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Remade in ChinaForeign Investors and Institutional Change in China$
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Scott Wilson

Print publication date: 2009

Print ISBN-13: 9780195388312

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780195388312.001.0001

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The Diffusion of Pay-for-Performance Institutions

The Diffusion of Pay-for-Performance Institutions

(p.125) 5 The Diffusion of Pay-for-Performance Institutions
Remade in China

Scott Wilson

Oxford University Press

This chapter addresses the dynamic interaction between micro-level institutional change and macro-level reforms of labor institutions, emphasizing on the compensation institutions. It moves beyond the issue of wage levels in the aggregate to analyze the development of the models of compensation used by state-owned enterprises (SOEs) and foreign-invested enterprises (FIEs) and the role that foreign investors have played in China’s ongoing compensation reforms. Then, it argues that Chinese officials, frustrated by SOEs’ slow progress on wage reforms, allowed foreign investors increasing leeway to introduce new compensation models. It begins with an outline of the “iron rice bowl” and state compensation reforms. Next, it analyzes the efforts of foreign investors to transfer their compensation institutions to China, and, related, the comparable success of those institutions in China. The sections on Japanese and US compensation systems reveal the distinct approaches taken by foreign investors and the adjustment processes that each have undertaken in China. Finally, it addresses how foreign investors and Chinese actors have contributed to Chinese wage reforms.

Keywords:   China, pay-for-performance institutions, institutional change, labor institutions, compensation institutions, state-owned enterprises, foreign-invested enterprises, foreign investors, reforms

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