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A synthetic and geocentric model of organizational management applied to curriculum planning for management… Bu, Nailin 1992

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A SYNTHETIC AND GEOCENTRIC MODEL OF ORGANIZATIONALMANAGEMENT APPLIED TO CURRICULUM PLANNING FOR MANAGEMENTEDUCATION IN THE PRC: THE CASE OF MOFERTbyNAILIN BUB. Sc. (Computer Science) Fudan UniversityA THESIS SUBMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFDoctor of PhilosophyinTHE FACULTY OF GRADUATE STUDIESCOMMERCE AND BUSINESS ADMINISTRATIONMay 1992the requiredWe accept this thesis as conformingst4THE UNIVERSITY OF BRITISH COLUMBIA(c) Nailin Bu, 1992In presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission._____________________Department of Commerce and Business AdministrationThe University of British ColumbiaVancouver, CanadaDate___________DE-6 (2/88)ABSTRACTThis study is an attempt to outline an overallcurriculum plan for the management education programs of thePeople’s Republic of China (PRC), which would be adapted tothe needs of the country while drawing on knowledge andresources from the West. This study also searches for ananalytical tool to facilitate cross—national comparisons inareas of management.A need—based curriculum planning process is followed,which focuses on the discrepancies between the actual andrequired managerial capabilities in the PRC. A frameworkconceptualizing the nature of management is proposed toprovide an overall structure for examining the needs formanagement training.It is suggested in this framework that nationalcharacteristics affect organizational environments, which inturn influence the nature of organizational management. Itis further suggested that organizational environments invarious national contexts be examined from two perspectives:(a) internal vs. external, and (b) technical vs.institutional. Effective management involves forming andimplementing strategies and tactics which would balance alliiAbstractaspects of organizational environments within a particularcontext.Based on the framework, the management of PRC’senterprises involves reconciling economic with ideologicaland social criteria, as well as reconciling the interests ofthe state and the community, and of the organizationalmembers. This perspective on management in the PRC ispartially tested through a questionnaire survey administeredto a sample of PRC managers from the Ministry of ForeignEconomic Relations and Trade (MOFERT). The survey resultssupport the notion that, to succeed in the PRC, it isimportant not only to manage the technical but also theinstitutional aspects of organizational environments.The questionnaire also surveyed MOFERT managers’ self—reported managerial capabilities to uncover the overall andthe differentiated needs for training among managers fromvarious backgrounds. As predicted, MOFERT managers recognizetheir skill deficiency in all aspects of managementidentified. This echoes the widespread recognition of theurgent need for upgrading managerial skills in the PRC.The survey results indicate the extent to whichmanagers’ different backgrounds contribute to theiriiiAbstractcapabilities of dealing with various aspects of management.MOFERT managers having tertiary education, contrary to theprediction, do not report more confidence in fulfillingmanagerial tasks which are supposedly highly related totheir specific disciplines of technical and professionaltraining. On the other hand, managers’ work experience,connections with government agencies, and/or sympathy withthe official ideology are shown to contribute, in general,to better capabilities in aspects of management requiringmore behavioral and political as opposed to technicalskills. However, those same managers report no moreconfidence than other managers in dealing with aspects ofmanagement which, though still calling for political skills,are dramatically affected by the current economic reforms inthe PRC.Based on conceptual and empirical analyses, curriculumplans are recommended for the various levels of businessadministration programs of the PRC. The extent oftransferability of existing Western teaching materials invarious subject areas are also discussed.While this study focuses primarily on the content issueof management education in the PRC, the proposed frameworkhas much broader implications in both topical andivAbstractgeographical terms. It synthesizes various contemporaryadvancements in organizational research, enabling a holisticview of organizational management. It is also geocentric inorientation, enabling genuine cross—cultural comparisons andcontrasts. Hopefully, the framework provides a general modelfor systematic analyses of cross—national similarities anddifferences in organizational management.VTABLE OF CONTENTSAbstract iiTable of Contents viList of Tables xList of Figures xiiAcknowledgement xiiiIntroduction 10.1 General Context of the Study 10.2 Curricula of PRC’s Management Education Programs:Backgrounds 4Chapter 1Cross—National Management: Limitations and NewDirections 111.1 Globalized Business Environment: Major ChallengesFacing Management Research 121.2 Cross—National Management Research: The Need For NewOrientation 131.2.1 The Need For Integration Across Nations 141.2.2 The Need For Integration Across TheoreticalStreams 171.2.3 A New Strategy of Cross-National ManagementResearch 20Chapter 2An Overview of Industrial Management in the PRC 222.1 Macro—Economic Context of Industrial Management inthe PRC 222.1.1 Structure of Economic Coordination 232.1.2 Evolution of the Coordinating Mechanism 262.1.2.1 The change of ownership 272.1.2.2 The change of control 302.1.2.2.1 Central AdministrativePlanning 312.1.2.2.2 AdministrativeDecentralization 322.1.2.2.3 Economic decentralization. .372.2 Enterprise Management in the PRC 442.2.1 Organizational Structure and Reward systems. .452.2.1.1 Organizational Structure 452.2.1.2 Reward Systems 48viTable of Contents2.2.2 Evolution of the Practices of EnterpriseManagement 492.2.2.1 “One—Man” Management 502.2.2.2 The Unified Leadership of the Party. .532.2.2.3 The Mass Participative Management... .552.2.2.4 Integrative System of Management 572.2.2.4.1 Decentralization of Power. .582.2.2.4.2 Restructuring of MaterialIncentive Systems 61Chapter 3 Methodology and Domain of the Study 633.1 Methodology of the study 633.2 Domain of the Study 66Chapter 4The Conceptual Framework 714.1 National Characteristics and organizationalenvironments 734.1.1 Internal—External Dimension 744.1.1.1 External Environments 774.1.1.2 Internal Environments 794.1.2 Technical-Institutional Dimension 834.1.2.1 Technical Environments 854.1.2.2 Institutional Environments 904.1.3 Organizational Environments in a Framework.. .964.2 Organizational Environments and the Nature ofManagement 974.2.1 The Nature of Organizational Management in thePRC 974.2.2 Functions of Management in PRC’s Enterprises ina Framework 99Chapter 5Identifying the Needs for Management Education in thePRC: Hypotheses 1035.1 The Significance of Managing External-Internal andTechnical-Institutional Aspects of OrganizationalEnvironments: Hypothesis Group 1 1035.2 Discrepancies Between the Required ManagerialFunctions and the Abilities of Managers in the PRC:Hypothesis 2 .1045.3 Discrepancies of Levels of Managerial Abilities amongPRC Managers From Various Backgrounds: HypothesisGroup 3 1055.3.1 Hypotheses 3.1 1075.3.2 Hypothesis 3.2 1085.3.3 Hypotheses 3.3 1085.3.4 Hypotheses 3.4 109viiTable of Contents5.3.5 Hypotheses 3.5 1105.3.6 Hypotheses 3.6 1105.3.7 Hypotheses 3.7 112Chapter 6Data Collection and Hypothesis Testing 1176.1 survey instrument & Its Psychometric Property 1176.1.1 survey Instrument 1176.1.2 Measurement Properties and statisticalTechniques 1196.2 Data Collection and the Respondents 1216.3 Instrument Validation 1256.4 Hypothesis Testing 1286.4.1 Results: Hypothesis Group 1 1286.4.1.1 Hypothesis 1.1 1286.4.1.2 Hypothesis 1.2 1296.4.2 Results: Hypothesis 2. 1306.4.3 Results: Hypothesis Group 3 131Chapter 7Discussion 1457.1 on Hypothesis Group 3 1457.1.1 The Basic Assumptions underlying HypothesisGroup 3 1457.1.1.1 Actual Content of Post-secondaryEducation in the PRC 1517.1.1.2 Work Experience and GeneralOrientation 1567.1.2 Possible Bias of the Sample 1627.2 On the Generalizability of the Survey Results 1637.2.1 To MOFERT Organizations 1637.2.1.1 Estimating Sample Skewness 1647.2.1.2 Assessing Impacts of sample skewnessl677.2.2 Generalizability of the Survey Results to theLarge- and Medium- Sized State enterprises inthe PRC 1747.3 The Limitation of the Current Survey and QuestionsRequiring Further Research 176Chapter 8Conclusion and Practical Implications 1808.1 Management Education in the PRC: Content 1808.1.1 Limited Validity of Western Models ofManagement Education in the PRC 1808.1.2 A Comprehensive Curriculum Plan for the PRC’sManagement Education 1838.1.2.1 Teaching Technical Aspects ofManagement in the PRC 183viiiTable of Contents8.1.2.2 Teaching Institutional Aspects ofManagement in the PRC 1888.2 Upgrading Managerial Capabilities in the PRC:Strategy 1908.2.1 Avenues For Gaining Managerial Capabilities.1908.2.1.1 Post-Secondary Education 1918.2.1.2 Managerial Experience 1958.2.2 Designing Need-Based Management EducationPrograms 197Notes 200References 201Appendix ASurvey Instrument 223Appendix BSummary of Raw Data 234Appendix CComputational Details of Instrument Validation 241Appendix DSPSS Commands Used in Testing Hypotheses 1.1 and 1.2. .245ixLIST OF TABLESTable 1. Proportion of contributing forms of ownership togross industrial output value in the PRC (%) 28Table 2. Hypotheses on the differences in managerialcapabilities among PRC managers with various educationand work backgrounds 115Table 3. Basic biographical information of the respondentsin each data set 123Table 4. The structure of the survey data 124Table 5. Result of MANOVA contrasting importance ofinternal—external and technical—institutional aspects ofmanagement 130Table 6. Significance of one-tailed paired t-test comparingresponses to Questions A and B 132Table 7. Significance of t-tests comparing managerialcapabilities among managers of different backgrounds. .135Table 8. Significance of one—tailed t—tests on managers’relative capabilities of handling certain managerialfunctions 138Table 9. Testing results of Hypotheses Group 3, comparedwith the would-be results if the hypotheses were testedusing responses to Question C instead of Question B. . .141Table 10. Significance of t-tests comparing the extent oftraining on various managerial functions among managersof different backgrounds 147Table 11. Significance of one-tailed t-tests on managers’relative extent of training on certain managerialfunctions 151Table 12. One-tailed t-test comparing Pearson’s r withPearson’s rBC 157Table 13. Result of J’2 test comparing proportions ofmanagers with various levels of education in the surveysample with those of the population 165xList of TablesTable 14. Results of binomial tests comparing proportions ofmanagers with various areas of post—secondary educationin the survey sample with those of the population 166Table 15. Impacts of respondent characteristics on theirresponses to Questions A, B, & C 168Table 16. Summary of Raw DataCategorical Variables 235Table 17. Summary of Raw DataContinuous Variables 237Table 18. MANOVA output of Instrument Validation 244Table 19. MANOVA output testing H1.1 and H1.2 .246xiLIST OF FIGURESFigure 1. Structure of macro—economic coordination in thePRC 25Figure 2. Organizational structure in typical large- andmedium— sized state—owned enterprises in the PRC 46Figure 3. Four types of organizational structure which havebeen used in PRC’s enterprises 52Figure 4. Relationship between national characteristics andthe nature of organizational management 74Figure 5. Classified managerial functions in typical PRC’sindustrial enterprises 100Figure 6. Profile of MOFERT managers’ responses to QuestionsA and B 126Figure 7. A curriculum plan for the PRC’s managementeducation programs 184xiiACKNOWLEDGEMENTI owe so much to so many who provided the source ofencouragement to pursue and complete my Ph.D.The greatest of those is owed to my mentor, Dr. VanceMitchell, whose knowledge, wisdom, and generosity providedme with the inspiration to pursue research with scholarlyrigor and humanistic compassion. Equal debt is owed to myresearch supervisor, Dr. Merle Ace, for providing patientcoaching and excellent critiques, and for constantlyassuring me of his confidence in my work. I am also indebtedto Dr. Larry Moore, whose academic guidance and professionalsupport throughout my Ph.D. program ensured the process anextremely rewarding experience for me.I am grateful to the members of my committee, Dr.Graham Johnson and Dr. Terence McGee for bringing theirinsightful and stimulating perspectives to my research. Touniversity examinar, Dr. Aprodicio Laquain for hisconstructive comments and suggestions. To the externalexaminer, Dr. Malcolm Warner for his review.My special appreciation must be expressed to myfriends, Derek, Luda and Kang in particular, who have sogenerously given their time to this dissertation, and to me.xiiiAcknowledgementI would also like to thank my colleagues at the School ofBusiness, University of Victoria for their trust and supportduring the past ten months.The financial support from the Canadian InternationalDevelopment Agency during my Ph.D. program is gratefullyacknowledged.Finally, I would like to express my deepest gratitudeto my former research supervisor and one of the pioneers ofChina’s management education endeavor, Professor SidneyYang, to whom this dissertation is dedicated. His life-longdevotion to cross—national learning and cooperation has beenand will continue to be the greatest inspiration.xivINTRODUCTIONThis study has two main objectives: (a) to outline anoverall curriculum plan for the management educationprograms of the People’s Republic of China (PRC), and (b) tocontribute to cross—national management research in general.0.1 GENERAL CONTEXT OF THE STUDYMany countries have devoted great amounts of resourcesto their systems of management education. It is, therefore,not surprising that management education is the subject ofongoing discussions. These discussions, according to Byrt(l986a), fall into four categories, namely the organization,the content, the method, and the product of managementeducation. The content of management education is currentlybecoming a major focus of attention (Anderson, 1987; Porter& McKibbin, 1988; Wexley and Baldwin, 1986). Porter andMcKibbin’s (1988) report, for example, criticizes theoveremphasis in North American business schools onquantitative skills at the expense of much needed behavioralskills. Heated debates in recent years also surround thecomparison between conceptually—based or competency—basedcurricula for management education in terms of theirrelevancy and effectiveness (e.g. Cameron & Whetten, 1983;1IntroductionJohnston & Associates, 1986; Vaill, 1983). Meanwhile, withgrowing international exchanges and cooperation in the areaof management education, concern has emerged over theapplicability of foreign management education systems inhost countries. There is widespread interest in searchingfor the appropriate strategy for developing and improvingmanagement education in countries of different economic,technological, socio—political and cultural environments(e.g. Bannister, 1991; Boisot, 1986; Boisot & Fiol, 1990;Byrt, 1989b; Easterby-Smith & Boot, 1986-87; Hayllar, 1989;Johnson, 1991; Pun, 1990; Rodwell, 1988; Safavi, 1981)Management education in the PRC is a particularlyinteresting and important research topic. The criticalshortage of management resources in the PRC was recognizedin the late 1970s as one of the major obstacles in thecountry’s endeavor towards modernization. The Chineseauthorities were immediately faced by the tremendous task oftraining over two million managers in the medium and largeenterprises as well as four and a half million governmentadministrators (Warner, 1988). Most of the 6.5 millioncadres have no professional qualifications beyond highschool (Bannister, 1991; Warner, 1985). On the other hand,the existing capacity of management training is very2Introductioninsufficient. Between 1979 and 1984, only 3.2% of the 1.5million university and college graduates, and 11.7% of the2.5 million special secondary school graduates majored inareas related to finance, economics, or management (Tuan &Liu, 1988). Remarkable efforts have been made towards thisambitious goal, resulting in a mushrooming growth ofacademic management education programs, executive managementtraining programs, management related associations andpublications, and joint projects with foreign countries onmanagement education and development (Battat, 1986; Boisot,1986; Chambers, Cullen, & Hoskins, 1989; Chen, 1989; Huang,1987; Keck, 1985; Limerick, Davis, & Fitzroy, 1985; Wang,1988; Warner, 1986, 1988).Despite the initial achievements, the PRC’s system ofmanagement education has just grown out of infancy. Trainedacademics and professionals in related fields are in severeshortage (Battat, 1986; Limerick et al., 1985; Markiand &Ullman, 1987; Warner, 1985, 1987). Learning from the Westernexperience has become and will continue to be an importantpart of the PRC’s effort to modernize its management.Therefore, searching for ways of adapting Western theoriesand practices to a very different local environment willcontinue to be a challenge facing the Chinese.3IntroductionThe current study attempts to address the contentaspect of management education programs in the PRC throughidentifying the country’s needs and tailoring its managementeducation curricula to its own needs, while drawing onknowledge and resources from the West. This study alsosearches for an analytical tool to facilitate cross—nationalcomparisons in areas of management.0.2 CURRICULA OF PRC’ S MANAGEMENT EDUCATION PROGRAMS:BACKGROUNDSSome serious problems in the curricula of the PRC’smanagement education programs have been identified. First,it is observed that insufficient attention has been paid toadapting foreign management notions and practices containedin the curricula of management development to the country’sreality (Liu, 1986; Limerick et al., 1985; Warner, 1988).Second, management education programs in the PRC continue tobe disciplinary and specialized, failing to focus ongeneration of a broad and integrative field of management(Battat, 1986; Chambers et al., 1989; Limerick et al.,1985)The content of management education has been aintricate issue in the PRC. In the early l950s, the new4IntroductionCommunist regime of China decided to establish an entirelynew system of management education in accordance with itsvision of the political and economic goals of the country.In practice, however, two major types of narrowly definedmanagement education programs set up in the 1950s closelyfollowed similar programs in the Soviet Union. The firsttype of program (often known as economic management in thePRC) was aimed at training economic administrators forgovernment offices at all levels. Typically offered incolleges of finance and economics as well as departments ofeconomics in comprehensive universities, this category ofprogram focused principally on the subjects of economictheory, economic management, and national financial andeconomic planning.The second type of program (often known as industrialmanagement in the PRC) attempted to prepare managers andengineers in industrial enterprises. These programs can befound within universities or colleges specialized in certainareas of engineering or applied sciences, and are typicallyassociated with certain particular industrial sectors. Thecurriculum of these program emphasizes sector specificknowledge and technology, and focuses on production andoperation management (Battat, 1986; Chambers et al., 1989).5IntroductionToday, when management development programs have beenreestablished after almost fifteen years of completeabandonment due to the Cultural Revolution, the problems ofthe lack of relevancy and the narrow orientation stillremain. The lack of practical orientation in PRC’smanagement studies is not atypical, considering the factthat social sciences in China suffer seriously fromdogmatism, orthodoxy being accepted without beingempirically tested for its truthfulness and relevancy(Hayhoe, 1987; Kuang, 1987). Meanwhile, management researchand education, like other fields of social science, ispolitically dangerous territory. Enthusiasm and originalityon the part of academics and administrators to bring aboutactual changes in practices are, believed by many Chinese,likely to result in punishments rather than rewards (Staw,1982). Consequently, conveniently chosen, and sometimesperipheral and outmoded theories and methods from developedcountries are accepted blindly without careful evaluation oftheir validity and applicability (Gai, 1989; Hayhoe, 1984;Hayllar, 1989)The disciplinary and specialized approach to managementeducation is also consistent with the “high level ofspecialization or compartmentalization of knowledge” within6Introductionthe Chinese academia in general (Hayhoe, 1987, P. 198). Inaddition, the current socio—economic system whichdiscourages mobility of faculty and exchange of informationbetween and within universities also contributes further tothe narrow focus of management education programs in the PRC(Limerick et al., 1985; “Qualifications and mobility,”1985)The PRC’s existing systems of management developmentare currently undergoing some changes in three majoraspects. First of all, the economic environment of thecountry today is drastically different from that of the1950s. There are increasing responsibilities and incentivesfor enterprises as well as all levels of government toparticipate in defining the content of managerial trainingprograms based on their beliefs in the nature of managerialwork. The First Ministry of Machine Building, which was thelargest of the PRC’s ministries in charge of engineering andmanufacturing, for example, sponsored a conference in 1978,with a primary agenda to discuss the curriculum ofmanagement training programs under its jurisdiction (Battat,1986). A similar discussion was also organized by theChinese Enterprise Management Association, the main7Introductioncoordinating body for the PRC’s management developmentprograms (Warner, 1986).The second frontier of the challenge to the existingsystem are the major changes in the structure of curriculaand the process of curriculum planning as part of the recentreform of higher education. With the implementation of newpolicies of higher education, the overspecialization ofknowledge categories is to be reduced, and moreparticipation of higher educational institutions in theprocess of curriculum design is to be allowed (Hayhoe,1987). As a result of this decentralization of decisionmaking, a creative new ethos is observed to be emerging inthe PRC’s universities. Disciplines are more broadly definedthan before, and integration between theory and practicalapplication is starting to be emphasized (Hayhoe, 1989).Third, the PRC has been aggressively seekinginternational assistance, especially from industrializedcountries, with the hope that a management education systemresponding to the PRC’s own needs will emerge as a result oflearning from varieties of approaches (Limerick et al.,1985) . Bilateral programs with governments, universities andprivate enterprises of the United States, Canada, GreatBritain, France, Germany, Japan, Australia, and other8Introductioncountries, and with international organizations such as theUnited Nations and World Bank have proliferated in the lastten years (Battat, 1986; Hayhoe, 1984; Huang, 1987; Keck,1985; Limerick et al., 1985; Warner, 1986, 1988).Integrative management curricula similar to MBA programs inNorth America have appeared in programs jointly administeredby PRC organizations and their foreign partners (Limerick etal., 1985; Warner, 1986).Despite the promising changes, PRC’s managementdevelopment, as argued by Warner (1988), is still “at thecrossroads” (p. 78), awaiting a clear direction. Further,similar to what is observed by Al-Faleh (1987) in the caseof Jordan, the PRC cannot afford to spread too thinly itscritically scarce human and material resources on numerousunfocused trials and errors. A strategic plan based oncritical need and feasibility analysis is needed.Before presenting the conceptual framework, theapproach and methodology, and the findings of this study,Chapter 1 will discuss some of the limitations of existingcross—national management research in addressing managementissues in non—Western economies and of transnationalorganizations; as well as identify some potential directionsfor theoretical advancements in the field. Chapter 2 will9Introductionprovide an overview of the structure and evolution ofindustrial management in the PRC, which not only sets afoundation for analyzing the needs for management educationof the country, but also illustrates the dimensions alongwhich Western—based management theories can be extended.10CHAPTER 1CROSS-NATIONAL MANAGEMENT: LIMITATIONS AND NEW DIRECTIONSIn searching for appropriate content of managementeducation in the PRC, a conceptual framework is proposed topinpoint the similarities and differences in organizationalmanagement across nations. While in this study the frameworkis primarily applied to address the content issues ofmanagement education in the PRC, the proposed framework isbelieved to have much broader applications, in bothgeographical and topical terms.Specifically, the conceptual framework is an attempt ofintegration along two dimensions. First, it is aimed atintegrating the managerial experiences of differentcountries in the world into a geocentric model ofmanagement. Second, it strives to integrate various isolatedmini—theories of management into a more syntheticunderstanding of the tasks of organizational management. Itis hoped that such a model will constitute an importantcontribution to cross—national management studies, which arebecoming a pressing agenda for management research, andwhich is in need of a new orientation.11Chapter 11.1 GLOBALIZED BUSINESS ENVIRONMENT: MAJOR CHALLENGES FACINGMANAGEMENT RESEARCHThe four decades which began soon after World War IIhave witnessed an enormous increase in the movement ofgoods, services, ideas, information and expertise acrossnational boundaries, and a tremendous growth oftransnational organizations, including multinationalcorporations (MNC5) and other forms of internationalalliances (Cascio & Serapio, 1991; Osigweh, 1989). “Theworld has begun to resemble a global village” (Doktor, Tung,& von Glinow, 1991, p. 259). Understanding the diversity ofmanagerial problems and practices across nations has becomean important issue for organizations involved in variousforms of international competition and collaboration, andhence a new challenge for management and organizationstudies (Scott, 1983).Beyond the leading industrialized countries and regionsof such a globalized economy, including North America,Europe, Japan, and more recently, Hong Kong, Singapore,South Korea, and Taiwan are the Third World and “socialist”countries. Despite their high aspiration for development,these economically underdeveloped countries located inAfrica, parts of Asia, Latin America, and Eastern Europe are12Chapter 1confronted with formidable managerial problems and criticalshortages of material and human resources (Kanungo & Jaeger,l990b). Meanwhile, “as the world becomes increasinglyinterdependent, the economic future of developed countrieshinges more and more on success in meeting the problemsfacing the Third World” (Kanungo & Jaeger, 1990a, p. xiii)and socialist countries.1.2 CROSS-NATIONAL MANAGEMENT RESEARCH: THE NEED FOR NEWORIENTATIONDespite the heightened attention to cross-nationalmanagement research in recent years, the studies in thisarea, in general, do not adequately reflect the reality ofthe new globalized world order (Adler, Doktor, & Redding,1986; Boyacigiller & Adler, 1991; Doktor et al., 1991;Rosenzweig & Singh, 1991), and fall short of addressing theconcerns of economically underdeveloped countries (Adler etal., 1986; Kanungo & Jaeger, 1990a). In order for managementresearch to remain relevant to managers, we are faced withthe need to extend the domestic—based, narrowly—focused,predominantly American management research to meet thechallenge of a globalized business environment.13Chapter 11.2.1 The Need For Integration Across NationsOne of the limitations of existing cross—nationalstudies on management and other related issues in socialsciences is the lack of attention to integrating theoreticaland empirical findings in various nations. Such limitationexists in studies with the following two types ofcontrasting orientations: ethnocentric orientation andidiosyncratic local orientation.Ethnocentric orientation. Studies with this type ofresearch orientation look at managerial issues in non—Western environments from Western theoretical perspectives(Adler et al., 1986; Carroll, Goodstein, & Gyenes, 1988;Skinner, 1964). The basic idea behind these studies is totest American-based theoretical models elsewhere. Whilereplicating studies in diversified situations is important,an exclusive emphasis on such approach has two majorpitfalls. First, it neglects the fact that values, problemschemata, behavioral scripts and environments differqualitatively as well as quantitatively across nations(Bond, 1988; Feldman, 1988; Peng, Peterson, & Shyi, 1991a;1991b). As a result, much of the American theoreticalframework and concepts fail to capture the essence ofproblems facing managers in developing and socialist14Chapter 1countries (Adler, Campbell, & Andre, 1989; Hofstede, 1987;Jaeger, 1990; Oberg, 1963; Osigweh, 1989). Second, suchethnocentric research mentality, reflecting the kind oftunnel vision we have in the West in spite of today’s neweconomic world order, prevents us from effective cross—national learning. While the tremendous economic success ishappening in the Pacific Rim (Kraar, 1990), we basically arestill asking whether our way will work overseas, rather thansearching for cross—cultural synergy to enrich our existingmanagerial theories and techniques (Adler et al., 1989).Idiosyncratic local orientation. Research with thistype of orientation isolate studies in one country frommainstream theorizing (Goodman, 1985; Skinner, 1964; Y. Wei,1985). In responding to the very limited relevancy andvalidity of Western—based management theories in lessindustrialized countries, Jaeger and Kanungo (1990) advocatethe development of indigenous management theories andtechniques to