Chinese Corporate Identity

Peter Peverelli

• Publisher: Taylor & Francis
• Year: 2006
• Print ISBN: 9780415546768
• eBook ISBN: 9781134194001
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book represents the first study of economic restructuring in reform era China to apply the concepts of identity and corporate space; notions that have become increasingly relevant as foreign invested and Chinese ventures face complex operational and societal issues in the wake of globalization.

Peverelli uses his own theoretical framework to examine and detect multiple identities of Chinese enterprises within a larger, comprehensive organization theory. A host of practical case studies taken from Peverelli's time as a consultant help to illustrate this original theory, while providing a practical reference to the modern Chinese economy and Chinese management.

Chinese Corporate Identity will prove a valuable resource to academics working in organization theory, cultural anthropology, sociology, and business and economics. In addition, its supporting case studies will be of interest to consulting firms, foreign embassies and consulates in China.

1: Corporate identity in a theory of organizing

Identity in context

This text intends to study the identity of enterprises from an organizing perspective. In this chapter, I intend to show how a more useful definition of corporate identity can be reached by trying to craft such a definition as an organic part of a comprehensive model of human organizing processes. This model is based on social integration theory as formulated in Peverelli (2000) and regards an enterprise as a social-cognitive structure, produced and continuously reproduced in ongoing social interaction. It has a social element, the actors connected to the enterprise, and a cognitive element, the ideas, perceptions, causal models, ways of doing things, etc., shared by those actors in relation to the enterprise. This coarse formulation will probably be more confusing than clarifying, but I will introduce the model in more detail further in this chapter. The gist in this paragraph is to clarify that I regard an enterprise as a product, a construct, of social interaction. The enterprise is a story, told and continuously retold by the actors involved. These actors include people working for the enterprise, but also comprise other actors, usually referred to as stakeholders in mainstream management literature. The analysis of such stories will therefore be an important methodology employed in this study.

There are more of such social-cognitive structures than enterprises. The city of London is one and so is the province of Limburg in the Netherlands. FIFA is yet another example, but also a street gang making a certain neighbourhood of Chicago unsafe for a nocturnal stroll. Even your family is one. To summarize, all our social institutions, organizations, etc., can be regarded as stories that are continuously narrated by a certain group of actors.

Those stories consist of a main theme, a plot, various sub-themes, a certain perception of reality, particular symbols, etc. The actors pertaining to the structure tell their story to give themselves a place to exist, to specify the role they play, recognizable for actors not belonging to that particular structure. I have coined the term cognitive space to refer to such structures. This term is inspired by the dual meaning of the notion of space. On one hand it provides a location, and on the other hand it puts a fence around that location, indicating what does and what does not belong to the location. In other words, the term space simultaneously refers to the location and its limits.

Now I am already coming closer to the link between my model of organizing and the topic of this study: corporate identity. I propose that the identity of a social-cognitive structure like an enterprise is the whole of the cognitive element. It is the cognitive element that creates coherence in the social element and at the same time makes the structure recognizable for actors not belonging to it.

If this was it, discussing corporate identity would be a simple matter. We actually may conclude that we do not need to discern a separate notion of corporate identity, as we already can refer to it as the cognitive element of the enterprise as a social-cognitive structure. However, the attempt to arrive at a definition of corporate identity we have initiated above already reveals that the identity of an enterprise is not only embedded in the cognitive element of that enterprise. It is also part of the cognitive elements of other social-cognitive structures. If we observe that the identity of an enterprise is not only recognized by its own actors, but also by those belonging to other such structures, we conclude that the identity is co-constructed by the latter. Identity is a bidirectional thing. Identity is apparently something that exceeds the limits of its owner. Your identity is useless unless it is also recognized by me and vice versa. Your identity is also part of mine and mine of yours. Apparently, identities of social-cognitive structures are created in a social-cognitive structure that is higher, or broader, than the individual structures. For the time being, I will refer to such a higher structure as a ‘context’. The identity of a social-cognitive structure, in our case an enterprise, is constructed in a certain context, which is itself also a social-cognitive structure, of which the enterprise acts as if it were an individual actor.

