The Emerald Research Register for this journal is available at The current issue and full text archive

xt archive of this journal is available at

www.emeraldinsight.com/researchregister www.emeraldinsight.com/0143-7720.htm

IJM
26,6 Strategic human resources,
innovation and
entrepreneurship fit
544
A cross-regional comparative model
Zhongming Wang and Zhi Zang
Center for Human Resources and Strategic Development, Zhejiang University,
Hangzhou, People’s Republic of China

Abstract
Purpose – Strategic human resource management (SHRM) is seen as crucial for innovation and
entrepreneurship in China. An empirical research was carried out to investigate main dimensions of
the model of human resources management (HRM), practices and their effects on organisational
performance in relation to innovation and entrepreneurship.
Design/methodology/approach – The research has two parts. The first part is a field survey on
human resource management practices and its main dimensions. The study was conducted in the
Chinese local companies and joint ventures across different partnerships. The second part is an
in-depth case-set analysis of Chinese entrepreneurship models from a strategic HRM perspective.
Findings – The results showed that both functional and strategic dimensions of HRM could be
identified which had differential effects upon organisational performance and that the most successful
local entrepreneurial firms were among the collective-based and globally-oriented ones.
Originality/value – This study demonstrated that the fit between strategic HRM practices,
innovation strategy and entrepreneurship model was significantly contributed to entrepreneurial
performance. A regional comparative model of SHRM and entrepreneurship was proposed for
sustainable business developments and organisational change.
Keywords Innovation, Human resource management, Organizational performance, China,
Entrepreneurs
Paper type Research paper

International Journal of Manpower
Vol. 26 No. 6, 2005
pp. 544-559
q Emerald Group Publishing Limited
0143-7720
DOI 10.1108/01437720510625458
1. Introduction
Under the new challenges from China entering WTO, developing IT, promoting
organisational reform, and encouraging innovation and entrepreneurship in the recent
years, the focus of manpower practices has shifted from employee-level of personnel
management to the core-employee and managerial levels of strategic human resources
management (HRM) (Wang, 2000; Tsui and Lau, 2002). There has been an increasing
demand for more integrated strategies of HRM practices, innovation, and
entrepreneurship in Chinese organisations (Wang, 2003).
Among recent developments in China, several significant changes need to be
noticed in order to understand the key issues in strategic HRM, innovation and
entrepreneurship. First, international entrepreneurship has become one of the major
approaches to business development. While international companies are increasingly
The research work was supported by the Chinese NSF Key Project No. 70232010 and the GRC
grant. Thanks for graduate students/colleagues, and entrepreneurs from 180 Chinese companies.
entering China with a figure of more than 450,000 foreign invested enterprises (FIEs), Strategic HR,
the international entrepreneurship approach is an effective strategy not only for innovation and
expending new markets and introducing overseas funds and managerial skills for
enhancing competitiveness but also for more and more local companies to introduce entrepreneurship
and recruit foreign knowledge-managers and technicians for their joint ventures and/or
key local facilities for their business development. Meanwhile, companies are
establishing their business branches overseas as a competitive entrepreneurship 545
strategy. So far, more than 6600 overseas ventures from Chinese companies were
formally established. Therefore, both strategic and cross-cultural HRM has become a
crucial supporting approach.
Second, technological innovation and entrepreneurial networking are among the
most popular strategies for business development in China through a variety of
cross-regional mergers, acquisitions, joint ventures, and business alliances. There is a
significant shift in mergers and acquisitions from the SOEs’ acquisition of private
companies in 2002, to the private company’s acquisition of SOEs in 2003. Many of them
incorporated with company-level technological innovations. However in many cases of
mergers, HRM was a bottleneck for effective integration. Therefore, strategic human
resource management (SHRM) strategies were urgently needed for supporting
organisational change, technological innovation and entrepreneurial development.
Third, for most of the Chinese firms, the secondary entrepreneurship
transformation is the main business-driven strategy in connection with
intrapreneurship, corporate entrepreneurship and strategic entrepreneurship (Wang,
2003a). However, among most Chinese companies, there is a lack of strategy-level
integration of SHRM with entrepreneurship and therefore the intrapreneurship was
often less effective in terms of sustainability (Wang and Mobley, 1999). Most of recent
studies called for strategic planning to be used to identify and improve those
organisational decisions and actions for integrating human resource functions into the
organisational and innovation strategy in order to support and implement the strategic
plan to achieve a competitive advantage (Wofford, 2002).
Because of the recent developments in international entrepreneurship, technological
innovation, multi-business strategy and intrapreneurship, strategic HRM becomes a
crucial approach for small and entrepreneurial firms in China. The purpose of this
study is to review recent research findings about the key dimensions of Chinese
entrepreneurship and to differentiate SHRM practices and their effects upon
organisational performance. Then a multi-level model of strategic HRM and Chinese
entrepreneurship is built on the basis of recent in-depth studies across regions and
ownerships.

