This paper argues that it is crucial to take account of both home and host country contexts in order, adequately, to understand their implications for Chinese enterprises investing into foreign countries. This calls for an analysis that is sensitive to both home and host country contexts, and that takes into account how the institutions and political systems in those contexts establish institutional and resource capital needs for the overseas-investing firm. We discuss and illustrate three different combinations of Chinese and host country characteristics, and the firm-level learning and adaptation required in the light of the relevant capitals likely to be available to Chinese firms. The analysis draws upon insights from resource-based, institutional, and political perspectives. While it is developed with specific reference to China, we also suggest that this form of analysis can be applied more generally to the implementation of outward foreign direct investment from any country.

Family business owners and researchers tend to overwhelmingly focus on the top-level structure of firms but ignore the middle-level practice – involving family members in the middle-management team. Compared to top managers at the strategic apex, middle-level managers are mainly responsible for internal operations and control, and the composition of the middle-management team has an immediate and direct impact on the overall workforce efficiency of family firms. Integrating agency theory and organizational justice perspective, we proposed that family involvement in middle management would have a negative impact on the labor productivity of family firms. We further corroborated this effect by identifying three boundary conditions at the individual (i.e., familial CEO), organizational (i.e., firm size), and regional (i.e., labor mobility) levels. Using a sample of 1,284 privately owned family firms in China, we found that family involvement in middle management, measured as the percentage of familial middle-level managers, was negatively associated with labor productivity. Furthermore, this negative relationship existed only when the CEO is a family member rather than a professional manager, when the size of the firm is large rather than small, or when the firm is located in regions with low rather than high labor mobility. These findings contribute to family business literature and provide practical implications for human resource management in family firms.

There is still an ongoing debate regarding the firm performance implications of pay gaps between top executives and subordinate employees. This study integrates relative deprivation theory and tournament theory to investigate the potential nonlinear effects of pay gaps. We expect that at low levels of pay inequality, increased inequality hurts firm productivity, while at higher levels of pay inequality, increased inequality helps firm productivity. Our study of Chinese firms confirms that pay gaps have an approximately U-shaped relationship with firm performance. This nonlinear relationship is weaker in state-owned enterprises (SOEs) than in non-SOEs, suggesting that state ownership is an important moderator in the association. Overall, this study explains previous mixed findings regarding consequences of pay gaps with meaningful implications for policymakers and entrepreneurs in China and other economies with similar cultural and institutional backgrounds.

We propose an integrative model on how contextual distance influences the learning process and performance of international strategic alliances (ISAs). We argue that contextual distance increases knowledge diversity but decreases knowledge exchange between the alliance partners, which has implications for the alliance's knowledge creation and performance. A meta-analysis of 46 empirical studies published between 1990 and 2013 dealing with Sino-foreign collaborations in China revealed that contextual distance showed an inverted U-shaped relationship with alliance performance. Proxies for partners’ contextual experience, for example, the length of an alliance's operation in China, the foreign partners’ in-country experiences, and ISAs’ location in a more developed Chinese region, moderate the learning processes. Implications and directions for future research are discussed.

We investigated how third party managers from China, Japan and the USA intervened in employees' disputes. Consistent with predictions, we found (using non-linear HLM analysis) that managers who were superiors to the disputants behaved autocratically and/or decided on conservative (e.g., contract adhering) outcomes; but managers who were peers (especially in China and the USA), generally involved disputants in decision-making and obtained integrative outcomes that went beyond initial contract related mandates. Our results extend prior research and theorizing using the dispositional and constructivist perspectives on culture by introducing norm complexity as an explanation for variations in third party conflict intervention behaviour within one culture.

Literature has advanced two contrasting theoretical perspectives related to the governance structure of business groups: the ‘value-constraining’ perspective, which focuses on principal–principal agency conflict and organizational inertia theory, and the ‘value-enabling’ perspective, which emphasizes the role of business groups in mitigation of institutional voids. Building on these two competing lenses, we develop hypotheses to examine post-acquisition performance of affiliate firms relative to stand-alone firms. As our empirical context, we study 440 majority-stake, domestic and cross-border merger and acquisition deals closed by Indian firms during the period 2002–2013. The results imply that in emerging markets, despite concerns of organizational inertia and principal–principal agency issues, the value-enabling impact of group affiliation persists. We also examine the contextual impact of intergroup heterogeneity owing to group diversification on post-acquisition performance and find that greater group diversification leads to better performance for affiliate acquirers.

As he gazed on the sea, Confucius sighed: ‘The passage of time is like the flow of water, which goes on day and night’. In later generations, the image of ‘water’ was found everywhere in Chinese literature, and most works used the metaphor first expressed by Confucius (Xing & Liu, 2015). However, Lao Zi's understanding differed from Confucius's, as he was more concerned with the virtues of water than its image. He believed that ‘the highest virtue is like that of water. Water benefits everything in the world without contending’.

