial & operational performance; ER climate

Outcomes

Chen 2010

CQ

577 workers in case study Dalian Devleopment Area; interviews of 12 union cadres the role of trade union and quadripartite interactions to resolve strike non-judicial n/a process v. legal proceedings for labour dispute settlement the institutional n/a and social basis of quadripartite interactions were explained

China’s unions act double institutional idenities, balancing the dual functions to manoeuvring between the government and workers and between management and workers

(Continued)

the non-judicial process of industrial conflict resolution that invovles a quadripartitie interactions reflects a low degree of insitutionaliszaiton of industrial relations in China. Strikes are not a lawful means to break an impasses in collective bargaining, rather they are a discursive expression of grievance and demand by unorganised workers. No estalbished institutional avenues to press for workers’ demand exist in China

are triggered off squarely at the point of production, with the living areas (hukou registration system) as bedrock for labour mobilization.

Journal Outlet

CJ

JIR

Empriical studies on SHRM in China

Chen & Xu 2012

Chan & Hui 2012

(Continued)

Research method

1700 Honda workers in China, mostly migrant intern and young workers

case study

interviews of case study individuals and groups including a dozen of judges and court officials in Dongguan

Sample

workplace TU reform

examination of effectivenss of workers’ collective action v. individual complaints

Industry

no specified

Theory

n/a

how is SHRM measured?

Honda branch in Foshan explained - 17 days strikes

Antecedents (contexts)

n/a

HR practices

a new generation of relatively well-educated migrant workers has developed a higher level of consciousness of assciational rights through their participation in collective struggles; fight against wage gap between expatriates and local workers (500:1)

emphasised more indiviudal labour relations and individualised dispute resolution than collective mechanisms to protect rights

Mediators/ Results Moderators/ Control variables

a wage increase n/s for all workers; a democratic reform of trade unions as the present TU barely represent workers’ interests

Outcomes

ILRR

Friedman 2014

Liu & Li 2014 BJIR

ILRR

Elfstrom & Kuruvilla, 2014

12 cities with 60 trade union

interview and observe unions officials in Guangong & Zhejiang

763 strikes 920082012)

multi-case interation study approach between external environment & internal mgt ideology on union role

n/a but the inductive approach to identify different way of strikes

a grounded theory as a methodology; and strategic choice theory (Kochan et al., 1986) n/a but the inductive approach to identify the managerial philosophy

local n/a entrepreneurism v. global integration

causes of strikes defensive v. and protests reactive thesis; Marx’s cognitive liberation v. offensive demands

qualitative field economic work development model and sectoral union patterns

quantitative

managerial strategies: ignoring, circumvention and compliance

context of industrial relations framework in two provinces were discused

n/a; but discuss managerial IR philosophies such as perception of Chinese trade unions as threat of business, useless buraucracy, political necessity or operational input; respect of labour laws; beilef in the value of employee invovlement

n/a

outline of n/a labour unrest trends in China, and context of labour shortages from 2000s onward

unionisation: setting up union and union functioning

sectoral level of bargaining

n/a; but took firm size, ownership and sector and region into consideration when discussing the managerial philosophies

n/a

offensive strikes n/a to improve wges and working conditions;

(Continued)

despite haivng differnet organizaitonal forms with different development models, unions in both provinces suffer from a lack of creibility and capabity to enforce labour contracts.

a holistic change in workers’ demand goes beyond wages, Chinese workers appear to want more of job details, increased respect of their input to workplace

Journal Outlet

HR

HR

HR

Empriical studies on SHRM in China

Choi & Peng 2015

Chung 2015

Gallagher et al. 2015

(Continued)

case study

Research method

household survey quantitative of 5 cities + a repreessntative survey of 1600 manufacturing firms

compliance datasets qualitative from 23 electronics companies; multiple interviews of 27 unions cadres, 24 lawyers, over 100 workers

a large electronics factory in south China

Sample

workers’s satisfaction with labor law enforcement

compliance to the labour law

managerial strategies in improving LR

Industry

Antecedents (contexts)

n/a

6 principles context was of humanized discussed practices: lead by reason; act with moral character; touch with emotion; discipline with the heart, teach with skill, and rule by law

how is SHRM measured?

no specified, but law compliance use of ‘selective enforcement thesis’ to explain the high v. low compliance of labour regulatinos

managerial control v. humanised or HR (human relations) approach

Theory

compliance to written labour contract, minimum wages; social insurance payment; overtime hour restruction

The factory’s poster: collaboration between management and woerks; inspire workers creativity; improve productivity

HR practices

n/a

education level, age,

n/a

thick compliance in written labour contract, but thin compliance to social insurance payment, and no compliance to overtime restriction

there was a discrepancy between rhetoric and practices, challenging the paternalist HR approach to manage and improve the capital-labor relationship. Inviduals still rely on threats to quit, or colelctive action to win concessions from management.