2. Cross-cultural studies on SHRM practices under the Chinese settings

One important question is what the SHRM dimensions are and how they differentiate
across different nations and cultures. Braun and Warner (2002) used a qualitative case
methodology and studied 12 multinational companies about the differentiation of their
HRM practices across different equity stake percentages of ownership forms with their
Chinese partners. They interviewed HRM directors from those companies by telephone
with semi-structured questionnaires. The focus of this interview research was on five
aspects of HRM practices: HRM functions, recruitment and selection, performance
appraisal, training development, and compensation. The results showed that there was
IJM a diffusion of HRM practices across different ownership forms and there were few
26,6 variations across cases. The HRM functions in the MNE’s PRC operations had a high
strategic importance though integration of international HRM practice with the local
culture and entrepreneurial models might be still a further task for many MNEs and
local companies. In another recent study, Bjorkman and Lu (2001) conducted
semi-structured interviews and a questionnaire survey and collected data among
546 managers from 63 manufacturing Chinese-Western joint ventures, concerning HRM
practices in terms of HR methods, recruitment criteria, professional training,
compensation and bonus, and criteria for promotion as well as the educational and
experience background of HR/personnel managers and MNC ownership. The results
showed that the HRM practices were considerably more similar to those of the MNCs
than to those of local manufacturing companies. Also the HRM practices were
dependent upon the establishment of joint ventures on the basis of existing Chinese
manufacturing operations.
In discussing about how resources could be managed more effectively, Simon and
Hitt (2003) proposed a three-component model that can lead to a competitive
advantage: resource inventory (evaluating, adding, and shedding), resource bundling,
and resource leveraging. Apparently, some HRM practices are more related to the daily
operations while others are more linked with long-term effects on performance.
H1. Among most of HRM practices, there are mainly two dimensions: functional
HRM practices and strategic HRM practices. The former is more related with
the daily operations while the later is more linked with company-level
progress or organisational performance.
How do SHRM practices affect other aspects of organisational capacity and
performance? White (2000) used a database from the Chinese Ministry of Public Health
and demonstrated significant effects of external environment and internal capacities
on technology decisions among the Chinese state-owned enterprises. In fact, social
capital, especially relational capital based on “guanxi” provided a framework for
business dealings in many Asian countries particularly in China (Hitt et al., 2002). As
summarized in an interview study key success factors of multinational firms in China,
nine strategies were proved to be crucial: top management commitment strategy, solid
training and feasibility strategy, patience and persistence strategy, overseas Chinese
strategy, brand image strategy, wholly owned MNC strategy, partner search strategy,
trust strategy, and effective HRM strategy. Among them, the last one was of vital
source of competitive advantage.
H2. HRM practices are different across business ownerships and joint venture
partnerships which links with organisational performance indicators.
Apparently, HRM practices are somewhat different cross-cultures. Cyr and Schneider
(1996) compared HRM practices in east-west joint ventures including companies such
as French-Polish, German-Czech, Swedish-Hungarian JVs, using extensive
semi-structured interviews with senior managers and other employees as well as
survey questionnaires and participant observations to measure strategy,
responsibility, communication, HRM practices and culture. The results showed that
there were similar positive effects of HRM and employees were satisfactory about
the training they have received but dissatisfied with salary in those joint ventures.
The authors see the need to create an environment in which local and foreign Strategic HR,
employees can work effectively together. Mueller and Thomas (2000) also discovered innovation and
that culture as defined by the Hofstede’s cultural model had significant influence on
entrepreneurial potential. Specifically, internal locus of control orientation combined entrepreneurship
with innovativeness is more likely in individualistic, low uncertainty avoidance
cultures than in collectivistic, high uncertainty avoidance cultures. Culture may
condition potential for entrepreneurship, generating differences across national and 547
regional boundaries.

