Does human resource management matter in a transitional economy? China as an example

This paper investigates the significance of how firms manage their human resources (HRs) within the confines of powerful social institutions in a transitional economy, the People's Republic of China (China). We propose that two dimensions, the role of human resource management (RHR) and followers' perception of the leader (TOP), are important contributors to firm performance as are the influences of the regional economy and firm ownership. We tested our hypotheses with a survey of 180 firms from nine cities in China. We found that both role of HRM (RHR) and follower's perception of top-level management (TOP) are important to firm performance. The study confirms that while social institutions remain powerful in a transitional economy, effective HRM is important to firm performance.