Principles of Chinese Management

By Haibo Hu

This book focuses on ancient Chinese management thoughts, building a Chinese management theory system and defining the core concepts.
 Firstly, it systematically reviews the excellent management ideas in traditional Chinese culture from the perspective of modern management, summarizing the experience and wisdom of Chinese management in order to disseminate the ideas to global readers, and highlighting the soft power of Chinese culture.
 Secondly, based on the management practices of Chinese local enterprises, the book refines the Chinese management model, constructing a modern management theory system with Chinese characteristics to promote innovation and changes in global management theory.

• Language: English
• Publisher: Springer
• Release date: Mar 1, 2021
• ISBN: 9789813365223

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© The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021

H. HuPrinciples of Chinese ManagementManagement for Professionalshttps://doi.org/10.1007/978-981-33-6522-3_1

1. Overview

Haibo Hu¹  

(1)

School of Business Administration, Jiangxi University of Finance and Economics (JUFE), Nanchang, Jiangxi, China

Haibo Hu

Email: [e-mail]

Only things of national characteristic belong to the world.

—Xun Lu, Demi-Concession Studio Essays

The world of management is emerging an Oriental upsurge.

—Dongshui Su (Dongshui et al. 2003)

Abstract

1.

Chinese management is a discipline that studies management thoughts and management practices in the Chinese context. Its purpose is to find out the general laws of Chinese management.

2.

The research subjects of Chinese management include Chinese management thought, Chinese management practice, and Chinese management context.

3.

Management is a kind of social science. Western management studies more on the study of natural science. Therefore, its research methods are mainly based on empirical methods, supplemented by case studies. Chinese management is more focused on the humanities, so its research methods include case study methods, comparative research methods, and interdisciplinary methods.

4.

The inherent flaws in Western management science determine that they need to learn from the East when facing difficulties. This is the first value of studying Chinese management. Studying Chinese management is still a compelling requirement of the sustained and rapid growth of China’s economy at the micro-level. It is also an inevitable reflection of the Chinese national culture consciously in the field of management. Moreover, it is also the social responsibility and historical mission that Chinese management researchers must undertake.

Keywords

Chinese managementChinese management thoughtsChinese management practicesChinese management contextCase studiesComparative research methods

Learning Purpose and Requirements

Define the basic concepts of Chinese management.

Understand the current situation and trending topics of Chinese management.

Identify the research objects of Chinese management.

Master the research methods of Chinese management.

Understand the research significance of Chinese management.

Introductory Case

During the Ming and Qing Dynasties, among the Jin merchants, there were many stories about ten thousand silver and one sentence, meaning if a family owed a debt of over tens of thousands silver to a Jin merchant, as long as the reasons were explained, the debt could be waived. The so-called Xiang Yu was the person or business who had business dealings with Jin merchants. The Jin merchants were very cautious when making choices of Xiang Yu. Jin merchants must have a detailed investigation and believe that the other party is of good creditworthiness before conducting business. Otherwise, they would reject it. Once it became a Xiang Yu, it would last till the end. Even if the other party has misfortune or even become unprofitable during the period, the relationship continues. And if the other party shut down, Jin merchant would forgive the debts. In the 11th year of the Republic of China (1922), Yang Laowu, the shareholder of Baotou Shuangshenggong and Shuangshengmao had a Xiang Yu relationship with the Fuzi. He owed 60,000 liang¹ to Fusheng, and they were about to close down and could not repay their debts. Yang Laowu did nothing more than kowtowing to Qiao Yingxia, who is the shareholder of Fusheng. The Erbaoqing merchant owed Fushengxi 8000 silver liang and did no repay. Guang Yiheng Villus store borrowed 50,000 silver from Fushengxi, and was unable to pay off the debt. They only forgone one of their property with a value of several thousand yuan. However, the shareholder of Fuzihao had strict requirements for himself. If the subsidiary of Fuzihao appeared to be closed for loss, shareholders always sent someone to deal with it. All the money owed to others was paid off, and the money others borrowed was just forgiven. However, no matter which subsidiary had a loss, he must carefully check the accounts in case the shopkeeper cook the book. This performance and practice of Qiao Yingxia were believed to have a significant influence on the reputation of Fuzihao, so that the trade and business people of Baotou were very proud to be able to have a business relationship with Fuzihao.

At first glance, this kind of Xiang Yu relationship is similar to the Western strategic alliance. However, under the detailed study, there will be obvious differences between the two: the first is that Xiang Yu can be either an enterprise or a person; the second is even knowing it would be a loss, it will cooperate with the other party, and if the other party goes bankrupt, it will not go to the court, which is in sharp contrast to the Western companies’ contractual relationship. Therefore, there are some management wisdom in Chinese business operations that are different from those in the West, and it is necessary to present them systematically.

Source Xianhui (2009).

1 Proposal of Chinese Management

On the one hand, the development of globalization promotes the collision and exchange of various ideas and concepts, making people’s ideas unified. On the other hand, globalization has also promoted people’s attention to local ideas. In management, the current trend is that the world is learning the Western management theory. The introduction of management textbooks written by Western scholars is an important way of learning, which develops a unification trend. However, there is a shortage of rethinking the shortcomings of Western management theory and constructing management concepts that fit different nations and their characteristics. Few people are aware of the urgency and necessity. Therefore, it is necessary to study Chinese management theory and prepare management textbooks with distinctive Chinese characteristics.

