| Summary: | It has been widely recognized that a properly designed HR system contributes to organizational competitive advantage through attracting, retaining and developing valuable human resources. However, little has been written to examine the construction of HR systems in acquired units after acquisitions to maintain and restore the value of the acquired human asset although researchers have given increasing attention to human issues in acquisitions. In addition, most existing studies on acquisitions focus on firms from the developed economy with limited efforts on emerging economies where acquisitions become increasingly vibrant. The purpose of this study is to explore the process of constructing HR systems for Chinese acquired units after acquisitions by foreign invested companies and investigate factors determining HR system elements. Drawing on theories of universal perspective, contingency approach, bargaining power perspective, and institutional theory, an integrated framework is proposed to reveal the interaction between factors at various levels that contributes to the development of HR systems for acquired units. Based on in-depth case studies on four international acquisitions in China, the findings show that while acquisitions as levers of changes open up opportunities to disseminate some Western HRM elements to Chinese firms, the extent and degree of change are mediated by acquired firms' political forces and the institutional arrangement, especially in appraisal and reward and employee relations subsystems. The change nature and process also varies among different levels of elements within the same subsystem. The theoretical framework is therefore developed towards a dynamic model to capture changes across different subsystems and different levels of components, particularly under the Chinese transitional institutional environment and its increasing integration with the global economy. This study contributes to the body of knowledge of human issues of acquisitions through extending the insights into a developing economy background and exploring the evolution process of HR systems for acquired firms. It also adds knowledge to the literature on Chinese HRM by examining the possible change trend of HR systems at Chinese acquired units under the interaction between acquisition partners and macro institutional arrangements.
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