The Chinese touch in small industrial organizations

AuthorJin, Yaoji

Leung, Davy Hak-kim

TitleThe Chinese touch in small industrial organizations
PublisherSocial Research Center, the Chinese University of Hong Kong
Publication Date1975
Keywords:Small business

Industrial organization

Abstract/ Concluding Remarks:On the basis of the above analysis of small factories and small entrepreneurs in Kwun Tong, the authors will attempt to offer some sociological generalizations about the organizational characteristics of Chinese small factories and the management of the Chinese small entrepreneurs. These generalizations should be treated as tentative hypotheses derived from an investigation of a particular Chinese industrial community. The validity of these generalizations is to be weighted against further empirical studies.

(1) The Chinese small industrial factories are basically of a non-bureaucratic structure that tends to be conducive to the development of informal authority relationship between the owner and the workers and tends to have a "one-man” management pattern.

It is revealed that most of the small factories included in this study are of a non-bureaucratic organization in nature. In these small establishments the departmental differentiation (division of labour) is simple; the organizational activities with respect to coordination and collaboration take place basically at an inter-personal level; the basic functional unit is primarily the individual, not the "department”. The looseness or absence of department boundary makes some allowance for the interchange and shifting of duties among the members; and, this rudimentary form of task differentiation also leaves a room f o r frequent contact and interaction among the members. In this light, the organizational activities are more likely to have a relatively high degree of informality and flexibility. Also, verbal communication is the most prevalent form used in these small factories. It is found that social interactions among the members are undertaken in a direct, face-to-face fashion. In addition, the simplicity of hierarchical structure found in most of the small factories investigated makes the communication between owner and workers direct and personal. Not surprisingly, the line between “formal organization" and ''informal organization” is blurred. The managerial style or modus operandi of the owner is more or less shaped by an individual's entrepreneurial orientation. Accordingly, the culturally specific managerial behaviour of Chinese entrepreneurs in small factories becomes more recognizable.

An overlap of ownership and management exists in most of the small factories under investigation. The owners of these small establishments play an important role in managerial operations. The primary decision-maker in such a small concern is more often the owner himself than other person; the managerial apparatus is, relatively, an insignificant mechanism in the decision-making process, as indicated by the meagre number of administrative staff and the monopolized function of the owner in the decision-making process. All these instances indicate clearly that the "one-man" management is the most dominant pattern of managerial operation in the small factories.

Udy (1959) argues that the four rational elements of formal organization, namely limited organizational objectives, a performance emphasis, a segmental participation of members and a compensatory reward system, do not invariably tend to be associated with the three bureaucratic elements - a hierarchical authority structure, an administrative staff and differential rewards according to offices. In the present study, the Chinese small factories under investigation are characterized as "non-bureaucratic" in their organizational structure, and the existence of the four rational elements suggested by Udy are discernable. The small industrial undertakings included in this study are mainly concerned with the production of commodities for commercial purpose - a clearly observable objective. The participation of workers in these organizations is based on mutual limited agreement - an exchange of skills/labour for monetary reward. Also, the owners of these factories distribute reward to the employees in return for their participation in the work of the factories. The owners put a performance emphasis on reward distribution to the employees with respect to the quantity and quality of work done. Hence, the rational elements suggested by Udy do have a pronounced place in the internal organization of these Chinese small factories; in contrast, the three bureaucratic elements suggested by him are less pronounced, if not totally non-existent.

(2) In case of Chinese small factories in Kwun Tong, factory size maintains a positive association with the degree of bureaucratization.

In case of small factories investigated in Kwun Tong, factory size has a noticeable effect on the organizational attributes of task differentiation, hierarchical structure, pattern of decision-making and number of a dmini s tra tive staff. With size of the small factories being controlled according to the classification scheme containing three categories of mini-small (with 1-9 employees), midi-small (with 10-19 employees) and maxi-small (with 20-49 employees) factories, a positive statistical association between factory size and the four organizational attributes mentioned is found. The tendency is that as factory size takes a large scale, the four elements tend to become more pronounced and more probably result in a higher degree of formality and impersonalization.

(3) In the management of Chinese small industrial undertakings, the impact of familism is insignificant, if not entirely fading out of existence.

Chau (1973) argues that the most prominent feature of the small industrial undertakings in Hong Kong is the presence of familism, which indicates, (i) the merger of family and factory in terms of manpower, financial affairs and authority pattern, and (ii) the absorption of employed workers into a family environment under which the owner in many instances fulfils a "total social responsibility" for the workers. Chau's generalization on the management pattern of industrial undertakings in Hong Kong does not appear to the authors to be valid. Contrary to Chau's argument, the empirical findings of this study rev eal t hat most of the entrepreneurs in the sampled small factory have set a clear-cut distinction between their families and their business , probably except for the Chiu-chow ethnic group in most mini-small factories . The involvement of the entrepreneurs' family members in the industrial concerns can by no means be viewed as a prominent pattern. On the contrary, very few entrepreneurs would deliberately s eek the participation of their family members. It seems that the small entrepreneurs have recognized the desirability of a functional differentiation between the family and their concerns.