Adding the notion of context greatly enhances the descriptive power of the definition of corporate identity. We can now envision a particular enterprise as being part of a number of different contexts. In each context a different identity will be constructed. In other words, enterprises develop multiple identities in multiple contexts. Albert and Whetten's seminal article (Albert and Whetten 1985) does speak of multiple identities, but fails to provide a proper definition of the different contexts in which such multiple identities are created. Moreover, Albert and Whetten are still defining the construction of organizational identity as a deliberate process.

The differences between various identity constructs do not have to be large, but even subtle differences can create confusion, or even conflicts, if the nature of the differences is not recognized by the actors involved. For example, Philips is based in Eindhoven, the capital of the province of Noord-Brabant of the Netherlands. When the company published its intent to move the corporate head office to Amsterdam, this met with severe resistance, from the staff as well as other parties in Eindhoven, including the municipal government. The identities of Philips and Eind-hoven were apparently so intertwined that moving the head office to Amsterdam was almost regarded as treason. The Board of Philips, however, consisting of people from various regions of the Netherlands or even beyond, failed to recognize this identity construct. In my model of organizing the Board is a social-cognitive structure of its own, referred to as social-cognitive configuration or simply: configuration (this term will be further defined below). Apparently, the regional aspect of the corporate identity of Philips as constructed by the Board was ‘the Netherlands’ rather than ‘Eindhoven’. The Board therefore wished to move the head office to Amsterdam, the nation's capital, which is better known internationally than Eindhoven.

Summarizing, enterprises are social-cognitive constructs consisting of a social element and a cognitive element. The identity of an enterprise is the whole of the cognitive element with which the actors give themselves a place in society. It is also part of the cognitive element of other enterprises that are part of the same higher social-cognitive structure, called context. An individual enterprise can have multiple identities in multiple contexts. These are not yet hypotheses. In order to formulate hypotheses, I first need to formalize the above casual introduction of the organizing theory that I will use in the remainder of this text to study the various aspects of corporate identity.

A theory of social integration

Social integration theory draws heavily from the organizing theory of Karl Weick (Weick 1979, 1995, 2001). The central theme in Weick's theory is that of sense-making. Actors constantly encounter situations that are multiply interpretable. They try to make sense of such situations by reducing the equivocality to one single interpretation. This reduction process takes place in social interaction between several actors. Actors will exchange information regarding a specific topic until they have reached a certain level of agreement. In this respect, Weick's definition of interaction is close to the one proposed by McCall and Simmons (1966) quoted earlier. The achievement of this purpose is reflected by the degree to which the actors’ behaviour becomes interlocked. The interlocking of behaviour of actors in continuous social interaction is the basic definition of organizing in Weick's theory.

Weick further observes that actors perform this interpretation retroactively. Actors first act [enactment] on previous experience, until they encounter an equivocal situation. At that moment, the process to reduce equivocality starts until a sufficient degree of non-equivocality has been attained.

Moreover, actors do not search for the best (most realistic, most true, etc.) interpretation of that situation, but for the most plausible interpretation, i.e. the interpretation that suits the current context (the moment the interpretation takes place) of the actors best, is selected [selection].

As a result of the reduction, some possible meanings of the equivocal data will be rejected and some will be retained [retention]. The actors will then continue to act based on that interpretation, until more equivocality is met. This cycle of enactment ¨ retention is repeated endlessly. Actors build up a certain view of what the world is like based on the continuous process of sense-making. Weick refers to these views as cause maps. In the course of his sense-making, actor A may observe event Y and judge that it has been caused by event X. The next time event X occurs, A will presume (retroactive sense-making) that Y will follow. Consequently, if A wants to prevent Y from happening, A will try to avoid X. This will continue until something happens that runs counter to this part of A's cause map (e.g. an event X happens without causing an event Y), at which moment A will revise this map.

