The predominance of small businesses in China and the region highlights the need for managers from around the world to gain an understanding of how such businesses operate. Many small businesses-most of which are family or extended- family businesses-become part of the value chain (suppliers, buyers, retailers, etc.) within industries in which foreign firms may compete.
Exhibit 3-11 gives a general framework for comparing Western and Chinese cultures; shown are the resulting differences in Chinese attitudes and behavior, culture continues in Chapter 5 in the context of negotiation. Here we will point out some specifics of Chinese management style and practices in particular as they apply to small businesses. It is important to point out that no matter what size company, but especially in small businesses, it is the all-pervasive presence and use of guanxi' which provides the little red engine of business transactions in China. Guanxi means connections-the network of relationships the Chinese cultivate through friendship and affection; it entails the exchange of favors and gifts to provide an obligation to reciprocate favors. There is an unwritten code among those who share a guanxi network.44 The philosophy and structure of Chinese businesses comprises paternalism, mutual obligation, responsibility, hierarchy, familialism, personalism, and connections.45 Autocratic leadership is the norm, with the owner using his or her power, but also with a caring about other people which may predominate over efficiency.46
According to Lee major differences between Chinese management styles and those of their Western counterparts are human-centeredness, family-centeredness, centralization of power, and small size.47 Their human-centered management style puts people ahead of a business relationship and focuses on friendship, loyalty, and trustworthiness.48 The family is extremely important in Chinese culture, and small businesses tend to be run like a family.
The centralized power structure in Chinese organizations, unlike those in the West, splits into two distinct levels-at the top is the boss and a few family members, and at the bottom are the employees, with no ranking among the workers.49
As Chinese firms in many modern regions in the Pacific Rim seek to modernize and compete locally and globally, there is a tug of war between the old and the new-the traditional Chinese management practices, and the increasingly imported Western management styles. As discussed by Lee, this struggle is encapsulated in the different management perspectives of the old and young generations, as shown in Exhibit 3-12. A two-generational study of Chinese managers by Raitson et al. also found generational shifts in work values in China. They concluded that the new generation manager is more individualistic, independent, and risk-taking in the pursuit of profits. However, they also found the new generation holding on to their Confucian values, concluding that the new generation may be viewed as crossverging their Eastern and Western influences, while on the road of modernization.
Chinese Small Businesses : Effects of Organizations article from Culture Management Catagory Chinese Small Businesses
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