Confucianism, socialism, and capitalism: A comparison of cultural ideologies and implied managerial philosophies and practices in the P. R. China

Human Resource Management Review 22 (2012) 165–178

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Confucianism, socialism, and capitalism: A comparison of cultural ideologies and implied managerial philosophies and practices in the P. R. China Baiyin Yang ⁎ School of Economics and Management, Tsinghua University, Beijing, 100084, PR China

a r t i c l e

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Keywords: Confucianism Socialism Capitalism Cross cultural management P. R. China

a b s t r a c t This article posits that management theories and practices in the P. R. China have been influenced by three cultural forces: Confucianism, socialism, and capitalism. It explores the impact of the three ideological systems, cultural values, and beliefs on managerial philosophies and practices. It is suggested that contemporary organizational behavior and management practice in the P. R. China tend to reflect ideologies of three cultural forces. © 2012 Elsevier Inc. All rights reserved.

1. Introduction Cross-cultural study of management, as an area of intellectual and academic study, has existed for many years. There are no lack of theories and models explaining organizational behavior and managerial practices across different cultures and unique aspects of the Chinese culture (see a comprehensive review by Peng, Lu, Shenkar, & Wang, 2001). Yet a well-developed paradigm to create coherence in cross-cultural study is still lacking. Concerns have been raised as to whether or not modern organizational concepts developed in Western culture are applicable to the Chinese context (Chinese Culture Connection, 1987; Miner, Chen, & Yu, 1991; Nevis, 1983). Studies on Chinese management are particularly problematic because the Chinese culture as a construct in the social and behavioral sciences is reflected in different geographic regions (e.g., Hong Kong, P. R. China, Taiwan, and Singapore) as well as in different economic and political systems. It is more troublesome for some foreign researchers to understand different economic forms in the P. R. China—private firms, state-owned enterprises (SOEs), and foreign-owned and joint ventures. Contemporary studies of organizational behavior on greater China tend to neglect cultural differences within the area and lack a dynamic perspective of cultural change (Peng et al., 2001). Culture has long been considered one of the significant determinants for organizational behavior and managerial practice (Hofstede, 1980; Peng et al., 2001; Triandis, 1995). At the surge of globalization and new economics, it is crucial to understand the diversity of culture and how it impacts on management theories and practices. There is an abundance of literature on the concept of culture and cross-cultural study of organizational behavior and managerial practice (Lytle, Brett, Barsness, Tinsely, & Janssens, 1995; Peng et al., 2001). One timely approach is to investigate Chinese culture and implications for management in areas conceptualized in the Western literature, such as entrepreneurial orientation (Lee & Peterson, 2000; Tan, 1997), motivation (Miner et al., 1991; Nevis, 1983), organizational design (Vertinsky, Tse, Wehrung, & Lee, 1990), work value and human resource management (Pelled & Xin, 1997; Ralston, Gustafson, Terpstra, & Holt, 1995; Warner, 1996), and strategy management (Peng & Heath, 1996; Tan, 1997). Another approach is to examine certain unique Chinese concepts related to organizational behavior, such as guanxi (Luo & Chen, 1997; Tsui & Farh, 1997) and Confucian work dynamism (Chinese Culture Connection, 1987). However, a comprehensive framework explaining organizational behavior is not readily available. Furthermore, many have believed that there is a “Chinese culture” available

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for us to conduct research on and understand. However, P. R. China is so vast and complicated that no single version of cultural description can grasp its complexity. For instance, the prevailing wisdom hypothesizes that financial incentives will have less impact on Chinese employee motivation and productivity than on their American counterparts (Earley & Singh, 1995; Pelled & Xin, 1997). This hypothesis is based on the belief that a masculine cultures tend to have greater demands for remuneration. Contrary to the above hypothesis, empirical evidence shows that the Chinese prefer differential reward rules, and are more economically oriented than are the more humanistically oriented Americans (Chen, 1995). Due to the dramatic reforms and changes that have occurred in China, Chinese culture is changing, and it has multiple facets. In other words, we need to study several dominant cultural forces and explore how these forces have influenced managerial philosophy and practice in today's mainland China. In this paper, I will first identify key cultural dimensions that influence philosophy and practice of management and organization in contemporary Chinese society. Second, I will use P. R. China as an example to illustrate the influences of cultural ideologies on management practice and organizational behavior. It is posited that culture is a dynamic and fluid concept and that all cultures are changing at different speeds in different directions. I will identify ideological differences, cultural values, and beliefs among three dominant cultures—traditional (Confucianism), socialism, and capitalism. Third, I suggest that contemporary organizational behavior and managerial practice can be understood through dynamic relationships among three cultural forces. I will base my argument on observations and secondary analyses in a “hybrid form” (Earley & Singh, 1995).

2. Cultural forces and their impacts 2.1. Cultural and cultural dimensions What is culture? Culture is one of the key concepts for understanding international or cross-cultural studies of organizational behavior and managerial practice (Maznevski & DiStefano, 2000; Peng et al., 2001). Culture has been generally conceptualized as a complex set of norms, values, assumptions, attitudes, and beliefs that are characteristics of a particular group (Lytle et al., 1995). Triandis (1993) maintains that culture is the group's strategy for survival and it constitutes the successful attempt to adapt to the external environment. It is generally accepted that culture represents “software of mind” (Hofstede, 1991, p. 3) rather than hardware. For the purpose of consistency, I define culture as a complex set of beliefs, values, and social norms shared by a group of individuals. Here, culture is regarded as a complex system with three interrelated sub-systems: values, beliefs, and social norms. The above definition of culture, as a social construct with three major components, attempts to clarify potential confusion around the concept. There have been many conceptualizations of culture in various forms and terms. Among the reasons for this diverse conceptualization of culture and cultural dimensions is the lack of an agreeable definition of culture itself. An ordinary definition of culture normally consists of many interrelated terms. The current definition posits that there are three basic components of culture: values, beliefs, and social norms. According to Kluckhohn (1951),“A value is a conception, explicit or implicit, distinctive of an individual or characteristic of a group, of the desirable which influence the selection from available mode, means, and ends of action” (p. 395). A belief is an explicit conception that has been viewed as a representation of reality, while social norms are conventions, habits, and behaviors of individuals or groups evident in their daily lives. The above distinction among the three concepts, values, beliefs, and norms, suggests that culture consists of three distinctive but interrelated components. The values component reflects what is important for an individual or group of individuals. A value system distinguishes good from bad, right from wrong, and “ought to” from “ought not to.” The beliefs component indicates what is true among human beings' conceptions, and distinguishes this truth from falsehoods. The norms component consists of unspoken conceptions about behavior in daily practice. For instance, one expects to use chopsticks rather than a fork and knife when dining in a Chinese restaurant in Beijing. Rokeach (1973) compared the relationship of values to an individual's belief system and definition of self. He contends that values imply a preference pattern and a conception of preferability. Values emphasize the desirable rather than something that is merely desired. What are culture dimensions? Because culture is a complex concept, and there are many ways to define and examine this concept, it is necessary to break the complex concept into explicable and operational dimensions. The dimensions are used to reflect different aspects of the construct of culture. Here, dimensions are referred to as “components that cannot be easily subdivided into additional components” (Bollen, 1989, p. 180). Tayeb (2001) points out that breaking down culture into its constituent dimensions has certain merit in facilitating cross-cultural studies. There are many approaches to define cultural dimensions and to study cultural differences. Kluckhohn and Strodtbeck (1961) suggest six cultural orientations: (1) relation to environment; (2) relationships among people; (3) human nature; (4) activity; (5) time; and (6) space. Perhaps one of the most popular classifications of cultural dimension is that proposed by Hofstede (1980). Based on factor-analytic techniques with a dataset from employees of a multinational company, Hofstede (1980) suggested four dimensions underlying organizational behavior: power distance, individualism, masculinity vs. femininity, and uncertainty avoidance. A fifth dimension, long-term orientation, was added later (Hofstede & Bond, 1984). Organizational behavior and managerial practice, which tend to be the subjects of many cross-cultural studies of management, can be regarded as sub-dimensions of social norms because they are reflective of certain behavioral patterns within organizations or societies. Consequently, the following analysis on cultural dimensions will focus on two major cultural systems—values and beliefs. Table 1 lists several basic cultural dimensions within two subsystems.