1.1 The Concept of Chinese Management

At present, many scholars have proposed the concept of Chinese management, and there are also some books titled Chinese Management, such as the version written by Su and He (Fudan University Press, 2006). They think China Management is a modern discipline that studies ancient, modern, and contemporary Chinese management thoughts and practices and explores the laws, principles, and methods that are generally applicable in Chinese management practice. In Liu and Chen’s version (China Social Sciences Press, 2010), they believe that Chinese management is a systematic study of the basic laws and general methods of Chinese social, economic, scientific, and military management activities. Li’s version (China Renmin University Press, 2005) believes that Chinese management is the sum of Chinese management theory and practical experience for thousands of years. The following points can be concluded:

1.1.1 Chinese Management is not a Simple Copy of Western Management in China

Due to unique Chinese history, Chinese management thinking and management practices are unique. Firstly, China has a long history and cultural continuity, so tradition profoundly impacts the Chinese people’s thinking and behavior. Secondly, China has risen rapidly as an economy in recent years. China has embarked on a development path that is vastly different from the West. A group of Chinese companies has entered the world stage, and their models also have distinctive Chinese characteristics. Therefore, Chinese management needs to learn from Western management, but it does not equal Western management because it mainly focuses on some unique Chinese management phenomena and finds out the patterns behind these phenomena.

1.1.2 Chinese Management is not Ancient Management

Although China’s history is very long, China’s Confucius, Lao Tzu, and Sun Tzu are world-class cultural celebrities. Their ideas have played an important role in promoting the formation of Chinese management thinking. However, history is constantly evolving; while some of their thoughts are still useful for our management today, others need to be abandoned. We study giants in order to stand on the shoulders of giants, not at the feet of giants. The purpose of researching history is to solve our current problems. Therefore, the study of ancient management is actually to surpass the ancients and serve our current management needs, and this is the first reason. The second reason is that modern management thoughts and management practices are also an important part of Chinese management. Our contribution to Chinese management while facing and solving problems today is not less than that of ancient management ideas.

Therefore, this book believes that Chinese management is a discipline that studies management thoughts and management practices in the Chinese background, and its purpose is to find out the general laws of Chinese management.

1.2 The Development Status of Chinese Management

At present, there has been a marked increase in the attention paid to Chinese management worldwide. There are six top management journals from 2000 to April 2009 publishing 61 articles focusing on Chinese management issues from foreign countries’ aspects (Yong and Qianni 2011). From domestic aspects, firstly, China knowledge Network (CNKI) had 104 articles about China-style Management, Chinese Management and Oriental Management from 1994 to 2008. The number of articles in the 5-year-period from 2004 to 2008 is bigger than the total number of articles in the ten-year period from 1993 to 2003. That is to say, in the last five years, there has been a significant increase in research on Chinese management (Yong and Baoping 2009). Secondly, there were 1283 articles (Jinlong and Yan 2012) related to China Practice Management in 30 important journals identified by the Management Science Department of the National Natural Science Foundation of China from 2001 to 2011. The research groups include Innovation Management and Sustainable Competitiveness Research Center of Zhejiang University, China Management Issues Research Center of Xi'an Jiaotong University, China Enterprise Strategic Management Research Center of South China University of Technology, Enterprise Strategic Management Research Center of Huazhong University of Science and Technology, Corporate Governance Research Center of Nankai University, Innovation and Development Research Center of Dalian University of Technology, Organization and Management Research Institute of East China University of Science and Technology, Oriental Management Research Center of Fudan University, Center for Crisis and Problem Management of Shanghai University, Zheshang Research Center of Zhejiang Gongshang University, etc.

On the one hand, domestic and international research on Chinese management has indeed grown significantly in recent years. On the other hand, there is a phenomenon of management jungle in the field of Chinese management research, such as the current influential concepts Chinese management, C theory, Oriental management, management of Chinese characteristics, He He management and so on. Harold Koontz pointed out that one of the reasons for the jungle phenomenon in management theory is semantic confusion. This kind of semantic confusion has caused multiple concepts coexisting in the field of Chinese management. This aspect helps different researchers dig deeper into some characteristics of Chinese management from different perspectives. On the other hand, the inconvenience of communication has made the accumulation of knowledge in this field face some limitations in quantity and quality. Therefore, it is necessary to find a way out of the jungle.

1.3 Hot Research Topics in Chinese Management

The field of Chinese management research covered by foreign top management publications includes ① Transnational management research, including the development strategy of multinational companies in China, direct investment to foreign countries and cross-cultural management of international companies. ② Strategic management research, mainly including the research on the strategic development of Chinese state-owned enterprises and the research on Chinese enterprises’ strategic choice in the period of economic transition. ③ Organizational behavior research, including human resource management research, organizational change and innovation research, and organizational behavior research in China (Yong and Qianni 2011).

The main focus of the articles published in the 30 major journals identified by the Department of Management Science of the National Natural Science Foundation of China in 2001–2011 is reflected from the following angles: ① Chinese management theory and methods and their relevance to practice. ② Practical research in specific areas, including the current management of Chinese organizations, the study of strategic management of domestic enterprises, the research of domestic enterprises’ innovation capabilities, and the influence of traditional culture on management practices (Jinlong and Yan 2012).

1.4 The Future Development of Chinese Management Science

The future development of Chinese management science may be carried out in the following aspects.

1.4.1 Creative Transformation of Traditional Chinese Management Thoughts

The creative transformation of Chinese tradition is a concept put forward by Yusheng (1988), a Taiwan scholar. It refers to reconstructing the symbols and value systems in some Chinese cultural traditions so that the transformed symbolic and value systems become seeds that facilitate change. Meanwhile, in the process of changing, transformed symbolic and value systems can preserve cultural identity. Also, this argument is fully applicable to Chinese management. Because any management ideas will continuously change in practice, defining the absolute and static ancient management ideas is absurd. However, completely abandoning ancient management ideas to build Chinese management science will be like building a house on the beach where the foundation is unstable. Therefore, the best way is to creatively transform traditional management ideas, retaining the recognition of tradition and infuse creative activities from managers and researchers, so it meets the needs to fit in the modern context.

