Int. J.

of Unman Resource Management 14:4 June 2003 487-510

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A comparative study of human resource management practices in international joint ventures: the impact of national origin

Yanni Jan
Aisstract This paper presents a comparative study of the effects of national origin, a company's strategic orientation and its investment profile on preference for the application of human resource management (HRM) practices as conducted in international joint ventures (IJVs). The approach extends understanding by offering a broader exploration of how national differences generate additional barriers that impact on specific HRM practices. The evidence from the study presented suggests that there is little support for national origin being a major independent influence. National distinctiveness does define the types of integration between parent companies and IJVs, but these collaborations do not necessarily reflect any specific national institutional bias. Examination of eighty-seven IJVs suggests that IJV management has a high degree of organizational autonomy in the implementation of a company's task-related inputs regardless of the national background of the foreign partner. The presence of a company's task-related effects on HRM practices plays a significant contextual role where the major attributes are the technology, management development and the compatible use of an IJV's resources. The results confirm that there is little evidence to suggest that partner-related influences derived from the partners' complementary resources and competences in the field of HRM development that are national origin specific have had significant influence over HRM development in the IJVs studied. Keywords practices. Introduction Organizational studies of human resource management provide strong evidence that the distinct national systems of business are strongly rooted in the specific cultural and institutioBal heritage of the home countries of business corporations (Hofstede, 1991). The pressures of operating in the worldwide competitive environment, the impact of new information and communication technologies and the globalization of production create uniformity of activity across all business, and yet national influences in multinational corporations are still observable (Dickeii, 1998). These phenomena have created increasing research interest in the diagnosis of how national differences generate specific additional barriers that may affect the application of technological development and how these barriers are overcome by specific human resource management (HRM) practices (Schuler and Jackson, 1999). The differences in HRM practice should be most marked in Dr Yanni Yan, G 7501, Faculty of International Business, City University of Hong Kong, Tat Chee Avenue, Kowloon Tong, Hong Kong, PRC (tel: +852 2788 7974; fax: +852 2788 9146; e-mai!:
iiikyany@cityii.edu.hk).
The International Journal of Human Resource Management

International joint ventures; national origin; investment profile; human resotirce

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international joint ventures (IJVs) where there are always at least two parent companies of different national backgrounds, and it is to be expected that the practices that support the partners' business strategies increase in control complexity to mitigate the effects of such barriers (Child and Faulkner, 1998). HRM activities in IJVs are increasingly regarded by researchers as being driven by an idiosyncratic set of organizational policies, regulations and norms that promote the maximization of economic goals (Lu and Bjorkman, 1997; Schuler, 2001). One role of HRM is to assist the IJV's management in the convergence of strategic orientations among partners of different national origins in the achievement of a business operation where the required bounded rationality is acceptable to all parties (Cyr, 1995), as the management of the complex organizational systems inherent in an IJV requires an understanding of the influences derived from a company's strategic orientation (Child, 1991). There are two main schools of thought conceming the relationship between national cultural factors and an investor company's investment profiles. One stresses that organizational dissimilarities are entrenched in the idiosyncratic national institutional regimes surrounding companies (Hofstede, 1991). These national effects can range from the broad sweep of economics to the very specific focus of indigenous cultural psychology (Hampden-Tumer and Trompenaars, 1993). It is argued that the presence of national effects plays a significant contextual role in the setting of HRM practices and that these can be assessed by evaluating cross-culttire organizational variances (Jackson and Schuler, 1995). National models of organization stress that the inertia of corporate governance, recruitment, information reporting, training and ingrained organizational practices are embedded within distinct systems of business, culture and innovation (Kanungo and Wright, 1983; Jaeger, 1990; Hofstede, 1991). This perspective postulates that national effects produce differentiated HRM practices that influence managerial pattems of behaviour and reinforces the notion that the behaviour and the actions of companies are the consequences of cultural influence (Rosenzweig and Nohria, 1994; Smith et al., 1996). Researchers holding such views stress that differences in organizational structure, cultural values and labour regulations account for the major differences in HRM practices between industrial enterprises of different countries (Jackson and Artola, 1997). The second school of thought emphasizes the idea that organizations may gradually be losing their national characteristics (Pauly and Reich, 1997). Technological change and development has been regarded as one of the most important contributory factors underlying the internationalization and globalization of economic activity. It is the adoption of common technologies that leads to uniform behaviours in the handling of these technologies (Casson et al., 1998). The convergence between modes of organization is believed to arise from economic and technological forces that are in tum motivated by universal human needs and driving forces (Bartlett, 1979). Hence, it is assumed that organizational practices will become universal across national borders and will lead to uniform corporate organizational structures independent of country of origin as they respond to uniform environmental pressures (Crookell, 1986). Research is concentrated on how organization transcends national boundaries, recognizing that in so doing there may be powerful forces for international homogeneity through the transfer of organizational practices (Scullion and Starkey, 2000). Using the argument that organizational form follows function, the globalization of production generates certain operational contingencies that establish a functional imperative for organizational design and process, regardless of national setting (Delery and Doty, 1996). The extent to which a multinational moves away from a functionally based logic and localizes its technological resource and management expertise is likely to have an impact on a universal set of cultural norms and organizational effectiveness (Slocum and Lei, 1993).