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Table 1 Identification and definition of cultural dimensions. Cultural dimensions Belief system Nature of human beings Religious faith Nature of knowledge Nature of change Motivation of human beings Value system Relation to natural world Relation among people Priority of activities Basis of moral standard Priority along time Ideal & vision

Definition What is the basic and underlying nature of humans? Is there a superpower (e.g., God) external to humans? Can human beings objectively know the natural world? What is the nature of changes around human beings? What is the basic motivation of human beings? How important is human beings in relation with the natural world? How important is individual vs. group accomplishment? Which of the basic mode of human activity that contributes to accomplishment most, thinking, feeling or doing? Where do human beings establish moral standard? Or should moral standard be based on reasoning or feeling? What is most important human beings along the time, past, present or future? What is ideal state of human beings?

2.2. Cultural influences on managerial philosophy and practice The concept of culture has received a great deal of attention in the management literature (Earley, 1997; Hofstede, 1980; Lytle et al., 1995; Peng et al., 2001; Triandis, 1995). It is generally agreed that managerial philosophy and practice can be understood as a function of cultural factors. Similarly, culture also influences organizational behavior. Here organizational behavior can be loosely defined as an approach to organizations and management shared by a group of people within a certain geographic area. Cultural and social variables have dynamic relationships and they have direct impact on organization behavior. On one hand, cultural factors and social variables determine managerial philosophy in general and organization practice in particular. Managerial philosophy and practice are viewed as parts of organizational behavior at the national/country level. On the other hand, organizational behavior has reinforcement functions that perpetuate its context, such as cultural and social structures. Lytle et al. (1995) suggest that cultural orientations are reinforced and perpetuated through socialization, training, rewards, and sanctions. While the dynamic relationship between culture and management can be examined through various perspectives, this paper will mainly focus on three dominant cultural ideologies and their influence on organizational formation and transformation in the P. R. China. 2.3. Chinese culture as a result of three competing ideologies Three major competing and merging ideologies, Confucianism, socialism, and capitalism, have shaped Chinese culture. Culture as a concept is so close to ideology that sometimes they have been used interchangeably. Viewing culture as a social construct with different elements, this paper examines ideology in two major cultural components, values and beliefs, and their impact on the third cultural component, organizational institutions and behaviors. Ogden (1989) suggests an approach that examines issues in the P. R. China in terms of cultures: tradition, socialism, and development. She maintains that “the interaction of these three variables permits us to merge historical, cultural, economic, political, and social factors, and to see from this just how rich is the mosaic that today is China” (p. 352). This paper examines capitalism as a culture [ideology and implied managerial practice] instead of “development” for the following reasons. First, Western liberal conceptualizations of development tend to associate economic growth with a capitalist approach. Capitalism as an ideology has existed long enough for us to examine its underlying values, beliefs, and implied organizational practices. Thus, capitalism is a better term than development for theoretical analysis. Second, the P. R. China has in practice been borrowing managerial approaches mostly from those capitalist economies. Even though the term “capitalism” has been carefully avoided in the media and official documents, and replaced with the phrase “international developed nations” for political and ideological reasons, there is no doubt that nearly all of the developed nations have been largely influenced by capitalist ideology. Third, development has different meanings and interpretations according to various values and beliefs. It is almost impossible to predict the actual developmental direction for the P. R. China, and for virtually every nation, because the factors influencing development are so complicated. However, China will clearly tend to form its unique developmental direction under the influences of traditional, socialist, and capitalist values and beliefs. It is unlikely, and in fact impossible, that China will simply copy the developmental model of those capitalist nations. However, capitalism will have strong influence on its aspiration and development. According to Ogden (1989): “China's achievements must be judged by criteria appropriate to a developing country with socialist and traditional Chinese cultural values” (pp. 4–5). The three main cultural ideologies followed different historical trajectories in the P. R. China. The first ideology, Confucianism, was firmly established as a predominant creed in Chinese history and may be the most representative of Chinese culture (Xing, 1995). It is a very common belief that Chinese culture is almost equated with Confucianism (Xiong, Luo, & He, 1997). This paper refers to traditional Chinese culture interchangeably with Confucianism. The second ideology, socialism, was the dominant dogma and has been institutionalized for at least thirty years since the communist party took power in 1949. Even though it continues to influence the Chinese daily, and will to a certain extent in the foreseeable future, its orthodox ideology was challenged and thus began fading in late 1980's when China initiated economic reform and an open-door policy. The third ideology, capitalism, was

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regarded as evil during the socialist movement. Since the economic reform, it has been recognized that certain capitalist elements such as free market and financial incentives could not be eliminated, and that China has to borrow the advanced managerial theories and tools of capitalism. In fact, some social and managerial aspects tend to be more capitalist in certain parts of the P. R. China than in capitalist countries. 3. Cultural values and beliefs as ideologies Based on the previous arguments, it is imperative to examine three competing cultural forces in the P. R. China. Table 2 identifies the characteristics of Confucianism, socialism, and capitalism on major dimensions of value and belief systems. It should be noted that these characteristics have been identified largely based on normative analysis rather than empirical data. In reality, a pure socialist society does not exist. No matter how much effort was devoted to “cut the capitalist tale” [in Mao's terms] during the Cultural Revolution, free-market values could not be gotten rid of completely. On the other hand, nearly all of the capitalist societies have some degree of socialist measures in terms of government intervention into the free economy and increasing social welfare programs. Thus, we should analyze the essence of culture—cultural values and beliefs—viewing culture as ideology first and then examining implied managerial practices. 3.1. Belief system This paper argues that beliefs are different from values. The value system concerns priority or importance, while the belief system determines what is true in the world. Therefore, the belief system is composed of basic assumptions about the natural world and human beings. These assumptions are basic and fundamental hypotheses that cannot be easily proven to be true or false, and thus human beings have to accept certain assumptions in order to act. Human beings have to hold some basic beliefs as guidelines for their thinking and actions. These beliefs have the same function as axioms in mathematics. Even though no one can, or has even tried, to extend two parallel lines into infinity, it is generally accepted that they will not meet. This belief provides one of the fundamental axioms for the Euclidean geometry. However, non-Euclidean geometry has been developed based on other beliefs [e.g., two parallel lines will cross eventually]. Thus, the belief system includes basic assumptions about the natural world and human beings that cannot be easily tested. While the value system reflects the priorities of an individual or a group of individuals, the belief system contains views about the natural world and human beings. At least five dimensions can be identified to examine cultural beliefs: human nature, religious faith, the nature of knowledge, the nature of change, and human motivations. The first dimension of the belief system is the nature of human beings. Capitalism is built on the Western traditional assumption that the basic nature of people is essentially evil. This was probably due to the Christian influence that accepts mankind as a result of eating the fruit from the tree of good and evil. On the contrary, the Chinese belief about human beings tends to assume that the basic nature of people is essentially good, or at least is changeable. Confucianism assumes that evil comes about later in life (ren-zi-chu, xing-ben-shan, i.e., a human is born with goodness). Socialism recognizes an evil part of human beings and believes that most are capable of being educated toward good. Based on the doctrine of class struggle, socialist practice normally views oppressors as evil and thus they need to be sent into labor camps for re-education in order to become a “new person.” The second dimension of the belief system is related to the first one. One's religious faith is one of the fundamental keys to one's basic assumptions about the world and his/her actions in daily life. Capitalism grew from the Western culture that seems to have a strong religious faith. Though there are different kinds of religions, the major religion in the Western world is Christianity. Christianity views God as a single superpower external to human beings. Instead of arguing that Christianity is the necessary condition for the capitalism, the paper points out that religion has played an important role in capitalist development. The traditional Chinese religion did not have such a belief about a single superpower. The Chinese word for god, shen, has many meanings rather than being attached to one superpower. Shen means god or divinity; it also means anything that is mysterious, marvelous, or supernatural.

