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PERSPECTIVES
Future research on human resource managementsystems in Asia
Pawan Budhwar & Yaw A. Debrah
Published online: 17 September 2008# Springer Science + Business
Media, LLC 2008
Abstract Re-emphasizing the need to examine human resource
management(HRM) in context, this article builds around four themes.
First, it analyses the mainissues discussed in the existing
literature regarding HRM in the Asian context.Second, it highlights
the critical challenges facing HRM function in the region.Third,
along with the analysis, it presents an agenda for future research.
Fourth, itpresents a framework useful for highlighting the context
specific nature of AsianHRM functions and the main determinants of
HRM policies and practices from across-national comparative
perspective.
Keywords HRM .Asia . Research in HRM . Cross-national HRM
Considering the rapid globalization, developments in the field
of HRM and anumber of region-specific significant developments,
there is now a greater need toexamine HRM systems of Asian
countries. For compositional simplicity in thisarticle, we use Asia
(or Asian countries) to refer mainly to the main emergingeconomies
in the region (i.e., China, India, South Korea, Taiwan, Hong
Kong,Malaysia, Singapore, Indonesia, the Philippines, Thailand and
Vietnam) oftenreferred to as developing Asia by the UN and also
Japan. An analysis of keyachievements of the Asian region
highlights a number of important facts, such as itproduces more
goods and services than either North America or the European
Unionand this trend is expected to accelerate in the years to come.
Many of the importantemerging economies are located in Asia (see
The Economist, 2007). Further, theyattract an enormous amount of
foreign direct investment (FDI). For example, Chinawas the top
destination for foreign capital in 2003 with a record inflow of $55
billion,overtakingAmerica for the first time and now continuing to
do so (see Rowley&Warner,
Asia Pac J Manag (2009) 26:197218DOI
10.1007/s10490-008-9103-6
P. Budhwar (*)Aston Business School, Aston University, Aston
Triangle, Birmingham B4 7ET, UKe-mail: [email protected]
Y. A. DebrahSchool of Business and Economics, University of
Wales, Swansea,Singleton Park, Swansea SA 2 8PP, UKe-mail:
[email protected]
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2005; UNCTAD, 2007). It is also predicted that most new members
of the newlyaffluent nations would come from Asia in the
twenty-first century (see Tan, 2002).Despite all this, most Asian
emerging economies have a long way to go before theyacquire the
status of developed nations (for example, in professionalism,
formalism, andrationalization of management systems). Nevertheless,
it is important to examine the roleof HRM function in the region as
it plays a significant role in the economic developmentof nations
(see Debrah, McGovern, & Budhwar, 2000; Tayeb, 1995). The
existingliterature (see for example, Budhwar, 2004) highlights a
scarcity of HRM research inthe Asian context (with an exception of
the Chinese and Japanese contexts).Considering the growing economic
importance of the region, it has now become animperative to
regularly conduct systematic research investigations which can
highlightthe relevant HRM system(s) for the region. This will not
only help decision makers todevelop appropriate policies but will
also help in developing valid HRM theories.
Lately, Jackson and Schuler (1995) and Schuler, Budhwar, and
Florkowski (2002)have called for the examining of HRM systems in a
given context. It will not onlyhelp to highlight the context
specific nature of HRM but also to reveal the influenceof various
factors and variables on HRM. This will contribute to the
development ofrelevant policies and practices and theories of HRM
(Budhwar & Debrah, 2004).Research in contextual isolation is
not only misleading, but it strongly hinders theunderstanding of
core aspects of the phenomenon in any significant way (Schuleret
al., 2002: 41). In a significant contribution to this debate, Meyer
(2006) assertsthat in view of the challenges facing Asian
businesses, Asian researchers shouldfocus on context-specific
issues. In his view, such research should be capable ofmaking major
contributions, for instance by explaining context-specific
variablesand effects, and by drawing on traditional Asian thought
in developing new theories.In this article, we review the existing
literature on HRM in Asia, highlight possibleavenues for future
research, and also how research investigations on HRM in Asiacan be
conducted in a meaningful manner. Table 1 highlights the main
themesalong which research in the Asian context related to the
field of HRM has beenconducted. It also helps us to identify the
key gaps in the existing literature andenables us to draw themes
for future research. For example, what are the dominantemerging HRM
models of major Asian economies? What are the main factorswhich
dictate HRM in Asia? How best we can examine the influence of
suchfactors on Asian HRM? Is HRM converging or diverging within
Asian countries?
Developments in Asian HRM and the research agenda
Based on the above analysis and a thorough literature review, we
propose a list of 16areas for future research directions. Our first
proposed focus for future research is:
Future research direction 1: Need to conduct more research in
the Asian region soas to highlight the context-specific nature of
personnelfunctions and relevant HRM system(s) for each nation.
An analysis of relevant literature highlights that the field of
HRM is still evolvingin the region. The literature analysis on HRM
in Asia in particular shows thatresearch has been and is being
conducted on the following topics. First, the literature
198 P. Budhwar, Y. Debrah
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regularly features a number of country-specific studies, such as
those on Japan(Sano, Morishima, & Seike, 1997), Singapore (Chew
& Horwitz, 2004), Hong Kong(Kamoche, 2003; 2006), Thailand
(Kamoche, 2000; Siengthai & Bechter, 2005),Vietnam (Kamoche,
2001), Malaysia (Chew, 2005), Taiwan (Lin, 1997), Indonesia(Habir
& Larasati, 1999) and Korea (Rowley, 1998). At present, a lot
of research isbeing published on different aspects of Chinese
management (Chow, 2004; Cooke,2005; Mathews, 2006; Peng, 2007;
Warner, Wong, & Lee, 2002). Similarly, there isinformation
available regarding different aspects of managing human resources
indifferent countries of the region (see Budhwar, 2004). For
example, the Japaneseemployment system and the management models of
Singapore, Chinese and Koreanbusinesses are now explored in the
literature (see Isobe, Makino, & Goerzen, 2006;Rowley, 1998;
Tsui-Auch & Lee, 2003). However, in the present context, the
validityof a number of such established ideal-typical management
models is questionable. Toprovide up to date information to both
academics and practitioners, there is a need toexamine the
applicability of such models in the present global context. To make
theanalysis more meaningful, researchers should make serious
attempts to highlight themajor factors that determine HRM policies
and practices in the region.
