Managing Across Diverse Cultures in East Asia

Issues and challenges in a changing globalized world

Malcolm Warner

• Publisher: Routledge
• Year: 2013
• Print ISBN:
  9780415680899
• eBook ISBN:
  9781136260285
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Why 'Managing across diverse cultures in East Asia'? We re-examine in this book the link between culture and management across the region vis a vis the new economic, political and social landscape that has appeared over the last decade. We accordingly present a set of chapters on East Asian cultures, economies, societies and their management across the board, focusing on countries such as China, Japan, South Korea, as well as the Overseas Chinese enclaves of Hong Kong SAR, Macao and Taiwan. The contributors to this edited book are all specialists in their respective fields; they hail from a variety of universities and business schools across the world, located in a wide range of countries in the East and in the West. The chapters, we believe, reflect a balance between the past and present, theory and practice, as well as the general and the particular.

'East Asia could not be more important. Malcolm Warner could not be more insightful. Reading Managing Across Diverse Cultures in East Asia will allow you to gain a profound understanding of the cultural complexity in this dynamic region of the world.' - Nancy J. Adler, McGill University, Montreal

'We all need to understand more about management in East Asia, and to learn from it. Managing Across Diverse Cultures in East Asia has contributions from international experts who provide significant insights into the cultures of the most dynamic region in the world today. This book is a landmark publication.' - John Child, University of Birmingham

'This edited volume, with contributions by significant scholars from around the globe, provides a timely and penetrating review of management issues across East Asia, a region that rivals Europe and North American in economic significance and is still ascending. It is a must read for anyone who is interested in international management.' - Kwok Leung, City University of Hong Kong

'Helping a new generation of readers interested in this important region to make better sense, Managing Across Diverse Cultures in East Asia is destined to become a new classic. I expect this well-researched book to be widely read, cited, and debated in the years to come.' - Mike W Peng, University of Texas at Dallas

'Having had such unexpected disasters as earthquakes, floods and financial crises in recent years, we are increasingly dependent on people-management. Development of human resources, in turn, requires region-specific and organization-specific strategies. The present volume edited by Malcolm Warner points the reader to the secret of success in high-performing economies and firms in East Asia.' - Yoko Sano, Kaetsu University, Tokyo

Part I
Introduction

Is it not pleasant to learn with a constant perseverance and application?

(Confucius: Analects, I, i)

1
Managing across diverse cultures in East Asia

Introduction

Malcolm Warner

Introduction

Why ‘Managing across diverse cultures in East Asia’? We hope in this chapter to re-examine the link between culture and management across the region. A new economic, political and social landscape has been emerging in Asia over the last decade (see earlier work, including my own, Warner, 2003) given the increasing influence of the People’s Republic of China (Zhonghua renmin gongheguo) (hereafter China or PRC) vis-à-vis its neighbours – Japan and South Korea, as well as Hong Kong SAR, Macau and Taiwan (see chapters 5, 6, 7 and 8 in this book). The recent global financial crises have, in their turn, led to speculation about a ‘reordering’ of the world economic system, both internationally and regionally. An alternative economic order may indeed be in the making, with the ‘Beijing Consensus’ becoming a rival to the Washington version. The inter-relationships between the players in East Asia itself have additionally become more complex – given the increasing economic integration between the PRC and its neighbours in East Asia in the context of the wider growth in the region.

As Lee and Hong (2010:1) put it:

Developing Asian economies have grown impressively over a period of nearly 30 years. The region’s real GDP in purchasing power parity (PPP) terms climbed from about $3.3 trillion in 1980 to an estimated $24.5 trillion in 2009. That is an increase of 7.5 times, compared with just three times for the world economy during the same period. Real per capita GDP expanded in excess of four times during the period, while average global income registered less than a two-fold increase. Such robust, prolonged growth has clearly raised incomes, lifted millions out of poverty, and expanded developing Asia’s global economic influence.

