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A cross-regional comparative model

Strategic human resources, innovation and entrepreneurship fit A cross-regional comparative model Abstract Purpose – Strategic human resource management (SHRM) is seen as crucial for innovation and entrepreneurship in China. An empirical research was carried out to investigate main dimensions of the model of human resources management (HRM), practices and their effects on organisational performance in relation to innovation and entrepreneurship. Design/methodology/approach – The research has two parts. The first part is a field survey on human resource management practices and its main dimensions. The study was conducted in the Chinese local companies and joint ventures across different partnerships. The second part is an in-depth case-set analysis of Chinese entrepreneurship models from a strategic HRM perspective. Findings – The results showed that both functional and strategic dimensions of HRM could be identified which had differential effects upon organisational performance and that the most successful local entrepreneurial firms were among the collective-based and globally-oriented ones. Originality/value – This study demonstrated that the fit between strategic HRM practices, innovation strategy and entrepreneurship model was significantly contributed to entrepreneurial performance. A regional comparative model of SHRM and entrepreneurship was proposed for sustainable business developments and organisational change. Keywords Innovation, Human resource management, Organizational performance, China, Entrepreneurs Paper type Research paper 1. Introduction Under the new challenges from China entering WTO, developing IT, promoting organisational reform, and encouraging innovation and entrepreneurship in the recent years, the focus of manpower practices has shifted from employee-level of personnel management to the core-employee and managerial levels of strategic human resources management (HRM) ( 2000; 2002). There has been an increasing demand for more integrated strategies of HRM practices, innovation, and entrepreneurship in Chinese organisations (2003). Among recent developments in China, several significant changes need to be noticed in order to understand the key issues in strategic HRM, innovation and entrepreneurship. First, international entrepreneurship has become one of the major approaches to business development. While international companies are increasingly entering China with a figure of more than 450,000 foreign invested enterprises (FIEs), the international entrepreneurship approach is an effective strategy not only for expending new markets and introducing overseas funds and managerial skills for enhancing competitiveness but also for more and more local companies to introduce and recruit foreign knowledge-managers and technicians for their joint ventures and/or key local facilities for their business development. Meanwhile, companies are establishing their business branches overseas as a competitive entrepreneurship strategy. So far, more than 6600 overseas ventures from Chinese companies were formally established. Therefore, both strategic and cross-cultural HRM has become a crucial supporting approach. Second, technological innovation and entrepreneurial networking are among the most popular strategies for business development in China through a variety of cross-regional mergers, acquisitions, joint ventures, and business alliances. There is a significant shift in mergers and acquisitions from the SOEs’ acquisition of private companies in 2002, to the private company’s acquisition of SOEs in 2003. Many of them incorporated with company-level technological innovations. However in many cases of mergers, HRM was a bottleneck for effective integration. Therefore, strategic human resource management (SHRM) strategies were urgently needed for supporting organisational change, technological innovation and entrepreneurial development. Third, for most of the Chinese firms, the secondary entrepreneurship transformation is the main business-driven strategy in connection with intrapreneurship, corporate entrepreneurship and strategic entrepreneurship (2003)  However, among most Chinese companies, there is a lack of strategy-level integration of SHRM with entrepreneurship and therefore the intrapreneurship was often less effective in terms of sustainability (1999). Most of recent studies called for strategic planning to be used to identify and improve those organisational decisions and actions for integrating human resource functions into the organisational and innovation strategy in order to support and implement the strategic plan to achieve a competitive advantage (2002). Because of the recent developments in international entrepreneurship, technological innovation, multi-business strategy and intrapreneurship, strategic HRM becomes a crucial approach for small and entrepreneurial firms in China. The purpose of this study is to review recent research findings about the key dimensions of Chinese entrepreneurship and to differentiate SHRM practices and their effects upon organisational performance. Then a multi-level model of strategic HRM and Chinese entrepreneurship is built on the basis of recent in-depth studies across regions and ownerships. 