Industry- and firm-level determinants of employment relations in China: a two-level analysis

Abstract

Factors influencing the adoption of human resource management (HRM) policies and practices are nested within the multilevel contexts of firms and industries. Institutional theory focuses on environmental pressure and suggests that an organization’s choice of an HR system is partly attributable to mimetic isomorphism. This paper contributes to the strategic HRM literature by estimating the relative effects of industry-level isomorphism and firm-level contingencies on employers’ choice of labor contracts. Drawing on different theoretical perspectives, this study examines multilevel environmental and organizational factors as determinants of HR systems and tests their impacts on the use of short-term labor contracts and weighted average labor contract duration, using a survey of 313 manufacturing plants in China. Utilizing a hierarchical linear model, our analysis shows that while most of the variance in HR systems occurred at the firm level, approximately 7% of the total variance in the four HR programs we studied are explained by industry-level factors. Findings suggest that international competitive pressure, capital intensity, firm size, unionization and ownership type have significant effects on use of labor contracts in a manufacturing context.