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The variations in a company's strategic orientations and in the investment profile of the partner-specific and task-oriented inputs in an IJV that occur as a consequence of the nationality of the foreign partner have generated little significant interest in the study of international HRM (Martin and Beaumont, 1998; Jain et al, 1998). This paper presents a comparative study of the effects of national origin and of a company's investment profile on preference for the application of HRM practices as conducted in IJVs. The contention that more effective HRM practices can be developed through the understanding and incorporation of national characteristics is contrasted with an assessment that calls into question whether national origin is the dominant paradigm, and this is achieved using the methodology of analysing the parameters of a company's strategic orientation and its investment profile. The paper is shaped as follows: it begins with an examination of the evidence supporting the impact of national cultural grouping on the application of HRM practices among companies that have established IJVs in China. The main theoretical perspectives of international business studies appertaining to HRM practices are used to assess the literature relating to national cultural analysis. This is followed by a discussion of the methodology adopted for the study and presentation of the descriptive data that explore national origin, strategic orientation and investment profile in the preference for the adoption of generic practices addressing various aspects of HRM. The national effects that are elucidated from the literature review, together with some of the empirical studies that have explored this connection, are then considered in order to establish the relationship between these HRM practices and national cultural groupings. In conclusion, the paper further discusses the implications of national effects, the parameters of a company's strategic orientation and its investment profile for the application of HRM practices in IJVs. National calture effects National cultural analysis asserts that national origin may influence HRM practices through the mediation of an investor company's strategic orientation and investment profile. The influence of these HRM practices can be highlighted for each country in terms of the strength of the national institution characteristics at the company level (Evans and Lorange, 1990; Becker and Gerhart, 1996). In the context of intemational business, national origin implies that business institutional foundations in different nations comprise the state, the legal governance and the financial and economic system (Anthony and Quintanilla, 1998). The magnitude and detail of the national institutional influence on an IJV can also be used as a foundation for country-specific predictions of companies' adoption of HRM practices (Gamble, 2000). The approach in the literature is based upon the idea that an organization will evolve its own distinct characteristics from the cultcral preferences and embedded institutions inherited from its parent companies. Key strategic orientations and a company's investment preferences are identified as typifying each of these oational groupings and evidence is sought of the impact of these parameters on the investors' actions in implementing integration and control across their business cperations (Schuler, 2001). The potential for control and influence on preference for the adoption of HRM practices has established that task-oriented influences (compatibility) relate to an IJV's engagement in the pursuit of knowledge and competencies that establish an organizational competitive imperative, while partnerspecific influences (complementarity) imply that ventures connecting with the knowledge and competencies add to or build upon those of the partner (Schuler, 2001: 5). The analysis in this study is based upon a sample of joint ventures located in China where the foreign-irivestiag partners can be grouped into the four broad national cultural categories

490 The Intemational Journal of Human Resource Management of Anglo-Saxon, Continental European, Japanese and Overseas Chinese. Finally, the distinctions established by the research model show the extent to which influences derived from national origin, a company's strategic orientation and its organizational quality investments affect its preferences in the adoption of HRM practices, as shown in Figure 1. Anglo-Saxon Anglo-Saxon business culture places a strong emphasis on the achievement of financial results. Its businesses are managed for the maximization of profits and for the satisfaction of shareholders (Goodstein, 1981; Lawrence, 1996a, 1996b). Emphasis on personality assessment in formal recruitment procedures is the norm. Companies tend to devise elaborate procedures for dealing with contingencies in areas that include systematic financial planning, budgetary control, formal selection procedures, job descriptions and management development (Anthony and Quintanilla, 1998). US companies feature strongly on openness, equality and recognition by providing higher than average opportunities for recruitment, career development and training (Jacobs, 1991). The most important criteria for recruitment and rewards in US companies are personal achievement, commitment and creativity (Femer and Quintanilla, 1998). The use of sophisticated management and information-reporting systems is also highly accentuated and implemented by the employment of trained managers (Chandler, 1986). Most UK companies also adopt similar information-sharing systems and reporting structures (Channon, 1973; Jones, 1986). Formal integration of a company's strategic business units at corporate level is achieved by the use of contracts that define business and employment relations (Arrighetti et al., 1997). Companies are highly reliant on the use of formalized systems that are dependent upon HRM departments for their effective implementation. Facilitation of these methods relies on experts in managerial training on staff development, intemal communication and business integration (Locke, 1989). AngloSaxon companies operate in the belief that property rights are derived from ownership, and hence companies favour owning a majority equity share in an IJV to ensure formal integration with their corporate systems (Nichols, 1969; Jacobs, 1991). US management is based on a particularly rationalistic paradigm that is manifest in a high use of formal

Strategic Orientation

Investment Profile

Strategic Role of Human Resource Management Practices

Figure 1 Strategic role of HRM practices in intemational joint ventures

Yan: A comparative study of HRM in IJVs 491 reward systems and operating procedures (Hampden-Tumer and Trompenaars, 1993). The level of rationalism and formalization is reported to be somewhat less in UK companies (Lawrence, 1996b; Easterby-Smith et al., 1995). Continental European The strategic orientation of Continental European companies has been marked by a relatively long-term approach to business and features long-teim relations with employees, suppliers and banks where the relations are moderated by trust and loyalty (Brewster, 1995). Internally, companies look for similar traits and try to achieve this by concentrating on personality assessment in formal selection procedures (Barsoux and Lawrence, 1990). A candidate's intemational experience is considered highly important when recruiting senior executives. Despite the concentration on trust and loyalt)?, sophisticated information-reporting systems and tight control of labour costs are accentuated through rigorous budget-setting and review processes (Ebster-Grosz and Pugh, 1996). Althotigh companies grant considerable managerial autonomy to the general managers of subsidiar)' companies, such autonomy does not permeate through the organization as these managers operate in a highly autocratic manner and are reluctant to grant employees further down the chain of command access to information about production processes and managerial matters (Sparrow and Hiltrop, 1997). Researchers find that European companies generate low scores v/hen assessed for equality, job security and recognition (Maurice et al., 1980). European companies' reliance on contracts is moderated by a trust relationship and this differentiates their HRM organizational practices from other national cultural groups (Child et al., 1983). The primary task of the HRM department is to engineer highly formalized and standardized procedures where control is boilt upon personal supervision, backed by the authority of senior management support (Ebster-Grosz and Pugh, 1996). HRM departments maintain primary responsibility for the recruitment and training of personnel, although there is also strong emphasis on the more bureaucratic activities of information provision and it is the department's task to ensure that the company is not in breach of any regulations (Calori and Woot, 1994; Ferner, 1997). Technical training is strongly emphasized within all training activities, although there are relatively large differences in the training systems of companies of different nationalities (Locke, 1989). High managerial autonomy leads to low levels of integration between headquarters and affiliated companies. Thus intemational operations tend to be decentralized, with diversity, rather than adopting standardized policies and practices (Forsgren, 1990). Japanese The major Japanese companies have a long-term orientation that is reflected in an emphasis on strategic rather than financial goals (Amante, 1993). A company takes key strategic decisions by process of intemal consultation, but, once a decision is taken, commitment is expected at all levels of the organization and the day-to-day management style is autocratic (Pascale and Athos, 1981; Bartlett and Yoshihara, 1988). This approach is dynastic i and, when associated with the view that employees are members of the company family, leads to long-term employment practices that are sustainable only if growth rather than bottom-line profit is the priority (Abbeglen and Stalk, 1985). The wide raage of recruitment, selection, training and incentive policies generates sophisticated HRM systems (Dore, 1973; Oliver and Wilkinson, 1992). Employment commitment is expected toi be a two-way experience and people have to give a high degree of loyalty to their company (Orm, 1991). The HRM function is charged with facilitating these