3. Entrepreneurship and its relationship with technology innovation and

SHRM
The relationship between technology innovation, HRM and entrepreneurship has been
an active area of research. Many studies demonstrated that technology and HR are
closely linked for competitive advantage (Wang, 2000; Shrivastava and Shaw, 2004).
Clark (1998) carried out a case study to examine how a leading American project
management firm responded to the competitive pressures through a process of
entrepreneurial change. The study concluded that the corporate human resource
functions could become entrepreneurial in integrating to line managers’ functions and
that the “design failure” of strategic HRM was the main reason for low competitive
conditions. There has been a dramatic shift in the focus of industrial R&D strategies
from general quality programs in 1980s and early 1990s to the re-engineering design
with synonymous downsizing, entrepreneurial planning and HR support. So SHRM
can be an important part of the technology innovation cycle (James, 2002). As part of
technology innovation globally, the role of HRD in the process of international
technology transfer as an approach to international entrepreneurship was studied and
identified (Osman-Gani, 1999). The results showed that in the process of the transfer,
human resource development plays a significant role in improving the effectiveness of
management technology and in achieving organisational objectives. However, we need
to clearly understand the impact of cultural differences for successfully transfer of
technology across cultures on HRD and management policies. Michie’s study (1999)
focused upon HRM practices and R&D innovation and noticed that short-term HRM
practices such as short contracts are negatively correlated with new-tech investment
whereas long-term and high-commitment HR practices are positively correlated with
investment in R&D and new technology. Many recent studies indicated that SHRM
could be an effective facilitator for both technological innovation and entrepreneurship.
In a study on the technological determinants of entrepreneurial behaviour, Marsili
(2002) applied a typology of technological regimes to examine the sources and
obstacles to entrepreneurial entry and noticed that innovation in technologies of
opportunities could be effectively associated with entrepreneurial behaviour by the
knowledge and HRM support. This characterisation of the dynamics of knowledge
accumulation proved to be crucial for enhancing the competitive advantages. McElwee
and Warren (2000) also found that for many fast growth SMEs, the main problem is
finding and retaining high-quality employees and that HRM approach in the pursuit of
quality is critical to success. What is the situation related to Chinese manufacturers?
In the recent years, there has been a shift of the focus of Chinese organisational reform
and changes from large-group and state-based business re-structuring to the high
innovative and entrepreneurial development. Especially, the nation-wide technological
IJM innovations and organisational systems innovation call for more effective strategic
26,6 HRM support. Li (2000) presented an exploratory model of competence and
performance from a survey in 72 companies. The results showed that marketing
competence was ranked high by Chinese managers while human resource competence
has been found to be significantly correlated with performance. Different kinds of
methodology were adopted in conducting research on dimensions of SHRM and
548 entrepreneurship (Geringer et al., 2002).
H3. Both functional and strategic HRM practices in turn influence their
effectiveness, especially the innovation performance.

4. Entrepreneurship models and its requirements for HRM support

Entrepreneurship has been one of the major relevant areas in human resources and
innovation. Under the Chinese context, entrepreneurial meant hard-working,
dedication and diligent (Wang, 2000). So it was traditionally seen as part of local
culture. In the early 1970s and 1980s, many local farmers started their own business
“outside of” the central planning systems though these were mostly individual
business or collective township business. In the 1990s, a multi-ownership model of
enterprise systems transformation was developed among Chinese companies while in
the early 2000s, entrepreneurship became a focus of business development in the
country. As Poutziouris et al. (2002) pointed out, the Chinese small family firms made
important contributions to the acceleration of business development across the social
and industrial sectors as well as the geographic boundaries of the Pacific Rim. They
proposed five classifications of entrepreneurial class for the Chinese family business
community:
(1) bourgeois entrepreneurial with generational family business;
(2) solo-entrepreneurial with single owner-manager;
(3) marital (co-entrepreneurship with husband/wife as founders and managers);
(4) parento with parents and children in control; and
(5) geno with generations involving more relatives.

These kinds of entrepreneurship were configured by a two-dimension axis of family

participation-family development versus political market economy-business growth.
Another recent study by Thakur (1998) on investment, opportunity choice and human
resources in new venture growth tested a path-based typology model of new venture
growth and human resource management for integrating important aspects of
entrepreneurship such as family labour or supervisory resources, empathetic
leadership style, and entrepreneurial teams. As to the performance, Motowidlo and
Dunnette (1990) categorized it into two dimensions: task performance and contextual
performance. The former is more based on how the short-term task objectives are
achieved whereas the latter refers to the dedication and extra efforts at work which
lead to long-term outcomes.
H4. Entrepreneurship could be categorized into two dimensions: functional versus
strategic HRM and individualistic versus collectivistic entrepreneurship.
Among the different types of entrepreneurship models, companies under
collective entrepreneurship has a closest link between strategic HRM and
 organisational level performance whereas under individual entrepreneurship, Strategic HR,
individual level performance indicators are more closely related to functional innovation and
HRM practices.
entrepreneurship
In reviewing the past decade of entrepreneurship research methods, Chandler and
Lyon (2001) summarized a significant trend toward more multivariate analysis and
emphasis on reliability and validity in research methodology and called for the
development of more sophisticated theoretical models and more longitudinal research.
549
Also, Davidsson and Wiklund (2001) focused upon the level of analysis in
entrepreneurship research and suggested to use new-enterprise as a new level of
analysis and regard entrepreneurship as a broad research domain with more precisely
defined issues, concepts, and levels of analysis.

