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Zhang-Zhang, Y. Sustainable Strategic People Management in China. Encyclopedia. Available online: (accessed on 29 November 2023).
Zhang-Zhang Y. Sustainable Strategic People Management in China. Encyclopedia. Available at: Accessed November 29, 2023.
Zhang-Zhang, Yingying. "Sustainable Strategic People Management in China" Encyclopedia, (accessed November 29, 2023).
Zhang-Zhang, Y.(2023, June 15). Sustainable Strategic People Management in China. In Encyclopedia.
Zhang-Zhang, Yingying. "Sustainable Strategic People Management in China." Encyclopedia. Web. 15 June, 2023.
Sustainable Strategic People Management in China

The increasing prominence of the Chinese economy in global business has prompted much interest and curiosity among policymakers, business practitioners, and scholars seeking to better understand the phenomenon of Chinese management. Based on China’s sustainable gross domestic product (GDP) growth, which has led the country to assume a top economic power position in terms of GDP based on the purchasing power parity (PPP) value, as well as its innovative capability enhancement to achieve a top position according to the World Intellectual Property Organization (WPO), it focuses on how China has become a reference point for emerging markets seeking to benchmark their sustainable growth in terms of the economic dimension. Special attention is given to enterprises' sustainable strategic people management to achieve excellent performance which aggregate at higher levels to reflect in the industry and the nation's competitiveness. 

SPM management by values VUCA dynamic environment

1. Sustainability and Strategic People Management

It remains debatable whether sustainability is a fad or an example of rhetoric in the field of management, despite its increasing impacts and the growing interest in it on the part of scholars and practitioners [1]. No matter which argument is preferred, the fact is that sustainability is a valuable currency in a field with global concerns. Despite them being considered “grand challenges,” many organizations and institutions are striving to integrate the United Nations’ sustainable development goals (SDGs) into strategies, policies, and practices for implementation in many dimensions [2]. As a global concern, multinational corporations (MNCs), whether large or small and medium-sized enterprises, are also making efforts to play a role and act in relation to sustainability and the SDGs, regardless of critiques concerning their insufficiency [3][4][5][6][7][8].
While sustainability has become a fashionable topic in the fields of management and international business, it can be divided into three dimensions, namely the economic, social, and environmental or ecological dimensions [9], with enterprises from both advanced economies and emerging markets being affected by those dimensions [10]. The economic dimension of sustainability has always been a concern of firms in terms of their management practices, as firms inherently need to sustain their economic results to ensure their financial performance and longevity, although the social and ecological dimensions are relatively recent subjects of managerial attention, especially when doing business in developing countries and emerging markets [4][11][12]. The factors that underlie the effective implementation of sustainability strategies in emerging markets largely rely on the commitment of top management and discretionary slack, in addition to external factors such as legal forces [12]. Therefore, the value represented by leaders and the ability to spur on managers and staff at different levels are essential in terms of allowing effective strategic management to function within enterprises [13], including their sustainability strategies.
The conceptualization of SPM proposes sustainability as a strategic orientation rather than a performance measure, as it is perceived within the traditional focus. Both leadership and cultural values are incorporated as key constituents of the achievement of the multiple dimensions of sustainability in a turbulent and highly dynamic context [14]. In terms of a highly dynamic context, a specific strategy may require constant adjustments in accordance with environmental, knowledge-related, and innovation management changes if it is to become more critical in such a context. While dynamic capabilities must be able to flow (i.e., to sense, organize, capture, and renew knowledge and information, to generate new knowledge and organization), relatively static organizational elements such as structure and specific human resources (HR) practices may be unable to cope due to the high costs associated with constantly changing them, whereas leadership, culture, and learning could be the dynamic elements required to facilitate the contributions of people to the formulation of strategies [15].
Emerging markets are often characterized by high levels of volatility, uncertainty, complexity, and ambiguity (VUCA), which are considered sources of highly dynamic contexts, along with other elements such as technology disruption and unexpected crisis events [14][16][17]. China, as a leading emerging market, is characterized by all these factors and their interactive effects. In addition to learning technology from the West following its economic opening, China has also developed its own technologies and innovations, which have positioned it as the number one country in terms of IP applications since 2012. Certain other emerging economies, such as India, Turkey, Iran, and Russia, are also rising to the top of the global ranking with regard to IP [18][19][20]. Chinese enterprises such as Alibaba, Tencent, and PingAn are among the top-ranked patent grantees in relation to the emerging blockchain technology associated with financial technology (fintech) and artificial intelligence (AI) technology [21]. Moreover, significant crises such as the 1998 Asian financial crisis and the 2008 global financial crisis have served as opportunities for China to become more resilient. In light of all this, how do Chinese enterprises manage to enhance their innovation capability over time and ensure their development, thereby sustaining the nation’s growth?