We conducted two studies to investigate the contingent role of regional human capital quality (i.e., the knowledge, skills, and abilities of the collective workforce in a region) in the relationship between firm-level human resource (HR) practices (i.e., practices focusing on employees’ human capital development) and firm performance in China. Drawing upon human capital theory, we hypothesized that the human capital–enhancing HR practices and regional human capital quality have a substitutive effect on firm performance. Study 1 uses a World Bank survey of 9,125 firms in 30 provinces. We found that the human capital–enhancing HR practices relate more strongly to firm performance when regional human capital quality was lower than when it was higher. Study 2 used a sample of 203 firms across seven provinces. We found similar results. We further hypothesized and found that the substitutive effect of regional human capital quality was stronger when a firm adopted an innovation strategy. Our findings provide new evidence for the contingency perspective of strategic HR management and highlight the importance of matching HR practices with local labor quality conditions and the business strategy of the firm.

In a transitional economy such as China's, when resources are unevenly distributed across different sectors, the disadvantaged sector may seek a growth path that bypasses resource constraints. We investigated this phenomenon in the context of the Chinese real estate industry. By comparing the post–merger and acquisition (M&A) performance of acquiring firms between state-owned enterprises (SOEs) and privately-owned enterprises (POEs), we attempted to show that POEs are better performers in the market should they be granted equitable resources, and the superior performance is strengthened by market-oriented institutional environment. We used M&A events data of publicly listed real estate firms in China from 2004 to 2012, in conjunction with firm characteristics and province-level market environment data. We found the results to be consistent with our hypotheses. In particular, compared to SOEs, privately-owned acquiring firms tend to have better post-M&A performance when both the regions of the acquirer and the target have high level of marketization. The results suggest that the private sector in China's transitional economy is potentially more efficient than the state-owned sector, as long as the market environment is favorable.

Organizational hybridity refers to the combination of multiple institutional logics and identities that, within an organizational setting, do not conventionally complement one another. In such conditions, organizations must develop strategies to combine logics and sustain their hybrid forms. Success, however, is not inevitable. In this article, we take a legitimacy-as-process perspective to focus on a failed Microfinance Organization (MFO) in the African context of Zambia. MFOs represent a fascinating context because of their hybrid nature and need to balance several competing institutional demands. We utilise field interviews to analyse the process through which MFOs fail, analysing actor legitimation responses to emerging hybridity demands. We identify three phases associated with these changes: 1) dependent coupling, (2) misaligning legitimation, and (3) circumnavigating over conformity. Our findings emphasise that legitimation efforts in a failed hybrid are not simply the reverse of those that succeed. We observe adaptive processes consistent with successful hybrids but that ultimately sow the seeds of eventual failure. This demonstrates the need to re-think the role of legitimation strategies in hybrids alongside their potential deleterious consequences.

Managers make comprehensive strategic decisions to cope with environmental challenges. Questions remain regarding how different types of leadership styles influence top management team (TMT) strategic decision comprehensiveness (SDC) and firm performance. This study explores the impact of two different CEO leadership styles on TMT SDC and subsequent firm performance, considering the moderating role of TMT cognitive conflict. Based on data from 357 questionnaires of 126 firms in China, we found that 1) CEO empowering leadership positively affects SDC; 2) CEO directive leadership generates an inverted U-shaped effect on SDC; 3) the effect of SDC on firm performance is positive; and 4) TMT cognitive conflict weakens the relationship between CEO empowering leadership and SDC. This study takes a systematic approach by integrating CEO-TMT dynamics into SDC, which in turn affects firm performance, and thus offers a holistic view of how upper echelons influence firm performance.

This article provides background information on public and non-profit sector innovation in the past thirty years in the West as well as in China. We summarized and commented on the articles in this issue, which document cases of public and non-profit sector innovation in China and theorize their significance. These cases tell vivid stones about how Chinese organizations innovate and also point out the importance of the role of government in initiating or constraining these innovations. We find, through the review of these studies, that China's public and non-profit sector organization innovation experiences carry some important messages about the unique features of China's public and non-profit organizations that should not be ignored while studying changes in China.

This interview contributes to the conversation around the automobile industry by focusing on the Chinese electric vehicle (EV) sector. Both of the discussants’ research interests encompass China's industrial competitiveness, innovation, science and technology policy, and the evolution of Chinese manufacturing industries. Professor Feng Lu, the interviewee, has conducted continuous and substantial fieldwork tracing the development of the Chinese automobile industry. He was one of the first experts to urge the Chinese government to help local automobile manufacturers develop innovation capabilities and proprietary products. Further, his 2005 book, The Policy Choice to Develop China's Automobile Industry with Independent Intellectual Property Rights, profoundly influenced the national policy transition toward emphasizing in-house innovation.

