Asia Pac J Manag (2009) 26:197218

DOI 10.1007/s10490-008-9103-6
PERSPECTIVES

Future research on human resource management

systems 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 main
issues 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, it
presents a framework useful for highlighting the context specific nature of Asian
HRM functions and the main determinants of HRM policies and practices from a
cross-national comparative perspective.
Keywords HRM . Asia . Research in HRM . Cross-national HRM
Considering the rapid globalization, developments in the field of HRM and a
number of region-specific significant developments, there is now a greater need to
examine HRM systems of Asian countries. For compositional simplicity in this
article, we use Asia (or Asian countries) to refer mainly to the main emerging
economies in the region (i.e., China, India, South Korea, Taiwan, Hong Kong,
Malaysia, Singapore, Indonesia, the Philippines, Thailand and Vietnam) often
referred to as developing Asia by the UN and also Japan. An analysis of key
achievements of the Asian region highlights a number of important facts, such as it
produces more goods and services than either North America or the European Union
and this trend is expected to accelerate in the years to come. Many of the important
emerging economies are located in Asia (see The Economist, 2007). Further, they
attract an enormous amount of foreign direct investment (FDI). For example, China
was the top destination for foreign capital in 2003 with a record inflow of $55 billion,
overtaking America for the first time and now continuing to do so (see Rowley & Warner,
P. Budhwar (*)
Aston Business School, Aston University, Aston Triangle, Birmingham B4 7ET, UK
e-mail: p.s.budhwar@aston.ac.uk
Y. A. Debrah
School of Business and Economics, University of Wales, Swansea,
Singleton Park, Swansea SA 2 8PP, UK
e-mail: y.a.debrah@swansea.ac.uk

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P. Budhwar, Y. Debrah

2005; UNCTAD, 2007). It is also predicted that most new members of the newly
affluent 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 they
acquire the status of developed nations (for example, in professionalism, formalism, and
rationalization of management systems). Nevertheless, it is important to examine the role
of HRM function in the region as it plays a significant role in the economic development
of nations (see Debrah, McGovern, & Budhwar, 2000; Tayeb, 1995). The existing
literature (see for example, Budhwar, 2004) highlights a scarcity of HRM research in
the Asian context (with an exception of the Chinese and Japanese contexts).
Considering the growing economic importance of the region, it has now become an
imperative to regularly conduct systematic research investigations which can highlight
the relevant HRM system(s) for the region. This will not only help decision makers to
develop 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 only
help to highlight the context specific nature of HRM but also to reveal the influence
of various factors and variables on HRM. This will contribute to the development of
relevant policies and practices and theories of HRM (Budhwar & Debrah, 2004).
Research in contextual isolation is not only misleading, but it strongly hinders the
understanding of core aspects of the phenomenon in any significant way (Schuler
et al., 2002: 41). In a significant contribution to this debate, Meyer (2006) asserts
that in view of the challenges facing Asian businesses, Asian researchers should
focus on context-specific issues. In his view, such research should be capable of
making major contributions, for instance by explaining context-specific variables
and 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 possible
avenues for future research, and also how research investigations on HRM in Asia
can be conducted in a meaningful manner. Table 1 highlights the main themes
along which research in the Asian context related to the field of HRM has been
conducted. It also helps us to identify the key gaps in the existing literature and
enables us to draw themes for future research. For example, what are the dominant
emerging HRM models of major Asian economies? What are the main factors
which dictate HRM in Asia? How best we can examine the influence of such
factors 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 16
areas 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 so
as to highlight the context-specific nature of personnel
functions and relevant HRM system(s) for each nation.
An analysis of relevant literature highlights that the field of HRM is still evolving
in the region. The literature analysis on HRM in Asia in particular shows that
research has been and is being conducted on the following topics. First, the literature

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199

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 is
being published on different aspects of Chinese management (Chow, 2004; Cooke,
2005; Mathews, 2006; Peng, 2007; Warner, Wong, & Lee, 2002). Similarly, there is
information available regarding different aspects of managing human resources in
different countries of the region (see Budhwar, 2004). For example, the Japanese
employment system and the management models of Singapore, Chinese and Korean
businesses are now explored in the literature (see Isobe, Makino, & Goerzen, 2006;
Rowley, 1998; Tsui-Auch & Lee, 2003). However, in the present context, the validity
of a number of such established ideal-typical management models is questionable. To
provide up to date information to both academics and practitioners, there is a need to
examine the applicability of such models in the present global context. To make the
analysis more meaningful, researchers should make serious attempts to highlight the
major factors that determine HRM policies and practices in the region.
Future research direction 2: Cross-national HRM research should help to highlight
the emerging management model(s) applicable to
specific countries of the region.
Second, a number of studies focus on the possible issues and problems relating to
HRM in Asia from a global perspective (see El Kahal, 2001; Narula, 2006).
Emphasizing cultural values, Kao, Sinha, and Wilper (2000) stress the need to
indigenize the management practices in Asian organizations. The authors challenge
the applicability of Western management and organization theories in the Asian
context. Pun, Chin, and Lau (2000), on the basis of a comparative analysis between
Anglo-American and Chinese cultures, highlight the pervasive influence of Chinese
cultural heritage and collective orientation on Chinese organizational life. In order to
adapt to the growing global environment, these authors suggest the need to
determine changes to aspects of Chinese management culture. This is a big challenge
to local organizations, as due to the deep cultural and institutional differences, even
the foreign firms operating in China find it hard to implement their head-quarters
HRM practices in their Chinese subsidiaries (see Kidd, Li, & Richter, 2001).
Arguably, this is changing as a study by Bjorkman and Lu (1999) reveal the
successful implementation of global standardized HRM practices in foreign firms
operating in the Chinese context. Similarly, Bjorkman and Budhwars (2007)
investigation also highlights the existence of a similar phenomenon in foreign firms
operating in India. Such results indicate that perhaps certain levels of standardization
of HRM systems is taking place around the globe. However, more research is needed
in this regard. This is an important agenda for future research, especially to highlight
the 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 global
standardized HR policies and practices in the Asian
context.