Another key theme in Weick's thinking is the notion of double interact, which was proposed to describe the sense-making process by actors in ongoing interaction. Actors who have to co-operate in performing a certain task will at first hold different interpretations of various aspects related to that task (equivocality). This equivocality will impede them to interlock their behaviour. During their initial interaction, the actors will exchange these interpretations and mutually adapt them until a common interpretation (regarding aspects essential to perform the task successfully) has been attained. If we wish to understand such interaction, it is insufficient to observe how B reacts to A. We also have to observe A's reaction to B's reaction to A. When actor A makes a statement to actor B, B can either affirm or deny A's statement. Subsequently, A can accept or reject B's reaction. This results in four possibilities as represented in Table 1.1.

Simple interacts are insufficient to assess the relation between A and B. If we know that B rejects A, we only know exactly that. However, if we also know that A in turn rejects B's rejection, we know that the relation between A and B on that particular issue is one of independence. If A had accepted B's rejection, the relation would have been one of conformity. Different outcomes of the double interact have different consequences for the continuation of the interaction between A and B. Moreover, the double interact is also indispensable for the construction of identity of both A and B, i.e. what A is to B and B to A. Again, Weick's analysis of interaction approaches the one drawn up by McCall and Simmons (1966). However, where McCall and Simmons stop at stating that interaction is ‘a joint function, as a mutual or reciprocal influence’ (McCall and Simmons 1966: 47), Weick elaborates on this concept by defining the double interact as the basic building block of social interaction.

Table 1.1 Types of double interact

Social interaction is an endless repetition of double interacts between actors. In the course of social interaction, actors will adjust their behaviour to their fellow actors, resulting in interlocked behaviour. Several consecutive cycles of interlocked behaviour constitute a collective structure, a pattern of collective behaviour, like regularly repeated activities in a company. A typical example of such a structure are the employees of a company who leave home every weekday to go to the place of work they share to do the things they do every working day, etc. Their collective sense-making of the world has crystallized in a number of shared daily routines, symbols of which they make sense of in similar ways, etc. That they do not have to make sense of what to do and why to do it every single workday makes life a lot easier for them and allows them to make more efficient use of their limited span of attention to make sense of whatever is not compliant with their expectations.

The last key notion from Weick's theory to be mentioned is ‘partial inclusion’. Each actor will be part of several groups of actors with interlocked behaviours. The formation of such groups is a continuous process; groups form and disband. Actors enter groups, while others leave them. During an effort to stabilize his inclusion in a certain group, an individual actor may be forced to integrate more of himself into that group. This notion of inclusion seems to bear great importance to organizing processes, however it is not very well elaborated by Weick.

It was especially this aspect that H.J. Van Dongen and his associates have used as a starting point to enrich Weick's theory. The most complete theoretical statement of their framework can be found in Van Dongen et al. (1996). The core theoretical notion of Van Dongen et al. is that of configuration. Configurations are groups of actors who, during continuous social interaction, have attained a similar interpretation of reality (compare Weick's interlocked behaviour). This definition reflects the two aspects of configurations:

1. a social aspect: frequent, organized, social interaction (e.g. work-related meetings);
2. a cognitive aspect: similar interpretation of reality.

Reality is understood as having a constructed nature. Actors construct their (version of) reality via an ongoing process of social interaction. These definitions of reality are never comprehensive theories comprising all aspects of reality. Actors only possess a limited span of attention. They will use this span to cover that part of reality that is essential; that which comes to the fore in the present context. Complex phenomena are reduced to simple, comprehensible, treatable facts (compare Weick's reduction of equivocality). Reality is constructed using a set of construction rules. Actors apply these rules in a continuous process of reconstruction of reality.

Following Weick, Van Dongen et al. recognize that actors are simultaneously included in several configurations. However, they replace Weick's term of ‘partial inclusion’ with the notion of ‘multiple inclusion’. Weick's term seems to reflect the perception that actors divided their attention over a number of inclusions and is therefore never totally included in any one structure. Van Dongen's term ‘multiple inclusion’ emphasizes that actors are included in several, theoretically indefinite, configurations. In each concrete occasion of social interaction, actors will tighten a shared inclusion, but they will also have access to other inclusions.