Future research direction 2: Cross-national HRM research should
help to highlightthe emerging management model(s) applicable
tospecific countries of the region.
Second, a number of studies focus on the possible issues and
problems relating toHRM in Asia from a global perspective (see El
Kahal, 2001; Narula, 2006).Emphasizing cultural values, Kao, Sinha,
and Wilper (2000) stress the need toindigenize the management
practices in Asian organizations. The authors challengethe
applicability of Western management and organization theories in
the Asiancontext. Pun, Chin, and Lau (2000), on the basis of a
comparative analysis betweenAnglo-American and Chinese cultures,
highlight the pervasive influence of Chinesecultural heritage and
collective orientation on Chinese organizational life. In order
toadapt to the growing global environment, these authors suggest
the need todetermine changes to aspects of Chinese management
culture. This is a big challengeto local organizations, as due to
the deep cultural and institutional differences, eventhe foreign
firms operating in China find it hard to implement their
head-quartersHRM practices in their Chinese subsidiaries (see Kidd,
Li, & Richter, 2001).Arguably, this is changing as a study by
Bjorkman and Lu (1999) reveal thesuccessful implementation of
global standardized HRM practices in foreign firmsoperating in the
Chinese context. Similarly, Bjorkman and Budhwars
(2007)investigation also highlights the existence of a similar
phenomenon in foreign firmsoperating in India. Such results
indicate that perhaps certain levels of standardizationof HRM
systems is taking place around the globe. However, more research is
neededin this regard. This is an important agenda for future
research, especially to highlightthe reasons for the occurrence or
non-occurrence of such phenomena.
Future research direction 3: Highlight the main factors
contributing (or otherwise)to the successful implementation of
Western globalstandardized HR policies and practices in the
Asiancontext.
Future research on human resource management systems in Asia
199
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Tab
le1
Thematic
areasof
contem
porary
HRM
stud
iesin
Asiaandareasof
future
research.
Themes/studies
Authors
Challenges
identified
Areas
offuture
research
Country
specific
studies
Japan
Isob
e,Mak
ino,
andGoerzen
(200
6),Sano
etal.(199
7)Provide
agood
understandingof
HRM
modelsin
specific
countriesbutmodelscannot
beextended/
appliedto
othercountriesin
theregion
There
istheneed
toexam
inetheapplicability
ofsuch
mod
elsto
theregion
asawho
le(allcoun
tries
intheregion
albeitwith
significantmodifications)
Singapore
Chew
(200
4)HongKong
Kam
oche
(200
3,20
06)
Taiwan
Tsui-A
uchandLee
(200
3),Lin
(199
7)Korea
Row
ley(199
8)China
Matthew
s(200
6),Cooke
(200
5),Warner,Won
gandLee
(200
2)Malaysia
Chew
(200
5)Vietnam
Kam
oche
(200
1)Thailand
Sieng
thai
andBechter
(200
5),Kam
oche
(200
0)Indonesia
HabirandLarasati(199
9)Dom
inance
ofAng
lo-A
merican
theories
Meyer
(200
6),Narula
(200
6),El-Kahal
(200
1)Itisargued
that
Asian
research
agendastend
tobe
dominated
bytheories
developedforAng
lo-
American
contextsthatarenotsufficiently
adapted
tolocalcircum
stances
Whatisrequired
isresearch
that
isable
tomake
major
contributio
ns,forinstance
byexplaining
context-specific
variablesandeffects,andby
draw
ingon
tradition
alAsian
thou
ghtin
developing
new
theories
Emerging
managem
entmod
els
Issues
relatin
gto
contextof
Asian
managem
ent
research.
Kao,Sinha,andWilp
er(199
9),Pun,Chinand
Lau
(200
0),Kiddet
al.(200
1),Hofstede(200
7)Challeng
estheapplicability
ofWestern
managem
entandorganizatio
ntheories
tothe
Asian
context.Itrelatesto
how
toindigenize
managem
entpractices
inAsian
organizatio
ns
There
istheneed
forcross-natio
nalHRM
research
toidentifyem
erging
managem
entmod
els
applicable
tospecific
coun
triesandtheregion
ingeneral
Emph
asison
cultu
ral
values
The
overem
phasisof
collectiveorientationon
Chinese
organizatio
nallifeisalso
seen
asa
challenge
Researchisneeded
tounderstand
whataspectsof
Chinese
cultu
reneed
tochange
inorderfor
Chinese/
Asian
firm
sto
adapttoglobalenvironm
ent
200 P. Budhwar, Y. Debrah
-
Tab
le1
(con
tinued)
Themes/studies
Authors
Challenges
identified
Areas
offuture
research
Pervasive
influenceof
Chinese
cultu
ral
heritage
Con
vergencedivergence
thesisin
theAsian
context
Row
ley(199
8),Row
leyandBenson(200
2),
Warner(199
8,20
02),Amante
(199
8)Recentinvestigations
intheregion
pointto
softconv
ergence
butevidence
isinconclusive
Moreresearch
needed
toestablishwhether
thereis
anyevidence
ofhardconv
ergence
inview
oftheheterogeneity
(suchas
populatio
n,geography,
econ
omies,econ
omic
developm
entph
ase,
labor
market,legalandpolitical
set-up)
Con
vergencedivergence
orcrossvergenceof
managem
entpractices
Isob
eet
al.(200
6),Row
leyandWarner
(200
5),Begin
(199
7)Row
ley(199
8),
Wan
g,Huan
g,an
dBan
sal(200
5),
Tuet
al.(200
2)
The
econ
omic
crisisof
thelate
1990
schallenged
thevalid
ityof
family
business
mod
elsin
their
presentcontext.Italso
usheredin
professional
managem
ent
There
isadearth
ofresearch
onissues
pertaining
totheem
ergenceof
professional
managem
ent.
