Case Study

T here is a growing body of research on strategic human resource manage- ment (SHRM). It is increasingly ac- knowledged that people are valuable resources for business success and

can be a source of sustainable competitive advantage for a firm (Ulrich, 1987; Wright & McMahan, 1992). Firms employing HRM practices that are internally consistent and compatible with firm strategy are believed to be superior performers. SHRM links human resource management practices with

the business strategy and mobilizes the abil- ity and actions of organizational members toward the firm’s goals (McMahan, Virick, & Wright, 1999; Ulrich, 1987). By facilitating the management process, it also has a criti- cal impact on initiating organizational change and development and, thus, lever- ages the implementation of a firm’s strategy (Lengnick-Hall & Lengnick-Hall, 1988). SHRM affects the behavior of individuals in their efforts to formulate and implement the strategies (Schuler, 1992) as well.

THE ROLE OF CORPORATE

CULTURE IN THE PROCESS OF

STRATEGIC HUMAN RESOURCE

MANAGEMENT: EVIDENCE FROM

CHINESE ENTERPRISES

L I - Q U N W E I , J U N L I U , Y I C H I Z H A N G , A N D R A N D Y K . C H I U

Extant research on strategic human resource management (SHRM) has pri- marily focused on the content of SHRM (best practices, bundles of practices, etc.) and its effect on firm performance. Little research has examined the SHRM process so as to better understand how SHRM is adopted and imple- mented and what impact it has on organizational processes and outcomes. This article examines the role of corporate culture in the SHRM adoption and implementation process. Empirical results from a sample of 223 Chinese en- terprises indicate that corporate culture has an impact on the adoption of SHRM, and that different types of culture affect the SHRM process differently. Specifically, group and developmental cultures have positive effects on the adoption of SHRM, but the effect of hierarchical culture is not significant. De- velopmental culture is also found to have a direct effect on firm performance. This study offers significant implications for HRM in China and other dynamic and emerging economies. © 2008 Wiley Periodicals, Inc.

Correspondence to: Dr. Li-Qun Wei, Department of Management, Hong Kong Baptist University, Kowloon Tong, HKSAR, PRC, Phone: +852 3411 7566, Fax: +852 3411 5583, E-mail: [email protected] or Jun Liu, E-mail: [email protected] if there are further inquiries.

Human Resource Management, Winter 2008, Vol. 47, No. 4, Pp. 777–794

© 2008 Wiley Periodicals, Inc.

Published online in Wiley InterScience (www.interscience.wiley.com).

DOI: 10.1002/hrm.20244

778 HUMAN RESOURCE MANAGEMENT, Winter 2008

Current research, however, primarily has examined the content of HRM systems, in- cluding best practices, HRM systems, and bundles of HRM practices. These practices have been found to be positively associated with firm performance (Delery & Doty, 1996, Huselid, 1995) and have been tested in vari- ous contexts, including China (Bjorkman & Fan, 2002; Law, Tse, & Zhou, 2003). The process of SHRM, however, has been rela- tively neglected (Bowen & Ostroff, 2004).

Drawing on the contingency perspective, scholars have examined some moderating ef- fects on the relationship between SHRM and firm performance, such as the role of strategy

(Delery & Doty, 1996; Huselid, 1995; Martell, Gupta, & Carroll, 1996), country origin, firm size, and corporate culture (Bae, Chen, Wan, Lawler, & Walumbwa, 2003; Chan, Shaffer, & Snape, 2004; Panayotopoulou, Bourantas, & Papalexandris, 2003). However, examinations of these moderators provide evidence of the condi- tions affecting the strength of the SHRM-performance link only, and fail to explore what happens in the SHRM process.

Mediation study has been ar- gued to be process analysis. Re-

sponding to a call to uncover the “black box” of the SHRM-performance link, re- searchers have examined some mediating effects of the SHRM-performance relation- ship. For example, Huselid (1995) tested the mediating role of employee turnover and productivity on the relationship be- tween high-performance work practices (HPWPs) and financial performance. Collins and Clark (2003) tested and con- firmed the mediating effect of the internal and external social network on the rela- tionship between a set of network-building HR practices and firm performance. Yet, these studies employed best practices or specific sets of HRM practices, and certain individual factors were observed only as mediating the SHRM process. There has been no systematic study of any organiza- tional-level factor to uncover how the

SHRM process is influenced and has an im- pact on the whole organization.

To fill this gap, this study examines an important organizational factor, corporate culture, to test its role in SHRM. As suggested by Bowen and Ostroff (2004), corporate cul- ture may act as an antecedent to SHRM or a mediator to the link between SHRM and or- ganizational performance. As a “higher-order social structure” (Bowen & Ostroff, 2004, p. 205), corporate culture reflects the values and beliefs embedded in an organization, shapes people’s behavior, and, thus, affects performance. Unlike prior studies regarding culture as a moderator (Chan, Shaffer, & Snape, 2004), this one proposes that corpo- rate culture not only influences the imple- mentation of SHRM, but is also directly in- fluenced by the implementation of SHRM. Moreover, since corporate culture reflects the beliefs and values of the corporate leader, it is directly linked to firm strategy, thus influ- encing the adoption of SHRM.

According to social context theory (Fer- ris, Hochwarter, Buckley, Harrell-Cook, & Frink, 1999), corporate culture represents a kind of organizational social environment influencing the establishment of an organi- zation’s HRM system. Different types of cul- ture may have diverse effects on the adop- tion of HRM practices with different emphasis and orientations. For example, group culture may facilitate the adoption of HRM practices by emphasizing the reward of employee loyalty and commitment to the or- ganization. On the other hand, when SHRM is implemented, the employees guided by the HRM practices and policies may also shape the corporate culture. Corporate cul- ture will be strengthened, since the HRM practices are designed to align employees’ values and attitudes with corporate values and strategic goals. Organizational outcome is, thus, improved with the strengthened corporate culture. To this end, corporate cul- ture may act as a mediator, carrying over the effects of SHRM on firm performance. De- spite this theoretical argument, it is un- known whether corporate culture, a key or- ganizational factor, will more likely influence the adoption of SHRM or be influ-

To fill this gap, this

study examines an

important

organizational

factor, corporate

culture, to test its

role in SHRM.

Human Resource Management DOI: 10.1002/hrm

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 779

enced by the implementation of SHRM, es- pecially in the emerging context of China. This study, then, will empirically test the role of corporate culture in these two sub- processes: the adoption and implementation of SHRM.

The conceptual model of this study is il- lustrated in Figure 1. To examine the role of corporate culture in the SHRM process, we tested two models: one with corporate cul- ture as a determinant of SHRM and the other with corporate culture as a mediator in the SHRM-performance link. The fitness of these two models will be observed and the media- tion effects examined.

The fact that China was chosen as the context for this study is particularly relevant, since HRM in Chinese enterprises has been going through continuous changes since the opening up of China and the beginning of business reforms in 1978. Throughout China’s transition to a market economy, Chi- nese firms have been facing strong competi- tion in both the local and global markets. Some firms are actively realigning their re- sources, systems, and even their corporate culture to fit market needs, while other firms, especially state-owned enterprises, are less market-oriented and still lag behind in terms of upgrading their management sys- tems (Wei & Lau, 2005). This economic and business transformation provides researchers with the opportunity to explore factors that

may influence the adoption and effective implementation of SHRM in China.