Van Dongen et al. regard Weick's double interact as a useful tool in describing the interaction between two actors. However, its shortcoming is that it presupposes a dyadic relationship. This may explain why Weick has problems in elaborating his concept of partial inclusion. Van Dongen et al. introduce a third party into the relationship between two actors. Instead of dyadic relationships, they look at the relationship between actors as being tertial. This third refers to other inclusions of actors. During social interaction within a certain configuration, actors can bring elements of their other inclusions into that interaction. A particular actor can use a certain definition of reality in one context (configuration), but use another one in another context (configuration). Actors can draw from a multitude of inclusions and the nature of their relationship is different for each different third party.

The framework of Van Dongen et al. still has a number of shortcomings. The main issue could be called the macro–micro problem. A configuration is defined as a relatively small number of actors who frequently interact on a very specific subject. The problem is that it is virtually impossible (and probably undesirable) to define a set of criteria to determine when a group of actors is too large to be called a configuration. Actors form groups in various ways and of various sizes. Some of these groups, for example a national political party, can be quite large. Such a national political party consists of a relatively large number of people who do not all frequently interact. There are conventions, but these tend to be large and not all conventions are attended by all members. However, they are bound together by cognitive matter comparable with the cognitive element of a configuration. That cognitive matter is constructed in more or less the same fashion as is the case in a configuration. For example, a political party usually has its own magazine in which members exchange ideas. One possible solution would be to expand the definition of configuration, but that would lead to such a broad definition that its explanatory power to clarify organizing processes would be harmed. We would like to have a notion akin to that of configuration that could be applied to the social aggregates described above.

Another conceptual flaw of the Van Dongen et al. model that is revealed in the political party example is that cognitive matter is not only constructed by actors in social interaction, but that social interaction between actors can also be stimulated by cognitive matter. To use an American example: Democrats from New York and those from San Francisco share some cognitive matter related to being Democrats, but may (and will) differ in the way New Yorkers differ in their world outlook from San Franciscans. New York Democrats may convene because they are Democrats, but seen from another perspective (third party) such a convention is also one of New Yorkers. To solve this problem I proposed the concept of cognitive space defined as: an association of any number of actors bound by a certain shared cognitive element. This definition may seem excessively complicated, as it could be simplified to: any number of actors bound by a certain shared cognitive element. However, such a definition seems to state that a cognitive space is ‘a number of actors’ with a certain attribute: ‘with a shared cognitive element’. By defining it as an association of a social element and a cognitive element the equal importance of both is better expressed.

As indicated in the introductory section of this chapter, I like the term space, because it refers to something that confines, but is broader than the notion of configuration. Space touches upon time as well as place, it refers to space in which interaction can take place, but simultaneously to the socially constructed limitations (impediments) of the interaction. Within a certain space, activities proceed according to the rules that hold in that space. It is like Weick's bracketing: actors are unable to comprehend all cues that come to them from their environment and construct their version of reality using a selection of cues (Weick 1979: 113). Actors give meaning to their activities and agree on rules prescribing the ways how to act or not to act during interaction and consequently start regarding those meanings and rules as existing confinements of their actions (reification). However, contrary to the framework of Van Dongen et al., we believe that this not only holds for social cognitive configurations, but also for larger groups of actors, which we are now referring to as spaces. The cognitive element (cause maps, construction rules, etc.) of such spaces are less specific than within configurations. Moreover, spaces differ in their degree of specificity. Larger, more dif...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Preface
• Introduction Chinese corporate identity
• 1: Corporate identity in a theory of organizing
• 2: The enterprise in the People's Republic of China
• 3: Lukang The construction of a state-owned enterprise
• 4: Henan vs Zhengzhou Conflict of identity between administrative levels
• 5: Mengniu the follower A case of intertwined identity
• 6: Yanjing The Emperor's messenger
• 7: Food Components Asia – China – Shanghai – ?
• 8: Chinese corporate identity Summary and integration
• Bibliography