Strategic Transfer of HRM Practices for Competitive Advantage: Implications for Sequential Transfer of Japanese HRM to China and Taiwan

Abstract

This paper explores how performance of Japanese affiliates in China and Taiwan can be affected by HRM practices transferred from Japanese parent firms. The following four sets of HRM practices were found to constitute critical resources transferred from the Japanese parent firms: educational investment (EDUC), in-company welfare (WELF), long-term commitment incentives (COMM), and on-the-job problem solving (SOLV). Results of regression analyses based on samples of Japanese affiliates in China (n=229) and Taiwan (n= 57) revealed that the transfer of the SOLV resource had a significant and positive contribution to affiliate's financial performance. Moreover, the result of a path analysis indicated that remaining three HRM resources were working for underpinning the function of the problem solving resource. Then this set of HRM resources contributed to the formation of an integrated HRM system within foreign affiliates, which conferred economic benefits to them. Results of this study contributed to understand the mechanism of gaining competitiveness through transferring HRM resources strategically from Japanese parents to overseas affiliates based on the sequential transfer model of HRM resources by shifting the contents of transfer from the basic to instrumental resources.