Current literature indicates that SHRM is being adopted in Chinese enterprises and is having a positive impact on firm perform- ance (Bjorkman & Fan, 2002; Ding & Akhtar, 2001, Wei & Lau, 2008), but there appears to be no systematic study of factors, such as corporate culture, affecting the SHRM process in China. To understand why organi- zational performance in China can benefit from SHRM, there is a need to investigate how SHRM is adopted and implemented (Zhu, Cooper, De Cieri, & Dowling, 2005). This study not only examines the effect of different types of corporate culture on SHRM, but also contributes to the under- standing of the SHRM processes in an emerg- ing economy context. Given that most cur- rent studies about SHRM are conducted on firms from advanced market economies, this study contributes to the study of SHRM in a different context (Tsang & Kwan, 1999).

Cultural Determinism and the Adoption of SHRM

Corporate culture has been defined as the basic assumptions and values of business leaders (Denison, 1996). It refers to the un- derlying values and beliefs held by business leaders that serve as a foundation of business management systems and practices exempli-

Human Resource Management DOI: 10.1002/hrm

FIGURE 1.The Conceptual Model of the Study: The Role of Corporate Culture in SHRM Process

780 HUMAN RESOURCE MANAGEMENT, Winter 2008

fying those basic principles (Denison, 1990). Since strategic decisions are made by corpo- rate leaders, there is a connection between corporate culture and strategy. Corporate culture is the core of a firm’s endeavor to im- prove organizational effectiveness and a source of competitive advantage (Barney, 1986). There are studies linking corporate culture to organizational outcome (Denison,

1984, 1990; Kravetz, 1988; Smith, Collins, & Clark, 2005). For ex- ample, relying on both qualita- tive and quantitative evidence, Denison (1996) examined four culture traits—adaptability, mis- sion, involvement, and consis- tency—and found that culture has a positive impact on organi- zational effectiveness. Examined as one of several intangible orga- nizational elements, corporate culture was found to have a strong impact on organizational performance (Carmeli & Tishler, 2004). Recently, Zhou, Tse, and Li (2006) studied a sample of Chi- nese firms and found that a par- ticipative culture plays a role in the organizational change process, influencing the subse- quent performance of the firm.

A crucial component of the social context of an organization,

corporate culture influences and is affected by many organizational aspects, including job performance, role expectations, and per- ception about business practices (Hofstede, Neuijen, Ohayv, & Sanders, 1990). According to the competing values culture instrument (Quinn & Spreitzer, 2001), corporate culture can be classified into at least three types: group culture, developmental culture, and hierarchical culture. Group culture has a people orientation, emphasizing the estab- lishment of a family-like environment for employees. A developmental culture empha- sizes the entrepreneurial behaviors of em- ployees and a commitment to innovation and development. In such an environment, which emphasizes a regular review of the firm’s strategy and objectives, employees are

encouraged to take risks and acquire new re- sources to innovate. Correspondingly, organ- izations with a hierarchical culture pay at- tention to the establishment of procedures and emphasize rules and regulations.

Corporate culture reflects certain deeply embedded patterns of management behav- ior. Although some scholars regard culture and strategy as synonymous (Greiner, 1983), others argue that corporate culture precedes strategy formulation (Saffold, 1988). Some believe that strategic decisions are made as a reflection of the mind-set of corporate lead- ers (Schein, 2004). Since culture “defines the way things are done,” it influences how busi- ness leaders formulate their firm’s strategic goals. And since SHRM represents a set of in- ternally consistent HR practices based on firm strategy, it is guided by firm strategy and, hence, influenced by corporate culture.

Values and orientations implied by a cor- porate culture are infused through the firm’s strategy, as well as through managerial prac- tices, such as HRM. SHRM may act as a medium for carrying over invisible corporate values and beliefs to employees. At this point, corporate culture is linked to the strategic process as well as to the organiza- tional outcome. Following this logic, corpo- rate culture is an antecedent of SHRM, which transfers the effect of corporate culture onto the performance of the firm.

H1: Corporate culture (whether group, develop- mental, or hierarchical) has a positive effect on the adoption of SHRM, and SHRM medi- ates the culture-firm performance link.

SHRM Implementation and Corporate Culture

Corporate culture is also a type of social con- trol that identifies behaviors and attitudes that are appropriate for an organization’s members to display (O’Reilly & Chatman, 1996). Corporate culture research focuses on understanding organizational identity and the collective commitment it facilitates (Schneider, 2000). The implementation of HRM is a process through which messages are communicated to employees about

SHRM may act as a

medium for carrying

over invisible

corporate values

and beliefs to

employees. At this

point, corporate

culture is linked to

the strategic

process as well as

to the organizational

outcome.

Human Resource Management DOI: 10.1002/hrm

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 781

which behaviors are important, expected, and reinforced (Bowen & Ostroff, 2004). Em- ployees in the same organization tend to communicate and learn from each other and, thus, exhibit similar patterns of behav- ior under the influences of corporate policies and procedures. These patterns of activities and employee behaviors then lead to an en- vironment in which most employees have similar understandings and beliefs; hence, the corporate culture is shaped.

The behavioral perspective of SHRM also emphasizes the realization of a firm’s strate- gic goals through appropriate employee be- haviors (Jackson & Schuler, 1995; Wright & McMahan, 1992). Certain HRM practices to elicit and reinforce different employee be- haviors and meet the requirements of differ- ent strategies are needed. SHRM practices and policies may create a situation where un- ambiguous information is communicated to employees regarding appropriate behavior regarding the firm’s strategy (Bowen & Os- troff, 2004, Tsui, Pearce, Porter, & Tripoli, 1997). When employees exhibit similar atti- tudes and behaviors in the organization, some patterns of behavior will be formed and the corporate culture is nurtured.

The implementation of SHRM would suggest that HRM policies and practices should be designed according to the firm’s strategy. As employees are mobilized to ex- hibit certain behaviors along with the HRM practices related to the firm’s strategy, they must possess a common mind-set. For exam- ple, if the firm intends to enhance its com- petitiveness, innovation and development would naturally be among the key strategic objectives for achieving this in a turbulent environment. Employees would be expected and motivated to acquire new resources, ini- tiate entrepreneurial activities, and identify and solve problems in a proactive way. By so doing, employees would have a shared un- derstanding of the strategic intent of HRM policies and procedures. As a result of these shared understandings and beliefs, a certain type of corporate culture would be nurtured and reinforced.

Research also indicates that firm per- formance can be enhanced if corporate cul-

ture can be cultivated to facilitate business development and innovation (Klein & Sorra, 1996; Schneider, Gunnarson, & Niles-Jolly, 1994). People are likely to perform better in the unthreatening and less distressing envi- ronment of a firm having an HR policy ori- ented toward caring for its employees. If the firm’s HR policies are targeted at developing systems and individuals with a change and innovation orientation, a developmental culture will be cultivated, which in turn al- lows the firm to improve performance. Cor- respondingly, in firms that are less aggressive in business reform and discourage innova- tion and entrepreneurship, a hierarchical culture will be developed.

H2: The implementation of SHRM has a positive effect on corporate culture (whether group, developmental, or hierarchical), and culture mediates the link between SHRM and firm performance.

