Open AccessInstitutions as Constraints and Enablers: Changes in Human Resource Management Practices of Foreign Companies during Economic Reform in China
Author(s) -
Wennan Lu
Publication year - 2019
Publication title -
the copenhagen journal of asian studies/the copenhagen journal of asian studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.312
H-Index - 13
eISSN - 2246-2163
pISSN - 1395-4199
DOI - 10.22439/cjas.v36i2.5649
Subject(s) - china , human resource management , business , planned economy , scarcity , human resources , institution , economic reform , resource (disambiguation) , face (sociological concept) , economic system , economic growth , market economy , economics , political science , management , sociology , computer network , social science , computer science , law
This article demonstrates how the development of labour market institutions alongside economic reform has impacted the human resource management (HRM) practices of foreign companies in China. A historical approach is applied to examine the transformation of China from a centrally planned labour administration system to a market-based labour institution. The HRM practices of foreign companies are seen being embedded in China's macro-institutional environment, which constrains and/or enables foreign companies to exercise people management. Drawing on previous research, the study shows that HRM practices in the early reform period were primarily constrained both by formal and by informal institutions. The evidence from Finnish companies operating in China shows that HRM practices in the late reform period are largely enabled by formal institutions; however, foreign companies face the need for adaptation to the demands of informal institutions. Furthermore, the scarcity of human resources and rapid yet heterogeneous socio-economic development pose additional challenges for people management in China today.