Mediators/ Results Moderators/ Control variables

improved n/a capital-labour relations, reduced worker turnover

Outcomes

Wen & Lin, 2015

JCC

Wenling

case study

changing and corporatism; the restructuring Wenling model the state corporatis IR system in order to regulate workers’ wage demands and reduce labour conflict collective barganining and collective agreements Changing IR condiitons in China was discussed n/a; but state that labor conflict generated from unpaid wages, labour violation with withholding ID cards, long working hours employers n/a association bargaining with workers intervened by local government, leading to steady annual wage increased

(Continued)

without institutionalised collective bargaining, there migth not be an increased wage rate for migrant workers; reconstruction of the Wenling’s corporatist system of IR reduced serious labour conflicts, regulated wage growth, mitigated workers’ discontent; employers were more able to attract and retain skilled workers, solve labour shortage and promote regional economic growth and build a ‘harmonised’ society.

Journal Outlet

ER

IJHRM

Empriical studies on SHRM in China

Chung 2016

Cooke et al., 2016

(Continued)

interviews of 25 managers and 24 frontline workers from four manufacturing companies

fieldwork in the China manufacturing subsidiary of a foreign firm

Sample

employer’s LR strategies or reaction to the IR changes in China

Industry

multi-case workers’ study approach grievances and HR resolution mechanism

qualitative

Research method

confrontational (strike) v. collaborative (voice mechanism) HR approach

prefernce of the unitarist approach; the subsittution approach of ‘carrot’ v. ‘stick’

Theory

Antecedents (contexts)

n/a but the inductive approach to identify a set of grievance mgt practices in China

both changing context of grievance mgt in the West and China were discussed

union’s function n/a as collectie voice, monopoly and external affairs

how is SHRM measured?

as identified by both managers and employees as: voice mechanism such as employee survey, opinion box, consultation meeting, open door policy, Communist party-people liaison etc.

n/a

HR practices

a proposed n/a model as: pluralist legalistic procedural justice-oriented HRM, v. unitarist paternalistic pragmatic problemsolivng-oriented HRM

sources of grievances were identified as remuneration, pay inequality, inequal social security distribution, poor management competence; work practices (long working hours) and work allocation/pace; work autonomy, absence of voice mechanism

employer emphasized managing indiivdual grievance prodedures to counter against a growing concern about ‘bottom-up collective voice’; minimise and decollectivise the monopoly role of union at the firm level and maintain while reducing union chairman’s role in external affairs.

Mediators/ Results Moderators/ Control variables

employer n/a responses to changing three union functions

Outcomes

Globalization interviews of 167 qualitative IT assemblyline workers (electronics contract manufacturing industry)

Lüthje & Butollo 2017

179 workers in coal quantitative mining companeis

APJHR

Huang et al. 2016

employment reigms, wage increase no specified

whether practice social exchange of democratic theory management would improve labor relatons in coal-mining firms

measure of wider global and workers’ age, China context turnover, working were discussed hours, wages

democratic management measured by employees perception of participation in decision-making, managerment behaviour in resposne and employee presentativeTrade union behavior organizational commitment, trust in senior management

not specified; labour conflict but indicate the role of trade union

satisfaction with HRM practices by Hall et al. (2008) used measure employees’ perception of performance appraisail, training & coaching, pay, informatino sharing

n/a

trust in management and employeeline manager relations; satisfaction of HR practices used as mediators; age, gender, job grade and tenure, labour contract signed, supersion role used as control

(Continued)

substantial changes on the technological and organizational side, but very few on the social side, as no substantial changes in the regimes of employment patterns, wage systems and task assignmetns, with a high share of short-term mingrat

a positive relationship between employees perceived efficacy of demcratic management and org commitment was found, but the mediating effect of trust in senior management weakened the relationship; no singificant result was found to verify the relationship between DM and employeesline managers relationship, despite the latter affect positively on org commitment.