Researchisneeded
onho
witisevolving
Factors
contribu
tingto
thechanging
nature,managem
entand
employmentrelatio
nsin
firm
sandotherdominantbusiness
groups
(chaebols,keiretsus)
Vermaet
al.(199
5),Kuruvilla,
Das,Kwon,
andKwon
(200
2),Frenkel
andPeetz
(199
8),
Debrah(200
2),Hadiz
(200
2),
Frenk
elandPeetz
(199
8)
The
effectsof
globalizationon
employment
relatio
nssystem
s.For
exam
ple,
thedeclinein
unionmem
bershipandem
ploymentsecurity
Further
research
needed
onmorecoun
triesto
determ
inethenew
patternsof
employment
relatio
nsandto
provideacomprehensive
picture
ofthemaindeterm
inantsof
HRM
system
sin
the
region
The
impact
ofglobalizationandinternationalcompetitivenesson
employees
Row
leyandBae
(200
4),Wisem
an(199
8),
Budhw
arandFadzil(200
0),Luo(200
2)The
challenges
arisingfrom
thechanging
organizatio
nalenvironm
entandviolationof
psychologicalcontract
The
need
todeterm
inewhatconstitutesviolationof
psychologicalcontractand
thecontextualpatterns
anddiversity
ofresponsestopsychologicalcontract
violations
Economic
liberalizationandprivatizationhave
resultedin
increasedstress,d
eclin
ingjobsecurity,
downsizingandretrenchmentin
China,India,
Vietnam
,andJapan
Inadditio
n,itisnecessaryto
exam
inehowto
achieveabalancebetweentraditionalmanagem
ent
basedon
grou
pism
andnewmanagem
entb
ased
onindividu
alism
For
employeesthemovefrom
traditional
employ
mentpractices
constitutes
violationof
psychologicalcontract
Itisalso
essentialto
exam
inetheem
erging
nature
andconstituentsof
internal
labormarkets(ILMs)
inAsian
firm
s
Future research on human resource management systems in Asia
201
-
Tab
le1
(con
tinued)
Themes/studies
Authors
Challenges
identified
Areas
offuture
research
HRM
issues
innew
sectorssuch
asITeS
&BPO
Bud
hwar
etal.(200
6),Cheng
appa
andGoy
al(200
2),Chowdh
ry(200
3),Prabhakar
(200
3),Bud
hwar
etal.(200
6),Ofori(200
3),
Hou
ghtonandSheehan
(200
0),Debrahet
al.
(200
0),Bibby
(200
3),Ali(200
5)
These
stud
ieshave
high
lighted
thestressful
nature
ofcallcenter
workandworkin
business
processou
tsourcingfirm
s.Thisisalso
thecase
with
know
ledge-driven
econom
yworkers(biotech
clusters)butthereisnotevidence
ofmanagem
ent
strategies
todeal
with
theseproblems
Itisessentialforresearchersto
investigatethe
causes
ofem
ployee
dissatisfactionin
thenew
sectorsandhigh
light
thekind
ofHRM
system
and
practices
suitableforthenew
sectors
Diversity
managem
ent
Holland
(200
3),Debrah(200
2)Issues
relatin
gto
gender
(wom
en),ageand
ethnicity
have
been
brough
tto
thefore
dueto
labour
shortagesandtheloom
ingdemographic
timebo
mb
Highlight
themainconcerns
ofboth
foreignand
localfirmstowards
themanagem
ento
fworkersin
thesector
Snape
andRedman
(200
3)The
challenges
facedby
firm
sin
managingthe
increasing
numbers
ofwom
enandim
migrantsin
theworkplace
have
notbe
fully
explored
Researchisrequired
onthedy
namicsof
diversity
managem
entin
theAsian
contextandstrategies
formanagingdiversity
Pilling(200
3)
HRM
andorganizatio
nalperformance
Bae
andLaw
ler(200
0),Huan
g(199
8),
Agarw
ala(200
3),Singh
(200
3)Haveno
tedthemixed
andless
conclusive
results
relatin
gto
thecontribu
tionof
HRM
tofirm
performance
intheAsian
context
Researchalso
needed
tohigh
light
thenature
and
kind
oflegislationsuitableto
safeguardthe
increasing
diverseworkforce
Qualityof
research Tung(200
5),Meyer
(200
6),W
hite(200
2),
Lau
(200
2),Kao
etal.(199
9),Kiddet
al.(200
1)Researchlim
itedto
simplistic
comparisons,
correlationalanalysisprovidingno
insightinto
underlying
processesandskew
ed,idiosyncratic
sampling
Itisnecessaryto
exam
inethisrelatio
nshipin
the
Asian
contextand
toshed
light
onwhich
school
ofthought(universal-bestpractices,contingencyor
bundles)
ismoreapplicable
inAsian
organizatio
nsResearchers
need
tocontinuously
develop,
test
andre-testconstructssuitableforconductin
gresearch
intheAsian
Context.
Boldtypeface
indicatesthat
thearticle
was
publishedin
AsiaPacificJourna
lof
Man
agem
ent.
202 P. Budhwar, Y. Debrah
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Third, a significant number of scholars (see for example,
Amante, 1998; Andrews& Chompusri, 2005; Rowley, 1998; Rowley
& Benson, 2002; Warner, 1998, 2002)have examined the
convergence-divergence thesis in the Asian context. Though,over the
last decade or so, research evidence has helped to supplant the
convergenceview, recent investigations in the Asian region (see
Warner, 2000, 2002) emphasizethe notion of soft convergence as an
outcome of globalization. From themultinational corporations (MNCs)
perspective, the implementation of globalstandardized HRM practices
and policies (with local adjustments) is also anindication of soft
convergence. However, considering the heterogeneity (such
aspopulation, geography, economies, economic development phase,
labor markets,socio-cultural, legal and political set-up, and HRM
systems) of the region andcontext specific nature of HRM, it will
not be sensible to talk about significant orhard convergence. More
research is needed to confirm such a thesis.
Future research direction 4: Examine the convergence-divergence
or cross-vergence thesis for HRM systems in the Asiancontext.
Fourth, the unique characteristics of different business groups
(such as chaebols,keiretsus) operating in different countries in
the region which have contributed agreat deal in their economic
success have attracted a lot of research interest (seeIsobe et al.,
2006; Rowley & Warner, 2005). These business groups have deep
rootsin the core institutions (such as family structure,
Confucianism), and socio-culturalbackground of their respective
societies and accordingly have their own HRMsystems (see Begin,
1997; Rowley, 1998; Yang, 2006). The economic crisis of late1990s
and the present competitive environment have raised questions
regarding thevalidity of such ideal-typical family business
management models in the presentcontext (see Tsui-Auch & Lee,
2003; Tu, Kim, & Sullivan, 2002; Wang, Huang, &Bansal,
2005). Before the economic crisis, such groups, although
professionalizedtheir management systems, retained family control
and corporate rule. However, thepressure created by the economic
crisis is forcing the groups to relinquish somefamily control and
corporate rule by absorbing more professional managers into
theirtop management (Peng & Delios, 2006). A similar pattern is
emerging in the Indianprivate business houses where top positions
are being offered to best availableprofessionals and a more formal
and rationalized approach to HRM is being adopted(see Budhwar,
2003). However, this phenomenon is still evolving across many
Asiancountries and there is a scarcity of reliable literature in
this regard (White, 2002). Toconfirm it more research is needed and
should be the focus of future research.
