Inside the Changing Business of China

Organizational Evolution, Culture, Leadership and Innovation

Chris Rowley, Ingyu Oh, Chris Rowley, Ingyu Oh

• Editore: Routledge
• Anno: 2021
• ISBN:
  9781000197532
• Edizione: 1
• Argomento: Betriebswirtschaft
• Categoria: Unternehmensentwicklung

The rapid speed and size of China's economic expansion growth is well known. Several causes and reasons are commonly given for this performance, now joined by some commentary questioning how sustainable this is in the light of slowing growth rates and the need for different types and forms of growth – knowledge/innovative, services, etc – as well as demographic trends within the global context of trade frictions and finally the '3Cs' of 2020 – coronavirus contagion and containment. This collection of research provides further evidence about China's performance in terms of the role of business and management and also points to future issues. This is detailed in terms of the key areas relevant to performance, such as culture, change, leadership, innovation and knowledge. The theoretical and practical implications of the work contained herein is also noted as well as some calls for future work in key areas.

Inside the Changing Business of China is a significant new contribution to the study of China's economic growth for researchers, academics and advanced students of international business, management, leadership and innovation.

This book was originally published as a special issue of Asia Pacific Business Review.

Introduction: the changing shapes of business in China: organizational, cultural, leadership and innovation

ABSTRACT

The rapid speed and size of China’s economic expansion growth is well known. Several causes and reasons are commonly given for this performance, now joined by some commentary questioning how sustainable this is in the light of slowing growth rates with the need for different types and forms of growth – knowledge/innovative, services, etc. – as well as demographic trends as well as the global context and trade frictions. The collection of research provides further evidence behind China’s performance in terms of the role of business and management and also points to future issues. We detail this in terms of the key areas relevant to performance, such as culture, change, leadership, innovation and knowledge. The theoretical and practical implications of the work contained herein is also noted as well as some calls for future work in key areas.

Introduction

Despite the trade wars, the behemoth of the Chinese economy continues its advance. If we use the yardstick of 1978, an unforgettable year in Chinese history, when Deng Xiaoping’s economic reforms were first introduced in selected areas of Shenzhen and its outlying special economic zone, China’s per capita gross domestic product (GDP) was about US$300. That was about to change. To emphasize that there was no road map for economic reform, Deng said the Chinese must ‘“cross the river by feeling out the stones with our feet.”’ His most famous aphorism in terms of the socialist market economy was an old proverb from his native Sichuan: ‘“It doesn’t matter whether a cat is black or white, as long as it catches mice.”’

Since the reforms the national economy grew at an annual pace of roughly 10%, which means that GDP doubled every 7?years or so. By 2009 China had overtaken Japan to become the second largest economy in the world, albeit some measures show this milestone as having been reached as early as 2002. Now some measures show China to have overtaken the US to become the largest in the world. In any case, China by 2010 had become the world’s largest exporter, and by 2012 the greatest manufacturing economy in the world. One commensurate impact of this is the idea of perhaps a shift from Pax Americana to Pax Sinica (Kueh 2012; Duarte 2017). Not surprisingly then that by 2015 Chinese per capita GDP had climbed to more than US$8,000. Indicative examples of this explosive and heady economic climb include that in just two years, 2011–12, China produced more cement (6.6. gigatons) than the US had produced in the whole of the 20^th century (4.5 gigatons). Likewise, China also produced more steel in two years (2017–2019) than the UK has ever (in 150?years).

However, notwithstanding such achievements, China’s economy is often presented by many commentators and policy makers as ‘faltering’ in terms its GDP growth rates. It is prudent to say that China is only in the initial stages of building high-end research facilities and creating an environment conducive to innovation, one that would include the ability to import foreign-born and educated talent. Having played catch-up for 4 decades, China is still: ‘far from overtaking the United States or Japan, either in technological innovation or in economic sophistication’ (Lie 2018, 20).

With this perspective, China is still dynamic and growing, albeit as a slower rate of approximately 6% annually, down from the halcyon days of over 14% in the early 1990s and mid-2000s. Chinese policy makers need to remember that compared to many economies in the world, including Europe and even other Asian ones, such as Japan and South Korea, with low growth rates, this is still a great place to be in.

What are some of the aspects of this performance both in the past and the future? Clearly the Deng-led ‘opening up’ is part of the equation as it consisted of the state-led and directed elements as well as business and management change to help allow China to be the latest to take over the mantle of the ‘workshop of the world’. Other aspects of ever more importance in the future include the requirements for not only organizational performance, but agility and change, with leadership, innovation and knowledge in the context of national culture are critical. This cocktail of conditions comprises the key areas covered by this collection.

Context

The state of scholarly understanding on the rise of China in the 21^st century has been divided into two opposite poles with the Western bias of China as either a threat and of the nativist fallacy of China as a new friendly and converging force that will unite the region and the world in a positive direction (see inter alia, Calder and Ye 2004; Friedberg 2005; Lee and Son 2014; Mearsheimer 2014; Allison 2017; Lie 2018).

