Institutions, complementarity, human resource management and performance in a South-East Asian Petrostate: the case of Brunei

Abstract

This is a study on the incidence and impact of specific sets of HR practices on organisational performance (OP) across different types of firm, within an emerging market setting, where institutional arrangements are fluid and developing. The literature on comparative capitalism suggests that, within advanced societies, formal and informal regulations are mutually supportive, and will be sustained by associated HR systems, optimising OP. In contrast, in settings where institutional arrangements are weaker, there will not be the same incentives for disseminating mutually supportive HR bundles, and when these do exist, they are unlikely to yield any better outcomes. We found that this was indeed the case in the petrostate of Brunei as the usage of integrated HR models did not work better than individual interventions. Whilst it is often assumed that, in petrostates, the primary focus of institution-building is to service the needs of the oil-and-gas industry, we found no evidence to suggest that integrated HR systems were any more effective there; this may reflect the extent to which the industry’s HR needs may be simply resolved through turning to overseas labour markets – both for skilled and unskilled labour. At the same time, we found that the efficacy of HR practices varied according to firm characteristics: even in challenging contexts, firms may devise their own solutions according to their capabilities and endowments.