The Development Path Of Professional Employer Organizations In China

The most spectacular reform among the world is happening now in China which provides a great database and test side for the research of the impact of institutional change on economy. In this context, how a country formulate a proper system for the need of economic growth is extremely important. But unfortunately, there exist no successful experience on a whole nation’s scale for China’s reference. Therefore, the Chinese has walked on a road where no other races has set there foot on before. Institutional change greatly affects economy. The birth and growth of Professional Employer Organization (PEO) in China is the consequences of institutional change.Professional employer organization, which first took place in northern America, marks a brand new way of human resource management. It comes into China as an alternative system at the very beginning of reform and opening up. It had helped to stabilize society, but also caused a serious of social problems. How do we evaluate professional employer organizations for the development of China? How government standardizes the market of professional employer organization? Those meaningful questions need to be answered.Labor dispatching is a tripartite relationship between workers, PEOs, labor-using companies. Service contracts exist between PEOs and labor-using companies. Labor contracts exist between PEOs and workers. This is quite a different way of human resource management and it makes the boundaries of private companies interesting. Does it imply the boundary shifting of enterprises? How does a company’s boundary been changed? And how do we explain it?PEO is a rather new area for academic community especially for economy. Capital and labor are two key factors of production, thus it makes the research of labor important especially in developing China. This paper is focus on several issues below.Firstly, about PEOs, what kind of research is going on among the academic community? What consensus? What differences?Secondly, since PEOs in China greatly depend on government regulations, what are the features of Chinese PEOs?Thirdly, in economy, optimal allocation of resources is an efficient tool for analyzing PEOs. Are PEOs in China a result of optimal allocation of resources?Fourthly, what kind of improvement can we make for PEOs in China?The structure of this paper is as below.First part is about the concept of PEOs, and then the origin of PEOs. and then the description of the current development status of the industry and then the research methods and logical framework of this paper.Second part is literature review. A description of the current research status of PEOs.Third part is an analysis of PEOs through historical and comparison perspective.Fourth part is an analysis of PEOs using the theory of institutional economics and tools of transaction cost analysis.Fifth part is the conclusion and proposal.