The organization and management of factories in Kwun Tong


Mok, Victor

TitleThe organization and management of factories in Kwun Tong
PublisherSocial Research Center, the Chinese University of Hong Kong
Publication DateJune, 1973
Keywords:Industrial management

Factories; Kwun Tong

Abstract/ Concluding Remarks:The theory of organization has been of great interest in the economic and sociological literature. At the micro-level, an organization is a social unit deliberately set up for the purpose of achieving specific goals. Our interest here is with a special type of economic organizations, namely factories. We wish to investigate their behavior in a period of social change, modernization as it is usually called, in which organizations are striving for rationality and efficiency. It is in this that they cannot be taken out of their social context. The development of organizations is in fact part of the modernization process, and the construction of new organizations is also circumscribed by longstanding socio-economic confines. Therefore, the study of organizations in connection with modernization must be a comparative one. We could either trace the impact of social change on organizations by studying their life-history, or by taking a cross-section of organizations we could compare their behavioral patterns according to their stage of development. We have chosen the second approach.

In this study of Kwun Tong factories, we compare the organizational and management patterns of "modern" and "traditional" ones. A working hypothesis is that the large factories are the modern ones. Of course this is not entirely correct because size is only one factor. We should also consider another important factor -- technology, which unfortunately is very difficult to quantify. However, when we use size as a variable, elements of technology have already been imputed into it as size generally does correlate positively with the level of technology. In addition, the range of technological differentiation in our study is perhaps not as wide as one might imagine. Remember our sample was from the "registered" factories. By virtue of this, we have already excluded the household factories and those working under the putting-out system. Even the very small ones we have in our sample are of urban-located types, powered by electricity and equipped with machine tools. In an economy like Hong Kong, the diffusion of technical know-how is also much less of a problem. Therefore, their technological difference with the large factories is to a considerable extent embodied in size differentiation. This turns out to be quite true in our findings.

Another basis we use for comparison is the cultural background of factory proprietors. As Hong Kong is largely a Chinese society, changes in the organizational and management patterns of its Chinese factories are manifestations of a traditional society in rapid transition under the impact of modernization. But the non-Chinese factories are different; basically they are direct transplants from societies which have already gone through this process. Thus, a comparison not only shows the basic difference between these two groups of factories, but also the extent to which the Chinese factories have changed in the direction of modernization.

To paraphrase from Amitai Etzioni, an organization is characterized by the existence of a power center directing its goal-achieving activities, internal relationships defining its division of power and labor, and rules regulating its personnel changes. In other words, there is a management apparatus, an organizational structure, and mechanism for personnel deployment. These are the major facets included in our analysis to bring out the contrast between the "modern" and "traditional" factories.

Needless to say, "modern" and "traditional" are very simple and ideal-typed descriptions. We should pursue further to specify their more concrete attributes. Traditionalism in factory organization and management is characteristic of its kinship ascription. The family remains to be an economic unit of production; even when there is a considerable number of outsiders working along with its members, the latter group always has prerogative on basic decisions regardless of achievement. Family (or kinship) favoritism also prevails in the recruitment of new personnel. The transformation of a traditional society into a modern one leads to a gradual fading of these patterns. Kinship relations may endure in some more advanced form, corporate ownership for instance, but the family ceases to be an economic unit of production. Increasingly, ascription gives way to achievement until the "institutionalization of rationality" takes over. It is at this stage that we find organizations in their modern form.

According to Wilbert Moore, a large and modern organization should have the following attributes: there is a hierachy pyramid of authority, an internal regulatory structure independent of particular persons, a complex communication network, and decisions are regulated by norms of rationality. What these amount to is what Max Weber called a bureaucratic structure, the detailed features of which are summarized by Amitai Etzioni as:

1. A continuous organization of official functions bound by rules;
2. A systematic division of labor, rights and power;
3. The organization of offices following the principle of hierachy;
4. The root of authority based on knowledge and training;
5. Separation of management and ownership;
6. Control not monopolized by any incumbent; and
7. Administrative acts, decisions and rules formulated and recorded in writing.

It is along these general lines we conduct our comparison and summarize our findings.

