Most ethnic Chinese share a common Confucian legacy with the Japanese and Koreans, but the way the Asian Chinese run their organizations, differs from them. The unique way that the Chinese business system operates is known as ‘overseas Chinese management’ (Petzall, Abbott & Timo 2007). Although both the Japanese and Koreans and the Asian Chinese are collectivist, community is more important to the former, while family ties and ‘guanxi’ are more significant to the latter (Petzall, Abbott & Timo 2007). ‘Guanxi’ is a special relationship between two individuals due to the existence of particularistic ties who are obliged to maintain a long-term relationship with mutual commitment and loyalty ...view middle of the document...
As high technological industries operate under such environments that require decentralized, participative organizational structures with extensive sharing of skills and knowledge, Chinese family firms are restricted to low and simple technologies and small-scaled organizations because of their management style (Babcock & Babcock 1998).
Petzall, Abbott and Timo (2007) highlight another reason why Chinese family firm are unable to expand is because of the lack of trust and willingness to open up to one another between employers and employees; supervisors and subordinates. Being small and family-focused, Chinese managers find the need for human resource management (HRM) redundant. Controversially, this generates distant relationships between the employers and employees which make it difficult for employees to be loyal and committed. The inability to trust outsiders dampens the opportunity for the business to grow as the bigger a firm is, the more the need for capable people to be in senior positions to help support the growth.
One problem would thus be getting the right people to fill managerial positions. In overseas Chinese management, traditional owners want members of the family to be in charge. The question arises: are there enough family members to take on such roles? In the olden days, the answer would be ‘yes’, where a man who could have as many wives as he wants, would have many sons as well. This in turn leads to another question: are the descendants competent? Yet, the high-ranking senior positions would still be given to family members, whether they are competent or not. This favoritism of allowing weak family members to hold managerial positions adversely affects effective ownership control.
However, if the management leaders are able to demonstrate attributes of the Chinese gentleman, i.e. humanness '' ‘jen’ and politeness '' ‘li’, and if the employees share similar cultural heritage of Confucianism, employees will still respect and be loyal to the managers and the business and will be more committed (Babcock & Babcock 1998).
Although Petzall, Abbott and Timo (2007) mentioned nothing about how overseas Chinese firms financed their businesses, it is inferred from Ahlstrom et al. (2004) that they relied on internal financing which also constraints growth due to heavy dependence on family members and distrust of outsiders, which were points stated by Petzall, Abbott and Timo (2007).
Another characteristic of the overseas Chinese management is the resentment of managers for their workers to join or support trade unions. Trade unions act as a voice of employees to negotiate with employers for improvements in key areas like wages, working hours and working conditions via collective bargaining. Employers view the formation of trade unions as a threat and use ‘divide and rule’ tactics prevent employees from linking up and becoming more powerful. Thus, it is not surprising that many discontented workers, upon gaining...