2. Chinese Firms and People Management

From the outset, it is important to understand the economic transformation that China and Chinese management have been experiencing, particularly its implications for research concerning people management and SPM development. According to the International Monetary Fund (IMF), in terms of GDP based on the PPP value, China overtook the United States and became the world’s largest economy in 2016, and it has maintained its number one position since then [22]. This development was a result of the Chinese economic miracle, which stemmed from the country’s capability to consistently grow at a rate of approximately 10% per year. Despite the growing base for continuous development and the fact that it is difficult to maintain a two-digit growth rate, the Chinese GDP growth rate has been maintained at a relatively high ratio. This has even proven true during the COVID-19 pandemic because, in spite of a predicted economic slowdown, the factual and projected data concerning China are still much more optimistic than the data concerning advanced economies provided in the World Economic Outlook overview [23].
In an attempt to predict China’s economic growth, some speculate that the post-COVID-19 rebound will result in the effects of the trade war, decoupling, and deglobalizing [24][25]. In earlier studies, some scholars argued that the Chinese economic rise is a result of different paths: top-down, centrally managed capitalism and bottom-up, decentralized grass-roots capitalism [26][27]. During the process of transitioning from a planned economy to a market economy, Chinese privately-owned enterprises (POEs) have benefited from the related economic opening policies, along with other ownership modes such as state-owned enterprises (SOEs) and foreign-owned enterprises (FOEs), although the former has been less protected and supported than other types of enterprises [13]. This is due to the so-called “visible hands” of the leadership, which manage the success of POEs in China’s highly competitive markets as well as in global markets. In the Chinese domestic markets, SOEs have enjoyed government support with regard to resource access and acquisition, while FOEs have the privilege of negotiating with government agencies at different levels as well as fiscal advantages. For their part, POEs can only rely on their managerial capability, social networking, and entrepreneurial spirit to address all the challenges (e.g., less chance to access bank loans) found on the less trodden road at the beginning of entrepreneurial exploration in China [13].
Due to the rise of the Chinese economy, both Chinese enterprises and Chinese management have been the subject of considerable attention, which has led to the integration of diverse Western and Japanese managerial models with traditional Chinese practices, especially with regard to the dominant management theories that originated in the United States [28]. Aside from the dominance of Western theory in the Chinese context, there have also been indigenous attempts to unfold the paradoxical Chinese model in order to complement or move beyond established frameworks [29][30]. This hybrid knowledge exchange and flow between the West and the East can be similarly seen in Japanese management studies [31]. Within the Chinese system for managing people, hybrid mechanisms also reflect the evolution of the dynamic tradeoff between macroeconomic, institutional, and organizational factors, a process characterized by mutual learning between the East and the West [32]. This complex and compressed process of industrialization and management that has unfolded in China following its economic opening [33], as well as the reality of the country being on its way to leading with regard to certain digital innovations [16], highlight the coexistence of the old and the new, in addition to the featured potential of China. While institutional factors play an important role [34], people, knowledge, culture, and the intertwined variations in such factors feature the required characteristics of value, rareness, inimitability, and organizability (VRIO) as resources required to sustain firms’ competitive advantages [35].
People management has often been identified as important in terms of managing Chinese enterprises due to humanism being its core value [36]. At the macro level, economic reforms have driven the mobility of labor (i.e., people immigrating from rural to urban areas), the termination of the historical “iron rice bowl” (i.e., lifetime employment), and the weakening of the “HuKou” system (i.e., Chinese household registration system) [37]. Gradually, the well-educated workforce has become the source of a talent war being waged among both Chinese enterprises and multinationals operating in China, while cost efficiency is being increasingly considered in relation to work associated with less value-adding tasks. At the micro level, differentiated ways of managing people within enterprises have been developed following the introduction of HR practices originating in the West, such as recruitment, performance appraisal, and the high involvement/high performance work system (HIWS/HPWS), to strategically manage successful businesses in China [38][39]. These old and new ways of managing people, in addition to the coexistence of hybrid employee profiles (e.g., old and young generations, rural and urban populations, international and local talent), have combined to increase the complexity of people management in China [20][40], where dual systems and mechanisms are often applied [41][42][43]. Yet, while human resource management (HRM) policies and practices from the West have been adopted by Chinese enterprises and adjusted to the Chinese context in an effort to accommodate its uniqueness and its traditional personnel management practices, the effectiveness of such policies and practices has been much questioned in the literature [27][38][39][44][45].

