Dynamics of decision power in the localization process: comparative case studies of China-Western IJVs

Abstract

International HRM has focused on the MNC and its control and compliance mechanisms, particularly the tension between ‘internationalizing’ practices and normative host-country practices. This contingency approach does not capture the complexity of MNC interactions in the local environment, however, particularly with regard to international joint ventures (IJVs). Partners to the IJV may wish to impose their own practices, and use contractual and non-contractual resource power, internationalization expertise and operational consistency requirements to gain relative decisional advantage. Case studies of four Sino-Western IJVs illustrate the dynamics of IHRM development under conditions of weak socio-legal constraint and high cultural distance between partners.

Keywords:

• International HRM
• China
• international joint ventures
• localization

Notes

1 The IHRM literature has historically used the language of ‘standardization’ and ‘localization’ to describe the tension between culturally distinct HR practices, where standardization is seen as practices that are aligned with those of a foreign MNC parent and localization as reflecting the indigenous practices of the host country. With multiple partners, it may be more appropriate to adopt the concept of ‘isomorphism’ from institutional theory, as the IJV may attempt to gain legitimacy and resources from multiple parents (representing divergent business systems) as well as from more traditional institutional arrays.

2 Key phrases are presented in context, with the source noted. We use square brackets, [ ], where slight changes are made to a quote, either to protect anonymity or to make the quote flow grammatically with the rest of the text. Parentheses, ( ), are used where the quote is supplemented for clarity, for example when ‘it’ is used in a quote, and it would not otherwise be clear what company or object is being referred to.

3 While adherence to local labour legislation may seem like a localized practice, few large PRC organizations adhere strictly to the labour legislation, which many local companies treat as administrative guidelines only.

Additional information

Notes on contributors

Shaohui Chen

Shaohui Chen, China Europe International Business School, 699 Hongfeng Road, Pudong Shanghai, China 201206 (tel: [phone]; fax: [phone]; [email protected]);

Ljiljana Erakovic

Ljiljana Erakovic, The University of Auckland Business School, Commerce C Building, 18 Symonds Street, Auckland 1020, New Zealand (tel: 64 9 - 373 7599 Ext: 86855; [email protected]).