address organizational issues in developingcountries effectively. While recognizing the urgent need toexplore special challenges facing less industrializedeconomies, the present author, following Lincoln (1990),cautions the potential pitfalls of treating problems invarious nations as unique phenomena. Devoting our attention15Chapter 1exclusively to the creation of localized management theorieshas at least two drawbacks. First, it is very difficult fordeveloping countries to effectively benefit from theexisting knowledge and resources from the Westernindustrialized countries without a general framework whichcan help pinpoint the similarities and differences inmanagerial tasks across various nations.Second, ignoring the generalizability of organizationalscience across nations will also compromise the capabilityorganizational science to meet the challenges ofincreasingly globalized business environment, one in whichcorporations as well as consumers are becoming so activelyinvolved in the movements of tangible and intangible itemsacross nations that it diminishes the significance oftraditional national borders (Ohmae, 1990). A MNC, forinstance, is composed of a set of subsidiaries which operatein distinct national contexts. On the other hand, a MNC is asingle organization which operates as a whole in a singleglobal environment (Rosenzweig & Singh, 1991). An exclusiveindigenous approach would offer an inadequate analyticaltool for a MNC which is concerned with not only the fitbetween its subsidiaries with the local environments of the16Chapter 1host countries, but also the strategic integration of theorganization as a whole (Ricks, Toyne, & Martinez, 1990).Geocentric orientation needed. “If the perspective ofsocial science as developed in the West is inadequate, thatmust be demonstrated by the creation of a new and bettersocial science instead of developing separate socialsciences for different societies” (Azumi, 1974, p. 527). Thelevel of analysis in the field of management andorganization science should move up from idiographicunderstanding of management in individual nations togeocentric oriented theoretical framework so that cross—cultural variations can be encompassed (Redding, 1987;Redding & Whitley, 1990).1.2.2 The Need For Integration Across Theoretical StreamsAnother related problem of existing cross—nationalmanagement research is that insufficient attention has beengiven to a search for integrative theoretical models tofacilitate a holistic and multi-disciplinary view oforganizational management (Doktor et al., 1991; England,Negandhi, & Wilpert, 1979; Roberts & Boyacigiller, 1984;Rosenzweig & Singh, 1991; Steers, 1989). The North Americanresearch tradition favors mini or partial theory (Goodstein,17Chapter 11981). Most of the cross-national studies by North Americanscholars, while describing certain relationships betweensome limited aspects of national characteristics and somedimensions of management, fail to account for the complexrelationships between various dimensions of management(Khin, 1988; Rieger & Wong—Rieger, 1990).Studies involving a small number of variables tend toenable better internal validity, which is highly emphasizedin the North American academia dominated by positivist-empiricism (Gergen, 1978). However, this type of researchconduced in isolation tend to have limited theoretical andpractical value. Keys and Miller (1984), for example, arecritical of the oversimplified approaches typically taken inthe numerous studies on Japanese management practices. Thenarrow comprehension of the Japanese business environmentand of its impacts on the system of the Japanese managementresults in much of the theoretical inconsistencies andcontradictions in the area. What is most needed tosignificantly advance this area of research are, accordingto Keys and Miller,18Chapter 1models that reflect the “system” of Japanesemanagement——the interdependencies of thepolitical, economic, social, and religiousvariables with management practices ... [and] thatencompass the evaluation and the context ofJapanese management practices, rather thanfocusing on the techniques or concepts inisolation. (p. 352)Meanwhile, narrowly focused studies provide limitedguidance for managerial practitioners, who are faced withsituations complicated by numerous interdependencies.Moreover, one—to—one comparisons on certain organizationalvariables between Western and non—Western nations are oftenmeaningless, at least in a practical sense, since thedifferences across nations are frequently qualitative, aswas mentioned earlier.The absence of a synthetic model also prevent themeaningful cumulation of research findings in the field “dueto lack of consensus on identification, definition, andmeasurement of factors (Bhatt & Miller, 1983: p. 27).Synthetic Orientation Needed. The field of cross—national management acutely needs synthetic approaches,where the theoretical strengths of various partial theoriesare incorporated (Roberts & Boyacigiller, 1984). Suchapproach would enable us to study complex organizations inbroader terms, simultaneously taking into account many19Chapter 1important organizational variables and their relationshipsto gain a holistic understanding of organizational reality(Keys & Miller, 1984; Miller & Mintzberg, 1983)1.2.3 A New Strategy of Cross—National Management ResearchStark and Nee (1989) call our attention to the researchstrategy of “genuine cross—systemic comparisons” (p. 9)exemplified by the work of Kornai (1989) in the field ofcomparative economics. Rather than mechanically searchingfor one—to—one correspondences between various features ofWestern economies and their socialist counterparts, Kornaitakes a research strategy which achieves integration acrossnations and across various isolated theoretical concepts.Two important characteristics of Kornai’s researchapproach warrant our particular attention. First, ratherthan simply projecting features of Western economies totheir socialist counterparts, he theorizes by building upfrom careful observations of the socialist economy, andcombining them with pointed contrasts to the capitalisteconomy (Stark & Nee, 1989). Concepts and theories developedin the West, in Kornai’s work, become critically selectedanalytical tools instead of standards by which to evaluateother forms of economy.20Chapter 1Second, rather than comparing particular elements inisolation between capitalist and socialist countries,Kornai’s work also addresses “institutional configurations”of the socialist economy. By doing so, he and others usingthe similar research approach are able to generatetheoretical models explaining the dynamics of the socialisteconomy, which, on one hand, borrow some research tools fromthe West, while, on the other hand, provide vantage pointsfrom which to look back at the capitalist economy. “Thespecific features of each system are revealed in theirmutual contrast” (Stark & Nee, 1989, p. 13).Following the examples set by Kornai and others incomparative economics, the conceptual framework of thecurrent study, which will be discussed in detail in Chapter4, attempts to describe the organizational “configuration”based on comparisons and contrasts of organizationaldynamics across nations.21CHAPTER 2AN OVERVIEW OF INDUSTRIAL MANAGEMENT IN THE PRCIn order to understand the particular knowledge andskills required in managing the PRC’s industrial enterprisestoday, and to explore the dimensions along which andmanagement theories can be extended to better reflect thereality of management in and across various nations, thischapter addresses itself to both the macro— and micro—contexts of industrial management in the PRC.The PRC’s industrial management at both the nationaland enterprise levels is affected by two major concerns:modernization and revolution (Andors, 1981). The evolutionof industrial management in the PRC reflects (a) theinterpretation of the two concepts, (b) the relative weightsassigned to the two objectives, and (c) the beliefs aboutthe possible means to achieve the two ends.2.1 MACRO-ECONOMIC CONTEXT OF INDUSTRIAL MANAGEMENT IN THEPRCMacro—economic context of industrial management in thePRC is discussed by focusing on (a) the basic structure inwhich activities of enterprises are coordinated to achieve22Chapter 2the national goals, and (b) the evolution of thecoordinating mechanism since 1949.2.1.1 Structure of Economic CoordinationIn the PRC, economic activities of state—ownedenterprises (SOE5) are coordinated primarily throughadministrative measures. The role of the market mechanism,though expanding in recent years, continues to be secondary.The administrative coordinating mechanism consists of twointerwoven subsystems, namely, branch—type administrationand interbranch administration. The branch-typeadministration means that all units concerned with similaroperations are linked hierarchically and form a singlebranch. The most characteristic and perhaps the mostimportant form of branch-type administration in the PRC’seconomy are the ministerial organizations, which reach intovarious regions of the country to control lower levelorganizations such as enterprises. On the other hand,interbranch administration refers to the subsystem in whichunits of production are grouped based on their geographicallocations, and are coordinated and controlled by regionalgovernments, such as provincial governments (Schurmann,1968)23Chapter 2The diagram in Figure 1 captures key structures of thecoordinating mechanism of the PRC’s industries. Roughlyspeaking, industrial enterprises in the PRC are controlledin one of the four ways, according to Lyons (1990). Thefirst group of enterprises (represented as Enterprise 1 inFigure 1), which can be called central enterprises, arecontrolled directly by certain branch-type agencies, mainlyministries of the central government. These enterprises aretypically large in size, technologically advanced, locatedin large cities, and relatively important to the nationaleconomy. The second group of enterprises (represented asEnterprise 2 in Figure 1) are provincial enterprises,activities of which are coordinated by regional governments.The’ two subsystems of the coordinating mechanism dooverlap, which results in dual leadership by ministries andprovinces over the third and fourth groups of enterprises.In the case of the third group of enterprises (representedas Enterprise 3 in Figure 1), which can be calledcentral/provincial enterprises, ministries are responsible“for the production and financial plans, for providing mostinputs and for distributing outputs” (Lyons, 1990, p. 43),while the provinces in which the enterprises are locatedhandle political and welfare matters, and exercise control24Chapter 2Figure i. Structure of macro-economic coordination in thePRC.over residual production capacities of the enterprises. Inthe case of the fourth group of enterprises (represented asEnterprise 4 in Figure 1), which can be calledprovincial/central enterprises, the provinces areresponsible for production and financial plans, and materialsupplies, while the relevant ministries provide certaintechnical support.25Chapter 2In comparison, interbranch coordination allows moreregional autonomy and hence more inputs from the lower levelgovernment agencies than branch—type coordination. Inaddition, annual plans handed down from the centralgovernment to provinces are typically less rigid than thosegoing to ministries (Lyons, 1990).Figure 1 also indicates that the two subsystems ofeconomic coordination are controlled at the top by the StateCouncil, which is the executive body of the centralgovernment. The State Council is composed of ministries,formed according to functional specialization, and specialcommissions, such as the State Planning Commissions and theState Economic Commission). The State Council, at the sametime, controls regional governments, the top echelon ofwhich is divided into provinces, autonomous regions, andmunicipalities directly under the central government(Laaksonen, 1988; Schurxnann, 1968).2.1.2 Evolution of the Coordinating MechanismThe evolution of the PRC’s macro—economic coordinatingmechanism can be analyzed from two dimensions: ownership ofindustrial enterprises, and control over public ownedenterprises.26Chapter 22.1.2.1 The change of ownershipThe focus of this sub—section is on the change ofownership relations of the PRC industry. One of the mostimportant characteristics of socialism is the publicownership of means of production, according to orthodoxMarxism. Public ownership consists of two forms: stateownership and collective ownership. A state—owned enterpriseis one “where the means of production and the products orincome are owned by the people,” while a collectively—ownedenterprise is one “where the means of production and [the]products or income are owned by workers in the collectives”(State Statistical Bureau, People’s Republic of China, 1988,p. 805). The change of ownership forms in the PRC’sindustrial sector since 1949 primarily reflect the influenceof the Maoist socialist revolution. Nevertheless, the ongoing economic reform since 1978 is showing gradual butunmistakable departure from the socialist path opened up byMao (Laaksonen, 1988; Liu, 1987). Table 1 illustrates thechanges in the composition of various forms of industrialownership in terms of their respective contributions togross industrial output value.27Chapter 2Table 1. Proportion of contributingforms of ownership to gross industrialoutput value in the PRC (%)OwnershipYearState Collective Private Othersa1952 76.17 3.26 20.751957 80.14 19.03 0.831962 87.80 12.201965 90.07 9.931970 87.61 12.391971 85.91 14.091972 84.88 15.121973 84.02 15.981974 82.41 17.591975 81.09 18.911976 87.33 21.671977 77.03 22.971978 77.63 22.371979 78.47 21.531980 75.97 23.54 0.02 0.471981 74.76 24.62 0.04 0.581982 74.77 24.82 0.06 0.681983 73.36 25.74 0.12 0.781984 69.09 29.71 0.19 1.011985 64.86 32.08 1.85 1.211986 62.27 33.51 2.76 1.461987 59.73 34.62 3.64 2.021988 56.80 36.15 4.34 2.711989 56.06 35.69 4.80 3.451990 54.60 35.62 5.40 4.38Source: Editorial Department of the PRC Year Book (1991, p.184)Notes: Figures are at current prices; Empty cells representzero percent.aFigures in this column include output value of 5mb—foreignjoint ventures and foreign—owned enterprises.28Chapter 2The share of state—owned enterprises in the PRC grewrapidly from 1949 until 1965, when it reached 90% of theoutput value of industries. After 1965, the proportion ofstate—owned enterprises started to decline, while theproportion of collective ownership started to growconstantly. The share of private ownership of industrialenterprises dropped to virtually zero during the period ofeconomic rehabilitation and socialist transformation from1949 to 1956.However, the economic reforms marked by the ThirdPlenary Session of the 11th Party CentralCommittee held in December 1978 brought about newperspectives on the appropriate forms of ownershipin the PRC in order to achieve economicprosperity. As is suggested in an articleappearing in Beijing Review (Zhao, 1986) :Ineconomically backward socialist countries likeChina, while public ownership dominates, othereconomic sectors should be allowed, to helpdevelop the economy over a comparatively longperiod. The individual economy, 5mb-foreign jointventures and solely foreign—owned enterprises maybe regarded as necessary supplements to thesocialist economy. (p. 14)Further, the author argues:Traditionally, it was thought that the collectiveeconomy would be of low productivity, and aprogression was envisaged whereby smallcollectives would grow and then be taken over bythe state. That has not been the case andproductivity of many large collective enterprisesis much greater than some state—owned enterprises.(p. 14)29Chapter 2Such new thinking has in fact led to the emergence ofan private economy, Sino—foreign joint ventures and solelyforeign—owned enterprises as well as to the growth ofcollective enterprises in the PRC in recent years. Recentstatistics of the PRC’s industrial output show that theshare of industrial output from enterprises which are ownedneither by the state nor socialist collectivities has grownfrom virtually zero in the 60s and 70s to 9.78% in 1990.Collective enterprises produced 35.6% of industrial outputin 1990, compared to 23.5% in 1980. on the other hand, theshare of output from state enterprises dropped 21.4% from1980 to 1990.2.1.2.2 The change of controlThe focus of this sub-section is on the shift ofdecision—making powers between the State, regions and SOEssince 1949. According to Jackson (1986), the following threeforms of power distribution have appeared, to variousextents, in socialist economies, including the former SovietUnion, Eastern European countries, and the PRC.30Chapter 22.1.2.2.1 Central Administrative PlanningCentral administrative planning is considered to be thetraditional means of coordinating national economies insocialist countries, and originated from the Soviet Union(Jackson, 1986). In this system, rigid and direct control bythe central government over the activities of the units ofproduction is realized by a strong branch-type coordinatingmechanism through which mandatory production and financialplans are imposed on enterprises.The economic system of the PRC during the early l950s,under strong Soviet influence, was dominated by centraladministrative planning (Schurmann, 1968). Detailedproduction quotas for each enterprise were set by the State.The State was also responsible for allocating raw materialsand funds for production and investment as well as fordistributing finished products. Earned profits byenterprises were turned over to the central government forredistribution. The responsibility of enterprise managementwas limited to the task of utilizing available resources toachieve production targets.31Chapter 22.1.2.2.2 Administrative DecentralizationAdministrative decentralization is “a minor reforminvolving the partial transfer ... of powers to lowerlevels” (Jackson, 1986, p. 407) in order to enhanceefficiency and flexibility of the system while retaining thebasic structure of administrative planning. Administrativedecentralization is realized through enlarging the powers oflocal governments and enterprises in making less strategicdecisions.Enlarging the powers of regional governments. Theweakness of the traditional central administrative planningsystem and the potential advantage of incorporating regionalinitiatives into the planning system was recognized in thePRC during the late 1950s (Andors, 1977; Lee, 1987). Theidea emerged from both the concern over economic imbalanceand the concern regarding overconcentration of politicalpower. The Eighth Congress of 1956 called for astrengthening of the “dual rule” of the two parallel subsystems of economic planning, namely, branch—type andinterbranch administration (Schurmann, 1968).The general trend of administrative decentralizationhas continued in the PRC since then, despite the turmoil32Chapter 2during the Great Leap Forward, and later, the CulturalRevolution. Between 1957 and 1958, over 80% of the centralenterprises were transformed into one of the other threetypes of enterprises (Lee, 1987). By the end of the 1970s,the number of central and central/provincial industrialenterprises declined to fewer than 10,000, with 2,000-3,000of these purely central, while more than 70,000 state—ownedenterprises were controlled primarily or entirely byregional authorities (Lyons, 1990).In the reform efforts after Mao, a deepenedadministrative decentralization has reached areas which weretraditionally under close supervision of the centralgovernment. For example, one of the latest reform measuresin the area of international trade requires the Ministry ofForeign Economic Relations and Trade (MOFERT), a branch-typecentral agency, to decentralize its operations and pass someof its control over the PRC’s foreign trade to variousindustrial ministries (i.e. other branch-type agencies), andlocal governments (i.e. interbranch administrative organs).In particular, MOFERT is required to subordinate its localbranches to the leadership of regional governments to agreater extent, and to transform some of its tradingcompanies from central enterprises to central/provincial33Chapter 2enterprises. Trading companies which are mainly under thecontrol of regional authorities or other ministries alsoemerged by the early 1980s. Meanwhile, the export licensingauthority for an increasing number of commodities is beingdelegated from the MOFERT headquarters to the local branchesof MOFERT or regional governments (Cheng, 1988; Gorman,1986; Tseng, 1991).Enlarging the powers of enterprises. The PRC reformsince 1979 has also implemented administrativedecentralization through expansion of enterprise self—management. Zhao (1986) summarizes this aspect of the reformendeavor in this way:In the past, ownership by the whole people wasequated with management by state departments. InOctober 1984 the third Plenary Session of the 12thParty Central Committee decided that ownership beseparated from management power: let the stateremain the owner but take management away from thestate and leave it to enterprises themselves. (p.14)Specifically, the state has reduced its monopoly in thedistribution of producer and consumer goods. According toFujimoto (1991), the central government allocated 72production goods (including raw materials) in 1988, downfrom 572 in 1972, and tracked 60 final products in 1987,down from 120 in 1984. Meanwhile, the number of mandatory34Chapter 2targets or plan indicators issued to individual enterpriseshas been reduced from eight to four, namely, output, productquality, fulfillment of contracts, and profits (Jackson,1986). The State Council announced in 1984 and 1985 that therights of enterprises to make decisions be expanded in areasincluding production planning, product marketing, pricing ofproducts outside the state plan, material purchases, use ofsurplus funds, disposal of assets, establishment ofsubordinate organs, personnel and labor management, paymentincentives, enterprise affiliation, and technologicalimprovement (Child & Yuan, 1990; Fujimoto, 1987).Under the new reform initiative, an enterprise, firstof all, has more autonomy in deciding on the means tofulfill the state plan. Second, after fulfilling the stateannual plan, an enterprise can determine its above—planoutput, and market goods not bought up by the Commerce,Materials and Supply Departments in various levels of thegovernment (“Sichuan Baige Qiye,” 1979). Enterprises, on theother hand, are responsible for acquiring raw materials andproducer goods which are not allocated by central orregional governments by either signing contracts with otherfirms or purchasing in the market place (Jackson, 1986).35Chapter 2It was estimated 20% of the PRC’s total industrialproduction in 1985 was outside the domain of state plan(Fujimoto, 1987). Based on the data collected from six SOEslocated in Beijing, Child and Yuan (1990) concluded thatmanagement in all the enterprises had secured substantiallymore autonomy in 1988 than in 1985, especially in planning,personnel, use of funds, and assets disposal.While enterprise managers have been granted theauthority to make business decisions, they still encountergreat constraints in implementing their decisions. Rights ofenterprise managers, though supported by the centralgovernment in principle, are vague and contradictory, andthus subject to reinterpretations by the local governments.Enterprises frequently have to be involved in rounds ofnegotiations with the local governmental agencies in matterssuch as bank loans and staffing. Various forms of“administrative interference” from local government bureausremain to be one of the major complaints expressed by PRCmanagers (Child & Yuan, 1990; “Ta Shang Lishi De,” 1991).Administrative decentralization was designed to buildflexibility and adaptability into the basic economicplanning system by allowing more autonomy at lower levels,but it did not solve the problem of how to motivate various36Chapter 2regions and enterprises to contribute to the nationaleconomic goals (Andors, 1977). Economic efficiency andgrowth would not materialize from nonmaterial incentives or“revolutionary passion” alone (W. Wei, 1985).2.1.2.2.3 Economic decentralizationEconomic decentralization is a model of economiccoordination based on the market mechanism. Administrativeagencies (central or local) no longer issue annual stateplans containing detailed and specific instructions toindividual enterprises. Enterprise management has the rightto make business decisions based on market forces (Jackson,1986). One of the most significant characteristics of thepost—Mao reform is that it involves not only administrativedecentralization of the earlier reform attempts, but alsoeconomic decentralization (Boisot, 1987; Jackson, 1986).Building market mechanisms at the national level. Stepshave been taken to build an economic infrastructure at thenational level to facilitate the development of “marketsocialism”. Decentralization of the banking system startedto be experimented in Special Economic Zones (SEZs) andseveral major cities in the late 1980s to strengthen thehorizontal connections among branches of various banks37Chapter 2located at major commercial centers. Financial markets ofshort—term finance, bills, securities, and foreigncurrencies are also beginning to be created under the reformprogram (Dipchand, Dodds, McGraw, & Chen, 1991; JETROShanghai Office, 1987). The PRC’s first national securitiesmarket—-the Shanghai Securities Exchange--was established inDecember, 1990, though only a few stocks and bonds haveactually been traded in the exchange (Burke, 1991).Introducing market mechanisms into the labour system isone of the most important and perhaps the most intricatetasks of building market mechanisms in the PRC. For morethan thirty years, every urban worker in the PRC wasguaranteed an “iron rice bowl”. The government agencieswould allocate the urban school graduates to given workunits, where they would be secured for a life—long tenure(Howard, 1991; “Making a Dint,” 1986; “The New Labours,”1986; Tung, 1982; White, l987c).Two major deficiencies of such a labour policy havebeen recognized. First, it prevents a rational flow andoptimal distribution of human resources across enterprises,industries, and regions. Second, the life—long employmentcauses complacency among industrial workers, which is38Chapter 2considered to contribute to the low productivity found inPRC enterprises (Howard, 1991; Tan, 1989; White, 1987c).To achieve an optimal match between people and theirjobs, efforts are made to incorporate various forms ofmarket measures into the dominant labour allocation system.Many job information or employment service centers have beenset up in various cities to generate reports on trends ofjob markets, and to help the supplies and the demands meet(“The New Labours,” 1986; White, 1987a). Meanwhile, manyenterprises are beginning to adopt the meritocratic approachof employee selection. Job applicants are selected based ontheir performance on examinations after they go throughphysical and political screenings. Those examinations,designed either by the enterprises, or by the municipallabour bureaus, test high school level knowledge in Chinese,mathematics, and sometimes physics—chemistry and politics(“Making a Dint,” 1986; Shirk, 1981; Tan, 1989).On the other hand, the recent labour reform is alsoaimed at breaking the life-long employment system. Under thenew labour contract system, which was developed in SEZs andShanghai, and then became mandatory for new recruits in allSOEs in 1983, employees are hired on a contract basis. Newworkers, after being selected, would sign a labour contract,39Chapter 2specifying mutually agreeable terms of employment. Salariesof workers under the system are reassessed every year basedon the technical skills, work attitudes and contributions ofthe workers. Meanwhile, plans were also made to graduallyuniversalize the labour contract system to all SQE employees(Howard, 1991; “The New Workers,” 1986; White, 1987c).The implementation of the labour reform has encounteredtough resistance in the PRC. According to Howard (1991) andWhite (1987b, l987c), the actual implementation of thesystem has been superficial in most of the SOEs, wherelabour contracts signed are long—term or are virtuallyrenewed automatically for every worker.While the contract system is welcomed by skilledemployees, who are in critical shortage, it creates aserious threat to the job security and welfare of unskilledworkers, who are in acute surplus (“The New Labours,” 1986,White, l987c). Responses from enterprise managers are alsodiverse. Younger and more technical oriented managers tendto give more support to the new policy than older and morepolitically oriented managers (White, l987c).In addition to the opposition to the new policy fromthe social groups whose vested interests are jeopardized,40Chapter 2resistance to the policy comes also from the fact that thecurrent PRC society in general has very low social tolerancefor a high level of turnover and unemployment (Howard,1991). This results partly from cultural values andsocialist ideology which embrace security and equality(White, l987b, l987c; “Solving China’s Employment Problems,”1991). What also contributes to the problem are the lack ofinstitutional alternatives other than the work units inensuring basic social security for surplus labour, and thepractical barriers to job mobility, such as work unitassigned housing (“Qualification and Mobility,” 1985; Yang,1989)The reformist leaders in the central government have,nevertheless, pressed for the expansion of the contractsystem to a larger scope. A more innovative form of thelabour contract system named optimization throughregrouping, had been introduced in 6% of the SOEs by 1988(Howard, 1991). Under such an approach, employees areencouraged to form work teams voluntarily and to contractfor production projects on a group basis, though individualemployees within the teams are still required to sign labourcontracts on an individual basis.41Chapter 2Ensuring accountability at the enterprise level. Reformefforts during the Mao era merely shifted planning authorityfrom the central government to local governments or workunits, which was essentially a level of the stateadministrative hierarchy. Under the post—Mao reform program,on the other hand, the expansion of enterprise autonomy,discussed in the previous section, is combined with neweconomic incentives and sanctions which hold enterprisesresponsible for their own profits and losses.Three major categories of reform programs have beenimplemented to gear the enterprises for a more market—oriented economic system emphasizing