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STANDARDIZATION AND LOCALIZATION
IN THE HUMAN RESOURCE MANAGEMENT
OF SINO- FOREIGN JOINT VENTURES:
AN INDUCTIVE MODEL AND RESEARCH AGENDA

Shaohui Chen, PhD Candidate

&

Marie Wilson, Associate Professor

Department of Management and Employment Relations
The University of Auckland
Private Bag 92019
Commerce C Building, 18 Symonds Street, Auckland, New Zealand 64 9-3737599ext.7667 or 4808(Tel.)
64 9-3737477(Fax)
s.chen@auckland.ac.nz(e-mail)
m.wilson@auckland.ac.nz(e-mail)

Identification Number: 68

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STANDARDIZATION AND LOCALIZATION
IN THE HUMAN RESOURCE MANAGEMENT
OF SINO- FOREIGN JOINT VENTURES:
AN INDUCTIVE MODEL AND RESEARCH AGENDA

Department of Management and Employment Relations
The University of Auckland
Private Bag 92019
Commerce C Building, 18 Symonds Street, Auckland, New Zealand

Identification Number: 68

STANDARDIZATION AND LOCALIZATION
IN THE HUMAN RESOURCE MANAGEMENT
OF SINO- FOREIGN JOINT VENTURES:
AN INDUCTIVE MODEL AND RESEARCH AGENDA
Summary
The tension between Standardization orientation of multinational companies and the necessity of localized adaptation has been identified as an enduring theme in the internationalization of human resource management. This tension has been highlighted in the Chinese context by academic researchers and practitioners (Chiang, 2000; Ding, Fields, & Akhtar, 1997; Goodall & Warner, 1997; Kraar, 1999; Lu & Bjorkman, 1997; Upton & Seet, 1997; Wang & Satow, 1994). This paper assesses the perspectives of standardization and localization by reviewing key theoretical frameworks and empirical studies of effective international human resource management (IHRM). The key assumptions in IHRM standardization and localization are explored through the mechanism of 'difference drivers' related to relative advantage in competency, consistency, power and experience, which contribute to the hybridisation of HRM practices in Sino-foreign joint ventures(JVs).

The model developed extends existing IHRM models by acknowledging that there are (at least) three critical organizational 'players' in an IJV, and that each has a complex of factors that effect their interaction with one another and development of IHRM practices and policies. Finally the internationalization environment is seen as a more subjective construction, influenced by interaction and perception rather than by purely objective environmental factors and organizational characteristics. Propositions and a research agenda are established.

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Keywords
International HRM, Standardization & Localization, Sensemaking, China, Joint Ventures

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STANDARDIZATION AND LOCALIZATION
IN THE HUMAN RESOURCE MANAGEMENT
OF SINO- FOREIGN JOINT VENTURES:
AN INDUCTIVE MODEL AND RESEARCH AGENDA

'' When a multinational corporation invests in a plant in another country, it has to become a citizen of that country in its attitudes if it ever wants to benefit from its investment''.
--Henry Kissinger, 1999.

With economic reform and its open door policy, the People's Republic of China (PRC) is becoming a preferred investment location for multi-national companies (MNCs). Preferential tax policies, a huge potential market and low costs of production have attracted a surge of foreign investment. Since the late 1970s, the Chinese economy has grown far more rapidly than the OECD, with average growth rates over 9% in the 1990s, spiking to almost 14% in 1993. China's premier, Zhu Rongji, announced in 1996 that China's economy will maintain an 8-9% growth rate in the next 15 years. The World Bank predicts that China will be the largest economy in the world in the year 2020. Meanwhile, 'China is the largest recipient of foreign direct investment among developing countries and the second largest in the world after the United States' (Fang, 1999, p1). In 1999 alone, China approved 17,100 foreign direct investment projects with contractual foreign investment US$412.38 million (Chinese Ministry of Foreign...
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