1.4.2 Theoretical Improvement of Chinese Management Practice

The purpose of any system of learning is to spread knowledge quickly and to serve the practice better. It is true real companies can learn from some star companies, but this kind of learning is often a kind of superficial learning, often knowing how but not knowing why. Therefore, extracting general theories from Chinese management practices is not only beneficial to the study of many Chinese companies, but such learning can also bring fundamental changes.

2 Research Objects of Chinese Management

A clear research object is an important indicator of whether a subject is mature. Compared with other disciplines, management is not mature enough. For example, we can find that physics and mathematics textbooks rarely have major revisions or rarely revise every few years. These textbooks can work for decades, but management textbooks cannot. It must add some new content every few years to reflect the new development of management theory and new changes in management practices. But constant revision does not mean that management has no clear, well-recognized research objects. Management is a study of how various organizations can achieve their goals through management functions, such as planning and commanding. Its research objects include people, money, things and issues and so on. Also, Chinese management studies must study these as well, and even when studying Chinese management, it is necessary to understand the research objects and research contents of Western management. Charles Horton Cooley, an American sociologist, put forward the view named me in the mirror in his book Human Nature and Social Order published in 1902. This opinion is that human behavior depends largely on the understanding of self, and this kind of understanding is mainly formed through social interaction with others. Others’ evaluations and attitudes toward themselves are a mirror to reflect oneself, and individuals know and grasp themselves through this mirror. Therefore, the human self is formed through interaction with others. For Chinese management, Western management is its own mirror, and through this mirror, we can better understand some of the characteristics of Chinese management. However, as an emerging discipline, the research object of Chinese management is certainly special. In summary, it contains the following three aspects of research content.

2.1 Chinese Management Practice

As a country with a long history, China has a wealth of management practices. For example, in the management field of political organizations, various feudal dynasties have made a lot of attempts in the hierarchical design of government organizations, the division of imperial power, and the imperial examination system. The examination system was relatively fair and progressive at that time and was invented to select officials. Meanwhile, in military organization, a large number of attempts have been made, such as the recruitment and training of soldiers, the improvement of equipment, etc. Also, the commercial field practice is enormous, and the name of merchant Shang ren reflects that China had some relatively large-scale commercial activities during the Shang and Zhou dynasties. Si Maqian specially wrote the Biography of the Goods in Historical Records, which gives us a clear understanding of ancient business activities. A large number of businessmen have also left their footprints in history because of their excellent management, such as Bai Gui and Fan Li.

China has not only rich and successful management practices but also has many failed ones. These lessons should become the research object of Chinese management because failure often causes people to reflect and improve. For example, in the early days of the founding of PRC, Angang Constitution was created with distinctive local characteristics, which once had an important impact on Japan’s high-quality management thinking. But in China, this management practice has not been able to last until now, and its cause of failure has become a question we must answer today. If we can solve this problem, it will undoubtedly have positive significance for us to cultivate more management innovations with Chinese characteristics in the future.

Whether it is a successful experience or not, when studying these management practices, we should notice that these management practices are products under certain conditions, and some management practices can be introduced from one organizational domain to another. In other words, some management practices can extract theories with a wide range. Nowadays, many enterprises advocate militarized management, but merely transplanting some military organizations’ management practices, and we rarely see military managed like enterprises. That is to say, some practices of business organizations cannot be transplanted into military organizations, and the generality of the theory extracted from practice is limited.

2.2 Chinese Management Thoughts

In 1949, Jaspers, the German philosopher, proposed in his masterpiece The Origin and Goal of History that human history can be divided into four stages: prehistoric period, ancient civilization period, axial period, and modern era technology. According to Jaspers, the historical significance of the above four periods cannot be equal. Prehistoric and ancient civilizations can be intermittent, the axis period is a breakthrough period, and the modern era of science and technology is the second intermittent period. The axis period is more important than the other three periods; from 800 to 200 BC and centering 500 BC, the spiritual foundation of mankind began laid their groundwork simultaneously or independently in China, India, Persia, Palestine and Greece, and humans are still attached to this foundation until now. This era has produced all the basic categories that we are still thinking about and created a worldwide religion that people still believe today. Moreover, mankind has been living by everything that is produced and created during the axis until now. Every new leap recalls this period and is ignited by it. Since then, this has been the case, the awakening of the axial phase’s potential and the recall of the potential of the axial phase, or the revival of the sacral, always provide spiritual motivation. Therefore, the first thing to study Chinese management thoughts is to study the management wisdom contained in the thoughts of the Spring and Autumn Period. Generally speaking, when it comes to this period, we will think of a state of hundred schools of thoughts. It feels that there are contradictions in the thoughts from the hundreds of schools, but behind the differences on the surface, there is a unified discussion on how to establish a normalized and orderly society. It’s just different perspectives lead to different conclusions. For example, Confucian emphasizes the establishment of social order through the ruler’s love and recognition from the people. Taoists believes that the small country with a small Utopian society is an ideal form of social organization, while Legalists believe that law plays a crucial role in the social order. It can be said that these views reveal some basic laws in organizational management from a biased but very perspective. Therefore, what we need is a comprehensive perspective. In actual social management, the Chinese feudalism dynasty adopted the characteristics of tolerant externally, strictly internally.

