HRM Practice and the Influence of “the Country of Origin” in Chinese MNC's operating in the UK

A number of studies have noted the influence of national differences on HRM strategic choice and practices of multinational companies (MNC's). These have mostly concerned the influence of the characteristic s of a host country on management practice in the subsidiaries, that is an ethnocentric strategy or the process of forward diffusion. In particular they have focussed on the way in which the culture and institutions of the host country constrain the diffusion of home practices into subsidiaries. Recent research on MNCs' HRM however has paid more attention to the influence of the home country on HRM strategic choice and practice in overseas subsidiaries. This is referred to as " the country of origin " effect (Ferner,1997). However, most research focuses on the differences between national models rather than on explaining the process by which the country of origin influences HRM strategic choice and practice. Further, research has been concentrated on MNC's from advanced economies and it has yet to be established how the country of origin influences strategies used by MNCs from developing countries that are operating in a developed country, and have a large cultural difference from the host country. This is especially relevant to case of subsidiaries of Chinese MNCs operating in western countries, e.g. the UK. Those who have made comparative studies of the West and China have concluded that significant national differences create problems for the transfer of management between the two. This research has included analyses of the effect of different national characteristics on HRM strategy and transfer in the Chinese context. However, how these distinctive national differences in HRM influence Chinese companies operating in foreign countries has yet to be explored. The aim of this paper therefore is to begin to address this deficiency by describing a study of Chinese subsidiaries in the UK. It examines how national differences influence HRM strategic choice and practice in the subsidiaries and in particular the influence of changes in the Chinese business system since the 1980s, when these companies started their international expansion. The study found that the HRM strategic choice and practice of these companies exhibits obvious characteristics of their country of origin. Firstly, HRM strategic choice is shaped by their need to compete in international markets, a requirement brought by the reform of the Chinese economic and business system. Secondly, the scope and extent of localisation reflects the characteristics of the stages of economic …