accountability andeconomic incentives. First, the profit retention system putinto effect in 1979 (Jackson, 1986) was soon replaced on alarge scale by an enterprise tax system in 1984 (Fujimoto,1987, 1991; “Reassessing,” 1988). Under the new tax system,enterprises are entitled to distribute to an assortment offunds (e.g. Production Development Fund, Collective WelfareFund, Bonus Fund, and Reserve Fund) all the retained profitsafter paying taxes on their earnings (Jackson, 1986;Kobayashi, 1987, Plasschaert, 1988).The second category of measures includes a managementcontract system (chengbao jingying zeren zhi), implemented42Chapter 2on a large scale since 1987. Managers are accountable forthe achievement of key economic indices defined under thecontract and have the authority of making business decisionsnecessary for achieving the goals (Fujimoto, 1987;“Industry,” 1987).Finally, an enterprise bankruptcy law was introduced inthe late 1980s to dismantle the system and expectation thatthe government will provide unlimited assistance to salvageenterprises suffering chronic losses (Fujimoto, 1987).Assessment of the reform towards accountability hasbeen mixed. Some China observers (e.g. Fischer, 1991;Jackson, 1986) have expressed measured optimism that thereform did create a sense of accountability among PRCmanagers. Managers in one of the PRC’s SOEs, for instance,were reported making decisions on above—plan product mix andproduction development investment based primarily on thecriteria of profitability and long-term financial viabilityof the enterprise (Jackson, 1986).However, the eventual effectiveness of the reformmeasures aimed at increased accountability has beenquestioned by some. Despite the apparent rising incentivesfor viable financial management at the enterprise level, the43Chapter 2PRC’s economic decentralization program is, in essence,partial, with the central planning system still dominating(Chamberlain, 1987; Fujimoto, 1991). Such partial“marketization” of a socialist economy, according to Kornai(1989), is not capable of achieving equilibrium of supplyand demand. Chronic shortage for capital and materialresources will persist and worsen, which will inevitablylead to periodical tightening of state control over micro-as well as macro— economic activities. The belt—tighteningmeasures implemented in the PRC in 1988, which brought thereforms to a standstill (Yamanouchi, 1991), appeared toreflect deep contradictions in the current vision of asocialist market economy.2.2 ENTERPRISE MANAGEMENT IN THE PRCThe PRC’s industrial management at the enterprise levelis examined through a brief account of the evolvingorganizational structure and reward system within typicalSOE5 since 1949.44Chapter 22.2.1 organizational Structure and Reward systems2.2.1.1 Organizational StructureFigure 2 illustrates the organizational structure of atypical SQE in the PRC. As is shown in the figure, thetechnical core of an enterprise is divided vertically intofour levels: namely, the factory (or the corporation), thesub—factory (or division), the workshop (or department), andthe group (Jackson, 1986). Supporting the technical core arefunctional units, such as planning, finance, technicalaffairs, labour and wage, supplies, and quality control,established at various levels of the hierarchy.Parallel with such managerial chain of command, whichis relatively familiar to the Westerners, is that of theCommunist Party organization at each level within the PRCenterprises. There usually is a Party committee (dangwei) atthe factory level, a general Party branch (dang-zongzhi) atthe sub-factory level, a Party branch (dang-zhibu) at theworkshop level, and a Party cell (Dang-xiaozu) at the grouplevel. Each level of the party organization is headed by aParty secretary and his/her deputies (or a Party cell leaderand his/her assistant(s) in the case of the Party cell). Theleadership role of the Party organization in the PRC45ILWORK SHOPLINE AUTHORITY(Ws -L)-Management-the Party-TU & W/SC-the Youth LeagueirChapter 2Figure 2. organizational structure in typical large- andmedium- sized state-owned enterprises in the PRC: Double-linedboxes highlight line units, and single-lined boxes highlightfunctional units.FACTORYLINE AUTHORITY(F-L)-Management-the Party-TU & W/SC-the Youth LeagueFACTORYFUNCTIONAL UNIT(F-F)-Management-the Party-TU & W/SC-the Youth LeagueIF-FIIiTSUB-FACTORYLINE AUTHORITY(SbF-L)-Management-the Party-TU & W/SC-the Youth LeagueSUB-FACTORYFUNCTIONAL UNIT(SbF-F)—Management-the Party-TU & W/SC-the Youth LeagueSbF_j[SbF-FJIIIs-L IIWORKSHOPFUNCTIONAL UNIT(Ws—F)-Management-the Party-TU & W/SC-the Youth League[ws_F]GpLjtGROUPLINE AUTHORITY(Gp-L)—Management-the Party-TU & W/SC-the Youth LeagueGROUPFUNCTIONAL UNIT(Gp-F)—Management-the Party-TU & W/SC-the Youth LeaguefcpFJ46Chapter 2enterprises reaches far beyond the Party members. The Partyis involved in a variety of managerial matters to variousextents (Laaksonnen, 1988). The authority relationshipbetween the management and the Party committee1 has alwaysbeen a sensitive and unsettling issue in the PRC, which willbe discussed in some detail in Section 2.2.2. In addition,the Communist Youth League, an auxiliary Communist youthorganization, also plays certain leadership roles amongyoung workers.The workers’ and staff’s congress (W/SC) and the tradeunion (TU) in SOE5 constitutes the two major interrelatedforms of work—place democracy in the PRC (Ng & Lansbury,1987). The W/SC, which is composed of representativesdirectly elected by workers and staff bi-annually, isintended to provide an opportunity for rank and file workersto participate in the decision-making of enterprisemanagement, the Party committee and the trade union(Laaksonnen, 1988). The trade union in a PRC enterprise is agrass-roots unit under the leadership of the All-ChinaFederation of Trade Unions. Within the enterprise, the unionoperates through its representatives at each level of theorganizational hierarchy. The trade union branch in eachenterprise deputizes the W/SC as its executive organ when it47Chapter 2is in recess (Ng & Lansbury, 1987). The evolving roles ofthe worker’s congress and the union in the PRC’s enterpriseswill also be addressed in Section 2.2.2.2.2.1.2 Reward SystemsThe ideology of the PRC government stresses that “alltypes of material incentives should be used hand-in-handwith moral encouragement” (Henley & Nyaw, 1987, p. 139). Therelative weights of the forms of rewards, however, havechanged substantially over the years, as will be discussedin Section 2.2.2.The principle forms of material incentives includebasic wages, subsidized commodities, bonuses, and welfarebenefits such as health care and paid vacation. Basic wagesreflect both the cost of living, and the level of skills andthe types of responsibility required for particular jobs.Wages are calculated based on a system of progressive gradesassigned to each employee according to their levels ofskills, adjusted for the cost of living and types ofoccupation (Henley & Nyaw, 1987; Kobayashi, 1987; Shenkar &Chow, 1989). The extent to which bonuses are used in the PRChas experienced substantial changes.48Chapter 2Various forms of non—material stimuli including labouremulation campaigns, quality circles, and ideologicaleducation are also used in an attempt to motivate employeesthrough raising their political consciousness andinternalizing their sense of responsibility (Henley & Nyaw,1987). In addition, the sanction by one’s work group is alsoa very important type of non-material stimuli for a Chineseemployee who, according to Nevis (1983), tends to have avery high need for social belonging. Mutual performanceappraisal and criticism in peer groups are, therefore,powerful motivating tools in the work place (Goodman, 1984).2.2.2 Evolution of the Practices of Enterprise ManagementEnterprise management in the PRC has evolved throughvarious forms. Following Child (1987), the forms ofenterprise management in the PRC are divided into fourcategories. According to their most salient characteristics,these forms of industrial management are labelled in thisanalysis as (a) “one—man” management2, (b) unifiedleadership of the Party, (c) mass participative management,and (d) integrative management. It should be noted, however,that management takes a mixture of various forms, and the49Chapter 2classification reflects only the dominant form of managementat a particular period of time.2.2.2.1 “One—Man” ManagementThe term “one—man” management refers to the managementprinciple advocated in the Soviet Union that one person, thefactory director, was in complete control of factory. Oneindividual was also responsible for and had power over eachproduction unit, such as workshop and group. The Soviet formof “one—man” management dominated the PRC enterprises duringthe period of 1949-1956, when the Soviet Union providedsubstantial material and technical assistance to the ChineseCommunist government. The “one—man” management system wascharacterized by a strong technical orientation and strictindividual responsibility. Production was organized based onthe principles of scientific management: clear division oflabour and highly standardized production methods.Organizational control was achieved through holding managersand workers individually responsible for fulfillingproduction targets.Under such a system, as illustrated in Figure 3 (a), thefactory director (FDR) was given the ultimate power tomobilize material and human resources to achieve production50Chapter 2targets issued by the state, for which he/she would be heldresponsible. The roles of the Party Committee and massorganizations were restricted to mostly administrativematters, which enabled the FDRs to manage businessoperations without political interference (Schurmann, 1968).At the same time, a strong technical orientation alsoled to centralization of functional responsibility andauthority. Functional units at the lower levels oforganizations (e.g. group, or workshop levels in Figure 2)were kept to a minimum.The spread of the “one—man” management system in themajor industrial enterprises was supported by the highpriority set by the new Communist regime to industrializethe country so that the recent victory of the Communistrevolution could be best protected. It was also believed,under the strong influence of the Soviet experts, that themost efficient way to maximize productivity in theenterprise was to manage it based on technical rationality(Lee, 1987)Although moral encouragement had already beenestablished as an important part of non—material rewards inthe PRC enterprises, material benefits were highly51II___________________________________________________IMANAGEMENT(FDR)hTE_PARTYHI]THEYOUTHILEAGUEBUSINESSDMINISTTION(a)THEPARTY(SECRETARY)I______rMANAGEMENTTU&W/SCTHEYOUTHLEAGUEBUSINESS—INISTRATION(b)REVOLUTIONARYCOMMITTEE/TRIPLECOMBINATIONLMAGENTCOMMITTEEIIi___iiMANAGEMENTTU&W/SCTHEPARTY1____THEYOUTHLEAGUEBUSINESSHIADMINIsTRATIONfl(d)Figure3.FourtypesoforganizationalstructurewhichhavebeenadoptedinPRC’senterprises:(a)one-manmanagement,(b)unifiedleadershipoftheParty,(c)massparticipativemanagement,and(d)integrativemanagement.Singlelinedboxeshighlightcomponentsoforganizationalauthoritystructure,doublelinedboxesr,highlightelementsoforganizationalmanagement;=supervisoryrelationship,=advisoryrelationship,==collaborativerelationship.(iiIIHBUSINESSIIADMINISTRATIONII(c)Chapter 2emphasized during the early to mid 1950s. Model workers weretypically rewarded with monetary incentives, in addition tooffering recognition (Henley & Nyaw, 1987). A bonus systemwas also used quite extensively to enhance productivity. By1954, according to Henley & Nyaw (1987), over 40% of workershad been under piece—rate bonus systems.2.2.2.2 The Unified Leadership of the PartyThe “one—man” management practice was replaced after1956 with a new system named factory director responsibilityunder Party committee leadership. The change stemmed fromthe concern by certain Party leaders, Mao especially, thatthe revolutionary goal of the government would diminishunder the technocratic and bureaucratic orientation of the“one—man” management system. Mao also believed that theSoviet system, which overconcentrated the power at the handsof FDRs, undermined the leadership role of the Party and theinterests of rank and file workers (Chamberlain, 1987;Schurmann, 1968).The new system was originally set up so that the Partycommittee would oversee the policy issues while the FDRwould be responsible for daily business operations. However,53Chapter 2once the Party was involved in a major way in the affairs ofthe enterprises, the distinction between policy andoperations became blurred, and “the enterprise Partycommittee came under increasing pressure to decide allissues, large and small” (Chamberlain, 1987, pp. 632—633).Meanwhile, the collective leadership intended in the systemgradually became a rhetoric only. The Party secretary,replacing the FDR, was now the “one—man” in charge ofeverything and had ultimate power over everyone else(Chamberlain, 1987; Walder, 1989) (see Figure 3(b)).The W/SC started to be recognized officially as earlyas 1956, suspended throughout the Cultural Revolution, andrevitalized in the late 1970s. However, before the Post-Maoreform, the role of the W/SC was limited and vague. Itgenerally involved reviewing the overall performance of theenterprise and channeling employees’ voice (Ng & Lansbury,1987). The W/SCs, as well as TU, were put under the firmcontrol of the Party (Nelson & Reeder, l987a), as shown inFigure 3(b).This de facto form of “unified leadership under theParty secretary”, in the view of Chamberlain (1987),persisted from 1956 to the mid 1960s, interrupted by theCultural Revolution, and restored in the early 1970s until54Chapter 2the death of Mao. Attempts made by several leaders duringthose periods of time to return to the more technicaloriented “one—man” management system did not succeed.With the departure from technical rationality whichunderlay the “one—man” management, increased pressure wasput on technical experts and professionals to operate closeto the shop floor. Many functional units at the factory andsub—factory levels were divided and reformed under thecontrol of workshops (referring to Figure 2).During the period of unified leadership by the Party,material incentives were constantly under attack as a“revisionist idea”. By 1958, the piece—rate bonus systemswere abolished, and replaced by a system which paid across—the—board bonuses to virtually every worker regardless oftheir performance. Managers and technical personnel wereexcluded from receiving bonuses (Henley & Nyaw, 1987).2.2.2.3 The Mass Participative ManagementMao’s urge for “revolution” in enterprise managementsince 1956 was more radical than merely establishing theParty leadership within enterprises. To Mao, leadership bythe Party could not stop the tendencies of bureaucratization55Chapter 2and the lack of mass participation, which he sensed acutelyin the management of the industry. He also argued that theenormous creativity within “laymen” should be tapped inseeking economic development and technological innovation,rather than relying solely on “experts” (Lee, 1987).Mao’s vision of the mass participative management waspartially attempted during the brief period of the GreatLeap Forward (1958-1960) (Nelson & Reeder, l987b). Rank andfile workers were encouraged to play the roles ofspecialists and to make suggestions on production methodsand technological innovations. The reward system was changedfrom emphasizing piece—rate and individual—based materialincentives under “one—man” management to emphasizing time—wage, work team bonus, and ideological incentives (Ng &Lansbury, 1987; Lee, 1987; Schurmann, 1968). All thosepractices, however, did not weaken the leadership positionof the Party, which had been firmly established by the latel950s.The Cultural Revolution was the only period of timewhen mass participative management was actually practiced,albeit in a chaotic and extremist fashion (Nelson & Reeder,1987b). At various levels of the state, the Party, and theenterprise hierarchies, leadership power was seized by mass56Chapter 2organizations of rebel workers and the Red Guards.“Revolutionary committees” and “triple combinationcommittees”, composed of rebel workers, militaryrepresentatives and revolutionary cadres, took over themanagement of enterprises. Meanwhile, many functionaldepartments within the enterprises were dismantled, andcadres and technical personnel were transferred downward toworkshops. The W/SC also ceased to exist (Mg & Lansbury,1987; Lee, 1987) (see Figure 3(c)). The bonus system as animportant form of material incentives was also entirelyabolished (Henley & Nyaw, 1987).This radical form of management was later dismissed, inlight of the poor labour discipline in the work place, andthe disastrous economic consequences. “By the early 1970s,the Party committee secretary was back in command,controlling the revolutionary committee and the enterprisesas a whole” (Chamberlain, 1987, p. 633).2.2.2.4 Integrative System of ManagementThe post—Mao reform of enterprise management is multidimensional, similar to the macro economic reform discussedin the last section. Not only is the reform aimed at57Chapter 2decentralizing decision—making power, but also at therestructuring of incentive systems within the enterprises.2.2.2.4.1 Decentralization of PowerDecentralizing power within enterprises has been one ofthe central themes of the post—Mao reform of enterprisemanagement. The emerging model of integrative management, asis illustrated in Figure 3(d), seeks to achieve both theeconomic and political goals of enterprises, while avoidingthe extremist approaches of the earlier models.Most importantly, the reform seeks to “loosen the gripof the enterprise Party secretary over the Party committee”,and to “break the Party organization’s monopoly of powerwithin the enterprise as a whole” (Chamberlain, 1987, p.636)First of all, the formulas proposed at the early stagesof the reform between the late 1970s and the early 1980sinclude: (a) factory director responsibility under Partycommittee leadership (dangwei lingdao xia de changzhangfuzezhi), (b) collective leadership by the Party committee,democratic management by workers/staff, factory director incommand of operation (dangwei jiti lingdao, zhigong minzhu58Chapter 2guanhi, changzhang xingzheng zhihui). Both formulasemphasize the collective leadership by the Party committeeinstead of by the Party secretary (Chamberlain, 1987).Second, in both of the formulas mentioned above and thenewer formula proposed in the mid 1980s——factory directorresponsibility system (changzhang .fuzezhi), FDRs are givenpower to handle enterprise operation without theinterference of the Party organization (Chamberlain, 1987).According to the newer formula, the factory director chairsthe management committee which consists of the director,deputy director, chief engineer, chief economist, charteredaccountant, Party committee secretary, trade unionpresident, secretary of the Communist Youth League committeeand a representative elected by the W/SC (An, 1986). Whilethe two early formulas still retain the power of the Partyto make decisions on policy issues, the later formula goes astep further to restrict the role of the Party to only oneof “building the enterprise’s Party organization” and“ideological and political work” (An, 1986, p. 4).Meanwhile, renewed attention is given to the role ofthe W/SC and the TU within enterprises. The ProvisionalRegulations Concerning Workers’ and Staff’s Congress inState—Owned Industrial Enterprises announced in 198159Chapter 2affirmed that W/SC is the principal form of democraticmanagement in the enterprises. At least in theory, the W/SCis now “capable of removing, validating and electing”management in the enterprises (Mg & Lansbury, 1987, p. 154)(see Figure 3(d)).In addition, the new reform program also calls fordecentralizing decision—making powers down to functionaldepartments within enterprises (Child & Yuan, 1990). Since1978, many functional departments in the enterprises haverecominenced, and most specialists and experts have beenrestored to their original areas of expertise (Jackson,1986)Nevertheless, the decentralization of decision—makingpowers within enterprises continues to be a challenging taskof reform. Restricting the influence of the Partysecretaries proves to be an up—hill struggle in manyenterprises due to the still great involvement of the Partyin personnel matters, and the extensive Party power networkstretching down to organizational hierarchies withinenterprises as well as up above enterprises (Fischer, 1991;Schermerhorn & Nyaw, 1990; Walder, 1989). On the other hand,decentralizing decision—making down the management structurewithin enterprises has not yet been practiced to any60Chapter 2significant extent, according to a survey among six BeijingSOEs by Child & Yuan (1990).2.2.2.4.2 Restructuring of Material Incentive SystemsThe post—Mao reform, while maintaining the importanceof non—material rewards, as is reflected in the increasedattention to worker’s participation, re—asserts the roles ofmaterial incentives. First of all, the bonus systemabandoned during the Cultural revolution was restored in1978. The amount of bonus paid has increased from 10-12% ofthe basic wage to around 25% of the basic wage in recentyears (Kobayashi, 1987). With the implementation of theenterprise tax system, the government has, at least intheory, loosened up all control over the enterprises on theamount of bonus paid, except levying taxes from enterpriseson the above-norm bonus (Henley & Nyaw, 1987; Kobayashi,1987). In addition, many enterprises have switched to adifferentiated bonus system, which was largely discontinuedsince the late 1950s (Tan, 1989).Second, the recent reform marked the first substantialchange in the remuneration system established soon after1949. Under the pre—reform wage system, wage scales weredetermined by the central government, and were unrelated to61Chapter 2the performance of employees and the enterprises for whichthe employees work (Henley & Nyaw, 1987). The recent wagereform has resulted in a number of models, all of which areaimed at linking wages more closely to economicperformances. Under the floating wage system, for instance,part of an employee’s wage and bonus is “floating”,contingent on the financial performance of the enterprise.Another system adopted is the structural wage system, whichdivides an employee’s wage into a basic wage, a senioritywage, a position wage, and a flexible wage. The flexiblewage is determined according to the performance of theindividual and the profitability of the organization (Henley& Nyaw, 1987; Kobayashi, 1987; Shenkar & Chow, 1989; Wong,1989)The effectiveness of material incentives in the PRCwork place as a motivational tool, nevertheless, is limited.PRC managers are under pressure from workers who typicallyprefer a relatively egalitarian distribution of wages andbonuses (Boisot, 1987). Tax on bonuses imposed by thecentral government has also become increasingly heavy(Fischer, 1991).62CHAPTER 3 METHODOLOGY AND DOMAIN OF THE STUDY3.1 METHODOLOGY OF THE STUDYIn order for the PRC’s management education programs toassimilate knowledge and resources from the industrializedcountries, and to bring about real improvements in theenterprise management practices of the country, truly need—based and integrative programs must be designed. Althoughsystematic need assessment for designing managementeducation programs is still rare in practice (Byrt, 1989a;London, 1985), the necessity for needs assessment issuggested by several scholars (e.g. A1-Faleh, 1987; Graham,& Mihal, 1986; Johnson, 1991; Moore & Dutton, 1978; Reilly,1987; Wexley, 1984; Wexley & Baldwin, 1986)Following Moore and Dutton (1978), the needs formanagement education are defined as the discrepanciesbetween the actual and desired managerial capabilities. Thisstudy adopts a frequently used methodology of training needassessment —— self—report questionnaire —— whileacknowledging that the validity of this method is debatable(Tharenou, 1989).63Chapter 3Questionnaires investigating managers’ skilldiscrepancies in the settings of Western industrializedcountries are typically designed based on the conceptualframework of the classical management functions of planning,organizing, leading and controlling (e.g. Graham & Mihal,1986; Tharenou, 1989). However, the validity of such aframework in describing the reality of managing has beencontroversial (e.g. Carrol & Gillen, 1987; Kotter, 1982;Luthans, Rosenkrantz & Hennessey, 1985; Mintzberg, 1973;Quinn, Faerman, Thompson, & McGrath, 1990). Further, it isalso questionable as to whether such a framework capturesthe essence of managerial functions in developing andsocialist countries (Kanungo & Jaeger, 1990b).A new framework conceptualizing the nature ofenterprise management is proposed in this study to providean overall structure for assessing the needs for managementeducation. This framework is believed to be more integrativenot only in the sense that it synthesizes variouscontemporary advancements in organizational research, butalso in the sense that it is geocentric in orientation,which enables cross—national comparisons of managerialfunctions.64Chapter 3The managerial capabilities required to manage PRCindustrial enterprises were derived based on the framework,and were partially tested through a questionnaire surveyadministered to a sample of PRC managers. The questionnairealso surveyed PRC managers’ self—reported managerialcapabilities to uncover their overall needs for training andthe differentiated needs for training among managers fromvarious backgrounds. Finally, recommendations are maderegarding content of management education in the PRC.The approach to the content issue of managementeducation used in the present study can be beneficial toboth Westerners and Chinese who participate in upgrading thePRC’s management education system (e.g. Bu & Mitchell,1992). It is also hoped that the approach adopted in thisstudy will be of some value to other developing andsocialist countries which share similar problems indesigning their management development programs.The conceptual framework is also intended to serve asan synthetic and geocentric model which enables a systematicanalysis of cross—national similarities and differences inorganizational management. It is hoped that such a modelwill constitute an important contribution to cross—nationalmanagement studies, which, as is discussed in the previous65Chapter 3section, have some serious problems in terms of researchorientations.3.2 DOMAIN OF THE STUDYAs stated in the introduction to this study, improvedcurriculum planning for management education programstraining managers and administrators across various sectorsof the PRC’s economy is needed. However, the requiredmanagerial abilities, on which curricula of managementeducation should be based (Campbell, Dunnette, Lawler, &Weick, 1970), vary to certain extent across differentsectors. The empirical part of the current study focusesprimarily on curricula of management education for managersof the enterprises under the jurisdiction of the PRC’sMinistry of Foreign Economic Relations and Trade (MOFERT)and administrators working at various divisions of theMOFERT headquarters. The extent of the generalizability ofthe research findings is also examined.Until the mid-1970s, all the imports and exports of thePRC were governed solely by the MOFERT headquarters inBeijing. MOFERT oversaw the operations of 12 state-ownedimport and export corporations, each of which is chargedwith the trading of a group of commodities, and of seven66Chapter 3corporations specializing in transportation, insurance, andfinancial aspects of foreign trade. Those MOFERTCorporations operated according to the foreign trade planapproved by the State Council, which specifies the exportand import quotas of various commodities and their prices,as well as the nationalities of trading partners. Thecentral foreign trade plan was typically dictated by thepolitical and ideological positions of the PRC ininternational matters more than by economic concerns.Business contacts with foreign trading corporations weremostly restricted to the twice-yearly Canton Trade Fair.Because of the monopolistic position of each MOFERTcorporations over certain commodities and services,competition between MOFERT corporations was rare. MOFERTmanagers attending trade fairs established contacts buttypically had no authority for closing any deals. (Gorman,1986)The process of administrative and economicdecentralization of both the domestic economy and theforeign trade sector started in the late 1970s, as wasdiscussed in Sections 2.1.2.2.2 and 2.1.2.2.3, has graduallychanged the mandate of MOFERT corporations. It has brokendown the monopoly of the MOFERT corporations over the PRC’s67Chapter 3foreign trade. Those corporations now must, on one hand,compete domestically with trading companies outside theMOFERT’s jurisdiction for the supply of export commoditieswhich are beyond the control of the MOFERT, and on the otherhand, compete both domestically and internationally formarket shares. Intensified competition has led many MOFERTtrading organizations to diversify and extend theiroperations to areas other than trading, such asmanufacturing and financial services (Tseng, 1991).The practical importance of the enterprises beingexamined in this study is twofold. First, corporations underMOFERT are primarily responsible for planning andimplementing large scale trading of major products ininternational markets and for overseas investment. Thusthese corporations play significant roles in the economy ofthe PRC, which is increasingly oriented towards the globalmarket. According to statistics provided by the PRCgovernment (Editorial Department of the PRC Year Book,1991), PRC’s foreign trade totaled US$115.4 billion in 1990,up from US$20.6 billion in 1978, and PRC’s exports accountedfor 16.9% of its GNP in 1990, up from only 4.7% of GNP in1978. Over 30% of the PRC’s total international trade stillgoes through the MOFERT trading companies (MOFERT,68Chapter 3International Trade Center, & UBC/UKLM Consortium, 1991). onthe other hand, the limitations of the PRC’s managerialcapacity, felt across all sectors of the economy, are evenmore acute for the MOFERT organizations, which face directcompetition with foreign enterprises in internationalmarkets.Second, all of the MOFERT enterprises being studied arelarge- and medium- sized state-owned enterprises (LMSOEs)3.SOE5, especially LMSOE5, have been performing very poorly incomparison with the non—state industrial sectors. One thirdof the LMSOEs are running