An empirical study of human resource management practices in family firms in China

Abstract

The purpose of this study is to identify factors affecting the formalization of human resource management (HRM) practices in family firms. Our study of 205 family firms in the People's Republic of China suggests that firm size shows a significant, positive relationship to HRM formality, while firm location shows no effect. With resource advantages, large firms are able to adopt more formal and sophisticated HRM practices that enable them to gain legitimacy and social acceptance as well as coordinate and control their expanding workforce and complexity effectively. In contrast, informal HRM of small firms not only enables them to manage their resource constraints but allows much needed flexibility to respond to the country's ever-changing business environment. The lack of location effect, however, appears to demonstrate that the adoption and diffusion of formal HRM practices will likely take some time to manifest even in the more industrialized regions of the country, given the unique historical and cultural heritage deeply embedded in the minds of the Chinese and Chinese firms. The findings of this study clearly demonstrate the mixed influences on HRM of traditional Confucian values and the market ethic underpinning the constantly changing social and economic milieux of China.