Table 2 Comparison of three value and belief systems as cultural ideologies. Cultural dimensions Belief system Nature of human beings Religious faith Nature of knowledge Nature of change Human motivation Value system Relation to natural world Relation among people Priority of activities Basis of moral standard Priority along time Ideal & vision

Confucianism

Socialism

Capitalism

Naturally good No single superpower Subjective, situational truth Cyclical change Spirit

Class-bond No religious faith Subjective, positional truth Linear & cyclical Spirit

Naturally evil Single external superpower – God Objective, absolute truth Linear change Material

Harmony Hierarchical Being and doing Feeling Past oriented Harmonized society

Mastery Collectivism Doing and being Common good Future oriented Communism

Mastery Individualism Thinking and doing Reasoning Present oriented Developed individuals

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In the Chinese literature of mythology, there are many gods that hold power over human beings. For example, there is guan-yin who takes care of human reproduction, and there is guang-ti who is in charge of war affairs. As far as socialism is concerned, no religious faith was believed and no religious practice was allowed. The third dimension of the belief system concerns the nature of knowledge. Western culture has leaned heavily toward a rational tradition, which views knowledge as objective and that reality exists independently from mental representations of the world. Such tradition also posits that logic and rationality are formal and that intellectual standards are not arbitrary. This tradition maintains a view of absolute truth about the world. The traditional Chinese view of knowledge is subjective and has an instrumental function. The subjective view posits that knowledge is contextually based and thus truth is situational. Different perspectives on the nature of knowledge are related to views about reality. The objective perspective of knowledge might be a result of a view of a single reality, which is assumed to be created by a single superpower, and to have consistent and lawful relationships among its elements. The subjective perspective of knowledge views multiple realities and implies an interpretive approach to the natural world (Roth & Yang, 1997). Socialism accepts the subjective view of knowledge and views that it is created according to one's social and political position, such as status or class. Therefore, truth is subjective under socialism, and the concept of positionality is the key to understanding relative truth. The fourth dimension of the belief system is about change in the natural world. Marshak (1994) compared the organization development (OD) model of change popularized by Lewin to the model based in East Asian and Confucian cultural tradition. Different assumptions about change are revealed. The author contends that the Western OD approach is grounded in certain beliefs and assumptions that view change as linear, progressive, destination or goal oriented, based on creating disequilibrium, and planned and managed by people who are separate from, and act on, things to achieve their goals. On the other hand, the Eastern model comprises beliefs and assumptions that change is cyclical, processional, journal oriented, based on maintaining equilibrium, and observed and followed by people who are one with everything, and must act correctly to maintain harmony in the universe. Beliefs and assumptions about change are related to the belief dimensions previously discussed. Western culture holds that there is a single best reality [created by God] for humans to achieve in a forward-moving way. Eastern culture assumes multiple realities, and that there is no best or better mode of change. For example, Taoism emphasizes that there is a constant ebb and flow to the universe and everything in it is cyclical. There is a Chinese saying: tian-bu-bian, tao-ye-bu-bian (i.e., nature is not changing and so the Tao remains constant). Socialism views the nature of change as a combination of linear and cyclical. Overall the world is changing in a linear fashion, from primitive communism to slavery, feudalism, capitalism, socialism, and then to communism. The fifth dimension of the belief system relates to the inherent motivation of human beings. Based on the assumption that human beings are inherently evil, Western culture presumes a materialistic motivation. Thus, capitalism tends to largely rely on materialistic motivation. Individual interests tend to be legitimate, and thus a conflict of interest is acceptable. Eastern culture, particularly Confucianism, however, maintains that the essence of human kind is in its spirit. In the case of conflict between material and spirit, people should pursue the spiritual direction rather than the material one. Eastern culture recognizes that people might be seduced by the materialistic world and by selfishness and so calls for self-control and cultivation. There is a Buddhist scripture that captures such a view: ku-hai-wu-bian, hui-tou-shi-an (i.e. the materialistic sea is endless, coming back [to be the good one] you can reach the shore). It is virtuous to have moral discipline and to impose self-control (Chinese Culture Connection, 1987). In the battlefield, Western soldiers are instructed to protect themselves, while Chinese soldiers are educated to she-shen-qu-yi (i.e., sacrifice your body for justice and righteousness). The socialist belief of human motivation tends to be similar to that of traditional Chinese culture.

3.2. Value system Six major dimensions within the value system are interrelated factors that influence individual and organizational behaviors. The first dimension is a human being's relationship with the natural world. Kluckhohn and Strodtbeck (1961) suggest that there are three possible values attached to the relationship between human beings and the environment: (1) subjugation assumes the role of understanding and subjugating ourselves to the plan determined by a larger natural or supernatural element; (2) mastery calls for control over nature and the environment around us; and (3) harmony requires us to maintain a balance among the elements of the environment in relation to human beings. Capitalism was established in the Western culture, which places value on mastery, while the Eastern culture emphasizes harmony. Traditionally, the Chinese view harmony as the ultimate goal of humankind (i.e., tian-ren-he-yi or the great harmony between humanity and nature). Like capitalism, socialism places value on mastery but emphasizes that all of society, not just a few elite, should be masters of the world. The second dimension within the value system is the relationship among people. Kluckhohn and Strodtbeck (1961) point out three orientations along this dimension: individual, collective, and hierarchical. The individual orientation maintains that our main responsibility is to and for immediate family and ourselves. The collective orientation assumes that our main responsibility is to and for a larger extended group. The hierarchical orientation upholds that it is normal and good that power and responsibility are unequally distributed throughout society, and are stable over time. Hofstede (1980) posits that this dimension is a conglomeration of values concerning the relationship of a person to his or her collective or group. There is no doubt that capitalism is characterized by individualism, while Chinese traditional culture is typified as hierarchical based on Confucian doctrines. Beliefs of Confucianism state that social stability is the foremost value and it can be achieved via unequal relationships between people. Five basic principles (i.e., wu-lun) define desired relations between ruler and subject, father and son, older and younger siblings, husband and wife, and older