The ‘Twenty-first Century’ is thus likely to be the century of Asia. In this volume, we will accordingly present a set of chapters on Asian cultures, economies, societies and their management across the board, but with a particular focus on East Asia as this is increasingly, it would be true to say, the emerging fulcrum of economic power. We have decided to concentrate on this part of the wider Asia-Pacific, as it is home to many of the fastest growing economies in our increasingly globalised world. Leading the pack is China, now seen as the ‘powerhouse’ of the world economy, with a fifth of the world’s population (see chapter 5). Its economy has been growing at unprecedented pace for the last three decades, since Deng Xiaoping introduced his economic reforms at the end of the 1970s.

Many of these Asian countries were formerly called the ‘Little Tigers’ or ‘Dragons’ (see Vogel, 1991) tracking what was then the ‘bigger’ one, which was Japan, now a significant economic power but increasingly overshadowed by what had become known as the ‘Middle Kingdom’ (Chongghuo) over the centuries, in terms of aggregate levels of population, resources and wealth. The so-called ‘Asian miracle’, which led to their growth, it is said, mainly came about through the ‘work ethic’, through perhaps what one economist has seen as ‘perspiration’ rather than ‘inspiration’ (see Krugman, 1994). The contributions presented in this volume are all intended to explore this perceptive observation in greater detail and to update our knowledge of the region’s achievements, deepen our understanding of its ways and enhance what we can learn from it.

As economic power is now seen as moving from ‘West’ to ‘East’ (see chapter 2) with nations like China even being seen as potential global bankers of last resort, there is an increasing degree of interest in how these Eastern economies have come to the forefront of international attention and how their management and managers contribute to their success. China is now recovering the economic hegemony it formerly enjoyed for centuries until the Industrial Revolution took root in Western Europe (see Maddison, 2007). It was once the ‘Workshop of the World’ and is now once again taking over this niche. In the tenth century AD, it had been the world’s leading economy in terms of per capita income. The West once imported most of its manufactured products from the East, many at bargain-basement prices. But a new ‘Silk Road’, whether material or digital, will probably be passing on goods and services to the West, higher and higher up the ‘value-chain’, in future years.

We are well aware that there is no single entity called ‘Asia’ or even ‘East Asia’. The constituent parts have had a long and difficult history, going back millennia (see Fairbank et al., 1973). There is a complex tapestry of cultures, many of them originating from the deep and distant past (see Goody, 1996). We will be looking at where there are overlays, given that for example China had already conquered and/or influenced many of its neighbours over the centuries. Its cultural influence has been extensive in countries like Japan, Korea and Vietnam, to cite but a few (see Holcombe, 2011). The Confucian inheritance has in its turn been noteworthy (see chapter 3). In later centuries, imperial expansion by powers in the region, whether from the East or the West, had profound impacts.

Is there a ‘winning’, ‘killer-app’ Asian management model to copy? At one stage, the Japanese were held up as an example and their management was said to be de rigueur. But there are no easy answers. Management has often had both an exogenous, as well as an indigenous, origin. We find that there was sometimes even a two-way flow between different national ways of managing. Western, Taylorist management was mainly imported into Japan after the First World War (as indeed it was into China) and then again after the Second World War (as a US government-led Scientific Management training programme for Japanese managers, for instance) and was then reimported back to North America and Western Europe in the form, amongst others, of total quality management practices (TQM), such as ‘Zero-Defects’ (ZD) policies, amongst others (see Warner, 1994). What was once just ‘Western’, now became ‘Eastern’.

For a long time, management theory and practice had already diffused from the West to the East (see Westney, 1987). In the early phases of modernisation, exogenous influences were dominant. These entered the new environments through foreign invested firms, joint ventures, management consultants and the like. In the later phases of modernisation, these may well be integrated into local practices and then modified and re-exported back to their source. This phenomenon has been seen in the Japanese case but has not yet occurred in the Chinese one. As Japan has been in a state of economic stasis in recent years (see chapter 7), there has been less emphasis on promoting its management models as ones to emulate. Although China is now in the ascendant, its management has not as yet been promoted externally as an exemplar. Of course, this may change with time, as the latter country is building a number of top global MNCs, such as Haier, Huawei and Lenovo (see Nankervis et al., 2013, in press).