deficits and another third showgood balance but hold massive inventories of inferiorproducts (Fujixnoto, 1992). The reform of LMSOEs isrecognized by the leading economists in the PRC (e.g. Liu,1987) to be “the really difficult issue” (p. 172).The share of contribution by SOE5 to PRC’s grossindustrial output value has declined constantly since 1965(see Table 1), and such trend is likely to continue in thenear future considering the recent poor showing of the statesector and booming of the non—state sectors. However, SOE5currently still generate approximately 55% of the totalindustrial output, and “remain the dominant mode ofindustrial organizations in China” (Child & Yuan, 1990, p.69Chapter 3322). LHSOEs, in particular, are considered the backbone ofthe PRC’s economy. According to Fujimoto (1992), PRC’s over10,000 LMSOEs, while just 25% of the total number ofindustrial enterprises in the country, generate 45.6% of theindustrial output and contribute over 60% to the stateindustrial revenue. Further, the vital position of statesector, as the status quo, is deeply entrenched in thecurrent bureaucratic apparatus and political coalitions.Forces against radical measures, such as closing down red—ink SOEs, should not be underestimated (Huang, 1990).Studying PRC’s MOFERT corporations has also theoreticalsignificance. Despite the fact that state-owned enterprises(SOE5) play crucial roles in both developing andindustrialized economies, the literature on management ofSOE5 remains scarce (Hafsi, Kiggundu & Jorgensen, 1987).Hopefully, some of the critical issues facing SOEs ingeneral can be extrapolated from this study which looks intoSOE5 within MOFERT of the PRC.70CHAPTER 4THE CONCEPTUAL FRAMEWORKAn important research agenda of cross—nationalmanagement research is to explore the economic,technological, socio—political and cultural diversity acrossnations and the impacts of such diversity on organizationalmanagement (Boyacigiller and Adler, 1991; Kanungo andJaeger, 1990b). Farmer and Richman (1964) put forth one ofthe earliest and most cited synthetic theoretical frameworksaimed at examining the relationships between nationalcharacteristics and the systems of management. According toFarmer and Richman, national characteristics (includingeconomic, political—legal, sociological and educationalfactors) aid or inhibit the effectiveness of management,which in turn affect productive efficiency of organizations.While its significant contribution to cross-nationalmanagement research is unquestionable, Farmer and Richman’s(1964) analysis has two major limitations. First of all, theultimate objectives of industrial organizations is narrowlydefined in the model. Although “[t]here is overwhelmingevidence to indicate that economic efficiency andimprovement are desired” in all countries (Farmer & Richman,1964, p. 57), industrial organizations also have social and71Chapter 4political objectives to varying degrees in differentcountries. The differing organizational objectives betweenthe capitalist and socialist systems (Child, 1981) and theWestern and Eastern societies (Khin, 1988), for example,have not been adequately attended. A truly geocentric modelof management should not treat the saliency of productiveefficiency observed in the West as being universalphenomenon (Redding, 1987).Second, it is an oversimplification to assume that“[a]ll productive enterprise managers perform the samegeneral managerial functions: planning and decision making,control, organizing, staffing, and direction” (Farmer &Richman, 1964, p. 57), and to equate how well suchmanagerial functions are carried out with managerialeffectiveness. Managerial functions are determined by atleast two factors: (a) objectives of organizations, whichvary across different nations, and (b) possible means toachieve the organizational objectives, which are alsoinfluenced by national characteristics. A truly geocentricmodel of management should, therefore, not treat managerialfunctions identified in the West as universal.The essence of the framework proposed in this study isthat national characteristics affect organizational72Chapter 4environments, which in turn influence the nature oforganizational management. Effective management involvesforming and implementing strategies and tactics which wouldbalance all aspects of organizational environments within aparticular context.The case of the PRC is emphasized throughout thedescription of the conceptual framework in this chapter to(a) illustrate the usefulness of the framework inunderstanding management reality of the country, and (b) tolay the foundation for the next Chapter which discusses PRCmanagers’ training needs.4.1 NATIONAL CHARACTERISTICS AND ORGANIZATIONAL ENVIRONMENTSIn the present analysis, organizational environment isdefined, following Duncan (1972), as “the totality ofphysical and social factors that are taken directly intoconsideration in the decision-making behavior of individualsin the organization” (p. 314).The impact of national characteristics onorganizational environments is examined from two angles: (a)the impact on the internal vs. external environments oforganizations, and (b) the impact on the technical vs.73Chapter 4institutional environments of organizations, as isillustrated in Figure 4.NATIONAL CHARACTERISTICS:— Economic system— Technological development— Socio—political considerations- Cultural traditionINTERNAL EXTERNALENVIRONMENTS ENVIRONMENTSORGANI ZATIONAL MANAGEMENTTECHNICALL ENVIRONMENTSFigure 4. Relationship between national characteristics andthe nature of organizational management.4.1.1 Internal-External DimensionAn organization is a collectivity of people, capital,and technology, as well as a member of a larger community74Chapter 4which includes consumers, suppliers, competitors, andgovernment agencies. National characteristics affect thenature of management through the internal and externalenvironments of an organization. Internal environment isdefined as relevant factors within the boundary of anorganization, over which the organization has hierarchicalcontrol. External environment is defined as relevant factorsoutside the boundary of an organization, over which theorganization has no hierarchical control (Duncan, 1972).The notion of internal and external environments hasits foundation in the dominant modern management thinking,particularly works of Barnard (1938) and of Selznick (1957).According to Barnard and Selznick, modern organizations arenot only instruments which create products and services forthe market, but also institutions, in which organizationalmembers involve themselves socially and emotionally asindividuals and as groups. Organizational activities are,therefore shaped by the interactions of organizationalmembers as well as the constraints of externalcontingencies.To cope with the pressures generated from both internaland external environments, the management of an organizationis concerned not only with external adaptation, which75Chapter 4involves attracting external resources and supports andpromoting sales and profits, but also with internalintegration, which involves maintaining employee commitmentand moral as well as organizational cohesiveness andstability (Quinn et al., 1990).Identifying internal and external environments asmediating variables for explaining relationships betweennational characteristics and organizational managementclosely approximates the model of cross—nationalorganizational research proposed by Drenth (1985). InDrenth’s model, national characteristics influence thebeliefs, attitudes, and behaviors of organizational members(including managers), which in turn influence organizationalmanagement. Meanwhile, national economic, technological,socio—political, and cultural conditions, as a part oforganizational environments, influence organizationalmanagement directly.This approach is also consistent with the emergingmacro—micro approach in the field of cross—nationalmanagement research (Joynt, 1985, p. 60) and in socialscience research in general (DeWalt & Pelto, 1985).According to Joynt (1985) and Nath (1988), the new approachis superior to the earlier studies which either76Chapter 4overemphasize macro variables to the complete exclusion ofmicro variables, or are directed solely towards beliefs,attitudes, and behaviors of organizational members at theexpense of an organizational level analysis.The scheme of internal—external environments enhancesour understanding of how organizational management acrossnations is similar or different. In his model for studyingmanagement education in Africa, Safavi (1981) stresses theimportance of examining both the external and internalenvironments facing African managers. According to him,governmental policies, infrastructure, demography, andsocial morality form critical elements of externalenvironments of an organization. Needs of workforce,interpersonal relations, and attitudes towards equality andauthority form critical elements of the internal environmentof an organization. The current author agrees with Safavithat the basic elements of his model are meaningful inregions other than Africa.4.1.1.1 External EnvironmentsEnterprises operating in various nation states arefaced with different external environments. Most centrallycontrolled economies, for instance, are characterized by77Chapter 4vertical relationships between enterprises and centralgovernments. In such relationships, the structures andactivities of central governments are the dominant forcesshaping external environments of organizations (Carroll etal., 1988; Safavi, 1981).It is also found that, in Eastern cultures which valuecollectivism and accept unequal status among parties insocial relationships to a greater extent than Westerncultures, hierarchical relationships tend to form amongorganizations, and between organizations and thegovernments. The state governments in most Eastern Asiancountries typically play much stronger roles in controllingand/or guiding enterprises than their counterparts in theWest (Dunphy & Shi, 1989). The hierarchical relationshipsamong organizations are exemplified by the enterprisegroupings (keiretsu) prevailing in Japan. The organizationsin those groupings are often composed of major corporationsand their “child” companies, bonded by long—termsubcontracting relations between them (Mendenhall & Oddou,1986)The PRC is both a centrally controlled economy and asociety with high power distance. The whole society of thePRC can be characterized as a mega—organization, or as78Chapter 4“China, Inc.” (MacLeod, 1988), in which the rigid controlfrom the Central Party Committee and the government isextended to each element of the society through the verypowerful Party and government apparatus. As virtually alevel of the national network of control, PRC enterprise isresponsible for obeying directions from the higherauthority, which are typically government agencies (Child &Yuan, 1990; Tan, 1989; Yang, 1989). This form of verticalrelationship is in sharp contrast with enterprises in theWest which are much more independent from such verticalcontrol, but instead are more involved in horizontalcooperation and competition in the market place (Fujimoto,1987; Plasschaert, 1988).4.1.1.2 Internal EnvironmentsOrganizations across nations share some similarfundamental characteristics in their relationships withtheir members. One of the most important similarities is thepersistence of hierarchy within boundaries of organizations.Despite the different beliefs and attitudes towardshierarchical control between socialist and capitalistcountries, hierarchy in organizations remains in both typesof countries (Tannebaum, Kavcic, Rosner, Vianello, & Wieser,79Chapter 41974). The relationships between PRC enterprises and theirmembers, like those of the West, are hierarchical in nature(Boisot & Child, 1988; Tung, 1989).However, there are major differences among enterprisesacross nations in their methods of internal organizationalcontrol. Research evidence (e.g. Hofstede, 1980; Hofstede &Bond, 1988) suggests that Western cultures are characterizedby low power distance and individualism, while Easterncultures are characterized by high power distance andcollectivism. Power distance is defined as the extent towhich the less powerful members of organizations andinstitutions accept and expect unequal distribution ofpower. Individualism and collectivism describe the degree towhich individuals are integrated into groups. In societiesdominated by individualism, people are supposed to lookafter themselves, while in societies dominated bycollectivism, people belong to collectivities which aresupposed to look after them in exchange for loyalty. Easterncultures are also found to be inclined towards associativethinking as opposed to abstract thinking. In comparison withWesterners who tend to analyze a situation by applyingabstract concepts and theories generated from other relatedsituations, Easterners tend to develop a holistic80Chapter 4comprehension of a directly experienced concrete situation(Easterby-Smith & Boot, 1986-87; Mendonca & Kanungo, 1990;Pun, 1990, Redding, 1980). The implications of such culturaldifferences for internal organizational management are ofimportance. In cultures with high power distance, strongcollectivism and high associative thinking, organizationsare typically run in a “clanlike” way, with managers actingas “fathers”. In contrast, Western businesses are to a greatdegree governed on the basis of a contractual andcalculative relationship between employers and employees(Allen, Miller, & Nath, 1988; Dunphy & Hackman, 1989; Dunphy& Shi, 1989; Hofstede, 1987; Hofstede & Bond, 1988; McEvoy &Cascio, 1990; Ouchi, 1980).The impacts of high power distance, strong collectivismand high associative thinking on the management of internalenvironments of PRC enterprises have been observed (e.g.Boisot, 1987; Redding, 1980; Sun, 1985; Tung, 1989). Firstof all, the egalitarian tendency resulting from collectivism(or lack of individualism) among the Chinese (Sun, 1985)influences the way in which an enterprise can assign tasksand distribute rewards among its members in order to obtainhigh productivity (McEvoy & Cascio, 1990). Second, the lackof individualism leads also to high relationship orientation81Chapter 4among Chinese employees (Boisot, 1987; Sun, 1985). They tendto be extremely concerned about “face saving” (gei mianzi)and relations (guanxi) with their supervisors and peers intheir work environments (Mendonca & Kanungo, 1990). For PRCworkers, fulfilling obligations to their supervisors orpeers can be one of the most important motivators foraccomplishing tasks. On the other hand, criticism bysupervisors or peers, especially in public, is considered tobe very shameful and hence a severe punishment. Third,individual-based controlling methods widely applied in theWest, such as individual goal setting and performanceappraisal, are likely to be resented by the PRC managers andworkers, for whom maintaining face is of primary importancein any long-term relationships (McEvoy & Cascio, 1990;Seddon, 1987). Fourth, paternalism in the Chinese tradition,resulted from both collectivism and high power distance,demands that managers be respectable and directive on theone hand, while personable and benevolent on the other(Alutto & Coleman, 1987; Mendonca & Kanungo, 1990; Pye,1985; Wong, 1986). Finally, the Chinese tendency ofassociative thinking as opposed to abstract thinking impliesthat their behaviors on the job are influenced more by thecontext of the task than by guidelines and rules (Mendonca &Kanungo, 1990; Redding, 1980). The meaning of a job in terms82Chapter 4of its contribution to the group, departmental,organizational, or national well—being or the satisfactionof end users is highly emphasized.4 • 1 • 2 Technical-Institutional DimensionOrganizational environments exert influence onorganizations not only through the control of scarceresources, but also through the enforcement of rules andnorms (Scott, 1987b). The nature of management can,therefore, also be seen as being influenced by technical andinstitutional constraints imposed on the enterprise, whichare in turn shaped by the characteristics of the nations inwhich the enterprise operates. Technical environments aredefined as those within which products and services areexchanged such that organizations are rewarded for theireffectiveness and efficiency in obtaining resources (Dess &Beard, 1984; Scott & Meyer, 1983), while institutionalenvironments are norms of appropriate organizationalpractices collectively shared within the community andreinforced by regulatory agencies and public opinion(Tolbert, 1985).The dichotomy of technical and institutionalenvironments of organizations gained particular attention in83Chapter 4organizational research when institutional theory, whichfocuses on the pressures of institutional environments,appeared in recent years to complement the earlier resourcedependence approach, which focuses on technical environments(Scott & Meyer, 1983; Tolbert, 1985; Scott, 1987a). As aresult, an emerging approach to organizational issuesemphasizes a mixture of both technical and institutionalconstraints facing organizations (e.g. Oliver, 1991).Combining the insights provided by both resourcedependence and institutional perspectives, the management ofan organization involves coping with the technicalenvironment of the organization to “ensure a stable flow ofresources” and dealing with “problems and uncertaintiesassociated with exchange transactions” (Tolbert, 1985, p.1). Meanwhile, the management of an organization alsoinvolves coping with the institutional environment bycomplying with the socially accepted norms in order tomaintain organizational legitimacy (Tolbert, 1985).The importance of considering institutional as well astechnical aspects of organizational environments issupported in cross—national management studies. It isdemonstrated that organizational action is influenced notonly by profit motives but also by cultural traditions and84Chapter 4regulatory rules (e.g. Gerlach, 1989; Jorgensen, 1990;Joynt, 1985; Lincoln, Hanada, & Olson, 1981; Lincoln &Kalleberg, 1989; Yeung & Wong, 1990). As Lincoln (1990)observes:A mounting body of evidence on the technology-organization relation in diverse societal settingssuggests that technology interacts in complexways with local cultures and institutions indetermining how organization, management, andindustrial relations systems respond. (p. 260)4.1.2.1 Technical EnvironmentsIncreasing productive efficiency is perceived invirtually all countries as a desirable objectives ofindustrial enterprises (Farmer & Richman, 1964).Nevertheless, national characteristics, such as economicstructure, technological development, political stability,legislation, and socio—cultural variables, shape thetechnical environments in which organizations achieve theirproductive efficiency. The patterns of resource dependenciesand forms of resource exchanges between enterprises andtheir environments differ across nations.Economic variables of a nation, which may includewhether a seller’s market is dominant, the availability ofraw material, and rate of inflation, are found to influence85Chapter 4managerial planning and decision making (e.g. Negandhi,1985). A nation’s political stability is also suggested tobe an important determinant of managers’ capability forforward planning (e.g. Davis, 1971; Lauter, 1970).Developing and developed countries are typically found to bedifferent in the above aspects of national characteristics(Jaeger & Kanungo, 1990), resulting in different technicalenvironments.From another perspective, socialist economies andcapitalist economies form distinct technical environmentsfor enterprises. The survival of enterprises in a socialistcountry is virtually guaranteed by the government,regardless of their financial performance. Efficiency inresource utilization and responsiveness to market demands onthe part of socialist firms are not required as they are inmarket economies. Rather, socialist enterprises are oftenrewarded on the bases of the size of production capacity andphysical output, which causes firms to hoard and hidereserves in order to be allocated more resources by thestate. In socialist countries, such firm behaviors result inchronic resource shortage and thus a seller’s market, whichin turn intensify inefficiency in resource utilization andlack of responsiveness to consumer needs, and legitimize86Chapter 4even tighter administrative control by the state (Kornai,1989)Technical environments of organizations are alsoaffected by the socio-cultural contexts in which they areembedded. Organizations in Western and Eastern countriesdiffer significantly in their internal operating andcontrolling mechanisms, resulting in different means ofachieving productivities, as discussed in Section 4.1.1.2.Meanwhile, the resource exchange relationships between firmsand their external constituents in countries with differentcultural traditions differ too, as indicated in Section4.1.1.1. In addition, in more relationship oriented culturesincluding most Asian Pacific countries, information andresources tends to be exchanged within networks ofacquittances and in less structured formats (e.g. informalconversations or hand—shake agreements). On the contrary, inmore contract oriented cultures, including most Westerncountries, information tends to be exchanged through publicmedia, and in more codified formats (e.g. computerizeddata). Resource exchanges in these cultures are oftenaccomplished through open bidding in the market place,resulting in legally binding written contracts (Boisot,1987). The traditions of various cultures in handling87Chapter 4information and resource exchanges shape in important waysthe technical environments of enterprises. The prevalence ofinternal labour markets within firms and the alliances andnetworks that forms among firms observed in Japan is a goodexample of such connections between cultural traditions andthe structures of economic activities (Lincoln, 1990).Organizations in the PRC, to some degree, share thesame goal as their Western counterparts in achievingorganizational performance. The state as both a taxcollector and as a shareholder, and organizational membersas the main beneficiaries of post—tax retained earnings,demand good organizational performance (Boisot & Child,1988). However, there are major differences between thetechnical environments facing PRC enterprises and theirWestern counterparts.First, the state control of enterprise governance issubstantial in the PRC, despite the recent call fordecentralization and enterprise autonomy (Wall, 1990).Macro—economic coordination in the PRC is achieved primarilythrough administrative means. Rather than managing theirenterprise as an independent economic entity, PRC managersare on “the receiving end of a vast hierarchical chain ofcommand stretching above it” (Yang, 1989, p. 45). Such an88Chapter 4economic system has created a technical environment in whichindustrial enterprises rely heavily on central allocation ofmaterial and financial resources. The willpower and skillsof dealing with government agencies, which are typicallyneglected in Western management curricula (Safavi, 1981),are crucial to the PRC managers.Second, the chronic shortage of resources in the PRC,which stems partly from its underdeveloped economy, andpartly from its partial economic reform programs, alsoforces enterprise managers to act in “irrational” ways froma Western perspective. Different types of managerialactivities, for example, are required to cope with acquiringresources which are in critical shortage. Many PRCenterprises have to stockpile materials to create slacks(Lockett, 1988), and have procuring agents (caigouyuan) onstaff to make deals for scarce resources, as well ascultivating relationships (guanxi) with potential suppliersby gift—giving (MacLeod, 1988; Wall, 1990; Walder, 1989).Finally, a very different pattern of individualmotivation, interpersonal relationships, and organizationalcontrol mechanisms exists in the work places of the PRC,which has been addressed in some detail in the previousparagraph where internal environments of the PRC enterprises89Chapter 4are discussed (Section 4.1.1.2). Such differences certainlyaffect the way organizational performance can be managed inthe PRC.4.1.2.2 Institutional EnvironmentsThe institutional environment of an organization, whichdefines the appropriate organizational behaviors, is alsoinfluenced by national characteristics (Baron, 1988). Forinstance, substantially different business orientationsexist between the countries in the Far East and in the Westfor two main reasons. First of all, in countries sharing acommon Chinese philosophical heritage, in which Confucianismand Buddhism prevail, individuals and enterprises areencouraged to compromise their own benefits for the ultimatewelfare of the larger community. According to Confucians,peaceful sharing with others and subordination to collectivegoals by individual entities are necessary for achieving thehighest social well-being. On the contrary, in the Westernsocieties, where an individualistic perspective dominates,society is considered at its best if the individual entitieswithin it maximize their self-interest (Gibson & Wu, 1989;Nevis, 1983).90Chapter 4Second, it can be recalled that the enterprises in theWest are considered to be independent legal entities withcontractual relationships with their employees. However, incountries dominated by a collectivist orientation,enterprises are to some extent considered to be mini—societies with economic, social and developmentalresponsibilities to their employees. Life-long employment, astrong internal labour market, and extensive on—the—jobtraining in Japanese and Chinese enterprises (Chiu & Bu,1990; Dunphy & Shi, 1988) are indications of the impact ofsuch socio—cultural beliefs. In a similar sense, Hutton(1991) makes the distinctions between the “financially-oriented, deal—driven, and employee—indifferent” systems ofAnglo—Saxon capitalism vs. Japanese “peoplism” which“nurtures employee, ties in investors and bankers andorganises markets so that long—term relationships andinvestment can prosper” (p. 15).Differences in institutional environments facingenterprises can also be found between socialist andcapitalist countries. In analyzing activities within anation, Yang (1989) makes the distinction between civilsociety and the state. Civil society refers to the realm ofnon—governmental private economic activities and sectional91Chapter 4economic interests, as well as to the realm of public andvoluntary associations and societies. In capitalistcountries, civil society penetrates the central state, whosepolicies must to a great extent reflect the interests ofprivate business and interest groups. In socialistcountries, on the contrary, state government seeks todictate civil society through nationalization of privatebusiness, central planning, and disbanding or taking overthe control of voluntary association. Enterprises insocialist countries, which subordinate to the control oftheir governments, to a greater degree, need to reflect theeconomic, socio-political, and ideological goals set bytheir governments (Kornai, 1989). On the other hand, becauseof the ineptness of civil society in socialist countries,enterprises are typically made to be mini—societies,providing a full range of social services in addition toperforming economic activities. “They are at the same timeentities of the state and of civil society--embodying boththe prerogatives and interests of the state as well as thoseof particular groups in society” (Yang, 1989, p. 39).The institutional environments of the enterprises inthe PRC, in particular, are drastically different from thoseof the West. One of the most distinctive characteristics of92Chapter 4the institutional environments of the PRC enterprises is thesocial norm that the welfare of organizational members andof the larger society is a fundamental responsibility of theorganization. This is very different from the practices oftypical Western firms which assign a much lower priority tothe welfare of organizational members and the larger society(Boisot & Child, 1988; Child & Yuan, 1990; Peterson, 1988;Scott, 1988; Yeung & Wong, 1990).The urban workforce in the PRC regards the insurance oftheir well—being, ranging from means of subsistence andcompanionship to personal achievement, as the most importantfunction of their work units (Schermerhorn & Nyaw, 1990).This belief has not only been nurtured by the country’sthousands of years of cultural heritage, but has also beenlegitimized by the socialist ideology and institutionalizedby the highly regulated economy and tight political controlimposed since the Communist government took power in 1949.PRC employees’ intensive need to belong and to be takencare of is a product of the strong collectivist orientationevident in the Chinese culture (Chiu & Bu, 1990; Hofstede,1980; Hsu, 1981; Hui & Triandis, 1986; Sun, 1985) . Thestrong resistance against the labour contract system at thegrassroots level, which was discussed in the previous93Chapter 4chapter, provides a good illustration of such a culturaltendency.The cultural tradition is further reinforced by theimplicit social contract formed under the Communist regimebetween the employees of industrial enterprises and thestate as represented by enterprises (Shirk, 1981; White,1987b; Yang, 1989). In his latest interview with ChinaToday, the PRC’s Minister of Labour expressed a strongcommitment of the PRC government towards low unemployment.It was promised that “in the next five years China will holdthe unemployment below 3.5 percent” (“Solving China’sEmployment Problems,” 1991, p. 16). Given the right todismiss surplus workers, enterprises are still under greatpressure to provide alternative job opportunities forreplaced workers (Child & Yuan, 1990).The central government of the PRC, on the other hand,interprets the responsibilities of the enterprises to ensurethe welfare of their members based on the goals it sets forthe country——economic prosperity and revolution (Andors,1981) --and the means of achieving those goals it espouses-administrative control. Consequently, the governmentregulates the allocation of economic resources amongenterprises and among employees (which greatly affects the94Chapter 4technical environments of the PRC enterprises). Also thegovernment legislates the distribution of political andadministrative power among interest groups, and seeks tocontrol people’s attitudes and non—work related behaviors.Enterprises are perceived as both economic andadministrative entities responsible for controlling thespiritual as well as material aspects of their employees’lives. Enterprises