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important aspects and has a historically high status derived from such involvement. Most academic discussion of Japanese HRM practice has focused on the operations area, namely production and supply (Abo, 1994), where Japanese companies place reliance on trust rather than contract and use a form of control based on shared corporate norms and understandings. Less reliance is placed on formal contraets than on personal trust both in intemal employment relationships and in extemal relations with suppliers or financial institutions (Orm, 1991; Beechler and Yang, 1994). Relationships are key to the whole business system, both within the company and through its extemal networks (McMillan, 1996). Japanese companies endeavour to integrate with, and leam from, their affiliates and partners through the secondment of staff to adviser role positions within such units (Nonaka and Takeuchi, 1995). They are likely to offer training, job security and promotion opportunities to their employees, and this suggests egalitarianism in their use of company benefits (Broad, 1994). However, Japanese companies score comparatively less on openness. Recognition, as evidenced by promotion, and reward policies are based on seniority, efficiency and conformity with organizational values rather than on the basis of creativity or professionalism (Pascale and Athos, 1981). The HRM focus is on investment in training, especially within the company, and this results in low levels of formalization (Beechler and Yang, 1994). The whole workforce is constantly encouraged to improve its skills, and there is considerable investment in continuous intemal training that has a heavy technical emphasis (Alston, 1989; Pascale and Athos, 1981; Yeung and Wong, 1990). Emphasis on integration via personnel deployment strengthens the trust relationship between management and their staff (Gerlach, 1992). Overseas Chinese The Overseas Chinese approach is based upon the family business concept and has been marked by a high level of competitive awareness, coupled with adaptability and a shortterm orientation (Easterby-Smith et al., 1995). The strategic orientations of Overseas Chinese companies are sustained by reliance on personal networks to obtain feedback about any need for adjustment. A flexible response is achieved via a centralized decisionmaking process that is implemented through a simple informal structure glued together by bonds of interpersonal trust and loyalty to the head of the family. Emphasis on relationships rather than on personality assessment in formal recruitment practices has exerted considerable influence on HRM activities (Bond, 1996; Whitley, 1992). The HRM function is regarded as entitled to be consulted on issues relating to social welfare, establishment of incentive policies, staff development and training (Holton, 1990). Overseas Chinese companies often spin-off affiliates that are run by family members or close associates as this provides a relationship bonding between parent companies and new ventures (Brown, 1995; Verburg, 1996). Information sharing tends to be constrained by the boundaries of their limited social reference groups. Personal loyalties and relationships are emphasized and there is a reliance on trust rather than formal contract (Child, 1991). Flexibihty and low eost are characterized as among their main strengths, and any expenditure on indirect costs, such as training, is invariably low (Redding, 1990; Chen, 1995). The preference, based upon a long Chinese tradition that holds the law in low regard, is for an implicit and moral basis for business dealings, rather than a formal legal footing, and thus the viability of dealings rests upon trust between the parties (Tsui and Farh, 1997). Such a simple structure has little formalization, and emphasis is placed on loyalty rather than clearly defined performance criteria. It is widely acknowledged that identities and loyalties are vertical in direction and highly personalized (Lockett, 1988; Redding, 1990; Brown, 1995). Most employees identify with the aims of the

Yan: A comparative study of HRM in IJVs 493 company and view their personal and professional competence development as being at one with these aims (Meier et al., 1995; Bjorkman and Lu, 1999a, 1999b). Overseas Chinese companies are distinguished by a closely linked institutional system of co-operation and negotiation (Verburg et aL, 1999). Adoption of HRM practices A fundamental assumption in studying business institutional foundations is that a company's investment profile asserts rights to control the implementation of resource investmeEts across national borders. These investments are influenced by the investor's strategic expectations and beliefs (Bartlett and Ghoshal, 1989). Research on preference for the adoption of given HRM practices within an IJV emanates from a company's strategic orientations and from the influences of its investment profile on the task and partner-specific resource inputs. Balancing decentralized flexibility with a company's task-oriented influence and centralized partner-specific influence appears to promote a preference for the adoption of HRM practices, as the balancing power is committed both to organizational competitiveness and to the long-term interests of the joint venttire process (Child and Faulkner, 1998). The objective of the analysis of HRM practices is to reveal how an investor's strategic expectations and managerial investment behaviour pattems map the specific organizational properties of national culture using parameters. Strategic orientation Strategic orientation becomes critical ia situations when partners working in IJVs perceive (iifferences in beliefs, values, financial and strategic targets (Crookell, 1986; Smith et ah, 1996; Edstrom and Galbraith, 1997). These emerge when a control mechanism, iutroduced by one partner to manage specific investments, results in the adoption of specific performance standards, task completion targets, policy interpretations and organizational practices (Dowling and Sehuler, 1990; Doz and Prahalad, 1992). Strategic/financial targets are aimed at ensuring the existence of economic activities that include the acquisition of low-cost sourcing, minimizing the sum of production and transaction costs, increasing economic scale, improving a company's competitive position, gaining the knowledge to leam, enlarging business expansion to intemational markets and gaining a new source of skills to improve human capital (Shleifer and Vishny, 1997; Schuler, 2001: 4). It has been argued that the diffusion of national institutional pattems through the strategic application of HRM practices can be better understood in the context of an examination of the partners' strategic orientation that includes vision, culture, practices, structure and strategy (Geringer and Frayne, 1990). Ding et al. (1997) conclude that bundles of HRM practices are characterized by an integrated set of organizational targets that are contingent upon a parent's strategic o"ientaticT Of part'cular importance are the organizational structure, design, recruitmen., caiecr management, remuneration and communication that are designed to devvlop fa ther the potential of employees who possess the required skills and relevant nterndt'enal ventumg experience (Schuler, 2001: 10). The overall influences resulting ' om ditt'-rent national origins will show variations if a company's strategic orientations and It KHM piactices posit national uniqueness in organizational structures, systems zad behaviours. (Becker and Gerhart, 1996). Hypothesis la: The greater the consideration given to strategic targets, the greater the likelihood that those targets will be important in defining the human resource activities of IJVs.

