HRM lives inside and outside the firm: employers, skill shortages and the local labour market in China

Abstract

We examine the experiences of foreign-invested enterprises with localized shortages of skilled process workers in a local labour market in China: Suzhou Industrial Park (SIP). In particular, we examine how they respond to three major challenges: deficiencies in the vocational education and training system (VET); provision of workplace-based training; and poaching of skilled workers by other companies. We statistically examine employers’ responses to these challenges by using five independent variables: firms’ duration in SIP; size of firms’ skilled workforces in SIP, employers’ experiences of recruitment difficulties; employers’ perceptions of VET deficiencies; and employers’ experiences of employee poaching by other employers. Our findings show a range of approaches within firms that both confirm and contradict the economics-oriented human resource management (HRM) literature and recent discussion on the effects of Confucian values on HRM. As well, more innovatively, we find that firms use their HRM practices to link their internal labour markets and the local external labour market. Moreover, these firms engage with local institutions to meet their market-oriented requirements, suggesting the need for a more locationally sensitive approach to ‘HRM with Chinese characteristics’.