The International Journal of Human Resource

Management

ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: https://www.tandfonline.com/loi/rijh20

Internationalisation of Chinese banks and

financial institutions and its implications for IHRM

Robert Jack, Yimin Huang, Jian-Min (James) Sun & Fei Guo

To cite this article: Robert Jack, Yimin Huang, Jian-Min (James) Sun & Fei Guo (2019)
Internationalisation of Chinese banks and financial institutions and its implications for
IHRM, The International Journal of Human Resource Management, 30:14, 2121-2136, DOI:
10.1080/09585192.2019.1598037

To link to this article: https://doi.org/10.1080/09585192.2019.1598037

Published online: 09 Apr 2019.

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THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT
2019, VOL. 30, NO. 14, 2121–2136
https://doi.org/10.1080/09585192.2019.1598037

Internationalisation of Chinese banks and financial

institutions and its implications for IHRM
Robert Jacka, Yimin Huangb, Jian-Min (James) Sunc and Fei Guoa
a
Department of Management, Faculty of Business and Economics, Macquarie University,
Sydney, Australia; bDepartment of Marketing, Faculty of Business and Economics, Macquarie
University, Sydney, Australia; cDepartment of Management and International Business, The
University of Auckland Business School, Auckland, New Zealand

ABSTRACT KEYWORDS
In this special issue (SI), we aim to advance the theoretical China; banks and financial
and empirical knowledge of emerging market service firms institutions; internationalisa-
by analysing some of the key IHRM implications of the tion; international human
resource management
internationalisation of Chinese banks and financial institu-
tions (BFIs). The selected articles in this SI provide rich
insight into the human resource management (HRM) chal-
lenges these firms face when they establish operations in
overseas markets and draws attention to trends and devel-
opments which challenge the way HRM has been under-
stood in Chinese multinational enterprises (MNEs). The
articles address the importance of Chinese BFIs relationship
with the state and the influence of political ties in the for-
mation of management leadership styles and managerial
mindset. Included, as part of our contribution to this SI, is
an analysis of a major Chinese bank’s subsidiary operation
highlighting its human resources practices, adaptation strat-
egies and relationship with its head office.

Background
Internationalisation within the banking and financial services sector is a
multifaceted phenomenon, associated with both market opportunities
and challenges as banks align internal changes in operations and assets
with an international strategy (Li, Qiu, & Wan, 2011; Selmier, 2018;
Sparrow, Farndale, & Scullion, 2013). It is a complex and dynamic sector
that emphasises effectiveness, efficiency and calculability with flexibility
and speed (Newenham-Kahindi, 2011). In common with many service
firms, banks and financial institutions (BFIs) are called upon to deliver a
number of different service activities. These combinations of activities
imply greater complexity in the successful delivery of a product to

CONTACT Robert Jack rob.jack@mq.edu.au Department of Management, Faculty of Business and

Economics, Macquarie University, Sydney, Australia
ß 2019 Informa UK Limited, trading as Taylor & Francis Group
2122 R. JACK ET AL.