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The International Journal of Human Resource Management The greater the consideration given to financial targets, the greater the likelihood that those targets will be important in defining the human resource activities.

Hypothesis lb:

Task-related influence A company's investment profile is regarded as pervasive when an IJV organization uses the parent company's image to project its own management systems, quality and prestige to its market and supply chain (Melewar and Saunders, 1999). This pervasive power can be established in many forms that are typically used when the joint venture's business is characterized by decision-making urgency (Doz and Hamel, 1998; Schuler, 2001: 2). Task-related influence is used to manage those resotirces invested to achieve quality, productivity and efficiency and is culturally independent in nature (Kamoche, 1996). A partner's investment of capital, technology and marketing expertise can affect the longterm strategic development of the IJV, as the task-related influences occur when the requirements to be met are related to a 'globalized' operation. The due influences on the operation require investors to provide a consistent and clear structure as to the conduct of IJV management procedtires in the handling of resource and knowledge inputs (Shenkar and Zeira, 1987). Resource-based views of task-related influence emphasize the sfrategie relevance of knowledge-based competencies where the investor is directly linked to the achievement of a sustained competitive advantage generated from resources that are valuable, rare, inimitable and non-transferable (Barney, 1991). When IJV partners' structural or functional specializations complement each other and they share similar structural or organizational characteristics that build upon or create greater asset bases, enabling them to enter new markets by achieving organizational flexibility, then task-related influences are likely to be more effective and dominant (Begin, 1992; Li and Shenkar, 1996). Contextual factors include market conditions, business strategies, technology and management expertise, which generate economic value to organizations by enabling organizational human capital to be more productive and adaptable. Economic literature indicates that human capital, technology, skills, experience and knowledge can play an important role in establishing preferences for the adoption of particular HRM practices within IJVs (Lei and Slocum, 1992; Nonaka and Takeuchi, 1995). Assessment on complementary task should include an analysis of the nature of the importance of the IJV's task to the partner, the type of knowledge involved and the nature of the partner's reward and control system. Hypothesis 2a: The greater the degree of task-oriented influence, the greater the likelihood of the complementary use of the IJV's resources and the greater the chance that benefits will occur from human resource activities within IJVs. The greater the degree of task-oriented influence, the more extensive will be the use of the flow of information and the greater the likelihood that there will be benefit from the human resource activities of IJVs.

Hypothesis 2b:

Partner-related influence Assessment of a partner-specific influence is used to identify the ability and the worth of a partner within the organization by measuring the value of the necessary technological skill, management expertise and international venturing experience brought to the

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venture by that partner (Geringer and Frayoe, 1990; Melewar and Saunders, 1999). Partner-related influence stresses the monitoring and co-ordination responsibilities of HRM that are based upon differentiated provision of resources that are culturally embedded with the technologies of the specific provider (Geringer, 1991). Making the necessary organizational adjustments to partner-specific influence can play a particularly important role in the way that such knowledge inputs, knowledge transformation and knowledge utilization are incorporated into the joint venture process (Lu and Bjorkman, 1997). The provision of proprietary resources may expose a partner's beliefs or opinions as to how work should be completed, how resources and tasks are distributed and where priorities should lie. It appears that the greater the partner-specific influence accruing from the possession of technology, management and marketing expertise, the easier it may be for the provider to exercise its influence over an IJV's HRM practices (Doz and Prahalad, 1992). Such an argument tends to support the notion that an IJV partner may need to use its specific skills and talents to create a team around senior managerial appointments, as this is how it can ensure that the necessary reporting systems are established and the fair reward and incentive policies necessary for the successful implementation of the resources invested can be set up (Martin and Beaumont, 1998). On the one hand, a partner-specific influence is leveraged from the relative endowment of resources, skills and competencies. The sources of bargaining power of an individual partner can be established through internalization of key value-added competencies, as knowledge flow, sharing and transfer can play an important role in supporting human resource practices throughout IJV development (Cyr, 1995; Lei et al., 1992). On the other hand, the partner-specific influences can also be more effective when they communicate internally consistent expectations in ways that are congruent with the partners' behaviour requirements.