Methodology

Data Collection

The data for this study were col- lected through a questionnaire survey of executive managers in China. The respondents were the CEOs and HR and finance direc- tors from the sample firms. Ques- tionnaires were mailed to 586 firms, with each firm receiving a set of two questionnaires: one for the chief HR manager and one for the CEO/finance manager. HR managers provided the SHRM-re- lated information, and the CEOs/finance di- rectors responded to another questionnaire related to basic business information and performance indicators. Both instruments included questions about corporate culture.

Of the 621 completed questionnaires that were returned, 367 were from HR man- agers and 254 from CEOs/finance managers. The response rate was 53.0 percent, which is good by survey research standards (Baruch, 1999; Roth & BeVier, 1998). After matching the HR manager and the CEO/finance man-

People are likely to

perform better in the

unthreatening and

less distressing

environment of a

firm having an HR

policy oriented

toward caring for its

employees.

Human Resource Management DOI: 10.1002/hrm

782 HUMAN RESOURCE MANAGEMENT, Winter 2008

ager questionnaires, we obtained 223 usable firms in the sample. The valid response rate of the study was 38.1 percent.

Sample

The sample included firms with various own- ership profiles, including state-owned enter- prises, foreign-invested enterprises, and pri- vate firms. Of the 223 firms, 66 (29.6%) were state-owned enterprises, 43 (19.3%) were for- eign-invested enterprises, and 106 (47.5%)

were private firms, and the re- maining are shareholding firms and others. These firms are lo- cated all over China and cover various industries. Manufacturing firms accounted for 24 percent of the sample; service firms ac- counted for 40.8 percent. The av- erage age of the firms was 14 years, with a standard deviation of 11. The average number of em- ployees of the sample firms was 1,264.

Measurement

The major constructs employed in this study included SHRM, cor- porate culture and firm perform- ance. An 11-item instrument on strategic human resource man- agement was adapted from the Strategic Human Resource Man-

agement Index developed by Huselid (1995) and the Strategic Human Resource Manage- ment Scale for Chinese businesses developed by Zhao (2001). The HR managers were asked to describe the extent to which their firms have adopted these practices on a five- point Likert scale, ranging from 1 = very low extent to 5 = very high extent (see the Ap- pendix for a list of the items). Cronbach’s re- liability coefficient was calculated, and the alpha value was .89, indicating acceptable measurement reliability.

Corporate culture was measured by items adapted from Quinn and Spreitzer (2001). The competing value culture model by Quinn and Spreitzer (2001) identified four

types of corporate culture: group, develop- ment, hierarchical, and rational culture. However, we employed only the first three types of culture only in this study, for they are particularly relevant to Chinese firms. Chinese culture is characterized by collec- tivism—that is, it has a long-term orienta- tion with an emphasis on rules and order. Hence, group and hierarchical culture can be found in many Chinese firms (Liu, Zhang, & Leung, 2006; Taylor, 2005; Wong, 1998). In recent years, with business reforms and mod- ernization, a developmental orientation has led some Chinese firms toward more aggres- sive competition (Lau, Tse, & Zhou, 2002). A rational culture, however, features a short- term orientation and quantitatively defined jobs and structure, with an emphasis on in- dividuals. Because of the incompatibility of rational culture with Chinese culture, we did not employ it in this study.

Both the HR managers and CEOs/finance directors were asked to assess their agreement with some descriptions of the values and ori- entations of management in their firms. Four items were used to measure each of the cul- ture scales. These items were rated on a five- point Likert scale, ranging from 1 = very low extent to 5 = very high extent. For justifying the propriety of the aggregated culture meas- ures and examining whether there was signif- icant between-company variance in each scale, three indices were calculated: intraclass correlation coefficient [1] and [2] (ICC[1] and ICC[2]) and within-group interrater reliability (Rwg) (Bartko, 1976; James, 1982; James, De- Maree, & Wolf, 1993). Results1 suggested those scales could be meaningfully aggregated to the group level. We calculated the means of scores provided by HR and CEOs/finance managers as the measure of corporate culture. The reliability alpha values of the three cul- ture scales were .83, .68, and .63, respec- tively—quite similar to those of the original scales by Quinn and Spreitzer (2001).

Prior research indicates that the subjective evaluation of firm performance by senior managers is highly correlated to objective measures (Venkatraman & Ramanujam, 1986; Wall et al., 2004). Perceptual assessment has been adopted by many researchers as a proxy

Both the HR

managers and

CEOs/finance

directors were

asked to assess

their agreement with

some descriptions

of the values and

orientations of

management in

their firms.

Human Resource Management DOI: 10.1002/hrm

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 783

for measuring firm performance, which is even a preferred choice in China because of low reliability of objective financial perform- ance disclosed by Chinese firms (Luo & Park, 2001, Peng & Luo, 2000). In this study, firm performance was measured by four indicators: net profit, new product development, effi- ciency, and return on assets (ROA). These as- pects were evaluated to capture a firm’s finan- cial status and potential for innovation. The CEOs/finance managers were asked to assess the firm by comparing its performance with the industry average during the year. All re- sponses were measured using a five-point Lik- ert scale. The alpha value for the scale was .75, indicating acceptable reliability.

Statistical Method

Using LISREL 8.50 (Jöreskog & Sörbom, 1993), we conducted confirmatory factor analyses (CFAs) to test the psychometric properties of those multi-indicator con- structs, which included all independent and dependent variables. We first ran an overall model with five latent factors and 27 indica- tors. The five-factor model fit the data rela- tively well (χ2(314) = 566.75, p < .05; compara- tive fit index [CFI] = .93, Tucker-Lewis index [TLI] = .92; root mean square error of ap- proximation [RMSEA] = .066) and demon-

strated a significant improvement from the null model. (See Table I for details.)

For testing the discriminant validity of the constructs, we compared the five-factor model with the other four alternative models: a three-factor model derived by combining the items for the three types of culture into one factor; a two-factor model derived by combining the items for SHRM and the three types of culture into one factor; a second- order model in which SHRM and three latent factors for culture at the first order were com- bined into one second-order factor; and fi- nally, a one-factor model combining all 27 items into a single factor. Results indicated that all the alternative models did not fit as well as the five-factor model. In addition, we used Akaike’s (1987) information criterion (AIC) to evaluate the relative fit of non-nested models (Jöreskog & Sörbom, 1993) and found that none of the alternative models fit as well as the five-factor model. This indicates the construct distinctiveness of SHRM, group cul- ture, developmental culture, hierarchical cul- ture, and firm performance. The fit indices of these models are presented in Table I.

Table II reports the means, standard devi- ations, and correlations of the major vari- ables. SHRM is positively correlated with all three types of culture (group culture, r =.34, p < .01; developmental culture, r =.36, p < .01;

Human Resource Management DOI: 10.1002/hrm

χ2 df RMSEA CFI TLI

1. Null model 2501.33 351

2. Five-factor model 566.75 314 .066 .93 .92

3. Three-factor model 631.39 321 .090 .84 .82

4. Two-factor model 702.45 323 .112 .71 .68

5. Second-order model 592.98 319 .080 .87 .85

6. One-factor model 781.32 324 .141 .62 .56

Five-factor model: The model consisted of one 11-item SHRM factor, three four-item culture factors, and one four-item performance factor. Three-factor model: All 12 items for three culture scales formed one combined factor. Two-factor model: Items for SHRM and for culture scales formed one combined factor. Second-order model: SHRM and three culture factors (at the first order) formed a second-order factor. One-factor model: All items were combined as one latent factor.

