Strategic human resource management (SHRM) is defined as the pattern of planned human resource deployments and activities intended to enable an organization to achieve it’s goals (Ngo, Lau, & Foley, 2008, p. 73). It has been argued that when a firm’s human resource practices are consistent with each other and with the firm’s strategic goals, organizational efficiency and performance will be enhanced. The positive relationships between SHRM and HR practices with firm performance have been demonstrated in the West, and more recently in China. This literature review will explore the Strategic Human Resource Management (SHRM) system abroad in the People’s Republic of China, assessing the impact of these practices on firm's performance in state and privately owned enterprises.
According to Ngo, Lau, & Foley, “before the economic reform, state-owned enterprises had dominated the Chinese economy. The operation and management of the companies were strongly influenced by traditional culture and communist ideology. The Chinese culture has been marked by collectivism and Confucianism, with an emphasis on respect for hierarchy, in-group harmony, reciprocity, and loyalty. Such organizations include privately and state-owned firms” (Ngo et al., 2008). Furthermore, prior to the current economic reforms, these firms adopted a system that resembled an internal employment mode, which was often called the ‘iron rice bowl’ and was characterized by the centralized assignment of labor, unified wage standards, internal training and promotion, and lifelong employment (Li, Lam, Sun, & Liu, 2008, p. 338).
Ngo, Lau, and Foley focused on examining strategic human resource management (SHRM) and human resource practices in the People’s Republic of China to assess the impact of these practices on firm performance and the employee relations climate. They also tested whether the firm ownership moderates the above relationships. Results from a sample of Chinese firms from varied industries and regions showed that the levels of adoption of SHRM and HR practices were lower in state-owned enterprises than in foreign-invested enterprises and privately-owned enterprises (Ngo et al., 2008). According to Liang, Marler, & Zhiyu, in retrospect to economic and institutional theoretical perspectives, there are greater arguments for adoption of fewer practices or different HR practices (SHRM), particularly for state-owned enterprises and privately-owned enterprises in China. State-owned enterprises are still bound by old social contracts and the "old" China HRM model based on the iron rice bowl employment policies and the cadre system. Moreover, further review identifies several obstacles that make the U.S.-based universal best-practice HRM model more costly to adopt without some adaptation (Liang, et al., 2012).
Ngo, Lau, and Foley