The heterogeneity of Asia represents an issue but then the diversity of local environments may also be a problem in most parts of the world. But we will look for common characteristics which will help to explain why they look different from their Western counterparts. Even within East Asia, there are, additionally, specific management practices according to the location studied. It is perfectly permissible to talk about ‘Chinese’, ‘Japanese’ or ‘South Korean’ management, for example and many do (see chapters 4, 5, 6, 7 and 8). Hong Kong, Macau and Taiwan may in turn present difficulties, because they have generic Chinese characteristics (see chapter 6), as well as their own local ones. Some even bundle them together as ‘Overseas (Nanyang) Chinese’ management, which is also a phenomenon found outside East Asia, as in the case of Singapore and indeed elsewhere wherever Chinese do business.

Although the Asian societies used to have considerable differences in national wealth and income between each other, with Japan having the lead over the others, the gap is narrowing (see Table 1.1). All the countries of East Asia have, however, seen a relative increase in their standard of living in recent years, with the possible exception of North Korea. China, for example, has now a much improved level of GDP per capita in purchasing power parity (PPP) terms compared with the past, although this is less the case in money terms. It is, however, likely that there will be a weaker differential in future years. The Chinese economy grew over the last three decades at around 10 per cent per annum but the growth rates of Hong Kong, Singapore, South Korea and Taiwan, all with relatively higher levels of initial income per capita, somewhat declined relatively over the period. It is said that as countries get richer they do so less rapidly over time and their growth rates slow down (Lee and Hong, 2010:2). Table 1.1 shows their key economic indicators for 2010.

Table 1.1 Key economic indicators, China, Japan and South Korea, 2010.

	China	Japan	S. Korea
Population total	1,338,300,000	127,450,459	48,875,000
GDP, aggr.	$5,878,629m	$5,497,812m	$1,014,483m
GDP growth, p.a.	10.3%	5.1%	6.2%
GDP per capita/US$	$4,393 [7,600, PPP]	$43,137	$20,757

Source: World Bank (2011) Available at http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/0,pagePK:50004410˜piPK:36602˜theSitePK:29708,00.html (accessed 11.11.11).

There is another, wider debate which deals with what has been called ‘convergence’, on the one hand and ‘divergence’ on the other (see Warner 2002, 2011). As far as the former is concerned, the argument centres on industrial societies and their economies, as a result of the modernisation process, becoming more like each other and consequently their enterprises appearing to be increasingly similar as the modernisation process proceeds (see chapter 11). Managerial ideas are transmitted across frontiers very quickly these days and are adopted by indigenous firms and then spread as new forms of enterprise structure are cloned through a process of institutional and organisational isomorphism. By a process of copycat ‘convergence’ behaviour, new organisational templates become established.

The counter-argument, relating to ‘divergence’, would present the case for societies and their enterprises retaining their distinctly national characteristics, plus or minus (see chapter 3). The ‘societal effect’ (see Maurice et al., 1980) would ensure national differences remain in place. Unlike where societies and constituent enterprises were becoming more and more like each other, they and their firms might even become more and more distinct. The reductio ad absurdum would be where all countries and institutions were totally different from each other, which is an unlikely scenario. There are, of course, refinements of these states of play, such that there can be either ‘hard’ (absolute) or ‘soft’ (relative) versions of each. There might be, for example, ‘soft convergence’ where enterprises may look increasingly like those found elsewhere in the world but retaining many local characteristics (see Rowley et al., 2005). The truth probably lies somewhere in the middle of the ‘convergence–divergence’ spectrum. In spite of the degree of possible ‘convergence’, however, when you are in Tokyo for example, the way of doing business over there still remains very much Japanese, as it does in Beijing in terms of its ‘Chinese characteristics’.

