A Stakeholder View of Strategic Management in Chinese Firms

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VOL 15, NO1, JUNE 2007: pages 1 of 13

Dr Xueli Huang1 Dr Scott Gardner2 Despite the fact that China has emerged as a driving force of the world economy over the last decade, little research has been undertaken into how Chinese firms strategically manage their businesses. This paper develops a theoretical framework of strategic management in the Chinese firms through reviewing and synthesising five strategic perspectives that are relevant to the Chinese context: the Industry Structure View (ISV), Resources-Based View (RBV), Institutional View (IV), Relational View (RV), and Stakeholder View (SHV). We elaborate the relevance of the SHV in the Chinese context and its relationships with other strategic perspectives. Finally, we offer several managerial and research implications based on the theoretical framework developed. Key Words: strategic management, Chinese firms, stakeholder perspective I. INTRODUCTION

One of the most significant developments in the global economy is the re-emergence of China as a major driving force of the world economy. Since the implementation of the open-door, market-oriented policies in 1979, China has quadrupled its GDP and sustained a significant average growth rate of over 9 per cent. The foreign direct investment (FDI) in China in 2004 amounted to US$ 60 billions, making China the biggest FDI destination country over three consecutive years from 2002. Chinese organisations now compete fiercely in domestic markets, and the international trade arena, with the value of China’s international trade accounting for over 70 percent of its GDP in 2004. The Chinese have also expanded their business operations to other countries as illustrated by the recent examples such as the Levono, China’s largest Personal Computer (PC) manufacturing company, acquiring IBM’s PC division, and the unsuccessful bid of China National Offshore Oil Corporation (CNOOC), China’s third largest oil company, for Unocal, the ninth largest oil company in the USA. Despite the important role played by the Chinese economy in general, and Chinese firms in particular, in the global economy, China has been considered as one of the most underresearched regions in the world (Tsui, Schoonhoven, Meyer, Lau, & Milkovich, 2004). Although interest from executives, academics and media on Chinese business matters has


Dr Xueli Huang is Senior Lecturer at the School of Management, Edith Cowan University. Email: x.huang@ecu.edu.au 2 Dr Scott Gardner is Associate Professor at Murdoch University. Email: s.gardner@murdoch.edu.au


A stakeholder view of strategic management in Chinese firms

increased dramatically over the past several years, little research effort has been devoted to studying the strategic management of Chinese organisations. This paper investigates strategic management in Chinese organisations. In doing so, an attempt is made to integrate the current literature on strategic management, focusing on the two dominant perspectives of the past twenty years: the Industry Structure View (ISV) (Porter, 1979) and the Resource Based View (RBV) (Barney, 1997; Prahalad & Hamel, 1990; Wernerfelt, 1984). It also examines Post, Preston and Sachs’ (2002) conceptual schema of complementary perspectives for strategic analysis of 21st century corporate environments - the Stakeholder View (SHV). In attempting to make sense of increased strategic complexity and the central role of networks of human relationships in shaping economic activity in Eastern (notably Chinese) and Western markets, our analysis will call upon the ISV, RBV and SHV with additional reference to other contemporary strategic perspectives including the Relational View (RV)(Dyer & Singh, 1998), and the Institution-Based View (IBV) (Peng, 2002). By focusing these lenses on how business is conducted in the cultural context and commercial environment of China,...
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