International Human Resource Management in South Korean Multinational Enterprises

International Human Resource Management in South Korean Multinational Enterprises

Haiying Kang Jie Shen International Human Resource Management in South Korean Multinational Enterprises

Haiying Kang School of Management, RMIT University, Melbourne, Australia Jie Shen Shenzhen Audencia Business School (SABS), Shenzhen University Shenzhen, China ISBN 978-981-10-3092-5 ISBN 978-981-10-3093-2 (ebook) DOI 10.1007/978-981-10-3093-2 Library of Congress Control Number: 2017932758 The Editor(s) (if applicable) and The Author(s) 2017 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Hiroshi Watanabe Printed on acid-free paper This Springer imprint is published by Springer Nature The registered company is Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Foreword I am very pleased to write a Foreword for International Human Resource Management in South Korean Multinational Enterprises by Haiying Kang and Jie Shen. This book is one of the first scholarly efforts to outline and examine the international HRM practices used by managers in South Korean multinational enterprises operating in China. Using both interview data and survey data, the authors discuss IHRM policies and practices and provide examples of good and bad outcomes. This book is underpinned by a strategic approach to HRM, focusing on the linkages between strategy, people, and performance. The South Korean MNEs in this study were operating in China with South Korean expatriate managers and host-country Chinese nationals. A particular contribution of this book is the focus of the authors on the willingness of host-country nationals to assist expatriate managers. There is a lack of research on this issue, and the discussion on this topic is one of the key contributions of this book. Readers will be engaged by the relevant examples that appear throughout the book and by the rigorous intellectual and practical approach that the authors apply to their research findings, linking key IHRM concepts to the outcomes of their empirical research. Professor Jie Shen has published extensively in the field of international human resource management. This book will certainly be appreciated by many researchers and managers. Peter J. Dowling International Management & Strategy La Trobe University Melbourne, VIC, Australia v

Foreword Dr. Haying Kang and Professor Jie Shen have written a very interesting research book titled International Human Resource Management in South Korean MNEs. Both authors have published extensively in the field of international human resource management, and Professor Shen is considered a world-class expert in this field. This book presents an interesting analysis of how South Korean MNEs manage international human resources management in their international subsidiaries. Past IHRM literature has focused on how MNEs based in Western countries have managed IHRM. With the emergence of countries such as China, South Korea, and India, researchers are now interested to know whether MNEs originating in these countries exhibit different IHRM approaches. Hence, this book is very important and relevant. The book conducts a comprehensive analysis of a range of IHRM policies and practices, including international staffing, international training and development, international performance appraisal, and international compensation. The authors have appropriately chosen China as the host nation. China is now a major force in world markets and is the largest recipient of foreign direct investment. It is the ideal experimental field for understanding how foreign MNEs manage IHRM overseas. This book analyzes the reasons behind South Korean MNEs decisions on IHRM policies and practices. For example, the authors argue that the relative strength of the South Korean economy over the Chinese economy is a major reason South Korean MNEs transfer some of their HRM practices to Chinese subsidiaries. Such an analysis enriches the IHRM vii

viii FOREWORD literature and enables companies across the world to develop effective IHRM strategies. This book also explores the effects of IHRM practices on host-country nationals work outcomes. More specifically, this study explores the effects of IHRM on the willingness of HCNs to help expatriates. The book provides a better understanding of organizational contextual effect on HCNs attitudes and behaviors toward expatriates. The existing IHRM models focus on strategic integration. This study considers the interests of employees and external stakeholders by exploring the effects of high-commitment IHRM and socially responsible IHRM on HCNs willingness to help expatriates. This is certainly a pioneering research. The authors should be commended for writing a book that fills an important gap in IHRM research. Very little is known about the IHRM policies South Korean MNEs adopt in their overseas operations. After reading this book, companies all over the world will be able to deal more effectively with South Korean MNEs and enhance the value of joint venture partnerships. Brian D Netto Curtin Graduate School of Business Curtin University Perth, WA, Australia

내벗이몇인가하니수석과송죽이라동산에달오르니그더욱반갑구나두어라이다섯밖에또더하여무엇하리 You ask how many friends I have? Water and stone, bamboo and pine. The moon rising over the eastern hill is a joyful comrade. Besides these five companions, what other pleasure should I ask? Yun Seondo ( 윤선도, 1587 1671) ix

Acknowledgment We wish to thank a number of people who without their contributions to our inspiration and support this book could not have been written. In particular, we thank Professor John Benson who has collaborated with us on non-traditional expatriates. We would like to thank Professor Peter Dowling for working with us on exploring the relationships of international HRM practices with employee outcomes and for endorsing this book. We sincerely thank Professor Brian D Netto who has been supportive to our research and also endorses this book. Above all we would like to express our gratitude to our families, Yingai Quan, Changlong Kang, Chengri Quan, Ci Song, and Ben Shen, who have provided tremendous support and encouragement to us. It is to them that we hereby dedicate this work. Last but not least, our research was partially supported by the Chinese National Science Foundation Grant 71572157 and Key Chinese National Science Foundation Grant 71132003. Haiying Kang Jie Shen xi

