Localization in the Age of Globalization: Institutional Duality and Labor Governance
Structures in China’s Foreign-Invested Enterprises
January 2007
Yang Cao and Wei Zhao
Department of Sociology
University of North Carolina at Charlotte
[ABSTRACT] We extend the neoinstitutional theory of organizations to examine how China’s
foreign-invested enterprises (FIEs) manage their labor relations by adopting four formal structures.
Two of these structures have indigenous origins, while the other two are imports from Western
capitalist economies. Empirical evidence is drawn on original data collected in a national survey of
Chinese FIEs. Our analysis shows that a significant proportion of FIEs have localized their labor
practices by adopting Chinese-style structures and that these local structures prove more effective
than imported structures in reducing the tensions and conflicts between labor and management.
The extent of FIE adaptation is shaped by both institutional processes and strategic considerations.
These findings support our view that FIEs as transnational organizations can adapt considerably to
distinct institutional environments across national boundaries, and that organizational interests
interact with institutional forces to shape their structures and practices. This study also sheds light
on the emerging institutional order in transitional economies.
* Please direct all correspondence to Yang Cao, Department of Sociology, University of North
Carolina at Charlotte, 9201 University City Boulevard, Charlotte, NC 28223, or email at
## email not listed ##
. Research reported in this paper has been supported in part by a
Faculty Research Grant from the UNC-Charlotte. The authors are especially grateful to Dr.
Peter S.K. Chi, Professor Emeritus of Cornell University, for generously providing us with the
data. We also thank Charles Brody and Xueguang Zhou for their helpful comments.
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