T A B L E I Comparison of Measurement Models

784 HUMAN RESOURCE MANAGEMENT, Winter 2008

Human Resource Management DOI: 10.1002/hrm

M ea

n S

D 1

2 3

4 5

6 7

8 9

10 11

12 1)

F ir

m a

g e

13 .5

8 10

.5 6

1. 00

2) S

O E

a .3

0 .4

6 .4

9* *

1. 00

3) F

o re

ig n

-i nv

es te

d

fi rm

sa .1

9 .4

0 –.

16 *

–. 32

** 1.

00

4) P

ri va

te fi

rm sa

.4 8

.5 0

–. 30

** –.

62 **

–. 47

** 1.

00 5)

M an

u fa

ct u

ri n

g fi

rm sa

.2 4

.4 3

.0 3

–. 07

–. 01

.0 5

1. 00

6) S

er vi

ce fi

rm sa

.4 1

.4 9

–. 01

.1 4*

–. 16

* .0

0 –.

47 **

1. 00

7) F

ir m

s iz

eb 5.

90 1.

42 .3

2* *

.3 2*

* .0

3 –.

32 **

.2 2*

* –.

20 **

1. 00

8) G

ro u

p c

u lt

u re

3. 72

.8 2

–. 09

–. 07

.1 3

–. 02

.0 4

–. 04

–. 09

(0 .8

3) c

9) D

ev el

o p

m en

ta l

cu lt

u re

3. 62

.8 2

–. 05

.0 3

.0 3

–. 04

.1 2

–. 13

–. 03

.4 2*

* (0

.6 8)

c

10 )

H ie

ra rc

h ic

al c

u lt

u re

3. 54

.8 5

.0 6

.0 6

–. 01

–. 03

.0 6

–. 09

.0 5

.3 0*

* .3

0* *

(0 .6

3) c

11 )

S tr

at eg

ic H

R M

3. 48

.7 1

–. 05

–. 04

.0 7

.0 3

.1 3*

–. 08

–. 03

.3 4*

* .3

6* *

.1 6*

(0 .8

9) c

12 )

Fi rm

p er

fo rm

an ce

3. 37

.8 9

.0 1

.0 2

.0 4

–. 02

.0 9

–. 10

.0 0

.1 6*

.2 8*

* .0

8 .3

2* *

(0 .7

5) c

** C

o rr

el at

io n

is s

ig n

ifi ca

n t

at t

h e

0. 01

le ve

l ( tw

o -t

ai le

d ).

* C

o rr

el at

io n

is s

ig n

ifi ca

n t

at t

h e

0. 05

le ve

l ( tw

o -t

ai le

d ).

a D

u m

m y-

co d

ed .

b F

ir m

s iz

e is

c al

cu la

te d

b y

th e

lo g

o f

th e

to ta

l n u

m b

er o

f em

p lo

ye es

. c Va

lu es

in t

h e

p ar

en th

es es

a re

t h

e re

lia b

ili ty

c o

ef fi

ci en

ts (

C ro

n b

ac h’

s al

p h

a) o

f th

e co

n st

ru ct

s.

T A

B L

E

I I

M ea

ns , S

D s,

a nd

C or

re la

tio ns

A m

on g

Va ri

ab le

s

Culture as a Determinant of SHRM

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 785

and hierarchical culture, r =.16, p < .05). Group and developmental culture are posi- tively correlated to firm performance (r = .16, p < .05 for group culture, r = .28, p <.01, for development culture), while the correlation between hierarchical culture and firm per- formance is not significant. The correlation coefficient between SHRM and firm perform- ance is .32 (p < .01). The three types of culture correlate with each other as well (correlation coefficients range from .30 to .42, p < .01).

Data Analyses and Results Report

We employed LISREL 8.50 to test the relation- ships among corporate culture, SHRM, and firm performance. Structural equation model- ing is an ideal technique to analyze our data, given the multiple correlated independent variables (IVs) and dependent variables (DVs) in our study. Unlike in conventional meth- ods, such as multiple regressions, some pre- dictor variables needed to be controlled to generate unique variance because of the IVs.

In LISREL, there is no need to introduce con- trol variables, since the technique is to repro- duce the real (observed) relationships among the targeted IVs and DVs according to the par- simonious structural model (Bollen, 1987).

We adopted Kelloway’s (1998) method of examining mediation effects to test the two mediated models with SHRM and corporate culture as the mediator, respectively. Specifi- cally, we tested not only the mediated model, but also the partially mediated models by adding the path(s) of IV(s) to performance to the mediated model. The nonmediated mod- els were further tested by removing the path(s) of mediator(s) to firm performance from the partially mediated model. By evalu- ating model fitness, model comparison, and changes in path-effect size, we could deter- mine whether there was any mediation ef- fect. Two sets of structural equation modeling (SEM) analyses were conducted, separately, for testing Hypotheses 1 and 2. Results for testing the determinant role of corporate cul- ture (Hypothesis 1) are shown in Table IIIa,

Human Resource Management DOI: 10.1002/hrm

DV SHR Performance

IV Group Culture

Mediated model .32** --- Partially mediated model .32** .00 Nonmediated model .35** .11*

Developmental Culture Mediated model .37** --- Partially mediated model .35** .25* Nonmediated model .39** .31**

Hierarchical Culture Mediated model .02 --- Partially mediated model .04 –.06 Nonmediated model .03 –.04

SHR Mediated model --- .41** Partially mediated model --- .32** Nonmediated model --- ---

Model fit: Mediated model: Chi-square = 585.45, df = 320, RMSEA = .074, CFI = .90, TLI = .89. Partially mediated model: Chi-square = 578.81, df = 317, RMSEA = .072, CFI = .91, TLI = .90. Nonmediated model: Chi-square = 584.02, df = 318, RMSEA = .074, CFI = .90, TLI = .89.

T A B L E I I I a

786 HUMAN RESOURCE MANAGEMENT, Winter 2008

and those for testing culture as the mediator (Hypothesis 2) are given in Table IIIb.

Table IIIa presents the results for testing the culture-SHRM-performance link. Accept- able fit indices can be observed for the par- tially mediated model. Its difference from the mediated model is statistically insignificant (∆χ2(∆df) = 6.64(3), p > .05), which indicates that the paths from culture to firm performance can be eliminated from the baseline model (partially mediated model) without damage to the model fit. In contrast, the comparison be- tween the partially mediated model and the nonmediated model demonstrates a signifi- cant difference (∆χ2(∆df) = 5.21(1), p < .05), which suggests the path from SHRM to firm performance should not be removed. Accord- ing to the parsimony rule of evaluating SEM models, the mediation model is preferable. Hence, culture is an antecedent of SHRM.