Contents 1 Introduction 1 2 Methodology 27 3 International Recruitment and Selection Policies and Practices 51 4 International Training and Development Policies and Practices 85 5 International Performance Appraisal Policies and Practices 113 6 International Reward and Compensation Policies and Practices 141 7 The Use and Management of Non- traditional Expatriates Working for South Korean MNEs in China 167 xiii

xiv Contents 8 The Effects of IHRM on Employee Outcomes 191 9 Conclusions 213 Bibliography 235 Index 273

Authors Dr. Haiying Kang, Lecturer of HRM at RMIT, Melbourne, Australia. Her research interest is international HRM. Dr. Kang has published her research in the International Journal of Human Resource Management, Human Resource Management, Thunderbird International Business Review, and Asia Pacific Business Review. Dr. Jie Shen, Professor of HRM at Shenzhen International Business School, Shenzhen University, and Adjunct Professor of HRM at the University of South Australia. Previously, he held positions as Professor of HRM and Associate Professor of HRM at Curtin University, Monash University, and the University of South Australia. His main research interests are HRM, international HRM, and corporate social responsibility. He has published over 70 refereed articles in journals, such as the Journal of Management, Human Resource Management, Journal of Business Ethics, International Business Review, International Journal of Human Resource Management, and Group & Organization Management. His is the author of the following books: International HRM in Chinese MNEs, Human Resource Management Strategic Integration of Indian Organizations, and Labour Disputes and Their Resolution in China. xv

Abbreviations BARS BHMC CCT CFA CFI CMV CSR EMBA FDI FIE GFI GDP HCN HRM IHRM JV KPI MBA MBO MNE OBOR POE POS PRP RMSEA SME SOE Behaviorally Anchored Rating Scale Beijing Hyundai Motor Company Cross-cultural training Confirmatory factor analysis Comparative fit index Common method variance Corporate social responsibility Executive Master of Business Administration Foreign direct investment Foreign-invested enterprise Goodness of fit index Gross domestic product Host-country national Human resource management International human resource management Joined venture Key performance indicator Master of Business Administration Management by objective Multinational enterprise One-belt, one-road Private-owned enterprise Perceived organizational support Performance-related pay Root mean square error of approximation Small- and medium-sized enterprise State-owned enterprise xvii

xviii ABBREVIATIONS SEM SIHRM SPSS SRIHRM SRMR TLI TCN UniSA UK USA Structural equation modeling Strategic international human resource management Statistical Product and Service Solutions Socially responsible international human resource management Standard root mean square residual Tucker Lewis index Third-country national University of South Australia United Kingdom United States of America

List of Figures Fig. 1.1 Stages of Chinese inward FDI (1979 1999) 17 Fig. 8.1 Standardized structural coefficients (Note: OI, organizational identification; POS, perceived organizational support) 205 xix

List of Tables Table 1.1 Transition of HRM in South Korea 11 Table 1.2 South Korean outward FDI (1980 2015) (unit: 1000 US$) 13 Table 1.3 Overseas investment of South Korean MNEs in different industries in 2015 (unit: 1000 US$) 14 Table 1.4 South Korean direct investment in China (unit: 1000 US$) 15 Table 1.5 Evolution of HRM in China 16 Table 2.1 Company profile 35 Table 2.2 Interviewees profiles (September October 2011) 36 Table 2.3 Interviewees profiles (December 2013 May 2014) 37 Table 2.4 Means, standard deviations, reliabilities, and correlations between variables 39 Table 2.5 Coding examples 41 Table 3.1 Advantages and disadvantages of different staffing approaches 62 Table 3.2 Nationalities of managers in the case companies in 2011 63 Table 3.3 Expatriate turnover rate from 2007 to 2011 73 Table 4.1 A model of training rigor 94 Table 5.1 Performance appraisal criteria in sample MNEs 127 Table 5.2 Extent of localization and standardization of the international performance appraisals of South Korean MNEs in China 131 Table 6.1 Expatriates compensation 154 Table 6.2 HCNs compensation 154 Table 6.3 Advantages and disadvantages of the international reward and compensation approaches 156 Table 7.1 Number of traditional and non-traditional expatriates used in the Chinese subsidiaries from 2004 to 2013 171 Table 8.1 Means, standard deviations, reliabilities, and correlations between variables 201 Table 8.2 Comparisons of the measurement models 202 xxi