Future research direction 5: Highlight the main factors
contributing to thechanging nature and management systems
ofdominant business groups (for example, chaebols,keiretsus) in the
Asian region.
Fifth, some scholars highlight the effects of globalization on
the employmentrelations system of Asian countries (Frenkel &
Peetz, 1998; Verma, Kochan, &Lansbury, 1995). Most countries of
the region (like many others around the globe)experienced decline
in the union membership (Kuruvilla, Das, Kwon, & Kwon,2002).
Changes in industrial relations in the Asian context due to
globalization is
Future research on human resource management systems in Asia
203
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also contributing to adjustment from previously salient
constraint (labor peace andindustrial stability) to the new
imperative of enhancing firm-level competitivenessthrough both
numerical and functional flexibility (Kuruvilla & Erickson,
2002). It isclear that globalization and the Asian economic crisis
of late 1990s have certainlyaffected the employment relations of
Asian countries in one way or the other, such asemployment security
(see Debrah, 2002; Hadiz, 2002). What are the new pattern(s)or
perhaps more valid scenario of employment relations is then worth
examining?
Future research direction 6a: Highlight the emerging patterns of
employmentrelations in Asian countries.
From the above discussion it becomes evident that the existing
HRM research inthe Asian context is both limited and possibly not
conducted in a systematic mannerwith a clear framework which can
highlight the main determinants of HRM, and alsohighlight the
context specific nature of the personnel function, and enable
scholars todraw a comprehensive picture of the scene. This is
consistent with Meyers (2006)view that in Asia research agendas
tend to be dominated by theories developed forAnglo-American
contexts that are insufficiently adapted to local
circumstances.Research investigations along the lines of Asian
context-specific issues cansignificantly help to cover such gaps.
An analysis of the existing literature, alsohighlight a number of
challenges faced by the HR function in the region. The nextsection
presents some of the main challenges and further research areas as
a possibleway forward to overcome the challenges.
Challenges facing HRM function in Asia
As indicated above, at present globalization is changing the
(stable) workplacesystems in the region. This is evident in many
countries. Thus, the effects of changescreated by the globalization
pose major challenges for HRM in the Asian region(also see
Hofstede, 2007). For instance, in China and India there is some
evidencethat economic liberalization arising from globalization and
competitive pressures ischanging the pattern of HRM, employee
relations and industrial relations and laborlegislation (see Cooke,
2005 for information on China and Saini & Budhwar, 2004for
developments in the Indian legal framework). Some of these changes
areoccurring both in the private and public sectors in both
countries. In China, it isargued that the emergence of market
economy is undermining the nanny employerimage of organizations as
there is a concerted effort to shift the huge welfare burdenfrom
employers to individuals. In line with this approach, the
downsizing oforganizations and changing recruitment and retention
practices have resulted ininsecurity for workers in China. It is
expected that a similar pattern will emerge incountries like India
where many of the state owned firms have surplus labor.However,
unlike China, downsizing in India will be strongly resisted by both
tradeunions and opposition political parties.
Similarly, the changing business environment in Japan has put
tremendouspressures on employers to change their traditional
employment practices in order tosurvive. Accordingly, Japanese
employers are restructuring their employmentsystems in response to
low growth, globalization and international competitiveness.
204 P. Budhwar, Y. Debrah
-
The major elements of the Japanese style HRMlifetime employment,
senioritypromotion system, enterprise unions, keiretsu and
sub-contracting relations devel-oped essentially in response to
rapid and high economic growth during the post-warindustrialization
boomare being fundamentally transformed.
This transformation is by no means smooth, especially against a
background of lowgrowth, recession and rising unemployment,
Japanese employers are experiencingsignificant HRM problems.
Consequently there are calls for a critical re-evaluation ofthe
basic framework of the established Japanese HRM model. In this
regard, for acountry famous for providing lifetime employment, this
is a major transformation withfundamental and long-term challenges
for HRM. The deep-seated challenges are notlimited to Japan, China
and India as they are occurring through out the region.
Thechallenge facing HR managers who are dealing with the global
forces is how they canminimize the threats posed by global
competitive pressures on HRMwhile at the sametime taking advantage
of the opportunities created by globalization to restructure
theirHRM and employee relations practices. This also provides a
great opportunity forresearchers and should be considered as an
important research agenda.
Future research direction 6b: Highlight the dynamics of
employment relations inAsian countries.
Globalization and international competitiveness can pose
significant threat to theproductivity and morale of employees. In
an attempt to explore these challenges,Rowley and Bae (2004) have
proposed the use of Rousseaus (1995) three-foldtypology of
psychological contracts as an analytical tool. This is quite
pertinent inview of the impacts of globalization and competitive
pressures on HRM discussedearlier. Throughout the Asia-Pacific
region, the changes in traditional employmentpractices have crucial
consequences for HRM. These include increased stress,declining job
securityas a result of downsizing and rising
unemploymentascompanies adopt labor flexibility strategies to
reduce labor costs (Wiseman, 1998).In such a changing environment,
employees still expect to be treated fairly, rewardedequitably,
provided growth opportunities, to know what is expected of them and
begiven fair and constructive feedback on their performance
(Armstrong, 2001). Thisis particularly the case in Japan, China,
India, and Vietnam. In the last threecountries there are internal
changes pertaining to privatization of state-ownedenterprises
(SOEs), which have resulted in insecurity for workers. In the case
ofJapan the insecurity arises from changes in the external economic
environment.
