The Impact of Global Value Chains on the Retention of Staff in Chinese SMEs

Abstract

Small and medium-sized enterprises (SMEs) represent ninety-nine percent of China’s registered enterprises, yet they remain a much under researched phenomenon. In addition our knowledge of what constitutes human resource management (HRM) in Chinese enterprises is skewed, in that the majority of research is largely positivist and relies on responses from a single respondent, normally a manager. To respond to these lacuna this study is situated in six SMEs, all based in China, all supplying Buyer Driven Value Chains and all employing internal migrant workers. This marginalised group of migrant workers are the secret ingredient behind China’s economic miracle, which has historically relied on a largely passive, socially unequal workforce to underpin the cost effectiveness of the program of export orientated industrialisation (EOI), which has led to it being described as the workshop of the world. The study takes a longitudinal, qualitative, multi-stakeholder approach and utilising an inductive, social constructionist ontology has generated new insights into our knowledge of what constitutes the world of work from the perspective of the participants in it. Institutional and cultural influences are key determinants which impact the industrial relations process and practices, for example the Open Door and One Child policies and the pervasive cultural influence of guanxi, which are all evident in the empirical evidence. This study fills gaps in our knowledge and shows the construct of HRM is well understood in China. All practices are in use with subtle nuances, with the exception of appraisal, as it is culturally challenging, in that it is the opposite of the cultural preference of saving face. The study considers and contributes to the debate around global value chains (GVCs). Empirical evidence from the study clearly shows the asymmetrical patterns of power, in which lead firms keep a tight control on costs and concomitantly push risk further down the chain, which impedes their supplier’s ability to use HRM to aid staff retention.