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HU Jianming
Key Features and Application of Confucian thought in Modern Chinese Enterprise
Management
Introduction
In recent years, the application of Confucian thought in a modern enterprise is a fashionable
research issue. Confucian thought is one of the mainstream thoughts in ancient China. The
core of Confucianism is about the three core virtues, namely Yi (appropriateness), li (rites),
and Ren (kindness). It occupies an important position in the four dominating structures of
ancient Chinese society, including scholar-official, peasants, merchants, and workers.
Especially, Chinese businessmen were deeply influenced by the Confucian spirit. They
believe that Confucianism is the root of management thought.
As Warner M. (2016) viewpoint, the Confucian basic meaning is about benevolence,
righteousness, propriety, wisdom, and harmony. These virtues are recognized as extreme
goodness by Confucius. And the relationships, rites, dignity, and obligation are essential
consensus about doing Chinese business. (p. 613) Hennig, A. (2016) also states that the rites
that are based on the Confucian spirit, have been rooted in the corporate culture of Chinese
companies. Traditional Chinese virtues such as respect, kindness, diligence are seen for the
basic ethics from subordinate to superior. In terms of these ethics, the relationship between
employees and leaders has become closer. (p. 576 - 577)
Modern company management in western business theory is a complex and scientific
management system, including making decisions, leading and motivating staff, establishing
enterprise culture and business ethics. Although the current Western management theories are
systematic and scientific, many scholars also admit that the management model of enterprises
will change according to the culture of different regions. Therefore, more and more scholars
have begun to pay attention to how East Asia companies integrate business management with
their local cultures and how they win tremendous accomplishments.
Literature Review
Making Decision
Decision-making is the essential function of company management. In Western business
theories, they usually say that company leaders must rationally consider the costs and benefits
of the decision before deciding whether to take action or not. However, the western
decision-making is completely different from Confucian traditional management. Zhu, Y.
(2015) indicated that the decisions of Chinese entrepreneurs are more affected by emotions
(Qing). They prefer to use the principle which is "whether they conform to Confucian spirit"
to decide whether to take action or not, because Confucianism emphasizes a "harmonious
society". It means that individual and organization must consider the overall social well-being
to make a decision. Any entrepreneur who only considers economic interests and does not
consider the impact of society, will be ethically judged by the Chinese government and the
public. So if a company does not conform to social ethics, they will be boycotted and
suppressed by them. (p. 613 - 615) Entrepreneurs use donations, visits, sponsorships, and
other diversified methods to show their humanity for the purpose of getting company
reputation from the public. So under the confucian management environment, Chinese
society, enterprises and society form a relationship of mutual benefit (Wang, L., & Juslin, H.,
2009, p. 436 - 437)
Leading and Motivating Employees
In any positive corporate culture, leadership is the core quality of managers. In Western
business theories, a leader must be a model for employees, using personal charisma to
influence employees’ enthusiasm for work. Confucianism has similar views. Henning A.
(2016) indicated that Confucian-style leaders, considering the prevailing social norms,
generally respect employees and treat employees kindly. At the same time, leaders must pay
attention to self-cultivation. Leaders are good at learning lessons, and often reflect on their
attitudes with employees, and endeavor to make themselves like ancient saints, such as
Confucius and Mencius.
