AM Lecture 3

International Management > Asian Management > Converging management? > Chinese management

Chinese management

Wah (2001) in Cultural Values, suggests that the influence of Chinese cultural values on managerial practice is so significant that it has created the distinguishing characteristics of the Chinese managerial system.

The characteristics of Chinese firms include:

Highly centralised decision-making
Low structuring of activities
Paternalistic style of leadership
Strong emphasis on collectivism and group behaviour
Strong family management and ownership

The Chinese Family Business (CFB) is run precisely like a family - they are integrated into one entity. Thus the money earned by the company is ploughed back into itself, as the role of the business is to provide for the family.

The influence of Chinese cultural values on organisational and managerial practices can be classified into:

People management - seniority and internal promotion. The objective of the firm is to run like a family, even though non-family members are employed. This is why favouritism occurs with family members.
Organisational structure - In a CFB, it is easy to mix business and family. There is a strong degree of hierarchy within the firm, but as there is rarely a formal or explicit organisation chart, it implies that the management position is based on the individual position and seniority in the family hierarchy.
Leadership style - as a result of the organisational structure, a paternalistic style is particularly dominant, as is nepotism. The basis of Chinese familism is reinforced by the moral values and obligation demonstrated by the leader. As long as the subordinates do not commit any major faults, they are unlikely to be fired, as employees rarely lose their jobs as a result of underperformance. However, due to Confucian-based culture of obligation to the family and hierarchical relationships, the Chinese work hard for the family in order not to lose face.
Business orientation and strategy - a Chinese business leader keeps an eye of the distant horizon while always paying close attention to the past and present. The ability to view future events is critical, because it provides the organisation with a broad perspective. Emphasis on the virtue of thrift (cost-cutting) means that limited resources are used, including material capital and human resources. This has resulted in improving productivity and overall profitability. Cost-cutting is also important as, unlike SOEs, a CFB is not supported by the government and survival of the family relies on the survival of the company.

As a CFB grows larger, it will be very difficult to retain the traditional way of doing things, so there is pressure for family run firm to change their structure.

Weaknesses

Guanxi

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