2. Cross-cultural studies on SHRM practices under the Chinese settings One important question is what the SHRM dimensions are and how they differentiate across different nations and cultures. (2002) used a qualitative case methodology and studied 12 multinational companies about the differentiation of their HRM practices across different equity stake percentages of ownership forms with their Chinese partners. They interviewed HRM directors from those companies by telephone with semi-structured questionnaires. The focus of this interview research was on five aspects of HRM practices: HRM functions, recruitment and selection, performance appraisal, training development, and compensation. The results showed that there was a diffusion of HRM practices across different ownership forms and there were few variations across cases. The HRM functions in the MNE’s PRC operations had a high strategic importance though integration of international HRM practice with the local culture and entrepreneurial models might be still a further task for many MNEs and local companies. In another recent study,  (2001) conducted semi-structured interviews and a questionnaire survey and collected data among managers from 63 manufacturing Chinese-Western joint ventures, concerning HRM practices in terms of HR methods, recruitment criteria, professional training, compensation and bonus, and criteria for promotion as well as the educational and experience background of HR/personnel managers and MNC ownership. The results showed that the HRM practices were considerably more similar to those of the MNCs than to those of local manufacturing companies. Also the HRM practices were dependent upon the establishment of joint ventures on the basis of existing Chinese manufacturing operations. In discussing about how resources could be managed more effectively, (2003)  proposed a three-component model that can lead to a competitive advantage: resource inventory (evaluating, adding, and shedding), resource bundling, and resource leveraging. Apparently, some HRM practices are more related to the daily operations while others are more linked with long-term effects on performance. H1. Among most of HRM practices, there are mainly two dimensions: functional HRM practices and strategic HRM practices. The former is more related with the daily operations while the later is more linked with company-level progress or organisational performance. How do SHRM practices affect other aspects of organisational capacity and performance?  (2000) used a database from the Chinese Ministry of Public Health and demonstrated significant effects of external environment and internal capacities on technology decisions among the Chinese state-owned enterprises. In fact, social capital, especially relational capital based on “guanxi” provided a framework for business dealings in many Asian countries particularly in China (2002). As summarized in an interview study key success factors of multinational firms in China, nine strategies were proved to be crucial: top management commitment strategy, solid training and feasibility strategy, patience and persistence strategy, overseas Chinese strategy, brand image strategy, wholly owned MNC strategy, partner search strategy, trust strategy, and effective HRM strategy. Among them, the last one was of vital source of competitive advantage. H2. HRM practices are different across business ownerships and joint venture partnerships which links with organisational performance indicators. Apparently, HRM practices are somewhat different cross-cultures.(1996) compared HRM practices in east-west joint ventures including companies such as French-Polish, German-Czech, Swedish-Hungarian JVs, using extensive semi-structured interviews with senior managers and other employees as well as survey questionnaires and participant observations to measure strategy, responsibility, communication, HRM practices and culture. The results showed that there were similar positive effects of HRM and employees were satisfactory about the training they have received but dissatisfied with salary in those joint ventures. The authors see the need to create an environment in which local and foreign employees can work effectively together.  (2000) also discovered that culture as defined by the Hofstede’s cultural model had significant influence on entrepreneurial potential. Specifically, internal locus of control orientation combined with innovativeness is more likely in individualistic, low uncertainty avoidance cultures than in collectivistic, high uncertainty avoidance cultures. Culture may condition potential for entrepreneurship, generating differences across national and regional boundaries. 3. Entrepreneurship and its relationship with technology innovation and SHRM The relationship between technology innovation, HRM and entrepreneurship has been an active area of research. Many studies demonstrated that technology and HR are closely linked for competitive advantage ( 2000;2004). (1998) carried out a case study to examine how a leading American project management firm responded to the competitive pressures through a process of entrepreneurial change. The study concluded that the corporate human resource functions could become entrepreneurial in integrating to line managers’ functions and that the “design failure” of strategic HRM was the main reason for low competitive conditions. There has been a dramatic shift in the focus of industrial R&D strategies from general quality programs in 1980s and early 1990s to the re-engineering design with synonymous downsizing, entrepreneurial planning and HR support. So SHRM can be an important part of the technology innovation cycle ( 2002). As part of technology innovation globally, the role of HRD in the process of international technology transfer as an approach to international entrepreneurship was studied and identified ( 1999). The results showed that in the process of the transfer, human resource development plays a significant role in improving the effectiveness of management technology and in achieving organisational objectives. However, we need to clearly understand the impact of cultural differences for successfully transfer of technology across cultures on HRD and management policies.  