5. Study 1: Dimensions of SHRM and its models across joint venture

partnerships
5.1 Participants
This study was carried out among 97 local Chinese enterprises and international joint
ventures and the main purpose was to find out the characteristics of HRM practices
and their relationship with entrepreneurial performance. Among them, 358 managers
from 75 companies participated in the field survey from the five types of companies:
(1) Chinese-western joint ventures;
(2) Chinese-Japanese joint ventures;
(3) joint ventures with Hong Kong or Taiwan regions;
(4) Chinese state-owned enterprises; and
(5) Chinese township and private firms.

A field-structured interview was conducted among HR managers and supervisors at

25 international joint ventures and 22 local companies in China. They were asked
to describe the most frequently used HR practices in their companies in relation to
technological innovation and organisational changes.

5.2 Measurement
A check-list scale of HRM practices was then developed. Each practice item is scored 1
and scaled by 1-5 points to measure the degree of application. The total score of each
practice is 20. Twenty-two HR managers and supervisors generated a list of 56 typical
HR practices which are categorized into ten areas of HR practices. Table I presents the
ten-category list of HR practices.
Also, a five-point scale of HRM practice check-list was developed with a scale of
organisational performance by the following seven indicators:
(1) Market performance: How does the company have a higher market share
compared with other companies in the similar industrial sector?
(2) Profitability: How is this company profitable in comparison with other
companies in the similar industrial sector?
(3) Competitiveness: How is this company competitive in comparison with other
companies in the similar industrial sectors?
IJM
Category
26,6
Personnel selection and placement
550 Personnel training and development
Performance appraisal and management
Career development and promotion
Pay and bonus systems management
Employee participation program
Quality control program
Management by objectives program
Team management
Corporate culture development
Table I.
Ten category of HR
practices
Indicators
Actions for adaptation of formal procedures
Use of tests in personnel selection and placement
Development of job descriptions for key positions
Specific job requirements for applicants
Specific orientation training programs
Periodic training needs analysis
Regular evaluations of training programs
Evaluations on training results and outcomes
Regular performance appraisal activities
Formal procedures and evaluation forms
Tailor-made criteria for performance appraisal
Specific rules for rewards by performance
Regular promotion planning
Developmental opportunities for employees
Periodic internal employee position transfer
Regular channels for external transfer
Specific pay link with performance
Bonus link with monthly performance
Pay link with company profits
Bonus link with different position
Formal regulations for employee participation
Regular meeting by trade union participation
Employee participation program in management
Regular communication with employees
Organizing formal quality control teams
Regular quality circle activities
Quality as performance indicator
Regular quality control training programs
Specific work/performance goals
Employee participation in goal setting
Specific plans for implementing objectives
Formal appraisal for goal accomplishment
Procedures for role specification in teams
Specific team goal setting
Formal evaluation on team performance
Team selection and training
Inter-departmental coordination meetings
Conflict resolution meetings
Regular cultural activities
Meetings to discuss company vision

(4) Task accomplishment: What is the company’s task fulfilment compared with
other companies in the similar industrial sectors?
(5) Personnel turnover: How high is the personnel turnover in this company
compared with other companies in the similar industrial sectors?
(6) Employee satisfaction: How do employees satisfy in comparison with
employees in other companies in the similar industrial sectors?
 (7) Innovation performance: How is the performance under technological and Strategic HR,
managerial innovation in comparison with other companies in the similar innovation and
industrial sectors?
entrepreneurship
These indicators of organisational performance were first tested by industrial bureau
officials, using both ratings and coding from the business performance. These ratings
and coding were highly correlated and proved to have high internal consistency 551
reliability, average correlation coefficients was 0.86.

5.3 Main results

The analysis showed that there were significant differences in human resource
practices across five types of companies. Using factor analysis and in-depth interview,
the ten categories of HRM were grouped into two key dimensions: functional human
resources and strategic human resources. Tables II and III present the means for ten
HRM practices and the two dimensions of HRM.
Table II shows the differences in means across the five kinds of ownership: Chinese
State companies, Chinese township (private) companies, western joint ventures,
Japanese joint ventures and Taiwan/HK overseas joint ventures. As we can see from
the results, among the four kinds of ownerships and partnerships, European and
American joint ventures and Chinese local companies had generally higher level in HR
practice indicators whereas joint ventures with Japanese and Hong Kong/Taiwan
partnerships had generally lower level of HRM practices. The HRM practices among
SOEs were among the intermediate level. Across the ten HR practices, however,
significant differences were found among long-term HRM practices such as career
development packages, quality control activities and corporate culture development
activities as well motivational systems. With these HR practices, same tendency was
shown with Euro/US joint ventures and local companies having a significantly higher
scores. Across various of HR practices, SOEs showed higher level of those HR
indicators of performance appraisal, quality control and team development, Euro/US