By observing the change of effect sizes in Table IIIa, we learn that the significant effect (.11, p < .05, the nonmediated model) from

group culture to firm performance becomes insignificant in predicting firm performance (.00, p > .05, the partially mediated model) after SHRM is introduced. Similarly, the ef- fect from developmental culture to firm per- formance becomes weaker (from “.31, p < .01” to “.25, p < .05”). In contrast, the effect of hierarchical culture on firm performance does not change with the introduction of SHRM. In addition, the mediation model demonstrates that both developmental cul- ture and group culture have positive effects on SHRM (.37, p < .01; .32, p < .01), while the effect of hierarchical culture is not signifi- cant. SHRM has a positive effect on firm per- formance (.41, p < .01). Given this evidence, we conclude that Hypothesis 1 is partially supported. SHRM plays a full mediation role between group culture and firm perform- ance, a partial mediation role between devel- opmental culture and firm performance, and no mediation role between hierarchical cul- ture and firm performance.

Human Resource Management DOI: 10.1002/hrm

Culture as a Mediator to SHRM-Performance Link

DV Group C Develop C Hier C Performance IV

SHR Mediated model .59** .64** .36** --- Partially mediated model .57** .61** .38** .37** Nonmediated model .60** .68** .35** .39**

Group Culture Mediated model --- --- --- .07 Partially mediated model --- --- --- –.01 Nonmediated model --- --- --- ---

Developmental Culture Mediated model --- --- --- .44** Partially mediated model --- --- --- .22 Nonmediated model --- --- --- ---

Hierarchical Culture Mediated model --- --- --- –.08 Partially mediated model --- --- --- –.10 Nonmediated model --- --- --- ---

Model fit: Mediated model: Chi-square = 612.45, df = 318, RMSEA = .078, CFI = .84, TLI = .81. Partially mediated model: Chi-square = 600.44, df = 317, RMSEA = .076, CFI = .88, TLI = .86. Nonmediated model: Chi-square = 613.75, df = 320, RMSEA = .076, CFI = .88, TLI = .86.

T A B L E I I I b

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 787

Table IIIb presents the results for testing the SHRM-culture-performance link. None of the three models fits perfectly well, since all CFIs and TLIs are below the critical value— that is, .90. In addition, model comparison illustrates a worse fit of the mediated model compared to the partially mediated model (∆χ2(∆df) = 12.01(1), p < .05), which indicates that the path from SHRM to firm perform- ance should definitely be maintained. There- fore, the mediation model could not be sup- ported, meaning that corporate culture as a mediator of the SHRM-performance link could not be confirmed. Therefore, Hypoth- esis 2 was not supported.

To better understand the effect of culture as an antecedent of SHRM, we further as- sessed the total, direct, and indirect effects among the four variables in SEM (Bollen, 1987; Fox, 1980). Following the instructions of Kenny, Kashy, and Bolger (1998) for test- ing the mediation, we decomposed the total effects of the latent independent variable on the dependent variable into direct and indi- rect effects when running the full structural model. This method helped to test the indi-

rect effect(s) from the IV(s) to the DV(s) (via mediators). When the indirect effects were significant—that is, the confidence level did not contain zero—mediation was confirmed, regardless of whether the total effect was sig- nificant (Kenny et al., 1998).

The estimates of total, direct, and indi- rect effects obtained from these SEM analyses are listed in Table IV. Results show that group and developmental cultures’ indirect effects (.09 and .10, p < .05, via SHRM) on firm per- formance are significant, indicating the me- diating role of SHRM. In addition, the direct effect of group culture on firm performance is not significant, whereas the effect of de- velopmental culture on performance is sig- nificant. These results, again, indicate that SHRM served as a full mediator between group culture and firm performance and a partial mediator between developmental cul- ture and firm performance. The path dia- gram in Figure 2 illustrates the entire struc- tural model.

The structural model provided a good fit (χ2(319) = 580.96, CFI = 0.91, TLI = 0.90, RMSEA = 0.072). Three of the four direct

Human Resource Management DOI: 10.1002/hrm

DVs SHRM Firm Performance IVs Group Culture Directa .31** .01

Indirecta -- .09* Totala .31** .10

Developmental Culture Directa .35** .26** Indirecta -- .10* Totala .35** .36**

Hierarchical Culture Directa .03 –.07 Indirecta -- .01 Totala .03 –.06

SHRM .29** --

.29**

aNonstandardized estimated parameters, calculated by single sample method.

*p < .05; **p < .01.

T A B L E I V Summary of Direct, Indirect, and Total Effects (Culture as a Determinant)

788 HUMAN RESOURCE MANAGEMENT, Winter 2008

paths were significant: the effects of devel- opmental culture on SHRM (.35, p < .01), group culture on SHRM (.32, p < .01), and SHRM on firm performance (.32, p < .01). The path from hierarchical culture to SHRM was not significant. Developmental culture has a significant effect on firm performance as well (.25, p < .01).

In summary, we found that corporate culture acted as an antecedent of SHRM. Both group and developmental culture had a positive effect on SHRM, while the rela- tionship between hierarchical culture and SHRM was not significant. In addition, we found that the effects of the developmental and group cultures on SHRM and perform- ance were different. The positive impact of group culture on firm performance was suc- cessfully transferred by SHRM, but develop- mental culture still had some direct effect on firm performance.

Discussion of Our Findings

This study examines the role of corporate culture in the implementation of SHRM. We

propose that corporate culture facilitates the adoption of SHRM, which has positive ef- fects on firm performance. Alternatively, SHRM may facilitate the cultivation of cer- tain types of culture, which, in turn, have positive effects on firm performance. Our findings support the first proposition: that it is more likely that culture acts as an an- tecedent of SHRM. This is consistent with Wei and Lau’s (2005) study about the deter- minants of SHRM. The importance of HRM to top management has been found to be one of the determinants of the adoption of SHRM in Chinese firms. The perceived im- portance of HRM is actually a partial reflec- tion of the firm’s values or corporate culture. If a firm has an orientation toward strategi- cally managing its human resources, it is more likely that SHRM will be adopted.

Results of our study indicate that both de- velopmental and group cultures facilitate the adoption of SHRM, and SHRM has positive ef- fects on firm performance. Moreover, devel- opmental culture also has some direct positive effects on firm performance. A firm’s perform- ance can be enhanced by its adoption of

Human Resource Management DOI: 10.1002/hrm

FIGURE 2. Structural Model of Corporate Culture, SHRM, and Firm Performance

* p < .05; ** p < .01; *** p < .001.

+ The path coefficients as well as the significance level as indicated by * are listed in the figure.

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 789

SHRM or a developmental culture. For the adoption of SHRM, an appropriate culture, ei- ther developmental or group, may help.

The results of this study support the “cul- ture determinism” argument that a good cul- ture possibly leads to the adoption of effec- tive management practices, such as SHRM, that may benefit the organization. The proposition that culture acts as a mediator of the SHRM-performance link is not con- firmed. Since developmental culture has a di- rect effect on a firm’s performance, we con- template that corporate culture—such as group and developmental culture—not only facilitates the adoption of SHRM, but may also directly benefit the firm’s performance,

The different effects of developmental and group culture have some practical implica- tions for Chinese firms. In the transitional economy of China, entrepreneurship and in- novation implied by a developmental culture may be very important, since such an orienta- tion not only facilitates the development of advanced management practices like SHRM, but also helps improve the firm’s bottom line. However, the people orientation of a group culture helps only the adoption of SHRM, while the rule orientation of a hierarchical cul- ture is irrelevant to the development of SHRM.