First, we find that size is indeed a very important factor in determining the behavioral pattern of factories. In virtually all aspects of our investigation, the large factories are those with attributes characterizing the modern ones. They have more complex organizational structures and better-defined division of labor. Internal matters, like communication, are conducted through formal channels, and there are more systemized schemes for promotion and salary increase. Even though the public joint-stock company is not a common form of factory ownership in Hong Kong, the large factories are increasingly moving in the direction of partnerships and family proprietorships. Management and decision-making are no longer entirely under the jurisdiction of the proprietors and their kinsfolks; teamwork and consultation have a very important role to play. In addition, top management has become a well-developed apparatus which continues to function and takes over the responsibilities in the absence of the proprietors. In other words, there exists an automatic mechanism providing a smooth transfer of authority -- the so-called "sucesssion crisis" is not much of a problem. And furthermore, personal relations have only a very limited scope in which to operate in the recruitment of personnel. Instead, employees of all categories are recruited mainly through the impersonal means of the market mechanism. Also in general, welfare and benefit provisions are better and more regularized. It is in all these we observe a remarkable contrast with the small factories, which are pre-dominantly under single proprietorship. Not only proprietors, their kin-folks and personal relations remain to be the core of management and decision-making, but also there is a very simple organizational structure with little clear-cut division of labor and power. In many respects, businesses are conducted informally with no prescribed mechanism for tackling problems systematically. In short, the distinction between the large and small factories correlates very well with the dichotomy between the modern and the traditional sector.

Second, in almost all respects, we observe the non-Chinese factories are more "modern" than their Chinese counterparts. A meaningful comparison, however, should be made on the basis of equal size, as in average the non-Chinese factories are larger so that the real difference might be distorted by the size effect. In so doing, we still find that it is generally true. With respect to organizational complexity, there is a big difference between the small factories of these two groups, but the large Chinese factories are at least as complex departmentally and hierarchically as the non-Chinese ones. The recruitment practices for administrative and clerical personnel are also more formal and impersonal among non-Chinese factories, and again even bigger differences are found in such practices between the small Chinese and non-Chinese factories. As for management, decision-making and communication patterns, the Chinese factories are more informal and still attach greater weights to personal relations. The overall picture is then the Chinese factories are indeed more adhered to traditionalism, and especially the small ones. In considering whether the non-Chinese factories are really more modern, we should take note of their particular situation in the local setting. We have used the higher degree of organizational complexity and procedural formality as indications of modernity. But these may also arise out of necessity rather than organization and management attitudes attributable to cultural differences.

As foreigners operating businesses in Hong Kong, the non-Chinese proprietors inevitably have to face the language barrier. In addition, their personal relations are much more limited in scope, so that they have less to rely on even if they want to. These will necessitate more complex organizations and formal procedures in comparison with the Chinese proprietors. This contrast will be more marked for the small factories because on the one hand such problems tend to be more acute with the small non-Chinese factories, and on the other hand the small Chinese factories are indeed the traditional ones.

Third, within the Chinese group the difference between the small and large factories is similar to that between the small and large ones in general. We observe that the educational background of the Chinese entrepreneurs correlates positively with factory size, so that it is not possible to identify its independent effects. In general, it is the small Chinese factories that constitute the traditional sector. Especially among the very small ones, many of them have yet to extend beyond the family. Proprietors, their spouses and kinfolks are still the nucleus of management and decision-making, and there still exist many traditional practices such as traditional apprenticeship, the provision of lunch and accommodation, and close personal ties. On the contrary, the large ones are quite modern by our criteria except in one respect, namely the employment of administrative personnel. It is here that we see remains of the extended family and native groups. Even though these close friends and relatives may not hold top management positions or share decision-making responsibilities, their personal relations with proprietors place them high in line of trust. The relatively large number of these people in a large factory, strategically deployed in various departments and administrative levels, indeed goes very far in safeguarding the interest of the proprietor in addition to whatever merits these people may have with respect to achievement. In the process of transition to modernity, this practice seems to have its passing value before the "institutionalization of rationality" finally materializes. The process of mental adjustment is also lagging. There is no doubt that in practice the Chinese entrepreneurs can readily adjust to the ever changing environment under rapid industrialization. They are a pragmatic group -- they accept what they have to and react accordingly. It is a matter of survival. However, regardless of the degree of their success, they still avert from the concept of risk-taking, or at least the idea of it. It is interesting to note their lingering reservations on profit-seeking. Even though it has become a fact of life in their everyday business endeavor, the traditional Chinese attitude of looking down upon profit-seeking has not entirely faded out of their mental process. Perhaps this is a way of seeking refuge from the highly competitive world to which they are only recently exposed. What is even more interesting is that the more successful and better educated they are, the less inclined they are to admit that the traditional ideas are incompatible with profit-seeking activities in an industrial-commercial society. Inconsistent as you might call it, they seem to enjoy the best of two wor1ds. In all, traditionalism certainly dies hard.
NoteBibliography: leaf 65
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