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Emerald Group Publishing Limited
Copyright © 2012, Emerald Group Publishing Limited
Article Type: Guest editorial From: Chinese Management Studies, Volume 6, Issue 3
I am honoured to have been invited to guest edit this issue of Chinese Management Studies, Volume 6, Number 3. The papers in this issue make a significant original contribution to our understanding of Chinese management issues both from the theoretical and functional management perspectives. The papers by Chinese scholars reinforce our understanding that what works at home (Western perspective) does not work in China and these scholars provide unique insights into Chinese Management Studies from a variety of perspectives.
In the initial stages of the “opening up” of China since 1979, Western firms transferred their technology in the mandated form of international joint ventures with Chinese firms although eventually Wholly-owned Foreign Enterprises (WOFEs) were permitted. Chinese firms provided the premises, labour and knowledge about local conditions. At this time Western firms were convinced of the superiority of their technology and management skills.
At the beginning of the twenty-first century the picture has begun to look rather different. Western management techniques can no longer be viewed as “superior”. The considerable challenges faced by firms in developed market economies, who are struggling to survive in an era where uncertainty is now the norm, shows that this is no longer the case. Chinese scholars are beginning to write about the nexus between occidental and oriental management theory. Typically it is not and/or but both.
This is the theme of the first keynote paper by Youmin Xi, Xiaojun Zhang and Jing Ge. They offer an insightful view of how firms in the West deal with the four salient components of the contemporary organizational environment, which is characterised by four key components: complexity, change, ambiguity and uncertainly or CCAU. Their paper: “Replying to management challenges: integrating oriental and occidental wisdom by HeXie Management Theory” suggest that Western philosophical approaches to confronting management challenges arising from CCAU emphasize standardization and rational design on the basis of science, law, and religion. Conversely, oriental philosophical approaches to management challenges oppose such rigid systems in favour of flexibility and adaptability which emphasize harmony and morality. Whereas Western thought attempts to limit the occurrence of unpredicted events through the development of scientific systems, oriental thinking aims to provide a flexible and fluid system which absorbs the effects of CCAU, thus limiting its impact. These two perspectives both have their own advantages and disadvantages when facing management challenges in the context of CCAU. By integrating these two complementary approaches, these authors propose an alternate theory; the HeXie Management Theory (HXMT). HXMT establishes a clear vision and mission to direct the development of organizations; to organize an integrated management system through the HeXie Theme and HeXie Coupling, and to apply the component “He Principle” and “Xie Principle” as basic mechanisms to cope with management challenges.
The paper by Xinming Deng, Zhilong Tian, Jianfeng Li and Muhammad Abrar entitled: “The diversification effects of a firm’s political connection and its performance implications: evidence from China”, provides empirical evidence of the importance of political connections in China. Whereas Western firms will lobby politicians for favours, Chinese business people want to be politicians and the standing of their company will be enhanced as a result. These authors use as their sample private enterprises listed on Shanghai and Shenzhen Stock Exchange in China for the period 2002-2005. They found that most Western scholars have used enterprises in developed market economies to provide the theoretical interpretation of corporate diversification. What Western scholars overlook is the importance of the role of institutional factors when studying firm’s diversification in a transitional system. They have also ignored the increasing influencing mechanism of political connection upon firm performance in the context of China which is critical for firms to understand when competing in China or competing against Chinese firms in international markets.
Qian Wang and Junsheng Dou’s paper, “Chinese managers’ cognition of corporate social responsibility: an empirical investigation” examines the phenomenon corporate social responsibility (CSR) in the context of China. There has been very little investigation into this topic in the Chinese context although the debate on whether or not the firm should be socially responsible, reaches back in the Western context to the Berle-Dodd debates of the 1930s. Dou and Wang trace the genealogy of this debate and conclude that it is endogenous rather than exogenous factors (such as laws and regulations) which drive managers in firms to become socially responsible. They find very little evidence of this amongst a sample of Chinese managers. It would seem that the current position, pace Friedman, is that Chinese managers perceive that the responsibility of the firm is to “maximise profits for shareholders”.