Authors

Emerging management models

Issues relating Kao, Sinha, and Wilper (1999), Pun, Chin and
to context of Lau (2000), Kidd et al. (2001), Hofstede (2007)
Asian
management
research.
Emphasis on
cultural
values

Country specific studies

Japan
Isobe, Makino, and Goerzen (2006), Sano
et al. (1997)
Singapore
Chew (2004)
Hong Kong
Kamoche (2003, 2006)
Taiwan
Tsui-Auch and Lee (2003), Lin (1997)
Korea
Rowley (1998)
China
Matthews (2006), Cooke (2005), Warner, Wong
and Lee (2002)
Malaysia
Chew (2005)
Vietnam
Kamoche (2001)
Thailand
Siengthai and Bechter (2005), Kamoche (2000)
Indonesia
Habir and Larasati (1999)
Dominance of Anglo-American theories
Meyer (2006), Narula (2006), El-Kahal (2001)

Themes/studies

Areas of future research

There is the need for cross-national HRM research

to identify emerging management models
applicable to specific countries and the region in
general
Research is needed to understand what aspects of
Chinese culture need to change in order for Chinese/
Asian firms to adapt to global environment

Challenges the applicability of Western

management and organization theories to the
Asian context. It relates to how to indigenize
management practices in Asian organizations
The overemphasis of collective orientation on
Chinese organizational life is also seen as a
challenge

It is argued that Asian research agendas tend to be What is required is research that is able to make
dominated by theories developed for Anglomajor contributions, for instance by explaining
American contexts that are not sufficiently adapted
context-specific variables and effects, and by
to local circumstances
drawing on traditional Asian thought in
developing new theories

Provide a good understanding of HRM models in There is the need to examine the applicability of
specific countries but models cannot be extended/ such models to the region as a whole (all countries
in the region albeit with significant modifications)
applied to other countries in the region

Challenges identified

Table 1 Thematic areas of contemporary HRM studies in Asia and areas of future research.

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P. Budhwar, Y. Debrah

Authors

Recent investigations in the region point to

soft convergence but evidence is inconclusive

Challenges identified

Further research needed on more countries to

determine the new patterns of employment
relations and to provide a comprehensive picture
of the main determinants of HRM systems in the
region

There is a dearth of research on issues pertaining to

the emergence of professional management.
Research is needed on how it is evolving

More research needed to establish whether there is

any evidence of hard convergence in view of
the heterogeneity (such as population, geography,
economies, economic development phase, labor
market, legal and political set-up)

Areas of future research

The need to determine what constitutes violation of

psychological contract and the contextual patterns
and diversity of responses to psychological contract
violations
Economic liberalization and privatization have
In addition, it is necessary to examine how to
resulted in increased stress, declining job security, achieve a balance between traditional management
downsizing and retrenchment in China, India,
based on groupism and new management based on
Vietnam, and Japan
individualism
For employees the move from traditional
It is also essential to examine the emerging nature
employment practices constitutes violation of
and constituents of internal labor markets (ILMs)
psychological contract
in Asian firms

The impact of globalization and international competitiveness on employees

The challenges arising from the changing
Rowley and Bae (2004), Wiseman (1998),
organizational environment and violation of
Budhwar and Fadzil (2000), Luo (2002)
psychological contract

Convergencedivergence or crossvergence of management practices

Isobe et al. (2006), Rowley and Warner
The economic crisis of the late 1990s challenged
(2005), Begin (1997) Rowley (1998),
the validity of family business models in their
Wang, Huang, and Bansal (2005),
present context. It also ushered in professional
Tu et al. (2002)
management
Factors contributing to the changing nature, management and
employment relations in firms and other dominant business groups
(chaebols, keiretsus)
Verma et al. (1995), Kuruvilla, Das, Kwon,
The effects of globalization on employment
and Kwon (2002), Frenkel and Peetz (1998),
relations systems. For example, the decline in
Debrah (2002), Hadiz (2002),
union membership and employment security
Frenkel and Peetz (1998)

Pervasive
influence of
Chinese
cultural
heritage
Convergencedivergence thesis in the Asian context
Rowley (1998), Rowley and Benson (2002),
Warner (1998, 2002), Amante (1998)

Themes/studies

Table 1 (continued)

Future research on human resource management systems in Asia

201

Authors

Areas of future research

Have noted the mixed and less conclusive results

relating to the contribution of HRM to firm
performance in the Asian context

Bold typeface indicates that the article was published in Asia Pacific Journal of Management.