Furthermore, the authors find that as an employment criterion, nepotic consideration or particularistic standards favoring the employment of the entrepreneurs ' relatives, has had an insignificant place in recruitment system of the small factories in Kwun Tong. The social structure of a Chinese small industrial undertaking does not overlap with the owner's kinship network. On the contrary, not a small number of the entrepreneurs even utilize certain objective technical qualification standards as a strategy to prevent the intrusion of kinship forces into his concern. The small entrepreneurs seem to have a view that the practice of nepotism is detrimental to the effective operation of a factory. In short, it is evident that in the industrial realm of Hong Kong, the social significance of familism is diminishing.

(4) The incentive system of the small factories is partly manifested by an organizational phenomenon of “managerial indulgence”

It has been pointed out that the incentive system of the small factories is composed by two crucial parts: the monetary reward scheme and the instances of "managerial indulgence ". Managerial indulgence is defined as the owner's tolerance of the workers' deeds in the factory that lie beyond the official line of behaviour. These instances include the owner's practice of lending money to the workers, smoking in the factory premises, casual relaxation granted during the operational process, and the owner's response to the workers' personal affairs. The social significance of managerial indulgence in these small factories can be seen from two angles: (i) managerial indulgence is the behaviour consequence of an intrinsic value upheld by the entrepreneur who cherishes "human relationship" as something good in itself; (ii) managerial indulgence is the manifestation of an expedient strategy used by the owner to stabilize labour force in his small undertaking; in a way it is a practice to make small factory, vis-a-vis large ones, more attractive to the workers who realize that working condition in large factories is better but may still appeal to the informal, lax social climate in the small ones. The authors are of the impression that entrepreneurs in the small factories tend to use such a "managerial indulgence" to build up the workers’ morale and to promote a harmonious atmosphere in their plants. In this light, managerial indulgence is seen partly as the entrepreneur's strategy in managing his small concerns and it does not indicate the looseness or absence of discipline.

(5) In the socio-cultural context of Hong Kong society, the prime motive of Chinese small entrepreneurs to enter into industrial enterprise is based on an achievement orientation in which two kinds of impetus, the desire for recognition and the desire for autonomy, are of much importance.

McClelland (1960) notes that an entrepreneur as a promoter of his own career seeks recklessly to "get a head" of the others; and, a potential entrepreneur is the one who does not let the organization to define file-supervision jobs (jobs to be done according to formal procedures) for him. An entrepreneur is thus perceived as a person who often adapts his strategies to try what he thinks as worth. In the industrial sphere of Hong Kong society, acquisitiveness is not seen as something deleterious to the ethical values and individual integrity as such; acquisitiveness is, in fact, viewed as a socially approved norm in this industrial-commercial city. Owning a firm, to most of the small entrepreneurs, implies not only a self-sustained source of income but al s o an opportunity to demonstrate the owner's worth in the community. The Confucian doctrine that acquisitiveness affects personal harmony and social poise is no longer an intrinsic value as such to be upheld unconditionally by small entrepreneurs. It is questionable, to say the least, to assert that the traditional Chinese personality lacks an achievement orientation. The manifestation of such achievement orientation, in fact, had been pronounced in the traditional Chinese literati class whose members had a strong aspiration to succeed in the civil service examination. In the commercial industrial sphere of Hong Kong, the newly engaged small entrepreneurs have shown clearly an achievement orientation in an urge to establish an industrial concern of their own.

(6) The entrepreneurs in Chinese small factories do not on average have a high level of formal education. Their educational attainment relates positively to the size of factories they run. As regards their former occupation, three types can be distinguished: ascribed owner, technician/production worker and managerial personnel in other factories.

The previous analysis has shown that the educational attainment of the entrepreneurs in Chinese small factories is on the average low. However, it is worth noting that the educational attainment of the small entrepreneurs bears a positive statistical association with size of their factories. Entrepreneurs in the mini-small factories are on average educated merely to the primary level; the educational standing of entrepreneurs in midi-small and maxi-small factories is relatively higher usually to the secondary level. As regards the former occupation of the small entrepreneurs, except for those who directly inherited their factories, the other two groups of entrepreneurs - those with managerial experience and those with technical experience had been mostly former employees of some large industrial undertakings (with more than 50 employees). It is important to note that the larger industrial undertakings have seemingly performed as a socialization agency through which the ability and impulse of the entrepreneurs to set up small industrial concerns are fostered and inspired.

(7) The role of the entrepreneurs in the Chinese small factories is basically an organizational and administrative one. Their style of handling authority relations with the workers are of two patterns: the economic-rational type and the human-relation type. These patterns of management relate both to the ethnicity of the entrepreneurs and to the size of the factory.

