Industry- and firm-level determinants of employment relations in China: a two-level analysis

Abstract

Factors influencing the adoption of human resource management (HRM) policies and practices are nested within the multilevel contexts of firms and industries. Institutional theory focuses on environmental pressure and suggests that an organization’s choice of an HR system is partly attributable to mimetic isomorphism. This paper contributes to the strategic HRM literature by estimating the relative effects of industry-level isomorphism and firm-level contingencies on employers’ choice of labor contracts. Drawing on different theoretical perspectives, this study examines multilevel environmental and organizational factors as determinants of HR systems and tests their impacts on the use of short-term labor contracts and weighted average labor contract duration, using a survey of 313 manufacturing plants in China. Utilizing a hierarchical linear model, our analysis shows that while most of the variance in HR systems occurred at the firm level, approximately 7% of the total variance in the four HR programs we studied are explained by industry-level factors. Findings suggest that international competitive pressure, capital intensity, firm size, unionization and ownership type have significant effects on use of labor contracts in a manufacturing context.

Keywords:

• Antecedents of HRM systems
• labor contract duration
• international competitive pressure
• export orientation
• China
• manufacturing firms

Notes

1. We thank one of the anonymous reviewers on this constructive comment.

2. The 17 manufacturing subsectors are as follows with the number of firms in bracket: 313, Food (22); 312, Beverage and tobacco product; 314, Textile product mills (39); 315, Apparel (39); 316, Leather and allied product (11); 322, Paper product (10); 323, Printing and related support activities (5); 325, Chemical (39); 326, Plastics and rubber products (18); 327, Non-metallic mineral product (4); 331, Primary metal (14); 332, Fabricated metal product (30); 333, Machinery (34); 334, Computer and electronic product (31); 335, Electrical equipment, appliance and component (38); 336, Transportation equipment (2); 337, Furniture and related product (3).

3. Since there are no data on the average labor contract duration of employees with open-ended labor contracts, we assigned 15 years to these employees following the economics convention of assigning a value that is 50% more than the highest value, which was 10 years.

4. Due to multicollinearity between percentage of export and capital intensity, they are entered individually to the regression analyses.