It is necessary to examine this relationship in the

Asian context and to shed light on which school of
thought (universal-best practices, contingency or
bundles) is more applicable in Asian organizations
Researchers need to continuously develop, test
and re-test constructs suitable for conducting
research in the Asian Context.

Research also needed to highlight the nature and

kind of legislation suitable to safeguard the
increasing diverse workforce

Issues relating to gender (women), age and

Highlight the main concerns of both foreign and
ethnicity have been brought to the fore due to
local firms towards the management of workers in
labour shortages and the looming demographic
the sector
time bomb
The challenges faced by firms in managing the
Research is required on the dynamics of diversity
increasing numbers of women and immigrants in
management in the Asian context and strategies
the workplace have not be fully explored
for managing diversity

These studies have highlighted the stressful

It is essential for researchers to investigate the
nature of call center work and work in business
causes of employee dissatisfaction in the new
process outsourcing firms. This is also the case
sectors and highlight the kind of HRM system and
with knowledge-driven economy workers (biotech practices suitable for the new sectors
clusters) but there is not evidence of management
strategies to deal with these problems

Challenges identified

Quality of research
Tung (2005), Meyer (2006), White (2002),
Research limited to simplistic comparisons,
Lau (2002), Kao et al. (1999), Kidd et al. (2001) correlational analysis providing no insight into
underlying processes and skewed, idiosyncratic
sampling

HRM and organizational performance

Bae and Lawler (2000), Huang (1998),
Agarwala (2003), Singh (2003)

Snape and Redman (2003)

Pilling (2003)

Diversity management
Holland (2003), Debrah (2002)

HRM issues in new sectors such as ITeS & BPO

Budhwar et al. (2006), Chengappa
and Goyal (2002), Chowdhry (2003), Prabhakar
(2003), Budhwar et al. (2006), Ofori (2003),
Houghton and Sheehan (2000), Debrah et al.
(2000), Bibby (2003), Ali (2005)

Themes/studies

Table 1 (continued)

202
P. Budhwar, Y. Debrah

Future research on human resource management systems in Asia

203

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 convergence
view, recent investigations in the Asian region (see Warner, 2000, 2002) emphasize
the notion of soft convergence as an outcome of globalization. From the
multinational corporations (MNCs) perspective, the implementation of global
standardized HRM practices and policies (with local adjustments) is also an
indication of soft convergence. However, considering the heterogeneity (such as
population, geography, economies, economic development phase, labor markets,
socio-cultural, legal and political set-up, and HRM systems) of the region and
context specific nature of HRM, it will not be sensible to talk about significant or
hard convergence. More research is needed to confirm such a thesis.
Future research direction 4: Examine the convergence-divergence or crossvergence thesis for HRM systems in the Asian
context.
Fourth, the unique characteristics of different business groups (such as chaebols,
keiretsus) operating in different countries in the region which have contributed a
great deal in their economic success have attracted a lot of research interest (see
Isobe et al., 2006; Rowley & Warner, 2005). These business groups have deep roots
in the core institutions (such as family structure, Confucianism), and socio-cultural
background of their respective societies and accordingly have their own HRM
systems (see Begin, 1997; Rowley, 1998; Yang, 2006). The economic crisis of late
1990s and the present competitive environment have raised questions regarding the
validity of such ideal-typical family business management models in the present
context (see Tsui-Auch & Lee, 2003; Tu, Kim, & Sullivan, 2002; Wang, Huang, &
Bansal, 2005). Before the economic crisis, such groups, although professionalized
their management systems, retained family control and corporate rule. However, the
pressure created by the economic crisis is forcing the groups to relinquish some
family control and corporate rule by absorbing more professional managers into their
top management (Peng & Delios, 2006). A similar pattern is emerging in the Indian
private business houses where top positions are being offered to best available
professionals and a more formal and rationalized approach to HRM is being adopted
(see Budhwar, 2003). However, this phenomenon is still evolving across many Asian
countries and there is a scarcity of reliable literature in this regard (White, 2002). To
confirm it more research is needed and should be the focus of future research.
Future research direction 5: Highlight the main factors contributing to the
changing nature and management systems of
dominant business groups (for example, chaebols,
keiretsus) in the Asian region.
Fifth, some scholars highlight the effects of globalization on the employment
relations 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

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also contributing to adjustment from previously salient constraint (labor peace and
industrial stability) to the new imperative of enhancing firm-level competitiveness
through both numerical and functional flexibility (Kuruvilla & Erickson, 2002). It is
clear that globalization and the Asian economic crisis of late 1990s have certainly
affected the employment relations of Asian countries in one way or the other, such as
employment 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 employment
relations in Asian countries.
From the above discussion it becomes evident that the existing HRM research in
the Asian context is both limited and possibly not conducted in a systematic manner
with a clear framework which can highlight the main determinants of HRM, and also
highlight the context specific nature of the personnel function, and enable scholars to
draw 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 for
Anglo-American contexts that are insufficiently adapted to local circumstances.
Research investigations along the lines of Asian context-specific issues can
significantly help to cover such gaps. An analysis of the existing literature, also
highlight a number of challenges faced by the HR function in the region. The next
section presents some of the main challenges and further research areas as a possible
way forward to overcome the challenges.