Overall, our findings contribute to the current study of the relationship among cul- ture, SHRM, and firm performance. First, we confirmed that corporate culture is an an- tecedent of SHRM. Despite studies of various functional factors as the determinants of SHRM (Wei & Lau, 2005), little research has focused on important organizational factors, such as corporate culture. Moreover, most prior studies examined corporate culture as a moderator or mediator, overlooking its direct effect on the adoption of SHRM. Given the increased importance of corporate culture in China, its influence on SHRM is worthy of investigation. By adopting the competing values culture model, we examined the role of three types of culture on the adoption of SHRM. We found empirical support for the proposition that the design of SHRM prac- tices is aligned with or based on corporate culture. In other words, corporate culture fa- cilitates the development of SHRM.

Second, responding to the call to go be- yond the SHRM-performance link and fur- ther investigate the causal relationship be- tween SHRM and organizational outcomes (Wright, Gardner, Moynihan, & Allen, 2005), our examination of corporate culture as an antecedent or a mediator adds evidence to the literature of SHRM adoption and im- plementation. We found support for the per- spective of “culture determinism”—that cor- porate culture is an antecedent to the adoption of SHRM—though a de- velopmental culture also directly affects organizational perform- ance. Going beyond the content of SHRM practices, our empirical evidence adds support to studies of the SHRM process, enriching the social context view of HRM (Ferris et al., 1999).

Third, we tested the relation- ships in the context of China. Given the dynamic business envi- ronment of economic and enter- prise reform in China, we propose that one important condition of SHRM adoption in China is the institution of appropriate corpo- rate cultures so as to improve firm performance. Both developmental and group cultures might provide some impetus for firms to develop SHRM, which would enhance the competitiveness of Chinese firms.

This reminds us of the impor- tance of building up corporate culture in Chinese enterprises. Our research findings suggest that some cor- porate culture have positive effects on firm performance, and the effects of certain cul- ture were indirect (i.e., through the imple- mentation of effective HRM practice). A firm’s efforts to establish a certain type of cor- porate culture eventually pays off in terms of better performance. Corporate culture is crit- ical to the adoption of sophisticated manage- rial practices such as SHRM. However, it is also worth noting that a hierarchical culture is irrelevant to both SHRM development and firm performance. Although the three types of culture are somewhat correlated, hierarchi-

The results of this

study support the

“culture

determinism”

argument that a

good culture

possibly leads to the

adoption of effective

management

practices, such as

SHRM, that may

benefit the

organization.

Human Resource Management DOI: 10.1002/hrm

790 HUMAN RESOURCE MANAGEMENT, Winter 2008

cal culture may have some merits in the Chi- nese context, which is characterized cultur- ally by a high power distance. A hierarchical culture is neither effective in promoting the development of SHRM nor helpful in en- hancing firm performance.

Chinese firms are undergoing tremen- dous environmental changes and business reforms. One of the goals of enterprise re- form is to establish effective corporate cul- tures while upgrading internal management systems. Building an appropriate and strong culture is a fundamental way to modernize

Chinese business. It is critical for firms initiating effective manage- ment practices such as SHRM to implement strategic changes in response to heightened competi- tion. Chinese firms are benefiting from these activities. Considering the long-term effects of corporate culture, it is necessary for Chinese firms to take more initiative in building an appropriate one.

Our research findings have an- other practical implication. Since corporate culture reflects the mind-set of top leaders of the firm, it is critical for top management to promote any new, advanced man- agerial practices, such as SHRM, by accepting and merging them into the philosophy of business man-

agement. Given the novelty of SHRM, it is dif- ficult for most Chinese firms to adopt and im- plement it without the support of top management (Wei & Lau, 2005). HR execu- tives in many Chinese firms complain that the failure to adopt management innovations such as SHRM stems from lack of support from top management. If the values and beliefs of top management can become aligned with what is required for the establishment and ap- propriate functioning of SHRM, the firm can ultimately benefit from implementing it.

Study Limitations Point to the Need for Future Research

This study examines the role of corporate culture in the SHRM process. Corporate

culture acts as one determinant of SHRM, and different cultures have different ef- fects. We have examined group culture, de- velopmental culture, and hierarchical cul- ture in this study. Future studies, especially qualitative studies, are needed to examine why these different cultures influence busi- ness initiatives such as SHRM. For example, we have found that developmental culture has direct effects on both SHRM and firm performance, but group culture has direct effects on SHRM only. Such different roles of culture in Chinese firms need to be fur- ther investigated.

Our study has the common limitation of all cross-sectional studies. We are unable to test the reciprocal relationship between SHRM and corporate culture based on the data collected contemporaneously. Future longitudinal studies are needed to capture the causal relationship of SHRM and corpo- rate culture in various Chinese enterprises and the corresponding impact on firm per- formance. As Chinese firms upgrade their human resource management systems with more extensive business reforms and gradu- ally build corporate cultures, further studies on the interactions of SHRM and corporate culture may provide evidence on the internal process-related determinants of firm per- formance in China. Comparative studies of Chinese firms with different historical back- grounds and from diverse industries would also be helpful for both theory development and the practice of SHRM.

Another missing aspect is the impact of the strength and a change of corporate cul- ture. According to the life-cycle theory of cultural evolution (Schein, 1985), cultural development and strength interact with cor- porate development. The dynamic process of cultural development and its impact on SHRM and corporate effectiveness needs to be further examined in future research. Fur- ther studies are particularly needed to ex- plore the relationships among these three types of culture. With Chinese business re- form and heightened market competition, the evolution of corporate culture from hier- archical to group and developmental is more likely to occur in Chinese firms. Longitudi-

It is critical for firms

initiating effective

management

practices such as

SHRM to implement

strategic changes in

response to

heightened

competition.

Human Resource Management DOI: 10.1002/hrm

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 791

nal research may be helpful for following up on such changes. In addition, our study fo- cused only on developmental, group, and hi- erarchical cultures. Other types of culture, such as innovative, rational, or bureaucratic, may exist or coexist in Chinese firms. An ex- amination of the effects of different kinds of corporate culture on SHRM practices would create a more comprehensive picture of the role of corporate culture and its effects on SHRM and firm performance.

Moreover, factors besides corporate cul- ture that may influence the adoption of SHRM and its effects on performance need to be further identified. For example, other organizational capabilities, such as knowl- edge management and learning, and insti- tutional factors may affect the adoption and implementation of SHRM. Given the unique institutional environment of China, future studies are needed to test the rela- tionships among corporate culture, SHRM, and firm performance in other contexts and

to generalize the conclusions to other cul- tural settings.

Drawing from the literature of corporate culture and social context theory of SHRM, this study developed a model suggesting that corporate culture may function as an an- tecedent to the adoption of SHRM. Alterna- tively, corporate culture may mediate the re- lationship between SHRM and organizational performance. The results of the study support the notion that a developmental or a group culture facilitates the creation of SHRM, which has a subsequent positive impact on firm performance. This research contributes to the SHRM literature by uncovering the role of different types of corporate culture in the development of SHRM. It also has significant implications for management practice, espe- cially in the field of SHRM development and culture management—both of which are crit- ical for firms gaining competitive advantage through strategically managing human re- sources in China.