are periodically inspected by theirsupervising government agencies for compliance with theParty and government policies and directives, such aspolitical and ideological education of employees (Tung,1982; Yang, 1989). One editorial (An, 1986) in the BeijingReview, for instance, stressed that despite the newlyintroduced factory director responsibility system, partyorganizations in enterprises would still be responsible for“ideological and political work”, and that the “workers’position as masters of the country and the enterprises” (p.4) should not be compromised.Further, as was discussed earlier, the public and thegovernment of the PRC tend to put more emphasis on theenterprises’ social and moral responsibility to the largersociety than is the case in the West. Industrial enterprisesare often burdened with obligations to serve the local95Chapter 4communities in such forms as funding local medical andrecreational projects. Directives issued by the centralgovernment forbidding soliciting additional financialcontributions from enterprises for fear of exhausting theirproduction capacity do not prove to be effective.Enterprises typically hesitate to refuse requests from localgovernment agencies due to the substantial control localgovernments have on them (Boisot & Child, 1988; Child &Yuan, 1990)4.1.3 Organizational Environments in a FrameworkThe notion of internal—external and technical—institutional environments describes two independentdimensions of organizational environments. Together thesetwo dimensions form a four—category representation oforganizational environments. The external —technicalenvironments are the resource exchange relationships betweenan organization and the larger community. The internal—technical environments are the resource exchangerelationships between an organization and its members. Theinternal—institutional environments are the social normswhich regulate the relationships between an organization andits members. The external—institutional environments are the96Chapter 4social norms which regulate the relationships between anorganization and the larger community.4.2 ORGANIZATIONAL ENVIRONMENTS AND THE NATURE OF MANAGEMENTThe four aspects of organizational environmentsconstitute four facets of organizations which need to bemanaged. Effective management involves forming andimplementing strategies and tactics which would balance allaspects of organizational environments within a particularcontext.4.2.1 The Nature of Organizational Management in the PRCFor managers of the PRC enterprises, organizationalmanagement involves reconciling “economic with ideologicalcriteria” and “the interests both of the State ... and ofthe enterprise as a corporate group” (Child & Yuan, 1990, p.325)Managing internal and external environments. To manageboth the internal and external environments, PRC managers“must effectively negotiate a complex set of relationshipswith government agencies ... [including] the industrialbureau or company, the relevant bureaus of taxation and97Chapter 4finance, the local planning commission and local banks” overdivision of factory earnings between the enterprise and thestate, and the extent of state subsidy on enterprise growthand employee welfare (Walder, 1989, p. 254). Meanwhile,managers are also required to perform duties such asmarketing, raw material acquisition, production controllingas well as other “‘external relations’ between theenterprise and its political, social and economicenvironment” (Chamberlain, 1987, p. 645). Though thesefunctions may appear familiar to most Western mangers, theconditions under which PRC managers perform them are verydifferent, as was discussed in the last section.On the other hand, being managers in the PRCenterprises is much like being “mayors” who have to be“concerned with “public opinion” within the enterprises(Walder, 1989, p. 251). If managers “cave in to pressurefrom higher authorities, workers may blame them for renegingon their duty to protect and represent their interests asthe enterprise’s representative [sic]” (Howard, 1991, p.113).Managing technical and institutional environments. Tomanage both the technical and institutional environments, aPRC manager98Chapter 4is more than a manager of an economic enterprise.He [sic] is also the leader of a socio—politicalcommunity. This community often contains thousandsof people, and in some cases tens of thousands. Heis responsible not only for their income, but fortheir welfare and that of their dependents, [whichinclude] housing. . .healthcare system, schools,meal services, entertainment facilities,employment for the offspring of employees, ... thepensions of retired workers, ... sports teams andcultural events”. (Walder, 1989, p. 249)In addition, the PRC managers are also under pressureto make sure that their enterprises as virtual “territorialentities” provide their communities with various welfareservices (Boisot & Child, 1988, p. 224).4.2.2 Functions of Management in PRC’s Enterprises in aFrameworkBased on the analytical structure provided by theconceptual framework represented in Figure 4, managerialfunctions required in PRC’s industrial enterprises to copewith various aspects of organizational environments areidentified in Figure 5.The functions of management in the PRC are thus dividedinto four categories, which are coordinated by strategicformation. Specifically, these managerial functions are asfollows:99Chapter 4INSTITUTIONALQUADRANT IINURTURING18. Delivering employeewelfare19. Organizing socialactivities20. Providing developmentalopportunities forbenevolent purpose21. Encouraging employeeparticipation22. Ideological educationQUADRANT IVDIPLOMACY23. Following the Partyline24. Public relationsFormation11. specifying job duties12. Designing organizationalstructure13. Establishing financialcontrolling system14. Personnel management15. Establishing informationsystem16. Team building17. Mediating conflictsQUADRANT IIGOVERNANCETECHNICAL1. Negotiating withgovernment agencies2. Formulating financialstrategy3. Acquiring financing4. Managing production5. Controlling inventory6. scheduling production7. Acquiring rawmaterialsMarketingDirecting subordinatesPromoting technologicalinnovationQUADRANT IPROFIT MAXIMIZATIONFigure 5. Classified managerial functions in typical PRC’sindustrial enterprises.INTERNAL25. strategyEXTERNAL8.9.10.100Chapter 4Profit Maximization (Quadrant I) involves achievingproductivity and/or profitability by efficiently gathering,directing and coordinating work, people, technology, andinformation. Specifically, the PRC managers are required notonly to formulate financial, technological and marketingstrategies, to gather materials, financing, information andhuman resources, to plan and control production processes,but also to negotiate with various levels of governmentagencies over output quotas, profit retention rates,resource allocations and personnel arrangements.Governance (Quadrant II) involves establishing andmaintaining organizational structure and processes forstability and efficiency. Specifically, the PRC managers arerequired to organize and control relationships betweeninterrelated tasks, and work performance of individuals andgroups on the basis of the characteristics of the workforce.Nurturing (Quadrant III) involves taking care ofemployees’ physiological, emotional, and developmental wellbeing, Specifically, the PRC managers are required to lookafter the welfare of their employees as defined by thesociety and the government, such as housing, social101Chapter 4activities, non—work—related training, and ideologicaleducation.Diplomacy (Quadrant IV) involves building andmaintaining organizational legitimacy in the largercommunity by operating in socially desirable ways.Specifically, the PRC managers are required to keep theorganizational practices in line with the essence of Partyand government policy, and social morality.Strategy Formation involves formulating overallbusiness strategy and tactics to guide daily operations.102CHAPTER 5IDENTIFYING THE NEEDS FOR MMAGEMENT EDUCATION IN THE PRC:HYPOTHESESThe propositions implicit in Figure 5 about the typesof managerial functions required in the PRC enterprisesprovide a framework for designing curricula of PRCmanagement education. Three sets of hypotheses are set forthto assess the applicability of the framework proposed inChapter 4, and the overall and differentiated needs formanagement education in the PRC.5.1 THE SIGNIFICANCE OF MANAGING EXTERNAL-INTERNAL ANDTECHNICAL-INSTITUTIONAL ASPECTS OF ORGANIZATIONALENVIRONMENTS: HYPOTHESIS GROUP 1The first set of hypotheses suggests that, for theoverall success of an enterprise, it is important to balanceall aspects of the organizational environment, internal andexternal, as well as technical and institutional. The aboveidea translates into two hypotheses, varying with the degreeof rigidity in operationalizing the idea.H1.1: A1 = A11 = A111 = A, where A1 denotes theimportance of managerial functions identified in Quadrant I103Chapter 5of Figure 5 (“Profit Maximization”), A11- denotes theimportance of managerial functions identified in Quadrant IIof Figure 5 (“Governance”), A111 denotes the importance ofmanagerial functions identified in Quadrant III of Figure 5(“Nurturing”), and A denotes the importance of managerialfunctions identified in Quadrant IV of Figure 5(“Diplomacy”).H1.2: krnternai = AExternal, and ATechnical =Ainstjtutjonal, where Ainternal denotes the importance ofmanagerial functions identified on the left part of theInternal—External dimension of Figure 5, AExternal denotesthe importance of managerial functions identified on theright part of the Internal-External dimension of Figure 5,ATechnical denotes the importance of managerial functionsidentified on the lower part of the Technical—Institutionaldimension of Figure 5, Alnstjtutjonal denotes the importanceof managerial functions identified on the upper part of theTechnical-Institutional dimension of Figure 5.5.2 DISCREPANCIES BETWEEN THE REQUIRED MANAGERIAL FUNCTIONSAND THE ?BILITIES OF MANAGERS IN THE PRC: HYPOTHESIS 2Many observers of PRC management (e.g. Limerick et al.,1985; Lockett & Littler, 1983; “To Exercise Expert104Chapter 5Leadership,” 1986; Tuan & Liu, 1988; Warner, 1986, 1988)agree that significant discrepancies exist between therequired managerial functions in PRC enterprises on the onehand, and the abilities of PRC managers in performing suchfunctions on the other hand. Recent economic reforms havenot only intensified the demands for existing managerialabilities (e.g. production management), but also createddemands for new managerial abilities (e.g. marketing). Itis, therefore, hypothesized that there exist an overallinadequacy of managerial capabilities among PRC managers.H2.O: Aj > Bi, for i = 1, 2, 3,...,25, wheredenotes the importance of managerial function i (identifiedin Figure 5) to the overall success of the PRC enterprises;while Bi denotes the abilities of the PRC managers toperform managerial function i identified in Figure 5.5.3 DISCREPANCIES OF LEVELS OF MANAGERIAL ABILITIES AMONGPRC MANAGERS FROM VARIOUS BACKGROUNDS: HYPOTHESIS GROUP3Managers of PRC enterprises have become moreheterogeneous over recent years (White, 1987c). In fact,there has been some evidence in the literature that PRCmanagers with different levels of education (White, l987c)105Chapter 5and of different generations (Barnowe, 1988) showsignificantly different attitudes and orientations.Understanding the different needs for managementtraining between managers with higher education vs. thosewithout, and among managers with formal training in variousdisciplines is of critical importance to ensure theeffectiveness and efficiency of management educationprograms. If significant differences among managers withdifferent backgrounds are substantiated, such differencesshould be reflected in the curriculum variations ofdifferent types of management education programs.In this study, five sets of managers are defined asclassifiers of PRC managers’ backgrounds. The first set (G1)distinguishes those managers with little formal educationbut with long political, military, and administrativetenures from those who are more or less professionals. Thesecond set (G2) distinguishes managers with training inscience and technology from those without. The third set(G3) distinguishes managers with training in the humanitiesor social science (excluding management) from those without.The fourth set (G4) distinguishes those managers with formaltraining in economic management, in which applied economics,finance or accounting are the major subjects, from those106Chapter 5without. The fifth set (G5) distinguishes those managerswith formal training in industrial management, which mainlyfocuses on subjects such as operations management,production organization, and systems engineering, from thosewithout.Based on the existing understanding of the PRC’s cadresystem, education system, and general economic, sociopolitical and cultural characteristics, a series ofhypotheses are generated concerning the comparative levelsof managerial abilities among various categories ofmanagers.5.3.1 Hypotheses 3.1Due to their longer tenure as cadres and the particularcriteria on which they are usually selected for leadershippositions, managers in Gl are likely to outperform othermanagers in managerial functions which require a great dealof outside connections with government agencies and otherenterprises (such as items 1, 3, and 7). Since economicmanagement training is intended to prepare cadres in highlevel positions in government agencies, the opportunities ofsuch training tended to be given to those with the “right”family backgrounds and ideological orientations. Therefore,107Chapter 5managers in G4, much like their counterparts in Gi, tendalso to perform well in the managerial functions describedin items 1, 3, and 7.H3 .100: B (G1UG4) > Bj (G1UG4), when i = 1, 3, and 7,where BJ(X) denotes the level of ability to performmanagerial function j among managers who belong to set X.H3 .111: Bj (G1) > Bj (j), when i = 1, 3, and 7.H3 .112: Bj (C4) > Bj (), when i = 1, 3, and 7.5.3.2 Hypothesis 3.2Managers in G4, due to their special training in thesubject of finance, are more prepared than other managers indealing with financial planning (such as item 2).H3 .200: Bj (G4) > Bj (G), when.i = 2.5.3.3 Hypotheses 3.3Managers in G2 and G5 are likely to be competent inhandling well-defined technical tasks (such as items 4, 5and 6) because of their technical and professional trainingin the field of science, engineering, and/or industrialmanagement. In addition, their understanding of the108Chapter 5importance of advanced technology, as well as their rapportwith scientists and engineers in the organization tend tohelp them to manage the process of technical innovation(such as item 10).H3 .300: Bj (G2UG5) > Bj (G2UG5), when.j = 4, 5, 6, and10.H3 .311: Bj (G2) > Bj (), when i = 4, 5, 6, and 10.H3 .312: Bj (G5) > Bj (), when i = 4, 5, 6, and 10.5.3.4 Hypotheses 3.4Managers in Cl, due to their deeper involvement in thesocial and political aspects of life within enterprises(Schurmann, 1968), are typically more empathic to employees’welfare needs (such as items 18, 19, and 20). They are alsolikely to be more effective in directing subordinates (suchas item 9), for Chinese workers, as discussed in Chapter 4,tend to be more responsive to paternalistic leadership styleand organizational environment.H3 .400: Bj (G1) > B (j), when j = 9, 18, 19, and 20.109Chapter 55.3.5 Hypotheses 3.5Managers who are well trained in industrial management(G5) tend to have a better understanding of the perspectivesof modern systems theory. Therefore, they typically arebetter equipped for the tasks of designing and coordinatingvarious subsystems of an organization to enhance the overalleffectiveness of the whole system (such as items 11, 12, 13,15, and 25).H3 .500:.Bj (G5) > Bj (), when i = 11, 12, 13, 15 and25.5.3.6 Hypotheses 3.6Two major points have been made to support thearguments of adopting methods of liberal education in thetraining of managers, and of selecting managers fromgraduates majoring in liberal arts. First, liberal educationencourages an active and questioning approach to subjectmatters. Second, liberal education develops broadlyapplicable skills, including the skills of communication(Johnston, 1986; Useem, 1986).However, as is suggested by Johnston (1986), theliberal arts (including humanities, fine arts, social110Chapter 5sciences and sciences) are not necessarily taught liberally.Chinese academia and society had long been dominated by theabsolute and unquestioned authority of classical teachingsfor thousands of years before the May 4th Movement of 1919.Today, modern disciplines of liberal arts have proliferatedin universities across the country. Nevertheless,positivist-empiricism still does not prevail, especially inthe disciplines of social sciences and the humanities, whereConfucian texts have been replaced by Marxist—Leninistdoctrines as unquestionable authority (Hayhoe, 1987).Critical thinking is discouraged.On the other hand, skills of communication arereasonably well developed among graduates of social sciencesand the humanities in the PRC, though not among graduates ofnatural sciences. In addition, students of social sciencesand the humanities tend to gain a good understanding of thesocio—political aspects of business environments due to thenature of their subjects of study.Therefore, it is argued that managers in G3, togetherwith their colleagues in Gi and G4, who typically have agood grasp of government policies and public opinion due toorientation and/or experience, are more effective inmanagerial functions described in items 21, 22, 23, and 24.111Chapter 5H3.600: B(GiUG3UG4)> BJ(G1U34), when j = 21, 22,23, and 24.H3.611: B(GiUG3) > B(GiUG3), when j = 21, 22, 23, and24.H3 .612: Bj (G3UG4) > Bj (G3UG4), when j = 21, 22, 23, and24.H3.613: B(G4U1) > Bj(G4UGi)1 when j = 21, 22, 23, and24.H3 .621: Bj (G1) > Bj (), when j = 21, 22, 23, and 24.H3 .622: Bj (G3) > Bj (), when j = 21, 22, 23, and 24.H3 .623: Bj (G4) > Bj (G4), when j = 21, 22, 23, and 24.5.3.7 Hypotheses 3.7The current economic reform program has had profoundimpacts on objectives and means of performance management inPRC’s enterprises. As was discussed in Chapter 1, new labourpolicies have been introduced to allow enterprises torecruit and select employees based on merit. The systems oflinking remuneration to individual, group, andorganizational performance is also being developed.112Chapter 5Not only are enterprises gaining more power to plan andmanage their human resources, but also they are givenincreased pressure to improve labour productivity. One ofthe new challenges is for enterprises to maintaininterpersonal and inter—group cooperation while introducing“pay for performance” measures (e.g. differential bonussystem).The economic incentives and means of performancemanagement was not clearly sanctioned by the centralgovernment until the mid-1980s (Tan, 1989). It is,therefore, speculated that managers from all types ofbackgrounds are equally short of skills in managing the workperformance of people (such as items 14, 16, and 17) in thenew economic environment. It is noteworthy that managers inG4 and G5 received hardly any training in the area ofperformance management from their formal business—relatededucation, according to Battat (1986), Von Glinow &Teagarden (1988) and Warner (1987).Marketing (item 8) is another area which is probablytoo new for the managers to have gained much proficiency.The management of PRC enterprises prior to the economicreform, as in all central planning economies, requires nomarketing skills since all products are specified and113Chapter 5distributed centrally (Pearce, 1991; Tung, 1989; Wall,1990). Consequently, the subject of marketing wasnonexistent in the curricula of business and economicsrelated disciplines until very recently (Livingstone, 1987).113.700: B < Bavg’ when j = 8, 14, 16, and 17, where Bdenotes response to Item j under question B, andBavg = (fBk)/25 - (B8 + B14 + B16 + B17).H3.701: B(Gi) BJ(Gi), when j 8, 14, 16, and 17.Ff3 . 702: Bj (G2) = Bj (), when i = 8, 14, 16, and 17.H3 . 703: Bj (G3) = Bj (), when i = 8, 14, 16, and 17.H3 . 704: Bj (G4) = Bj (Ga), when j = 8, 14, 16, and 17.H3.705: B(G5) = B(), when j = 8, 14, 16, and 17.Hypotheses Group 3 stated above are summarized in Table2.114Chapter 5Table 2. Hypotheses on the differencesin managerial capabilities among PRCmanagers with various education and workbackgrounds2. Formulating financial strategy B(G4)>B ()4 . Managing production5. controlling inventory B (G2) >B ()6. scheduling production B (G5) >B ()10 . Promoting technological innovation8.Marketing =, L9.Directing subordinates B(Gi )>B()ll.Specifying job duties12 . Designing organizational structure13 .Establishing financial controlling B(G5)>B()systemII 15.Establishing information system14 . Personnel management16.Team building =, L17 .Mediating conflicts18.Delivering employee welfare19.Organizing social activities B(G1)>B(j)III 20.Providing developmental opportunitiesfor benevolent purpose21 . Encouraging employee participation22 . Ideological education B (G1) >B ()B(G3)>B()IV 23.Following the Party line24 .Public relationc 25. strategy formation B(G5)>B ()Managerial Functions Hypothesesl.Negotiating with government agencies3 .Acquiring financing7.Acquiring raw materialsIB (G1) >B (j)B (G4) >B ()Notes: G1 denotes managers without post—secondary education;G2, managers with post—secondary training in science or115Chapter 5Table 2 Continued.engineering; G3, managers with post—secondary training inthe humanity and social sciences; G4, managers with post—secondary training in economic management; G5, managers withpost-secondary training in industrial management. B(G1)denotes the average level of ability to perform themanagerial functions concerned by managers belonging to setGk (k = 1, 2,...,5); Symbol = denotes that B(Gk) = B(Gk),k = 1, 2, ...,5, and symbol L denotes that the averagelevel of ability of all the managers to perform themanagerial functions concerned is lower than their averageability to perform the other managerial functions.116CHAPTER 6DATA COLLECTION AND HYPOTHESIS TESTINGThe data for testing the hypotheses concerning needsfor management education in the PRC in general and theMOFERT organizations in particular is obtained from aquestionnaire survey administered to a sample of MOFERTmanagers from the PRC.6.1 SURVEY INSTRUMENT & ITS PSYCHOMETRIC PROPERTY6.1.1 Survey InstrumentThe survey instrument used (see Appendix A) consists offive parts. Parts A, B, and C are questions (Questions A, B,and C) investigating respondents’ attitudes on the list of25 managerial functions found in Figure 5. Question Aconcerns the relevance of the 25 categories of managerialfunctions for the overall success of an enterprise, QuestionB concerns the respondents’ self—reported abilities toperform those categories of functions, while Question C isconcerned with the training received associated with thosecategories of managerial functions. For each question,managers surveyed were asked to respond by rating eachcategory of managerial functions in the list on a five—point117Chapter 6Likert scale. For example, in answering question A, “as awhole, how important do you think the following types ofenterprise management functions are for the overall successof an enterprise”, the respondents were asked to rate eachcategory of managerial functions in the list on a scaleranging from 1 (not important) to 5 (very important).Part D gathers biographical information aboutrespondents, including sex, age, level of education,disciplines of training, job position, technical andprofessional titles, and birth place and the places wherethey have lived. Part E is open-ended, asking for additionalcomments.The list of 25 items of managerial functions wasgenerated on the basis of those identified in the frameworkin Figure 5, with particular consideration given to ensurethat the wording of the items fits the PRC reality, and iseasy for the respondents (PRC managers) to understand. Items1 to 10 of the managerial functions in the questionnairecorrespond to items in Quadrant I of the framework in Figure5, Items 11 to 17 to those of Quadrant II, Items 18 to 22 tothose of quadrant III, Items 23 and 24 to those of QuadrantIV, and Item 25 to that of the center box of the framework.The items appearing under each of the three questions (A, B,118Chapter 6and C) as shown in Appendix A are randomly ordered, and aretherefore numbered differently from those in Figure 5.To ensure that the Chinese version to be used in thesurvey is of good quality in terms of accuracy of meaning,grammar and style, and is consistent with the Englishversion, the questionnaire was prepared by the authorsimultaneously in English and Chinese. The draft was thenrevised a number of times on the basis of eight pilot testsadministered to Chinese nationals who have lived in the PRCin recent years. Another person with a good mastery of bothcolloquial English and Chinese translated independently theChinese version into English. Adjustments on both theEnglish and the Chinese versions were then made to ensureaccurate comparability of the two versions.6.1.2 Measurement Properties and Statistical TechniquesThe issue concerning the appropriate statisticaltechniques of analyzing data obtained from Likert scales,such as those in the survey instrument used in this study,is a much debated one in the field of psychology and otherbehavioral sciences. Specifically, the issue is whetherstatistical techniques that require interval data can beapplied to data obtained from measurement scales which is,119Chapter 6in a strict sense, only ordinal (Burke, 1953; Senders,1953). The “fundamentalist” point of view argues that,unless investigators can demonstrate that particularmeasurement scales are interval, parametric statisticaltechniques such as t—test and analysis of variance shouldnot be applied (Stevens, 1946). Such a view point has beenseriously challenged. Two of the strongest arguments againstit are presented below.Invariance of results. According to McNemar (1962),parametric inferential statistical techniques can be usedwhen the scale of measurement is not strictly intervalbecause “nowhere in the derivations purporting to show thatvarious ratios will have sampling distributions which followeither the F or the t or the normal distribution does onefind any reference to a requirement of equal units” (p.375)Nunnally (1967) further asserts that the conclusions ofparametric influential statistical tests, in most cases,will not be altered in any serious way when tests areapplied to a Likert scale of a certain variable as opposedto a strictly interval scale of the same variable, becausethese statistical techniques are quite robust to monothetictransformations of raw data. The “invariance of results” is120Chapter 6also demonstrated empirically (Baker, Hardyck, &Petrinovich, 1966).Equal-appearing interval scales. Coombs (1950, 1964)argues that we seldom obtain truly interval measures inpsychology, but often construct scales which are more thanjust ordinal ones. Nunnally (1967), in particular, contendsthat Likert-type attitudinal scales can be considered“equal—appearing” interval scales (1967).While the debate has not yet been fully resolved, theacademic convention in behavioral sciences over the last fewdecades has allowed parametric statistical techniques to beapplied to Likert scale data as long as they meet theassumptions in the specific statistical methods, such asnormality of the population distributions. In light of theabove two major counter arguments against the“fundamentalist” viewpoint, parametric inferentialstatistical tools are applied in testing the hypotheses inthis study.6.2 DATA COLLECTION AND THE RESPONDENTSThe survey questionnaire was administered to threegroups of senior and middle managers working in either SOE5121Chapter 6under the jurisdiction of MOFERT, or various functionaldivisions of MOFERT. The data collection was carried outbetween April, 1990 to February, 1991. The first set ofquestionnaires was administered to 38 senior and humanresources managers from MOFERT organizations attending anexecutive training program (a part of the PRC human resourcedevelopment project sponsored by the United Nations) inVancouver during April and May, 1990. The second set wassent to 75 middle managers working in two of the MOFERTenterprises. These managers were surveyed in the PRC duringAugust and September, 1990, with the assistance of two humanresources managers within the two respective enterprises.The third set was administered to 36 managers from MOFERTorganizations attending the same type of training program asthe first set of respondents in Zhongshan, GuangdongProvince, the PRC in February 1991.The return rates from the first and the third sets ofthe survey respondents were both 100%, while that of thesecond set was 22.7%, resulting in a total of 91 cases ofvalid responses. The mean and standard deviation of all theresponses are listed in Appendix B.Table 3 summarizes the age and gender distributions ofthe 91 respondents.122I-.’CDHCDPH-HC)000 II.QCtH-H0)CD0r1‘1-QHCD0CD tnIiCD(1)0C)<0H-CtH-H0P.’HCDCDCDP.’C)U)C)HCtH-0)0)CDU)P.’U)b.’C)H-0)0H,U)0)<HdH-U)U)Ct CDQH 0LI-U)IICD(31CDC)•CtP.’CtU)CDU)Ct0CDHIIH CDH-<0CDJH-H-‘P0)0 (.‘CtP.’—CDCt0H-<.IICD0)0P.’H,0H,010-‘1 HC)Ct0CDP.’U)CDU)r1I-H-H-U)AcDCtPCDCD0H-U)H(I)U)CtCtHOH-II0HH HC)U)U)CtU)bCtI--Li-I-iCDCD)WC)Ct0-r1CDH,(I)P.’9)•.U)H-P.’‘-‘1CDC)U)ACD-9)1<0HP.’CDU)CD9)U)CDCtt.eU).9)CD C)CtC)Ct0Cl)0H-H<CDCDHCD9)C)CDH0H-C).‘H,CtH-CDoop.’HH,9) HH,CtH09)‘-<IIP.’CD-P.’ H-t’)Ct<CtU]H-CD00H-CtCtP.’.‘-CD9)CDCtU)U)9)H-U)ozH,0CtCDCD 9)HCt 9)‘1 CD00U)CDP.’xCD Ct’lU) .9)‘p CD 9) II CD 0 Ct 9) 9) H- H 9) H CD I-1 09) Ct 9) U) CD CtA 1 CDr1 (D•(DItI-i-00CDI-atoll 0II-I.I-I-(DO01511 I-’rtOcool(D(tCtI-’-0L.’)A 0 Ct 9) H 9) H CDA 0 Ct 9) H 1Tj CD 9) H CDA 0 Ct 9) H 0 CttjrJTjCDCDCD0)9J9)9)H9)H9)HHCDHCDHCDCDCDCDCl) CDOH0i‘)P(3‘DiO(3JOOH 0M-‘Js)O00—J0101003—)o\°0‘OH0000MO‘(3(3‘(3a—i,pUi000DU1aCD 9)‘p CD ‘p CD9, rt CD 1 0Table4.ThestructureofthesurveydataI-.Notes:Fori=1,2,...,91,andj=1,2,...,25,a-denotessubjecti’sresponsetoitemjunderQuestionA;b1,-denotessubjecti’sresponsetoitemjunderQuestionB;Cj,jdenotessubjecti1sresponsetoitemjunderQuestionC.Gk(k=l,2,3,4,5)issetdefinedinthesamewayasinTable2,whichclassifiessubjectsbasedontheireducationalandworkbackgrounds.c-i (t 0ResponsestoRespondentSetQuestionAQuestionBQuestionC(I)(Gk)(VariableA)(VariableB)(VariableC)(VectorA)(VectorB)(VectorC)12...2512...2512...251a1,a1,2...a1,b1,b1,2...b1,sC1,C1,2...C1,252a2,1a2,•..a2,5b2,1b2,•.