17 Pages

The Diffusion of Human Resource Management Practices among Chinese Firms: The Role of Western Multinational Corporations

There is a long-standing debate about the impact of multinational corporations on the host country (Moran, 1993). Most of this discussion has been on the direct economic implications of multinational firms, for example on the foreign trade balance, domestic competition, long-term economic development and local employment. In spite of calls for research into the influence of the organizational patterns of multinational enterprises on host countries (Westney, 1993), there has been much less work on the impact of foreign firms’ operations on noneconomic aspects of local society. We know that multinational firms tend to introduce parts of the parent company’s practices into their foreign subsidiaries. For instance, Western corporations bring Western managerial accounting procedures to their affiliates in China (Firth, 1996). Evidence from China also suggests that Western firms tend to implement human resource management (HRM) practices that are more similar to those of the parent company than those of local Chinese firms (Björkman and Lu, 2001). This contrasts with developed countries such as the USA, where foreign companies tend to adapt their HRM practices to a much higher degree to the host environment (Rosenzweig and Nohria, 1994). The question addressed in this paper is how Western corporations through the HRM practices that they introduce into China influence the HRM practices adopted by Chinese firms.