Challenges facing HRM function in Asia

As indicated above, at present globalization is changing the (stable) workplace
systems in the region. This is evident in many countries. Thus, the effects of changes
created 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 evidence
that economic liberalization arising from globalization and competitive pressures is
changing the pattern of HRM, employee relations and industrial relations and labor
legislation (see Cooke, 2005 for information on China and Saini & Budhwar, 2004
for developments in the Indian legal framework). Some of these changes are
occurring both in the private and public sectors in both countries. In China, it is
argued that the emergence of market economy is undermining the nanny employer
image of organizations as there is a concerted effort to shift the huge welfare burden
from employers to individuals. In line with this approach, the downsizing of
organizations and changing recruitment and retention practices have resulted in
insecurity for workers in China. It is expected that a similar pattern will emerge in
countries like India where many of the state owned firms have surplus labor.
However, unlike China, downsizing in India will be strongly resisted by both trade
unions and opposition political parties.
Similarly, the changing business environment in Japan has put tremendous
pressures on employers to change their traditional employment practices in order to
survive. Accordingly, Japanese employers are restructuring their employment
systems in response to low growth, globalization and international competitiveness.

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The major elements of the Japanese style HRMlifetime employment, seniority

promotion system, enterprise unions, keiretsu and sub-contracting relations developed essentially in response to rapid and high economic growth during the post-war
industrialization boomare being fundamentally transformed.
This transformation is by no means smooth, especially against a background of low
growth, recession and rising unemployment, Japanese employers are experiencing
significant HRM problems. Consequently there are calls for a critical re-evaluation of
the basic framework of the established Japanese HRM model. In this regard, for a
country famous for providing lifetime employment, this is a major transformation with
fundamental and long-term challenges for HRM. The deep-seated challenges are not
limited to Japan, China and India as they are occurring through out the region. The
challenge facing HR managers who are dealing with the global forces is how they can
minimize the threats posed by global competitive pressures on HRM while at the same
time taking advantage of the opportunities created by globalization to restructure their
HRM and employee relations practices. This also provides a great opportunity for
researchers and should be considered as an important research agenda.
Future research direction 6b: Highlight the dynamics of employment relations in
Asian countries.
Globalization and international competitiveness can pose significant threat to the
productivity and morale of employees. In an attempt to explore these challenges,
Rowley and Bae (2004) have proposed the use of Rousseaus (1995) three-fold
typology of psychological contracts as an analytical tool. This is quite pertinent in
view of the impacts of globalization and competitive pressures on HRM discussed
earlier. Throughout the Asia-Pacific region, the changes in traditional employment
practices have crucial consequences for HRM. These include increased stress,
declining job securityas a result of downsizing and rising unemploymentas
companies adopt labor flexibility strategies to reduce labor costs (Wiseman, 1998).
In such a changing environment, employees still expect to be treated fairly, rewarded
equitably, provided growth opportunities, to know what is expected of them and be
given fair and constructive feedback on their performance (Armstrong, 2001). This
is particularly the case in Japan, China, India, and Vietnam. In the last three
countries there are internal changes pertaining to privatization of state-owned
enterprises (SOEs), which have resulted in insecurity for workers. In the case of
Japan the insecurity arises from changes in the external economic environment.
For many employees in Japan, China, India and Vietnam, the move away from
traditional 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 of
employees response to the perceived violation of the psychological contract, such as
reduce effort on the job or output and reduced contributions in the form of loyalty
and commitment. In the Asian context, there is the need for research to ascertain
what constitutes violations of psychological contract. It is also necessary to explore
the contextual patterns and diversity of responses to psychological contract
violations.
Future research direction 7: Highlight the emerging nature and constituents of
psychological contract in the Asian context.