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and younger friends. Socialism was based on collectivism, and committed to communism in theory, but was hierarchical in reality. In general, most socialist countries have displayed a high level of collectivism (Peng & Heath, 1996). The third dimension within the value system is the perceived importance among various activities conducted by human beings. Kluckhohn and Strodtbeck (1961) contend that the activity dimension is concerned with the most basic modes of engaging in activity. Three orientations have been suggested: doing, thinking, and being. The doing orientation maintains that our natural and preferred mode of activity is to be continually engaged in accomplishing tangible tasks. The thinking orientation maintains that our natural and preferred mode of activity is to consider all things carefully and rationally before taking action. The being mode is to do everything in its own time. Capitalism seems to place priority on thinking and then doing, Confucianism's emphasis is on being and doing, and socialism puts priority on doing and then being. Thinking is the least preferred in socialism because it assumes that great thinkers such as Marx, Lenin, and Mao had outlined an ideal society. The fourth value dimension is the basis of moral standards. The first three dimensions offer explicit and implicit standards for individual and group judgments, while the fourth one suggests preferred ways of making a moral judgment. Wilson (1993) argues that there are four universal morals shared by all people: sympathy, fairness, self-control, and duty. The Western culture, soil for capitalism, tends to use reasoning as a tool in making moral judgments (Kohlberg, 1969) and is concerned with different levels of judgment: good, right, and “ought” (Girvetz, 1973). Consequently, the Western moral standard leans to fairness and contractual duty among societal members, i.e., equality. Chinese traditional culture tends to view sympathy and self-control as the moral standard and socialism places common wellness as the moral standard, and at the same time it has to rely on certain doctrines in reality. However, the main concern of these two ideologies is equity instead of equality. Capitalist societies such as the United States tend to establish moral standards on reasoning and rationality. Earley (1997) contends that: “if one examines the icons of American society, it is easy to observe such figures as Madonna, Mick Jagger, O. J. Simpson, and Bill Gates and it is much more difficult to take notice of those responsible for social concerns and values. Thus, lian [concerns the rules underlying moral character and basic ethics] is viewed as somewhat important to the extent that it is instrumental in maintaining an edge over one's competitors” (p. 205). The fifth dimension in the value system is the priority along time, and it directs our main concerns and energy along the nature-time framework. Kluckhohn and Strodtbeck (1961) list three orientations along this dimension: past, present, and future. The past orientation posits that the past, and past precedents, provide the best models for how we should look at decisions today. The present orientation maintains that today's needs are the most important and should be met regardless of past patterns or future possibilities. The future orientation argues that we should look toward the long-term future and sacrifice what we need to in order to achieve our future goals. While capitalism is present-oriented and socialism tends to be future-oriented, Confucianism emphasizes the past mode with regard to time orientation. The traditional Chinese culture views time as a process of eternity, and it succeeds the past oriented mindset and behavior (Xing, 1995). The difference of time orientation between intrinsic value and consequence should be noted here. Socialism has a strong preference for the long-term future [e.g., to build a communist society] but in reality many of its long-term plans tend to be impractical and invalid. A common slogan in the P. R. China was “production first, life later” [xian-shen-chan, hou-shen-huo]. This approach worked well when the central planning system was initially built on a market foundation. However, the central planning system failed to continuously maintain productivity because production was not driven by the consumers' needs. On the other hand, capitalist production tends to meet consumers' present needs, and producers tend to have long-term plans based on various rational forecasts. Therefore, capitalism places a strong present emphasis on consumption and future emphasis on production with regard to time orientation. Weber (1904/1930) asserted that “time is money” for the Protestants. Time orientation is somewhat related to religious beliefs. Weber contended that: “Waste of time is thus the first and in principle the deadliest of sins. The span of human life is infinitely short and precious to make sure of one's own election. Loss of time through sociability, idle talk, luxury, even more sleep than is necessary for health. . . .is worthy of absolute moral condemnation. . . .[Time] is infinitely valuable because every hour lost is lost to labour for the glory of God. Thus inactive contemplation is also valueless, or even directly reprehensible if it is at the expense of one's daily work. For it is less pleasing to God than the active performance of His will in a calling” (1904/1930, pp. 157–158). The sixth dimension of the value system is concerned about the ideal destination for human beings or the vision for a society. The capitalist ideology emphasizes individual rights and freedoms and views fully developed individuals as the ultimate goal. Traditional Chinese culture places harmony among human beings and nature as the ultimate goal. Thus, a harmonized society is viewed as much more important than an individual's rights or growth. The dimension of ideal destination relates to one of relationships among people in the value system, but these two dimensions are different because one concerns the end and the other concerns the means. The dimension of ideal destination assumes the kind of goal that human beings should pursue in a society while the dimension of human relation speaks to the means used to pursue such a goal. The Western culture and capitalism tend to seek fully developed human potential with an active individualistic approach, while Confucianism places peace and harmony as the ultimate goal. Consequently, Confucianism uses a collective approach and a predetermined hierarchy with assumed roles. The ideal destination under socialism is communism, where human beings are supposed to act “from everyone who can and to everyone who needs” as articulated by Karl Marx. Consequently, socialism views equity as more important than equality (Nevis, 1983). 4. Managerial philosophies and practices under different cultural ideologies Analyses in the last section reveal that three competing cultures, capitalism, Confucianism, and socialism, have different values 'and beliefs. The above analyses may risk the possibility of being stereotyped and biased. Xing (1995) contends that cultural generalization tends to be dangerous but necessary. It is dangerous because an easy categorization may be biased without

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solid empirical evidence, and there are always a few individuals from a culture who tend to deviate from its mean, while the generalization is normally established on means. It is necessary because a certain degree of cross-cultural consensus is needed for understanding and adapting to different cultures. This section attempts to generalize managerial philosophies and practices under the influences of different cultural ideologies, namely Confucianism, socialism, and capitalism. 4.1. Managerial philosophy Table 3 summarizes the major differences of three approaches to management under Confucianism, socialism, and capitalism ideologies. Cultural values and beliefs tend to form the basis of different economic, social, and political institutions. The interactions among value and belief systems and social norms have resulted in different spiritual attachments in different social contexts. In his classic study, Weber (1904/1930) studied the capitalist spirit and emphasized the psychological conditions that made possible the development of capitalist civilization. He observed that for the Calvinist “The world exists to serve the glorification of God and for that purpose alone. The elected Christian is in the world only to increase this glory of God by fulfilling His commandments to the best of his ability. But God requires social achievement of the Christian because He wills that social life shall be organized according to His commandments, in accordance with that purpose” (1904/1930, p. 108). For those who were educated by Christianity in the West, the term “spirit” means the relationship with God. Thus, the spiritual life is standing detached from worldly affairs in the capitalist culture. On the contrary, the dominant spiritual idea in Chinese society is Confucius' teaching: “xiu-sheng, qi-jia, zi-guo, ping-tian-xia” (i.e. cultivate moral qualities, set up family, serve for the country, and work toward equality and a harmonious world). Consequently, the traditional Chinese view of spirit is that it exists only in entering into worldly affairs. Socialism views socialist society as the prior stage to communism and calls for tributes to this great social status. Lei Feng, a PLA soldier who has been praised as an exemplary model for people to learn, captured the socialist spirit: “Treat comrades with warm as in the spring, treat duties with fervent as in the summer, treat individualism just as swiping the leaves in the fall, and treat enemies with cold-blooded and ruthless as in the winter” (1960). Because modern concepts of organization and management have been developed in the capitalist world, the following paragraph will start discussion from managerial philosophies and organizational approaches as implied in the capitalist ideology. As a result of interactions among values, beliefs, social contexts, and spiritual attachment the dominant organization and management theory in most capitalist societies tends to rely on technical rationality. Private ownership of business is the main characteristic of capitalism. Organizations are set up to maximize their earnings or profits. Organizations are established on an individual basis. Individual employees are hired and fired based on mutual will. The overall managerial strategy is characterized as a proactive approach which requires positivistic means in problem solving (i.e., an empirical approach, a fact-finding process toward a positive direction). Decision making is characterized as a rational process (i.e., linear, step-by-step, maximizing outcomes). Harrison (1995) summarizes six steps in a rational decision-making process: (1) define the problem, (2) identify the decision criteria, (3) allocate weight to the criteria, (4) develop the alternatives, (5) evaluate the alternatives, and (6) select the best alternative. March (1994) identifies a set of assumptions that underlie rational decision-making. Such a decision-making model assumes that the problem is clear and unambiguous, and that managers clearly know their options and preferences. These assumptions reflect Western values and belief systems (e.g., single reality, objective knowledge, mastery over nature, and preferred reasoning and thinking style). The capitalist management approach also emphasizes innovation and progression as viable means to reach the organizational mission (i.e., maximizing profit). At the same time, organizational systems and structures have weighed heavily in management theory and practice. In summary, the capitalist management philosophy can be featured as technical rationality (Redding, 2002). Accordingly, most foreign-owned enterprises, and some joint-venture firms, in the P. R. China tend to identify with a capitalist managerial approach. Viewing the world as chaotic and human beings as naturally good (or at least individuals can be educated to be good), Chinese traditional management philosophy takes a vastly different stand from the West. The dominant Chinese culture impels individuals to enter into worldly affairs to find their spirit [though some sub-cultures such as Taoism might have different views]. In the long history of feudalism, the emperor owned all lands and other resources, while private ownership was also recognized. Traditional private businesses are set up on a family basis with a managerial philosophy of benevolence and righteousness. Very often a family is the majority collective investor and keeps control (Redding, 2002). Business is viewed as an instrumental entity to yield goods and Table 3 Managerial philosophies and approaches implied by three cultural ideologies. Characteristics

