STANDARDIZATION AND LOCALIZATION OF HRM
Is focused on entry to the Chinese market during a booming economic period. In contrast, Moneyco’ s management structure is dominated by the Chinese partner. The British CEO is the only representative of the foreign enterprise in the operating structure, and the British MNE holds a minority of seats on the board, well below its equity stake. Like Buildco, the western MNE seeks entry to the Chinese market.
Unlike Buildco, Moneyco is a niche expert in the particularities of financial instruments in china, which during the last few years have undergone significant, and from Moneyco’s perspective, very disruptive change. Both JV agreements are essentially silent on matters of HR practice. The MNE partners of both Moneyco and Buildco face similar HRM contexts in China, with local staff and HR managers and identical legislative and demographic contexts, but both experience different issues in the design and delivery of HRM systems. We will use the propositions established earlier to articulate the nature of those differences.
The first proposition is that, “[s]trong drivers of HR expertise and HR consistency in more than one JV partner will increase the probability of conflict over HRM policies and practices”. In Buildco, JV top management acknowledge the expertise of the MNE parent in its industry. As the CFO states, “out parent company has a very good reputation in the world. Our product and after-sale service occupy the top level in the industry. This is why our business is running so smoothly in China; there is a cool shadow under the big tree.” The MNE internal and public documents stress not only its industry position, but also the centrality of its systems and structures, particularly HR, to this position. This acknowledged expertise in the industry is translated into a generalized acceptance of systems provided to the Chinese partner. The MNE has a complete set of management systems and structures that it imported into the JV setting, although there is some scope for adaptation. The JV’s HR manager explained, “ We just followed the foreign partner’s procedure first as a test to review if and see if it has some conflict with local conditions. If we found something that required change, we were required to analyse the reason and suggest a better way”. The CEO also said: “ we feel easy because we know what we are required to do. We are clearly told the principle and the aim”. In fact, there are no deviations from the MNE standard HRM policies and practices. This pattern is repeated in other operations run by the MNE where, except where it contravenes local legislation, policies and practices are standardized.
The expertise and consistency drivers of the western MNE do not appear to cause conflict in this case; the local partner does not express expertise or consistency assumptions regarding HRM, indeed it appears to welcome all the systems and processes as extensions of the technology transfer process. The JV’s CFO, representing the Chinese partner, sees this strategy as one that ensures that the advanced technology is transferred to the local staff and raises both the JV and Chinese partner’s competitive advantage regionally. The JV’s HR manager also said the Chinese partner encouraged him to implement westernized HR practices such as training and performance-based reward systems. Eventually, the Chinese partner, who has no standardized or consistent practices amongst its own companies, even sent representatives of other JVs to Buildco to study its practices. Although Buildco’s western parent does have assumed expertise and consistency drivers in human resources, it encounters no reason for disagreement from its very accepting Chinese partner,