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Perhaps this is going to become a much bigger challenge in information

technology enabled services (ITeS) providers such as call centers and business
process outsourcing (BPO) firms, or teleworking as an alternative mode of work
arrangement where problems relating to psychological contract and job stress
become 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 first
job. However, after a while the dark side of the rosy picture starts to emerge and
the level of staff morale declines considerably (see Budhwar, Luthar, & Bhatnagar,
2006; The Economic Times, 2003). To a great extent, the lack of talent development
initiatives is held responsible for this (Chowdhry, 2003), as the lack of career
structure provides a good opportunity to competitors to poach talented people
(Prabhakar, 2003). Such emerging trends pose challenges to HR managers regarding
both their recruitment and retention policies and practices (see Budhwar, Varma,
Singh, & Dhar, 2006). Here, there is the need for researchers to provide insights into
the causes of dissatisfaction in call center work in emerging economies and what can
be done to promote growth and development of workers in the sector.
Future research direction 8a: Highlight the kind of HRM systems suitable for new
sectors (such as ITeS) in the region.
Further, the emergence of the knowledge-based economy/knowledge-driven
global economy is also creating a significant challenge for managers is the Asian
region regarding how to manage employees involved in it. The importance of human
knowledge in economic growth is now widely acknowledged. Knowledge is now
considered 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 is
one in which the generation and exploitation of knowledge play the predominant
part in the creation of wealth (DTI, 1998). The two key drivers of the knowledge
economy are globalization and communication technology (Houghton & Sheehan,
2000), both of which are prevalent in the South-East Asian region. Research is
urgently required on the appropriate forms of compensation and motivation to retain
knowledge workers.
Singapore was one of the first countries to move towards a knowledge-driven
economy (Ofori, 2003) and has instituted plans/programs to develop a world-class
workforce. Singapore considers its current economy to be progressing from capital
intensive to knowledge based. To a great extent, Hong Kong is also following the
same model. To achieve this objective, Singapore has acknowledged the importance
of talent and education, and life-long learning among other factors as the key
determinant of a competitive economy (Debrah et al., 2000). HRM has a major role
to play in the knowledge economy not least because of its ability to equip employees
with 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, HRM
managers will have to develop new strategies for managing people. These issues
would be of interest to managers in the region as they move towards knowledgedriven economies in their attempts to compete in the global economy. The
management of knowledge workers thus provides considerable challenges for HR
managers.

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Across the Southeast Asia region, governments are trying to develop biotechnology
industry. Many of the ambitious projects are in India, Singapore, South Korea, Taiwan
and China. Many cities in these countries already have thriving high-tech industries
and 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 other
knowledge-based industries. In India, Hyderabad is witnessing a gathering of the
elements needed to create a life science hotspot to match its IT industry (Merchant,
2003). Southeast Asian countries, particularly China, Korea and Taiwan are building
biotech clusters to attract back to their native (East Asian) countries expatriate
scientist trained overseas (mainly the United States).
As these biotech clusters take hold in Asia, the need for knowledge workers will
increase. The companies that are able to attract expatriate scientists must be capable
of harnessing the knowledge of the scientists. In this respect, HR managers need to
contribute effectively to knowledge management by exhibiting expertise in the area.
In a changing psychological contract environment, HR managers need to be able to
promote values and norms, which emphasize the importance of sharing knowledge,
commitment and trust. In relation to that, HR managers must be capable of
developing compensation and career development structures that can not only
motivate but also retain knowledge workers. In addition, HR managers must be able
to develop performance management processes and organizational and individual
learning programs for knowledge workers in organizations (Armstrong, 2001).
Future research direction 8b: Highlight the factors which can contribute to the
efficient management of knowledge workers.
Another essential challenge in HRM in the Asia-Pacific region is the effects of the
transition from collectivism to individualism in HRM practices in countries such as
Japan, India, China and Vietnam. Here, along with the managerial responses to
employees perceived violation of the psychological contract is the need for
managers to develop a new culture where promotion, pay and other organizational
benefits will be based on individual contributions rather than group characteristics.
In this regard, it appears that globalization and competitive pressures are pushing
organizations in East Asia to move towards the western system of determination of
employee benefits. How to achieve an effective and successful change to individual
based HRM practices within the broad East Asian culture of groupism is then a
critical challenge for all managers in Asia.
Future research direction 9: How to achieve a balance between the traditional
management customs which are strongly dictated by
socio-cultural aspects of a given society and changing
individualistic emphasis of HRM functions?
Yet, another challenge for HRM managers in the region is the issue of diversity
management. In recent years, diversity management has been a burning issue in the
management of HRs in the Asian region. The issues relating to gender, age, ethnicity
among others, have assumed increasing importance. However, against a background
of labor shortage problems in many Asian countries, the governments are
encouraging more women to enter the labor market (see Special Issue of Asia
Pacific Business Review, 2005). In view of the declining birth rate in many East