Confucianism

Socialism

Capitalism

Managerial spirit Ownership Organizational value Organizational form Managerial strategy Problem solving Managerial emphasis Decision making Managerial strategy Main characteristic

Enter into worldly affairs Private in empire Benevolence and righteousness Family basis Reactive Naturalistic means Process and practice Intuitive The golden mean (harmony) Center on social morality

Tribute to the communism Public Common wealth Class basis Central planning Doctrine Values and vision Rely on rules Authoritative commands Based on planning economy

Stand aloof from worldly affairs Private-individual Maximizing profit Individual basis Proactive Positivistic means System and structure Analytical Innovation and progression Rely on technical rationality

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services to fulfill its social responsibility. Chinese businesses tend to depend on networking closely related to family and lineage (ChiCheung, 1998; Weidenbaum, 1996). The overall managerial strategy is reactive (i.e. ying-bian) or sometimes passive (wu-wei-er-zhi, i.e., manage by letting things take their own course). Such managerial philosophy is consistent with the naturalistic/interpretive problem solving method. The decision-making process is intuitive and can be characterized as “muddling through.” One of Deng Xiaoping's major reform theories is so called mo-zhe-shi-tou-guo-he (i.e., grope for stones while crossing the river). Deng Xiaoping was brave enough to initiate the economic reform because he saw the need to leave one side of the river (i.e., Soviet-style stagnated economic system) for the other (market-oriented system), but he was limited by social and cultural contexts. Why didn't he think through the process and then lead his followers across the river? Are there any better alternatives, such as building a boat or constructing a bridge? What are the consequences if the river floods or the stones in the river are wobbly? These technical and detailed questions normally do not get adequate attention from Chinese leaders/managers who are constrained by the traditional mindset. What appears to be important for Chinese managers is the question: are they doing the right thing (good vs. bad)? Related to this problem solving style is the emphasis on the human side rather than the system side in management. Rules and regulations do not appear to be as important as human beings. Managers in a collectivistic culture prefer personal appeals and emotional strategies rather than analytical decisions (Shane, 1994). Consequently, organizational process and practice have received more attention than have structure and system. From a Western perspective, organizational structure in a collective culture tends to be ambiguous and deemphasize formal authority for the reasons of informality and egalitarianism (Weihrich, 1990). Though there are various managerial theories and preferred methods, the essence of the Chinese managerial approach can be found in the dated Confucianism classic the Doctrine of the Golden Mean (i.e., zhong-yong). Basically, the mean managerial method prefers to bring about equilibrium rather than create disequilibrium. Such equilibrium requires balance, not only between human beings and the environment but also among people in a community or society. As a consequence, unity and harmony within the organization are highly valued. Maintaining a systematic harmony has been regarded as the fundamental goal (Sun, 2002). The underlying force that drives such managerial philosophy is social morality that calls for organizational ethics and social responsibility. Zhang (1993) contends that “yi-li-lian-quan” (i.e., the overall balance between justice/righteousness and profit) is the driving force for enterprise competition in East Asia. Private business in the P. R. China and ethnic overseas Chinese firms are inclined toward a business approach implied by Confucianism. Convergences and divergences between orthodox socialism and the mainstream traditional culture, Confucianism, can be identified in the Chinese-style socialist approach. Public ownership of business was the main characteristic of socialism before China launched economic reform. Even though other forms, such as collective and private ownership, did exist to a certain extent, Mao wanted to minimize and eventually eliminate those economies, particularly the later one that provides the foundation for capitalism. Nearly all properties belonged to the public (Nevis, 1983). Economic egalitarianism can be traced thousands of years back to Chinese history that is filled with corrupt old dynasties and new dynasties in turn. The new dynasties were normally brought by uprisings with certain egalitarian slogans (e.g. tian-xia-wei-gong, or land under heaven belongs to all). Organizations such as factories and people's communes were set up to generate common wealth that had no clear ownership among the participants. Managerial spirit speaks as a tribute to communism. In Mao's time, there was a slogan: “Think contribution, not compensation.” (i.e., zhi-jiang-feng-xian, bu-jiang-bao-chou). Organizations were established on a class basis, where working classes such as the proletariat and farmers were supposed to take leadership while other classes had no rights. They were to follow and obey. The overall managerial strategy was based on a central planning system and managers at the low level had little or no decision making power. Most decisions were made based on rigid rules and required taking ideology into account (Nevis, 1983). The whole nation became one firm, and managers had to passively receive instructions from the top. The socialist management approach also emphasized communist values and vision as viable means to reach great harmony. At the same time, Marxist and Maoist doctrines are viewed as universally applicable theories, and thus ordinary people had to simply learn and apply them. Managerial decisions were carried out through authoritative commands. Therefore, the Chinese socialist management approach is congruent with its root ideology and the central planning economy. The SOEs exemplify such an approach. 4.2. Managerial practice This paper argues that economic institutions can be explained not only by social and historical factors but also by cultural values and beliefs. It suggests that cultural ideologies determine managerial philosophies, which in turn influence managerial practice, and that such interactions form different institutions. Following Weihrich (1990), this paper compares and contrasts managerial practices implied by three cultures based on a framework of managerial functions. It has been widely recognized that key managerial activities can be categorized into four groups: planning, organizing, leading, and controlling (Rubbins, 1998). Table 4 compares managerial practices in Confucianism, socialism, and capitalism. These three cultures are reflected in mixed economic entities. Confucianism can be observed from these individual and family-based enterprises with traditional form. Because SOEs were set as examples for socialism, socialism tends to reflect itself more in the SOEs than in other economic entities. In the meantime, capitalism tends to be more identifiable in foreign and joint ventures. 4.2.1. Planning Planning seems to be a Western concept that assumes that managers have the ability to articulate organizational goals and means by which they can be achieved. Rubbins (1998) suggests that planning “includes defining goals, establishing strategy, and developing plans to coordinate activities” (p. 3). The traditional Chinese managerial practice did not value planning because the traditional culture emphasized implicit or tacit knowledge and learning-by-doing. While the traditional Chinese planning

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Table 4 Managerial practices in three different institutions. Managerial practices