Journal Outlet

Xi et al., 2017 ILRR

Empriical studies on SHRM in China

(Continued)

Research method

1265 employees and quantitative 190 HR managers from 190 enterprises (manufacturing v. service) in China

Sample

Industry

Partnership theory

Theory

Antecedents (contexts)

use of selective China context partnership was discussed practices deducted from various sources

how is SHRM measured?

training and development, employee participation, flexible compensation, benefit/ risk sharing, two-way communication, participation by employee representatives, job/employment security

HR practices

employee attitude with affective commitment, turnover intention and job satisfaction

Outcomes

labor relations climate as mediator measured by harmony, openness, hostility, apathy, and promptness. Controlled by age, gender, education, tenure, industry and ownership

partnership practices lead to better labor relations climate, which mediated effectively the relationship between HRM and employee attitudes.

workers, low wages, extensive overtime hours; TU failed to address the issue of living standards, wage increases esp for the migrant workers; call for more democratic workplace representation, the establishment of ocllective bargaining at factory adn industry levels, and inclusion of labour standards

Mediators/ Results Moderators/ Control variables

Shen 2006

MIC

IJHRM

Huang & Verma 2018

General Reviews of Labor issue & SHRM in China

JIR

Wang & Cooke 2017

313 manufacturing plants

court ruling of 897 strickes

quantitative

quantitative

HR flexibility; ER/LR were not specifically assessed.

balacne in industrial relations

Institutional theory; contingency perspective; org ambidexterity; HR flexibility

everything not prohibited is allowed v. everything not allowed is prohibited’

measure of labor contract length, short v. long and duration; unionisation international competition pressure (businsess strategy proxied); capital intensity

cases by region; China legal by court levels; context was by plaintiff (ee discussed v/ er), by dispute reasons; by workers’ claims of the nature of their action; by ratio decidendi; by the legalithy of dismissal; and by legitimacy of work rules

index of employee invovlment programs as part of HRM practices: formal employee susestion system, participatory teams, open communications, formal information sharing and compalint resolution system

n/a

short-term contract signed; average labor contract duration; flexibilityinducing HR practices

owership, firm size, business strategy as control

Principles n/a applied in court rulings: violation v. rule of reason

(Continued)

found the posiitve effects of multilevel predictors such as key enviornmental (industry level factor) and org contingencies (internal competition) on manufacturiers’ use of flexibilityinducing HR practices

the majority of court decisions uphold the employers’ decision to dismiss strikesr on the grounds of ‘violation’, instead of ‘rule of reason’; a dominance of a formalist approach to legal reasoning underpinned by the courts’ professional conservatism and political duty.

APJHR

Cooke 2009

HRMR

Zhao & Du 2012

IJHRM

IJHRM

Chen et al., 2016

Jiang & Messersmith 2018

Fan et al. 2016 HRMR

AOMP

Liang et al., 2012

Kim & Wright MOR 2010

Journal Outlet

Empriical studies on SHRM in China

(Continued)

Sample

Research method

Industry

Theory

how is SHRM measured?

Antecedents (contexts)

HR practices

Outcomes

Mediators/ Results Moderators/ Control variables

Index

ability 66, 76, 97, 99, 101, 111, 151, 165, 168, 177 Abrami, R.M. 87, 89–90, 103 accession to WTO 10, 49, 180 administrative approaches 94, 96, 99 agreement 7, 19, 29, 31; collective agreement 19, 52, 112, 122, 209 Ahlstrom, D. x, 3, 6–8, 10, 17, 33, 190 Akhtar, S. 3–4, 7, 22, 29, 59, 72, 83, 91, 98–99 Alfes, K. 2, 10 All China Federation of Trade Union (ACFTU) 52, 68, 72, 111–113, 123, 134–135 Allen, N.J. 72, 78 Alshathry, S. 124, 142 AMO (ability–motivation–opportunity) 101, 177 Anderson, N. 85, 103 approach/approaches 2, 5, 8–9, 16, 25, 41, 47, 58, 78, 84, 111, 115, 117, 121, 123–124, 133; 137, 142, 155, 171; 180; administrative approaches 94, 96, 99; contingency v. configurational approach 28, 91, 92–93; corporatist approach 112, 116, 123, 135, 146, 209; decentralized approach 47, 140, 178; hard v. soft approach 124, 133; humanized approach 57, 127, 130, 133; labor management approaches 10, 64, 121; pluralist approach 122, 134; strategic approach 37, 114, 117; unitarist approach 122, 125, 128–129, 136, 141 assistance 44, 137 bargaining 64, 109, 113, 115–118; collective bargaining 116, 118, 122, 125, 135, 137