Means across ownerships

CH SOEs Euro/US IJVs HK/TW JVs JP IJVs TS firms
M/SD M/SD M/SD M/SD M/SD
HRM practices (N ¼ 62) (N ¼ 30) (N ¼ 46) (N ¼ 10) (N ¼ 14) F

Personnel selection 2.98/0.83 3.35/0.60 3.18/0.69 2.38/0.53 3.30/1.05 1.90

Training development 2.91/0.99 3.05/0.67 3.02/0.77 2.63/0.88 3.58/1.02 1.36
Performance appraisal 3.13/0.96 3.28/0.65 3.41/0.75 2.75/1.06 3.30/0.95 0.97
Career development 2.38/0.76 2.80/0.54 2.87/0.63 2.13/0.67 2.81/0.54 4.41 * *
Pay and bonus systems 1.80/0.57 3.13/0.66 3.10/0.75 2.15/0.88 3.75/0.59 10.12 * *
Employee participa tion 2.82/0.79 3.03/1.62 2.63/0.75 2.13/0.48 3.00/0.84 1.02
Quality control program 3.09/0.84 3.40/0.76 3.46/1.47 3.00/0.61 3.93/1.23 2.42 *
MBO program 2.95/0.75 3.06/0.60 3.00/0.71 2.50/0.71 3.58/1.00 1.84
Team management 3.05/0.99 3.15/0.71 1.75/1.52 2.30/0.54 3.55/1.47 1.95
Corporate culture 3.05/0.95 3.24/0.38 2.17/1.46 2.51/0.85 3.45/1.48 3.14 * *
Table II.
Note: CH SOEs: Chinese state-owned enterprises; Euro/US: European and American joint ventures; Means of ten HR
HK/TW JVs: Joint ventures with Hong Kong and Taiwan firms; JP IJVs: Japanese joint ventures; practices across SOEs
TS Firms: Township firms; and N: Number of companies and joint ventures
IJM
Dimensions Indicators Measures M/SD
26,6
Functional human Personnel selection and Formal procedure, using tests, job
resource dimension placement analysis, description 3.10/0.77
Performance appraisal Regularity, formal forms, specific
criteria, specific rules 3.23/0.84
552 Pay and bonus systems Performance link, bonus-system,
profit-based, team-based 2.61/0.84
Personnel training and Orientation, needs analysis,
development program design, evaluation 3.00/0.88
Strategic human resources Career development and Promotion, opportunities, internal-
dimension promotion and external- transfer 2.62/0.70
Employee participation Regulations, participation, worker
congress, communication 2.78/0.98
Quality control program QC teams, QC circle, indicator, TQM
training activities 3.32/0.54
Management by Specific goals, goal setting, goal
objectives accomplishment/evaluation 3.01/0.74
Team management Team roles, team goals,
performance evaluation, training 2.63/1.01
Corporate culture Coordination, conflict resolution,
Table III.
activity, vision discussion 3.03/0.96
The two dimensions of
HR practices Note: N=162

firms were good at selection and quality control activities, Japanese firm were higher in
terms of quality control and performance.
Chinese township companies had more practices in job requirements while Chinese
state-owned companies used very fewer test instruments. Again, both Chinese
township companies and Japanese joint ventures had more formal HRM practice
especially in terms of orientation training and results evaluation. Western joint
ventures were similar to Chinese township companies. It is important to note that the
sub-samples of the township companies were those large and more productive
township firms around Wenzhou area, the hometown of Chinese entrepreneurship
firms (both township and private companies).
The results showed that the use of performance appraisals in the Chinese companies
focused more on positions and the whole company, whereas performance appraisal in
the joint ventures was more focused on actual performance. The results of career
development and promotion further informed that both western joint ventures and
Japanese joint ventures had more HR practices in terms of regular promotion, new
opportunities and turnover while the Chinese state-owned companies appear relatively
weak on these career development aspects of HRM.
In terms of compensation practices, Chinese township companies showed lower
level of practices in regularity and formality while other joint ventures had more
formal practices, with Japanese joint ventures again revealing higher means. The
results showed that the Taiwan and Hong Kong joint ventures had the lowest level of
employee participation whereas both western- and Japanese-joint ventures had the
highest levels of participation in management. In the Chinese state-owned enterprises
and township companies, although the formality of participation, the trade union
organisation, and the knowledge of the company were all relatively high, actual
participation was low. Quality control was formal in both Japanese and township firms Strategic HR,
and relatively low in the Chinese state-owned companies and western joint ventures. innovation and
Management by objectives is more formal in the Japanese companies and township
companies whereas it was very low in the Taiwan and Hong Kong enterprises. entrepreneurship
Corporate culture development practices were shown to be at a similar level
across-partnership, except that western and Japanese joint ventures had more
emphasis on company vision. 553
5.4 Relationships between organisational performance and HRM practices
The results showed that there is a close relationship between the HRM practice
indicators evaluated by HR managers and the organisational performance
independently rated by industrial bureau officials. Figure 1 presents the results of
multiple regression analysis of the effects of both functional and strategic HRM on
organisational performance.
Figure 1 presents the relationships between the different HRM practices and
performance. As it is shown, the higher levels of functional HRM practices lead to
superior performance on all seven indicators. At this stage of development, functional
HRM seemed playing a crucial role on general performance whereas strategic HRM
affected more innovation performance and task accomplishment. The results largely
supported the hypothesis that functional and strategic HRM practices influenced
organisational performance.

