Abstract
This study tests two competing theories concerning human resource practices and firm performance--best practice theory and contingency theory. Using data collected from 201 firms in eastern China, the findings show that best practice theory applies for human resource practices such as emphasis on training and development, pay competitiveness, incentive pay, long-term orientation on human resources management. However, team work, job security and promotion from within, which are assumed to be effective human resource practices in the West, do not significantly contribute to firm performance in this context. Moreover, contingency theory is not supported for all three basic contingencies: business strategy, ownership and industry, except that long-term orientation of human resources management is more effective in state-owned enterprises than it is in joint ventures. Human resource practices in the current Chinese state-owned enterprises and joint ventures are compared with each other and also with the effective human resource practices found in this study. Implications for managers and future research directions are addressed.
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