3. Sustainable Strategic People Management and Confucianism

SPM considers culture to be a key component of its dynamic capability flow. Here, the study of cultural values is quite complex. The idea of cultural studies within organizations was introduced in the 1960s, has evolved over time, and has now been the focus of attention in the management and international business fields for decades [46][47][48][49][50][51][52][53][54]. One remarkable example in this regard is the work by Hofstede and his various colleagues [54][55][56]. National culture and organizational culture are often highlighted as the two most relevant levels of study in the international context, and they have certainly driven the evolution of cultural value studies in such a context, which have now entered a stage of complexity [38][53][56]. Management scholars such as Drucker and Chakraborty also highlight the issues of ethics and values in management [57][58]. To make management sustainable, the management by values (MBV) concept suggests three dimensions of values to interact and balance within the organizational space, which represents a different approach from earlier mechanical views of management style, such as management by instructions and management by objectives [59][60][61]. MBV considers the economic, ethical, and emotional dimensions of values to represent management philosophy and practices, which could be major drivers of the development of sustainable, competitive, and more humane cultural values within organizations [60]. The MBV conceptualization appears to function well in organizations facing highly dynamic contexts associated with unstable, turbulent, and uncertain environments [62], and consequently, it may grasp and manage the flexible elements that need to be instilled in the minds of people serving as knowledge workers to guide their practices and behaviors in order to achieve the multiple goals of sustainability. Due to being strongly rooted in traditional Chinese values such as Confucianism, Chinese management may sustain its distinctive cultural features through self-renewing processes involving innovative mechanisms [20][44][63][64].
People management is not a new concept, although SPM is a novel conceptualization developed as an extension of strategic human resource management (SHRM) [14]. The agreed and consolidated theoretical framework is still challenging, and the paradigm appears unable to respond to the current strategic needs of the firms despite its flourishing and legitimization in the research field [65][66][67]. Rather than an extension, it is probably more appropriate to consider SPM a different paradigm from SHRM. As a major point of difference, SPM can be distinguished from SHRM due to having sustainability at the core of its strategic orientation, which it achieves by situating people as the center of attention, while SHRM is performance-oriented and relies on HRM to be profitable [14][68]. Among other aspects, SHRM focuses on aligning HR with strategy implementation [69][70], which is appropriate in a relatively stable environment but difficult to achieve in a highly dynamic environment, such as emerging markets, where VUCA occurs in daily life [11]. While it is true that the strategic importance of people (人 in Chinese) has been widely considered and studied in China, meaning that it has its strategic roots in ancient Chinese philosophy, the term HRM may be of concern because the term HR (人力资源 in Chinese) did not exist in ancient China. In this sense, people management and HRM need to be explicitly distinguished, as some scholars have sought to do in the contemporary management field [14][71][72].
