Workforce size adjustment as a strategic response to exchange rate shocks: A strategy tripod application to Chinese firms

He, Xinming, Rizov, Marian and Zhang, Xufei (2021) Workforce size adjustment as a strategic response to exchange rate shocks: A strategy tripod application to Chinese firms. Journal of Business Research . ISSN 0148-2963

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Workforce size adjustment as a strategic response to exchange rate shocks: A strategy tripod application to Chinese firms
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Abstract

How firms use workforce size adjustment as a strategic response to external shocks such as exchange-rate fluctuations is an important but not yet fully understood topic. To address the void in the literature, we apply the strategy tripod theoretical framework, which sees the external shocks as an industrial impact, the budget constraints as an institutional force, and the firm leverage as an organisational capability to examine the firms’ strategic response in terms of workforce size adjustment in the Chinese economy context. Based on longitudinal data of Chinese manufacturing firms, our analysis finds that facing exchange rate shocks, firms with hard budget constraint are more responsive in adjusting their workforce than firms with soft budget constraint. Furthermore, highly levered firms, with hard budget constraint, will adjust their workforce more aggressively than firms with less debt in their financial structure.

Keywords:HR strategy, workforce adjustment, exchange rate shocks, soft budget constraint, Chinese firms
Subjects:L Social studies > L160 International Economics
N Business and Administrative studies > N200 Management studies
L Social studies > L140 Econometrics
N Business and Administrative studies > N600 Human Resource Management
L Social studies > L150 Political Economics
L Social studies > L111 Financial Economics
L Social studies > L110 Applied Economics
L Social studies > L170 Economic Systems
N Business and Administrative studies > N611 Industrial Relations
Divisions:Lincoln International Business School
ID Code:46421
Deposited On:13 Sep 2021 13:28

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