•b2,5C2,1C2,...C2,53G1a3,1a3,2...a3,b3,2...b3,25C3,1c32...C3,25.G..G3..1aj,jb1,Cj,j.C4...G5..91a91,1a91,2...a91,25b91,1b91,2...b91,25C91,1C91,2...c91,25Chapter 66.3 INSTRUMENT VALIDATIONBefore proceeding to test the hypotheses usingresponses to Question A and/or Question B of the surveyinstrument, a test is conducted to statistically rule outthe possibility that greater importance assigned by therespondents to certain aspects of management (Question A)automatically lead them to report greater capabilities inperforming the same managerial functions (Question B)Specifically, it is to verify whether there exists at leastone j ( = 2, 3, ..., 25), so that (A — A_1) = (B — Bj_i).The validation test is conducted by applying ProfileAnalysis to response vector A and response vector B, where A= (A1, A2, ..., A25), and B=(B1, B2, ..., B25). Figure 6illustrates the respective profiles of response vectors Aand B. Profile analysis on A and B, in this analysis, testswhether the two profiles, which are drawn according to A andB respectively, are parallel. Such a test is handled by (a)converting vectors A and B to their respective slope vectorsPA and PB, and (b) performing Hotelling’s T2 on the twodependent vectors PA and PB (Harris, 1975, pp. 67-88).125Respon8eto1[QuestionAQueatlonIII12345678910111213141516171819202122232425SurveyItemFigure6.ProfileofMOFERTmanagers’responsestoQuestionAandB.F1Chapter 6Computationally, the original 1 x 25 response vectors Aand B are converted to their respective 1 x 24 slope vectorsPA = (PA1, P212, ...,PA24) and PB = (PB1, PB2, ...,PB24),where PAJ= Aj - Aj+’ PBj = Bj - BJ+11 for j = 1, 2, ...,24. After the conversion, Hotelling’s T2 test on Vectors PAand PB is handled by performing a multivariate analysis ofvariance on PA and PB with repeated measures through MANOVAprocedure in the Statistical Package for Social Sciences(SPSS) (SPSS Inc., 1986). The mathematical details of thetest, including the SPSS program used in the computation andthe computer output, is provided in Appendix C.The result of the analysis shows, as detailed inAppendix C, that the parallelism hypothesis of the profileanalysis is rejected, F(24, 42) = 6.96734, p < .001. Thisimplies that, despite the fact that respondents are asked torespond to both Questions A and B on the same group ofmanagerial functions, the answers to the two questions donot appear to confound each other.127Chapter 66.4 HYPOTHESIS TESTING6.4.1 Results: Hypothesis Group I.The tests of Hypothesis Group 1 are modeled based on asingle—factor design with repeated measures on the samefactor, because the same group of subjects responded to all25 items under each of the three questions (Winer, 1962).6.4.1.1 Hypothesis 1.1Hl.1 is tested by verifying whether A1, A11, A111, andA are significantly different, whereA1 = 1/1OAj,‘7A11 = l/7Z A,3 tIA111 = 1/5 Aj, and3:18z4Aiv = 1/2tAj.ja3Computationally, the test is realized by using amultivariate repeated measures design supported by theMANOVA procedure in SPSS to compare A1, A11, A111, and A.Hypothesis 1.1, which predicts equal importance of the fourcategories of managerial functions A1, A11, A111, and A,128Chapter 6is rejected, F(s = 1, m = 1/2, n = 43) = 16.09516, p < .001.In order, the mean importance scores assigned to profitmaximization, governance, nurturing, and diplomacy are4.408, 4.519, 4.213, and 4.593. The respondents, therefore,differentiate the four aspects of managerial functions interms of their significance to the overall success ofenterprises. A detailed list of the computer commands usedto execute the statistical analysis for Hl.1 as well as forHl.2 is provided in Appendix D.6.4.1.2 Hypothesis 1.2Hl.2 is tested by specifying two sets of contrastswithin the NANOVA procedure used in testing Hypothesis 1.1.(Appendix D describes the computational details of thisanalysis.) The first set of contrasts compares Ainternalwith Aexternal, where Ajnternal = (A11 + A111)/2, andAExternal = (A1 + A)/2; The second test comparesATechnical with Ainstitutional, where ATechnical = (A1 +A11)/2, and Ainstitutional = (A111 + Ai)/2. Hypothesis 1.2receives partial support (see Table 5). Specifically, theprediction that the technical and institutional aspects oforganizational management are perceived to be equallyimportant is supported. However, the prediction that the129Chapter 6internal and external aspects of organizational managementare perceived to be equally important is rejected. In fact,the external aspect of management is reported as beingsignificantly more important than the internal aspect ofmanagement.Table 5. Result of MANOVA contrastingimportance of internal—external andtechnical-institutional aspects ofmanagementMean SD Hypoth.MS Error MS F(l,90)Ainternal 4.366 .519 1.65107 .9950 16.59298*AExternal 4.501 .525ATechnjcal 4.464 .527 .33477 .11592 2.88808Ainstjtutjonal 4.403 .525* p < .056.4.2 Results: Hypothesis 2The tests of Hypothesis 2 (H2.0) are also modeled basedon a single—factor design with repeated measures on the samefactor. H2.O is tested by comparing subjects’ responses toQuestions A and B for each of the 25 items listed under thetwo questions. This implies a group of 25 separateunivariate single—factor designs with repeated measures on130Chapter 6the same factor. Computationally, the testing is undertakenby applying 25 separate one-tailed t-tests with pairedobservations to and Bj. for j = 1, 2, 3, ...,25, whereAj denotes respondents’ ratings to item j of the managerialfunctions in responding to Question A of the surveyquestionnaire, and B denotes respondents’ ratings to item jof the managerial functions in responding to Question B ofthe survey questionnaire.As is shown in Table 6, Bj is, as predicted,significantly greater than Aj for all j (=1, 2, ...,25)with p < .05. Therefore, the hypothesis that significantskill deficiencies across all the areas of the proposedenterprise management exist among the PRC managers is fullysupported in this study.6.4.3 Results: Hypothesis Group 3The testing of all the hypotheses in Hypothesis Group 3frame the available survey data into a series of single—factor univariate designs. While the variation of surveyitems under Questions A and B is treated as the factor inthe testing of hypotheses group 1 and 2, the variation ofbackgrounds of the subjects (G1, G2, G3, G4, and G5) istreated as the factor in the testing of Hypothesis Group 3.131tibLPHPPPPPPPPPPPP01014()L’JJaa0101ppooCD U) 0 UI CD(.).)4(.)..w.(M(t\)i((.CDCM0-.p01o1-.-i()L)C34oaOOWjp0101—JPMC0JPGWOl401P0010G01O1ML.F-DOOMWPD(’301MMpOM3OM()O01001(s)‘D01DCMPP—OM—01O)()WMOOOPMGOCO‘DG0-OM0PM0101-1G01D010100P0P0P0P000P0P0HOP0PPPPHOPCP0PP‘DDMOl00OG010DI—DM1MO00P0001P—aMCZ00WOW4a’MM‘J‘.DP(OM.D0101OOE’JpCMOj4O-LiMMO00.tP0)ODP0101014a(M’.D(iOOOOOOOOODOOOO-.JOOOUi0)O01-1DpowpW,‘DCPp.I-ICDp.CD U) (.t.,I..I-’.,Hi0P.atoII CD 0 Hi0 U)I-I.H CD0PPPMO01OPHOOD0O‘JGCM-1M0OM0-.101P0.1O01(,JPC...)*OO-M‘O)OD******************************************ci- CD 0’Chapter 6Table 6 Continued.Response Mean SD df tA17 3.8023 1.115 85 2.87**B17 3.3256 1.152A18 4.2360 0.930 88 5.41***BiB 3.3258 1.3381119 3.5795 1.132 87 4.71***B19 2.7841 1.2451120 4.4444 0.672 89 9.81***B20 2.9556 1.2081121 4.2759 0.831 86 4.32***B21 3.6437 1.1711122 4.4483 0.912 86 4.04***B22 4.0115 1.1151123 4.5465 0.877 85 3.19***B23 4.1395 1.065A24 4.6092 0.721 86 5.09***B24 3.8391 1.2561125 4.8736 0.367 86 6.26***B25 4.0805 1.081* p < .05** p < .01*** p < .001Operationally, set G1 is defined as containing managerswhose level of education is lower than college level; set G2is defined as containing managers whose level of educationis not lower than college level and who have post—secondaryeducation in disciplines of science, applied sciences, orengineering; set G3 is defined as containing managers whose133Chapter 6level of education is not lower than college level and whohave post—secondary education in disciplines of thehumanities or social sciences (excluding management); set G4is defined as containing managers whose level of educationis not lower than college level and who have post—secondaryeducation in economic management; and set G5 is defined ascontaining managers whose level of education is not lowerthan college level and who have post—secondary education inindustrial management.Hypotheses 3.1 to 3.6 are tested by performing a seriesof one—tailed t—tests which compare responses to Question Bof the survey questionnaire by managers who belong tocertain classifying sets versus those who do not (seeunshaded zone of Table 7). The analyses indicate that,Hypothesis 3.2 and 3.4 are fully supported, Hypotheses 3.6are supported except in the case of Item 23, Hypotheses 3.5and 3.1 are partially supported, while Hypotheses 3.3 arerejected, p < .05.Hypotheses 3.7 are tested by (a) performing one-tailedt—tests comparing managers with or without certaineducational and working backgrounds to test H3.701 to H3.705(see shaded zone of Table 7), and (b) performing one-tailedt—tests comparing the responses by the managers to Items 8,134Chapter 6Table 7. significance of t—testscomparing managerial capabilities amongmanagers of different backgroundsHypothesis Classifying Item df t-ValueSet (j)H3. 0 0 G1UG4 1 86 —.183 85 —.247 85 2.30*1 G1 1 86 —.373 85 —.567 85 .922 G4 1 86 —.173 85 .097 85 1.83*H3.2 0 0 G4 2 83 2.26*H3.3 0 0 G2UG5 4 82 .235 85 —1.196 86 .8910 84 1.401 G2 4 82 —.145 85 —1.786 86 .5910 84 .982 G5 4 82 .845 85 1.156 86 .7010 84 1.09H3.4 0 0 G1 9 97 2.62**18 88 2.34*19 87 1.94*20 88 2.61**H3.5 0 0 G5 11 88 1.4812 86 2.89**13 85 —.5515 87 .1025 86 .8213500 r1 CD (n()E’JP0t..Ja’P a’GC) P4sPPP0000(DHrIH.I-J.‘H..(.)t’3I—JPL.JP4))pJP4L.3rPOOOOOOOOOOOOOOGOOOQ—1aaa.l-_Ja’oa-.Joa’a’—aa’Oi—a’a’G-.OI-‘.3 I-’ CD 0 (•t I.. CD* *PM)It”)JPPM--WOP01(_)-J0OI-JDJO01J0L)01‘DJ01F-0aa4)Da’F-u1oa’0001o-.iuia-1Oa’**********************************P CDri CD 0Chapter 6Table 7 ContinuedHypothesis Classifying Item df t-ValueSet (j)Notes: The hypotheses listed in the shaded zoneare tested by two-tailed t-tests, negative tvalues indicate higher score from respondents whodo not belong to the respective classifying sets.On the other hand, all the other hypotheses listedin unshaded zone are tested by one—tailed t—tests,negative t—values indicate that score differencesbetween managers belonging to differentclassifying sets are in the opposite direction aspredicted, and significant t-values indicate thesupport for the respective hypotheses.* p < .05** p < .01*** p < .001137Chapter 614, 16,and 17 under Question B with the average of theirresponses to the other items under question B (Bavg) to testH3.700 (see Table 8). Hypotheses 3.7, whichpredict that theabilities of managers in performingmanagerial functions ofmarketing,personnel, team building, and conflict resolution,are relatively low in comparison withother managerialfunctions, regardless of the types of their formal training,are not fully supported.Table 8. significance of one-tailed ttests on managers’ relative capabilitiesof handling certain managerial functionsItem Mean df t—ValueB8 3.0690 86 —2.90*B14 4.0115 86519aB16 3.9655 86523aB17 3.2759 86 —1.12Notes: The mean of Bavg is 3.4122.Negative t-value indicates that the meanof B (j = 7, 14, 16, 17) is smallerthan that of Bavg.aAlthough the t-values are significantat p < .001 for two-tailed t-tests,their directions are contrary to thepredictions that B14 and B16 be smallerthan Bavg.* p < .05138Chapter 6The t-values listed in Table 7 show that managers withvarious backgrounds indicate no significant differences intheir abilities of performing those functions, as ispredicted. The only exception to the above statement is thatin the area of marketing, managers with science andengineering training (G2) indicate significantly lowerability, p < .05, in comparison with others.However, comparing the responses of the MOFERT managersto the above four managerial functions with the average oftheir responses to the other items under question B, (aslisted in Table 8) fails to confirm all the predictionsstated in the hypotheses. While the results confirm thepredicted relative lack of marketing skills, the hypothesesconcerning the other three managerial functions arerejected. In fact, managers reported significantly higherthan average confidence in dealing with personnel matters(B14) and building teams (B16), which is contrary to thepredictions.The statistical results in Tables 7 and 8 are combinedand re—arranged in Columns B of Table 9. Table 9 indicatesthat the proportion of the hypotheses supported in139Chapter 6Hypothesis Group 3 isfairly loW (22 out of atotal of 56,or 39.3%).140ManagerialFunctionsClassifyingSets(Gk)(Itemj)G1G2G4G5(1_2)a(n2=19)a(n39)a(n4=28)a(n5=4)aBbCCBbCCBbCCBbCCBbCCl.NegotiatingwithgovernmentagenciesRRRR2Formulatingfinancia)strategy3.AcquiringfinancingRRRR4.Managingproduction445.Controllinginventory6.Schedulingproductior7.AcguiringrawmaterialsRRSR*8.Marketing4Table9.TestingresultsofHypothesesGroup3,comparedwiththewould-beresultsifthehypothesesweretestedusingresponsestoQuestionCinsteadofQuestionB9.DirectingsubordinatesSSCDTable9Continued.*17.Mediatingconflicts4$MManagerialFunctionsClassifyingSets(Gk)(Itemj)G2G3G5(n1=12)a(n2=19)a(n—39)a(n4=28)a(n4)aBbCCBbccBbCcBbCcBbCC10.Promotingtechnologicalinnovation11.Specifyingjobduties-12.Designingorganizationalstructure13.Establishingfinancialcontrollingsystem*14.Personnelmanagement4$15.Establishinginformationsystem*16.Teambuilding44ri (D ‘1Table9Continued.H L)ManagerialFunctionsClassifyingSets(Gk)(Itemj)G1G3G5(n1=12)a(n2=19)a(n—39)a(n4=28)a(n—4)aBbCCBbCcBbCCBbCCBbCC18.DeliveringemployeewelfareSR19.OrganizingsocialactivitiesSR20.ProvidingdevelopmentalopportunitiesforbenevolentpurposeSR21.EncouragingemployeeparticipationSRSR22.IdeologiCaleducatiorSSSS23.FollowingthePartylineSSSS24.PublicrelationSSSS25.StrategyformationTable9Continued.Notes:ThecellsrelatedtothoseofH3.l-H3.6whicharegeneratedbasedprimarilyonthecontentofpost-secondarytrainingarepartiallyshaded.EachoftheitemsassociatedwithHypothesesH3.7ismarkedbya“*“beforetheitem.aFork=1,2,...,njdenotesthemaximumnumberofcasesbelongingtosetGkinthissurvey.Theactualnumberofvalidcasesbeingprocessedinthecalculationoneachitemdependsonthenumberofvalidresponsestoeachitem.bcoiumnsBindicatewhetherthehypothesesinHypothesesGroup3,whichconcernstherelativecapabilitiesofmanagersbelongingtotheclassifyingsetspecifiedinthecolumninhandlingthemanagerialfunctionspecifiedbytherow,issupported(codedas“S”)orrejected(codedas“R”)atp<.05.Emptycellsmeanthatnohypothesishasbeenmadeconcerningtheparticulargroupsofmanagersandontheparticularmanagerialfunctions.CcolumnsCindicatewhetherthehypothesesinHypothesesGroup3wouldbesupportedor(codedas“S”)orrejected(codedas“R”),atp<.05,ifresponsestoQuestionCinsteadofQuestionBwereusedinthehypothesistesting.Emptycellsindicatethatnohypothesishasbeenmadeconcerningtheparticulargroupsofmanagersandontheparticularmanagerialfunctions.rt (t 1CHAPTER 7DISCUSSIONThe results of statistical analyses described inChapter 6 show that Hypothesis 2 is fully supported,Hypothesis group 1 is partially supported, while the supportfor Hypothesis Group 3 is fairly low. The focuses of thissection are (a) to explore possible explanations for therejection of some of the hypotheses in Hypothesis Group 3,(b) to assess the generalizability of the survey results toMOFERT as well as PRC’s other SOE5 in general, and (c) todiscuss the limitations of the current study.7.1 ON HYPOTHESIS GROUP 3In exploring the causes for the lack of support forsome of the predictions in Hypothesis Group 3, thepossibility of false assumptions underlying some of thehypotheses, and the possibility of sampling biases areexamined.7.1.1 The Basic Assumptions underlying Hypothesis Group 3Hypothesis Group 3 predicts the similarities ordifferences in managerial capabilities among managers with145Chapter 7various education and work backgrounds. As can be recalledfrom Chapter 5, assumptions were made in generating thehypotheses in Hypothesis Group 3 on (a) the content andeffect of post—secondary training, and (b) the nature andimpact of factors other than formal education, such as worktenure, political and social orientation, and connectionwith the government.To determine the plausibility of such assumptions, theresponses to Question C of the survey questionnaire areanalyzed and compared with those to Question B.Specifically, the same statistical procedures applied toresponses to Question B in testing Hypothesis Group 3 wereapplied to responses to Question C to discover how managersfrom various backgrounds are similar or different in theamount of the training received on various managerialfunctions. The results of such statistical analyses aresummarized in Tables 10 and 11, in correspondence withTables 7 and 8.Columns C of Table 9 are a re—arrangement of Tables 7and 8 to reveal whether the hypotheses in Hypothesis Group 3would be supported or rejected if responses to Question Cinstead of Question B were used in the statistical testing.146Chapter 7Table 10. significance of t-testscomparing the extent of training onvarious managerial functions amongmanagers of different backgroundsPropositiona Classifying Item df t-ValueSet (j)P3. 0 0 G1UG4 1 83 .463 81 .257 81 .171 G1 1 83 —1.403 81 .057 81 —1.172 G4 1 83 .783 81 .197 81 .68P3.2 0 0 G4 2 82 .00P3.3 0 0 G2UG5 4 81 —1.765 83 —1.436 80 —1.7110 83 .261 G2 4 81 —2.165 83 —2.026 80 —2.3110 83 —.462 G5 4 81 .585 83 1.086 80 1.0510 83 1.66*P3.4 0 0 G1 9 81 3.25***18 83 .9019 84 1.3020 83 1.66*P3.5 0 0 11 85 1.2912 83 1.75*13 82 —.9815 81 1.0125 86 .82147Chapter 7Table 10 Continued.Propositiona Classifying Item df t-ValueSet (j)P3.6 0 0 G1UG34 21 85 1.4422 84 2.26*23 86 1.68*24 84 1.77*G1UG3 21 85 1.3922 84 1.0723 86 —.0224 84 1.352 G3UG4 21 85 .7722 84 1.4523 86 1.2824 84 1.133 GUG1 21 85 —.1122 84 1.1923 86 2.03*24 84 .202 1 G1 21 85 —.1822 84 1.0223 86 1.5124 84 —.352 G3 21 85 1.2422 84 .8223 86 —.7224 84 2.16*3 21 85 —.8622 84 .1823 86 1.72*24 84 —.61148Chapter 7Table 10 Continued.Propositiona Classifying Item if t-ValueSet (j)?347 0 1 Gj B 30/ 14 84 11916 82 1.0617 84 —0214 $4 —41117 84a c;3 a $014 S4 —.1516 32 1.67/•....:./•:.14 84 .7716 s2 —SI14 84 5516 82 .5917 84 —41Notes: This table should be compared with Table 8.The propositions listed in the shaded zone aretested by two-tailed t-tests, negative t-valuesindicate higher score from respondents who do notbelong to the respective classifying sets. On theother hand, all the other propositions listed inunshaded zone are tested by one—tailed t—tests,negative t—values indicate that score differencesbetween managers belonging to differentclassifying sets are in the opposite direction aspredicted, and significant t-values indicate thesupport for the respective hypotheses.aThe each of propositions in this tablecorresponds with one of the hypotheses inHypothesis Group 3. While Hypotheses H3.l to H3.7149Chapter 7Table 10 Continued.predict the similarity or difference betweenmanagers from various backgrounds in theirmanagerial capabilities, Propositions P3.1 to P3.7conjecture the similarity or difference betweenmanagers from various backgrounds in the extent oftraining received on various managerial functions.* p < .05** p < .01*** p < .001150Chapter 7Table 11. significance of one-tailed ttests on managers’ relative extent oftraining on certain managerial functionsItem Mean df t-ValueC8 2.6914 80 —2.20*C14 3.6420 80 526aC16 3.6049 80 640aC17 3.3457 81Notes: This table should be comparedwith Table 9. The mean of Cavg is2.9636. Negative t—value indicates thatthe mean of C- (j = 7, 14, 16, 17) issmaller than that of Cavg.aAlthough the t-values are significantat p < .001 for two-tailed t-tests,their directions are contrary to thepredictions that C14, C16, and C17 besmaller than Cavg.* p < .057.1.1.1 Actual Content of Post-Secondary Education in thePRCThe primary basis for generating some of the hypothesesin Hypothesis Group 3 was the presumption about the contentof post—secondary education received by the managers whomajored in various subject areas. (The cells representingthose 38 hypotheses in Table 9 are partially shaded.) There151Chapter 7are at least two plausible explanations for the rejection of29 out of 38, or 76.3% of the hypotheses in this category.One possible conjecture is that the initial assumption aboutthe content of post—secondary training in the varioussubject areas concerned does not reflect the PRC reality.Another possible conjecture is that the initial assumptionthat the managerial capabilities of these managers is highlyrelated to their formal training is false.A total of 18 of the partially shaded cells in Table 9represent the hypotheses in H3.l to H3.6. (Items associatedwith H3.l to H3.6 are not preceded by a h1*.) Most of thecases represented in the partially shaded cells of Table 9provide certain confirmation for the first conjecture. Amongthe 13 cases where the hypotheses (among H3.l to H3.6) thatone group of managers has superior capabilities in handlinga certain task are rejected, 12 of such cases coincide withthe rejection of corresponding propositions that thisparticular group of managers have more formal training onthe task, (as are indicated by both “R” in Columns B and Cin each of the 12 shaded cells in Table 9). The onlyexception is that while managers with post—secondaryeducation in industrial management (G5) report to havesignificantly more training in “specifying job duties”152Chapter 7(indicated by an “S” in Column C), they report nosignificantly higher capabilities in fulfilling the sametask (indicated by an “W’ in Column B).On the other hand, among the five cases where thehypotheses (among H3.l to H3.6) that one group of managershas superior capabilities in handling a certain task aresupported, 3 of such cases coincide with the support ofcorresponding propositions that this particular group ofmanagers have more formal training on the task, (as areindicated by both “R” in Columns B and C in each of the 3shaded cells in Table 9).A total of 20 of the partially shaded cells in Table 9represent the Hypotheses in H3.7. (Items associated withH3.7 are identified by a “*“ before each of the relevantitems in Table 9.) A comparison of the t-values in theshaded zones in Tables 7 vs. 10 shows that, first, managerswith various backgrounds demonstrate no difference in theircompetency in managerial functions represented by Item 14,16, and 17, and, at the same time, report no differences inthe amount of training they receive in those managerialfunctions. Second, the inferior managerial capability infulfilling marketing function (represented by Item 8)reported by the managers trained in science and engineering153Chapter 7coexists with the lesser degree of training in this areareported by the same group of managers. The rest of themanagers show neither differentiated capacity nordifferentiated amount of training among them in the area ofmarketing. Meanwhile, managers from various backgrounds,contrary to the predictions, report higher capabilities inpersonnel management (Item 14) and team building (Item 16)compared with their capabilities in other areas, and theyalso report better training in these areas, compared withother areas (see Tables 8 and 11).It should be noted, however, that three cases existwhere differentiated managerial capabilities betweenmanagers from different backgrounds or across differentmanagerial functions do not coincide with the differentiatedextents of training in these aspects, as was assumed. One ofthese cases has to do with the capabilities of thosemanagers with post—secondary training in social sciences andthe humanities (G3) in “Encouraging employee participation”(see Table 9). Another similar case involves “MediatingConflicts”, where a significantly above average amount oftraining in this area (see Item C17 in Table 11) is notmatched by a substantial above average managerial capability(see Item B17 in Table 8). It may well be that the focal154Chapter 7managerial tasks in these cases are less technical and hencehave a weaker association with the extent of formal trainingin this respect. The second conjecture appears to be moreplausible for these particular aspects of management.The third case concerns the capabilities of thosemanagers with formal training in economic management (G4) in“formulating financial strategy”. The seemingly superiorcapabilities in financial planning by managers in G4 do notappear to be related to their training in the same area. Itis worth noting that most of the MOFERT managers surveyedwho have tertiary education in economic management (G4) aregraduates of institutions under the jurisdiction of MOFERT,among which the University of International Business andEconomics is the most prestigious. A possible explanationmay be that, while their education does not providesufficient professional training on financial strategyformation per Se, their affiliation with MOFERT during theiruniversity education enhances their familiarity with thespecific sector. In the context of the PRC, where businesspractices are less codified and standardized (Boisot, 1987),sector specific knowledge may well be an importantcontribution to managerial capabilities.155Chapter 7The overall pattern of the data also suggests that thehigh correlations between responses to Question B and toQuestion C revealed in Table 9 should not simply beattributed to the result of method variance. The Pearsoncorrelation coefficients between responses to the itemsunder Question A and under Question B (rs) are, in most ofthe cases (16 out of 25, or 64%), significantly smaller thanthe Pearson correlation coefficients between responses tothe items under Question B and under Question C (rBCs), (p <.05). This shows that the high association which therespondents attribute to Question B and C is not a result ofthe characteristics of the particular survey instrument orthe way the survey was presented, which would otherwisecause the respondents to attribute the similar highassociation to Question A and Question B. The detailedresults of one—tailed t—tests which compare the two sets ofmutually dependent correlation coefficients rAjBj and rBjcj,for j = 1, 2, ..., 25, are summarized in Table 12.7.1.1.2 Work Experience and General OrientationOther hypotheses in Hypothesis Group 3 were built onthe assumption that proficiency in performing certainmanagerial tasks is determined by aspects of a manager’s156Pearsonr&SignificancetestManagerialFunctionst_ValuearrBCl.Negotiatingwithgovernmentagencies.16*.29**1.032.Forinulatingfinancialstrategy-.00.36***2.83**3.Acquiringfinancing.06.48***3.51***4.Managingproduction.26**.38***.885.Controllinginventory.26**.41***1.386.Schedulingproduction.01•33***2.41**7.Acquiringrawmaterials.01.38***2.99**8.Marketing.15.41***2.06*9.Directingsubordinates.32***.52***1.70*10.Promotingtechnologicalinnovation.1535***1.67*11.Specifyingjobduties.19*.36***1.30Table12.One-tailedt-testcomparingPearson’srABwithPearson’srBC12.Designingorganizationalstructure.20*•74***6.11***Table12Continued.24.Publicrelation.06.21*1.00Pearsonr&SignificancetestManagerialFunctionst_ValuearrBC13.Establishingfinancialcontrollingsystem.05•45***3.02**14.Personnelmanagement.19*.38***1.4315.Establishinginformationsysten—.07.20*1.80*16.Teambuilding.41***.40***—.0817.Mediatingconflicts.08.42***2.46**18.Deliveringemployeewelfare.06.46***2.85**19.Organizingsocialactivities.11.82***8.45***20.Providingdevelopmentalopportunitiesforbenevolent-.10•74***8.12***21.Encouragingemployeeparticipation.10.38***2.06*22.Ideologicaleducation.52***•53***.1123.FollowingthePartyline.27**•43***1.34rt •1Table12Continued.Pearsonr&SignificancetestManagerialFunctionst_ValuearrBC25.Strategyformation-.12.31**3.22***Notes:rdenotesPearson’scorrelationcoefficientbetweenresponsetoItemjunderQuestionAandresponsetoitemjunderQuestionB;rBCdenotesPearsoncorrelationcoefficientbetweenresponsetoItemjunderQuestionBandresponsetoitemjunderQuestionC.Acc01Jngto(Glass&Hopkins,1984,pp.310—311),theformulaforcalculatingt—valueforcomparingtwodependentPearsoncorrelationcoefficientsrandrBcaret=(rBC-r)/ 2(1-r2-rBc2-rcA2+2rrBCrCA)whereNisthenumberofcases,rCAdenotesPearsoncorrelationcoefficientbetweenresponsetoItemjunderQuestionBandresponsetoitemjunderQuestionC.*p<.05**p<.01***p<.001rt (t(N-3)(1+rCA)H ‘iiChapter 7background other than the nature of his/her formal training.