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AM Lecture 4Management > Asian Management > Culture-organisational background > Laoban characteristics > Structure > Effectiveness of structure
Effectiveness of structureThe Chinese personal network functions as an effective organisation and as an alternative to "modern" markets. They have created a market environment for themselves with no support from the state. They have developed a market from a niche they have created, where they can co-operate with each other to develop market principles, gain access to capital and exploit any business opportunity. There is a fundamental difference between the economic networks in Chinese society and the markets in advanced capitalist economies. For example, Chinese economic networks are not legally institutionalized and hence under no government control. There is also no state guarantee for participants in rotating credit associations or private business partnerships. The only insurance participants can hope for is personal trust ("xingyong").
Owing to their tendency to work abroad Laoban are open to outside influences and have incorporated them into their firms. Thus a mixture of management styles can be observed. For example, Yeh (2002) places Taiwanese management practice between Americal and Japanese practice. American similarities include: horizontal specialisation and importance of technical education in rectruiting employees. Japanese similarities include: importance of past performance, seniority in promotion, preference for those related to current employees, and quality circles and social activities. These are all designed to improve performance. This demonstrates the Laoban's flexibility, adaptability, access to funding, huge networking, hedging bets, and spreading risk. These structural elements have helped them survive, in addition to the extra motivation required of supporting a family. The structure of the Laoban makes for good competition in the West, particularly as they have been so constrained that they have become innovative firms. They have remained flexible and small, due to the speed of decision-making. It also means that certain types of manufacturing are chosen by the Laoban, such as IT.
Internationalisation of Taiwanese firms
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