Figure 1.
Effects of HRM on
organizational
performance (b)
IJM 6. Study 2: SHRM, innovation and entrepreneurship modelling
26,6 The development of HRM practices has been closely related to innovation and
entrepreneurship activities in Chinese companies. However, there is a lack of models
for representation of the relationship between SHRM, innovation and entrepreneurship
strategies. An in-depth multi-case study was conducted to investigate the models of
Chinese entrepreneurship and innovation as it is related to key dimensions and HRM.
554 Field structured interview was carried out among CEOs and HR managers from
24 local companies in the Yangtze Delta Region (Zhejiang, Shanghai and Jiangsu
provinces). Altogether 52 people were interviewed. The interview guide includes
questions relating to key issues in entrepreneurship. Here are the main questions:
(1) General background of business development and services.
(2) What are the context, process and key events of the business development?
(3) What are the key KSAOs for successful and failure of the business?
(4) HRM practices and business strategies in the context of Chinese culture?
(5) How do innovative activities facilitate and enhance entrepreneurship?
(6) What are the entrepreneurial performance in relation to HRM and innovative
strategies?
6.1 Wahaha group growth: International entrepreneurship model
Many successful companies in China adopted an international entrepreneurship model,
i.e. developing new business ventures through joint-venturing with foreign firms and
competing well-known international brands through similar business approach and
strategy. We interviewed CEO and HR managers of the famous local company Wahaha
group. Transferred and grown from a small and local nutritional food school factory,
the Wahaha group has now more than 10,000 employees and is ranked as No. 1
beverage producer in China. With a progressive cross-regional entrepreneurial
strategy, 40 subsidiary companies across 16 provinces or cities in China are developed
by Wahaha group with approaches of acquisitions, mergers, JVs and alliance
partnerships. Two kinds of important international entrepreneurial actions were made
in the last ten years by the Wahaha group: one action was to develop five subsidiaries
of Danone Group joint venture (1996) with a cross-regional corporate culture strategy;
the other was to produce so-called “Future Cola” (2000) to compete with multinationals
such as Coca Cola with a national brand strategy. We therefore proposed that the
Chinese international entrepreneurship model may represent a combination of local
ownership with international approach to culture and national/international business
strategies.

6.2 Hengdian group growth: Multi-business entrepreneurship and intrapreneurship

model
The field study also focused upon how already-successful-local companies started their
second-round of entrepreneurship through business innovation and strategic HRM.
One example was the Hengdian group located in Zhejiang province. Our interview
revealed that the company was developed from a small countryside village factory
producing silk products. Now it has more than 37,900 employees who are working in
30 subsidiaries, three overseas subsidiaries, and six international joint ventures. Two
key components of Hengdian group’s international entrepreneurship were mostly Strategic HR,
reported during the interview: innovation and
(1) a four “J core values” approach of joint-venture entrepreneurship with overseas entrepreneurship
companies and local community: joint-venture with other firms, joint-ownership
with community, joint welfare with townships, and joint-shareholding with
employees which created a collective entrepreneurship platform for innovative
business development; 555
(2) intrapreneurship (developing new ventures) by internationalisation HR
strategy: 36 foreign managers and technicians (knowledge workers) were
hired to work in their new start-ups and subsidiaries.

These practices have brought into the group innovative managerial practices and
technology transfer.

6.3 Lenova group and Haier group: Transformational entrepreneurial model

The field interview showed that most of Chinese collectively-owned enterprises are
under transformation into shareholding or multiple-ownership systems with
entrepreneurial approaches to start their new business, renew their HR strategies
and develop high-performance culture. Both Lenovo group (IT sector) and Haier group
(Home appliances sector) are among the most successful collectively owned
entrepreneurial firms in our interview sample. Field interview showed that there
were four significant entrepreneurial features from those collectively owned
companies:
(1) High growth, usually started from a small group-based collective firm and
quickly grew into a group with several thousands of employees with rapid
business.
(2) Team-based, mostly transformed from collective-systems to shareholding firms
with entrepreneur team development.
(3) Multi-business, largely diversified business models and new forms of
organisations.
(4) Cross-regions, commonly adopted cross-regional business models to expand
their competitiveness and innovativeness.