Human Resource Management DOI: 10.1002/hrm

LI-QUN WEI, PhD, is an associate professor in the management department of Hong Kong Baptist University. Her research interests include strategic human resource management, Chinese business strategies, and top management teams. She is active in both teaching and research in the field of strategic HR and international strategies of firms from emerging economies, especially China. Her articles have been published in the Journal of Interna- tional Business Studies, the International Journal of Human Resource Management, Re- search and Practice of Human Resource Management, and Asia Business and Management.

JUN LIU, PhD, is an associate professor in the OB and HR Department, School of Busi- ness, Renmin University, P.R. China. He obtained his doctoral degree in management from the Chinese University of Hong Kong in 2005. His research interests include lead- ership, HR practice, psychological contracts, and organizational politics.

YICHI ZHANG, PhD, is a professor of management at the Guanghua School of Manage- ment, Peking University. He obtained his bachelor’s, master’s, and PhD degrees from the School of Economics, Peking University. His research interests currently focus on high- performance work practices, the strategic link between employment relationship and firm performance, and the effects of employee perceptions of HRM in China. His re- search papers have appeared in leading Chinese academic journals.

RANDY KI-KWAN CHIU, PhD, is a professor of human resource management at Hong Kong Baptist University. His academic research interests include management psychol- ogy, professional ethics, and human resource management. His scholarly work, which includes more than 90 articles, has been featured in various international academic jour- nals and conference presentations.

792 HUMAN RESOURCE MANAGEMENT, Winter 2008

NOTE 1. Results for ICC[1], ICC[2], and Rwg calculation are

available from the first author.

REFERENCES

Akaike, H. (1987). Factor analysis and AIC. Psychome- trika, 52, 317–332.

Bae, J., Chen, S., Wan, T. W., Lawler, J. J., & Walumbwa, F. O. (2003). Human resource strategy and firm per- formance in Pacific Rim countries. International Journal of Human Resource Management, 14, 1308–1332.

Barney, J. B. (1986). Organizational culture: Can it be a source of sustained competitive advantage? Acad- emy of Management Review, 11, 656–665.

Bartko, J. J. (1976). On various intraclass correlation reli- ability coefficients. Psychological Bulletin, 83, 762–765.

Baruch, Y. (1999). Response rate in academic studies—A comparative analysis. Human Relations, 52, 421–438.

Bjorkman, I., & Fan, X. (2002). Human resource man- agement and the performance of Western firms in China. International Journal of Human Resource Management, 13, 853–864.

Bollen, K. A. (1987). Total, direct, and indirect effects in structural equation models. In C. C. Clogg (Ed.), So- ciological methodology (pp. 37–69). Washington, DC: American Sociological Association.

Bowen, D. E., & Ostroff, C. (2004). Understanding HRM- firm performance linkages: The role of the “strength” of the HRM system. Academy of Management Re- view, 29, 203–221.

Carmeli, A., & Tishler, A. (2004). The relationships be- tween intangible organizational elements and orga- nizational performance. Strategic Management Jour- nal, 25, 1257–1278.

Chan, L. L. M., Shaffer, M. A., & Snape, E. (2004). In search of sustained competitive advantage: The im- pact of organizational culture, competitive strategy and human resource management practices on firm performance. International Journal of Human Re- source Management, 15, 17–35.

Collins, C. J., & Clark, K. D. (2003). Strategic human re- source practices, top management team social net- works, and firm performance: The role of human re- source practices in creating organizational competitive advantage. Academy of Management Journal, 46, 740–751.

Delery, J. E., & Doty, D. H. (1996). Modes of theorizing in strategic human resource management: Tests of uni- versalistic, contingency, and configurational per-

formance predictions. Academy of Management Journal, 39, 802–835.

Denison, D. R. (1984). Corporate culture and organiza- tional culture and effectiveness. Organization Sci- ence, 6, 204–223.

Denison, D. R. (1990). Corporate culture and organiza- tional effectiveness. Wiley: New York.

Denison, D. R. (1996). What is the difference between organizational culture and organizational climate? A native’s point of view on a decade of paradigm wars. Academy of Management Review, 21, 619–654.

Ding, D. Z., & Akhtar, S. (2001). The organizational choice of human resource management practices: A study of Chinese enterprises in three cities in the PRC. International Journal of Human Resource Man- agement, 12, 946–964.

Ferris, G. R., Hochwarter, W. A., Buckley, M. R., Harrell- Cook, G., & Frink, D. D. (1999). Human resources management: Some new directions. Journal of Man- agement, 25, 385–415.

Fox, J. (1980). Effect analysis in structural equation models. Sociological Methods and Research, 9(1), 3–28.

Greiner, L. E. (1983). Senior executives as strategic ac- tors. New Management, 1(2), 11–15.

Hofstede, G., Neuijen, B., Ohayv, D. D., & Sanders, G. (1990). Measuring organizational cultures: A qualita- tive and quantitative study across twenty cases. Ad- ministrative Science Quarterly, 35, 286–316.

Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity and corporate financial performance. Academy of Man- agement Journal, 38, 635–672.

Jackson, S. E., & Schuler, R. S. (1995). Understanding human resource management in the context of or- ganizations and their environments. Annual Review of Psychology, 46, 237–264.

James, L. R. (1982). Aggregation bias in estimates of perceptual agreement. Journal of Applied Psychol- ogy, 67, 219–229.

James, L. R., Demaree, R. G., & Wolf, G. (1993). Rwg: An assessment of within-group interrater agreement. Journal of Applied Psychology, 78, 306–309.

Jöreskog, K. G., & Sörbom, D. (1993). LISREL 8 user’s reference guide. Chicago: Scientific Software.

Kelloway, E. K. (1998). Using LISREL for structural equa- tion modeling: A researcher’s guide. Thousand Oaks, CA: Sage.

Kenny, D. A., Kashy, D. A., & Bolger, N. (1998). Data analysis in social psychology. In D. Gilbert, S. T. Fiske, & G. Lindzey (Eds.), Handbook of social psy-

Human Resource Management DOI: 10.1002/hrm

Corporate Culture in the Process of Strategic Human Resource Management and Chinese Enterprises 793

chology (4th ed., pp. 233–265). New York: McGraw- Hill.

Klein, K. J., & Sorra, J. S. (1996). The challenge of inno- vation implementation. Academy of Management Review, 21, 1055–1080.

Kravetz, D. J. (1988). The human resource revolution: Implementing progressive management practices for bottom-line success. San Francisco, CA: Jossey- Bass.

Lau, C. M., Tse, D. K., & Zhou, N. (2002). Institutional forces and organizational culture in China: Effects on change schemas, firm commitment and job satisfac- tion. Journal of International Business Studies, 33, 533–550.

Law, K. S., Tse, D. K., & Zhou, N. (2003). Does human resource management matter in a transitional econ- omy?—China as an example. Journal of Interna- tional Business Studies, 34, 255–265.

Lengnick-Hall, C. A., & Lengnick-Hall, M. A. (1988). Strategic human resource management: A review of the literature and a proposed typology. Academy of Management Review, 13, 454–470.

Liu, A. M., Zhang, S., & Leung, M. (2006). A framework for assessing organizational culture of Chinese con- struction enterprises. Engineering, Construction and Architecture Management, 13, 327–342.

Luo, Y., & Park, S. H. (2001). Strategic alignment and performance of market-seeking MNCs in China. Strategic Management Journal, 22, 141–155.