Barley, S.R. 156, 160 Barney, J. 25–28, 33, 43, 45, 84, 90, 103 Bartram, T. 34, 54, 78, 103, 160, 170, 181 Becker, B.E. 2, 10, 41, 43, 54, 84, 103 Bednall, T. 86, 103 Beer, M. 1, 10, 37, 46, 54, 57, 79, 124–125, 176, 180 Beijing 53, 167 benefits 6, 8, 61, 96, 122, 137; employee benefits 6, 29, 64; social benefits 115, 179; welfare benefits 142 best employer of choice 73–74, 122, 126, 154 best-fit v. best practice 17–19, 21, 28, 93, 188, 190–191 Björkman, I. 3, 8, 28–29, 66–67, 74, 77, 123, 176 Boon, C. 2, 31, 44–45, 53, 91 Boxall, P. 1–2, 27, 50, 84, 101, 147, 174 Brewster, C. 108, 174, 180 business strategy 1, 9, 17, 22, 63–64, 74, 91, 100–101, 175, 177; national business system 9, 29, 32; trategy 9, 18, 22–23, 48, 49, 118, 133 capability 20, 26–27, 33, 84, 99, 106, 186; dynamic capability 27, 95, 103, 201; employee capability 26, 84, 94; innovative capability 88–90, 100 change/changes 2, 4, 6, 8–10, 30, 32, 51, 53, 58, 67, 102, 133, 156, 176; cultural changes 2, 6, 48, 97, 140, 148; economic changes/reform 4–5, 8, 10, 30, 32, 51, 58, 109, 137, 156; experimental changes 58, 140;

216

Index

institutional changes 5, 10, 30, 32, 50–51, 67, 102, 137, 175; legal changes 51, 136, 140; political changes 2, 5, 8, 10, 30, 32, 48, 50, 102, 148, 156; policy changes 4, 30, 50–51, 67, 97, 133, 156, 175; regulatory changes 8, 122, 128, 129, 130, 134–135; social changes 5, 30, 32, 51, 109; structural changes 97 Chatterjee, D. 83, 104, 185 Chen 2–5, 7, 40, 49, 112–113, 119, 121, 129–130, 136 child 42, 108, 114, 133, 137 China Labour Bulletin 9, 116, 119, 125, 141, 143 Chinese Community Party (CCP) xi, 3, 6, 9–10, 29, 37–38, 50–51, 59, 62, 65–66, 86, 89, 110–113, 115–116, 123, 133, 135–136, 148–153, 156, 173–175, 180 Choi, S.Y-P. 57, 79 choice/choices 23–24, 29, 37–38, 47, 49–51, 57–58, 60, 62–67, 73, 77–78, 91; policy choices 58, 62, 65; strategic choices 23, 29, 49–50, 65, 67, 74, 78, 127, 135, 175–176 Chow, I. H. x, 18, 22, 28–29, 46, 70, 72, 84, 86, 91, 96, 100–102, 147, 176 Chowhan, J. 84, 96, 101–102, 104, 147, 160 Chung 2, 11, 51, 116, 119, 123, 128–129, 130, 135–136, 141 collective agreement 52, 112, 209 Collins, C. 2, 11, 84, 104, 203 compensation 3, 23–24, 69, 74, 76, 90, 93, 132, 134, 187 competency 17, 26–27, 59, 69, 72, 133, 190, 192 competitive strategy 22, 49, 81 Cooke, F.L. xi, 2, 4–7, 9, 25, 29, 32, 38, 44, 49, 64, 67, 74–75, 115, 126, 130–135, 140–142, 153, 165, 169, 176, 179 creativity 2, 33, 41, 83, 86–87, 89, 99; employee creativity 20, 57, 84–85, 91, 94, 96, 98, 100–102, 148, 159, 177; individual creativity 11, 83–85, 90, 108, 173, 180; team/collective creativity 85–86, 98, 102, 178 cultural 2, 4–6, 46, 51, 77, 97–98, 126, 140, 147–148, 150, 153–158, 166–167, 178; cultural factors, xi 48; Cultural Revolution 111; cultural norms or values 7, 47, 49, 160

