This chapter will examine the growth of some of the main Asian economies and in particular explore their human resource practices. Japan has become an exemplar of and model for HRM practices, and is the subject of so many published works that the observation of its organisational working practices has become an industry in itself, despite recent severe setbacks to the Japanese economy.
Hong Kong has also witnessed extraordinary growth over the past 20 years, and has become a major centre in Asia for commerce and finance despite its absorption into the communist mainland regime. The People’s Republic of China (PRC) has potentially the largest market in the world in terms of population, and foreign investors have been keen to gain a foothold there. Foreign companies have set up manufacturing bases and established joint ventures, and the export of Chinese goods has seen a huge expansion.
This is an economy with an enormous potential. Its management processes have not been scrutinised to the same exten as the Japanese systems, but there is a burgeoning literature on management and HRM in China. In addition, Singapore and South Korea are examined here as examples of other ‘tiger’ economies in the region, although space limits further investigation of important Asia Pacific economies such as Australia, India, Indonesia, Malaysia, New Zealand, the Philippines, Taiwan and Thailand.
The assumption in the past was that management and employee relation practices could be transposed to any international context with requisite training and the implementation of proper systems of management, usually American. Another assumption by many Westerners was that Asian cultural influences on management could largely be ignored. This was a perspective strongly informed by imperialist attitudes that assumed that what was good for Western economies could automatically be transplanted into any sociocultural context.
As has already been noted in Chapter on international HRM, these convergence assumptions have been rigorously challenged by divergence theorists from a cultural and institutional perspective, as well as by Whitley (1992) and his followers, who believe that each national context throws up its own unique business system. However, more recently there has been a return to the convergence view, much influenced by the phenomenon of ‘globalisation’ (a concept still largely ill defined and subject to much misunderstanding) and the relative decline of Japan in relation to the United States in the latter part of the 1990s.
Separating and analysing the relative strength of convergent and divergent variables of international HRM has become the main focus of a number of studies in the Asia Pacific region (Warner, 1993; Easterby- Smith et al., 1995; Leggett and Bamber, 1996; Paik et al., 1996; Rowley, 1997; Sparrow and Wu, 1999; Warner, 2000).
Recent studies that have examined the specific question of divergence and convergence in the Asia Pacific region have come to the general conclusion that divergence of HRM practices remains predominant (Leggett and Bamber, 1996; Rowley, 1997; Warner, 2000).
This is due to socio-cultural differences, varied investment patterns and financial institutional practices, and political and historical factors that have led to different stages of economic development. Leggett and Bamber (1996) claim that despite enormous growth, high investment from foreign companies and closer cooperation through the Association of South East Asian Nations (ASEAN) and the Asia-Pacific Economic Cooperation (APEC) forum, Asia Pacific economies diverge into three tiers or levels of development. The top tier, led predominantly by Japan, also includes Australia, Hong Kong, New Zealand, Singapore, Taiwan and South Korea.
The non-Anglo-Saxon countries are generally known as the Asian tigers, and are made up of what has come to be called newly industrialised economies (NIEs). These have witnessed impressive growth rates in their economies over the past 20 years, and are moving into a second phase of development where the reliance on cheap labour is being superseded by investment in high technology and service industries.
The second tier is a second generation of tigers, comprising Malaysia, the PRC and Thailand. They reflect the earlier experience of the older tigers, and are at present at the stage of being ‘caught in a “sandwich trap” of cheap labour competition from below and exclusion from higher value-added markets from above’ (Deyo, 1995: 23). The third tier, made up of Burma, India, Indonesia, the Philippines and Vietnam, comprises a diverse range of economies that have not reached the overall developmental stages of the first two tiers.
Sections of the Indian economy, however, have experienced enormous growth in the past ten years, albeit from a comparatively low base, and some sectors are highly developed. What characterises this tier is the availability and abundance of cheap and unskilled labour. Nevertheless, to put these economies into one all-embracing category does not do justice to the diversity of their cultures, nor the political and social structures that create their unique business systems. As Warner (2000) states:
‘There is hardly any evidence to support the classic convergence hypothesis . . . it is hard to argue that Asian HRM is fast converging to a common model’. In separating forms of convergence into ‘hard’ and ‘soft’ (‘hard’ being labour market and economic influences exemplified by deregulation and privatisation and institutional structures, and ‘soft’ being more concerned with sociocultural variables) Warner (2000) concludes that In studying the management practices of the five Asian countries in this chapter we are also studying the uniqueness of each business system – the factors that make Chinese systems in Hong Kong different from those of the PRC and of Japan. We begin by examining the Japanese business system from the perspective of its human resource management practices.
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