Martell, K., Gupta, A., & Carroll, S. J. (1996). Human re- source management practices, business strategies, and firm performance: A test of strategy implemen- tation theory. Irish Business and Administrative Re- search, 17(1), 18–35.

McMahan, G. C., Virick, M., & Wright, P. M. (1999). Alter- native theoretical perspectives for strategic human resource management: Progress, problems and prospects. In P. Wright, L. D. Dyer, J. W. Boudreau, & G. T. Milkovich (Eds.), Research in personnel and human resources management: Strategic human re- sources management in the 21st century (Supple- ment 4, pp. 99–122). Greenwich, CT: JAI Press.

O’Reilly, C., & Chatman, J. (1996). Culture as social con- trol: Corporations, cults, and commitment. In B. Shaw & L. Cummings (Eds.), Research in organiza- tional behavior (Vol. 18, pp. 157–200). Greenwich, CT: JAI Press.

Panayotopoulou, L., Bourantas, D., & Papalexandris, N. (2003). Strategic human resource management and its effects on firm performance: An implementation of the competing values framework. International Journal of Human Resource Management, 14, 680–699.

Peng, M. W., & Luo, Y. (2000). Managerial ties and firm

performance in a transition economy: The nature of a micro-macro link. Academy of Management Jour- nal, 43, 486–501.

Quinn, R. E., & Spreitzer, G. M. (2001). The psychomet- rics of the competing values culture instrument and an analysis of the impact of corporate culture on quality of life. In R. W. Woodman & W. A. Pas- more (Eds.), Research in organizational change and development (Vol. 5., pp. 115–142). Greenwich, CT.: JAI Press.

Roth, P. L., & BeVier, C. A. (1998). Response rates in HRM/OB survey research: Norms and correlates, 1990–1994. Journal of Management, 24(1), 97–117.

Saffold, G. S. (1988). Culture traits, strength, and organi- zational performance: Moving beyond “strong” cul- ture. Academy of Management Review, 13, 546–558.

Schein, E. H. (1985). Organizational culture and leader- ship. San Francisco, CA: Jossey-Bass.

Schein, E. H. (2004). Organizational culture and leader- ship (3rd ed.). San Francisco, CA: Jossey-Bass.

Schneider, B. (2000). The psychological life of organiza- tions. In N. M. Ashkanasy, C. P. M. Wilderon, & M. F. Peterson (Eds.), Handbook of organizational culture and climate (pp. xvii–xxiii). Thousand Oaks, CA: Sage.

Schneider, B., Gunnarson, S. K., & Niles-Jolly, K. (1994). Creating the climate and culture of success. Organi- zational Dynamics, 23(1), 17–29.

Schuler, R. S. (1992). Strategic human resource man- agement: Linking the people with the strategic needs of the business. Organizational Dynamics, 21(1), 18–33.

Smith, K. G., Collins, C. J., & Clark, K. D. (2005). Existing knowledge, knowledge creation capability, and the rate of new product introduction in high-technology firms. Academy of Management Journal, 48, 346–357.

Taylor, R. (2005). China’s human resource management strategies: The role of enterprise and government. Asian Business & Management, 4(4), 5–21.

Tsang, E. W. K., & Kwan, K. M. (1999). Replication and theory development in organizational science: A crit- ical realist perspective. Academy of Management Review, 24, 759–780.

Tsui, A. S., Pearce, J. L., Porter, L. W., & Tripoli, A. M. (1997). Alternative approaches to employee-organi- zation relationship: Does investment in employees pay off? Academy of Management Journal, 40, 1089–1121.

Ulrich, D. (1987). Organizational capability as a competi- tive advantage: Human resource professionals as strategic partners. Human Resource Planning, 10(4), 169–184.

Human Resource Management DOI: 10.1002/hrm

794 HUMAN RESOURCE MANAGEMENT, Winter 2008

Venkatraman, N., & Ramanujam, Y. (1986). Measure- ment of business performance in strategy research: A comparison of approaches. Academy of Manage- ment Review, 11, 801–814.

Wall, T. D., Michie, J., Patterson, M., Wood, S. J., Shee- han, M., Clegg, C. W., et al. (2004). On the validity of subjective measures of company performance. Per- sonnel Psychology, 57(1), 95–118.

Wei, L. Q., & Lau, C. M. (2005). Market orientation, HRM importance and competency: Determinants of strate- gic HRM in Chinese firms. International Journal of Human Resource Management, 16, 1901–1918.

Wei, L. Q., & Lau, C. M. (2008). The impact of market ori- entation and strategic HRM on firm performance: The case of Chinese enterprises. Journal of Interna- tional Business Studies, 39, 980–995.

Wong, Y. H. (1998). The dynamics of Guanxi in China. Singapore Management Review, 20(2), 25–42.

Wright, P. M., Gardner, T. M., Moynihan, L. M., & Allen, M. R. (2005). The relationship between HR practices and firm performance: Examining causal order. Per- sonnel Psychology, 58, 409–446.

Wright, P. M., & McMahan, G. C. (1992). Theoretical per- spectives for strategic human resource manage- ment. Journal of Management, 18, 295–320.

Zhao, S. (2001). Human resource management studies. Beijing: People’s University Press.

Zhou, K. Z., Tse, D. K., & Li, J. J. (2006). Organizational changes in emerging economies: Drivers and conse- quences. Journal of International Business Studies, 37, 248–263.

Zhu, C. J., Cooper, B., De Cieri, H., & Dowling, P. J. (2005). A problematic transition to a strategic role: Human resource management in industrial enter- prises in China. International Journal of Human Re- source Management, 16, 513–531.

Human Resource Management DOI: 10.1002/hrm

Strategic Human Resource Management (SHRM) (alpha = .89)

1. Match the attributes of managers to the strategic plan of the firm. 2. Identify managerial characteristics necessary to run the business in the long term. 3. Modify the compensation system to encourage managers to achieve long-term strategic objectives. 4. Design staffing plans to help implement business or corporate strategies. 5. Evaluate key personnel based on their potential to implement strategic goals. 6. Conduct job analysis based on what the job may entail in the future. 7. Conduct staff development programs designed to support strategic changes. 8. HRM department is able to provide HR-related information for business strategic decisions. 9. There is HR planning in business, with clear and formal procedures. 10. Top managers are able to effectively communicate business goals and strategies to employees. 11. There is formal HR strategy in the business.

Corporate Culture

Group Culture: (alpha = .83) 1. Our firm is a very personal and people-oriented place. 2. The glue that holds our firm together is loyalty and tradition. 3. Our firm emphasizes human resources. 4. The head of our firm is generally considered to be a mentor, sage, or a father or mother figure.

Developmental Culture: (alpha = .68) 1. Our firm is a very dynamic and entrepreneurial place. 2. The glue that holds our firm together is commitment to innovation and development. 3. Our firm emphasizes growth and acquiring new resources. 4. The head of our firm is generally considered to be an entrepreneur, an innovator, or a risk taker.

Hierarchical Culture: (alpha = .63) 1. Our firm is a very formalized and structured place. 2. The glue that holds our firm together is formal rules and policies. 3. Our firm emphasizes permanence and stability. 4. The head of our firm is generally considered to be a coordinator, an organizer, or an administrator.

Items Measuring SHRM and Corporate CultureA P P E N D I X