It should be noticed that these management ideas in ancient China are also constantly evolving. This is reflected in two aspects: first, scholars constantly expand these ideas, and scholars from different schools even learn from each other, which is particularly evident in Confucianism, Buddhism and Taoism. Second, when these ideas enter the field of business organization management, they will also undergo some changes and adjustments from the field of social management. For example, in the field of social organization, there can only be one country and one leader at a time, so after the establishment of a new dynasty, there are often problems in dealing with heroes. For the pyramidal dynasty administrative organization, the more you go up, there will be fewer positions to switch, the smaller the space for promotion. For these founding heroes, it is basically impossible to motivate them through the promotions. Therefore, it is either a cup of wine to release the military power or to kill these heroes. But for a business organization, there can be a holding company, a subsidiary company, a related company, etc., or even, it is accepted that a person could leave the original enterprise to establish a separate one, so space for companies to motivate entrepreneurial elders through promotion is greater than that of political organizations. In other words, we must not only pay attention to the management ideas flashed in the traditional wisdom but also pay attention to the different manifestations of these ideas in various organizational types.

2.3 Chinese Management Situation

The so-called context is the background of management activities, such as the country’s economic, cultural, and political factors and a region. We should pay attention to Chinese management situation because management does not happen in a vacuum environment. Moreover, both the subject and the object of management are often limited by certain situational factors. Therefore, when researching management, attention must be paid to the contextual factors in which these activities take place. Western management is mainly based on empirical methods, so it often ignores situational factors and finds some universal truths. However, the resulting management rules often only apply to some of the developed countries but not other regions. In this way, just as fish need to focus on the water of their own life, people pay attention to the air they breathe. Although people are in a certain environment, it is not easy to perceive its existence. We must attach great importance to it and study Chinese management, and it is inevitable to pay attention to the management situation in China.

On the one hand, to study Chinese management is for creatively applying the Western management rules so that it can be applied to the reality of China, avoiding the opposite situation. On the other hand, it is sometimes difficult to tell the differences between the situation and management activities. In this case, studying Chinese management context will help to explore some of China’s unique management theories, thus better guiding Chinese management practices. Of course, we must notice the fact that situational factors are constantly changing. For example, the situational factors of Chinese enterprises in the early stage of reform and opening up are significantly different from the situational factors today in some aspects, with globalization accelerating (Table 1).

Table 1

Situational factors at the country level (Xiaoping et al. 2008)

3 Research Methods of Chinese Management

For the understanding of science, there are generally two views in the world: (Pengsen and Lie 2000) one is mainly represented by the United States and the United Kingdom. From this school’s perspective, science should be highly rigorous in logic and should establish a unified knowledge system in an empirical way. This kind of knowledge system needs to meet two conditions at the same time: ① Science is highly rigorous in logic, which means that it should be formulaic as much as possible. It is best to use mathematical models to represent it. The minimum standard is that science is at least a theory that can be justified. ② As empirical knowledge, science must be able to undergo direct observation and experimental testing. Germans represent the other school. From their point of view, all systematic knowledge can be called science as long as people have established a relatively complete knowledge system after systematically studying. No matter this knowledge system is as regular as natural science, it should be included in the science category. Therefore, according to the British and American views, only the natural sciences are strictly science, the social sciences can barely count as science, and the humanities cannot be regarded as a science. In this case, countries like the United Kingdom and the United States divide all disciplines into three categories: natural sciences, social sciences, and humanities science. The humanities science can only be a study, a subject, and cannot be called science. But according to German understanding, the humanities should also belong to science. The Germans divide all science into two categories: the natural sciences and the spiritual sciences (cultural sciences). It is clear that the spiritual or cultural sciences here include the social and human sciences. Because Western management is mainly dominated by the United Kingdom and the United States’ management theory, this book adopts the division method of the United Kingdom and the United States and believes that science is divided into three categories: natural science, social science, and humanities science. In this way, management should be a social science.

3.1 Common Research Methods of Western Management

Western management science, which is based on the study of the United Kingdom and the United States, has shown that it has moved closer to the natural sciences from the beginning of Taylorism and hopes to establish a rigorous knowledge system like natural science. Therefore, it shows the natural science imitation in research methods, and the research method is mainly empirical method.

The empirical method is the mainstream method of Western management, and it emphasizes the exploration of the nature of the phenomenon through the observation of a large number of recurring management phenomena and the construction of the model. This method’s advantage is that it provides a set of common standards for scholars to test each other’s results, which plays an invaluable role in the accumulation of management knowledge. However, this method has the following problems: ① Management is a dynamic, complex, and contextual social activity, thus management phenomena are often unique, continually changing, and challenging to reproduce. It causes Western scholars to cut a large number of unique management phenomena into the same kind of phenomenon when constructing a theory so that they make mistakes at the source of the theory, or the number of repeated management phenomena is insufficient, and the conclusions are unpersuasive. ② Because of the emphasis of observations on empirical methods, Western scholars’ research priorities are often tangible and superficial, and those intangible and implicit things are often ignored. This flaw is not particularly obvious when studying management aspects but is most exposed when researching the most important and noblest factor-people. Therefore, it can be found that the starting point of Western modern management theory is Taylorism. This theory’s core element is the standardization of actions because the actions are easy to observe and measure. However, Tyrone himself repeatedly called for a psychological revolution, but the end result was that the implementation of the Taylorism triggered the resistance of the workers. Therefore, Tom Peters criticized: The problem for American companies is that they focus too much on management tools, and these tools are overly biased toward measurement and analysis. Costs are measurable, but these tools cannot measure the value of employees in Metag or heavy industry companies producing high-quality products or the value of a salesperson in Frito-Lay running a mile for an ordinary customer (Waterman and Peters 1982) In other words, this method is either neglecting the irrational factors of employees’ emotions, loyalty, passion and so on, or well-meaning but ineffectual. ③ Since this method is based on the natural sciences, the hidden goal behind it is to establish a set of universally applicable management principles, but management involves not only physical factors but also human factors. It has the characteristics of natural science and has some characteristics of social sciences and humanities. Therefore, this method often pays insufficient attention to the social and humanistic sides of management, and thus it is inevitable to have Western bias.