Davies, D. 48–49, 54, 185 Delaney, J.T. 2, 12, 66, 79 Delery, J.E. 2, 12, 27, 34, 95, 104 Deng, P. 63, 79 Deng Xiaoping 7, 40, 111, 149 development xii, 1, 4–8, 10–11, 15, 17, 25, 32, 40, 47, 49, 58, 61–63, 65–66, 72, 77, 85, 89, 101–102, 109, 111–112, 116–118, 122, 125, 148, 164, 175, 180; career development x, 23–25, 90, 92–93, 95, 97, 99, 158, 178; corporate cultural development 167–168; developmental state 39, 50–51, 60, 86, 108, 112, 123, 133, 174; economic development 9, 21, 33, 37, 43–44, 46, 48, 50, 87, 100, 108, 113, 142, 179; employee development 18, 31, 74, 76, 153– 154, 157; human capital development 8, 64; national development 2, 9, 83, 115, 123, 173; organizational development; skill development 42, 44, 134; social development 8, 38, 83, 110, 112, 115, 152; theory development 2, 16, 26, 140 Deyo, F.C. 39, 55 dilemma 54, 143, 165, 169; social dilemma theory 165, 169 DiMaggio, P.J. 17–18, 28, 65, 90, 102, 147, 178 Dunlop, J.T. 110, 112, 118, 122 Eberhard, W. 40, 55 economic reform 2, 4–10, 30, 32, 40, 52, 57, 62, 83, 111, 137, 155 economy 4, 39, 41, 49–50, 59, 65, 77, 87, 89, 114, 176; coordinated market economy 39; developmental economy 39; liberal market economy 39, 116; marketized economy 164; political economy 167; socialist market economy 40, 50, 175; transitional economy 16, 35, 80, 175 Edgar, F. 106, 147, 154, 161 Edwards, T. 9, 12, 39, 44, 55, 108, 119 Elfstrom, M. 6, 12, 113, 116–117, 129, 136–137, 141 employment xi, 3, 6, 8–9, 19, 30, 47, 51, 60–61, 63–64, 111, 116–117, 121–122, 125–126, 168; employment benefits 6, 61, 121–122; employment laws 8, 51–53, 176; employment policy & practice 9, 73; employment relations 108, 110, 118, 124, 154;

Index employment rights 109, 117–118, 123, 130; employment security 19, 30, 70, 74–76, 79, 92–94, 115, 132, 134; employment status 6, 73, 170; employment systems 3, 5 enterprise reform xii, 2, 4, 11, 30, 33, 48, 57–58, 62, 65, 83, 173, 180 environment 5–6, 17, 28–29, 46–47, 74, 78, 87, 90, 102, 108, 125–126, 136, 142, 156, 166, 169, 174–175, 178 environmental protection 61–62, 177 equality 7, 38, 65, 141, 166; inequality 6, 12, 55, 122, 133, 165

217

spending 42, 44; non-government organizations (NGOs) 137, 142, 179 Grant, R.M. 10, 90, 96, 104 Greenwood, M. 108, 119, 125–126, 144 Guenzi, P. 155, 161 Guest, D.E. 2, 12, 108, 119, 122, 129, 170, 176 guidelines 9, 53, 60, 62, 134, 136; mandated management guidelines 9, 53, 136 guiding 15, 50–51, 155–156, 158–159

fan 3, 67, 74, 78, 87–88, 100, 123, 176 Fawcett, S.E. 147, 159, 163, 170 Ferris, G. 66, 79, 162 financial crisis 51, 62, 73, 125 Fineman, S. 164, 170 flexibility 7, 18, 28, 75, 128, 132, 142, 165, 168, 179; flexible compensation 93, 95, 134, 194; flexible management 99, 136, 201; flexible work arrangement 101, 122, 178; job flexibility 25, 102; organizational flexibility 18; strategic flexibility 167–169 Frenkel, S.J. 80, 114, 119 Friedman, E. 10, 41, 111, 114–116, 124, 130, 136–137, 140–142, 178 funding 37, 45 funds 9, 53, 136; labor funds 9, 53, 136

Hanushek, E.A. 44, 55 Harrison, T. 148, 157, 161 Hassard, J. 58, 80 hedonism 158, 164 Hofman, P.S. 142, 144, 179, 181 Hsu, S. 9, 39, 55, 110, 119 Huang, W. 111, 119, 129–130, 134–136, 141–142, 153, 211, 213 human capital 88, 18, 26–28, 41–46, 49–51, 53–56, 61, 64, 66, 88, 148, 164 human rights xi, 2, 11, 33, 108–109, 117, 123, 125–126, 130, 142, 147, 173–174, 176, 178–179; civil rights 117, 123, 130, 142; employment rights 118, 123, 130; labor rights xii, 57, 125, 173; workers’ rights 49, 111, 113, 115, 118 Huselid, M.A. 2, 27, 46, 66, 94, 97, 125, 167, 188

