Purpose: The purpose of this paper is to investigate how resort managers respond to employment legislation (Law No.02/2008).
Design/methodology/approach: The qualitative case study data from seven self-contained tourist resorts in the Maldives were used to investigate the managerial responses to employment legislation.
Findings: Resort managers' responses ranged from passive compliance to active resistance, with decoupling through opportunism as the dominant strategy used to circumvent the legislation. Some human resource management (HRM) practices emerged from resort managers' interactions with external stakeholders and employees. Strategic responses and HRM practices were driven by a search for legitimacy or efficiency and sometimes both. The findings show that there are differences between strategic responses and HRM practices by organisational subfield, local resorts and international hotel chains. The resorts' market orientation also influenced resort managers' responses and HRM practices.
Research limitations/implications: The findings of this paper have limitations because it was limited to a single industry/sector and to a particular piece of legislation. However, it demonstrates the complexity of the relationship between institutional context and HRM.
Originality/value: This paper shows that responding to employment legislation entails a high level of interplay between the institutional environment and HR actors, and between stakeholders (e.g. employees) and HR actors. It demonstrates the difficulty of reconciling institutional requirements with the preferences of different stakeholders and organisational interests. HR actors actively make sense of institutional requirements and modify HRM practices to accommodate stakeholders' varying perspectives and preferences. This suggests that in countries such as the Maldives, uneven institutional coverage (e.g. incomplete employment legislation) allows room for organisations to innovate - for better or worse.