Prologue: Business Environment and Economic Behavior

For more than two decades, sociologists, historians and economic geographers have produced many case studies on Chinese family businesses. A major consensus of these works suggests that ‘networking’, especially ethnic and familial, is extremely important to Chinese businesses. Various models and theories have been employed to explain this phenomenon. Notable among these explanations is the idea of Chinese entrepreneurship. According to this idea, such ethnicity-based groups as the Cantonese and the Fujianese (of the provinces of Guangdong and Fujian), are regarded to be culturally oriented towards business entrepreneurship and the cultivation of business networks. Before the outbreak of the Asian economic crisis in October 1997, many researchers believed that ‘Chinese entrepreneurship’ and the ‘business culture of networking’ contributed to the success of Chinese businesses in Asia (especially in the ‘Four Little Dragons’ of coastal Asia). For example, Confucian ethics and its emphasis on familial and ethnic networks is regarded as an asset for business expansion by Chinese international enterprises based in Hong Kong, Taiwan and Singapore. After the outbreak of the crisis, more research on the nature of Chinese entrepreneurship and the culture of networking was carried out. This research started from a different angle. The reliance on politically secured economic privileges (i.e.; nepotism), was identified as a defect of networking and thus, one of the major underlying causes of the crisis. The claim that the culture of networking contributes to business success actually offers a readily available explanation for its failure as well (see for examples Redding, 1990; Yeung, 1997; Yeung, 1998).