(The cells representing those 18 hypotheses in Table 9 areunshaded.) Compared with the category of hypothesesdiscussed in the previous section, the support for thiscategory of hypotheses is relatively strong, with 13 out of18, or 72.2% of the hypotheses being supported.A closer examination of the unshaded cells in Table 9reveals two sub—categories of managerial functions: (a)those traditional areas, especially those dealing withinstitutional aspects of organizational environment(Quadrant III and IV of Figure 5); and (b) those areas whichare newly defined or redefined in the recent Post—Maoeconomic reforms.Hypotheses concerning the first category of managerialfunctions, including items 9, 18, 19, 20, 21, 22, 23, and 24are fully supported. This result shows that managers in Gi(without formal higher education) and/or in G4 (with formalhigher education in economic management) tend to have higherconfidence in performing the first category of managerialfunctions. Managers in G4 are different from the otherhighly educated managers in that many of them, especiallythose graduated in Mao’s era, were assigned the subject160Chapter 7areas of study because of their “good” family backgrounds asdefined by the PRC authority, their political activism, andtheir potential of becoming governmental officials. Similarto their counterparts in Gl, their capabilities in dealingwith certain managerial tasks do not necessarily result fromthe training per se, but from their experience as managersand administrators, and their ideological orientation. Thisimplies that extensive managerial experience, which istypically associated with a better understanding of andcloser identification with the government policies, and witha more realistic view of the societal reality, does appearto contribute significantly to higher abilities in moreinstitutional and less technical areas of management.On the other hand, hypotheses concerning the secondcategory of managerial functions are rejected in almost allthe cases. Specifically, despite their work experience andconnections, managers in Gl and G4 do not report higherconfidence in the functions of “negotiating with governmentagencies” and “acquiring financing”. In addition, managersin Cl also fail to show superior ability in “acquiring rawmaterials”, to the contrary of the prediction. Thissuggests, as it has been by many authors (e.g. Walder, 1989;Warner, 1988), that the transformations in the economic161Chapter 7structure which are underway in the PRC are so fundamentalthat they are rapidly making the traditional rule of thumbobsolete. The old power network is falling apart.The only supported hypothesis concerning this categoryof managerial functions is one which predicts that managersin G4 have higher capability in raw material acquisition. Infact, hypotheses predicting superior capabilities bymanagers in G4 in fulfilling a range of managerial functionshave received a substantially higher rate of support thanother hypotheses in Hypotheses Group 3 (see Table 9). Thisphenomenon confirms again the proposition that sectorspecific training has certain practical importance in thecurrent PRC context, as mentioned in section 7.1.1.1.7.1.2 Possible Bias of the SampleA plausible explanation for the lack of support forHypothesis 3.7 concerning items 14 (“personnel management”)and 16 (“team building”) may result from the high proportionof human resource managers (53.9%) in the sample (seeAppendix B). The prediction that managers are significantlyless effective in dealing with personnel matters may well berejected because human resource managers, who are over—represented in the sample, are more familiar with this162Chapter 7aspect of management. One—tailed t—tests comparing theresponses to Question B by human resource managers and theother managers concerning item 14 and item 16 providesupportive evidence for the above conjecture. Specifically,human resource managers are found to be significantly moreconfident (M = 4.40) than their counterparts in other areas(M = 3.68) about their skills in dealing with personnelmatters, t(86) = 3.40, p < .001. Human resource managersreport significantly greater capability (M = 4.26) thantheir counterparts in other areas (M = 3.73) in buildingwork teams, t(84) = 2.82, p < .01.7.2 ON THE GENERALIZABILITY OF THE SURVEY RESULTS7.2.1 To MOFERT OrganizationsClearly, the sample of managers surveyed in the aboveanalyses is a convenient rather than a random one. Stepsare, therefore, taken to examine the extent of possiblebiases introduced by the sub-optimal sampling method beforeany attempt is made to generalize the findings of the surveyto MOFERT organizations in general.163Chapter 77.2.1.1 Estimating Sample SkewnessDue to limited access to the population statisticsconcerning the composition of MOFERT managers in general,the likelihood of sample skewness is estimated along onlytwo of the most crucial dimensions: levels and types ofeducation. To this end, the educational levels and areas ofpost—secondary training of the subjects in the sample arecompared with those of the MOFERT managers in general5.First, the nonparametricj2test is applied todetermine whether the difference between the sample and thepopulation in terms of their levels of education isstatistically significant (Siegel, 1956, pp. 42—47). Theanalysis shows (see Table 13) that a significantly higherproportion of the managers in our sample received post—secondary education, compared to those of the MOFERTmanagers in general.Second, a series of nonparametric binomial tests(Siegel, 1956, pp. 36-42) were applied to the dichotomousvariables G2, G3, G4 and G5. Such tests attempt to revealwhether there are significant differences between the sampleand the population in terms of the proportion of managerswell trained in certain categories of subject areas (science1640 U,Table13.ResultoftestcomparingproportionsofmanagerswithvariouslevelsofeducationinthesurveysamplewiththoseofthepopulationLevelofEducationProportions-Ek(0k-Ek)2/Ek(LEDU)ObservedExpecteda(0k)(Ek)JuniorHighandBelow1.1010.50—9.408.42SeniorHigh014.92—14.9214.92VocationalandSecondarSpecialtySchool2.2016.44—14.2412.33CollegeandAbove96.7058.9937.7124.112(3,N=91)=(0ic-Ek)2/Ek59.79*aDatainthiscolumnarecalculatedbasedonthestatisticsonMOFERTmanagers’educationallevelsprovidedinarecentprojectreportjointlyproducedbyMOFERT,InternationalTradeCenter,andUBC/UKConsortiumunderthesponsorshipoftheUnitedNation(MOFERTetal.,1991).*p<.001CD ‘1Chapter 7and engineering, social science and the humanities, economicmanagement, and industrial management). The results of thebinomial tests (tabulated in Table 14) indicate that nosignificant difference is found between the sample and thepopulation in respect of the areas of post—secondarytraining.Table 14. Results of binomial testscomparing proportions of managers withvarious areas of post—secondaryeducation in the survey sample withthose of the populationSubject Area Proportion Estimatedof Post-secondary ProbabilityEducation Observed Expecteda (p)( Gk)Science &Engineering (G2) .2400 .2253 .8677Social Science& the Humanity (G3) .4533 .3874 .2921Economic & IndustrialManagement (G4 or G5) .3671 .4187 .4146Note: N = 75.aThe data in this column are calculated based on thestatistics on the MOFERT managers’ type of formal trainingprovided in a recent project report jointly produced byMOFERT, International Trade Center, and UBC/UK Consortiumunder the sponsorship of the United Nation (MOFERT, et al.,1991)166Chapter 77.2.1.2 Assessing Impacts of Sample SkewnessAs an assessment of the extent that the possibleskewness of the sample on certain dimensions may causebiases of the findings, a series of analyses was conductedto examine the impacts of respondents’ biographicalcharacteristics, which include their age, sex, level ofeducation, place of birth, and current job location, ontheir responses to Questions A, B, and C. Table 15 is asummary of the statistical relationships between thebiographical characteristics of the respondents and theirresponses concerning various managerial functions.As shown in Table 15, respondents’ gender, age, birthplace, job location do not appear to influence significantlytheir responses to a majority of items surveyed. Therobustness of responses on those dimensions provides somesupport for the generalizability of the survey results amongMOFERT managers in general, despite the fact that noaccurate assessment of sample skewness in terms of gender,age, birth place and job location can be made.Similarly, respondents’ level of education, consideredin the aggregate without specialization breakdown does notappear to have had a major impact on the responses provided.1672.054.36*.511.76.36.79.29.04.07.021.321.56.758.76*1.05.50.001.212.681.073.66.58.06.61.086.62*8.70.31.36.55.132.83.55.00.76.46.141.281.97.00.02.441.38.00.60.77.12.52.303.291.63.11.03.54.15.00.04.161.532.02.098.17**2.392.181.22.46.092.094.78*.35.36.851.7121.55***4.60*.13.00.741.503.02.22.032.44.43.392.271.241.64.871.46.413.182.61.28.19.88.344.09*1.73.36.61.25.20.00.28.04.31.70.02.12.002.021.161.40.54.334•47*.24.36.45.001.061.99.36.47.231.1317.70***1.581.81.201.07.463.98*.64.00.52.48.66.33.661.08.041.32.44.16.172.53.041.22.341.19.432.161.14.531.23.03.652.431.71.41.295QQ*.451.87.62.624.38*.742.246.59*.381.271.46.18.165.06*1.60.265.64*.06.23.04.87.982.26.01.231.99.64.13.001.05.431.482.91.361.98.88.343.90.85.642.47.00.23737**.30.57.37.301.31.23.051.761.35.671.51.072.10.33.06.16.06.381.63rt CD 1Table15.ImpactsofrespondentcharacteristicsontheirresponsestoQuestionsA,B,&CImpactsofRespondentCharacteristicsSexAgeLeduG1G2G3G4G5BirthplWorkplMagtUnitHA1 A2 A3 A4 A5 A6 A7 A8 A9 A10AlA12A13A14A1t-A1 A17A18A19A20A2: A22A23A24A2r1.61—.01.08.03.02.062.46.01.01—.032.39.07.01.002.40.01.43.02.36.011.52.08.00—.07.18.09.08.12.55.04.18.063.08—.091.62.03.38.10.58.00.26—.10.20.19*1.14.18*.31—.14.76.171.63.38.31.26.80 64.311.04.21.35.72.24.20.42.92.30 55.941.48.91 65.22.32Table15Continued.c3’ ‘0rt CDImpactsofRespondentCharacteristicsSexAgeLeduG2G3G4G5BirthplWorkplMagtUnitB1.00.18.15.14.33.73.00.31.311.381.333.59B23.79—.06.521.45.45.194.53*1.41.75.224•57*.26B32.61.00.64.312.181.38.02.36.681.175.91*6.99*B41.62—.09.841.33.09.162.28.62.93.101.02.45.851.73—.00.83.003.05.24.001.27.55.73.92.04B65•33*.03.48.16.21.00.06.41.40.53.65.21B72.28.24*.32.841.721.413.031.191.101.123.424.13*Bg4.09*—.06.92.014.89.023.182.361.27.5212.45***7.92**B94.68*—.00.166.89*1.562.00.01.502.38*.48.13.08B1017.71***—.12.041.451.18.00.001.28.61.262.231.91B1].86—.09.944.22*.03.01.382.26.471.445.80*1.61B12.79—.05.18.081.91.722.907.90**1.37.55.00.07B134.17*—.04.681.911.241.00.32.37.44.664Q3*.01B14.11.11.201.07.752.962.28.11.67.4411.57***.17B1-2.62—.22*1.24.321.41.09.43.031.11.44.13.42.816.06.16.693.191.04.341.12.30.83.017.96**•93B17.62.20*.933.84.88.43.45.141.37.121.552.45B181.22.29**1.105.49*2.14.66.51.68.43.38.052.83B19.21.012.043.77.09.00.131.79.501.90.05.01B202.04.11.316.81*.051.201.36.74.85.61.30.75B2].03.05.825.12*10.64**3.764.33*4.41*.60.68.01.04.822.01.26**1.801.439.65**.11.20.64.33.28.321.33B23.08.21*.483.72.89.32.70.031.47.485.20*.00B24.00.08.894.14*30.44***6.21*7.84**7.05**1.641.76.35.00B253.76—.15.35.27.00.08.29.57.64.641.48.15C1.27.081.311.96.911.07.45.24.24.06.033.59C2.99.19*.15.992.26.01.012.171.66.8420.09***.12Table15Continued.ImpactsofRespondentCharacteristicsSexAgeLeduG1G2G4G5BirthplWorkplMagtUnitC4.97*.06.23.003.583.92.04.55.90.266.45*2.32C4.22—.091.161.054.802.21.05.31.62.36.12.01C51.54.10.81.584.483.58.081.08.43.268.12**•33C62.35.11.19.055.50*4.19.371.07.23.006.00*1.26C7.13.15.481.369.51**.86.632.211.15.408.1O**1.90C8.17.17.04.097.06**.082.141.371.00.038.1l**1.00C91.27.22*2.1410.59**3.64.052.221.781.41.021.29.59C13.62—.12.18.17.242.741.912.642.32*.092.153.87C1.36.141.80.115.12*2.25.021.67.43.384.85*.48C121.88.06.65.001.85.951.852.991.10.39.00.07C131.87.10.39.102.88.626.06*.98.62.143.51.44C14.61—.01.941.41.19.04.53.29.88.2519.01***6.88*C1c-.28.14.77.422.85.00.471.041.07.19.37.16C16.00.01.351.121.042.99.23.35.78.275.30*.29C171.33.19*1.72.00.01.08.18.14.85.541.62.81C18.29.151.98.812.40.571.75.44.841.001.53.04C19.56.111.411.701.26.24.01.35.401.43.001.14C201.92.05.962.774.12*.00.61.751.071.80.07.01C2.98.151.23.031.352.00.53.54.89.362.82.01C22.23.28**1.771.031.93.87.07.721.542.216.92*.68C23.05.09.462.272.54.463.07.441.87.381.39.08C24.45.042.51*.12.364.89*.34.11.63.70.631.48C25.04.10.222.385.04*.77.722.171.06.052.921.20Notes:Theimpactsofcategoricalvariables(includingSex,G1,G2,G3,G4,G5,Birthpl,Workpl,Magt,andUnit)ontheirresponsestovariousquestionsaretestedbyone-wayANOVA.ThesecolumnscontainF-ratiosandtheirsignificancelevels.Theimpactsofthesecontinuousvariables(includingAgeandLedu)onP 0rt (tTable15Continued.theirresponsestovariousquestionsaretestedbycorrelationanalysis.ThesecolumnscontainPearson’sr’sandtheirsignificancelevels.*p<.05**p<.01***p<.001Hrt (tChapter 7The only exceptional case is ratings of the extent oftraining received regarding public relations. Respondentswith terminal degrees or diplomas from secondary specialtyschool rated their training in this particular areasignificantly lower (M = 1.00, n = 1) than those withterminal degrees or diplomas from universities (M = 3.89, n= 61), junior high schools (M = 4.00, n = 1), college (M =4.10, n = 20), and post-graduate schools (M = 4.33, n = 3)at p < .05.However, it should be noted that the number of cases inthe sample with a level of education below college is verylimited. The statistical robustness of the responses inrespect to level of education may well be a result of therestricted range of education level included in the sample(Glass & Hopkins, 1984). The impact of education level onmanagerial capabilities among MOFERT managers in generalwith much more heterogeneous levels of education, as shownin Table 13, is possibly significant in some respects.On the other hand, the specific results regarding thehypotheses proposed in this study are, in general, robust tothe potential contamination of the sample skewness in levelof education. Specifically, the results concerning172Chapter 7Hypothesis group 1 that managers perceive institutionalaspects to be as important as technical aspects ofmanagement is not likely to change with a higher proportionof managers without higher education. In our current sample,Atechnical (M 4.464) is slightly greater thanAjnstjtutjonal (M = 4.403) (see Table 5). In a populationwith a higher percentage of managers in Gi, the perceivedimportance of institutional aspects of management may beslightly higher, which, however, is unlikely to change theoverall conclusion concerning Hypothesis 1.2.Hypothesis 2 was tested by comparing the responses toQuestion A and Question B. While discrepancies possiblyexist between the sample and the target population in theirresponses to each separate item, the support for Hypothesis2 is most likely to be maintained. Managers in the generalpopulation would possibly give a higher rating for itemsconcerning non—technical aspects of management in respondingto Question B, so would they give a higher rating to thesame items in responding to Question A. The relative gapsbetween the desirable and existing managerial capabilitiesare likely to persist.173Chapter 7Since backgrounds of managers are the classifiers intesting Hypothesis Group 3, the sample skewness in thesedimensions of backgrounds is fully controlled.7.2.2 Generalizability of the Survey Results to the Large-and Medium- Sized State enterprises in the PRCWhile the empirical survey of this study is directedexclusively to MOFERT managers who are either managers ofstate enterprises under the MOFERT jurisdiction orministerial administrators supervising and advising MOFERTenterprises, the framework and hypotheses generated aretargeted towards PRC’s SOEs in general. Although a certainextent of applicability of the conclusions from this studyis intended, the generalization of the survey results toSOE5 should be qualified with particular attention to thefollowing factors.Educational backgrounds of managers. Educationalbackgrounds of MOFERT managers are not entirelyrepresentative of managers in the SOE5. In terms of level ofeducation, without reliable data on the education level ofmanagers in SOEs, we can only conjecture that MOFERTmanagers’ level of education is not likely to be lower thanthose in SOE5 in general, and that the current sample over—174Chapter 7represents managers with higher education. The impacts ofthis inference has been discussed in Section 7.2.1.2.In terms of types of higher education, among 79managers with tertiary education in the sample, 19 (24.1%)received training in sciences and engineering (G2), 39(49.4%) received trainings in social sciences and thehumanities (G3), and 32 (50.5%) received training inmanagement (G4 and G5). In comparison, the proportions of1984 graduates of tertiary institutes all over the PRCmajoring in various fields of study are, calculated fromdata provided by Laaksonen (1988), 57.8% in G2, 37.0% in G3,and 5.2% in G4 and G5 combined. Obviously, higherproportions of MOFERT managers have tertiary education insocial sciences and the humanities (foreign languages inparticular) and in management (international trade andeconomics in particular), but a lower proportion in sciencesand engineering. The generalizability of findings regardingHypothesis Group 3 is less problematic, because of thecontrol for disciplines of training mentioned in section7.2.1.2, than those regarding Hypothesis Groups 1 and 2.Organizational environment and managerial tasks. Theorganizational environments of the enterprises, for whichthe managers in the sample work, may not be a perfect175Chapter 7representation of those of the SOEs in general. Enterprisescontrolled by MOFERT belong to the category of “centralenterprises” under the scheme proposed in Chapter 1. Becauseof its strategic importance to the national economy, centralenterprises can be expected to have priority in access toraw materials and other scarce resources. In addition, mostof the central enterprises are located in major cities,where the best educated workforce in the PRC are employed.On the other hand, central enterprises tend to be subject tomore central control and enjoy less flexibility inproduction, finance and marketing. Further, the specificfunctions performed by those MOFERT enterprises aredifferent from those of other state—owned enterprises whichare primarily oriented towards the domestic market.7.3 THE LIMITATION OF THE CURRENT SURVEY ATTD QUESTIONSREQUIRING FURTHER RESEARCHSampling error. As mentioned in Section 7.2, thesampling procedure of the current study results in thepossibility of sampling errors which compromises to someextent the internal and external validity of the study.Further, MOFERT organizations are different in a number ofways from the rest of the PRC’s SOEs. Although the176Chapter 7conceptual framework proposed in this study is aimed atproviding a better understanding of the PRC’s SOEs ingeneral, over generalization of the survey results must beavoided. Future research examining PRC’s SOEs in othersectors would certainly provide valuable data forcomparisons and contrasts.Response bias. The overall pattern of responses in thecurrent survey does not indicate serious response biascaused by the self—report questionnaire survey method used,as was addressed in Section 6.3.2.2 and 7.1.1.1. Respondentsseemed to be able to differentiate the 25 different items,as well as the same items under three different questions.However, the validity of self-report attitude surveys isalways questionable to a certain extent. Worth particularattention here is the danger of social desirability responsebias, where individuals tend to deny socially undesirabletraits and to admit to socially desirable ones (Zerbe &Paulhus, 1987). It is an especially important issue instudies using subjects from the PRC, where rigid social andpolitical control may intensify individuals’ need forapproval, which, according to Crowne and Marlowe (1960)tends to contribute to social desirability response bias.Future studies in this area which use alternative177Chapter 7methodologies to avoid such biases or techniques to measureand control such biases would constitute a substantialcontribution to the field.Undifferentiated treatment of managerial functions atvarious levels. Various managerial functions tend to receivedifferent degrees of emphasis at different levels of theorganizational hierarchy (Mintzberg, 1973). Keys and Wolfe(1988) argue, therefore, that differentiated content ofmanagement training be considered based on thedifferentiated functions of senior managers, middlemanagers, and first—line supervisors. The respondents in thecurrent study are at the senior and middle managementlevels. However, a majority of those respondents failed togive clear indications of the types and levels of theirpositions, presumably for fear of compromising theiranonymity. As a consequence, this study is unable to assessthe relative importance of the various managerial functionsidentified in the framework at different organizationallevels. Future research is needed to explore such potentialdifference, which is of great theoretical and practicalsignificance.Single country study. The framework serves as a veryuseful tool in analyzing the needs for education in the PRC.178Chapter 7However, as was stated in Chapter 2, the framework of thisstudy looking at the impacts of national characteristics onorganizational management from the perspectives of internal—external and technical—institutional environments hasapplication beyond the PRC. Future studies which apply thisframework in other national contexts would have significantimpact along two dimensions. First, such studies could helpunderstand management related issues in particular settingsfrom a synthetic as opposed to a narrowly focused viewpoint.Second, using this geocentrically oriented framework instudies associated with various national contexts willenable meaningful and accumulative comparisons betweennations to be made. The above two dimensions, the authorbelieves, constitute the two major areas on which cross—national management research ought to focus.179CHAPTER 8CONCLUSION AND PRACTICAL IMPLICATIONSThe findings of this study are of value in the ongoingefforts to upgrade the quality and usefulness of managementeducation in the People’s Republic of China. The frameworkwhich identifies and classifies managerial functions in thePRC provides a structure for analyzing the required contentof management education programs in the PRC and thetransferability of existing curricula of Western businesseducation. The empirical data also provide guidance onwhether and how curricula should vary across various levelsof management education programs.8.1 MANAGEMENT EDUCATION IN THE PRC: CONTENT8.1.1 Limited Validity of Western Models of ManagementEducation in the PRCWexley and Baldwin (1986) suggest that research on thecontent of management education is extremely atheoretical innature due to the fact that there is no comprehensive theoryon the antecedents of effective management. The lists ofrequirements for effective management generated by variouswriters (e.g. Kotter, 1982; Mintzberg, 1973; Quinn et al.,180Chapter 81990) vary greatly. Management scholars “still do not knowmuch about how different aspects of managerial effectivenessfit together to form a comprehensive whole” (Wexley &Balding, 1986, p. 287). Therefore, there is little agreementon what should constitute a curriculum of managementeducation.On top of such problematic research on content ofmanagement education is the lack of integration ofmanagement research across nations, as was discussed inChapter 2. This narrow orientation prohibits genuine cross—national learning in the design of management curricula.Despite the fact that curricula of management education inNorth America are subject to many criticisms domestically(e.g. Porter & McKibbin, 1988), they are still uncriticallycopied to developing countries, including the PRC,regardless of the differences in local conditions.The conceptual framework developed in this studyconstitutes an attempt to generate a geocentric andsynthetic model on the nature of management. It is hopedthat such a framework will provide guidance for the designof curricula of management education. In essence, theframework proposes that, since an organization facesexternal and internal pressures simultaneously, the181Chapter 8functions of management involve dealing with both theinternal and external aspects of environments effectively.Examined from a different angle, the framework also suggeststhat, since an organization faces technical andinstitutional pressures simultaneously, the functions ofmanagement involve dealing with both technical andinstitutional aspects of environments effectively.Interestingly, major criticisms over the curriculumcontent of management education in North America include itsoveremphasis on quantitative—oriented and specialized areasof organizational management. What have been largelyneglected are, according Mulligan (1987) and Porter andMcKibbin (1988), the integration across various functionalareas of business management, and the behavioral, legal,social, political and ethical aspects of organizational andenvironmental dynamics. In other words, the lack of acomprehensive understanding of the nature of organizationalmanagement, and hence the deemphasis of certain aspects ofmanagement (particularly, the institutional aspects), arerecognized as one of the major causes for dissatisfactionwith the current North American prototype of managementcurricula.182Chapter 88.1.2 A Comprehensive Curriculum Plan for the PRC’sManagement EducationThe list of major functions of PRC managers generatedon the basis of the present conceptual framework serves as auseful guide for designing need—based curricula ofmanagement education in the PRC. While failing to confirmall the predictions in Hypothesis Group 1, the surveyresults of this study support the notion that, in order forMOFERT firms to succeed in the PRC, it is important not onlyto manage the technical but also the institutional aspectsof organizational environments. Figure 7 represents atentative curriculum attempting to cover all the managerialfunctions identified in Figure 5. It is apparent from Figure7, subject domains which deal with technical aspects ofmanagement (the lower part of half of Figure 7) and strategyformation (the center cell of Figure 7) can be found in theWestern curricula of management education more frequentlythan those which deal with institutional aspects ofmanagement (the upper part of Figure 7).8.1.2.1 Teaching Technical Aspects of Management in the PRCThe similarity in domains of subjects between the PRCand the West associated with technical aspects of management183Chapter 8INSTITUTIONALQUADRANT IINURTURING- Studies of the Chinesesociety• Cultural history of China• Current societal issues- Management Skills• Individual differences• Stress— Organizational management— Cost accounting— Human Resource management- Computer Applications inbusiness- Management Skills• Group Dynamics• Conflict ManagementQUADRANT IIGOVERNANCE- Public relations- Studies of the Chinesesociety• History• Current governmentpolicy- Management skills• Communication• Symbolic management- Applied Mathematics- Applied economics— International businessand trade— Business negotiation— Financial accounting— Finance— Production management- Marketing- Management skills• Motivation• Leadership• Power and influenceQUADRANT IPROFIT MAXIMIZATIONTECHNI CALFigure 7. A curriculum plan for PRC’s management educationprograms.• QUADRANT IVDIPLOMACYINTERNAL-- Decision science- Strategic planning EXTERNAL— Managing change184Chapter 8lead to many opportunities for cross—cultural transplantingof teaching materials. Teaching materials associated withrelatively contextual free technical knowledge and skills,such as “applied mathematics”, “computer applications inbusiness”, and perhaps “decision science” can be morereadily transferred across nations.However, it should not be neglected that many of thecourses in Figure 7, despite their familiar titles toWesterners, can not be directly copied from the West. Theparticular contexts of management in the PRC call forefforts ranging from partial modification of Western modelsto complete redesign based on PRC conditions. The extent oftransferability of various courses taught in the Westdepends also on the extent to which today’s reforms in thePRC will change the economic system and societal values. Ingeneral, Chambers and his colleagues (Chambers et al., 1989)propose that transferring “the art in management” isrelatively less formidable than “the science in management”(p. 91)TransferrIng the arts in management. Basic assumptionsunderlying behavioral theories of management tend to be moreapparent in that contextual factors are very often included185Chapter 8in behavioral theories as independent or controllingvariables. In fact, many attempts have been made to adaptWestern theories to non—Western countries by altering one ormore parameters of the theories or by adding one or morevariables to the theories (e.g. Gibson & Wu, 1989; Hofstede,1987; Jorgensen, 1990; Lincoln, 1990; Mendonca & Kanungo,1990; Nevis, 1983; Parikh & Grag, 1990; Ouchi, 1980).Fragmentary as the cross—national management studies stillare, research in the area can potentially contribute to thegeneration of management theories relevant to non—Westernenvironments as well. In the short term, courses such as“management skills”, “human resource management”, and“managing change” can be structured on the basis of Westernmodels, and, at the same time, incorporate new findings fromcross—national management research. It is also importantthat the students be challenged to add their ownobservations on the applicability of the theories (Chamberset al., 1989; Johnson, 1991).Transferring the science in management. Many economics—based management theories, on the other hand, are oftenperceived as being logical, value—free and universal, andtend not to account for contextual factors (such as economicsystem and social norms) in their theories. The internal186Chapter 8logic of those theoretical paradigms is built onunquestioned basic assumptions of contextual conditionswhich do not hold in many non—Western societies.Microeconomics, for example, built on individualistutilitarian norms and a laissez—faire capitalist economy, iscertainly not applicable to the PRC. To resolve such aproblem, economics courses taught at the National Center forIndustrial Science and Technology Management Development inDalian, the PRC, jointly run by the Chinese and the UnitedStates adds “Chinese socialist economic theory and economiclaws” to the typical economics courses taught in the West(Warner, 1987).The challenge then is to design new courses, including“applied economics” and perhaps “marketing” and “productioncontrol”, which would be indigenous to the PRC’s situation.The existing courses taught in many of the PRC’suniversities, such as “national economic and fiscal planningand balancing”, are very typically filled with politicalrhetoric and outdated arguments of a pure planning economy,and are not at all geared to cope with the future of a“socialist market economy” (Warner, 1988). In fact, thereform currently under way in the PRC has already broughtenormous changes to the ways in which technical environments187Chapter 8of enterprises are to be managed. Experienced and wellconnected managers surveyed in the current study evidentlyare no longer confident about these aspects of management.Tremendous efforts are, therefore, needed in the redesign ofthe related courses by scholars both inside and outside ofthe PRC.8.1.2.2 Teaching Institutional Aspects of Management in thePRCManaging institutional environments of organizations isof particular importance for enterprise management in thePRC. Organizational environments for PRC’s enterprises arehighly institutionalized in two senses. First of all, thescope of organizational activities under institutionalscrutiny are broad. Pressures are exerted on enterprises tooperate in socially and ideologically acceptable manners indealing with their employees and the public in a wide rangeof matters. Second, the measures by which pressures areimposed on enterprises are coercive. Strong cultural andsocietal expectations for the welfare roles of enterprisescoupled with the government mandate for control tend toimpose rather than induce organizational conformity toinstitutional requirements.188Chapter 8The ability of an organization to respond to suchinstitutional environments is determined by, among others,the extent to which the management of the organization isable to recognize institutional expectations and to respondstrategically to such expectations (Oliver, 1991). It isbelieved that such managerial capabilities can be enhancedby providing, in management education, better exposure tohistory and to current psychological and socio-politicalissues, as well as better training in communication skills.While Western—based behavioral theories providevaluable resources in designing courses on “managementskills” as discussed in Section 8.1.2.1, Western models ofmanagement education have very little to offer in theteaching of the humanities (Mulligan, 1987). On the otherhand, courses currently offered in the PRC’s educationalinstitutes on the subjects of the