- Published: October 31, 2021
- Updated: October 31, 2021
- University / College: University of Sussex
- Language: English
- Downloads: 10
With the globalization of the world’s economic, various countries’ enterprises are becoming multinational companies. And more and more multinational companies are operating their subsidiaries in China and facing with the different institutional and cultural of China in the process of operation, so Chinese institutional and cultural factors influence multinational companies’ transfer of human resource practices to their subsidiaries operating in China. Above all, the human resource practices of multinational companies’ subsidiaries should be adjusted according to the local countries’ system and culture, so that the international human resource management of the multinational company can be conducted very well (Morris, Wilkinson & Gamble, 2009).The essay provides an analysis of the extent that Chinese institutional and cultural factors influence multinational companies’ transfer of human resource practices to their subsidiaries operating in China by using the example of Wal-Mart Stores’ subsidiaries’ HR practices. At first, this essay introduces the definition of human resource management and the understanding of Chinese institutional and cultural factors. After that, this essay provides an analysis of the extent that Chinese institutional and cultural factors influence multinational companies’ transfer of human resource practices to their subsidiaries operating in China. Last but not least, the essay concludes the influences of Chinese institutional and cultural factors on the multinational companies’ transfer of human resource practices in China.
An introduction of human resource management
2.1 The introduction of Human resources management
Human resource management refers to the management of the employment relationship within work organizations. Human resources management refers to a series of human resources policies and the corresponding management activities in the enterprise. A general definition of human resource management includes work relations, employment relations and industrial relations. Work relations refer to the way work is organised and the arrangement of workers according to technologies and production processes. Employment relations refer to the arrangements governing of employment such as recruitment, job tenure, training and promotion, and the reward of workers. Industrial relations refer to the representational systems existing in the enterprise, which includes collective bargaining, management union relations, alternatives (Gospel, 1992).International human resource management combines cross-cultural and international factors within the human resources management. International human resource management refers to the strategies, policies and practices of human resource management within the multinational company extended beyond national borders, covering the management of human resource in multinational companies and their subsidiaries abroad (Schuler & Florkowski, 1996). It also comprises human resource management/employment relations in global franchises, international joint ventures enterprise and non-commercial organizations such as UN agencies, international charities. The international human resources management system of multinational companies refers to the set of distinct activities, functions and processes that are directed at attracting, developing and maintaining an multinational companies’ human resources. It is thus the collection of the various human resource management systems which is used to manage people in the multinational companies, both at home and overseas.
2.2 The factors influencing international human resource management
International human resource management combines cross-cultural and international factors within the human resources management. And there are much more challenges faced by the international human resource management, because of the different host countries. The international human resource management needs to deal with more complex strategy, local or global staffing, expatriate performance and assessment considering the different values and attitudes, joint ventures and strategic alliances exist the problem about merger of cultures (Scullion, 2001).The biggest challenge to international human resource management is the cultural challenge to international human resource management. Differences among countries and differences between national cultures and the organizational cultures of multinational companies bring some of the biggest challenges to the international human resource management (Laurent, 1986). Compared to the human resource management, the international human resource management needs to pay more attention to the factors such as cultural differences between countries, employee nationality and population type. International human resource management has to manage much more activities, including paying more attention to cultural differences and fusion, paying attention to the personal lives of employees in human nature, facing much more external influence. In the international business environment, the analysis and prediction of human behavior in the international environment is becoming more and more difficult.
3. The understanding of Chinese institutional and cultural factors
3.1 The introduction of Hofstede’s Cultural Values
Geert Hofstede’s study play an important role on IB and IHRM, which concluded on attitude surveys of 116,000 IBM employees from around 50 countries in late 1960s (McSweeney, 2002). Through asking about preferences for management styles and work environment, Hofstede used their responses to identify four ‘value’ dimensions differing between countries. Hofstede pointed that there are differences existed in the common psychological procedure and the way of thinking among the people from different groups, different countries or regions, because they have been suffering from the different education, social and work. The main point of Hofstede’s model is that there are five aspects can measure the difference among different national culture. And these are power distance, avoidance of insecurity and masculinity/femininity, long-term orientation / short-term orientation (Yates & Cutler, 1996).The power distance refers to the unequal distribution of social recognition rights within the organization. Uncertainty avoidance refers to people try to avoid such a situation when they feel threatened by uncertainty and ambiguity. The main relationship between the individual and group is measured by the extent that individuals autonomous / embedded within the group. The factor-masculinity / femininity suggests that the dominated degree of the so-called masculine values in the society. Long-term versus short-term orientation refers to the extent to which individuals are oriented to long-term strategic goals vs. short-term temporary outcomes and immediate achievements.