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Asian countries, it is anticipated that the female labor force participation rate will
continue to grow. If this trend continues as predicted then HR managers face the
challenge of developing a safe and secure working environment for women. It must
be realized that in order for organizations to be able to recruit, motivate and retain
female employees, HR managers need to confront the issues relating to the
discrimination of women in the labor market.
Future research direction 10: Conduct research regarding the dynamics of diversity
management in the Asian context, especially to
highlight the different mechanisms adopted by firms
to manage diversity and also to indicate the
challenges and barriers faced by firms and decision
makers in this regard.
Perhaps the most daunting scenario regarding diversity management in Asian
countries is the looming demographic time bomb. As Holland (2003) asserts, on
average Asians are getting older. This is a slow, silent and unstoppable revolution
which 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 better
health care, higher standard of living, better education, and increase in life
expectancy in recent years, there has been a considerable increase in the number
of old people. At the same time, most East Asian countries are experiencing
decreasing birth rates, ageing workforce and hence labor shortages. It is estimated
that 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, one
in six Japanese is older than the mandatory retirement age of 65. But with a fertility
rate of just 1.3 children per womanway below the birth rate of 2.1 needed to
maintain a stable populationand a life expectancy of more than 80 years and
rising, it is estimated that by 2050 more than 36 percent of the Japanese population
will be above retirement age (Holland, 2003).
While some countries such as Singapore and Japan have made efforts in the
legislative 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 issues
relating to an ageing workforce depends on the severity of the problem but it is
likely that some countries would have to import labor or rely on immigration in
order to sustain economic growth. For instance, it is anticipated that Japan will need
6 million immigrants in the next 25 years but immigration is bitterly opposed by
those who equate it with crime (Pilling, 2003). Even if East Asian countries manage
to delay or resist limited or large scale immigration from both within and outside the
region, the countries would most likely need migrant workers.
Currently, there are legal migrant workers from labor-surplus countries such as
Indonesia and Philippines to labor-recipient areas, such as Hong Kong and
Singapore. There are also low-paid legal migrant workers from countries such as
India and Bangladesh in Singapore and Malaysia. In the construction industry in
Singapore, for instance, it is possible to find migrant workers from different
countries working together in a team. The management of such multicultural work

Future research on human resource management systems in Asia

209

teams is one of the challenges facing HR managers. Going by current demographic

trends, it is possible that the use of migrant workers is likely to increase in future
with multiple implications for the management of HRM in the Southeast Asian
region. Hence, researchers need to conduct more research on equal opportunities and
diversity management issues. Here, research can focus on single countries and
various aspects of discrimination and diversity management. It can also focus on
these issues as they pertain to a particular sub-region.
Future research direction 11: Highlight the nature and kind of legislation suitable
to safe guard the increasing diverse workforce in the
Asians 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 from
industrialized countries to the developing world. In the last decade, advancements in
information communication technology and availability of high skilled workforce in
some developing countries have made it possible for them to attract white collar jobs
from developed countries. It is estimated that 3.3 million jobs in the US (and
2 million in Western financial services) will be lost as a result. In the UK, 200,000
job losses have been predicted by 2008 (FT, 2003). Asia has been the major recipient
of these jobs. Firms outsourcing tasks to countries in Asia are expectedly skeptical
about a number of issues (such as quality, confidentiality, delivery requirements,
etc.). Examining such concerns can help to prepare Asian firms to respond properly
to overseas outsourcing firms.
Future research direction 12: Highlight the main concerns of both foreign and host
firms towards outsourcing of businesses to Asian
countries, especially related to human resources.
Lower cost locations such as India, the Philippines and China, are now attracting
outsourcing of much higher value-added services, such as medical diagnostics,
treasury management, and software development (FT, 2003). Bibby (2003) also
points to the offshore outsourcing of architectural services. For instance, a British
company, Atlas Industries, has set up an office in Vietnam to work entirely for the UK
market. The Vietnamese employees produce drawings and 3D computer-generated
designs for buildings at a relatively low cost. The work is assigned or finished product
transferred through email or a password-protected website (Bibby, 2003).
In India, the main activities or areas covered by the call centers include customer
care (such as remote maintenance, help desk and sales support), finance and
administration (for example, data analysis, medical transcription, insurance claims
and inventory management), HR and payment services (such as payrolls, credit-card
services, cheque processing and employee leasing) and content development, i.e.,
digital content, R&D, LAN networks and application maintenance (for more details
see Budhwar et al., 2006; Chenggapa & Goyal, 2002). As the competition, both
nationally and internationally, to get business contracts has increased considerably in
recent years; HR managers working in the sector are facing enormous challenges in
attracting and retaining the best employees.
At another level, HR managers face significant challenges in their attempts to
utilize internal labor markets (ILMs) in organizations. Appropriate ILMs are known

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to be conducive to the development of long-term employment relationships, bind