3.2 Research Methods of Chinese Management

3.2.1 Case Study

Thanks to Harvard Business School, which has adhered to the case teaching method all the way, the case method is well known in the management field. In the 1960s and 1970s, the empirical school and the contingency school felt the complexity and variability of managing research objects, and because of the limitations of empirical research, they began to advocate case study methods vigorously. Robert K. Yin, a well-known management case study expert, points out that case studies are an empirical inquiry, which studies temporary phenomena in the real-life context (Contemporary Phenomenon); in such a research context, the boundary between the phenomenon itself and its background is not obvious, and researchers can only use a large number of case evidence to conduct research (Yin 1984). A good case study is also of great importance to the development theory. Its role is embodied in the following aspects: ① Proposing and analyzing new research questions, constructing a new theoretical framework, or contributing to the development of new theories’ necessary research methods and procedures. ② Expanding the scope of the explanatory power of the existing theoretical system and solving problems that the existing theories cannot reasonably explain. ③ Strengthening or correcting related categories in existing theories, structural relationships between concepts, and related principles by confirming or rejecting existing theoretical assumptions or existing case studies (including comparative research or further in-depth research based on existing theoretical contribution case studies). Therefore, the case law is good at discovering problems that traditional empirical research is easy to ignore and can also review the problems found in empirical research.

Chinese management studies badly need a case study approach. On the one hand, the positivist research method advocated by Western management studies makes it possible to extract patterns that deviate from the specific situation, and on the other hand, it brings the defects that are easily overlooked in the special management phenomenon. Therefore, simply applying the positivism of Western management science may prove what has already been proved in Western management science in China’s context or just reconfirm the correctness of Western management. However, case study methods allow us to conduct a detailed study of Chinese management practices, discovering things that cannot be explained by Western concepts and theories, rather than fitting Chinese management reality to Western concept frameworks. In other words, the case study method helps us discover things that Western management theory ignores to construct a new theory. Moreover, this is not only a contribution to Chinese management but also a reference to Western management. A number of companies with international influence have emerged in China since the reform and opening up, and these enterprises’ business activities have also provided rich materials for case studies.

3.2.2 Comparative Research Methods

Comparison of Chinese and Western Management

The East and the West have created different historical processes, due to differences in geographical location, cultural characteristics, and ethnic groups. In terms of management, there are some identical things on both sides and also some obvious differences. For example, although there are differences in ethnicity between the East and the West, there is no difference in human nature (obviously, there is no Eastern brain anatomy and Western brain anatomy, and there are no structural differences in the Orientals’ brains and Westerners in nature). Therefore, the ancients emphasize the East China Sea and the West Sea, the same mind. However, people with the same human nature will have different external manifestations in different environments. For example, there is a part to pursue profits in humanity, but the West restricts profits to a reasonable range by means of contract. While Chinese traditional approach emphasizes the use of righteousness to control the mind of pursuing profit. Therefore, the comparison between Chinese and Western management requires discovering the Yi, which is a unique feature of Chinese management, and discovering the common things between East and West.

Comparison of Management Thoughts and Management Practices

Studying Chinese management science must involve things at the level of management thoughts, such as the management ideas contained in the philosophers’ thoughts in the Spring and Autumn Period, or the enlightenment of the thoughts of Confucian, Buddhism, and Taoist on management. These thoughts are not only the source of Chinese management we study today, but Western management scholars also use these ideas to overcome some of the shortcomings in Western management thinking, such as Herbert Simon, Peter St., and others who have admired systematical views in ancient Chinese thoughts. However, a basic reality in ancient China was that the whole society was divided into four levels: the scholars, the peasants, the workers, and the merchants. In this case ordinary businessmen’s understanding of classic books is questionable, not to mention applying them in business management. Another reality in ancient society is that there are not many scholars in the whole society, and the level of education is not high; in addition, the ordinary civilian’s exposure to classic books is not as convenient as today’s people. Therefore, there must be a gap in these classic ideas and everyday life, and this gap can only be filled with folk or practical things. Therefore, in addition to studying the management ideas in ancient classics, we must also study how the society or businesses work, such as the regulations of the Shanxi merchant ticket number in the late Qing Dynasty. The ideas behind these rules and regulations that are followed in practice and the kind of relationship they have with Confucian classics must be undoubtedly studied in depth.

Synchronic Comparison

When studying the northern Jin merchants and the southern Hui merchants in Ming and Qing Dynasties, we can find that both sides are striving to create a loyal culture in the business community. Therefore, both sides will carry out ideological education for the employees through the way of worshiping gods, but there are certain differences in the specific implementations. For example, the Jin merchants, who are mainly Shanxi people, have added Guan Yu in the gods of worship because Guan Yu is the embodiment of loyalty and was from Shanxi, according to folk saying. And the Hui merchants, whose main origins were in Anhui and Jiangxi’s Wuyuan, added Zhu Xi to the gods of worship because Zhu Xi’s ancestral home was Wuyuan in Jiangxi province. Then, through the comparison of the two major business groups that are relatively close in time and have great spatial differences in organizational culture construction, we can find that both sides are aware of the situation where employees scattered in distant areas are prone to immoral behaviors when the feudal society is underdeveloped, and the information transmission speed is slow. In this case, in addition to the formal rules and regulations, how to use flexible things to ensure employee loyalty becomes a common problem for both groups of merchants. Behind the difference, both groups of merchants adopt the same approach, which is to build employees’ recognition of certain values with the help of local cultural resources.