Hypothesis 3a: The greater the degree of partner-specific influence, the greater the likelihood that the resource complementarities in the IJV will develop and the greater the chance that benefits will occur from the human resource activities of IJVs. Hypothesis 3b: The greater the degree of partner-specific influence, the greater will be the emphasis upon leaming, knowledge sharing and technology transfer and the greater the likelihood that benefits will occur from the human resource activities of IJVs. A company's strategic orientation will define how it will wish to influence the operation of organizations within its investment profile and how it will be affected by HRM practices introduced by its paiiners. When an IJV is established, there is invariably considerable disparity between the HRM organizational practices of the partners and this can cause difficulties in deciding which of the partner's performance standards should be adopted (Lu and Bjorkman, 1997). HRM issues can be particularly significant when a partner with a strong bargaining position derived from being able to bring technology and management expertise inputs to the venture tries to impose specific practices (Harrish et al., 1998). Parent companies are likely to deploy their own HRM practices within IJV affiliates with the fundamental strategic objective of ensuring integration with their own corporate investment policies and procedures. Thus, it is likely that observable HRM practices will reflect the integrated impacts from a company's strategic orientation, and its organizational investment profiles.

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Hypothesis 4: The general impact established by a company's strategic orientation together with the influence it derives from task and partner-specific investment will affect the ability of the IJV to conduct HRM activities. Method The study incorporates parameters to evaluate the impact of HRM practices derived from national origin, a company's strategic orientation and its investment profile. The research was conducted in collaboration with staff from the University of Cambridge. The sample consists of eighty-seven IJVs formed between Chinese and foreign-owning companies. The foreign share of IJV equity ranged between 25 and 95 per cent. The interviews were conducted in English or Mandarin Chinese depending upon the nationality of the interviewees. The interviews with the Japanese joint ventures were conducted through interpreters. One hundred and sixty-one of the interviews focused on issues as seen from the foreign perspective and 193 on the same issues as regarded from the Chinese perspective, with a total of 354 managers interviewed face-to-face in the eighty-seven IJVs. Two hundred and thirty-one interviews were conducted with parent-firm personnel at managerial levels above the IJV nominee manager and, of these, ninety-three were with expatriate respondents and 138 with Chinese parent officials. On average, four interviews were conducted per case, where the interviewees included general managers, deputy general managers and functional heads. Two researchers visited each IJV and the research project was completed in April 1998. The information provided has been crosschecked against answers proffered by at least two respondents. In cases where there was more than one foreign partner or more than one Chinese parent company, only the foreign and Chinese parent companies with the most active involvement in the IJV's management were taken into consideration. The interviews were conducted with managers on an individual basis and were tape-recorded when that was acceptable to the manager. All data were transcribed onto separate schedules from the original notes and tapes immediately following the interviews. The IJVs are located in five industry sectors where a significant number of Sino-foreign joint ventures are found, namely chemical, electronics, engineering, fast-moving consumer goods and telecommunications. At the time of this study, these sectors were the largest in terms of output value among foreigninvested firms in China {China Statistical Yearbook, 1998). Companies of varying size were included in the sample as there is evidence that company size may also influence the adoption of specific human resource practices (Deshpande and Golhar, 1994). Additionally, all cases had been in business operation for not less than three years. The intention of the research was to identify IJV managers' preferences for the implementation of their respective parents' management practices. Quantitative and qualitative information has been used to compile a profile of each IJV. Records were consulted to obtain financial information where permission was granted, and background company documentation was also collected. The conclusions drawn are based upon these multiple responses of the interviewees, and the following variables have been used to structure the data collected. The research questionnaire is divided into four sections. The flrst contains questions on factors of national origin that might have an impact on the approach taken to HRM practice. The assessment of the national cultural impact is in line with Anthony and Quintanilla's study (1998), as they suggest that the national affiliation of an organization can affect the degree of available organizational choice in HRM system designs. Furthermore, their findings are usefiil in explaining how variations of managerial roles may be impacted upon by the different national regulatory systems of company law and

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corporate governance. Cross-national cultural groupings in this study, such as Anglo-Saxon, Continental European, Japanese and ethnic Chinese groups, are contrasted despite the presence of some heterogeneity within the first two (Hofstede, 1991; Hampden-Tumer and Trompenaars, 1993; Hickson and Pugh, 1995). The Continental European group is much less homogeneous, though it is considered by some to share similar 'communitarian' values (Choi et al., 1996). Calori and De Woot (1994) note that some of the European company directors they interviewed perceived a narrowing of the gap between American, European and Japanese management philosophies and practices. The IJVs' foreign parent companies were headquartered in Anglo-Saxon countries (USA and UK), Continental Europe (France, Germany, Netherlands, Sweden, Spain, Switzerland), Japao and ethnic Chinese territories (Hong Kong, Taiwan and Singapore). Scott (1995) indicates that national origins tie organizational practices to a set of interaational institutional expectations and regulations. The national origin classifications used in this study to define strategic application of HRM are based on his work. He warns that the national institutions may possess mandatory powers to enforce certain organizational arrangements that are based upon strong cultural and social values of the parent's home country. In ao attempt to ascertain the extent to which such strategic orientation is viewed as important, respondents were asked whether any strategic and financial targets were formally endorsed and actively supported by senior management at the time of IJV establishment. This line of questioning is in line with Child and Faulkner's findings (1998) that an investing company's strategic orientation should be consciously tailored to meet the needs of an individual partner in an IJV. The most senior foreign managers in the joint venture were asked to define the most important objective benefits that their parent companies sought from the IJV. For an IJV partner the most important strategic benefits identified include: (i) to gain a strategic position in China vis-a-vis competitors, (2) to establish a strong business presence/credibility in China, (3) to establish an opportunity for long-term profit, (4) to leam how to do business in China. The most important financial benefits included are: (i) to acquire low-cost sourcing, (2) to achieve low labour cost, (3) to gain benefit from transfer pricing, (4) to obtain benefit from tax incentives. A 5-point Lickert scale was used in which the range for objective importance was from 1 = not at all important to 5 = extremely important. The most senior foreign and Chinese managers were asked to rate whether those objectives identified are being achieved. Those objective achievements were scaled from 1 = not achieved to 5 = fully achieved. These scores were aggregated to provide indicators of the achievement of foreign parent strategic targets (alpha = .71) and financial targets (alpha = .73) respectively. A crosscheck of intemal reliability coefficients suggested that it is acceptable to aggregate these indicators into an overall measure of strategic and financial targets by the foreign parent companies (Nunnally, 1978). In this study, only the foreign partner's perspective is taken although responses were received from both foreign and Chinese paiiners. The task-oriented influence derived from an IJV's investment profile is examined as follows. The most senior foreign and Chinese managers in the joint venture were flrst asked to identify the importance of specific inputs available from an IJV partner in influencing its partner selection. The paitner's knowledge and resource commitments consist of five items measuring the parent company's perceived importance over acquisition of links with major customers, distribution channels, production technology, product technology and training. The assessments of task-related influence are binary scored (0 = not at all provided, 1 = provided). The most senior foreign and Chinese managers in this study include the general manager, deputy general manager, and heads

