Management and Organizations in the Chinese Context

We have a simple reason for editing this book. We would like to see and stimulate more research on organizational and management issues in a context that has the potential of becoming the new millennium’s world economic power. In fact, all the economic indicators suggest that China is well positioned to become a major competitive force in the twenty-first century. China’s economic reform has reached a critical juncture. Some say there is no turning back now. China is moving full steam towards a market economy and its privately owned enterprises, which were unheard of less than 20 years ago, are now producing more than 30 per cent of the country’s economic outputs. The urgency is fuelled by China’s aspiration to be fully integrated into the world economy by joining the World Trade Organization.

In this introductory chapter, we will provide an overview of the extant research on management and organizations in the Chinese context. This research focus is a relatively recent phenomenon since modern China was closed to the outside world until 1979. However, this overview goes beyond China as a location. We use the term ‘Chinese context’ deliberately so that our review is not confined to organizations in mainland China. The term ‘Chinese context’ refers to the location as well as to the social, cultural and institutional context within which firms are embedded or operating. Our literature review suggested that research in this context would extend beyond the People’s Republic of China (PRC) to include firms operating in Taiwan and Hong Kong and overseas Chinese firms in Southeast Asia. We refer to these areas as Greater China for convenience. Similarly, our definition would also include research on European firms in China or Chinese firms in Europe. Therefore, our review in this chapter will focus on different types of firms operating in the PRC as well as in other Greater China areas. A distinction is also made between Chinese firms (private or state-owned) and multinational corporations (MNCs) operating in the Chinese context.

China has embarked on a further major phase of enterprise reform in which the promotion of giant enterprises, new forms of corporate governance, entrepreneurship and internationalization all play key parts. This evolution will have an impact on foreign-invested firms in China, many of which are already in the process of re-evaluating China as an investment environment and their policies on partnership with domestic firms in that country. This chapter examines key issues for management and organizations arising within this context, first for Chinese SOEs and then for foreign firms.

China’s management reforms have not proceeded via a prior blueprint for privatization that aims to remove government from a direct role in the economy. Instead, a gradual and steady process of increasing competition, incentives and budgetary pressures on firms has occurred over a two-decade period that has seen rapid changes in economic growth and in the ways that enterprises operate. Government has not been stripped of its economic roles; instead regional and local governments have transformed the roles they play in an increasingly competitive economy. This chapter seeks to describe and explain this pattern of institutional change.

Paternalistic leadership, which combines strong discipline and authority with fatherly benevolence and moral integrity couched in a ‘personalistic’ atmosphere, has been found to be prevalent in overseas Chinese family businesses (CFBs). After critically reviewing the extant literature, we identify three constituent elements of paternalistic leadership (PL): authoritarianism, benevolence and moral leadership. We trace the deep cultural roots of each element and explore their relevance to organizations in contemporary Chinese societies. We then identify key research issues and propose a preliminary PL model for future studies on leadership in Chinese organizations.

The results of a questionnaire survey of 174 Sino—foreign EJVs and personal interviews with 40 managers and Chinese government of ficials revealed that foreign parents ranked control differently depending on whether they had majority, equal or minority stakes in EJVs. Regardless of equity level, ‘the right to appoint the general manager’, ‘board meetings’ and ‘auditing’ were viewed as important control mechanisms. Positive relationships were also found between foreign parents’ control over their EJVs and both their and Chinese parents’ satisfaction with EJV performance.

This chapter develops a theoretical model of optimum entry mode choice that is then modified through examination of 15 US high-technology entries into China. The model is based on foreign operations’ motivation theory, dominant logic theory, technology transfer cost theory and options theory. It is then linked to performance through contingency theory. The final adapted entry model proved effective in predicting the sample firms’ Chinese venture performance.

We propose an integrated framework for empirical research on Chinese international business negotiations. This framework considers the ways that traditional Chinese values and the social, economic and political environments of contemporary China might influence negotiation processes and outcomes. By addressing the categories of antecedent determinants that should be considered, the framework could also be applied to other settings in a search for the culture-specific aspects of international negotiations.

With China emerging as a world economy, there is a corresponding interest in guanxi, believed by both foreign managers and local Chinese leaders to be critical for business success in this context. Guanxi is a particular kind of interpersonal relationship or connection that serves as a form of social currency. It provides managers with access to scarce information, resources or influence. This chapter defines the conceptual domain of guanxi, reviews recent research relating various bases of guanxi to employment outcomes, and concludes with specific suggestions for future research.

This chapter focuses on the degree to which guanxi linkages and networks that are built using guanxi are important to the entrepreneurship and commercial success of many overseas Chinese in Southeast Asia. A model of various factors’ influences on their use of guanxi is developed. Research proposals concern the sources of overseas Chinese entrepreneurs’ business ideas and business information, and the extent to which guanxi explains their high rates of business start-ups and the performance of their firms.

This chapter examines theoretical and conceptual issues concerning teamwork in China. We discuss the increasing importance of teamwork in China’s business organizations and its relationship to the changing Chinese culture and economic environment. By placing teamwork in China in a cross-cultural context, we develop a conceptual model and associated propositions describing how individual attitudes and values influence teamwork.

A model of influence tactics with two dimensions, contingent control and gentle persuasion, was tested with data from 372 Chinese managers. Status, target’s behaviour and influencer’s personality were measured; the Big Five personality dimensions and personality facets drawn from Chinese culture measured the latter. Personality was associated with tactics choice, with the Chinese facets explaining additional variance after effects of the Big Five were partialed out.

This chapter concerns the impact of firm-level productivity cultures on competition in the global marketplace. The focus is on two sets of questions for which I will provide suggested but not definitive answers, since definitive answers will require additional sustained research. In other words, I am defining some basic questions rather than pursuing answers to questions already debated in the literature. The questions are as follows.

Localization is one of the key factors for a company’s survival and competitiveness in the Chinese market. Companies also need to localize if they want to capture greater local market share. By localization, I mean using local managers to run the business in the local setting, rather than expatriate managers from the parent company.

I am a research manager for a bank in Hong Kong. I do not manage big factories, as Dr Lily Chiang (Chapter 14) does. Instead, I manage professionals who write about the economy and the political environment that impact on firms in this region. I have lived in Hong Kong for 13 years, and I care a lot about China. I have even been accused of being a China advocate. I have great faith that China will continue to grow and prosper. Despite my enthusiasm for China, operating there is certainly a challenge for most multinational managers. All have had sleepless nights. There are so many issues that even an entire book would not be able to cover them all. Therefore, I will pick four areas that strike me as everyday challenges for managers in Hong Kong, China and Asia. I will focus in turn on one issue related to human resources, one related to managerial style, one related to business ethics, and one related to strategic management.