Vertical integration of corporate management in international firms: implementation of HRM and the asset specificities of firms in China

Abstract

This paper addresses the development requirements of an international firm in terms of the application of firm-specific assets and human resource management needed for the implementation of vertical integration decisions. The empirical investigation reported in this paper is based upon a sample of international joint venture (IJV) hotel firms in China. The evidence highlights how the vertical integration of corporate management acts as a catalyst for the emergence of a structural approach to strategic orientation, contractual control and formalization in hotel firms. The findings suggest that international HRM literature can be extended to take better account of the inner connection of a firm's structural properties in the vertical integration of its corporate management. Results from 136 IJV hotels offer valuable insights into both how the process of the vertical integration of corporate management positively influences the establishment of strategic orientation to achieve long-term development and how contractual control guides the development priorities of IJV hotel firms.