study (1999) focused upon HRM practices and R&D innovation and noticed that short-term HRM practices such as short contracts are negatively correlated with new-tech investment whereas long-term and high-commitment HR practices are positively correlated with investment in R&D and new technology. Many recent studies indicated that SHRM could be an effective facilitator for both technological innovation and entrepreneurship. In a study on the technological determinants of entrepreneurial behaviour, (2002) applied a typology of technological regimes to examine the sources and obstacles to entrepreneurial entry and noticed that innovation in technologies of opportunities could be effectively associated with entrepreneurial behaviour by the knowledge and HRM support. This characterisation of the dynamics of knowledge accumulation proved to be crucial for enhancing the competitive advantages. and  (2000) also found that for many fast growth SMEs, the main problem is finding and retaining high-quality employees and that HRM approach in the pursuit of quality is critical to success. What is the situation related to Chinese manufacturers? In the recent years, there has been a shift of the focus of Chinese organisational reform and changes from large-group and state-based business re-structuring to the high innovative and entrepreneurial development. Especially, the nation-wide technological innovations and organisational systems innovation call for more effective strategic HRM support.  (2000) presented an exploratory model of competence and performance from a survey in 72 companies. The results showed that marketing competence was ranked high by Chinese managers while human resource competence has been found to be significantly correlated with performance. Different kinds of methodology were adopted in conducting research on dimensions of SHRM and entrepreneurship ( 2002). H3. Both functional and strategic HRM practices in turn influence their effectiveness, especially the innovation performance. 4. Entrepreneurship models and its requirements for HRM support Entrepreneurship has been one of the major relevant areas in human resources and innovation. Under the Chinese context, entrepreneurial meant hard-working, dedication and diligent ( 2000). So it was traditionally seen as part of local culture. In the early 1970s and 1980s, many local farmers started their own business “outside of” the central planning systems though these were mostly individual business or collective township business. In the 1990s, a multi-ownership model of enterprise systems transformation was developed among Chinese companies while in the early 2000s, entrepreneurship became a focus of business development in the country. As  (2002) pointed out, the Chinese small family firms made important contributions to the acceleration of business development across the social and industrial sectors as well as the geographic boundaries of the Pacific Rim. They proposed five classifications of entrepreneurial class for the Chinese family business community: (1) bourgeois entrepreneurial with generational family business; (2) solo-entrepreneurial with single owner-manager; (3) marital (co-entrepreneurship with husband/wife as founders and managers); (4) parento with parents and children in control; and (5) geno with generations involving more relatives. These kinds of entrepreneurship were configured by a two-dimension axis of family participation-family development versus political market economy-business growth. Another recent study by  (1998) on investment, opportunity choice and human resources in new venture growth tested a path-based typology model of new venture growth and human resource management for integrating important aspects of entrepreneurship such as family labour or supervisory resources, empathetic leadership style, and entrepreneurial teams. As to the performance, Motowidlo and  (1990) categorized it into two dimensions: task performance and contextual performance. The former is more based on how the short-term task objectives are achieved whereas the latter refers to the dedication and extra efforts at work which lead to long-term outcomes. H4. Entrepreneurship could be categorized into two dimensions: functional versus strategic HRM and individualistic versus collectivistic entrepreneurship. Among the different types of entrepreneurship models, companies under collective entrepreneurship has a closest link between strategic HRM and organisational level performance whereas under individual entrepreneurship, individual level performance indicators are more closely related to functional HRM practices. In reviewing the past decade of entrepreneurship research methods, Chandler and  (2001) summarized a significant trend toward more multivariate analysis and emphasis on reliability and validity in research methodology and called for the development of more sophisticated theoretical models and more longitudinal research. Also,  (2001) focused upon the level of analysis in entrepreneurship research and suggested to use new-enterprise as a new level of analysis and regard entrepreneurship as a broad research domain with more precisely defined issues, concepts, and levels of analysis. 