For many employees in Japan, China, India and Vietnam, the move
away fromtraditional employment practices constitute a violation of
the psychological contract.Thus, the challenge for HR managers is
how to be able to deal with the outcome ofemployees response to the
perceived violation of the psychological contract, such asreduce
effort on the job or output and reduced contributions in the form
of loyaltyand commitment. In the Asian context, there is the need
for research to ascertainwhat constitutes violations of
psychological contract. It is also necessary to explorethe
contextual patterns and diversity of responses to psychological
contractviolations.
Future research direction 7: Highlight the emerging nature and
constituents ofpsychological contract in the Asian context.
Future research on human resource management systems in Asia
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Perhaps this is going to become a much bigger challenge in
informationtechnology enabled services (ITeS) providers such as
call centers and businessprocess outsourcing (BPO) firms, or
teleworking as an alternative mode of workarrangement where
problems relating to psychological contract and job stressbecome
prominent after a while (Baruch, 2001). For example, in the case of
India,majority of call center employees are full of enthusiasm when
they start their firstjob. However, after a while the dark side of
the rosy picture starts to emerge andthe level of staff morale
declines considerably (see Budhwar, Luthar, & Bhatnagar,2006;
The Economic Times, 2003). To a great extent, the lack of talent
developmentinitiatives is held responsible for this (Chowdhry,
2003), as the lack of careerstructure provides a good opportunity
to competitors to poach talented people(Prabhakar, 2003). Such
emerging trends pose challenges to HR managers regardingboth their
recruitment and retention policies and practices (see Budhwar,
Varma,Singh, & Dhar, 2006). Here, there is the need for
researchers to provide insights intothe causes of dissatisfaction
in call center work in emerging economies and what canbe done to
promote growth and development of workers in the sector.
Future research direction 8a: Highlight the kind of HRM systems
suitable for newsectors (such as ITeS) in the region.
Further, the emergence of the knowledge-based
economy/knowledge-drivenglobal economy is also creating a
significant challenge for managers is the Asianregion regarding how
to manage employees involved in it. The importance of
humanknowledge in economic growth is now widely acknowledged.
Knowledge is nowconsidered as the basic form of capital and as such
the accumulation of knowledge,it is argued, drives economic growth
(DTI, 1998). A knowledge-driven economy isone in which the
generation and exploitation of knowledge play the predominantpart
in the creation of wealth (DTI, 1998). The two key drivers of the
knowledgeeconomy are globalization and communication technology
(Houghton & Sheehan,2000), both of which are prevalent in the
South-East Asian region. Research isurgently required on the
appropriate forms of compensation and motivation to retainknowledge
workers.
Singapore was one of the first countries to move towards a
knowledge-driveneconomy (Ofori, 2003) and has instituted
plans/programs to develop a world-classworkforce. Singapore
considers its current economy to be progressing from
capitalintensive to knowledge based. To a great extent, Hong Kong
is also following thesame model. To achieve this objective,
Singapore has acknowledged the importanceof talent and education,
and life-long learning among other factors as the keydeterminant of
a competitive economy (Debrah et al., 2000). HRM has a major roleto
play in the knowledge economy not least because of its ability to
equip employeeswith skills, knowledge and attitudes to operate in a
competitive environment.Moreover, as the knowledge-driven economy
creates rapid and dramatic change,uncertainty and turbulence as
well as adjustment problems for employees, HRMmanagers will have to
develop new strategies for managing people. These issueswould be of
interest to managers in the region as they move towards
knowledge-driven economies in their attempts to compete in the
global economy. Themanagement of knowledge workers thus provides
considerable challenges for HRmanagers.
206 P. Budhwar, Y. Debrah
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Across the Southeast Asia region, governments are trying to
develop biotechnologyindustry. Many of the ambitious projects are
in India, Singapore, South Korea, Taiwanand China. Many cities in
these countries already have thriving high-tech industriesand want
to ride the next big wave by creating life-sciences centers/hubs.
Singapore,for instance, is pouring money into Biopolis, a science
park for biomedical and otherknowledge-based industries. In India,
Hyderabad is witnessing a gathering of theelements needed to create
a life science hotspot to match its IT industry (Merchant,2003).
Southeast Asian countries, particularly China, Korea and Taiwan are
buildingbiotech clusters to attract back to their native (East
Asian) countries expatriatescientist trained overseas (mainly the
United States).
As these biotech clusters take hold in Asia, the need for
knowledge workers willincrease. The companies that are able to
attract expatriate scientists must be capableof harnessing the
knowledge of the scientists. In this respect, HR managers need
tocontribute effectively to knowledge management by exhibiting
expertise in the area.In a changing psychological contract
environment, HR managers need to be able topromote values and
norms, which emphasize the importance of sharing
knowledge,commitment and trust. In relation to that, HR managers
must be capable ofdeveloping compensation and career development
structures that can not onlymotivate but also retain knowledge
workers. In addition, HR managers must be ableto develop
performance management processes and organizational and
individuallearning programs for knowledge workers in organizations
(Armstrong, 2001).
Future research direction 8b: Highlight the factors which can
contribute to theefficient management of knowledge workers.
Another essential challenge in HRM in the Asia-Pacific region is
the effects of thetransition from collectivism to individualism in
HRM practices in countries such asJapan, India, China and Vietnam.
Here, along with the managerial responses toemployees perceived
violation of the psychological contract is the need formanagers to
develop a new culture where promotion, pay and other
organizationalbenefits will be based on individual contributions
rather than group characteristics.In this regard, it appears that
globalization and competitive pressures are pushingorganizations in
East Asia to move towards the western system of determination
ofemployee benefits. How to achieve an effective and successful
change to individualbased HRM practices within the broad East Asian
culture of groupism is then acritical challenge for all managers in
Asia.
Future research direction 9: How to achieve a balance between
the traditionalmanagement customs which are strongly dictated
bysocio-cultural aspects of a given society and
changingindividualistic emphasis of HRM functions?
Yet, another challenge for HRM managers in the region is the
issue of diversitymanagement. In recent years, diversity management
has been a burning issue in themanagement of HRs in the Asian
region. The issues relating to gender, age, ethnicityamong others,
have assumed increasing importance. However, against a backgroundof
labor shortage problems in many Asian countries, the governments
areencouraging more women to enter the labor market (see Special
Issue of AsiaPacific Business Review, 2005). In view of the
declining birth rate in many East
Future research on human resource management systems in Asia
207
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Asian countries, it is anticipated that the female labor force
participation rate willcontinue to grow. If this trend continues as
predicted then HR managers face thechallenge of developing a safe
and secure working environment for women. It mustbe realized that
in order for organizations to be able to recruit, motivate and
retainfemale employees, HR managers need to confront the issues
relating to thediscrimination of women in the labor market.
