An institutional economic perspective on management in Chinese cultural contexts

Abstract

The aim of this paper is to examine various theoretical approaches used to manage in Chinese cultural settings, with a particular emphasis on cultural theories from institutional economics. Institutional economics offers explanations that are well-suited to understanding the rapid growth of the Chinese economy since the 1980s, when market-led economic reforms were introduced. This chapter provides a rigorous economic analysis that makes a strong contribution to the handbook, demonstrating the impact of economic institutional arrangements on the fast-growing Chinese economy. A significant contribution here is to highlight the complexity of managing in Chinese cultural settings. This complexity arises from the constantly changing soft institutions, such as the cultural practices of guanxi, which can vary significantly across different regions and communities. For instance, personal networks or guanxi are less important in overseas private Chinese businesses, Hong Kong, and Singapore. Due to economic activity, growth, and labor migration, there is a considerable cultural difference between different Chinese communities. Hong Kong, for example, has a distinct management culture compared to mainland China, as it has a long history of British administration and is an international trade and financial hub. This is evident in differences related to governance, the influence of the central government, relationships with foreign firms, human resources, and line management. The working language is predominantly English in Hong Kong, whereas Mandarin Chinese is the sole working language in mainland China.