Institutions, complementarity, human resource management and performance in a South-East Asian Petrostate: the case of Brunei

Abstract

This is a study on the incidence and impact of specific sets of HR practices on organisational performance (OP) across different types of firm, within an emerging market setting, where institutional arrangements are fluid and developing. The literature on comparative capitalism suggests that, within advanced societies, formal and informal regulations are mutually supportive, and will be sustained by associated HR systems, optimising OP. In contrast, in settings where institutional arrangements are weaker, there will not be the same incentives for disseminating mutually supportive HR bundles, and when these do exist, they are unlikely to yield any better outcomes. We found that this was indeed the case in the petrostate of Brunei as the usage of integrated HR models did not work better than individual interventions. Whilst it is often assumed that, in petrostates, the primary focus of institution-building is to service the needs of the oil-and-gas industry, we found no evidence to suggest that integrated HR systems were any more effective there; this may reflect the extent to which the industry’s HR needs may be simply resolved through turning to overseas labour markets – both for skilled and unskilled labour. At the same time, we found that the efficacy of HR practices varied according to firm characteristics: even in challenging contexts, firms may devise their own solutions according to their capabilities and endowments.

Keywords:

• Institutional complementarity
• HR practices
• recruitment and selection
• training
• internal career opportunities
• incentives and rewards
• organisational performance
• hierarchical regressions

Acknowledgements

The authors wish to record their debt to the anonymous referees for their comprehensive and constructive comments on the earlier iterations of this article, which helped us improve it significantly. Any shortcomings remain our own.

Notes

1. The population of Brunei is estimated at 406,000 about 67 per cent of whom are ethnic Malay. A further 15 per cent are ethnic Chinese and about three per cent are Indigenous. The relatively large population of foreign contract workers is drawn from Indonesia, Malaysia and the Philippines, as well as from South Asia. Brunei relies heavily on foreign labour in lower-skill and lower-paying positions, with approximately 120,000 guest workers brought in to fulfil specific contracts. The largest percentage of those work in construction, followed by wholesale and retail trade and then professional, technical, administrative and support services. http://dfat.gov.au/geo/brunei-darussalam/pages/brunei-darussalam-country-brief.aspx; http://www.state.gov/documents/organization/226810.pdf

2. Based on the formula to determine sample size, , where N is the population size and e represents the confidence level.

3. The basis of survey instrument for this study was a questionnaire, which has been developed and executed previously at the department of economics, University of Reading, under the directorship of Mark Casson and Raymond Loveridge (c.f. Casson et al., 1996, 1997, 1998).

4. In some instances where the HR director was not sure of the correct response he did consult his superiors and/subordinates.