customers, particularly when those customers are located across different

international markets. Often it assumes that some form of direct inter-
action between the service provider and the service user is required
(Boddewyn, Halbrich, & Perry, 1986; Fernandez Fernandez, 2001).
Service capabilities are perceived as being in the ‘head of employees’ and,
therefore, interaction between employees and customers may be essential.
These characteristics of BFIs lead to challenges for human resource man-
agement (HRM) in a variety of aspects.
Specifically, BFIs provide services based on specialised information,
which relies on the skills, talent and knowledge of employees (Masum,
Azad, & Beh, 2016). Many BFIs discover that internationalisation has
actually created the requirement for additional service activities across its
network. The degree of interaction necessary to deliver the firm’s prod-
uct to its international clients, the cultural expectations of the role of
financial services – together with cultural uncertainty about the complex-
ities of different forms of financial products – require BFIs to perform
further activities that complement their product offering and ser-
vice delivery.
The greatest management problem for BFI multinationals is to design
structures and systems that can reconcile the (often very) divergent stra-
tegic requirements of different products and markets (Grant & Venzin,
2009, p. 561). The scale of this problem increases with additional product
and international diversity. Combining the benefits of local adaptation
with the economies of global centralisation remains the fundamental
organisational challenge for international financial services companies
(Grant & Venzin, 2009). With increased global business competitiveness
and technological growth, BFIs with international business orientations
are under increasing pressure to carefully organise, coordinate and con-
solidate supervision of their worldwide operations by designing specific
HRM strategies and organisational systems in order to meet their clients’
demands and enhance their competitiveness (Newenham-Kahindi, 2011;
Volmer, Werner, & Zimmermann, 2007).
Researchers argue that HRM plays an increasingly important role in
supporting an multinational enterprise’s (MNE) business strategy and
subsidiary performance (Cooke, 2012). HRM practices within an MNE
can be conceptualised in terms of the degree of similarity with headquar-
ters/home country operations and/or the practices found in host country
organisations (Bjorkman & Welch, 2015; Rosenzweig & Nohria, 1994);
the intensity or extent of high performance/commitment HR practices
(Ngo, Foley, Loi, & Zhang 2011) or the signals that HR practices send to
local employees through their features such as distinctiveness, consist-
ency and consensus (Bowen & Ostroff, 2004). While global strategy is a
 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 2123

significant determinant of MNE success, the role of HRM remains a

challenge for firms operating abroad. For example, training and develop-
ing HR managers and expatriates for overseas responsibilities, and devel-
oping truly transnational companies, seem to be a test for many MNEs
(Harzing, 2004). As far as the banking and financial services sector is
concerned, MNEs within this sector have a strong influence on the trans-
fer of headquarter organisational practices since they use expatriates to
bring knowledge and HR innovation systems of headquarter practices to
a subsidiary (Harzing, 2004; Morgan, Kelly, Sharpe, & Whitley, 2003;
Newenham-Kahindi, 2011).
Despite their latecomer status to international expansion, a significant
amount of key research has already been published into many aspects of
Chinese firm internationalisation – specifically their motives to inter-
nationalise, entry mode choices and performance in international mar-
kets (Boisot & Meyer, 2008; Buckley et al., 2007; Child & Rodrigues,
2005; Deng, 2012). Although this research is extensive, it remains pre-
dominantly grounded in an analysis of China’s manufacturing firms (see
Boehe, 2016; Cooke, 2012; Xue, Zheng, & Lund, 2013 for some notable
exceptions). Studies of Chinese MNEs across different industry sectors,
and their HRM, remain limited (Cooke, Wood, Wang, & Veen, 2019).
Indeed, firms from its service sectors, although at times featured as part
of a broad database of firms for survey or multiple case study analysis,
have rarely been the focus of individual studies in the management field,
especially in HRM (Cooke, Wu, Zhou, Zhong, & Wang, 2018). This SI
aims to fill this gap.
Internationalisation of BFIs from emerging economies constitutes a
growing, but rarely addressed phenomenon, perhaps because internation-
alisation in banking and financial services has lagged behind that of
manufacturing (Boehe, 2016, p. 560). Although Chinese BFIs are becom-
ing aggressive about expanding internationally, consistent with many cat-
egories of Chinese firms, they are considered to be at the early stages of
internationalisation. During the first phases of their international devel-
opment, Chinese BFIs paid more attention to supporting Chinese com-
panies going global and providing financial support to established MNEs.
Gradually, their offering of global business grew more comprehensive
and service capabilities were strengthened. In recent years, most of the
larger and more internationally established BFIs are inclined to put more
focus on the transformation of the profit model and the diversification
of their overseas businesses (Ben et al., 2018). Chinese BFIs are actively
implementing an integrated strategy for their overseas businesses and are
adopting an unedified operating mode by enhancing their capabilities.
Although these strategies aim to improve Chinese BFIs competitiveness
2124 R. JACK ET AL.