6.4 Family business: Wenzhou individual entrepreneurship model

This is mainly based on of family business in areas of garments, mechanical
components, chemical products, and shoes. Functional HR are most popular in
Wenzhou with an emphasis on product marketing while generally recruiting
knowledge workers from cross-regions to support rapid business development. As we
interviewed CEOs and HR managers/supervisors from four key firms there, it was
noticed that although the Wenzhou model was widely seen as the Chinese
entrepreneurial model, it is shifting toward an innovative version of corporate
entrepreneurship and introducing more strategic HRM practices especially for core
employees. While many Wenzhou firms have invested in the western region of China,
many local firms in Chongqing area have hired foreign knowledge workers and
adopted more SHRM practices in terms of group packages and training.
IJM 6.5 Township entrepreneurship: Suzhou collective model
26,6 This model was formed during 1970s when township enterprises were flourishing
near Suzhou area near Shanghai. Most of Suzhou enterprises were collectively
owned and using lots of collective entrepreneurship approach, i.e. starting new
business through collectively-oriented HR strategies. However, in the recent years,
there is a clear trend of moving toward strategic HRM and multi-ownership.
556 Figure 2 summarizes the interview study by a two dimensional model of
entrepreneurship and SHRM practices. As we can see, the first dimension is individual
entrepreneurship versus collective entrepreneurship and the second dimension is
functional HRM versus strategic HRM. Eight models of entrepreneurship and strategic
HRM are presented in Figure 2.
Multiple regression analysis showed that among companies under individual
entrepreneurship model, individual performance such as operational employee
turnover, task accomplishment and individual satisfaction was significantly affected
by functional HRM practices such as recruitment on turnover ðb ¼ 20:14; p , 0:05Þ;
performance appraisal on task performance ðb ¼ 0:16; p , 0:05Þ; and reward/
compensation on satisfaction ðb ¼ 0:31; p , 0:01Þ: Among companies under collective
entrepreneurship, strategic HRM practices affected significantly the organisational
level performance indicators such as core employee turnover ðb ¼ 20:23; p , 0:01Þ;
leadership performance ðb ¼ 0:24; p , 0:01Þ and career satisfaction ðb ¼ 0:20;

Figure 2.
An
entrepreneurship-SHRM
model
p , 0:01Þ which functional HRM practices had marginal effects on performance Strategic HR,
indicators. However, if we take technological innovation indicator as a joint predictor, innovation and
the relationship between HRM practices and performance indicators are largely
enhanced. entrepreneurship

7. Conclusion 557
The results of the above-two studies largely supported or modified the four
hypotheses. The results showed that there are mainly two dimensions among HRM
practices in most Chinese companies: functional HRM practices and strategic HRM
practices. The former proved to be more related with most of performance indicators
while the later was more linked with innovation performance and task accomplishment
across levels. Also, HRM practices showed to be differentiated across business
ownerships and joint venture partnerships particularly among strategic HRM such as
career development, team compensation, quality control activities and corporate
culture. Both functional and strategic HRM practices significantly influence
organisational effectiveness, especially the innovation performance by strategic
HRM. Entrepreneurship could be categorized into two dimensions: functional versus
strategic HRM and individualistic versus collectivistic entrepreneurship. Among the
different types of entrepreneurship models, companies under collective
entrepreneurship has a closest link between strategic HRM and organisational level
performance whereas under individual entrepreneurship, individual level performance
indicators are more closely related to functional HRM practices.
These results have several important implications to HRM strategies, innovation
and entrepreneurship. First, team- and career-based strategic HRM practices have
long-term effects on organisational performance among the Chinese companies.
Second, culture plays a crucial role in formulating HRM practices such as team and
corporate culture activities. Third, collective entrepreneurship modelling is more
suitable to the Chinese context of both manpower and business development. Fourth,
technological innovation could moderate the effects of HRM on entrepreneurship. In
this aspect, more empirical research and case study are underway to find out the key
mechanism in relation to the rapid growth of the Chinese entrepreneurship.

