Quality and cost? The evolution of Walmart's business strategy and human resource policies and practices in China and their impact (1996–2017)

Abstract

This study responds to calls for more in-depth and qualitative studies, the return to a focus on external factors, and the inclusion of business strategy and industrial relations in human resource management (HRM) research, as well as more research in the retail sector in the Chinese context. We examine the coevolution of the business strategy and HR strategy of Walmart (China) in the last two decades and identify tensions in the context of intensifying competition in the Chinese retail market. We highlight the interactive effect of business and HR strategies through a historical lens. Our study reveals a shift from the original employee-oriented win-win strategy through rent sharing between the firm and the employees to a win-lose strategy through the introduction of more cost conscious HR policies and practices. Findings of our study challenge the conventional wisdom that firms adopt either the cost or quality strategy and, along with it, the suggestion of matching the quality strategy with employee-oriented HR policies and practices, and cost leadership with a transactional approach to HRM. We argue a cost and quality business strategy may be adopted, which requires the support of employee-oriented, rather than cost-oriented, HR policies and practices. K E Y W O R D Sbusiness strategy-HR strategy fit, China, industrial relations, multinational corporations, strategic human resource management, Walmart

Human resource management research and practice in Asia: Past, present and future

“…Their business strategy may not be well supported by their HRM strategy, in part due to the relatively low priority of HRM compared with other business functions, and in part due to the lack of international exposure and experience ( Cooke et al, 2019 ). Moreover, the respective role of subsidiaries as a strategic part of the MNC's global business strategy may differ within the MNC, with Chinese operations often playing the cash cow role to compensate for the declining profit margins from their counterparts in developed markets (e.g., Xie & Cooke, 2019 ). Froese, Sutherland, Lee, Liu, and Pan's (2019) critical review of challenges for foreign MNCs operating in China highlighted two challenges related to the business environment: regulatory and cultural challenges; and two management challenges: innovation and HRM.…”

“…In addition, existing HRM strategy models/architectures suggest that firms should adopt a differentiated approach to classifying groups of employees as well as to HRM practices, in order to optimize the effect and contain costs ( Lepak & Snell, 2002 ; Schuler, Dowling, & De Cieri, 1993 ). However, research evidence in the MNC context indicates that the pursuit of a cost-oriented model of business strategy still requires a quality-oriented (or high road) HRM strategy to support the former ( Xie & Cooke, 2019 ).…”

“…An important fact is often neglected, that is, subsidiaries in different geographic locations may play different roles strategically for the MNC ( Xie & Cooke, 2019 ). MNCs may pursue a strategic asset-seeking strategy in certain markets and a market-seeking strategy in others, and in developing Asian markets they may adopt the added strategy of exploiting a comparatively low-cost labour market/human resources.…”

The prospect of decent work, decent industrial relations and decent social relations in China: towards a multi-level and multi-disciplinary approach

“…Business nature and characteristics of labour strategy and practice Business nature and product market positions inform employer's labour market behaviour and consequently, employment strategy and HRM policy and practice, and underpin the labour standards (e.g. Schuler & Jackson, 1987;Xie & Cooke, 2018). More specifically, employers' attitudes towards union recognition and the nature of this recognition, attitude towards corporate social responsibility and enterprise culture of fairness, equity and inclusiveness are all important factors that may help shape the prospect and perception of decent work for those employed by the organization (also see micro-level analysis below).…”

Important issues in human resource management: introduction to the 2020 review issue

“…This applies not just to not-for-profit organisations but also to for-profit organisations (e.g. Xie & Cooke, 2019). Fourth, the exploration of avenues that may shape the future of work continues to be highly interesting.…”