Does Human Resource Management Contribute to the Development of Logistics and Supply Chain Capabilities? an Empirical Study of Logistics Service Providers in China

Article excerpt


Globally, logistics has emerged as a significant growth sector in most nations. Reputed to be the world's manufacturing hub, China is among the nations where the demand for logistics and supply chain services has been growing at a monumental pace (Bolton & Wei 2003, Goh & Ling 2003, China Logistics Yearbook 2006). The growth of the logistics service market in China has outstripped the pace of logistics infrastructure development, despite the vast amount of investment being channelled to develop transport and logistics related infrastructure. China's lack of modern logistics infrastructure exposes its logistics operations to a large array of risks (Kerr 2005). More prominent, however, is the distinct shortage of logistics and supply chain management expertise, including information system support capabilities, which have become hurdles to supply chain development in China (Hong, Chin & Liu 2004).The inadequate logistics infrastructure coupled with lack of skilled workers and management are blamed for the high levels of loss, damage and deterioration of stocks experienced, especially for perishable goods (Dolven 2002, Kerr 2005). These challenges, however, also generate opportunities for companies with advanced logistics systems and skilled people to grow their market.

Human resource management (HRM) as a practice and an academic discipline has developed substantially in China (Cooke 2009, Kim, Wright & Su 2010). Given the development of the logistics industry in China and the challenges it faces, HRM would be expected to play an important role in improving its effectiveness. Logistics service providers (LSPs), however, seem to share the general reluctance among business organisations in China to emphasise HRM practices in order to improve quality, despite the relative devilment of HRM and evidence that effective HRM practices are an important element of service quality and customer satisfaction (Li, Yang & Wu 2008). LSPs in China tend to concentrate more on systemic or structural, rather than human resource aspects, to improve their organisational effectiveness. The very limited emphasis on HRM among Chinese firms is encouraged by the view of employees as "a cheap, expendable resource" (Glover & Siu 2000: 867). To overcome this perception in the Chinese context, Glover and Siu (2000) propose the development of specific approaches appropriate for China to address issues of recruitment, training and development, and reward, instead of mimicking Western quality management models that are unlikely to work.

The key aim of this paper is to explore the relationship between HRM functions and key logistics capabilities in the logistics service industry in China and the identification of any possible effect HRM practices may have on the development of key logistics and supply chain (LSC) capabilities. This paper reports the findings of an exploratory research project that examines the relationship between the HRM functions of induction, recruitment and selection, performance management, reward management, and training and development and the key LSC capabilities of providing integrated logistics services (ILS), using information and communication technology (ICT) to solve complex logistic problems, devising flexible supply chain (FSC) solutions and offering industry specific logistics expertise (ISLE).

The next section presents the literature review of HRM in China, the key LSC capabilities examined and their relationship. Following is the methodology section, which outlines the data collection process, the sample and instrument used. The findings and their implications for HRM policies and practices are discussed in the final section.

Literature Review

Drawing on empirical and theoretical studies on HRM practices (Cutcher-Gershenfeld 1991, Pfeffer 1994, Delaney & Huselid 1996), Harel and Tzafrir (1999) identified that the six HRM practices of recruitment, selection, compensation, employee participation, internal labour market and training, have a positive relationship with organisational and market performance. …