Future research direction 10: Conduct research regarding the
dynamics of diversitymanagement in the Asian context, especially
tohighlight the different mechanisms adopted by firmsto manage
diversity and also to indicate thechallenges and barriers faced by
firms and decisionmakers in this regard.
Perhaps the most daunting scenario regarding diversity
management in Asiancountries is the looming demographic time bomb.
As Holland (2003) asserts, onaverage Asians are getting older. This
is a slow, silent and unstoppable revolutionwhich is reshaping
Asian societies. It is claimed that in the mid-1950s, old people(65
years and above) were a rarity in most East Asian societies.
However, with betterhealth care, higher standard of living, better
education, and increase in lifeexpectancy in recent years, there
has been a considerable increase in the numberof old people. At the
same time, most East Asian countries are experiencingdecreasing
birth rates, ageing workforce and hence labor shortages. It is
estimatedthat by 2050 nearly a quarter of East Asias population
will be aged 65 or over(Holland, 2003).
Japan is particularly affected by the problems of ageing
population. Currently, onein six Japanese is older than the
mandatory retirement age of 65. But with a fertilityrate of just
1.3 children per womanway below the birth rate of 2.1 needed
tomaintain a stable populationand a life expectancy of more than 80
years andrising, it is estimated that by 2050 more than 36 percent
of the Japanese populationwill be above retirement age (Holland,
2003).
While some countries such as Singapore and Japan have made
efforts in thelegislative arena to tackle the problem others have
paid little attention to it. However,an ageing population poses
serious challenges to HRM in the Asian region (Debrah,1996, 2002;
Snape & Redman, 2003). How each country responds to the
issuesrelating to an ageing workforce depends on the severity of
the problem but it islikely that some countries would have to
import labor or rely on immigration inorder to sustain economic
growth. For instance, it is anticipated that Japan will need6
million immigrants in the next 25 years but immigration is bitterly
opposed bythose who equate it with crime (Pilling, 2003). Even if
East Asian countries manageto delay or resist limited or large
scale immigration from both within and outside theregion, the
countries would most likely need migrant workers.
Currently, there are legal migrant workers from labor-surplus
countries such asIndonesia and Philippines to labor-recipient
areas, such as Hong Kong andSingapore. There are also low-paid
legal migrant workers from countries such asIndia and Bangladesh in
Singapore and Malaysia. In the construction industry inSingapore,
for instance, it is possible to find migrant workers from
differentcountries working together in a team. The management of
such multicultural work
208 P. Budhwar, Y. Debrah
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teams is one of the challenges facing HR managers. Going by
current demographictrends, it is possible that the use of migrant
workers is likely to increase in futurewith multiple implications
for the management of HRM in the Southeast Asianregion. Hence,
researchers need to conduct more research on equal opportunities
anddiversity management issues. Here, research can focus on single
countries andvarious aspects of discrimination and diversity
management. It can also focus onthese issues as they pertain to a
particular sub-region.
Future research direction 11: Highlight the nature and kind of
legislation suitableto safe guard the increasing diverse workforce
in theAsians context.
A number of other interesting HRM challenges are also emerging
in the region.One such challenge is the HRM issues relating to the
outsourcing of jobs fromindustrialized countries to the developing
world. In the last decade, advancements ininformation communication
technology and availability of high skilled workforce insome
developing countries have made it possible for them to attract
white collar jobsfrom developed countries. It is estimated that 3.3
million jobs in the US (and2 million in Western financial services)
will be lost as a result. In the UK, 200,000job losses have been
predicted by 2008 (FT, 2003). Asia has been the major recipientof
these jobs. Firms outsourcing tasks to countries in Asia are
expectedly skepticalabout a number of issues (such as quality,
confidentiality, delivery requirements,etc.). Examining such
concerns can help to prepare Asian firms to respond properlyto
overseas outsourcing firms.
Future research direction 12: Highlight the main concerns of
both foreign and hostfirms towards outsourcing of businesses to
Asiancountries, especially related to human resources.
Lower cost locations such as India, the Philippines and China,
are now attractingoutsourcing of much higher value-added services,
such as medical diagnostics,treasury management, and software
development (FT, 2003). Bibby (2003) alsopoints to the offshore
outsourcing of architectural services. For instance, a
Britishcompany, Atlas Industries, has set up an office in Vietnam
to work entirely for the UKmarket. The Vietnamese employees produce
drawings and 3D computer-generateddesigns for buildings at a
relatively low cost. The work is assigned or finished
producttransferred through email or a password-protected website
(Bibby, 2003).
In India, the main activities or areas covered by the call
centers include customercare (such as remote maintenance, help desk
and sales support), finance andadministration (for example, data
analysis, medical transcription, insurance claimsand inventory
management), HR and payment services (such as payrolls,
credit-cardservices, cheque processing and employee leasing) and
content development, i.e.,digital content, R&D, LAN networks
and application maintenance (for more detailssee Budhwar et al.,
2006; Chenggapa & Goyal, 2002). As the competition,
bothnationally and internationally, to get business contracts has
increased considerably inrecent years; HR managers working in the
sector are facing enormous challenges inattracting and retaining
the best employees.
At another level, HR managers face significant challenges in
their attempts toutilize internal labor markets (ILMs) in
organizations. Appropriate ILMs are known
Future research on human resource management systems in Asia
209
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to be conducive to the development of long-term employment
relationships, bindemployees to the organization and also help to
reduce employee turnover (seeOsterman, 1994). It is also known that
ILMs make it possible for HRM practices tobe consistent with a
systematic and rationalized employment system. However, inthe case
of countries like India and China (and many other Asian economies);
ILMsare generally based on social connections, political contacts,
caste, religion andeconomic power. Thus, in the context of present
business conditions in India andChina, the efficiency of the
established traditional ILMs is questionable. Also, in thepresent
context, the impact of Islam as an institution and its principles
isincreasing (especially in those countries where it is the
dominant religion) in bothILMs and HRM systems (Ali, 2005; Budhwar
& Fadzil, 2000; Syed, 2008). Thechallenge, however, is how HR
managers can engineer such a macro level changewithout alienating
powerful members of their organizations.