Confucian

Socialist

Capitalist

Planning Organizing Leading Controlling

Intuition Collective Clan & paternal Peer pressure & group norms

Top down Bureaucratic Education or force Idiosyncratic and political

Empirical Individual Entrepreneurial Performance against standards

tends to be based on intuition of individual managers, the capitalist style of planning tends to be formal, rational and quantitatively oriented. Unlike planning in the socialist society which relies heavily on the top–down approach based on every five-year plan, planning in the capitalist society tends to be empirical in the sense that it has no formal nationwide economic plan, but most firms rely on certain forms of forecast based on the assessment of market needs. Planning tends to be empirically based on data from market and consumer needs in the capitalist economy. 4.2.2. Organizing Organizing is another managerial function that involves setting up a structure to coordinate efforts so that all employees can contribute to the business goals in an effective and efficient way. The traditional Chinese organizing effort places emphasis on collective responsibility and accountability. At the same time, individual responsibilities are implied instead of being explicitly described in a formal organizational structure. Organizational change is normally reached by a changing process. It is facilitated by an agent of change within the firm, and is aimed toward the maintenance of harmony among those affected (Marshak, 1994; Weihrich, 1990). The organizing practice in the orthodox socialist organization tends to be rigid and bureaucratic. Normally speaking, they tend to be inefficient, rigid, insensitive to the market, and filled with redundant workers (Broadman, 2001). Individual responsibilities are not clearly defined and documented. Accountability is not an issue under the socialist ideology because it assumes that those in leadership (i.e. the proletariat) are conscious of liberating themselves and all human beings. Therefore, educating the masses and identifying the right personnel from the working class are the main organizing strategies under socialism. A top–down approach is common in organizational change and development. Nevertheless, it should be noted that a democratic organizing method, such as workers' participation in firm management, was emphasized in theory and was once a common practice before the reform started. Vertinsky et al. (1990) find that Chinese managers have scored higher on worker participation in decision-making and a democratic value of organization than have their Canadian and Hong Kong counterparts. As far as the capitalist organization is concerned, emphasis is placed on individual responsibility. Job descriptions are excellent examples of organizing effort to clarify and make explicit who is responsible for what (Weihrich, 1990). Accountability is emphasized at each level of the organization. Conflict is tolerated and normally accepted because of an individualistic view and the acceptance of individual interests. Organizational change is often conducted by an external agent of change, with changing of goals and structures instead of processes (Marshak, 1994; Weihrich, 1990). Based on behavioral science, organization development (OD) is a widely used tool for organizations to reduce conflicts and improve performance. 4.2.3. Leading Leading involves “motivating subordinates, directing others, selecting the most effective communication channels, and resolving conflicts” (Rubbins, 1998, p. 3). Confucianism views leaders as social integrators who are a part of a work group and who have concern for the welfare of their subordinates. Weihrich (1990) identifies a Japanese leadership style that is also valid for the traditional Chinese concept of management: “The role of managers is to create an environment of esprit de corps, and they are willing to help out in doing the same work their subordinates do. In an attempt to maintain harmony at almost any cost, managers avoid face-to-face confrontation” (p. 7). Managers are expected to be the role model for their subordinates and to build and nurture personal relationships. Individual interests are expected to follow group and organizational interests. While there are some universally desirable leadership attributes and behaviors (e.g., integrity, inspiration, administrative competence, vision, and collaborative team orientation) there are also a few uniquely Chinese attributes, such as abiding by principles and the father figure (Fu & Tsui, 2003). In sum, the traditional Chinese leadership style tends to be a clan and paternalistic approach. While socialist leadership shared considerable commonalities with the traditional one, it had dual approaches—education for comrades and those who were educatable, and force for enemies and those who resisted following. One of Confucianism's fundamental thoughts is benevolence or humanity (i.e., ren) (Xiong et al., 1997). Assuming that humans are innately good, Confucianism requires leaders to rely on benevolence and righteousness in leading their followers. Categorizing humans as belonging to either of two struggling social classes, the socialism leadership approach relies on education for the comrades and treats enemies with force. Group leading is much emphasized (i.e. ji-ti-ling-dao). Communication is primarily top–down following commands of the party central committee. Mao outlined the principles of leading as: “Minorities must obey the majorities, subordinates must obey supervisors, and all party members must obey the central committee.” Managers are instilled with the values of dedication and self-sacrifice. The managerial function of leadership is carried out differently in most capitalist contexts. Weihrich (1990) observes that “leaders are seen as the decision-maker heading the group; they are expected to be directive, strong, and determined” (p. 7). Leaders are expected to develop a vision for the organization, to clarify the direction of the group or organization, and to make

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correct decisions. Communication tends to rely heavily on formal channels and formats such as the written memo. While the communication pattern is a bottom–up approach, through an established democratic system, each organization tends to build a hierarchy with a top–down approach. Therefore, leadership under the capitalist ideology tends to be entrepreneurial, tends to emphasize technical competence and skill, and is change and risk oriented (Fu & Tsui, 2003). 4.2.4. Controlling Controlling involves “monitoring activities to ensure they are being accomplished as planned and correcting any significant deviations” (Rubbins, 1998, p. 3). The managerial function of controlling in traditional Chinese culture tends to rely on peer pressure and group norms in order to reinforce certain desirable performance standards. Individual performance receives less attention than group performance. Attention to controlling is placed on organizational process and daily practice rather than on formal structure and systems. The managerial function of controlling in the socialist context tends to be idiosyncratic. The orthodox socialists' controlling interests lean in a political direction [i.e., socialism vs. capitalism] instead of financial outcomes. Therefore, political and ideological controlling was the foremost important task in most socialist societies. In reality, controlling practice was idiosyncratic because of the lack of an adequate reward and performance evaluation system. SOEs lack an adequate governance system and thus managers often ended up with de facto control over the enterprises (Broadman, 2001). Controlling efforts and procedures varied greatly, depending on individual managers in charge. Some conscientious managers made controlling efforts on productivity and individual performance but received strong criticism for a “walk toward capitalism.” Mao Zedong removed Deng Xiaoping twice from his position for his efforts toward productivity and economic performance. Other managers cared less for, or took no interest in, productivity. Due to its ideological values and beliefs, socialism placed rigid control on its class enemies and followed a generous policy of laissez-faire for its comrades. It assumed that the key task for the communists was to fully arouse masses and then they would identify their own needs and devote massive energy and effort in building the socialist country. While no one individual should take personal credit for accomplishment (Nevis, 1983) it was hard to find a single responsible person when things went wrong under the group leadership approach. Consequently, controlling was the weakest managerial function in socialism. Controlling in capitalist organizations tends to focus on measuring performance against precise standards. Control emphasizes formal evaluative structures and procedures. Management by objectives is an example of this, because it requires verifiable objectives as a foundation for performance evaluations. Furthermore, control tends to be individually based because employees are accountable for their jobs, and managers for their business units. Top-level managers, such as the CEO, assume responsibility for organizational performance. CEOs are often under pressure by shareholders to show favorable financial outcomes. 4.3. Human resource management practice This section identifies the differences between human resource practices across different economic institutions with differentially dominated ideologies: Confucianism, socialism, and capitalism. I select this managerial aspect because human resource management practices strongly reflect cultural values and beliefs. Table 5 lists major characteristics. The traditional Chinese economic forms are family-based, and the priority of employment is given to closely related persons. Under Confucianism, the dominant management philosophy is one of social harmony by conforming to the traditional order. Westwood, Chan, and Linstead (2004) observed that Chinese employment relations are based on reciprocity values, and sustained by a tacitly held personal moral order. As most traditional Chinese business is organized in family form, employee selection is dominated by nepotism (Björkman & Lu, 1999). Promotion is mostly focused on morality and social acceptance. Compensation depends largely on seniority and only a small difference can be found between employees and managers. Such a philosophy works toward a harmonious society, and requires leaders to have strong morals and personal integrity so as to implement a benevolent policy (i.e., ren-zhen). Throughout the long history of China, virtually every party and government emphasized the importance of morality and personal integrity. Appointments are made primarily on the basis of a person's morality or loyalty to the party in power. Leaders and managers are selected even though they are not necessarily technically competent. Consequently, morality and social connections play important roles in employee selection. An ancient Chinese politician and scholar, Sima Guang, in his