Importantly, Confucian management is more likely to form a harmonious internal corporate
culture for employees. Harmony is the core of Confucianism. Employees adopt friendly
cooperation with each other to create mutual trust, which gradually becomes a Chinese
enterprise culture. (Henning A., 2016, p. 577) Besides, Zhu, Y. (2015) also agrees that
Confucian management wisdom comes from harmony. He thinks that the harmony of a
company is credited on Confucian ren-yi principle. It is a sophisticated interpersonal
communication system. So it also means that the maintenance of the relationship between
people in the Chinese company is crucial. (p. 618) At the same time, Po, K. Y. (2009)
indicates that confucian management causes collectivism of chinese companies. He said that
the concept of confucianism, “emperor-officials, father-son, older brother- younger brother”
from The Analects make employees look at the company as a big family, sincerely care about
the current situation of the company.（p. 465 - 466)
Bussiness ethics
Business ethics are also emphasized by Western theories. Company leaders must consider the
impact of the company’s behavior on society and other business companies. Lam, K. (2003)
indicates that there are many similarities between Confucian thought and Western thought,
including integrity, respect and trust. These universal values are indispensable in establishing
a good international business environment. (p.159)
Po, K. Y. (2009) also agrees that the Confucian norms can be considered as an important part
of corporate social responsibility (CSR). (p. 471) For instance, in the joint declaration from
some international business organizations, the social responsibilities of enterprises have been
defined by them. The content of the statement is that the company should guarantee the
human rights of employees, such as working hours, salary and equal job opportunities. They
are acknowledged as universal values by the western world, and are similar to Confucian
thought. Chinese entrepreneurs also try to incorporate Confucianism into their management
philosophy as a corporate commitment to business ethics. (p.471-472)
Conclusion
In conclusion, the above-mentioned scholars summarize the different essence of Confucian
thought and point out the positive influence of Confucianism on the management of modern
Chinese enterprises. However, the limitation of these studies is that they fail to criticize the
obstacles that modern Chinese companies faced in the implementation of Confucian
management philosophy, especially the challenges of modern Chinese companies under
global competition. For example, after China joined the WTO, China's corporate system was
collided by foreign multinational companies. Could Confucian management still maintain its
effectiveness?
The Obstacles and Challenges of Confucian Management in Practical
Business for Chinese Enterprise
Introduction
The challenges of Confucian management in globalization are comprehensive, especially the
profit-oriented digital business model and appearance of Chinese utilitarian individualism.
With the development of the times, Confucian management is constantly transforming in
response to challenges. Warner M. (2016) indicates that in the twenty-first century, Chinese
companies began to combine with the ideology led by the Chinese government, and gradually
developed a new corporate management model, named "Confucian capitalism". （p. 627)
Moreover, some scholars realize that Confucian management also showed some drawbacks in
modern society. For example, Tsai T. et al (2011) discusses widely the flaws of business
practices of Confucian management in enterprises, including human resource management,
organization structure, the performance of employees, and risk management, but he still
believes that Confucian management has more advantages than disadvantages. (p. 399 - 340)
In my opinion, these studies did not adequately discuss the drawback in Confucianism proper
so that it is unable to compete with the popular Western business management model.
The problem of work fairness
Maintaining fairness in the workplace is a topic that every company manager is really
concerned about. In the involute competitive market of China, companies are eager to gain
more business advantages for talents and become leaders in the industry. A good example is
Ren Zhengfei任正非, the chairman of Chinese leading mobile phone company "Huawei'',
said that his company can gain an important standing in the global market because of paying
attention to talent management. Indeed, in recent years, Chinese companies have responded
to the Chinese government’s "going international" slogan by opening branches abroad and
acquiring foreign companies. Talents who own international vision and interdisciplinary
skills, are loved by entrepreneurs. At the same time, high-quality talents are more concerned
about the salary, welfare and good promotion channels provided by the company.
Embarrassingly, if a company adopts the traditional Confucian management model, the
environment and culture of the company may not be favored by them. Tsai T. et al (2011)
criticizes that the emphasis of Confucian management on strict hierarchies and rigid rituals
may stifle the development of its company's innovation. (p. 318) Po, K. Y. (2009) also is
dissatisfied that Confucian management is authoritarian. The company leader is in a lofty
position that cannot be questioned, and supervises his subordinates though he is incapable.
Top-down authoritarianism breeds a repressive hierarchy culture. It is definitely different
from Western business theory which emphasized the modern company structure should be
“opening” and “flattening”.
It is undeniable that their doubts are reasonable. Some low-competitive companies in China
have a "flattering culture", especially some small enterprises and large state-owned
enterprises. Many Chinese bosses advocate the culture, which is the so-called survival
philosophy in the workplace. For example, flattering a leader is an indispensable way to get
the promotion. Under the influence of Confucianism, personal emotion (Qing) and
relationships of the workplace (guanxi) have a decisive influence on the company leaders in
deciding who is promoted. (Zhu Y. , 2015, p. 627) The confucian management model, on the
one hand, does make the relationship between employees closer. On the other hand, it makes
the promotion channel obscure and unfair. It will enable some capable candidates to consider
this problem and choose to join large Western companies that advocate “meritocracy”,
causing the loss of talents in Chinese companies to a certain extent. Compared with
individualism, collectivism is more vulnerable and negative in attracting talents.