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of finance, HRM, marketing, production and technical functions. The assessment is made using binary scores for whether people in these management positions were appointed by the Chinese or the foreign parent firms (0 = not appointed by parent; 1 = appointed by parent). A partner-specific influence derived from an IJV's investment profile is examined as follows; the partner's knowledge and resotirce commitments consist of five items measuring the importance of the parent company's influence over the competence of the partner's management, previous intemational experience, favourable past association with partner, technology collaboration and the adoption of the parent's symbols, slogans, rituals and ceremonies. The assessment is made using binary scores for the partner-related influence (0 = not provided, 1 = provided). The most senior foreign and Chinese managers in the joint venture were asked to rate the degree of partner influence over the IJV. Assessment of the partner's control was based on the four 7-point scales measuring the achievement of their respective parent company's perceived influence over formalized rules, target-setting, organizational, cultural and personal supervision (1 = not at all achieved; 7 = actually achieved). The application of the strategic role of HRM is assessed by examining how IJVs achieve eonsistency of behaviour and process through the development of high-quality competencies among those key personnel who are loyal to their national culture or origin in terms of: (a) recruitment vs relationship: the perceived reliance on personality assessment in the recmitment of, or emphasis on, Chinese relationship concepts; (b) reliance on contracts: the level to which the UV was limited by contractual provisions drawn up by the foreign parent company as measured in the areas of: brand names, marketing, product technology, production technology, suppliers, professional services; (c) formalization vs personalization: the perceived reliance of IJV control on formalized mles and procedures, target setting and organizational culture contrasted with comparable assessments of the extent of group control through personal supervision; (d) training: the trend in expenditure on fraining for IJV personnel after the formation; the provision of managerial, technician and operative training by the foreign parent, within the IJV or outside China, was also recorded; (e) integration: an assessment was made with reference to different bases of integration based upon ownership, confrol, personal contacts, systems, transactional integration between IJV and the parent, and by personnel deployment; (f) reward system: the perceived reliance on staff development and emphasis on the bonus reward system. Indicators used are based upon the senior managers' perceptions of the extent of foreign parent control over the IJV and of IJV autonomy (7-point scales: 1 = not adopted, 7 = fully adopted). Results and discussion The objectives listed in Table 1 indicate that there was significant differentiation in achievements of sfrategie and financial targets across four national groups. A higher value indicates that the particular strategic or financial target was, on average, more important to the category of parent companies in question. Strategic targets in this study include the creation of strategic position, the establishment of a strong business presence, learning how to do business in China and acquisition of an opportunity for long-term profitability. There is no striking evidence to suggest the strategic benefits sought by a partner from an IJV vary significantly from one national culture group to another. There is a comparative distinction, however, within the sfrategie target achievements of AngloSaxon joint ventures and the Continental European joint ventures where high values, which are statistically significant, are placed on the establishment of a strong business presence and in gaining a strategic position in China. Acquisition of an opportunity to

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establish long-term profitability was most highly rated by the Anglo-Saxon, the Continental Europe and Japanese joint ventures. The strategic objective achievement of 'leaming how to do business in China' is more highly rated in Anglo-Saxon joint ventures in comparison with other groups. The results may imply that acquisition of local market knowledge and local management practices, on the one hand, may incorporate and reconcile a foreign parent's distinctive economic market expansion strategies, as leaming from a local environment encourages creative behaviours and reduces high degrees of risk-taking. On the other hand, the increased pace of technological change, knowledge development and increasing intemational competition in China require that the strategic targets of foreign investing companies are relevant to the environment of rapid market change. The findings suggest that most Continental European and Japanese joint ventures need to acquire cmcial market and local knowledge capabilities that can be provided only by Chinese partners and they will offset the influence that this gives the Chinese partner by the influence that accmes from their technological and managerial knowledge. From the results of our interviews, it has been deduced that the sfrategie targets of the Japanese joint ventures tend to be established around a corporate vision that builds synergistically upon the different organizational foundations. Overseas Chinese companies give less emphasis than others to the long-term strategic objectives of: gaining a strategic position, the establishment of a strong business presence in China and opportunity for long-term profitability. The financial targets in this study are found to focus mainly on the acquisition of lowcost sourcing of materials, low labour costs and the achievement of benefit based upon transfer pricing policy. There is a relatively high emphasis on low-cost sourcing and low labour costs among Hong Kong, Taiwan, Singapore and Japanese joint ventures, which is understandable in view of the factor-cost profile combined with the geographical proximity to China. Hong Kong joint ventures were particularly concemed with the financial gains to be obtained from low labour costs, transfer-pricing benefits and tax breaks. This is in line with the assertion of most overseas Chinese joint ventures that a company's sfrategie targets are often affected by the successful bridging of internal and external company links under the orchestration of HRM activities and the specification of acceptable organizational performance standards, as such links are needed to establish a well-motivated and skilled workforce that enables a company to compete effectively in the global marketplace. The results of the study also show a distinction in that the strategic objective achievement emphasis of Anglo-Saxon and Continental European joint ventures is slightly different from those of Japanese, Hong Kong, Taiwan and Singapore joint ventures. There is, however, no significant difference in terms of the emphasis on financial target achievements, particularly in the acquisition of low labour costs, tax incentives and benefits from tax incentives. Of the task-related investments, two measures (resource investment profile and managerial position profile) stand out as being perceived by the partners to be important. The impact of technology development in joint ventures has played a significant part in the way in which tasks are accomplished. Table 2 suggests that the four national groups do not perceive their levels of achievement in the areas of technology and management expertise to differ significantly. No group likes to provision their resources unless they have an ability to influence the task-related parameters listed. Most of the Anglo-Saxon and Continental European joint ventures in this study are quite keen to commit marketrelated knowledge, such as the provision of links with intemational customers and the establishment of distribution channels. This finding reinforces the literature suggesting that the geographic dispersion of an investing firm's investment portfolio may have no significant impact on its ability to influence task-related parameters (Child and Faulkner,