in international markets, such transformations impose various challenges

and hurdles for HRM (Ben et al., 2018).
While domestic private ownership and foreign ownership of small or
regional banks is allowed, the ‘Big Five’ commercial banks (Agricultural
Bank of China, Bank of China, Bank of Communications, China
Construction Bank and the Industrial and Commercial Bank of China),
which dominate China’s banking and finance sector, are still largely state
owned with the Chinese state remaining the largest shareholder
(Gonzales-Vicente, 2011; McGuinness & Keasey, 2010). State ownership
has clear implications for various aspects of Chinese firm international-
isation (Cooke et al., 2018; Li & Xie, 2013). These can be positive, in the
form of a proclivity for diversification of risk and a greater variety in
product lines; or potentially negative as Chinese state- owned enterprises
(SOEs) are not fully designed or required to pursue commercial profit
maximisation (Li & Xie, 2013). Bruton, Peng, Ahlstrom, Stan, and Xu
(2015) highlight the setting SOEs now face and emphasise the complexity
of their mix of private and public ownership, explaining that state own-
ership itself should be viewed as a continuous variable. In this sense,
SOEs can be viewed as hybrid organisations (Amighini, Rabellotti, &
Sanfilippo, 2013; Wei, Clegg, & Ma, 2015). Support from the state, how-
ever, could affect the decision making of managers in SOEs during the
process of internationalisation as they would be mindful of maintaining
future support (Cui & Jiang, 2012; Jack, Guo, Huang, & Zhu, 2017).
Multiple and conflicting demands from citizens, politicians and managers
complicate the definition of ‘success’ and, thus, the actions taken to
achieve such success (Cuervo-Cazurra, Inkpen, Musacchio, &
Ramaswamy, 2014; Morgan et al., 2003).
HRM practices in China are evolving as Chinese firms are rapidly
internationalising and learning from firms in advanced economies
(Khan, Wood, Tarba, Rao-Nicholson & He, 2018). Chinese MNEs are
challenged by a shortage of experienced expatriates who have built up
knowledge of foreign markets and have a better understanding of inter-
national operations outside of their home country (Wang, Freeman, &
Zhu, 2013; Zhang & Fan, 2014). Without building an IHRM strategy, it
may be difficult to overcome their weaknesses, predominantly embodied
in a lack of international experience (Fan, Zhang, & Zhu, 2013). These
firms may not lack strategic goals, energy and courage in conducting
personnel reform, but they may lack HRM mechanisms to fully develop
employees’ potential.
As Budhwar, Tung, Varma, and Do (2017, p. 118) highlight, there is a
need to advance this stream of research by investigating the emerging
patterns of HRM in MNEs in diverse sectors from key developing
 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 2125

markets and, in particular, if they adopt a different approach while oper-

ating in different parts of the world. Furthermore, Cooke et al. (2019, p.
71) make the point that, as FDI from China, the key BRIC economy, is
likely to continue to grow (with MNEs as its key driver), a stronger
momentum is required in researching the impact the changing competi-
tive environment has on the broader HRM strategies of these firms. It is
in this context that a proposal was made calling for original research
papers that address some of the critical issues discussed above.

Contributions to this special issue collection

The final papers presented in this SI were selected from a number of
submissions. They benefited from a rigorous and comprehensive review-
ing process. Each paper in the collection pays special attention to a
unique set of issues, and together they contribute to our understanding
of the strategies and HRM practice of Chinese BFI operations in
Western markets. All three papers addressed the importance of Chinese
BFI overseas operations’ relationships with the state and their political
ties in the formation of management leadership styles and mindset.
Papers in this collection also call for a future research agenda focusing
on a better understanding of the shifting forces influencing HRM prac-
tice in the process of internationalisation of MNEs from emerg-
ing markets.
The paper by Su, Fan and Rao-Nicholson poses the research question
– How do Chinese BFIs configure their leader–top management team
(TMT) dynamics to form a well-functioning TMT that affects internation-
alisation performance? The high-performing internationalisation of an
MNE is contingent upon the availability and effective utilisation of one
of its key strategic resources, namely, its people. By utilising a combin-
ation of top leader (CEO or Chairman) characteristics and TMT diver-
sity, the article adopts a holistic approach to TMT composition, as
opposed to previous research which relies on isolating one TMT factor
from another. The authors highlight that one of the HRM difficulties fac-
ing MNEs is how to configure a functioning TMT that guides the firm
into foreign markets. The relationship and interactions between the char-
acteristics of the top leader (how their mindset can be shaped by their
education; work experience and political ties with their home country)
and TMT diversity (functional, educational and age) point to the possi-
bility of complex TMT configurations in explaining internationalisation
performance
To address their research question, the authors draw on a sample of
32 Chinese BFIs, and adopt fuzzy-set qualitative comparative analysis
2126 R. JACK ET AL.

