Paternalistic and transactional HRM: the nature and transformation of HRM in contemporary China

Abstract

Drawing on institutionalism and path dependency theory, this paper provides a conceptual framework to identify and explain the nature and transformation of Chinese human resource management (HRM). The framework is applied to case studies of three enterprises that are either state-owned or state-controlled. The paper groups HRM in contemporary China into three categories: Paternalistic; Transactional; and Differentiated with the last one involving a mix of paternalistic and transactional HRM policies and practices. The paper argues that, as China's economy has evolved from paternalistic socialism to market socialism in recent decades, Chinese HRM has responded, moving along the continuum from paternalistic to transactional HRM. The case studies reveal the impact on HRM practice of both the legacy of paternalistic socialism and three decades of marketization. The case study evidence clearly indicates that paternalistic HRM, common in state-owned enterprises in the pre-reform era, has evolved towards either transactional or diffe\\rentiated HRM. Among the changes in HRM practice is a decline in the welfare benefits and employment security of workers, the former ‘masters of society’.