Localization in the age of globalization: Institutional duality and labor management structures in China's foreign-invested enterprises

We examine, from an institutional perspective, labor management structures in China's foreign-invested enterprises (FIEs). Focusing on the adoption of two Chinese-style and two Western-style labor structures, we seek to understand the influences of global capitalism vis-à-vis those of China's domestic institutions which themselves are undergoing market-oriented transformations. Our empirical analysis is based on data collected in a national survey of FIEs conducted in 1996. The results show that a significant proportion of FIEs localize their labor practices by adopting Chinese-style structures and that the extent of localization is shaped by both institutional processes and strategic considerations. We also find that the two Chinese-style structures effectively reduce tension and conflict between labor and management, whereas the two Western-style structures do not appear to serve such function. These findings underscore the potency of the Chinese institutional environment and reveal how organizational interest interacts with institutional forces, giving rise to a distinctively “local” mixture of managerial structures and practices in the era of globalization.