humanities, includingChinese history, the history of the Chinese Communist Party,and sociology are very much dictated by the political andideological controls of the government.The revision of this category of courses runs much morepolitical risk in the PRC. On the other hand, the PRCgovernment appears to be much more open to new educationalapproaches in the areas of management than in other189Chapter 8disciplines. Management education is probably the area inwhich it is most likely to see a breakthrough towards lesspoliticized liberal education.8.2 UPGRADING MANAGERIAL CAPABILITIES IN THE PRC: STRATEGYThe survey results (Hypothesis 2) echoes the widespreadrecognition that there is an overall inadequacy ofmanagerial capabilities across all spheres of management inthe PRC’s industrial enterprises. The pressing question ishow to close such gaps.8.2.1 Avenues For Gaining Managerial CapabilitiesIt is assumed in outlining the curriculum plan (Figure7) that a comprehensive management education program is theonly avenue through which potential managers acquire thecapabilities required for fulfilling the managerialfunctions identified in Figure 5. In reality, variousaspects of managerial capability can be gained through otheravenues as well. Those avenues include education in subjectareas other than the comprehensive management program wehave proposed, as well as life and work experience. The restof this section will discuss the extent to which differenteducation and work backgrounds may contribute to the various190Chapter 8aspects of managerial capabilities. This discussion is ofpractical significance to developing countries, such as thePRC, in which the capacities for comprehensive managementeducation tend to be very limited.8.2.1.1 Post-Secondary EducationA crucial policy of the economic reforms envisioned bythe PRC leader Deng Xiaoping is to change the demographiccomposition of enterprise managers. The aim has been toincrease the proportion of those who are younger and thosewith higher education (Laaksonen, 1988). In other words, theproportion of managers in Gi (managers with little formaleducation) is expected to be lowered. In fact, several wavesof management shuffle have occurred in the PRC since 1979(Laaksonen, 1988). By one recent estimate, 60% to 70% ofeconomic administrators and managers have been replaced(Shirk, 1989). Consider the First Ministry of MachineBuilding for example. A survey conducted in the late l970sshowed that among 2,400 managers at the directorship levelin the 249 of its key enterprises surveyed, 64.3% had juniorhigh school education, 21.4% had senior high school orsecondary technical or specialty school education, and only14.3% had a higher level education (Battat, 1986). In191Chapter 8comparison, by 1986, 11% of the 65 factory directorssurveyed from the same ministry had secondary leveleducation, and 83% had a higher level education (Tuan & Liu,1988). Although the two sets of data are not completelycomparable, it is clear that a great number of professionalswere appointed to top management positions during the 1980s.The PRC’s official source claimed in 1985 that within largeand medium sized enterprises 80% of all Party secretariesand 90% of all factory directors now had a university andcollege education (Song & Wu, 1985/1986)6.One of the premises underlying this policy is thatmanagers with higher education tend to possess bettermanagerial capabilities, at least in certain importantareas. Although the current survey fails to confirm such abelief statistically (see Table 15), perhaps due to thelimitation of the sample, such a premise, with certainqualification, is likely to be a valid one. Nevertheless,since higher education has been assigned such a greatimportance in the promotion of managers, the nature andeffect of tertiary education warrant a closer examination inlight of the survey findings.According to this survey, managers having tertiaryeducation in certain subject areas do not perceive192Chapter 8themselves as having better training in managerial taskswhich have supposedly high associations with the areas oftheir specialties. Neither do they report more confidence infulfilling those tasks, as was expected. Expanding from thediscussion in the introduction, this phenomenon is likely tobe a direct result of the persistent emphasis on purity andspecialization of knowledge in the curricula of education inthe PRC (Hayhoe, 1987).Pure natural science disciplines are typically taughtin a small number of comprehensive universities controlleddirectly by the State Education Commission (formerlyMinistry of Education), with the mandate of trainingspecialists for theoretical and foundational sciences.Except for the “Cultural Revolution” period, the ivory towernature of the fields is highly valued, attracting the besthigh school graduates. Socialized with the elitist value,young students are typically not interested in practicalproblems existing in the workplace.Applied sciences, including engineering andagriculture, are situated in polytechnical universities,which tend to have lower status. In addition, thosepolytechnical universities typically specialize in a narrowrange of technological fields, and are under the193Chapter 8jurisdiction of certain branch-type ministries. Trainingspecialists instead of generalists is naturally theprincipal interest of the ministries in charge. Thenarrowness of focus inhibits the development of ability forthe students to adapt their professional skills to differentenvironments.Social sciences and the humanities, similar to purenatural sciences, are also taught in prestigiouscomprehensive universities. In these institutions, socialsciences and the humanities are removed from social realitybecause of the dictatorship of political ideology. Traineesare indoctrinated with political rhetoric, and theircritical thinking and analytical skills are typicallyunderdeveloped or suppressed (Hayhoe, 1987).The two types of management education programs in thePRC inherit problems of the disciplines from which they haveevolved. Economic management programs, as mentioned earlier,are usually offered in comprehensive universities as adiscipline of social sciences, (applied economics inparticular). On the other hand, industrial managementprograms are usually offered in polytechnical schools as anextension of technical training (Battat, 1986; Chambers etal., 1987).194Chapter 8In summary, university graduates trained in naturalscience and engineering disciplines (G2) and in industrialmanagement (G5) lack the motivation and ability to applytheir knowledge and skills to practical organizationalproblems related to their areas of expertise. On the otherhand, graduates of social science and the humanitydisciplines (G3) as well as economic management (G4), beingimbued with unquestionable doctrines, tend to be weak incritical thinking and analytical skills. While the situationmay be improved over the years, (the reforms in highereducation in the PRC are already showing promising signs),the relationships between areas of training and managerialcapabilities should not be taken for granted. Thesubstitutability of a higher education for a certain subsetof management education curricula should, therefore, not beassumed.8.2.1.2 Managerial ExperienceThe current survey results show that experienced PRCenterprise managers, as predicted, tend to have moreconfidence in dealing with those managerial tasks whichrequire behavioral and political more than technical skills,and which are not dramatically changing. An unanswered195Chapter 8question is to what extent this has resulted from years ofwork experience and/or from political and ideologicalorientation.The proposition that work experience contributes tobetter behavioral and political skills has importantimplications for the strategy of management education andfor the design of executive management training programs.First of all, we perhaps should broaden our definition ofmanagement education by including on—the—job training asplanned and integral module of a comprehensive managementeducation curriculum, as is suggested by Keys and Wolfe(1988). Second, executive management training programsshould emphasize areas in which experienced but lesseducated managers are more likely to encounter difficulties,which include those associated with the technical aspect ofmanagement, and those dealing directly with the rapidlychanging economic system.On the other hand, it cannot be ruled out thatpolitical and ideological identification with the governmentis the only reason for the higher ability of those moreexperienced managers in dealing with the above aspects ofmanagement. Nevertheless, it is certain that the next fewdecades will witness a drastic shrinkage of managers in this196Chapter 8category. The new policy increasingly selects managers onmeritocratic criteria, and growing skepticism with thegovernment policies and the Chinese cultural legacy isgrowing strong among China’s intellectuals (Barxnie &Minford, 1986; “Chinese Culture,” 1985).8.2.2 Designing Need—Based Management Education ProgramsManagement education programs in the PRC can takeseveral basic forms: (a) an undergraduate management programleading to a Bachelor of Business Administration, (b) apost—graduate management program leading to the Master ofBusiness Administration, and (c) a post experiencemanagement program leading to the Diploma of BusinessAdministration7.While managerial capabilities in allrespects are considered important, various programs shouldprovide different emphases according to the backgrounds andhence the needs of their trainees.Bachelor of Business Administration program. TheBachelor of Business Administration program is offered tohigh school graduates with no managerial experience. Thecurriculum should include all the subjects recommended inthe curriculum plan outlined in Figure 5. Two groups ofadditional courses should be incorporated into the basic197Chapter 8core management curriculum: (a) basic knowledge and skillcourses, such as mathematics, computer programming, Chinese,and a foreign language; and (b) industry or sector specificcourses depending on the needs of specific clientele, suchas ministries or regions. Sector specific knowledge, asdiscussed in Section 7.1.1.1, may be very important in thePRC’s industrial context.Master of Business Administration Program. The Masterof Business Administration Program is offered to people whohold a bachelor’s or higher degree, and who have managerialexperience. Since the students have had training in basicknowledge and skills as well as specialist skills, thecurriculum should concentrate on discussing in depth thecore management subjects listed in Figure 5.As was discussed in Section 8.2.1.1, the benefits of annon—business bachelor’s degree to the acquisition of relatedmanagerial capabilities are undetermined, at least in theshort term. Therefore, there is no sufficient ground fordesigning master of business programs with differentcurriculum plans for students with bachelor’s degree indifferent disciplines.198Chapter 8Diploma of Business Administration Program. The Diplomaprogram is offered to practicing managers without tertiarylevel education. Based on the survey results, those managerstend to have a good grasp of socio—political norms, andhence the institutional aspect of management. Thus thecurriculum of the diploma program should emphasize thetechnical aspects of management and strategic planningskills. In addition, the program should also incorporatecertain introductory technical courses essential to managersin the specific industries, sectors, or regions.199NOTES1 The order in which “management”, “the Party”, “TU &W/SC”’ and “the Youth League” appear in Figure 2 does notimply the actual power relation between the four componentsin the organizational authority structure.2 While the author is aware of its androcentricconnotation, the term is adopted in the paper to avoidpossible confusion for it is unfortunately a much sharedterminology among sinologists (e.g. Laaksonnen, 1988;Schurmann, 1968).According to Statistical Bureau, the People’sRepublic of China (1988, p. 806), two criteria should beused to distinguish between large, medium, and smallenterprises: (a) the annual production capacity (applied toenterprises which produce homogeneous products), and (b) thesize of the original value of their fixed assets (applied toenterprises which produce a variety of different products).In addition, the number of people employed is considered bysome (e.g. Child & Yuan, 1990; Tuan & Liu, 1988) to beanother classification criterion. 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L. (1987). Socially desirableresponding in organizational behavior: Areconceptualization. Academy of Management Journal, 12,250—264.Zhao, Y. (1986, December 8). Socialist features reexamined.Beijing Review, pp. 14-17.222APPENDIX ASURVEY INSTRUMENTSURVEY ON THE NEEDS FOR MANAGEMENT EDUCATION IN THE PRCA. As a whole, how important do you think the followingtypes of enterprise management functions are for theoverall success of an enterprise? Please answer thequestion by marking a “V’1 in what you see as the mostappropriate blank following each of the items.Not VeryImportant Important1. Acquiring necessary financing(through the government, banks orother channels).2. Keeping the direction and style ofenterprise management in line withthe essence of Party and governmentpolicies.3. Establishing an accurate andefficient system for gathering,transmitting and analyzingmanagement information tofacilitate coordination and controlof the organization.4. specifying specifications andduties for each job position.5. Formulating overall businessstrategy to guide operation.6. scheduling production to meet stateplans or customer needs.7. Designing organizational structure,i.e. specifying mutualrelationships among variousproduction and functionaldepartments.223Appendix ANot VeryImportant Important8. Directing subordinates decisivelyin order to fulfill tasks.9. Establishing an efficient financialcontrolling system.10. Providing employees with trainingand developmental opportunitiesfor benevolent purpose (e.g.sending employees to evening schoolto get their high school diploma,or to study English, etc.)11. controlling inventory level toguarantee material supplies, andat the same time, to speed upcapital turnover.12. Mediating interpersonal or intergroup conflicts.13. Delivering employee welfare (e.g.housing allocation, etc.) fairlyand reasonably.14. Marketing, including designingproduct functions and styles,setting prices, channellingdistribution, and promotingsales.15. Deciding the launch of new projectsand other developmental strategies,as well as the related financialplans.16. Promoting technological innovation.17. Acquiring necessary raw material(through government allocation orthrough purchasing).224Appendix ANot VeryImportant Important18. Team building to raise groupproductivity.19. Personnel management, includingselection, placement, performanceappraisal, compensation, training,promotion, and overall humanresource planning.20. Organizing social activities amongemployees and their families afterworichours.21. Encouraging employee participationin management.22. Strengthening employees’ ideologicaleducation.23. Negotiating with the competentauthorities concerned over outputquartos, profit retention rates,resource allocations and personnelarrangements.24. Production management, includingdesigning production process,determining production method,setting product standard, andmonitoring product quality.25. complying with social morality andestablishing good public image ofthe enterprise.225Appendix AB. How confident are you to perform the following types ofenterprise management functions if you are called on todo so? Please answer the question by marking a “V’1 inwhat you see as the most appropriate blank followingeach of the items.Feel FeelVery VeryDifficult Easy1. Acquiring necessary financing(through the government, banks orother channels).2. Keeping the direction and style ofenterprise management in line withthe essence of Party and governmentpolicies.3. Establishing an accurate andefficient system for gathering,transmitting and analyzingmanagement information tofacilitate coordination and controlof the organization.4. Specifying specifications andduties for each job position.5. Formulating overall businessstrategy to guide operation.6. Scheduling production to meet stateplans or customer needs.7. Designing organizational structure,i.e. specifying mutualrelationships among variousproduction and functionaldepartments.226Appendix AFeel FeelVery VeryDifficult Easy8. Directing subordinates decisivelyin order to fulfill tasks.9. Establishing an efficient financialcontrolling system.10. Providing employees with trainingand developmental opportunitiesfor benevolent purpose (e.g.sending employees to evening schoolto get their high school diploma,or to study English, etc.)11. Controlling inventory level toguarantee material supplies, andat the same time, to speed upcapital turnover.12. Mediating interpersonal or intergroup conflicts.13. Delivering employee welfare (e.g.housing allocation, etc.) fairlyand reasonably.14. Marketing, including designingproduct functions and styles,setting prices, channellingdistribution, and promotingsales.15. Deciding the launch of new projectsand other developmental strategies,as well as the related financialplans.16. Promoting technological innovation.17. Acquiring necessary raw material(through government allocation orthrough purchasing).227Appendix AFeel FeelVery VeryDifficult Easy18. Team building to raise groupproductivity.19. Personnel management, includingselection, placement, performanceappraisal, compensation, training,promotion, and overall humanresource planning.20. organizing social activities amongemployees and their families afterworkhours.21. Encouraging employee participationin management.22. Strengthening employees’ ideologicaleducation.23. Negotiating with the competentauthorities concerned over outputquartos, profit retention rates,resource allocations and personnelarrangements.24. Production management, includingdesigning production process,determining production method,setting product standard, andmonitoring product quality.25. complying with social morality andestablishing good public image ofthe enterprise.228Appendix AC. How much education or training have you received whichare associated with the following types of enterprisemanagement functions? Please answer the question bymarking a “V” in what you see as the most appropriateblank following each of the items.Received ReceivedNo AdequateEducation Educationor orTraining Training1. Acquiring necessary financing(through the government, banks orother channels).2. Keeping the direction and style ofenterprise management in line withthe essence of Party and governmentpolicies.3. Establishing an accurate andefficient system for gathering,transmitting and analyzingmanagement information tofacilitate coordination and controlof the organization.4. specifying specifications andduties for each job position.5. Formulating overall businessstrategy to guide operation.6. scheduling production to meet stateplans or customer needs.7. Designing organizational structure,i.e. specifying mutualrelationships among variousproduction and functionaldepartments.229Appendix AReceived ReceivedNo AdequateEducation Educationor orTraining Training8. Directing subordinates decisivelyin order to fulfill tasks.9. Establishing an efficient financialcontrolling system.10. Providing employees with trainingand developmental opportunitiesfor benevolent purpose (e.g.sending employees to evening schoolto get their high school diploma,or to study English, etc.)11. controlling inventory level toguarantee material supplies, andat the same time, to speed upcapital turnover.12. Mediating interpersonal or intergroup conflicts.13. Delivering employee welfare (e.g.housing allocation, etc.) fairlyand reasonably.14. Marketing, including designingproduct functions and styles,setting prices, channellingdistribution, and promotingsales.15. Deciding the launch of new projectsand other developmental strategies,as well as the related financialplans.16. Promoting technological innovation.17. Acquiring necessary raw material(through government allocation orthrough purchasing).230Appendix AReceived ReceivedNo AdequateEducation Educationor orTraining Training18. Team building to raise groupproductivity.19. Personnel management, includingselection, placement, performanceappraisal, compensation, training,promotion, and overall humanresource planning.20. Organizing social activities amongemployees and their families afterworkhours.21. Encouraging employee participationin management.22. Strengthening employees’ ideologicaleducation.23. Negotiating with the competentauthorities concerned over outputquartos, profit retention rates,resource allocations and personnelarrangements.24. Production management, includingdesigning production process,determining production method,setting product standard, andmonitoring product quality.25. Complying with social morality andestablishing good public image ofthe enterprise.231Appendix AD. Please provide the following personal information aboutyourself (You do not need to provide your name):1. Sex2. Age________3. Current job position(a) Department___________(e.g. personnel, production, ormarketing, etc)(b) Position4. Technical or professional title_______________________5. Please specify respectively whether you have received thefollowing types of education:(a) Primary school (Y/N)_____(b) Junior secondary school (Y/N)(c) Senior secondary school (Y/N)(d) Vocational school (Y/N)___Major_(e) Special secondary school (Y/N)Major(f) College (Y/N)___MajorUniversity! institute_________Department___ __ _(g) University (Y/N)MajorUniversity! instituteDepartment(h) Graduate school (Master or Doctorate) (Y/N)MajorUniversity! instituteDepartment_(i) List other types of educations or trainings you havereceived (e.g. management training courses):Name Duration Sponsoring Organization(s)232Appendix A6. In which province (or city) is yourcurrent work unit located? Province(or City)7. In which provinces (or city) were youborn?________Province(orCity)8. Please specify names of all the provinces (or cities)where you have spent more than five years since the ageof eighteen:Period Province(or City)From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19From 19 To 19E. Other Observations and Comments:233APPENDIX BSUMMARY OF RAW DATACategorical variables are summarized in Table 16, andContinuous variables in Table 17.234Appendix BTable 16. Summary of Raw Data:Categorical VariablesVariable Frequency (%) N0 1 2 3 4 5 6 7 8Sexa— 77.1 22.9 83Ledub 0 0 1.1 0 1.1 1.1 23.1 70.3 3.3 91G1C 86.8 13.2 91G2C 78.2 21.8 87G3c 55.2 44.8 87G4C 67.8 32.2 87G5C 95.4 4.6 87Birthpld 11.5 37.1 8.6 21.4 8.6 1.4 5.7 5.7 70Workpld 0 88.3 1.3 0 10.4 0 0 0 77Magte 46.1 53.9 89unit 29.6 70.4 71aMale is coded as “0”, and female “1”.bLedu describes the respondents’ levels of formal education.Code “0” denotes lower than elementary school; “1”,elementary school; “2”, junior high; “3” senior high; “4”,vocational school; “5” secondary specialty school; “6”,college; “7”, university; “8”, post—graduate school.CThese variables indicates whether an respondent has post—secondary education and in which subject areas. Value “1”for G1 denotes no post—secondary education; Value “1” forG2, post—secondary science or engineering education; Value“1” for G3, post—secondary social science or humanityeducation; Value “1” for G4, post—secondary economicmanagement education; Value “1” for G5, post—secondaryindustrial management education.235Appendix BTable 16 Continued.dBirthpl indicates where a respondent was born, and Workpl,where a respondent works. Code “1” denotes Heilongjiang,Jilin, and Liaoning Provinces, including Ha’erbin andChangchun; “2”, Hebei Province, including Beijing andTianjing; “3” Shandong Province, including Dalian; “4”,Jiangsu and Zhejiang Provinces, including shanghai; “5”,Guangdong, Fujian and Hainan Province, including Guangzhou,Shenzhen and Fuzhou; “6”, Shanxi Province; “7”, Henan andHubei Provinces, including Zhengzhou and Wuhan; “B’, SichuanProvinces.eMagt indicates whether a respondent is manager in humanresource areas (coded “1”), or other areas (coded “0”).‘unit indicates whether a respondent work in MOFERTministerial offices (coded “0”), or in MOFERT enterprises(Coded “1”).236Appendix BTable 17. Summary of Raw Data:Continuous VariablesVariable Mm Max Mean SD NAge 24 58 44.067 8.657 89A1 1 5 4.034 .994 87A2 1 5 4.259 .861 85A3 1 5 4.737 .716 90A4 1 5 4.554 .720 83A5 1 5 4.193 1.071 88A6 1 5 4.326 1.045 86A7 2 5 4.393 .836 84A8 1 5 4.616 .738 86Ag 1 5 4.440 .980 91A10 1 5 4.341 .958 85A11 2 5 4.703 .568 91A12 1 5 4.516 .821 91A13 1 5 4.742 .866 89A14 1 5 4.759 .664 87A15 3 5 4.758 .544 91A16 1 5 4.281 .953 89A17 1 5 3.816 1.116 87A18 1 5 4.244 .928 90A19 1 5 3.589 1.131 90A20 3 5 4.451 .671 91237Appendix BTable 17 Continued.Variable Mm Max Mean SD NA21 1 5 4.289 .824 90A22 1 5 4.455 .909 88A23 1 5 4.562 .865 89A24 1 5 4.611 .714 90A25 3 5 4.865 .375 89B1 1 5 3.568 1.081 88B2 1 5 3.141 1.236 85B3 1 5 2.598 1.186 87B4 1 5 3.476 1.103 84B5 1 5 3.218 1.205 87B6 1 5 3.864 1.126 88B7 1 5 2.851 1.281 87B8 1 5 3.045 1.249 88B9 1 5 3.360 1.110 89B10 1 5 3.302 1.128 86B11 3 5 4.556 .620 90B12 1 5 3.114 1.022 88B13 1 5 3.379 1.416 87B14 1 5 4.044 1.090 90B15 1 5 3.483 1.234 89B16 1 5 3.977 .959 88238Appendix BTable 17 Continued.Variable Mm Max Mean SD NB17 1 5 3.267 1.178 90B18 1 5 3.322 1.331 90B19 1 5 2.787 1.238 89B20 1 5 2.956 1.208 90B21 1 5 3.636 1.166 88B22 1 5 3.978 1.148 89B23 1 5 4.156 1.060 88B24 1 5 3.841 1.249 88B25 1 5 4.068 1.081 88C1 1 5 2.953 1.272 85C2 1 5 2.345 1.167 84C3 1 5 2.205 1.091 83C4 1 5 2.530 1.417 83C5 1 5 2.506 1.351 85C6 1 5 2.890 1.305 82C7 1 5 2.325 1.231 83C8 1 5 2.720 1.372 82C9 1 5 2.807 1.087 83C10 1 5 2.459 1.296 85C11 1 5 3.805 1.109 87C12 1 5 3.094 1.076 85239Appendix BTable 17 Continued.Variable Mm Max Mean SD NC13 1 5 2.381 1.289 84C14 1 5 3.663 1.242 86C15 1 5 2.940 1.272 83C16 1 5 3.631 1.106 84C17 1 5 3.279 1.185 86C18 1 5 3.224 1.267 85C19 1 5 2.721 1.243 86C20 1 5 2.753 1.122 85C21 1 5 3.517 1.199 87C22 1 5 3.930 1.196 86C23 1 5 3.864 1.186 88C24 1 5 3.919 1.020 86C25 1 5 3.294 1.308 85Note: A records responses to item j underQuestion A in the survey questionnaire shown inAppendix A; B- records responses to item j underQuestion B; C records responses to item j underQuestion C; w1iere j = 1, 2,...,25.240APPENDIX CCOMPUTATIONAL DETAILS OF INSTRUMENT VALIDATIONStep 1: Transforming Vectors A and B to Slope Vectors PA andPBTo transform 1 x 25 vectors A = (A1, A2,.,A25) andB = (B1, B2,..,B25) to their respective 1 x 24 slopevectors PA = (PA1, PA2, .., PA2) and PB = (PB1, PB2,PB24)’, where PA = Aj - Aj PBJ = B - B + 1’ for = 1,2, ..., 24, the following set of SPSS commands are executed:COMPUTE PA1=A1-A2COMPUTE PA2=A2-A3COMPUTE PA3=A3—A4COMPUTE PA4=A4-A5COMPUTE PA5=A5-A6COMPUTE PA6=A6-A7COMPUTE PA7=A7-A8COMPUTE PA8=A8-A9COMPUTE PA9=A9-A1OCOMPUTE PA1O=A1O-A11COMPUTE PA11=A11-A12COMPUTE PA12=A12-A13COMPUTE PA13=A13-A14COMPUTE PA14=A14-A15COMPUTE PA15=A15-A16COMPUTE PA16=A16-A17COMPUTE PA17=A17-A18COMPUTE PA1S=A18-A19COMPUTE PA19=A19-A20COMPUTE PA2O=A20-A21COMPUTE PA2 1=A2 l-A2 2COMPUTE PA2 2=A2 2 -A2 3COMPUTE PA2 3=A2 3 -A2 4COMPUTE PA24=A24-A2 5COMPUTE PB1=B1-B2COMPUTE PB2=B2-B3COMPUTE PB3=B3-B4241Appendix CCOMPUTE PB4=B4-B5COMPUTE PB5=B5-B6COMPUTE PB6=B6-B7COMPUTE PB7=B7-B8COMPUTE PBB=B8-B9COMPUTE PB9=B9-B1OCOMPUTE PB1O=B1O-B11COMPUTE PB11=B11-B12COMPUTE PB12=B12-B13COMPUTE PB13=B13-B14COMPUTE PB14=B14-B15COMPUTE PB15=B15-B16COMPUTE PB16=B16-B17COMPUTE PB17=B17-B18COMPUTE PB18=B18-B19COMPUTE PB19=B19-B20COMPUTE PB2 O=B2 O-B2 1COMPUTE PB2 1=B2 1-B2 2COMPUTE PB22=B22-B23COMPUTE PB23=B23-B24COMPUTE PB24=B24-B25Step 2: Performing Hotelling’s T2 test on the two dependentvectors PA and PBThe specific commands used in the MANOVA procedure toperform Hotelling’s T2 test on whether two dependent vectorsPA equals PB are listed as follows:MANOVA PAl PB1 PA2 PB2 PA3PA6 PB6 PA7 PB7 PA8PAll PB11 PA12 PB12PA15 PB15 PA16 PB16PA19 PB19 PA2O PB2OPA23 PB23 PA24 PB24/WSFACTOR=QUES (2)/ PRINT=TRANS FORMHOMOGENEITY (BOXM)ERROR (COR)SIGNIF (AVERF)/ANALYSIS (REPEATED)/DESIGNPB3 PA4 PB4 PA5 PB5PB8 PA9 PB9 PAlO PB1OPA13 PB13 PA14 PB14PA17 PB17 PA18 PB18PA21 PB21 PA22 PB22242Appendix CThe WSFACTOR subcommand in the above program specifiesQUES, which distinguishes responses to Question A or B bythe same group of subjects, as a within—subjects factor(SPSS Inc., 1986, pp. 477—551).Table 18 is a part of the computing output of the aboveSPSS program.243Table18.MMOVAoutputofInstrumentValidationEFFECT..QUESMultivariateTestsofSignificance(s=1,m=11,n=20)TestNameValueExactFHypoth.d.fErrordfSig.ofFPillais.799256.9673424.0042.00.000Hotellings3.981346.9673424.0042.00.000Wilks.200756.9673424.0042.00.000Roys.79925Note:Hypoth.dfequalstop,andErrordfequalstoN—p,whereNisthenumberofpairedobservations,andpisthenumberofelementsofthevectorsbeingcompared(Harris,1975).APPENDIX DSPSS COMMANDS USED IN TESTING HYPOTHESES 1.1 AND 1.2The specific commands used in the MANOVA procedure totest Hil and H1.2 are listed as follows:COMPUTE AI=MEAN(A1 TO AlO)COMPUTE AII=MEAN(Al1 TO A17)COMPUTE AIII=MEAN(A18 TO A22)COMPUTE AIV=MEAN(A23 TO A24)MANOVA Al All Alil AIV/WSFACTOR=QUAD (4)/CONTRAST(QUAD)=SPECIAL(4*1, 1, 1, —1, —1,1, —1, —1, 1,], —1, 1, —1)/WSDESIGN=QUAD/ PRINT=CELLINFO (MEANS)TRANSFORMERROR(COR)SIGNIF (UNIV)/DESIGNThe WSFACTOR subcommand in the above program specifiesQUAD, which distinguishes responses to items in Quadrants I,II, III, and IV under Question A by the same group ofsubjects, as a within-subject factor (SPSS Inc., 1986, pp.477-551). The CONTRAST subcommand specifies a prioricontrasts for the testing of H1.2.Table 19 is a part of the computing output of the aboveSPSS program for testing Hypothesis 1.2.245Table19.MMTOVAoutputtestingH1.1andH1.2(a)EFFECT..QUADMultivariateTestsofSignificance(s=1,m=1/2,n=43)TestNameValueExactFHypoth.dfaErrordfaSig.ofFPillais.3543016.095163.0088.00.000Hotellings.5487016.095163.0088.00.000Wilks.6457016.095163.0088.00.000Roys.35430(b)EFFECT..QUADUnivariateF-testswith(1,90)D.F.VariableHypoth.SSErrorSSHypoth.MSErrorMSFSig.ofF2b.3347710.43238.33477.115922.88808.093T3b1.651078.955371.65107.0995016.59298.000T4b5.5101312.035905.51013.1337341.20273.000aHYPOth.dfequalstop,andErrordfequalstoN-p,whereNisthenumberofobservations,andpisthenumberofelementsofthevectorsbeingcompared(Harris,1975)bT2,T3,andT4aretransformedvariables,representing(A1÷A11)—(A111+Apj),(A1+A)-(A11+A111),and(A1+A111)-(A11+A),respectively.11

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