Table 5 Dominated characteristics of human resource practices in three different institutions. Characteristic

Confucian

Socialist

Capitalist

Employment nature Selection Compensation Promotion Evaluation Succession Union role HR development HR function HR goal Main characteristic

Family or kin Nepotism Seniority Personal loyalty/social acceptance Qualitative method Family/seniority No role Management and utilization Social outcomes Social harmony Rule by human beings

Iron rice bowl Social class/connection Egalitarianism Political loyalty/connection Qualitative method Moral/political purity Consultation Development of morality and loyalty Political outcomes Communism Rule by human beings with rigid approach

Contract based on will Ability/competence Performance Contribution & potential development Quantitative method Competency Negotiation Training and development Economic outcomes Developed individuals Rule by law

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famous annalistic-styled historic book “Zi Zhi Tong Jian” best summarized such personnel practice. This book became a must-read for later rulers. Sima Guang proposed a dialectic relationship between two key qualities of an individual: de (i.e., morality or virtue) and cai (i.e., competence or merit). He posited that morality is the commander of competence, which in turn provides strength for morality. He further classified all individuals into four types. The first type is called sheng-ren (i.e., wise person) who possesses both strong morals and talent. The second type of person is called jun-zi (i.e., person with virtue) who shows strong morality but probably has less competence. The third type of person is named as xiao-ren (i.e., mean person or villain) who has certain ability and poor personal integrity. The fourth type of person is called yu-ren (i.e., mediocre person) who is low in both competence and morality. Sima Guang suggested that the wise person should be the first choice in personnel utilization, followed by the person with virtue. When neither the wise person nor the person with virtue is available, Sima Guang maintained that the mediocre person should be selected rather than the villain, because the mean person would work for his/her own interests rather than work for the community and society. Though less competent, the mediocre person is better than the villain because he/she will not be able to do harm to the organization/community/society. The key principle of Chinese human resource is often called de-cai-jian-bei (i.e., having both political integrity and competency). Under the traditional ideology, it is common to treat one's political integrity as personal morality or virtue. Therefore, traditional Chinese HR practice emphasizes social outcomes and harmony, and thus its main characteristic is rule by human beings (i.e. ren-zhi or yi-ren-wei-ben). The socialist practice of human resource in the P. R. China had many features similar to the traditional practice. Employment was long-term, long enough to be life-long (Ding & Warner, 2001). People normally use the term of “iron rice bowl” to describe the durable nature of employment under socialism. Similar to the traditional approach, employee selection was based on morality and social connections, and personal competence was regarded as less important. In China, guanxi (i.e., social connections) have been formalized as valid means of employment. Guanxi refers to a network of personal favors and obligations stemming from various social ties. Guanxi tends to have strong influence not only on employee selection but also on other aspects of organizational behaviors, such as work relationships, performance evaluation, and work outcomes (Tsui & Farh, 1997). Aufrecht and Bun (1995) observe that the lack of a free market for so many commodities makes guanxi a particularly tricky obstacle to overcome. Compensation established on the socialist philosophy of egalitarianism, and a mild variation did exist, but that was largely attributed to seniority rather than to performance (Ding & Warner, 2001). The reward system was established on the socialist values and beliefs that people are not motivated by material incentives, and everyone should sacrifice and thus be compensated equally. Consequently, poor performers received the same reward as did excellent performers (Nevis, 1983; Shenkar & Chow, 1989). Those who performed better only got political praise such as “model worker” (Shenkar & Chow, 1989). Promotion and succession of senior management was conducted on the basis of political loyalty, and sometimes social connection [i.e., guanyi] played a far more important role than technical factors such as managerial skills. Political competence (i.e., moral and ideological purity) has weighed much more heavily than managerial competence (Miner et al., 1991). Performance evaluation was largely qualitative in nature and tended to be subjective. Self-appraisal used to be the starting point for performance evaluations (Björkman & Lu, 1999). The role of the labor union was consultative, and tended to be coordinative since the reform (Warner, 1996). Human resource development (HRD) emphasis was placed on developing loyalty and morality. Consequently, most HRD effort was placed on ideological education. For example, the practice of educating firm managers through “party school” continues and is still common nowadays. Human resource is a new concept being introduced to China after the reform. Most organizations have personnel departments to take care of all personnel related affairs. Even though the economic reform and open-door policy were launched more than two decades ago, most government agencies still use the old terms such as department of personnel and education or division of cadre. One of the major HR functions was to bring about desired political outcomes (e.g., no one should be unemployed) rather than economic outcomes (e.g., profit and efficiency). Thus, personnel and cadre practice was supposed to function as a part of the broad social and political system working toward communism. In summary, personnel practices guided by socialism were characterized by ideological and rigid approaches. Human resource practices in the capitalist context tend to be congruent with its cultural values and beliefs. Furthermore, HR practice has been integrated into its social and cultural systems and becomes part of the social norm system. Most jobs in the capitalist society are contracts that are based on will. That is, both employers and employees find the best fit to meet their mutual needs in a free job market. Westwood et al. (2004) maintained that such employment relations could be characterized by a model of impersonal rational economic exchange in which individuals conduct utilitarian calculations. Such an approach tends to be based on the capitalist value that emphasizes the maximizing of economic outcomes and the optimizing of individual development opportunities. Employee selection is largely based on ability and competence. Employee compensation is established on the basis of work performance and contribution to his/her organization. Performance evaluation is conducted with quantifiable data in a scientific way. The labor union plays an important role in negotiation and bargaining on behalf of its members' interests. HRD has been placed in training and development to meet long-term goals. The basic function of HR practice is to contribute to the overall organizational performance in terms of profit making and thus is viewed as one kind of capital (e.g., human capital). The implicit goal of such HR practice is to fully develop individual potential in a competitive job market. Overall, the capitalist HR practice can be characterized as a rational approach that is ruled by law. 4.4. Summary of cultural influences Table 6 summarizes the influences of three cultural ideologies (Confucianism, socialism, and capitalism) on management and organizational models existing in contemporary Chinese society. It is proposed that three models of organizations (e.g., paternalistic, communal, and market) co-exist in China and they can be traced to three ideological ideas. First of all, the paternalistic model of

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Table 6 Influences of three cultural ideologies on organization models. Organization models

Confucianism

Socialism

Capitalism

Paternal model (e.g., traditional private business) Commune model (e.g., SOEs) Market model (e.g., Western firms) Hybrid model (e.g., emerging and future Chinese firms)

High

Medium

Medium

Medium

High

Low

Low

Low

High

Medium (mostly in the area of human relations and preserving the values of social order and harmony)

Medium (mainly in the aspect of strong state, emphasizing on common wealth and social responsibilities)