Gallagher, M. 115, 119, 129–130, 136–137, 140, 143 game (rules of game) 28, 122 Geare, A. 106, 147, 154, 155 Gini coefficient 9, 110 global strategy 29, 64 going global policy 4, 25, 59 Gong, Y. 19, 27, 29–31, 46, 59, 65–66, 72, 196 Gore, L.L.P. 8–9, 10, 12, 29, 110, 113, 115, 117, 123, 141, 179 government 3, 6, 25, 37–40, 42, 45, 49, 57–62, 65, 73, 83, 86–88, 90, 110–113, 116–118, 123, 125, 134– 135, 142, 152, 156, 159, 165, 173– 178; Chinese government 4, 8–9, 32, 37, 39–40, 50, 57, 65, 83, 86, 90; government control 63; government focus 60–61; government policies 25, 45, 47, 49, 65, 73, 78; government

incentive 18, 23, 76, 92–93, 99, 101, 112, 177, 192–195, 200; material v. non-material incentives 75, 99; monetary incentive 99; organizational incentive 45, 101, 112, 177; strategic incentive and rewards 23; tax incentive 40, 44–45 income/incomes 9–10, 38, 41, 43, 110, 154; high v. low-income 10, 39, 55; income gaps 110; institutional xi, 9–10, 28, 91, 147, 178; institutional actors 66, 86, 89, 102; institutional environment xi, 29, 77, 98, 126, 141, 180; institutional factors xi, 16, 29–30, 37–38, 46, 48, 51, 67, 87, 134, 173, 175–176; institutional reforms 5, 49, 137; institutional theory 16–21, 28, 30, 32, 43, 45, 50, 65–66, 72, 90, 98, 121, 133, 142, 149, 163, 169, 177

218

Index

International Labour Organization (ILO) 11, 52, 64, 109, 116 Jackson, S.E. 2, 22–25, 63, 65, 74, 99, 174–175 Jefferson, G. 57–59, 80, 89, 105 Jiang 20, 22, 31, 72, 83–84, 89, 91, 96–98, 103, 147, 174–176, 207 job (employment) security 21, 25, 30–31, 64, 70, 72–73, 75, 99, 134, 137, 142, 179 Kamoche, K. 2, 12 Kant, I. 108, 124, 144 Kaufman, B.E. 122, 144 Khilji, S.E. 2, 13, 35, 81, 145 Kim, S.H. 4, 27, 31, 34, 74–75, 78, 177, 203 knowledge 11, 18, 26–27, 41, 43–45, 66, 75, 101, 126, 148, 175; knowledge sharing & creation 76, 96; new knowledge xi, 18, 43, 75 knowledge-based theory/view 20, 32–33, 90, 94 knowledge exchange 84, 104, 148 knowledge transfer 27, 41 Kramar, R. 124, 144 labor 2, 6, 8, 29, 32, 40, 46, 51, 53, 57, 62–64, 76, 109, 141, 147, 178 labor conflict 2, 41, 111–113, 128, 130, 137 labor management 3, 9–10, 16, 49, 67–70, 79 labor market 37, 39, 41, 44–45, 48, 75, 115 labor relations 4, 10, 15, 38, 64, 110, 119, 121, 124, 129, 133, 142 labor shortage 114–115 labor unrest 6, 47, 115–118, 125, 135 Lado, A. 26, 34 Lardy, N. 58–59, 80 law/laws x, xi, 8–9, 21, 29, 31, 50–53, 67, 111–112, 114–115, 118–119, 125–129, 130–131, 134–136, 140–141, 170, 175–176, 178; labor contract laws xi, 52, 114, 136; labor/ employment laws xi, 8, 51, 52, 53, 176; trade union laws 8, 52 Law, K.S. xi, 7, 13, 17, 26, 34–35, 37, 40, 58–59, 72 Lee, C.H. 10, 47, 49, 53, 109, 110–113, 116, 121, 133, 137, 148