The problem of these two opposite poles of understanding is their tendency to generate misconceived hypotheses and research results about China. For one thing, China has never been a threat to the West in modern history, as much Germany and Japan had been. If Japan’s status as the world’s third largest economy does not threaten the West, why should China, a country that has never attacked or dropped bombs in Europe or Hawaii, be treated as a menace?

Having said the overly antagonized nature of China as a global menace may be overplayed, the country, nonetheless, creates a new question of hegemony in the region, especially to the two Koreas, Taiwan, Hong Kong and Japan and some of its neighbours in the region. For example, unlike the overly positive image of China as a regional and later global integrator, Hong Kong people are adamantly angry at the government for its attempt to try to merge the city into their political system. Taiwan has probably most ardently shown its discontent with the ‘One China’ policy as it has putatively supported pro-independence ideology since the 1990s (Tsai, Wang, and Weng 2019). Even in such faithfully pro-China countries as North Korea, politicians there are not interested in integrating its economy, culture, and political system into those of China (Choo 2016). If North Korea does not welcome integration with China, it is untenable to argue that Japan and South Korea would happily design a union of regionalism in North East Asia in a similar fashion to the EU. Therefore, China at the moment is neither the US nor the EU in that it has a hegemonic power that is enough to converge the region or the world into one economic and/or political unit.

In a similar vein, on a micro economic level, no Chinese company at the moment is considered to be a leading firm with ‘best’ practices of innovation, human resource management, accounting, finance, production management, marketing, or customer relations (Xia 2017). Furthermore, no Chinese firms are highly regarded for ethical behaviour, corporate social responsibility practices, or policies on environmental protection (Cumming, Hou, and Lee 2016). This fact alone augurs tremendous difficulties for Chinese firms to face in the future, despite their gargantuan size – and huge domestic markets and customer base – that easily helps them to be listed on the world’s top 100 multinational enterprise. However, it is still interesting and perplexing as to why these mediocre firms could garner enormous revenues and profits with increasing, thus not detrimental, levels of quality and customer loyalty.

Content

These perplexing questions about China’s businesses we delineated above are the key areas covered in this collection on Chinese business and management in a variety of important ways and topics. These range from organizational change in businesses, Confucian management, paternalistic leadership and interpersonal feelings and knowledge seeking, to innovation and firm performance.

The lingering issue with both macro and micro aspects of the Chinese economy and firms is threefold. First, whether China can succeed in organizing a new form of the economy that can bring in innovations that are both radical and incremental nature. Second, whether Chinese culture, such as Confucianism and Legalism, exists separately from modern Western culture and will provide the mental and intellectual basis for Chinese economic success. Third, whether China can overcome some of the disastrous unintended consequences of rapid development, including such political discontent as epitomized by the protesters and violence in Hong Kong and devise an alternative form of political economic governance to that of Western and Asian capitalism. This present collection does not answer all these grand questions, although they certainly provide readers with fresh interpretations of culture, knowledge sharing, innovation and leadership.

This collection starts with a useful commentary, ‘Folk tales and organizational change: an integrative model for Chinese management’ by Busse. This argues that the conditions of organizational change, such as speed, ambiguity and complexity lead to the somewhat counter-intuitive development of coping mental models of simplification. It shows the influence and support of ‘stories’ or ‘folk tales’ and their structural and functional parallels in organizational change. In particular, it both, first, shows the intertwining of ‘morphology’ (à la Propp) and ‘hero’s journey’ (à la Campbell) with the seminal ‘three steps’ (à la Lewin) view and, second, it develops a ‘three act’ framework to organizational change.

In understanding Chinese organizational evolution, we therefore, need to pay attention to how the government, or main actors of innovation, used Western, Japanese and Korean storytelling to convince floor level executors of change. However, the repertoire of such tales has quickly been depleted as China now has to assume the leadership role of innovations that defy the level of merely copying Korean, Japanese, or Western achievements (Oh 2018).

Next, the role of culture in terms of Confucianism and its impact on business practices is considered in ‘Does Confucian management exist in Chinese companies? An examination of the intersection between cultural influence and business practice in China’ by Atherton. This argues that there is a commonly held view that China is a Confucian country and that its organizations adopt such values to underpin their business models and practices. However, a case is made that China is not a Confucian country, albeit there are strands of Confucianism in society. Although some organizations adopt Confucian approaches to management, this cannot be generalized to all businesses. Therefore, it cannot be concluded that Confucian management has emerged as the prevailing feature of Chinese businesses.

An alternative understanding to the Confucian route to modernization would be the Western path, which undermines the very pedestal of Chinese tradition, Confucianism. Attributing Chinese success in economic development to Confucianism turns out to be a biased paradigm perf...