Future research direction 13: Highlight the emerging nature and
constituents ofILMs in Asian firms.
The existing ILMs system has also been linked to corruption in
Asian countries. Itis argued that ILMs system, where informality,
social networks and a high powerdistance are essential elements
tends to engender corruption in organizations (Luo,2002). This has
serious implications for efficient HRM system and HR
practitionersneed to pay due attention to it.
Future research direction 14: How to develop efficient HRM
systems in Asiancountries?
One of the key debates in the existing HRM literature is
regarding the extent to whichHRM helps to improve firms performance
(Guest, 1997; Katou & Budhwar, 2006;Wood, 1999). The literature
also reveals that most research investigations in thisregard have
been conducted in western developed nations. Few scholars have
initiatedsuch examinations in the Asian context. For example, Bae
and Lawler (2000) inKorea, Huang (1998) in Taiwan, and Agarwala
(2003) and Singh (2003) in India havepointed to the importance of
efficient HRM for successful operations. Expectedly, themessages
emerging from these investigations are mixed and less conclusive.
There isthen a great opportunity for researchers to highlight such
a relationship in the Asiancontext and also highlight which school
of thought (i.e., universalbest practices,contingency or bundles)
is more applicable in Asian organizations.
Future research direction 15: Examine the relationship between
HRM andorganizational performance in firms operatingin the
region.
Yet, another challenge revolves around the quality of research
in the Asiancontext (see, for example, Meyer, 2006; Peng, 2007;
Tung, 2005). In his analysis ofthe main limitations of research
conducted in the region, White (2002) suggests thattoo much of
research effort has been limited to simplistic comparisons,
correlationalanalyses providing no insight into underlying
processes, and skewed, idiosyncraticsampling. Such research, it is
argued, does not contribute significantly to theorydevelopment.
Accordingly, White (2002) highlights the need to increase both
rigorand relevance of research efforts in the Asian context.
210 P. Budhwar, Y. Debrah
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Along the same lines, Meyer (2006) argues that there is the need
for Asianscholars to undertake comparative research but such
research should not simplydocument differences or correlations
among variables. Rather, it has to explore causalrelationships and
processes to explain how and why contextual variablesinfluence
management practice. Meyer adds that the predominance of
Anglo-American trained researchers in Asia has the effect to
producing a homogenousperspective which affects the selection and
methodology of issues investigated. In hisview, Asian management
research is strongly influenced by traditions developed inNorth
America that may not always be useful in advancing management
knowledge inan Asian context. Perhaps, increased support from local
organizations for researchwould help focus researchers attention to
the investigation of local issues.
In response to this suggestion, Lau (2002) recommends the
adoption of Asiandeveloped constructs to study local and global
issues and calls for development andvalidation of new constructs so
as to get into the depth of Asian-based issues.Similar suggestions
have been made by many others. For example, focusing oncultural
values, scholars (see for example, Kao et al., 1999) highlight the
need toindigenize management practices in Asian organizations. Due
to the strong influenceof the socio-cultural context, the
applicability of Western management andorganization theories in the
Asian context is now questionable. To a great extentthis is a core
issue for Western firms operating in the Asian context (see Kidd et
al.,2001) and sends a clear message to researchers in the field.
Meyer (2006) suggeststhat Asian researchers need to focus their
research on local phenomena and issues ofimportance to local
managers. In a sense, theories should be adapted to explainlocally
interesting phenomena; or new theories should be developed to
overcome thelow explanatory power of adapted theories.
Future research direction 16: To continuously develop, test and
re-test constructssuitable for conducting research in the
Asiancontext.
Another challenge facing researchers in the Asian context is how
to conceptualizeand enhance our understanding of the heterogeneous
nature of HRM systems ofAsian nations; it is not sensible to
propose a single set of solutions for whole of theregion. Due to
its unique socio, economic, political and legal set-up, each
nationpresents its own unique sets of challenges for the HRM
function (see Debrah &Budhwar, 2004). Therefore, it is
important to emphasize the significance of eachcontext regarding
the development of appropriate HRM processes. The crucialquestion
is how do we conduct research which can satisfy such challenges?
Apossible way forward is to conduct a systematic analysis starting
from a basic leveland leading to an advanced level. The next
section presents a framework forconducting cross-national
comparative HRM research, which helps to highlight themain factors
determining HRM policies and practices in a given national
context.
Framework for analyzing cross-national HRM
Before discussing the framework for analyzing the context
specific nature of AsianHRM systems, we will highlight the complex
context of Asia which makes it
Future research on human resource management systems in Asia
211
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difficult to conduct a meaningful cross-national HRM analysis.
Perhaps, one of themore common mistake committed by both academics
and policy makers is the use ofterms such as Far-East, Asian or
Asia-Pacific in a very general sense. However,it is important to
acknowledge that each nation within the region has an
independentset of socio-economic components. These differ from one
another in content, arisinginevitably from the interplay of social
relations unique to themselves. Hence, there isa clear need to see
the management phenomena as part and parcel of the
distinctivepolitical, socio-economic, cultural and institutional
system of a country in the region(Hasegawa, 2002; Morishima,
1995).
In order to develop a conceptual framework for examining HRM in
a cross-national context involving both developed and developing
Asian nations which arenot homogenous in nature, it is important to
define HRM in the broadest sense. Forus, HRM is concerned with the
management of all employment relationships in thefirm,
incorporating the management of managers as well as non-management
labor.A similar approach to define HRM for emerging markets within
Asia such as Chinaand India has been recently proposed and
successfully adopted by other scholars (seeBudhwar & Khatri,
2001 for defining HRM in the Indian context and Cooke, 2005for the
Chinese context).
Over the years, different scholars in the field of HRM have put
forth a number offrameworks for conducting
international/cross-national HRM research (for detailssee Budhwar
& Sparrow, 2002). Based on a critical analysis of the
existingframeworks and extensive research in the field, Budhwar and
associates (seeBudhwar & Debrah, 2001; Budhwar & Sparrow,
2002) have proposed a frameworkfor examining cross-national HRM.
These authors have identified three levels offactors and variables,
which are known to influence HRM policies and practices, andworth
considering for cross-national examinations. These are:
& national factors (involving national culture, national
institutions, business sectorsand dynamic business
environment);
& contingent variables (such as age, size, nature,
ownership, life cycle stage oforganization); and
& organizational strategies (such as the ones proposed by
Miles and Snow andPorter) and policies related to primary HR
functions and internal labor markets.