Legge, K. x, 108, 122, 124, 145 Lengnick-Hall, C.A. 2, 13, 165–166, 171 Li, J. 17, 22, 28, 41, 63, 66, 74–75 Li, Keqiang 9, 87, 110 Li, X. 67, 74, 80, 89 Liang, X.Y. 3–8, 58, 72–73, 77, 137, 173 Lockett, H. 9, 13 Lowry, D. 125, 145 Luthans, F. 147, 151, 163–166, 168, 175, 182 Lüthje, B. 111, 125, 130, 136, 141, 165, 171 Lyons, L. 51, 55 Ma, Z.N. 110, 112, 120, 123 management 1–6, 16, 30, 32, 46, 50, 53, 60, 62, 83, 87, 96–97, 99, 109, 112, 121–122, 124–125, 130, 132–133, 135–136, 140, 165–166, 170, 180; democratic management 126, 134; employment relations management 123, 154; enterprise management 52, 57; grievance management 113–114; human resource management 1, 29, 43–44, 53, 67, 73, 108, 110, 126, 164, 173; humanized management 57, 130, 133; innovative management 83; labor-relations management 8–10, 15, 51, 64, 67, 117, 119, 129, 140–141, 173, 176, 178, 180; paternalist management 133; strategic management 22, 45, 121 Marx, K. 109, 117, 122, 145, 151–152 Maslow, A.H. 164, 171 Mattera, P. 125, 145 Meng, H. 153, 166, 168, 171 Mikkelsen, A. 78, 80 Mincer, J. 43, 55 Nankervis, A. 108, 124–126, 141, 145, 185 national economic development 2, 9, 16, 37, 42, 44, 48, 50, 86, 115, 123, 173, 180 Naughton, B. 57–59, 65, 74, 77, 83, 176, 182 Ngo, H.Y. 5–6, 46, 58, 72, 129–130, 134, 141, 204 NGOs (Non-Government Organizations) 137, 142, 179

Index OECD 42, 55, 88, 115 Onis, Z. 9, 13, 32, 38, 55 organizational capital 26, 28, 42, 45 organizational (corporate) culture 64, 90, 97, 147–148, 152–160, 163, 166–170, 179 overtime 116, 131, 135–136, 208, 212 ownership 4, 7, 30, 49, 57–61, 64–72, 74, 77, 88, 108, 130, 164, 167, 174, 176 Paauwe, J. 28, 30, 66, 80, 147, 161 Peng, M.W. 15–16, 25, 28–29, 37, 57, 90, 121, 129, 133, 141, 145 Penrose, E. 43, 56 Petrovic, J. 57, 80 Pettigrew. A.M. 154, 181 Pfeffer, J. 66, 80 political context 5, 8, 10, 12, 29, 49, 66, 126, 150, 156, 179 Porter, M.E. 22, 25–26, 30, 47, 65, 81 Posner, B.Z. 148, 154, 162, 164, 171 Priem, R.L. 27, 35 profits/profitability 9, 23, 40, 47, 72, 74, 89, 99–100, 122, 133, 141, 155, 174 Pun, N. 110, 119, 127, 130, 136–137, 204 Purcell, J. 2, 11, 84, 101, 105, 147, 162 Qiao, K. 4, 7–8, 13, 19, 28–29, 35, 70, 72, 74, 76, 81, 129, 145, 197 quality 18, 22, 24–26, 41–46, 49–51, 60–61, 63, 72, 75, 86, 88, 97–99, 102–103, 155, 164–165 Ralston, D.A. 6, 13 Rees, C.J. 9, 12, 39, 44, 108 resource-based view (RBV) 16–19, 25–28, 43, 45, 50, 96, 101, 103, 148–149, 163, 169 rights 2, 6, 8, 32, 113, 115–119, 126, 134, 137, 140–142, 147, 173–175, 178–179; collective rights 115; employee rights 8, 57, 123, 130; labor rights 2, 109, 125, 141; worker rights 48–49, 64, 111, 124 Ross, J. 39, 42, 56, 110 Rosso, B.D. 157–160, 162, 170–171 Rowley, C. 48–49, 54, 56, 164–165, 185 Schuler, R.S. x, 1, 12, 22–25, 34, 63, 65, 74, 99, 174–175, 181 Schulz, T. 125, 145