employees to the organization and also help to reduce employee turnover (see
Osterman, 1994). It is also known that ILMs make it possible for HRM practices to
be consistent with a systematic and rationalized employment system. However, in
the case of countries like India and China (and many other Asian economies); ILMs
are generally based on social connections, political contacts, caste, religion and
economic power. Thus, in the context of present business conditions in India and
China, the efficiency of the established traditional ILMs is questionable. Also, in the
present context, the impact of Islam as an institution and its principles is
increasing (especially in those countries where it is the dominant religion) in both
ILMs and HRM systems (Ali, 2005; Budhwar & Fadzil, 2000; Syed, 2008). The
challenge, however, is how HR managers can engineer such a macro level change
without alienating powerful members of their organizations.
Future research direction 13: Highlight the emerging nature and constituents of
ILMs in Asian firms.
The existing ILMs system has also been linked to corruption in Asian countries. It
is argued that ILMs system, where informality, social networks and a high power
distance are essential elements tends to engender corruption in organizations (Luo,
2002). This has serious implications for efficient HRM system and HR practitioners
need to pay due attention to it.
Future research direction 14: How to develop efficient HRM systems in Asian
countries?
One of the key debates in the existing HRM literature is regarding the extent to which
HRM helps to improve firms performance (Guest, 1997; Katou & Budhwar, 2006;
Wood, 1999). The literature also reveals that most research investigations in this
regard have been conducted in western developed nations. Few scholars have initiated
such examinations in the Asian context. For example, Bae and Lawler (2000) in
Korea, Huang (1998) in Taiwan, and Agarwala (2003) and Singh (2003) in India have
pointed to the importance of efficient HRM for successful operations. Expectedly, the
messages emerging from these investigations are mixed and less conclusive. There is
then a great opportunity for researchers to highlight such a relationship in the Asian
context 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 and
organizational performance in firms operating
in the region.
Yet, another challenge revolves around the quality of research in the Asian
context (see, for example, Meyer, 2006; Peng, 2007; Tung, 2005). In his analysis of
the main limitations of research conducted in the region, White (2002) suggests that
too much of research effort has been limited to simplistic comparisons, correlational
analyses providing no insight into underlying processes, and skewed, idiosyncratic
sampling. Such research, it is argued, does not contribute significantly to theory
development. Accordingly, White (2002) highlights the need to increase both rigor
and relevance of research efforts in the Asian context.

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Along the same lines, Meyer (2006) argues that there is the need for Asian
scholars to undertake comparative research but such research should not simply
document differences or correlations among variables. Rather, it has to explore causal
relationships and processes to explain how and why contextual variables
influence management practice. Meyer adds that the predominance of AngloAmerican trained researchers in Asia has the effect to producing a homogenous
perspective which affects the selection and methodology of issues investigated. In his
view, Asian management research is strongly influenced by traditions developed in
North America that may not always be useful in advancing management knowledge in
an Asian context. Perhaps, increased support from local organizations for research
would help focus researchers attention to the investigation of local issues.
In response to this suggestion, Lau (2002) recommends the adoption of Asian
developed constructs to study local and global issues and calls for development and
validation 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 on
cultural values, scholars (see for example, Kao et al., 1999) highlight the need to
indigenize management practices in Asian organizations. Due to the strong influence
of the socio-cultural context, the applicability of Western management and
organization theories in the Asian context is now questionable. To a great extent
this 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) suggests
that Asian researchers need to focus their research on local phenomena and issues of
importance to local managers. In a sense, theories should be adapted to explain
locally interesting phenomena; or new theories should be developed to overcome the
low explanatory power of adapted theories.
Future research direction 16: To continuously develop, test and re-test constructs
suitable for conducting research in the Asian
context.
Another challenge facing researchers in the Asian context is how to conceptualize
and enhance our understanding of the heterogeneous nature of HRM systems of
Asian nations; it is not sensible to propose a single set of solutions for whole of the
region. Due to its unique socio, economic, political and legal set-up, each nation
presents its own unique sets of challenges for the HRM function (see Debrah &
Budhwar, 2004). Therefore, it is important to emphasize the significance of each
context regarding the development of appropriate HRM processes. The crucial
question is how do we conduct research which can satisfy such challenges? A
possible way forward is to conduct a systematic analysis starting from a basic level
and leading to an advanced level. The next section presents a framework for
conducting cross-national comparative HRM research, which helps to highlight the
main 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 Asian
HRM systems, we will highlight the complex context of Asia which makes it

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P. Budhwar, Y. Debrah

difficult to conduct a meaningful cross-national HRM analysis. Perhaps, one of the

more common mistake committed by both academics and policy makers is the use of
terms 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 independent
set of socio-economic components. These differ from one another in content, arising
inevitably from the interplay of social relations unique to themselves. Hence, there is
a clear need to see the management phenomena as part and parcel of the distinctive
political, 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 crossnational context involving both developed and developing Asian nations which are
not homogenous in nature, it is important to define HRM in the broadest sense. For
us, HRM is concerned with the management of all employment relationships in the
firm, incorporating the management of managers as well as non-management labor.
A similar approach to define HRM for emerging markets within Asia such as China
and India has been recently proposed and successfully adopted by other scholars (see
Budhwar & Khatri, 2001 for defining HRM in the Indian context and Cooke, 2005
for the Chinese context).
Over the years, different scholars in the field of HRM have put forth a number of
frameworks for conducting international/cross-national HRM research (for details
see Budhwar & Sparrow, 2002). Based on a critical analysis of the existing
frameworks and extensive research in the field, Budhwar and associates (see
Budhwar & Debrah, 2001; Budhwar & Sparrow, 2002) have proposed a framework
for examining cross-national HRM. These authors have identified three levels of
factors and variables, which are known to influence HRM policies and practices, and
worth considering for cross-national examinations. These are:
&
&
&

national factors (involving national culture, national institutions, business sectors

and dynamic business environment);
contingent variables (such as age, size, nature, ownership, life cycle stage of
organization); and
organizational strategies (such as the ones proposed by Miles and Snow and
Porter) and policies related to primary HR functions and internal labor markets.