(fsQCA). The results identify a taxonomy of the leader–TMT dynamics

within Chinese BFIs during internationalisation, which demonstrates that
neither the top leader’s foreign experience nor political ties are necessary
for superior internationalisation performance. Four configurational solu-
tions, relating to an organisational outcome of ‘high internationalisation
performance’ are proposed – ‘Grass Roots’, ‘Strategic Executor’, ‘Born
Global’ and ‘Glocal’ (a combination of the global and local mindsets).
For each of these solutions the authors provide brief case examples,
across a range of private- and state-owned enterprises, within the sector.
Su, Fan and Rao-Nicholson’s paper provides us with a unique insight
into the characteristics of senior managers and their top management
team across key BFIs. The authors argue that both personal foreign
experience and political ties act as a pull and push factor, influencing
experiential knowledge, which contributes to managerial mindset forma-
tion, which in turn, influences firms’ internationalisation decisions.
Firms, therefore, rely on personal foreign experience to guide the infor-
mational processing and analysis, which can be deemed a pull factor
towards the leader’s mindset formation. Political ties, represented as
experiential knowledge reflecting both asymmetric information and
responding to national strategies, are treated as a push factor towards the
leader’s mindset formation.
The paper by Lin and Yang provides a comprehensive analysis of vary-
ing integration strategies of HRM practice of Chinese banks in Canada.
They identify the limitations in institution-based and resource-based
approaches in explaining HRM practices of Chinese MNEs, such as
banks, in their internationalisation process by recognising their unique
positioning and their relationship with the state. The findings by Lin and
Yang’s study challenges the assumption that emerging market MNEs are
more likely to localise their HRM practice when entering developed
economies. They found that the two case study Chinese banks in
Canada, with different business models and entry modes, tended to
adopt an integration approach rather than a localisation approach and
their HRM practices are consistent with the practices of the par-
ent company.
A set of important moderating factors linking the integration orienta-
tion to the implemented HRM practices were extensively examined,
including resource endowments, investment pathways, organisational leg-
acies and target markets. The close affiliation of Chinese banks’ overseas
operations with the state, through the parent company, not only provides
them with strong financial endowments and existing business clients, but
also offers them strong incentives to comply with the practices of the
parent company - while limiting their motivation to localise their HRM
 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 2127

practices. The study makes an important contribution to the literature by

positioning Chinese SOEs such as banks as a special case in emerging
market MNEs international expansion. Unlike conventional emerging
market MNEs entering Western markets, Chinese banks are actually rich
in resources, endowed by the state in the form of financial resources and
existing business clients, which support an integration approach rather
than localisation approach in HRM practices.
The paper by Zhu extends the discussion of the interplay among coun-
try-of-origin, host country and dominance effects on HRM practices in
foreign subsidiaries of MNEs, and makes an important contribution to
the extant literature with its focus on service MNEs from emerging mar-
kets. Foreign subsidiaries are likely to face competing institutional pres-
sures and need to maintain their legitimacy within the host country and
their parent MNEs. On the one hand, they are expected to adopt local
practices and engage with local institutional contexts to survive, while on
the other hand, they have to face internal pressures from headquarters to
continue home country practices. Such a dilemma could be more salient
for state-owned MNEs from emerging markets such as China, which are
hybrid organisations with a mix of private and public ownership. As a
result, the complexity in HRM practices in the foreign subsidiaries of
state-owned MNEs should not be underestimated as a straightforward
choice between global standardisation versus local adaptation. Instead,
there could be a third-way of HRM when state-owned MNEs go
international.
Using a case study with longitudinal design, Zhu collected and ana-
lysed qualitative data on a foreign subsidiary of one of the major state-
owned banks in China, to explore how a service MNE from an emerging
market approaches HRM in its subsidiary in a developed country. The
findings are interesting. First, hybrid HRM practices are discovered in
the foreign subsidiary to the state-owned MNE, i.e. HRM practices are
shaped by both dominance and host country effects. Second, an evolving
nature of the Chinese MNE’s approach to HRM practices in its foreign
subsidiaries is identified. HRM practices in the case bank in this study
evolved from a polycentric approach to an emphasis on global coordin-
ation and control, a shift towards a stronger dominance effect on HRM
in the foreign subsidiary of this MNE. This finding reveals the dynamics
of HRM practices during the course of internationalisation of MNEs
from emerging markets, which opens up a new avenue for future
research to further tap into the dynamics of international HRM.
The results of the studies by Lin and Yang and by Zhu, each focusing
on the approach to HRM in the subsidiaries of state-owned Chinese
banks operating in developed markets (Canada and Australia), show
2128 R. JACK ET AL.