Some writers, nonetheless, point to a common cultural legacy across Asia (see chapters 3, 10 and 16) but this is an argument different from the convergence one. In recent years, there has been a debate about the importance of ‘Asian values’ (see chapter 16) the motivation for which may have been political in part. Even so, there is little doubt that Confucianism has played a major role in influencing how many Asian societies work, over the longue durée and in recent times.

The philosopher, Confucius, (551–479 BC) (Kong Fuzi) may well be regarded as the uncrowned emperor of China (Ronan, 1978:79). There are other major streams of thought in Chinese thinking, such as the Legalists and the Daoists but the Confucians may still retain their niche (see Bell, 2008). The current Chinese leadership has even recently promoted what is in effect a synthesis of Confucianism, Capitalism and Marxism as a path to what they call the ‘Harmonious Society’, an ideological variation that was first officially proclaimed by [the former President] Hu Jintou in 2006 and is now widely used in China (see Warner, 2011). The Chinese government had even set up Confucius Institutes around the world to teach Chinese culture and language (see chapter 15). Another co-opted figure has been Sun Tzu (see The Economist, 2011) as the CCP has attempted to project ‘soft power’.

However, some caution must be used here, as it was not that long ago that Confucianism was seen as a backward philosophy and a negative factor as far as modernisation and economic growth were concerned. Confucius is problematic in another way: ‘Mao and his colleagues regarded Confucius’s philosophy as the ideological glue of the feudal system they destroyed; and so attempts to promote him are vulnerable to the growing split in the Communist Party’ (The Economist, 2011).There are also many kinds of belief-systems, let alone varieties of Confucian thought in Asia, so there may be no simple ‘cause-and-effect’ relationships between values and economic variables. Again, Confucianism is only one amongst several other competing belief-systems in the region, (such as Buddhism, Christianity, Islam and Shintoism, for instance). It has, however, more recently been recognised as having a positive influence compared with earlier opinion. This advantage may be due to an emphasis on the ‘interdependent self’ in the East, rather the ‘independent’ one dominant in Western thought (see Luo, 2000:8). Earlier, individualism was seen as linked to the Protestant work ethic and this was regarded as a potential motor of modernisation. Today, we are less sure about this; collectivism is now seen as having its virtues and interdependence is more highly regarded. More than a few chapters will reflect this debate, which is still ongoing.

A number of fundamental questions may now be posed at this juncture:

• What are the underpinning influences at the macro (-economy) level, as well as at the micro (-firm) level, which are related to the economy, culture and management in these economies?
• How does each societal case provide a unique story and experience regarding the global challenges and the pressures vis-à-vis reforming its management systems?
• How far are dysfunctions in each rooted in systemic problems (for example, widespread executive corruption in Japan, corporate bad behaviour in South Korea, or crony favouritism in China)?
• To what degree are such issues linked to changing values, business ethics and related issues such as ‘face culture’ in their respective societies?
• How may we evaluate positive and negative aspects of traditional value-systems, as well as their impact on management thinking and behaviour in East Asia?

Whilst we would not wish to over-generalise from the evidence presented in this volume, specific Chinese, Japanese, South Korean and other managerial examples in East Asia may enable readers to acquire insights into what was going on in the past, still continues to exist and may persist in the future. We would, however, recommend critical caution at all times in coming to terms with and interpreting possible general trends in management in the region, as well as more widely.

Structure of the book

The work is divided into three sections, establishing the structure of the book, each with a number of relevant chapters covering different aspects of international business in the region under their respective headings. We have tried to be as comprehensive as possible in covering the many dimensions of Asian management which we see as of potential interest to b...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Contents
• Figures and graphs
• Tables
• About the editor
• List of contributors
• Preface
• Abbreviations
• Part I Introduction
• Part II Themes
• Part III Societal case studies
• Part IV Issues and challenges in East Asian management
• Part V The future and conclusions
• Glossary
• Index