Perhaps, very large projects, spanning over a long period of time can effectively
examine the influence of all the three sets of factors and variables on HRM systems
of a particular nation at a given period of time. However, considering the infancy
stage of HRM in many Asian countries and the argument that HRM in a crossnational context can be best analyzed by examining the influence of national factors
(Brewster et al., 1996; Budhwar & Sparrow, 1998), we propose to initially examine
the impact of the main national factors on HRM in different Asian countries. This
will help to draw useful cross-national comparisons regarding the scenario of HRM
in different Asian countries. The national factors such as culture and institutions
form the macro environment of organizations in a national context. This approach
has 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 of
HRM in a large number of countries in Asia-Pacific, the Middle East and Africa.

Future research on human resource management systems in Asia

213

Nevertheless, to fully examine the above raised propositions, it is important to also test
the influence of both contingent variables and organizational strategies in different
national context. For a detailed explanation regarding the rationale for the selection of
various factors and variables included in the framework and practical applicability of
the 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 influence
HRM systems in different cross-national context are summarized in Table 2.
Investigation based on such a framework then helps to highlight the contextspecific nature of HRM. For example, the economic environment significantly
influences HRM in most Asian countries, but its impact varies from country to
country. For instance, in Japan the recessionary conditions of the past decade is
undermining traditional employment practices and precipitating changes in the
system. India has witnessed a boom in foreign direct investment since it liberalized
its economy. However, the arrival of foreign firms in the Indian labor market is
forcing local firms, in pursuit of efficiency, to rationalize their human resource
management practices.
In the same way, the political and legal set-up of the respective countries
influences HRM policies and practices in their own unique way. For example, China
allows 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 business
environment

Socialization process

National labor
laws

Competition

Common values, norms of

behavior and customs
Influence of pressure groups

Trade unions

Common strategies,
business logic
and goals
Regulations and
standards
Sector specific
knowledge
Informal and formal
benchmarking crosssector co-operation
Common developments
in business operations
Labor or skill
requirements
Merger activity

Assumptions that shape managers

perceptions, insights and mindsets
Management style
Personal connections
Meaning of work and values

Personal dispositions, attitudes

and manners
Approaches to cultural diversity
Match to the organization
culture

Politics
Educational &
vocational
training set up
Labor market;
professional bodies
International
institutions
Industry by itself

Employers federation Workforce mobility

Consulting
organizations
Placement
organizations
Trade bodies
Government
institutions
Local authorities
Voluntary bodies

Capital mobility

Business alliances
Changing composition
of workforce
Restructuring

Focus on total
customer satisfaction
Facility of information
Technological change;
globalization of
business

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P. Budhwar, Y. Debrah

the wishes of the communist party. But, in India there are many local, regional and
national unions which generally function in an adversarial way. Similarly, research
has revealed the unique influence of socio-culture context (for example, Islamic
work principles in many Malaysian firms; Confucian principles in China and
Taiwan) on HRM systems (Budhwar & Fadzil, 2000).
Apart from the national factors, as indicated above, an investigation based on both
the contingent variables (mentioned above) and organizational strategies (such as the
ones based on Miles and Snows (1984) typologyprospectors, analyzers,
defenders and reactors, can further help to get a more detailed picture of the
scene 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 world
economy. With the growing business interest in the region, both academics and
practitioners are interested in finding out about the kind of HRM systems appropriate
for the region. The challenges facing HRM in the Southeast Asia are clearly complex
and daunting. Majority of these challenges have emerged due to the changes in the
economic environment. In particular, globalization and international competitiveness
have brought to the fore the need for organizations to adopt appropriate HRM
practices in their quest for competitive advantage. In this globalized era, competitive
pressures have laid bare the limitations of the traditional models of management in
some Asian countries. Clearly, there is some indication that HRM is undergoing
transformation in the region but it is unclear what the outcome of this transformation
would be. Early indications are that there is a move towards individual basis in
employment systems. However, it is too early to see a clear model or approach
emerging. Possibly, a hybrid system (based on a mixture of both traditional Asian
characteristics and Western rationalized system) would emerge. However, it is
important that any HRM system that emerges in the region should be as proposed by
Meyer (2006), context based. It is hoped that the suggested future research areas
identified would guide researchers to investigate issues that can significantly
contribute in this regard.

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Pawan Budhwar (PhD, Manchester Business School, UK) is a Professor of International HRM and Head
of Work and Organisational Psychology Group at Aston Business School, Birmingham, UK. He is also the
Senior Associate Editor of British Journal of Management, Associate Editor of International Journal of
Cross Cultural Management and Director of Aston Centre for Human Resources and Aston India
Foundation for Applied Business Research at Aston University, Birmingham, UK.

Yaw A. Debrah (BA, MA Simon Fraser, Canada; PhD Warwick Business School, UK) is Professor of
Human Resource and International Management and Director of the MBA Programme at Swansea
University (University of Wales, Swansea, UK). He has worked at Nanyang Business School, Nanyang
Technological University, Singapore.