3.2 The analysis of the Chinese institutional and cultural factors
Cultural differences between different countries explain different mind-sets and different ideas about desirable policies of workers and managers from different countries. Institutional differences between different countries explains the different human resource policies because of the rules shaped by national forces, which includes employment laws, national industrial relations regimes and broader national differences in how business is organised.Relatively speaking, China is a country with large power distance, in which status symbol is very important. China belongs to the high uncertainty avoidance society, therefore it should be suitable and effective to implement employee participation in management and increase the stability of vocational humanistic policies in China. China advocates collectivism, the staff of the organization have a kind of emotional dependence, and it should be easy to construct harmonious relationship between employees and managers. China belongs to female degree society, paying attention to the harmonious and moral ethics and advocating the spirit of active participation in state affairs ( Farh & Cheng, 2000).Chinese institutional factors influence multinational company’s transfer of human resource practices to their subsidiaries operating in China to a certain extent. Chinese institutional factors include employment laws, national industrial relations regimes and broader national differences in how business is organised. In China, the transfer of human resource practices should be adjusted to suitable to the Chinese institutional factors. The multinational company enters China, the first challenge that it faced is the Chinese institutional factors. The Chinese institutional factors can influence the national business systems, which include corporate structures and governance, relationships between firms, capital markets and the financial system and systems of employment relations and collective bargaining (Fu & Kamenou, 2011).The transfer of human resource practice in multinational company can be influenced by Chinese institutional and cultural factors to a certain extent. For pay, performance and career development of the multinational company, the national systems structure can affect the relationship between performance and reward, both through pay systems, performance management and typical patterns of career progression. At the same time, it also should be consider the cultural difference.
3.3 The influences of Chinese institutional and cultural factors
In the human resources management practice, the management style of leadership is directly related to the implementation of the human resource management. Hofstede points that the impact factors influencing the enterprise leadership are “individualism and collectivism” and “the degree of accepting power distance”. The United States is a country with the highest individualism, so American leadership theory is based on the leader’s pursuit of private interests. However, the American leadership theory is not applicable in China, because China belongs to collective social, the worker concern groups, hope to obtain the safeguard from the group, and are willing to use group loyalty as reward. Hofstede thinks the degree of accepting power distance directly affect the realization of staff’s participation in management. China’s degree of accepting power distance is very high, so people are not involved in management, it is rarely that workers participate in management of enterprises. The conversion process of human resource practice in a multinational company, the multinational company should adopt suitable leadership to adapt to Chinese culture and system (Kirkman, Lowe & Gibson, 2006).The biggest influence factor to the enterprise organization structure is the degree of accepting power distance and the degree of uncertainty avoidance. This is because the organization’s main function is the distribution of power and to reduce or prevent the uncertainty of the business. Because of the high degree of accepting power distance, and urgent requirements to prevent the uncertainty in the business, so China tends to ”pyramid” type of traditional hierarchy. In the designing organization structure of multinational companies operating in China, the human resource management needs to take the high degree of accepting power distance and the high degree of uncertainty avoidance existing in Chinese culture into account (Farh & Cheng, 2000).In the human resource practice, staff incentive is a very important content. The greatest impact factor to the content of enterprise incentive is “individualism and collectivism”, “the degree to prevent the uncertainty” and “masculine and feminine”. The United States is the country with high degree individualism, so the incentive methods that they use according to individual, based on personal self- realization and personal gain dignity as the main content of the incentive. China is a country with high degree of collectivism, so the incentive should focus on the relationship between the individual and the collectism, too much reward to the individual is often won’t work. Although China tend to “butch” but psychology of prevent not positive is stronger, so a kind of no danger, very safe work became incentive factor (Edwards & Kuruvilla, 2005).
4. The transfer of human resource management in China
4.1 The introduction of Wal-Mart Stores
Wal-Mart Stores is a worldwide chain enterprise in American, one of the largest companies in the world, whose holder is Walton family. Headquarters is located in bentonville of Arkansas in the United States. Wal-mart’s business is mainly involved in retail trade, and it owns the most employees in the world. Since 1991, Wal-Mart Stores has been carrying out the globalization vigorously, from the United States to overseas development. Until now, Wal-Mart Stores already have 2133 Wal-mart stores, 469 Sam member stores and 248 Wal-mart shopping plaza, and these are located in 14 countries respectively (Stores, 2005). It is a miracle of retail that Wal-Mart Stores realizes so rapid development in a few decades. And there are a great many factors contributing to the success of the Wal-Mart Stores’ globalization. Of all the factors, International Human Resource Management plays an important role in the success of the Wal-Mart Stores’ globalization.