Greetz (1963) suggested that the major innovations and innovational problems the entrepreneurs face are organizational rather than technical. In case of small factories in Kwun Tong, his proposition seems to be true. To the fact that these small factories are of a technological nature, the entrepreneurs often involve themselves in the working process. They do have a strong productive orientation. However, it is the authors' unmistakable impression that entrepreneurs in the studied small factories are essentially concerned with the over-all managerial operations of their undertakings. Indeed, organizing and managing a group of technically skilled and/or unskilled workers with different social backgrounds in a common undertaking is the crucial problem to be confronted by the entrepreneurs. The authors tend to agree with Hoselitz's observation (1960) which states that

The chief characteristics of a small industrial entrepreneur is not so much his venturesomeness, nor his motivation to make profits, but his capacity to lead other men in a common undertaking and his inclination to introduce innovations.

From this study to major patterns for the small entrepreneurs to handle authority relations in their concerns are evident the economic-rational type and the human-relation type.

The economic-rational entrepreneurs, most of whom are in the maxi-small and midi-small factories, regard the owner-worker relationship as a specific economic one. These entrepreneurs take for granted that the workers are basically "economic men"; and they do not, or would not, recognize any association with the workers beyond a specifically confined exchange relationship. The workers are seen as the occupants of roles in the production procedure, whose primary function is to fulfill the objective requirements stipulated by the factory. The economic-rational entrepreneurs adopt a disciplinarian approach in administering their workers; in a sense they place great emphasis on workers' performance and they supervise their workers in a direct, matter-of-fact fashion. The economic-rational entrepreneurs rarely take "face" (chihng mihn) as a crucial regard in dealing with the supervisees; they would not consider the personal qualities of the workers, nor would they appeal to the social attribute of "gaam chihng" between them and the workers to resolve managerial problems. To put it in a nutshell, the economic-rational entrepreneurs manage and lead their workers by employing objective and impersonal criteria to evaluate the workers' performance. Most of the economic-rational entrepreneurs are of a Shanghainese origin. The majority of them are in the maxi-small and midi-small factories.

Another pattern of management, namely the traditional human-relation approach, views the workers basically as "social men" who need a socially harmonious working environment as well as monetary reward. The key feature embedded in this approach is the emphasis on "gaam chihng" between the owner and the workers. The human-relation type of entrepreneurs, most of whom own factories of a mini-small size, see their workers as "persons" in the production process, not roles only. The performance of the workers are to be assessed with reference to their personal qualities in addition to the objective requirements. With respect to supervision, the traditional human-relation entrepreneur would make allowance for some particularistic behaviour to come into the scene, e.g. "giving face" to the malconducted ones with regards to their seniority, etc. However, the authors are of the opinion that such a particularistic behaviour pattern results partly from a value orientation which cherishes a harmonious owner-worker relation as an intrinsic value in itself and partly from the owners' expedient rationality to "smooth" the work morale in the plants. Most of the entrepreneurs with a human-relation approach in managing their undertakings are Cantonese; and, a substantial portion of them are engaged in factories of a mini-small or a midi-small size.

(8) In maintaining business relationships with other people the Chinese small entrepreneurs tend to place great stress on economic rationality. Economic rationality in due course supersedes the Chinese general value orientation of a diffuse and particularistic nature.

This economic rationality encompasses three organizational principles upon which the entrepreneurs maintain their business relationships: (i) a conscious differentiation between functionally diffused social relations and functionally specific economic relations; (ii) an emphasis on the universalistic value of "seun yuhng" - credit in fulfillment of contractual terms in a deal; and (iii) a rationalization or rational use of "gaam chihng" - affectivity in facilitating transactions. It seems to the authors that the Chinese small entrepreneurs in the sampled factories have consciously separated economic relations from general social relations. While the former relations are primarily based on rational calculation and on the logic of market or efficiency, the latter places emphasis on social obligation and cultural-ethical considerations. Most of the small entrepreneurs have demonstrated their belief that separating economic relations from social relations is a functional requisite for operating an industrial concern in Hong Kong. They are inclined to think that business relations can only be firmly secured in contractual terms, i.e., on impersonal and universalistic basis. It does not mean that particularistic standards are absolutely abandoned; but it is a conceivable trend that the universalistic standards supersede the particularistic ones in business process. Silin’s assertion (1973) that universalistic criteria constitute an important aspect of Chinese economic behaviour is confirmed in this study. It is interesting to note that after having kept the universalistic standards intact, the Chinese small entrepreneurs tend to view particularistic behaviour as something acceptable on occasion. However, such particularistic standards constitute only an optional element in the social process and can hardly be viewed as an indispensable element in the business relationship.
NoteBibliography: leaves 80-82
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