marketisation have dominated the economic decision-making process and these
enterprises are facing restructuring and reform.
Generally speaking, LEs have well-established systems of external recruit-
ment of managers. Through examination, interview and evaluation proce-
dures, state-owned enterprises (SOEs) can obtain the most capable people from
outside their organisation. For a long time, people preferred the situation
within LEs for its security, better pay and welfare, good working environment,
and social prestige; this made recruitment even more competitive. Therefore,
the qualifications of managers in these enterprises still remain the highest,
with a superior level of university graduate and postgraduate. In addition, pub-
lic recruitment of employees is the major recruiting channel for LEs. However,
the public sector is not allowed to employ foreign workers. In terms of train-
ing, both on-the-job training and professional training are provided by the
enterprises. The compensation package has not been changed either. In fact,
among all types of enterprises, LEs seem to have the highest salary levels.
Bonuses are paid as a group incentive with an equivalence of three- to four-
month wages (Zhu and Warner, 2001).
The trade unions in the Taiwanese public sector have remained subservient
to the government for a long period (Frenkel et al., 1993). Even now, trade
unions in these state-owned LEs are not wholly independent, though they
have a strong membership base and bureaucracy. The functions of unions were
described as ‘promoting enterprise productivity as well as protecting workers’
interests’, and there is a strong sense of the ‘dual’ role of trade unions as a use-
ful bridge between employees and management to guarantee smooth indus-
trial relations (Zhu et al., 2000).
Summary of Asian capitalist market economiesWe see that HRM policies and practices in Japan and Taiwan were under the
influence of the traditional culture and the changing political and economic
environments. Key characteristics such as collectivism, harmony, loyalty, quality
of leadership and hierarchy, and strategic thinking can be found in both
Japanese and Taiwanese management systems. Those characteristics are
reflected in HRM such as group-oriented production activity (teamwork),
group-based performance evaluation and incentives, a relatively close salary
gap between management and employees, cooperative and harmonised
labour–management relations, relatively high employee commitment to the
company in return for internal promotion and a seniority-based wage system.
In addition, strategic thinking and strategic management are dealing with
changes, in particular during the period of economic transition and crisis. In
recent years, both increasing global competition and the Asian financial crisis
have forced the government and enterprises in Japan and Taiwan to adopt
more flexible policies and management systems. The new political environment,
HRM in East Asia 207