219

Scott, W.R. 17, 28–29, 35, 65, 81, 90, 187 Sebok, F. 150, 152–153, 155, 162 Seeck, H. 83, 85, 90, 97, 100–102, 105 selection 1, 6, 8, 66, 92, 94, 101, 170, 177, 180, 183, 188, 190, 199; market-oriented selection 68–69, 72; strategic recruitment and selection 23, 90, 98 Seligman, M.E.P. 153, 162, 164, 171 Sheldon, P. 4, 13, 141, 145 Shen, J. 21, 31, 35, 53, 56–57, 67, 74–78, 81, 84, 102, 111, 126, 142, 176, 179, 182, 200, 203, 213 Shipton, H. 83, 85–86, 89–91, 96, 100–103, 106, 177–178, 182 skills 18, 23, 25–27, 41, 43–45, 98, 101–102, 148, 168 Snell, S. 17, 26, 35–36, 148, 162, 191 social benefits 115 social capital 26–27, 53, 96, 148, 163 social dilemma theory 165, 169 social exchange theory 19–22, 31, 91, 94, 128, 134, 168–169 socialism 8, 40, 50–51, 58, 112, 118, 151 social responsibility 49, 57, 126, 135, 142, 157, 165 social security 37, 53, 59, 64, 67, 72, 130, 133 social welfare 38–39, 73, 137, 150 Sørensen, C.T.N. 148–149, 162 Storey, J. x, 13, 184 strategy 4, 25, 32, 49, 51, 64, 133, 135 Su, H. 149, 151, 162 Sun, L.Y. 3–4, 7, 18, 27, 46, 56, 67, 69, 74–75, 76, 81, 173, 182, 193, 200 Sun, Y.F. 89, 101, 106, 177 Sung, S.Y. 165, 171 Taylor, B. 109, 111, 113, 120 trade unions 6, 8, 37, 52, 68, 72, 108– 109, 111–113, 122–123, 125–127, 135–138, 142–143, 166 training 6, 10, 18, 24, 43, 45, 60, 63–64, 72, 74–76, 90–95, 98–99, 101, 124, 130, 134, 154, 168, 177; employee training 3, 87; skill (job) training 23, 25, 44 Tsui, A.S. 46, 50, 55, 147–148, 159, 162–163, 169, 171, 185 Tsutsui, W. 133, 146

220

Index

Ulrich, D. 17, 35, 81, 103, 125, 146, 148, 154–155, 158, 160, 165–166, 170–171, 190 UN (United Nations) 109 UNCTAD 5, 13 unemployment 52, 64, 116 values xii, 5–7, 13, 28, 46, 59, 65, 90, 102, 108, 122, 148, 155, 158, 164, 180, 183; cultural values 5, 47, 49, 158–159; human values xii, 6, 141; organizational values 59, 147; shared values 147–154, 156–158, 160, 163, 166–167, 169, 173, 179; socialist (communist) values 7, 60, 112, 115, 118, 165 Van De Voorde, K. 174, 182 wages 9, 37, 40, 61, 68, 109, 112, 115–117, 131, 133, 137; Minimum Wages Regulation 9, 53, 117, 135–136 Wakasugi, R. 10, 13 Wang, S. 19, 71–72, 89, 168, 198 Wang, T.Y. 113, 115, 120, 128–129, 130, 136–137, 139–141 Wang, Y. 41, 43, 56 Wang, Z. 148–150, 164 Wang, Z.M. 7, 22, 84, 92, 103, 166–167 Warner, M. xi, 2–4, 6–9, 40–42, 49, 51, 53, 67, 72, 77, 83, 111, 130, 164–165, 173, 176, 185 Watkins, M.D. 153, 162, 167, 172 Webb, S. 109, 118, 120, 122 Wei, L.Q. 17–19, 26, 28–29, 31, 59, 66, 70, 72, 81, 83, 91, 97, 101, 147, 163, 167, 169, 177, 179

Wen, X.Y. 112, 115–116, 120, 123, 128, 130, 135, 146, 209 Wernerfelt, B. 25–26, 36, 45, 56 Westwood, R. 167–169, 172 Whiteley, A. 46, 49, 56, 185 Wielander, G. 151–153, 159, 163, 165, 170, 172 Wong, A. 166, 172 workplace spirituality 147, 149, 157, 159–161, 163, 166–167, 169 work systems 5, 18, 31, 45–46, 174 World Trade Organization (WTO) x, 4, 7–10, 49, 58, 60, 112, 180 Wright, P.M. 1–2, 4, 16–17, 26–28, 33–36, 43, 45, 49, 65–66, 84, 148, 174–175, 181–182, 191, 214 Xi, M. 166, 202, 212 Xi Jinping xi, 51, 77, 87, 148–150, 152, 159, 176, 180 Xing, Y.J. 37, 56, 201 Xinhua News 42, 56 Yao, Y. 51, 56 Yi, Z.H. 110, 118, 120 Yuan, F. 86, 106 Zhang, J.A. 20, 95, 98–100, 103 Zhang, K.H. 3, 8, 14 Zhang, Y.C. 19, 67–70, 72, 74, 76, 78, 83–84, 91, 93, 100, 177 Zhao, J. 40, 56 Zhao, Z.J. 86, 106 Zheng, C. 3–4, 6–8, 40, 56, 59, 61–62, 66, 69, 72, 84, 89, 90, 96, 111, 120, 140, 146, 192 Zhou, Y. 72, 96, 98–99, 103, 107 Zhu, C.J.H. 2–4, 49, 72, 111, 123, 126, 142, 173, 179, 185, 191