The paper by Xumei Zhang, Wei Chen, Jie Tong and Xiangyu Liu entitled “Relational mechanisms, market contracts and cross-enterprise knowledge trading in the supply chain: empirical research based on Chinese manufacturing enterprises”, studies the effects of relational mechanisms and market contracts on cross-enterprise knowledge trading in supply chain examining the role of market contracts. Cross-enterprise knowledge trading is categorized into explicit and tacit knowledge trading. The indirect relational mechanism is mainly expressed by knowledge brokers, while the direct relational mechanism consists of shared goals and trust.
Using multiple regression analysis on questionnaire data from 256 Chinese manufacturing enterprises in supply chains, these authors show that knowledge brokers and market contracts have significant and positive effects on explicit knowledge trading, but the effects on tacit knowledge trading are not significant. Shared goals and trust have significant and positive effects not only on explicit knowledge trading but also on tacit knowledge trading, while trust has a stronger positive effect on tacit knowledge trading than explicit knowledge trading. Finally, the moderating effects of market contracts are proven in the relationships between relational mechanisms and knowledge trading, excluding the relationship between knowledge brokers and tacit knowledge trading.
The paper by Dong Wu, Xiao-bo Wu and Hao-jun Zhou, “International expansion and firm performance in emerging market: evidence from China”, examines the relationship between internationalization, diversification and firm performance in a sample of 318 Chinese listed manufacturing firms during the period 1999-2008. They conclude that at early and late stages of internationalization there is a negative effect on firm performance. In the early stages this negative effect is explained by high set up costs. As the firm becomes more highly internationalized the costs of coordination and control outweighs the benefits to be gained from higher levels of internationalization. Studies in the Western context have yielded mixed results in the past, but similar conclusions were reached in the 1990s, that firms experience a “threshold” level of internationalization. Firms at the medium level of diversification and internationalization achieve the most benefits.
Lianying Fu, Linhui Yu and Pinliang Luo in their study of organizational reform of China’s bankcard industry offer an empirically-based study of two-sided markets. Previous studies of the bankcard market have been based on purely theoretical principles. The empirical evidence they provide shows that from the micro-perspective of maximizing platform transaction volume, the “closed to open” organizational reform, i.e. introducing China Union Pay (CUP) into the market decreased rather than increased the performance of CUP’s members. The fundamental reason for this was imperfections in the market’s internal management mechanism and multi-party profit distribution mechanism, which led to dislocation and distortion in the positioning and function of the card association-CUP. The authors suggest that a second round of reform is needed in the bankcard market to address these issues.
Benjamin J.C. Yuan, Chun Yi Liu, Shun Chuan Ho, Hector K.M. Kao and Po Chang Shen’s paper describing “An application of a foresight-based new product planning model: a case study of a large household appliance manufacturer in China” starts with the premise that new product development (NPD) is a costly activity with high failure rate. Under such circumstances assigning the highest priority for future products which create the greatest value is the key success factor of a product planning model. This study constructed an improved planning model for new products based on the theoretical structures of technology roadmaps and patent analysis. The authors clearly defined a successful product planning model that can effectively control the key factors in the successful development of new products. They simplified the complex process of new product planning by using charts and by developing a new product roadmap providing the industry with a strategic thinking tool for NPD. By increasing the success rate of NPD, enterprises can reduce their costs in this respect. The authors conclude that the key area to develop in the future based on their scenario and patent analysis (of competitors) will be the aged care market. Given the growth of the aging population sector this has major implications for future product planning.
So to conclude, these papers offer unique insights into management, policy and theory in the China context. These papers contribute to the still as yet underdeveloped area of Chinese Management Studies and contribute to our knowledge and understanding of management in a large transitional economy.
Michèle E.M. AkoorieGuest Editor