Rather than narrowly focusing on employees within an organization, ensuring financial performance, and aligning with the firm strategy as in the case of HRM, SPM places people at the center of the firm to ensure its long-term survival and growth with a sustainability orientation. By offering an amplified meaning and a broader boundary, SPM recognizes all ranges of people, that is, stakeholders both inside and outside of the organization, to interact, create, and transfer knowledge (i.e., treating people as knowledge workers who are capable of utilizing their imagination and innovative capability not only to absorb and learn but also to create) [14]. As SPM could significantly contribute to strategy formulation given the importance of knowledge, it works better in highly dynamic VUCA contexts in which uncertainty is certain, which allows it to be more sustainable. Although Sun Tzu is quoted by Losovski concerning the strategic relevance of people in relation to actions [73][74], most of the associated strategic considerations are related to military activities and contexts, which The Art of War addresses. In the sphere of management and governance, Confucianism is the most common line of philosophical thought due to its ethical concerns regarding inner virtue, morality, and values [36][64][75][76]. Moreover, Hofstede and Bond also note that Confucianism could be a driver of the economic growth seen in the East Asia region, as all the emerging economies there have similar cultural roots and reflect the influence of Confucianism [77], although some may disagree with this [64]. If East Asian economic rise and success could be attributed to Confucianism, as has been the case for Japan, Korea, Singapore, Hong Kong, and Taiwan, it is arguable that China’s rapid economic development could also be highly related to the Confucian culture. In fact, it is arguable that the country’s Confucian roots have contributed to China’s dynamic cultural shift toward enhanced innovation capability through self-cultivation, lifelong learning, tolerance of mistakes, and moderation [20].
Four books have been compiled by Zhu Xi to represent the philosophy of Confucianism: The Analects of Confucius, The Book of Mencius, The Great Learning, and The Doctrine of the Mean. As a philosophy, Confucianism self-evolves and self-renews, with Neo-Confucianism forming the core of Confucian concern for society and government, as synthesized with the two other principal Chinese ancient philosophies, namely Taoist cosmology, and Buddhist spirituality, which predominated in intellectual and spiritual life in China, Korea, and Japan prior to the modern period [78]. Taking human nature as the starting point for the orthodox rules, the Confucian conception of governance not only consists of virtue, benevolence, and righteousness but also of the harmony of humans and nature (天人合一 in Chinese) [79]. If the practical significance of Confucian governance is performance-oriented, its people orientation concerns socio-ethical values [79], while the harmony between humans and nature can be viewed as ecological values.
Some aspects of Chinese business culture that have been influenced by Confucianism can be extracted here: “harmony,” “conscientiousness and consideration of others,” “humanistic management,” “ethical issues,” “democratic leadership,” “investigation (learning),” “knowledge sharing via relations and trust,” “reciprocity,” and “the use of ritual and time to build trust” [64][80][81][82]. Nonetheless, above all, it is a form of people-centric management, meaning that people are placed in a strategic position with regard to governance and management. Moreover, Confucianism places ethics and values at the core of all actions: “from which to think, to envision the meaning of our conduct and find guidance for action, policies, and decisions… help us at a point where we sorely need help” [78], in addition to utilizing human emotions such as “jiaoqing” or “ganqing” to persuade each other to engage in knowledge sharing [64]. Furthermore, the two Neo-Confucianism concepts of “ch’i” and “li” represent an energetic thrust toward systematic complexity, emerging and evolving with the complex pattern of organisms and ecosystems in a self-organizing way, starting “at a relatively simple level and transform as adaptive strategies within the system lead to continually increasing levels of complexity” [78] or self-renewing and contributing to innovation [20]. The dynamic nature of SPM requires a dynamic people management capability to function in a highly dynamic and complex environment [14], which echoes the complexity perspective [83] and the dynamic adaptive logic [15] and eventually contributes to sustainable SPM in a highly dynamic context.


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Subjects: Management
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Update Date: 15 Jun 2023