References
Bjorkman, I. and Lu, Y. (2001), “Institutionalisation and bargaining power explanation of HRM
practices international joint ventures: the case of Chinese-western joint ventures”,
Organisation Studies, Vol. 22 No. 3, pp. 491-512.
Braun, W.H. and Warner, M. (2002), “Strategic human resource management in western
multinationals in China: the differentiation of practices across ownership forms”,
Personnel Review, Vol. 31 Nos 5/6, pp. 553-643.
Chandler, G.N. and Lyon, D.W. (2001), “Issues of research design and construct measurement in
entrepreneurship research: the past decade”, Entrepreneurship: Theory and Practice,
Summer, pp. 101-13.
Clark, I. (1998), “Designing and sustaining an entrepreneurial role for the human function:
strategic choice or competitive conditions? Evidence from engineering process plant
contracting”, International Journal of Entrepreneurial Behavior & Research, Vol. 4 No. 1,
pp. 51-70.
IJM Cyr, D.J. and Schneider, S.C. (1996), “Implications for learning: human resource management in
east-west joint ventures”, Organization Studies, Vol. 17 No. 2, pp. 207-26.
26,6 Davidsson, P. and Wiklund, J. (2001), “Levels of analysis in entrepreneurship research: current
research practice and suggestions for the future”, Entrepreneurship: Theory and Practice,
Summer, pp. 81-99.
Geringer, J.M., Frayne, C.A. and Frayne, C.A. (2002), “In search of “best practices” in
558 international human resource management: research design and methodology”, Human
Resource Management, Vol. 41 No. 1, pp. 5-30.
Hitt, M.A., Lee, H.U. and Yucel, E. (2002), “The importance of social capital to the management of
multinational enterprises: relational networks among Asian and Western firms”, Asian
Pacific Journal of Management, Vol. 19 Nos 2/3, p. 353.
James, W.M. (2002), “Best HR practices for today’s innovation management”, Research
Technology Management, Vol. 45 No. 1, pp. 57-60.
Li, L.X. (2000), “An analysis of sources of competitiveness and performance of Chinese
manufacturers”, International Journal of Operations & Production Management, Vol. 20
No. 3, pp. 299-315.
Marsili, O. (2002), “Technological regimes and sources of entrepreneurship”, Small Business
Economics, Vol. 19 No. 3, pp. 217-31.
McElwee, G. and Warren, L. (2000), “The relationship between total quality management and
human resource management in small and medium-sized enterprises”, Strategic Change,
Vol. 9, pp. 427-35.
Mueller, S.L. and Thomas, A.S. (2000), “Culture and entrepreneurial potential: a nine country
study of locus of control and innovativeness”, Journal of Business Venturing, Vol. 16,
pp. 51-74.
Osman-Gani, A.A.M. (1999), “International technology transfer for competitive advantage: a
conceptual analysis of the role of HRD”, Competitiveness Review, Vol. 9 No. 1, pp. 9-19.
Poutziouris, P., Wang, Y. and Chan, S. (2002), “Chinese entrepreneurship: the development of
small family firms in China”, Journal of Small Business and Enterprise Development, Vol. 9
No. 4, pp. 383-99.
Shrivastava, S. and Shaw, J.B. (2004), “Liberating HR through technology”, Human Resource
Management, Vol. 42 No. 3, pp. 201-22.
Simon, D.G. and Hitt, M.A. (2003), “Managing resources: linking unique resources, management,
and wealth creation in family firms”, Entrepreneurship: Theory and Practice, Vol. 27 No. 4,
pp. 339-58.
Thakur, S.P. (1998), “Size of investment, opportunity choice and human resources in new venture
growth: some typologies”, Journal of Business Venturing, Vol. 14, pp. 283-309.
Tsui, A. and Lau, C.M. (2002), The Management of Enterprises in the People’s Republic of China,
Kluwer Academic Publishers, Dordrecht.
Wang, Z.M. (2000), Managerial Psychology, People’s Educational Press, Beijing (in Chinese).
Wang, Z.M. (2003), “Chinese models of entrepreneurship and strategic human resources”,
paper presented at the International Conference on Managing HR in the high-growth firms,
14-15 February, OSU, Columbus.
Wang, Z.M. and Mobley, W. (1999), “Strategic human resource management for
twenty-first-century China”, Research in Personnel and Human Resources Management,
JAI Press, Greenwich, CT, Suppl. 4, pp. 353-66.
White, S. (2000), “Competition, capabilities, and the make, buy, or ally decisions of Chinese
State-owned forms”, Academy of Management Journal, Vol. 43 No. 3, pp. 324-41.
Wofford, T.D. (2002), “Competitive advantage: strategy and human resources”, Journal of Strategic HR,
Applied Management and Entrepreneurship, Vol. 7 No. 1, pp. 135-47.
innovation and
Further reading entrepreneurship
Michie, J. (1999), “HRM practices, R&D expenditure and innovative investment: evidence from
the UK’s 1990 workplace industrial relations survey”, Industrial and Corporate Change,
Vol. 8 No. 2, pp. 211-34. 559