Medium (reflected in market-orientation, with profit seeking, and rational and analytic managerial approaches)

organizations refers to those firms that are established on traditional cultural values of Confucianism and are represented by some of typical traditional private business. Secondly, the communal model of corporations was built on socialist ideology and was mostly reflected in those SOEs. Lastly, the market model was largely influenced by capitalist values and beliefs and is more likely to be identified from Western-related firms such as joint-ventures and multi-national companies. Furthermore, an emerging model, namely a hybrid model, is developing in many Chinese firms because of the convergence of cultural influences. Many Chinese organizations are learning quickly from various economic institutions and managerial tools applicable to their unique cultural contexts. There is growing empirical evidence supporting the above proposition that different cultural values and beliefs impact different organizational models to various extents. In an attempt to test the applicability of two theories of corporate governance (i.e., agency theory vs. stewardship theory), Tian and Lau (2001) examined the impact of board composition and leadership structure on the performance of Chinese shareholding companies. It was discovered that the stewardship hypotheses received stronger empirical support. Since the above theories are based on conflicting assumptions about human behavior and thus offer different prescriptions about governance mechanisms, the influence of cultural values and beliefs on Chinese organizations is evident. On one hand, the agency theory is rooted in Western industrial and organizational economics, and it assumes that human behavior is naturally opportunistic and self-serving. Consequently, it calls for regulative control over managerial behavior in order to ensure that top managers act in the interests of shareholders. On the other hand, the stewardship theory accepts the assumption that managers are good stewards of the corporation. The latter theory assumes that managers are trustworthy and will work diligently for corporate interests and shareholders' benefits. Although the stewardship theory was developed in the Western context, its assumptions and propositions tend to be congruent with Confucian values and beliefs regarding human behavior. While the two organization theories have certain explanatory power, the fact that the stewardship theory is a better explanation for the contemporary Chinese corporate governance indicates the continuous impact of Chinese traditional cultural values and beliefs, despite the introduction of capitalist managerial mechanisms. Chinese private business under the influence of Confucian ideology can be best described as paternalistic (Farh & Cheng, 2000; Redding, 2002, Smith, 2003). The paternalistic model of organizations is reflected in strong role compliance and hierarchical structure based on moral reciprocity. Managers and leaders are expected to take care of their subordinates and employees and therefore prolong the relationship. On the other hand, employees benefit from such relationships in welfare provision, selection, and promotion based on such measures as loyalty, length of service, and skill profile. Smith (2003) observed paternalist management practices in many areas, particularly in the southern Pearl River Delta. While the Western (mostly capitalist) ideology has been gaining a greater influence in Chinese organization and management practice, it is predicted the emerging hybrid model will adopt the essence of capitalism—rationality. Based on an extensive study of economic history, Braudel (1982) contended that “capitalism could not exist without rationality” (p. 576). Here, rationality refers to an analytic approach to organization and management characterized by application of reasoning, continuous adaptation of means to ends, and an intelligent calculation of possibilities. Redding (2002) analyzed the evolution of capitalism in the Chinese private sector since the 1980's and concluded that “In two decades the capitalist has gone from pariah to member of the elite, and the surrounding ideology and institutions have equally re-formed themselves at high speed” (p. 237). Nevertheless, this analysis also revealed the enduring and dynamic influences of traditional values such as social harmony, hierarchy, control, and family collectivism. Government played, and will continuously play, a vital facilitator role in developing Chinese capitalism. In addition, it has been noted that the evolving Chinese private business can be termed as “network capitalism,” which is largely based on personalized guanxi, and low on horizontal coordination. It is posited that an emerging organization model of Chinese firms can be described as a hybrid that is shaped by all three cultural values and beliefs (Ding & Warner, 2001). Some recent studies provide evidence of co-existence, overlapping, and even convergence of three different cultural values in Chinese organizations and management practices. Ding and Warner (2001) traced China's labormanagement system since the 1950's and concluded that a hybrid human resource management model is taking place with both Chinese characteristics and the influence of foreign multinational corporations. Fu and Tsui (2003) analyzed pieces on business leaders in two major official Chinese newspapers, and found that the government reinforces the traditional values that are consistent with communist ideologies. Meanwhile, the Chinese government also introduces such Western management values as personal competence and skills. The researchers examined leadership attributes described in the official news media, and discovered that these attributes could be adequately coded into three ideological categories: Confucian, communist, and modern Western values.

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In sum, studies have demonstrated an emerging hybrid model of Chinese organizations and management practices. Such a model is evolving by adapting three seemingly different, potentially overlapping, and possibly converging ideologies: the continuing prevalence of Confucian values on harmonious human relationships, the socialist ideologies emphasizing the strong role of state and government and common wealth, and the Western rational style of managerial approach. 5. Conclusion In comparing three influential cultures in the P. R. China, this paper does not intend to evaluate which of them is the best or most suitable for social and economic development in China. As ideologies, all three cultures have both merits and flaws. The questions regarding the best social and economic institutions and the best organizational approach are largely determined by cultural values and beliefs. It is posited here that contemporary organizational behavior and managerial practices in China can be better understood through examining conflict and convergence of three cultures. Consequently, three corresponding forces need to be taken into consideration in examining current organizational transformation. Suppose a researcher has conducted a survey to compare work values between Chinese and Americans, and found that Chinese scored much higher on individualism, does that mean that Chinese employees no longer carry their traditional values? Not at all (see for example, Ralston et al., 1995). In fact, one is likely to discover strong capitalist influences in many East Coast areas such as Shanghai and Shenzhen. According to the above analyses, Chinese culture needs to be understood as conflict and convergence among three competing cultural systems. Many young employees tend to be quite individualistic, partially due to the influence of the Western culture, and partially reflecting a backlash against the socialist egalitarian ideology. While this paper does not offer any specific future direction of organizational transformation in China, it provides a framework for studying the major influences on organizational behavior and managerial practice. The main theme of this paper is that the organizational transformations in private, state-owned, and foreign-owned enterprises need to be studied through the confluences of Confucianism, socialism, and capitalism. The intent of this paper is neither to predict the future development in the P. R. China, nor to argue a preferable direction for Chinese society and management in organizations. Nevertheless, the theme of this paper suggests that three cultural forces will co-exist for a long time, and that the future will be determined to some degree by the convergence of these cultural forces. The conceptual framework presented in this paper also provides a useful tool for building organizational theories and analyzing managerial concepts that are unique to China. For example, guanxi as a Chinese indigenous concept can be examined in relation to cultural values and beliefs. It is commonly recognized that developing renqing (i.e., social or humanized obligation) is a precondition for the establishment and use of guanxi. It is believed that guanxi is useful because people involved in certain social networks will exchange humanized obligations. Therefore, such belief is rooted in several fundamental values and beliefs including the belief in human nature [i.e., goodness] and moral standards [i.e., based on feeling]. However, some people may not prefer guanxi or are less likely to fulfill renqing. Therefore, it is necessary to investigate the relationship between the guanxi practices and embedded cultural values and beliefs. This paper has identified several important cultural dimensions and analyzed differences among three cultures in terms of values, beliefs, and managerial philosophies and practices. As Tayeb (2001) has rightly pointed out, there is danger of losing sight of the big picture in any attempt to simplify and reduce complex cultural phenomena into neat categories. Culture should be viewed as a dynamic rather than static concept. More importantly, it is crucial to examine interactions among three cultural systems: values, beliefs, and social norms. For instance, some capitalist values and beliefs might be adapted into the Chinese context along with the institutionalization of the free market system. While scholars of cross-cultural study have long been interested in understanding the cultural influences on management theory and practice, the perpetuation function of the practice and organizational behavior (as part of social norms) as suggested by Table 1 should not be overlooked. A systematic examination of the dynamic relationships among three cultural components is beyond the scope of the current paper. It should be emphasized that culture as a collective learning outcome among a group of individuals, is a totality of three sub-systems: shared values, beliefs, and social norms. Furthermore, those who are interested in cross-cultural studies should adopt both historical and contemporary perspectives in examining the dynamic changes of ideologies and social norms. Acknowledgement The research was supported by the National Science Foundation of China (NSFC Projects. 70725005, 70890081 and 71172009). References Aufrecht, S. E., & Bun, L. S. (1995). 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