some consistencies in addressing a central question in IHRM - are

Chinese BFIs more likely to localise their HRM when entering developed
economies. Zhu’s longitudinal study highlights an evolving approach to
HRM by the Chinese bank, moving from a localisation approach to one
that adopts standardisation based on a global best practice model. Lin
and Yang’s comparative case study emphasises that HRM practices have
been integrated for the purposes of attaining both operational consist-
ency and following the government mandate to serve the national inter-
est. In addition, the integration approach aims to maintain ‘cultural
cohesion’, effectively resisting pressure to adapt to local cultures and
norms. The banks studied in both papers have adopted HRM practices
that are largely consistent with their parent companies’ practices and
only resource and business considerations bring about certain adjust-
ments towards local conditions.

Discussion
The role of the state and its ties with SOEs in the internationalisation of
MNEs from emerging markets has been clearly demonstrated in the
papers of this collection. The historical perception and interpretation of
SOEs is based on the view that these organisations were created by state
capital, managed by political appointees and developed to serve the col-
lective good (Cuervo-Cazurra et al., 2014). Because of an SOE’s affiliation
with its home institutions, when they invest overseas they can be per-
ceived by host-country institutions not simply as business entities, but
also as political actors which obviously has a significant impact on the
provision of customer service in the host country, particularly for BFIs
(Globerman & Shapiro, 2009).
The institutional pressures on SOEs are considered stronger in places
that perceive SOEs as inconsistent with their ideologies, or as threats to
their national security or competitiveness – that is, in host countries
with high levels of technological or institutional development. SOEs
make additional efforts in such countries to reduce the level of institu-
tional pressure and to increase their legitimacy (Meyer, Ding, Li, &
Zhang, 2014). The influence of institutions can also affect the SOE at the
micro-level. Micro institutions are similar to macro institutions in that
both have the ability to not only support, but also change and shape
institutional development. Specifically, micro institutional forces can
include the mindset of managers at the business level of the firm
(Bruton et al., 2015; Zhu and Jack, 2017). These conflicting institutional
pressures obviously affect the actors (i.e. subsidiary managers) involved.
 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 2129

