Skip to main content

Symbiotic relationship of modern contract and traditional ethic: Entrepreneur’s Zhongyong rationality and family firm governance choice

Abstract

What is the relationship between Chinese familism and the modern economic organization? Can a rational, contractual relationship grow out of Chinese familism that widely exists in Chinese family businesses? This paper holds that Chinese familism can nurture a rational and contractual relationship. However, such a relationship is not an extremely instrumental rationality of Logocentrism, but a zhongyong rationality characteristic of Confucian culture essence. This paper verifies empirically for the first time the existence of zhongyong rationality by analyzing family entrepreneurs’ governance choices. The results reveal that under the guidance of zhongyong rationality, entrepreneurs in Chinese family firms lay more emphasis on restraints than on efficiency, balance the interests among the management, the firm and the owning family, and maintain equilibrium between the insiders and outsiders. This research also finds that a shift from instrumental rationality to zhongyong rationality can provide more satisfactory and indigenous explanations to some phenomena widely in existence among Chinese family firms, as compared with corresponding Western theories.

References

  1. Cheung, T. 张德胜, King, Y. C. 金耀基, Chan, H. M. 陈海文, Chan, K. M. 陈健民, Yang, C. 杨中芳, Chiu, C. 赵志裕, Thireau, I. 伊莎白. 2001. 论中庸理性: 工具理性、 价值理性和沟通理性之外 (On zhongyong rationality: Beyond instrumental rationality, value rationality and communication rationality). 社会学研究 (Sociology Studies), 16(2): 33–48.

    Google Scholar 

  2. Chiu, C. 赵志裕. 2000. 中庸思维的测量: 一项跨地区研究的初步结果 (On the measure for zhongyong rationality: Preliminary findings from a cross-regional survey). 香港社会科学学报 (Hong Kong Journal of Social Sciences), (18): 33–55.

  3. Dooley, R. S, & Fryxell, G. E. 1999. Attaining decision quality and commitment from dissent: the moderating effects of loyalty and competence in strategic decision-making teams. Academy of Management Journal, 42(4): 389–402.

    Article  Google Scholar 

  4. Feng, Y. 冯友兰. 2007. 冯友兰文集第4 卷 (Feng Youlan Corpus, vol. 4). 长春: 长春出版社 (Chang Chun: Chang Chun Press).

    Google Scholar 

  5. Fornell, C., & Larcker, D. F. 1981. Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1): 39–50.

    Article  Google Scholar 

  6. He, X., 何轩, Chen, W. 陈文婷, & Li, X. 李新春. 2008. 赋予股权还是泛家族化? 家族企业职业经理人治理的实证研究 (Future options or pan-familism? Evidence from professional managers in China’s family firms). 中国工业经济 (China Industrial Economy), 25(5): 109–119.

    Google Scholar 

  7. He, X. 何轩, & Zhu, H. 朱沆. 2008. 利他主义, 亲情寻租和家族企业治理(Altruism, family rent-seeking, and governance on family firms). 外国经济与管理 (Foreign Economics & Management), 30(9): 28–33.

    Google Scholar 

  8. Jensen, M. C., & Meckling W. H. 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4): 305–360.

    Article  Google Scholar 

  9. King, Y. 金耀基. 1992. 中国社会和文化 (Chinese society and culture). 香港: 牛津大学出版社 (Hong Kong: Oxford University Press).

    Google Scholar 

  10. Liu, F. 刘凤良, & Jiang, T. 江艇. 2004. 行为宏观经济学的方法论意义 (Methodological meaning of behavioral macro-economics). 中国人民大学学报 (Journal of Renmin University of China). 18(2): 39–45.

    Google Scholar 

  11. Mustakallio, M., Autio, E., & Zahra, S. A. 2002. Relational and contractual governance in family firms: Effects on strategic decision making. Family Business Review, 9(3): 205–222.

    Article  Google Scholar 

  12. Pan, B. 潘必胜. 2006. 理性, 家族与中国现代化的路径依赖 (Rationality, Family and China’s Path Dependency on Modernization). In 陈 凌 (Ed.), 民营经济与中国家族企业成长 (Private economy and growth of China’s family firms). 北京: 经济科学出版社 (Beijing: Economic Science Press).

    Google Scholar 

  13. Podsakoff, P. M., MacKenzie, S. B., Lee, J., & Podsakoff, N. P. 2003. Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88: 879–903.

    Article  Google Scholar 

  14. Schulze, W. S., Lubatkin, M. H., Dino, R. N., & Buchholtz, A. K. 2001. Agency relationships in family firms: Theory and evidence. Organization Science, 12(2): 99–116.

    Article  Google Scholar 

  15. Tversky, A., & Kahneman, D. 1974. Judgment under uncertainty: Heuristics and biases. Science, 185: 1124–1131.

    Article  Google Scholar 

  16. Weber, M. 1995. 儒教与道教 (The religion of China: Confucianism and Taoism). 北京: 商务印书馆 (Beijing: The Commercial Press).

    Google Scholar 

  17. Weber, M. 1997. 经济与社会(上卷) (Economy & Society (vol. 1)), 林荣远 (Trans.). 北京: 商务印书馆 (Beijing: The Commercial Press).

    Google Scholar 

  18. Yang, G. 杨光飞. 2006. 家族企业的“家族式治理”: 人文制约抑或理性选择 (Family type of governance in family firms: Humane restraint or rational choice?) 江淮论坛 (Jianghuai Tribune),(4): 54–59.

  19. Yang, C. 杨中芳. 1996. 如何研究中国人 (How to understand Chinese). 台北: 桂冠图书公司 (Taipei: Laureate Publishing House).

    Google Scholar 

  20. Yang, C. 杨中芳. 2001. 中国人的世界观: 中庸实践思维初探 (World in Chinese people’s eyes: On the practice of zhongyong rationality). In 如何理解中国人 (How to understand Chinese people): 269–286. 台北: 远流出版事业股份有限公司 (Taipei: Yuanliu Publishing House, Co., Ltd.).

    Google Scholar 

  21. Yang, C. 杨中芳, & Chiu, C. 赵志裕. 1997. 中庸实践思维初探 (On the practice of zhongyong rationality). Unpublished dissertation.

  22. Yu, Z. 余治平. 2008. 经权, 常变的智慧—中庸之道的哲学根据 (Jinquan, constantly changing wisdom: Philosophical foundation for zhongyong rationality). 中山大学学报(社科版) (Journal of Sun Yat-sen University (Social and Science Edition)), 48(1): 102–126.

    Google Scholar 

  23. Yu, Y. 余英时. 2005. 现代儒学的回顾与展望 (Review and prospects of modern Confucianism): 254–255. 上海: 三联书店 (Shanghai: Joint Publishing House).

    Google Scholar 

  24. Zhai, X. 翟学伟. 2001. 中国人的行动逻辑 (Behavior logics of Chinese people). 北京: 社会科学文献出版社 (Beijing: Social Sciences Academic Press).

    Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Xuan He.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

He, X. Symbiotic relationship of modern contract and traditional ethic: Entrepreneur’s Zhongyong rationality and family firm governance choice. Front. Bus. Res. China 5, 436 (2011). https://doi.org/10.1007/s11782-011-0139-y

Download citation

Keywords

  • family firm
  • family business entrepreneurs
  • instrumental rationality
  • zhongyong rationality