Diachronic Comparison

The synchronic contrast emphasizes the contrast of different management forms at a certain point in time, while the diachronic contrast emphasizes the development and evolution of the management form over a continuous period. For example, shortly after the publication of Taylor’s Scientific Management Principles, Mu Ouchu translated it into Chinese and practiced it in his factory. From then on, to the outbreak of the War of Resistance against Japanese aggression in 1937, it constituted the first stage of Taylorism’s promotion in China. In the process, some domestic entrepreneurs paid attention to the integration with China’s actual situation and expanded and revised Taylorism. And when the People’s Republic of China was first established, we adopted a blindly following approach and learned the Soviet Union’s way of economics, introducing Taylorism again (the so-called Ma Gang’s Constitution). But in practice, this learning eventually evolved to the An Gang Constitution with distinctive Chinese characteristics. If we can compare the two practices and variations of Taylorism in China, it will undoubtedly help discover regularity in Chinese management.

3.2.3 Interdisciplinary Approach

It is generally believed that modern Western management science’s content is mainly derived from three disciplines: economics, sociology, and psychology. Economics provides rational human assumptions for Western management and the method of optimization; sociology brings the humanity assumptions of social and cultural people, the general ideas of organizations, and psychology has an important impact on Western management in terms of employee motivation.

Chinese management is less educated at the maturity level than Western management; thus, it is necessary to continuously absorb perspectives from other disciplines. In addition to finding solutions to problems in social sciences such as economics, sociology, and psychology, Chinese management needs to find inspiration in history, literature, philosophy, and other humanities, because a distinctive feature of Chinese management is to value people and focus on people, and an important function of humanitarian science is to answer the meaning of life.

4 The Significance of Studying Chinese Management

4.1 The Inevitable Choice of the World Economy Under Turbulent Conditions

Since the financial crisis in 2008, the world economy has constantly been adjusting in turmoil. Enterprises, the main components of the microeconomy, find it inevitable to create new management methods. The two problems in the Western management model determine that it must seek answers from the East and China.

4.1.1 Inherent Flaw in the Western Management Model Makes It Necessary to Seek Solutions from Management Models Outside

The philosophical tradition of individualism behind the Western management model determines that it attaches great importance to competition and ignores the important role of cooperation and harmony in human society development. Its research method based on natural science makes it too biased towards rationality, ignoring the role of human emotions and passions in management. For these shortcomings, the Western management model is constantly adjusting to achieve a breakthrough. And the starting point in the modern sense of Western management science—Taylorism is a typical representative of Newtonian physics applied in the field of management. Its emphasis on rationality, order, and efficiency has once greatly propelled the development of Western enterprises, but many problems have been exposed at the same time, such as increasing the labor intensity of workers without increasing the salary, and workers in turn were on strike to counter the implementation of Taylorism for many times. In order to solve these problems of the Taylorism, the Western management model has created the interpersonal relationship school, and began to pay attention to the needs of workers’ emotions. The related knowledge represented by Maslow’s humanistic psychology has also greatly promoted Western management models’ transformation. However, this kind of adjustment is only a tinkering work for the shortcomings of the Taylorism and leaves the Western management model’s basic characteristics untouched, which is based on rationality.

After World War II, the rise of the quantitative school made the Western management model enter the golden period once again until the Western world, especially the United States, has fallen into stagflation on a macro-scale until the 1970s. At the micro-level, American companies were pushed to corners when facing Japanese companies, forcing them to adjust one more time. But this time, it chose to seek the source of ideas from others rather than its own management model, which led to the rise of the Japanese management model. And then, corporate culture school has become a prominent school in management. Western management models’ emphasis on factors such as emotions has increased from the individual level of employees to the level of enterprises.

In the 1990s, the Western management model gave birth to a new wave of rational management model which is based on process reengineering. Actually, the essence of this adjustment was to re-optimize the traditional process in the context of the emergence of computer and network technology, where the process is still a manifestation of rational thinking. By the outbreak of the financial crisis in 2008, Western companies have faced a difficult situation once again, while China’s economy continued to improve, and a series of outstanding companies have emerged. Therefore, this fact makes it necessary for Western companies to adopt the management model of China as an important source when making adjustments to the management model.

4.1.2 Western Management Models Face the Dilemma of Diminishing Marginal Utility

When a new technology first appeared, the utility was exceptionally high, and as time passing by, the utility would gradually decrease. The same is true for management, and it must be acknowledged that the Western management model has been dominating the trend for a long time, and it has greatly promoted the development of the world economy, but we also need to notice that it face the problem of diminishing marginal utility. Taylorism solves the management problem at the workshop level in a rational way, while the quantitative school extends the rational management thinking to all aspects of the enterprise by means of operations research and other methods. The process of reengineering is to rationally rebuild the enterprise by means of information technology. It can be concluded that on one hand, every adjustment of the Western management model expands the scope of rational application in the enterprise; on the other hand, it cannot always escape its inherent limitations. Therefore, if Western management models want to fundamentally solve the problem of diminishing marginal utility, they should learn from other management models and make radical changes, and Chinese management model is undoubtedly an excellent reference.