How SOEs manage these conflicting pressures has flow on effects for
the management of its human resources (HR). Institutions, formal (i.e.
the state and its various subordinates) and informal (i.e. cultures, norms
and customs), have the effect of governing societal transactions in polit-
ical, legal and social aspects (Peng, Wang, & Jiang, 2008). Institutional
factors determine a firm’s direction and strategy of creating competitive
advantage and performance and the combination of a firm’s formal and
informal institutional frameworks shapes its strategic choices (Ingram &
Silverman, 2002).
Agency theory focuses on the management of relationships between
two parties in which the agent is tasked by the principal to perform an
action in the principals’ name. Agency theory views the firm as a nexus
of contracts between principals (owners) and agents (such as subsidiary
managers). As agents may not completely share owners’ goals and, as
they have access to superior information related to their specific tasks,
agents may have both the motivation and opportunity to behave in a
way that maximises their own utility at the expense of the principals
(Peng, Bruton, Stan, & Huang, 2016). In this context, interactions
between the managers of an SOE (as principals – government officials)
and managers of its foreign subsidiary(ies) (as agents – appointed expa-
triates) take on added complexity. Subsidiary managers make decisions
to accomplish the conflicting objectives of their own careers, while the
government officials and citizens of the home country seek to retain a
source of influence or power (Cuervo-Cazurra et al., 2014; Roth &
O’Donnell, 1996). Bruton et al. (2015), who emphasise that the hybrid
nature of SOEs enhances the complexity of the principal/agent relation-
ship, underline this point.
Research undertaken on a subsidiary of BankCo (a pseudonym for a
major Chinese bank) provides a further examination that confirms and
complements the analysis in the papers of this collection (Ben et al.,
2018: Jack et al., 2017). BankCo was established in 1984 as a state-owned
bank and was wholly restructured to a joint-stock limited company in
2005. Its internationalisation was initiated in 1992 when it opened its
first overseas representative office in Singapore. Since then BankCo has
expanded its presence to 42 countries and regions with a diversified
portfolio of businesses (Ben et al., 2018).
Drawing on 14 interviews with senior executives and middle manage-
ment (essentially BankCo’s top management team at the subsidiary), this
research examined the perceptions of senior managers who were both
initiating and implementing relevant policies and middle-level managers
who were experiencing and observing their implementation within the
subsidiary. HR managers and specialists were asked about their
2130 R. JACK ET AL.

Figure 1. The ‘third-way’ of management.

perceptions of how HRM practices were implemented and their impact

on recruitment and selection, performance appraisal and reward systems
(Jack et al., 2017). The study, summarised in Figure 1, reveals a duality
in management practices in BankCo’s overseas operation, a third-way of
management, as opposed to a ‘choice’ between localisation and globalisa-
tion. The third-way of management is a blend of the influence (or what
can be called the ‘shadow’) of the SOE’s organisational culture and the
subsidiary’s integration with the local culture. Critical roles are played by
both Chinese expatriates and local staff who assume diverse positions in
driving changes in the internationalisation process. But it is the inter-
national mindedness of senior executives that determine the direction of
change, i.e. leaning towards country-of-origin culture or an international
practice. Given the nature of the banking and finance sector, and the
involvement of the government as a key stakeholder, the influence of the
SOE’s organisational culture on its international operation is a perman-
ent feature of this subsidiary’s operation.
The organisational culture and management practices in BankCo’s
subsidiary are principally determined by the leadership characteristics of
the expatriates as senior executives (Khan, Wood, Tarba, Rao-Nicholson,
& He, 2018; Wei et al., 2015). They believe they have an obligation to
maintain the organisational culture of head office. However, their per-
sonal commitment to the internationalisation of BankCo has enhanced
their vision for the firm and their international mindset. This indicates a
dualistic role of expatriates as senior executives. They are, first of all, rep-
resentatives and ambassadors of the SOE culture in overseas operations.
 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 2131

But they are also assessed as ‘saviours’ by their determination to break

boundaries and make changes. As an example, the senior management
team expanded the activities of the subsidiary to undertake business/
transactions within the property sector of the host market, in spite of a
less than encouraging attitude from head office.

Conclusion, implications and future directions

Chinese BFIs represent a rich source of analysis as a distinct category of
emerging market firms. As service firms they are reliant on the skills,
capabilities and knowledge of their employees. As emerging market
MNEs they face contradictory pressures to integrate or localise their
HRM practices as well as overcoming a lack of resources and capabilities
considered essential to succeed in international markets.
As many of the key Chinese BFIs are SOEs they have a close affiliation
with the Chinese government, the most influential institution in their
home market. The legacy of the SOE system in overseas operations can
assist in managing international expansion. Indeed, previous research has
highlighted the hybrid nature of SOEs, embodied in the complexity of
their evolving ownership structure and increasingly diverse goals
(Cuervo-Cazurra et al., 2014; Martin & Li, 2015; Peng, et al., 2016).
What is evident in our own analysis and in the papers of this collection
is the agent/principal relationship within different managerial levels of
the subsidiary. Cuervo-Cazurra et al. (2014) discuss the complications
relating to a potential triple agency relationship ‘conflict’ within SOEs,
involving (i) subsidiary managers advancing their own careers, (ii) gov-
ernment officials/politicians interested in maintaining their influence and
(iii) home country citizens seeking to achieve broader development goals,
embodied in the operations of SOEs.
Research on Chinese BFIs’ overseas operation (with BankCo being a
key example) highlights that expatriate senior executives realise the
importance of hiring local staff to facilitate integration into the local
business community. They are aware of the differences between Chinese
(expatriate) staff and local staff and adopt diverse strategies to motivate
them. They invest more time meeting local partners and clients by
engaging with the local business community. These insights and initia-
tives into local requirements generate ideas to develop new financial
products for the local market (Jack et al., 2017). However, it has also
turned into an obstacle to the bank’s integration with the local market,
potentially being a restriction to any progression in internationalisation,
underscoring the ‘pull–push’ effect, developed by Su, Fan and Rao-
Nicholson (this SI), of senior executive’s international experience
2132 R. JACK ET AL.