4.2The employee relations of Wal-Mart Stores in China
Wal-Mart Stores is an American company, which is started under the American institution and culture. There are a lot of differences between American and China about institution and culture. Culturalist approaches argue that differences in national cultures can explain differences in business behaviour between countries, such as differences in nationally distinct beliefs, attitudes and values, and these cultural values are deeply-rooted and change only slowly if at all. So that the human resource practices in multinational company should be adjusted to the institution and culture in the host country, in order to make the multinational company adapt to the host country’s different culture (Gamble, 2000).In order to adapt to Chinese institutional and cultural factors, Wal-mart make a transfer of human resource practices to their subsidiaries operating in China. Wal-mart’s international human resource management mode includes human resource planning, recruitment and allocation, training development and implementation, performance evaluation and implementation, salary welfare and employee relationship management. Wal-mart’s human resources strategy is keeping talents, developing talents, recruiting talents. Keep talents policy includes partner policy, open door policy and public servant policy. To develop talents, Wal-mart establishs lifelong training mechanism, pay attention to learn and responsibility sense, and internal promotion system. Recruiting talents, Wal-mart select personnel from both the inside and the external to enrich the branch’s human reserves (Hodgetts, Luthans & Doh, 2003).For staff recruitment and configuration, Wal-mart provides equal employment opportunity for each applicants, regardless of race, age, gender, religion, disability, etc (Peterson, 2005). In the development and implementation of training, Wal-mart attaches great importance to human resources training and continuity, sets up the institute of Wal-mart, and uses the experience training and cross training. For performance evaluation and implementation, Wal-mart establishes a set of perfect performance evaluation flow chart. In Wal-mart, salary welfare is determined by the employee’s knowledge, the ability to solve problems, and responsibility requirements and market salary level. For employee relationship management, Wal-mart stick to employees participate, employee communication and contact feelings (Gamble, 2003).
4.3 The analysis of transfer of HR practices
The United States is a relatively small power distance country, whose employees tend to not accept the concept of administrative privileges, the lower level usually think they are the same as superior. So the relationship between employees and managers more equal, more harmonious, the staff is good at learning, progressing, surpassing ourselves and realizing personal value in the United States. Relatively speaking, China is a country with larger power distance, where the status symbol is very important. And it is thought to take for granted that the superior have privilege, which is greatly help to the implementation of the power from superior to subordinate. These features obviously against the harmonious relationship between employees and managers and constantly learning and progress of employees in the enterprise. Thus enterprises in China should adopt the humanistic policies, which include constructing the harmonious relationship between staff and managers, providing the opportunity to learn for employees in the work, and keeping them progress. It is necessary for manager consciously to reduce the distance between the enterprise internal power in practice, which can promote to achieve management objectives better (Sue & Sue, 1971).The United States is the society of the low degree uncertainty avoidance, the same humanistic policies does not work in the enterprise of United States, such as ‘overall quality management’ implements good in Japan, however, it is almost no effect in the United States. China also belong to the society of the high uncertainty avoidance, which is similar to Japan, therefore it should be suitable and effective to implement employee participation in management and increase the stability of vocational humanistic policies in China. In addition, in the society with the low degree of uncertainty avoidance, people are more likely to accept inherent uncertainty of life, and can accept more opinions, the subordinate’s authorization from the superior is executed more thoroughly, the employees tend to independent management and independent work. And in the society with a high degree of uncertainty avoidance, the superior tend to the strict control and clear instructions to subordinate.The United States is the society advocating individualistic, stressing individual character freedom and personal achievement, and carry out competition between staff personal. And it is an effective humanistic incentive policy that the personal performance rewards. China is the society advocating collectivism, the staff of the organization has a kind of emotional dependence, and it should be easy to construct harmonious relationship between employees and managers. The multinational company should think about the characteristics of Chinese culture in the process of the transfer of human resource practice (Tsang, 1994).The United States is a strong male degree country, in which important decisions in the enterprise are usually made by the top, the staff is lack of sense of identity to the enterprise due to frequent work transformation, and staff usually does not actively participate in management. China is a female degree society, paying attention to the harmonious and moral ethics, advocating the spirit of active participation in state affairs. As we described above, the humanistic management policy, allowing employees to actively participate in management, is feasible.
Multinational companies refer to companies that have productive operations and employees in many different countries. Multinational companies may be managing workforces of several hundred thousand employees in more than one country. With different political system, legal standards and customs that multinational companies have to face, the managers often meet with different employees of different nationalities, different cultural background, different language. The manager has to face these realistic problems, how to finish the work better, how to communication better, how to establish the perfect management system and so on. The manager can solve those problems by conducting international HRM in the international company (Dowling, Festing & Engle, 2008).Multinational company managers need to be aware of host-country HR systems, in order to avoid breaking laws, or binding collective agreements, ensure that workers are as motivated as possible, and understand properly what competencies are available in national labour markets, and different forms of flexibility. Because of the particularity of Chinese culture and system, the transfer of human resource practice in China should consider the Chinese institutional and cultural factors. Chinese institutional and cultural factors influence multinational company’s transfer of human resource practices to their subsidiaries operating in China to a certain extent. These power distance, avoidance of insecurity and masculinity/femininity, long-term orientation / short-term orientation existing in the Chinese institutional and cultural factors can influence the organizational structure, leadership style and motivation content in the human resource practice of the multinational company.