The Organizational Structure of the Traditional Chinese Firm and its Modern Reform

Whatever economic growth and development took place in nineteenth-century China, it was by no means an expansion highlighted by a commercial and industrial revolution comparable to that which occurred in Great Britain, the United States, and Japan. While many factors accounted for these alternative paths of change, one element was clearly the differing organization of business enterprise. In this essay, Professor Chan examines the organizational structure of the traditional Chinese firm during the nineteenth century. Then he presents two case studies, one of which illustrates how an enterprise developed an innovative strategy of growth based upon traditional Chinese methods, and a second that illustrates how a company wedded western managerial practices to the Chinese model with spectacular results. While it would be dangerous to generalize about the entire Chinese managerial experience from such a limited number of firms, their successful, though divergent paths of development do indeed suggest the role that traditional Chinese organizational methods had in stifling modern development as well as the influence that western practices and techniques would have on China's growth in the early to middle years of the twentieth century.