4.2 The Inevitable Reflection of China’s Economic Miracle at the Micro-level

China’s economy has maintained sustainable and rapid growth for a long time since the reform and opening up. China’s total GDP has jumped to the second place in the world, surpassing Japan, second only to the United States. Some people even predict that China’s economic aggregate is possible to surpass the United States as the world’s number one in the near future. Many scholars try to explain this kind of economic miracle from different aspects, such as the advantage of China’s low labor cost, or China’s foreign capital and technology introduction, but one thing is certain: this miracle is supported by the outstanding performance of countless Chinese companies. Therefore, to explain China’s economic miracle, it is necessary to explore the characteristics of these enterprises in China, and their management models, how are they similar and different to Western companies, and whether these differences can explain the outstanding performance of Chinese companies. Only by finding these differences can we understand how China’s economic miracle is created, and that also enables us to foresee the challenges that China’s economy faces, so as to make pertinent adjustments and changes, and find answers to the long-term success of China’s economic miracle.

4.3 The Inevitable Result of Chinese National Culture Consciousness and Cultural Self-confidence

The so-called cultural consciousness bears the meaning of cultural self-awareness literally. According to Fei Xiaotong, the phase means that people living in a certain cultural and historical circle have self-awareness about their own culture and have a full understanding of their development process and future. In other words, cultural consciousness means self-awareness, self-reflection, and self-creation of culture. Fei Xiaotong pointed out: Cultural consciousness is an arduous process. Only by knowing your own culture, understanding and accessing the infrastructure of multiple cultures can you establish your position in this emerging multicultural world. This is done through independent adaptation, learning from other cultures’ strengths, building a common co-existing basic order, and setting an environment where multi-cultures can coexist peacefully each with their own strengths, and jointly developing the principle of coexistence. Later, the conscious process is summarized by Fei Xiaotong as Every form of beauty has its uniqueness. What’s precious is to appreciate other forms of beauty with openness. If beauty represents itself with diversity and integrity, the world will be blessed with harmony and unity.

As one of four ancient civilizations, China is the only country that has retained a complete history and has a rich historical and cultural heritage. Although in the modern era, the Chinese nation has once fallen behind, and politically, it has been once bullied by the imperialist countries. China’s economy was once left behind by the Western countries and culturally, China was forced to learn from the West. But since the founding of New China, we have gained a firm foothold in politics and found a socialist system with Chinese characteristics, which was suited to our own national conditions. We have re-entered the forefront of the world economy. Also, we have rid ourselves of the imitation of Western culture culturally. Realizing Chinese civilization’s uniqueness, we have a clearer understanding of our own cultural characteristics, and we should neither be blind nor arrogant.

Management is a product of a certain culture. Different cultures create management models with different characteristics. And even some scholars believe that management itself is a culture. Therefore, the cultural consciousness and self-confidence of the Chinese nation must also be reflected in management. In other words, we should see the strengths of Chinese management, not only to summarize our advantages but also to recognize the merits of Western management while promoting our management model to Western management scholars to achieve mutual respect and learn from each other. In this case, some scholars have suggested that we should learn from Feng Youlan’s suggestion that Chinese philosophy should shift from speaking to the example to following to speak individually and realize the transformation of Chinese management from Interpreting facts and achievements to Extending facts and achievements. This transformation should be reflected in the following three aspects (Chongqing 2011).

4.3.1 Extending Chinese Traditional Culture

The traditional Chinese culture dates back a long time ago and continues till today. The treasures of wisdom contained in it are always an important source of thoughts for the Chinese nation and the whole world. The unique management wisdom contained in this has an important role in solving the deep-rooted defects in Western management, and it is also beneficial to solve the management challenges we face today.

4.3.2 Extending Western Management Studies

This kind of continuation refers to getting rid of Western management science based on a full understanding of Western management, paying attention to China’s unique situation, and integrating the things of universal management in Western management into Chinese management practice that they can construct new regularity.

4.3.3 Extending Modern Management Practices in China

Since the founding of new China, country has also made many breakthroughs and innovations in management. For example, Mao Zedong’s An Gang Steel Constitution (two participations, one reform, and three combinations (workers participate in management, government officials participate in labor; reform unreasonable rules and regulations; combine workers, cadres, and technical personnel) and the entrepreneurial practice of Guangdong businessmen and Zheshang businessmen who have emerged since the reform and opening up. These are also the contents that we will explore and expand nowadays.

4.4 The Compelling Obligation of Chinese Management Scholars to Shoulder Social Responsibility and Historical Mission (Chongqing 2011)

4.4.1 Chinese Management Scientists Are Required to Discover the Rules, Explain Phenomena and Guide Practice the Historical Breakthroughs and Challenges Faced During China’s Economic and Social Development

As an interdisciplinary science, management has both the characteristics of natural science as well as social sciences and humanities. Therefore, management must discover laws like natural science and influence on practices through research, like social sciences and humanities. The reasons behind China’s GDP growth from none to the second largest and rules to follow at the micro-enterprise level are the questions that Chinese management scholars must answer today. Although today’s China has created an economic miracle, it still faces various challenges. To find a sustainable and healthy development path and better integrate into the wave of globalization, we should import thoughts and export our thoughts. Facing the future challenges, it is even more necessary for Chinese management scientists to actively participate in practice and guide how to do, instead of imprisoning themselves in the ivory tower.

4.4.2 Chinese Management Science Development is in a Turning Point

Management science research and management education have developed rapidly in China since the reform and opening up, and it has become a prominent and highly-focused school. From now on, all aspects of society require not only initial study, reference, and imitation, but a summary of China’s own management laws and the construction of Chinese management science. Therefore, Chinese management scholars should be aware of this demand from the practice field, actively facilitate the transformation of their roles, and devote themselves to Chinese management’s construction.

Review and Discussion

1.

What is Chinese management? Why is Chinese management not the same as ancient management?