Therefore, in the increasing development of the global era, indeed, few Chinese companies
abandoned traditional Confucian management, actively seeking transformation and
embracing Western meritocracy. Personal emotion and relationships play less and less roles in
corporate promotion, instead of thorough business realism, such as kpi and okr assessment.
The problem of risk management
Many scholars have mentioned that Confucian leaders attach importance to self-cultivation.
In other words, Confucian managers pay more attention to self-centeredness. It may be a fatal
weakness in business management, because a leader’s fault can directly cause a company to
suffer huge losses. Po, K. Y. (2009) stated that paternalistic managers are more inclined to
suppress the personal freedom of other employees and hinder them to develop independently.
They allow employees to mechanically repeat execution through instruction one by one, and
finally make them become an “brainless execution machine”. (p. 473) Major policies of a
company are decided by only one person, which is extremely risky. Many failed companies in
China come from this problem. For example, the chairman of Sichuan Han Long Group四川
汉龙集团named Liu Han刘汉. He was a cowherd in the countryside of Sichuan Province in
the 70s. But, in the 00s, he established a comprehensive large enterprise and became the
richest in Sichuan. Unfortunately, the company fell because of the criminal lawsuit of the
boss. Since the boss was charged with “murder” by the police in 2013, the performance of the
company started declining. And then, it was merged and purchased by another company at a
low price in 2019.
Paternalistic management has advantages in decision-making and execution speed, which is
also a magic weapon for Chinese bosses under the dividend of economic reformation.
However, in the era of globalization, authoritarian management is increasingly unrecognized.
Many Chinese companies try to reduce the risks of the rapid change of the times, preferring
to be more conservative in decision-making. They generally solicit opinions from various
departments and adopt a method of multi-person decision. Besides, they will use high
technology to collect numerous market information and finally take action. The method is
more scientific and quantifiable in western management and It can reduce the negative
impact of Confucian management.
The problem of business ethics
Confucianism emphasizes that personal behavior is determined by individual moral sense. It
is different from the Western concept which is "humanity is evil and people need to be
restrained by law" . (Lee N. el at, 2009, p. 499) “Treat Other People As You Would Yourself”
is a classic quote by The Analects of Confucius. From the perspective of traditional Chinese,
humanity is kind. People will do something in line with business ethics from the heart out of
"benevolence" (Ren). In previous Chinese society, Confucianism was often used to criticize
the immoral behavior of businessmen. "Be rich and cruel", "collusion between officials and
businessmen","loot a burning house" are common Chinese idioms. Indeed, the constraints of
Confucian management on business ethics exist.
However, the views of Chinese people on business ethics are too subjective. Business ethics
is different in the perspectives of everyone: some people don't value credit; some people don't
recognize oral promise. Relying on "commercial tacit understanding" alone cannot make
modern business operations become effective.
Therefore, in recent years, with the rapid development of China's economy, more
businessmen abandon business ethics, such as registering trademarks firstly or wandering the
gray area of the industry, so that the Chinese government makes regulations of Chinese
business continue to improve. The establishment of commercial laws also smashed the
possibility of Confucian management - humanity is evil when businessmen are facing
interests. Tsai T. et al (2011) also mentioned that if a company is completely moral-oriented
to do business, it will be more difficult to make profits than a benefit-oriented company. (p.
335)
In terms of this, on the one hand, more Chinese companies will research what kind of
business behavior will not touch the current commercial law. On the other hand, they will
promote Confucianism on the moral level to achieve the practical application of Confucian
management. However, The capital Confucian management has actually distorted the original
intention of Confucianism. Chinese entrepreneurs are only concerned about getting the
maximum profit without breaking the law. Confucianism is just a slogan of greedy capitalists.
Ultimately, employees also choose interests, which are salary, welfare and career
development, instead of the loyalty emphasized by Confucianism.
Conclusion
In conclusion, The author elaborated on the three main deficiencies of Confucian
management, and discussed how these deficiencies caused negative effects on current
business practices of Chinese companies.
Reference
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