Perhaps, very large projects, spanning over a long period of
time can effectivelyexamine the influence of all the three sets of
factors and variables on HRM systemsof a particular nation at a
given period of time. However, considering the infancystage of HRM
in many Asian countries and the argument that HRM in a
cross-national context can be best analyzed by examining the
influence of national factors(Brewster et al., 1996; Budhwar &
Sparrow, 1998), we propose to initially examinethe impact of the
main national factors on HRM in different Asian countries. Thiswill
help to draw useful cross-national comparisons regarding the
scenario of HRMin different Asian countries. The national factors
such as culture and institutionsform the macro environment of
organizations in a national context. This approachhas been recently
successfully adopted by Budhwar and Debrah (2004), Budhwar(2004),
Budhwar and Mellahi (2006) and Kamoche, Debrah, Horwitz, and
Muuka(2003) to examine the HRM systems and to highlight the
context-specific nature ofHRM in a large number of countries in
Asia-Pacific, the Middle East and Africa.
212 P. Budhwar, Y. Debrah
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Nevertheless, to fully examine the above raised propositions, it
is important to also testthe influence of both contingent variables
and organizational strategies in differentnational context. For a
detailed explanation regarding the rationale for the selection
ofvarious factors and variables included in the framework and
practical applicability ofthe framework see Budhwar and Sparrow
(2002) and Budhwar and Khatri (2001).The core aspects of each of
the four national factors which are known to influenceHRM systems
in different cross-national context are summarized in Table 2.
Investigation based on such a framework then helps to highlight
the context-specific nature of HRM. For example, the economic
environment significantlyinfluences HRM in most Asian countries,
but its impact varies from country tocountry. For instance, in
Japan the recessionary conditions of the past decade isundermining
traditional employment practices and precipitating changes in
thesystem. India has witnessed a boom in foreign direct investment
since it liberalizedits economy. However, the arrival of foreign
firms in the Indian labor market isforcing local firms, in pursuit
of efficiency, to rationalize their human resourcemanagement
practices.
In the same way, the political and legal set-up of the
respective countriesinfluences HRM policies and practices in their
own unique way. For example, Chinaallows the existence of only one
national union which functions strictly according to
Table 2 Details of aspects of national factors determining
cross-national HRM.
National culture Institutions Industrial sector Dynamic
businessenvironment
Socialization process National laborlaws
Common strategies,business logicand goals
Competition
Common values, norms ofbehavior and customs
Trade unions Regulations andstandards
Business alliances
Influence of pressure groups Politics Sector
specificknowledge
Changing compositionof workforce
Assumptions that shape managersperceptions, insights and
mindsets
Educational &vocationaltraining set up
Informal and formalbenchmarking cross-sector co-operation
Restructuring
Management style Labor market;professional bodies
Common developmentsin business operations
Focus on totalcustomer satisfaction
Personal connections Internationalinstitutions
Labor or skillrequirements
Facility of information
Meaning of work and values Industry by itself Merger activity
Technological change;globalization ofbusiness
Personal dispositions, attitudesand manners
Employers federation Workforce mobility
Approaches to cultural diversity Consultingorganizations
Capital mobility
Match to the organizationculture
Placementorganizations
Trade bodiesGovernmentinstitutions
Local authoritiesVoluntary bodies
Future research on human resource management systems in Asia
213
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the wishes of the communist party. But, in India there are many
local, regional andnational unions which generally function in an
adversarial way. Similarly, researchhas revealed the unique
influence of socio-culture context (for example, Islamicwork
principles in many Malaysian firms; Confucian principles in China
andTaiwan) on HRM systems (Budhwar & Fadzil, 2000).
Apart from the national factors, as indicated above, an
investigation based on boththe contingent variables (mentioned
above) and organizational strategies (such as theones based on
Miles and Snows (1984) typologyprospectors, analyzers,defenders and
reactors, can further help to get a more detailed picture of
thescene and effectively examine the raised propositions (for more
details see Budhwar& Khatri, 2001; Budhwar & Sparrow,
2002).
Conclusion
Emerging markets based in Asia have made a significant
contribution to the worldeconomy. With the growing business
interest in the region, both academics andpractitioners are
interested in finding out about the kind of HRM systems
appropriatefor the region. The challenges facing HRM in the
Southeast Asia are clearly complexand daunting. Majority of these
challenges have emerged due to the changes in theeconomic
environment. In particular, globalization and international
competitivenesshave brought to the fore the need for organizations
to adopt appropriate HRMpractices in their quest for competitive
advantage. In this globalized era, competitivepressures have laid
bare the limitations of the traditional models of management insome
Asian countries. Clearly, there is some indication that HRM is
undergoingtransformation in the region but it is unclear what the
outcome of this transformationwould be. Early indications are that
there is a move towards individual basis inemployment systems.
However, it is too early to see a clear model or approachemerging.
Possibly, a hybrid system (based on a mixture of both traditional
Asiancharacteristics and Western rationalized system) would emerge.
However, it isimportant that any HRM system that emerges in the
region should be as proposed byMeyer (2006), context based. It is
hoped that the suggested future research areasidentified would
guide researchers to investigate issues that can
significantlycontribute in this regard.
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Pawan Budhwar (PhD, Manchester Business School, UK) is a
Professor of International HRM and Headof Work and Organisational
Psychology Group at Aston Business School, Birmingham, UK. He is
also theSenior Associate Editor of British Journal of Management,
Associate Editor of International Journal ofCross Cultural
Management and Director of Aston Centre for Human Resources and
Aston IndiaFoundation for Applied Business Research at Aston
University, Birmingham, UK.
Yaw A. Debrah (BA, MA Simon Fraser, Canada; PhD Warwick Business
School, UK) is Professor ofHuman Resource and International
Management and Director of the MBA Programme at SwanseaUniversity
(University of Wales, Swansea, UK). He has worked at Nanyang
Business School, NanyangTechnological University, Singapore.
218 P. Budhwar, Y. Debrah
Future research on human resource management systems in
AsiaAbstractDevelopments in Asian HRM and the research
agendaChallenges facing HRM function in AsiaFramework for analyzing
cross-national HRMConclusionReferences
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