2.

What is a management context?

3.

Why is management a social science?

4.

How to understand the similarities and differences between Western management and Chinese management in research methods?

5.

How does the concept of cultural consciousness help Chinese management?

6.

Some people think that studying management theory in China only needs to learn Western management theory and don't have to learn Chinese management. What do you think of this? Talk about your opinions.

Case of this Chapter

Kun Li, president of Shenzhen Airlines, talked about the establishment of a Chinese-style enterprise management model

One of the four inventions that propelled the development of modern civilization in the world is the compass. Its magnetic pointers were adjusted continuously with changes in the external environment, but they were always able to show direction with precision. This invention, which follows the laws of natural physics and is full of the ancients’ wisdom, brings new wisdom in corporate management to Shenzhen Airlines, promoting the philosophy and practice of Shenzhen Airlines management to create a precedent for modern enterprise management.

Simply speaking, the compass management model is a management model with Chinese characteristics, which sets the pointer as the goal, internal, middle and external disks as support and realize harmonious development of the direction, position, degree, change, and balance. Compass management is a management system consisting of a compass management philosophy and a compass management model.

The compass management model’s five major connotations are direction, position, degree, change, and balance.

The compass management philosophy is based on the traditional Chinese compass theory. The basic idea is to take the direction first, the position as the body, the degree as the method, the change to be the basis, and the balance as the key. Direction, that is to say, the goal, is the first essential point of enterprise development; the position, meaning the coordinate positioning, is to make a correct judgment for the development direction of the enterprise with accurate and reasonable analysis; the degree, in other words, the precise quantification, is to provide a solid guarantee for the development direction of the enterprise with precise and detailed rules; change, also named the dynamic innovation, means that the development of the enterprise should have substantial flexibility and adapt to the development of the times to make constant changes; balance, being the system harmony, is to realize the enterprise at the same time of development goals. Last, we must achieve a harmonious state of the internal and external environment of the enterprise. The compass management philosophy is the concept of enterprise development with its direction, position, degree, change, and balance.

The compass’s basic function is pointing out the direction, which uses the principle of like poles repel and unlike poles attract to tell the direction. The most distinctive feature is that the compass’s magnetic needle will adjust itself under all circumstances and finally point to the direction of identification without deviation. The directional characteristics of the compass are closely related to the vision and strategic management of modern enterprises. Targeting is one of the important concepts of compass management thinking in enterprises’ development and application. It combines the oriental tradition, specifies, implements the enterprise’s vision, and exerts the guiding role of direction to the enterprise.

Orientation is one of the main functions of the compass. This function is the embodiment of the traditional Chinese culture, believing that everything in the world has its place and partially is all in place. According to Book of Changes, the highest level of positioning is attaining the middle, that is, it stays where it should be. For the management of Chinese enterprises, they must also stay where it should be. With the rapid development of China’s economy and the acceleration of economic globalization, the living environment of Chinese enterprises has changed from relatively stable to dynamic, and the impact is reflected in two aspects: on the one hand, Chinese enterprises are facing more and more opportunities; on the other hand, fierce market competition has also determined that Chinese companies must change their business thinking of go with the flow. They must judge the situation and do what they can. Therefore, the guiding significance of the idea of positioning incorporates management practice is also prominent. Moreover, not only do enterprises need to be positioned, but everyone in the enterprise also needs to grasp their own development with the idea of position.

The two main categories of Chinese and Western thought, Tao and Logos, are often used to compare, and the differences between China and the West are often described as the fact that China is good at the overall abstract thinking, while the West is good at the logical thinking. However, with the development of the times, China and the world gradually deepen their understanding the traditional Chinese culture, and people are increasingly aware that Chinese thinking on the surface seems to be based on the overall abstract thinking, while being refined and rigorous in practice. The practical application of the compass also proves the existence of logical rigor in Chinese traditional culture. Chinese traditional compass circle is very complex, but the precision is very high, and each circle has a unique and accurate positioning and interpretation. The compass of this precision and rigor is the embodiment of the concept degree of enterprises’ ideological connotation. The precise and quantitative thinking embodied in degree makes management more orderly and easier for managers to control the whole management process, which is another inspiration for modern enterprise management.

A compass is a forecasting tool merging time and space. The subtle differences in location, direction, and time will cause great changes. The direct ideological basis is Book of Zhou Yi in which Yi means change, If the situation is extreme, then seek change, and change will bring long-lasting applications (Book of Changes, Xi Ci). Xi Ci comments on the basic thought of Book of Changes with life is change, which is to say that the development of all things in the universe is endless, circulating, and reforming is the origin of all things. The sixty-four hexagrams evolved from the change of Yin and Yang reflect the growth and decline of all things and the endless communication between humans, then humans and nature, and humans and the universe. Especially, Eight Hexagrams and Six Yao are not static but dynamic structures. The Six Yao lines are arranged from the beginning to the top, representing the moving process from beginning to end. When things develop to its extreme, will then go back to the beginning, and start a new round of movement. Through the so-called interaction between Yin and Yang and the Eight Hexagrams, it is fully proved that all-natural systems develop from disorder to order, and from order to disorder. Book of Zhou Yi stresses that the universe and all things can only move and change in time and are profoundly influenced by the factors of time. And if we grasp the time sequence, we can control the fate. As a dynamic and open system, the compass will also change according to the external field changes, reflecting the overall idea and change cycle in the Book of Changes. Therefore, the compass management brings another inspiration to modern management, which is the concept of dynamic innovation from change.

The concept of balance is often embodied in Chinese traditional culture. The management principles of the hexagram body must have six characters to become a chapter and be based on rigid and flexible