In this study, we examine the effect of institutional ownership on corporate philanthropy in China, an emerging economy. Employing stakeholder identification and salience theory, we posit that institutional ownership positively influences corporate philanthropy, which varies for different types of institutional investors. We further argue that institutional ownership's influence is stronger when philanthropy is aligned with firm goals. Using data from Chinese publicly listed firms, we find a positive effect of institutional ownership on philanthropy, and this effect is stronger for domestic institutional owners when compared to foreign institutional owners, and long-term when compared to short-term institutional owners. We also find that the positive influence of institutional ownership is stronger in private firms and in regions with low institutional development – situations characterizing high alignment between philanthropy and firm goals. Our findings highlight the important role of institutional investors on corporate philanthropy decisions, which have implications for scholars studying and policy makers enacting corporate governance in emerging economies.

Previous studies have found no relationship between scholar participation and public project performance. Building on the work of Lindblom (1977; 1990), I propose a model depicting scholars' roles in social organizations and governance. A study of thirty-two cases of large public works projects in China and seventeen projects in thirteen other countries shows a moderately positive relationship. The study further shows the greatest influence on project success occurs when participating scholars serve as information brokers and entrepreneurial activity organizers. Successful scholar participation occurred through five working principles: (1) there is dispersed and specialized knowledge production; (2) there is dispersed and asymmetric knowledge possession; (3) knowledge-driven volitions and consensus are criteria for knowledge; (4) the satisfaction of diverse and heterogeneous individual needs is realized through knowledge-driven institutional arrangements; and (5) there are multiple methods of knowledge application. In general, scholar participation seems to be more effective in projects in which there is low political intervention, and in village and county projects. The results of the study provide a theoretical and empirical foundation for further research on scholar participation in social organizations.

This study examines how cultural values (i.e., individualism and collectivism) and personality (i.e., self-perceived superiority and exhibitionism) jointly affect self-rating among Chinese respondents from mainland China (N= 161), Hong Kong (N= 350), and Taiwan (N= 398). The results demonstrated that respondents with a more individualistic cultural orientation exhibit greater leniency in self-rating than those with a more collectivistic cultural orientation. Furthermore, self-perceived superiority and exhibitionism are related to high self-ratings among individuals who expressed low individualism values, but not among individuals who expressed high individualism or collectivism values. The results suggest that self-rating research needs to take both the individual's cultural values and personality traits into account.

Although social harmony is one of the most important cultural values in many of Asian societies it has rarely been studied in the mainstream management literatures. Based on the group-value theory of justice we examined how group justice climates influence group effectiveness through group harmony. Analyses of data on 106 upper-level management teams from Chinese organizations showed that justice climates were positively associated with group harmony, which in turn was positively associated with team task performance and team helping behavior. Group harmony was found to significantly mediate the positive effect of both distributive and interactional justice climates on team helping behavior but only marginally on team task performance. Finally, in support of past research both at the group and individual level, procedural justice climate had the weakest effect on group processes and outcomes. By applying the group value theory on group harmony this paper aims to integrate Eastern and Western perspectives on one hand and the justice climates and group harmony research on the other. Theoretical and practical implications are discussed.

Loan guarantees to related parties by affiliated subsidiaries within family controlled pyramids form a means by which the controlling family expropriates value from minority shareholders. The controlling family, however, will attempt to escape blame for the behavior. Using a sample of 1785 listed Chinese firms affiliated with family-controlled business groups, we explore how family governance structure affects the use of related party loan guarantees. As hypothesized, we find that affiliates with non-family chairmen, but with family directors or senior executives, issue larger volumes of loan guarantees to related parties, whereas affiliates with family chairmen and those with non-family interlocking chairmen do not. The behavior is moderated by regional institutional development.

This research examines how people perceive and respond to potential conflict in work settings. When individuals highly value their interpersonal relationships with others, they may take the potential costs to relationships into consideration in deciding how to handle conflict. We propose that individuals take an avoidance approach to conflict to prevent disruption in relationships from confrontation. Specifically, the value that individuals place on superficial harmony is positively related to their negative anticipation of relationship costs, which in turn leads to conflict avoidance. Furthermore, the direct relationship between superficial harmony and negative anticipation and the indirect relationship between superficial harmony and conflict avoidance are negatively moderated by the closeness of relations between the parties involved. The results of two studies conducted in workplace settings supported our hypothesized moderated mediation model. Highlighting the role of superficial harmony in conflict avoidance, this research contributes to the existing literature on conflict management and has practical implications for effectively managing conflict in the workplace.

In this commentary, I discuss some philosophical issues related to contextualizing Chinese management research. First, it should be noted that contextualization can be interpreted in different ways by different philosophical perspectives. Second, the Duhem-Quine thesis implies that replications, in the form of empirical generalization, are an appropriate means of testing Western theories in a Chinese context. Third, owing to the difficulty of conclusively falsifying management theories, attempts to create theories that explain unique Chinese management phenomena may lead to theory proliferation and the perpetuation of weak, or even false, theories. Finally, I propose the study of empirical regularities as an alternative to the theory application and theory creation approaches.