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1998). On the whole, there are no significant national differences in provision of the partners' resources, including production technology and product technology, to joint ventures by their parent companies across the four national groupings. The appointment of senior managers and the establishment of communication channels in the AngloSaxon joint ventures via their intemal reporting lines are used to consolidate the partner's influence and confrol arising from their resource investments in the IJV. The Continental European joint ventures place a greater emphasis on the ability to appoint a foreign general manager and they are highly likely to appoint a foreign chief financial officer. This study finds that belief in the importance of appointing to senior managerial roles exists equally across the four national groups, and includes their desire to appoint nominees to managerial positions such as general manager, deputy general manager, marketing and HRM functional managers. There are, however, differences associated with appointments of the ehief financial controller and production managers. With respect to the employment of expatriates in joint ventures, the approach to personnel development in Hong Kong joint ventures is distinctive as they have fewer non-PRC joint venture general managers in comparison with other cultural groups, but a greater number of deputy general managers. In absolute terms, their expatriate deployment tends to be low but this result could be biased by the generally smaller sizes of their joint ventures. Table 3 lists the partner-specific influences over joint ventures that are predicted by their national cultural groupings. The listed items of partner-specific influence in joint ventures were found to exhibit no significant difference in terms of the control priorities and control mechanisms adopted by nationalities. The Anglo-Saxon joint ventures rely relatively heavily on confrol emanating from formalized mles rather than to personal supervision. Formalized mles are seen as methods by which ideas are shared across the organization and can be perceived as business integration mechanisms, because they shape and constrain courses of action for the IJV. The target setting provided by the Anglo-Saxon joint ventures is perceived as a tool that is used to correct skill deficiencies and disseminate information about IJV management policies and procedures. The AngloSaxon joint ventures rarely adopted the overt signs of their foreign parent's corporate culture, whereas these signs are apparent in the Continental European joint ventures. The influences of Anglo-Saxon companies that are derived from the competence of a partner's management, previous international experience and favourable past association with a partner are found to be positively correlated with the preference for the adoption of HRM practices in subsidiaries abroad. The findings indicate that the tradeoff in partner-speciflc influence is between the complementary expertise and knowledge that a partner is willing to transfer to the IJV and the critical resource decisions that must be dominated by the resource providers. Corporate organizational cultural influences in the Continental European joint venture appear high in areas such as the adoption of parent companies' symbols, slogans, rituals and ceremonies. There is qualitative evidenee from our interviews that, where IJV subsidiaries have foreign HRM managers, organizational practices based upon the expatriate culture will be favoured by the joint ventures. In particular, staff development tends to be monitored closely by US partners to evaluate whether the required strategic beneflts are being achieved by the overall business and whether the economic activities are being efficiently operated at all times through the necessary commitments of human resources. Hong Kong, Taiwan and Singapore joint ventures were found to operate under a relatively high degree of parental control. The main national differences in the Hong Kong, Taiwan and Singapore joint ventures are apparent in the frequency of meetings or visits between the foreign parent and the IJV, and the frequency of reporting of confrol information. Hong Kong joint ventures have between three and four times the frequency of meetings with their foreign

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parent than do the other national categories although this can be explained by geographic proximity. As a consequence, they require correspondingly less frequent formal reporting of IJV results. The Hong Kong, Taiwan and Singapore joint ventures relied relatively heavily on eontrol emanating from personal supervision rather than depending on target setting and corporate culture. The results suggest that complementary resources possessed by the Hong Kong, Taiwan and Singapore joint ventures show that the quality of the partner's management, rich marketing expertise and favourable past business association can bring positive influenee to market distribution networks. Table 4 shows the adoption of HRM practices in joint ventures across the four national culture groupings. The reliance of Anglo-Saxon joint ventures on confracts and formal reward systems are characterized by the extensive use of personnel deployed in building formalization, training and integration. Ownership equity in the Anglo-Saxon joint ventures has a bearing on task accomplishment goals, as majority equity-based influence can be partially used to force an UV to accept certain HRM practices, such as standardized management practices and technology systems, that are in line with the interests of the majority shareholder. The Continental European joint ventures exhibit HRM priorities targeted at information sharing and technical training, whereas they rate themselves as only mediocre for reliance on formalization and contraets as methods of establishing HRM practices. Japanese joint ventures exhibit relatively high scores related to long-term sfrategie orientations, but these scores are lower than either Anglo-Saxon or Continental European scores. The Japanese stress the importance of personnel development in the sharing of teehnical information and integration between parent and IJV subsidiary. Reliance on contracts and formalization in their joint ventures is relatively low in comparison with other groups. All the national groups place a sitnilar emphasis on training, although the Japanese joint ventures are particularly active in

Table 4 Adoption of HRM practices in IJVs predicted by national grouping (N = 87 IJVs) Application of HRM practice Nationality (mean scores: analysis of variance) Anglo-Saxon Continental European 3.26 3.4P 4.06 2.65 2.73 2.98 Japanese Hong Kong/ Taiwan/ Singapore 1.94 1.23 1.32 2.56 4.90'^ 4.72'

Formal recruitment vs relationship Reliance on contracts Formalization vs personalization Emphasis on training Integration between parent and affiliates Reliance on formal reward system

5.52 5.71 6.11 2.77' 4.23^ 4.80

3.93 2.42 2.54 2.69" 5.435 3.93

Notes High > 4.5; medium between 3.5 and 4.4; low < 3.4. 'Medium (emphasis on training, especially on managerial training); ^ medium (integration between parent and affiliates via systems and ownership); ^medium (reliance on contract, but it is moderated by trast); *high (emphasis on training, especially on technical training ); ^high (integration between parent and affiliates via personnel deployment); ^high (integration between parent and affiliates via relationships); 'high (reliance on formal reward system via money vs manager promotion).