combined with their political ties. Senior executives’ capacity to drive

changes in the subsidiary is bounded by their perceived identity of
ambassadors of Head Office and the ‘guardians’ of the legacy of SOE sys-
tem. As the Chinese expatriates within the senior and middle manage-
ment become more internationally minded, their contribution to
promoting internationalisation depends on how this is defined within
subsidiary and how much flexibility is allowed by Head Office. This indi-
cates the prevalence of micro institutions shaping key activities within
the subsidiary (Vermeulen, Van Den Bosch, & Volberda, 2007). As the
majority of the senior and middle management team have worked within
the SOE sector, they are more likely to inherit a mindset that may not
necessarily prioritise a subsidiary’s strategic orientation, over job main-
tenance and existing operational procedures and priorities (Bruton
et al., 2015).
Subsidiary managers’ values or identification may vary in the degree to
which they are attached to a principal organisation with the notion of
parent commitment – the psychological identification of a subsidiary
manager with headquarters – being particularly important in determin-
ing the agency relationship (Roth & O’Donnell, 1996). For the subsidiary
manager, although commitment to local operations remains important, a
high level of commitment to a ‘company way’ perspective is required. In
the context of the BankCo research, commitment to head office appears
to be at its strongest with middle management expatriates. This can take
the form of a strong, almost idealistic, attachment to their company
including the broader societal principles it is seen to represent as an
SOE. This, combined with the mindset of the senior expatriate managers,
creates an environment that actually diminishes the potential of goal
conflict and reduces the agency ‘problem’.
The incidence of micro institutions dominating operations within the
subsidiary can impact on the perception of the subsidiary by local staff.
It results in a cultural-cognitive micro institutional force, which creates a
shared system of meaning with the expatriate senior and middle manag-
ers (Scott, 2001; Vermeulen et al., 2007). The BankCo example under-
lines that local staff have little access to these shared meanings and
implies that the structure that appeals to one group within the subsidiary
may not appeal to another group with a different system of meanings.
Consequently, local staff assess themselves as simply ‘followers’. In many
ways, they assess the subsidiary as an international extension of a
Chinese SOE, not as a subsidiary of a SOE, which implies a more inter-
national orientation throughout its operations.
By presenting three distinct and insightful research papers, we believe
this SI makes an important contribution towards addressing the need for
 THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 2133

a more nuanced understanding of how Chinese BFIs cope with HRM

challenges during their internationalisation. For example, there is rela-
tively limited research examining the local integration challenges of
Chinese MNEs in overseas markets, particularly in developed markets
(Khan et al., 2018, p. 4). Papers in this collection, and our own research,
attempt to address this issue and advance both the theoretical and
empirical understanding in the field by highlighting both important the-
oretical and empirical advances in the field. Although the studies
included in this SI are broad, in terms of research themes and theoretical
perspectives, they provide substantial opportunities for further research
and we are optimistic that this SI will foster debate and create novel ini-
tiatives for significant contributions.

A note of thanks to additional contributors to this issue

We would also like to express our sincere gratitude to IJHRM adminis-
trator Penny Smith, Special Issues Editor Professor Karin Sanders and
former Editor Professor Peter Dowling for their helpful advice and sup-
port in the initial stages, and subsequent development, of this SI.

Disclosure statement
No potential conflict of interest was reported by the authors.

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