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extensive technical training and in-house managerial training both within the IJV and in the home country. The HRM practices observed in this study are reinforced by a system of rewards, including training, career development, promotion and remuneration. The Overseas Chinese joint ventures take a relatively short-term strategic view of IJV development. The integration between the parent and an IJV subsidiary is operated via personal relationships. Their reliance on formal reward systems is heavily financially oriented rather than relying on staff development programmes and this leads to less dependence on control, formalization and training. It was found that the application of HRM practices is predictable from the organizational contextual variables of ownership status, size, location, technology and resource availability. Coacinsions Th-s paper u:es comparative data across four national culture groups to analyse how the strategic roles cf HRM practice at the individual IJV level are affected by the nature and the impact of national origin. The analysis is consistent with previous research in demonstrating that foreign multinationals do diffuse several organizational behaviours and practices '.hat are characteristic of their national origin into their IJV subsidiaries. In this study, analyses at the individual IJV level are undertaken to offer a better understanding of a company's strategic orientation and its investment profile as predictors of HRM activities preferences, but the evidence presented suggests that there is little support for national origin being a major independent influence. It is the strategic orientation and irivestment protile of an investor company, factors that are weakly affected by national origifi, *'hich correlate positively with HRM activities. Those foreign-investing companies that pursue international sfrategies consistent with creating a strategic position in China iire most likely to seek to diffuse task-related business practices across national borders trom wherever they originate. Only when there is a technological resource base available "o transfer to an IJV can a partner's corporate headquarters specify the strategic iniendons for the IJV. In this study, the differences in companies' strategic orientation that might be expected between the Anglo-Saxon IJVs and other European nationalities are not apparent The strategic orientations measured show that the Anglo-Saxon and the Continenal European IJVs both place importance on the long-term orientation of establish'.nent of strategic presence vis-a.-vis competitors in China, while the strategic orieniation of Japanese and Overseas Chinese IJVs consistently emphasizes acquisition of low-cost jabour and sourcing. The Hong Kong joint ventures in the sample are clearly more opportunistic in their strategic targets and their business interests lie in realizing the more immediate benefits of investing in China. These differences suggest that geographic proximity may be a facto^ in the strategic orientation of given companies. The use of participant interview techniques in comparative research have achieved a conceptual understanding of the nature of the diffusion mechanisms used by multinat'tnial companies to spread best practice to their UV subsidiaries by using a methotlology whereby the linkages, such as strategic orientation, task-related influence, or partner-specific influence, can be tested empirically. The results suggest that importation of foreign technology and management practice can be successfully achieved through taskreiaied iri*luences alone. The analysis suggests tliat UV management has a high degree of organiza'donal and managerial autonomy in the implementation of the company's taskrelated ccnirol of activities regardless of the national background of the foreign partner. The eviderxe indicates that it is the task-related influence in an IJV that plays an important role in directly shaping HRM practices. In most cases the individual partners do not actually possess sufficient control to impose HRM organizational practices in line with the

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specific economic or sfrategie interests of their companies and there is no strong evidence to suggest that partner-related influences have significant impact on HRM in the IJVs studied. A company's sfrategie orientation and investment profile define the strategic role of HRM only within the context of providing the incentive and ability for UV subsidiary managers and employees to respond positively to the pressures from a specific partner. National distinctiveness does define the types of collaboration and integration between parent companies and IJVs in China, but these differences do not necessarily reflect any specifically cultural or national institutional bias. The largest effect found is that of geographical proximity of Hong Kong parents to their UVs and to a lesser extent of Japanese companies to their subsidiaries in Northem China. In most respects, the other Overseas Chinese parents and their IJVs display a rather similar profile to those of Westem and Japanese origin. The few instances in which the Japanese differ from Westem cases can also be accounted for primarily by the geography of Japan in relation to China. This study has examined important factors that facilitate or hinder UVs in developing beneficial HRM practices. It reveals that the partner's investment profile defines the taskrelated influence on such practices, and the desire to establish a strong business presence in China is a prereqtiisite to the achievement of integration and synergy between partners. There is little evidence that national culture-based obstacles to diffusion processes exist in IJVs. This leads to the important flnding that the implementation of task-oriented processes leads to HRM practices that transcend national culture groupings. Analysis of national cultural effects on strategic orientation shows that any predisposition postulated with respect to specific national groups is not strongly reflected in the responses of the managers interviewed. The findings show that the greater the interdependence between parent and IJV subsidiary, the greater will be the benefits that accme from at least some degree of integration of HRM practices across these units, and in this respect HRM practices in Sino-foreign UVs follow global management standards that are not significantly affected by the nationality of ownership. Acknowledgements Grateful acknowledgement is made for funding provided by the UK Economic & Social Research Council to defray the cost of the research from which this paper is drawn. The author would like to thank all those who have contributed to this paper: Dr John Fawn, Prof. John Child, Prof. Malcolm Wamer and Ms Shirley Hockin for their valuable comments and Prof. John Child, Dr Yuan Lu, Mr Shiquan Zhang and Mr Xinjian Wang for their assistance in fieldwork. References
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