5. Study 1: Dimensions of SHRM and its models across joint venture partnerships 5.1 Participants This study was carried out among 97 local Chinese enterprises and international joint ventures and the main purpose was to find out the characteristics of HRM practices and their relationship with entrepreneurial performance. Among them, 358 managers from 75 companies participated in the field survey from the five types of companies: (1) Chinese-western joint ventures; (2) Chinese-Japanese joint ventures; (3) joint ventures with Hong Kong or Taiwan regions; (4) Chinese state-owned enterprises; and (5) Chinese township and private firms. A field-structured interview was conducted among HR managers and supervisors at 25 international joint ventures and 22 local companies in China. They were asked to describe the most frequently used HR practices in their companies in relation to technological innovation and organisational changes. 5.2 Measurement A check-list scale of HRM practices was then developed. Each practice item is scored 1 and scaled by 1-5 points to measure the degree of application. The total score of each practice is 20. Twenty-two HR managers and supervisors generated a list of 56 typical HR practices which are categorized into ten areas of HR practices. Table I presents the ten-category list of HR practices. Also, a five-point scale of HRM practice check-list was developed with a scale of organisational performance by the following seven indicators: (1) Market performance: How does the company have a higher market share compared with other companies in the similar industrial sector? (2) Profitability: How is this company profitable in comparison with other companies in the similar industrial sector? (3) Competitiveness: How is this company competitive in comparison with other companies in the similar industrial sectors? (4) Task accomplishment: What is the company’s task fulfilment compared with other companies in the similar industrial sectors? (5) Personnel turnover: How high is the personnel turnover in this company compared with other companies in the similar industrial sectors? (6) Employee satisfaction: How do employees satisfy in comparison with employees in other companies in the similar industrial sectors? (7) Innovation performance: How is the performance under technological and managerial innovation in comparison with other companies in the similar industrial sectors? These indicators of organisational performance were first tested by industrial bureau officials, using both ratings and coding from the business performance. These ratings and coding were highly correlated and proved to have high internal consistency reliability, average correlation coefficients was 0.86. 5.3 Main results The analysis showed that there were significant differences in human resource practices across five types of companies. Using factor analysis and in-depth interview, the ten categories of HRM were grouped into two key dimensions: functional human resources and strategic human resources. Tables II and III present the means for ten HRM practices and the two dimensions of HRM. Table II shows the differences in means across the five kinds of ownership: Chinese State companies, Chinese township (private) companies, western joint ventures, Japanese joint ventures and Taiwan/HK overseas joint ventures. As we can see from the results, among the four kinds of ownerships and partnerships, European and American joint ventures and Chinese local companies had generally higher level in HR practice indicators whereas joint ventures with Japanese and Hong Kong/Taiwan partnerships had generally lower level of HRM practices. The HRM practices among SOEs were among the intermediate level. Across the ten HR practices, however, significant differences were found among long-term HRM practices such as career development packages, quality control activities and corporate culture development activities as well motivational systems. With these HR practices, same tendency was shown with Euro/US joint ventures and local companies having a significantly higher scores. Across various of HR practices, SOEs showed higher level of those HR indicators of performance appraisal, quality control and team development, Euro/US firms were good at selection and quality control activities, Japanese firm were higher in terms of quality control and performance. Chinese township companies had more practices in job requirements while Chinese state-owned companies used very fewer test instruments. Again, both Chinese township companies and Japanese joint ventures had more formal HRM practice especially in terms of orientation training and results evaluation. Western joint ventures were similar to Chinese township companies. It is important to note that the sub-samples of the township companies were those large and more productive township firms around Wenzhou area, the hometown of Chinese entrepreneurship firms (both township and private companies). The results showed that the use of performance appraisals in the Chinese companies focused more on positions and the whole company, whereas performance appraisal in the joint ventures was more focused on actual performance. The results of career development and promotion further informed that both western joint ventures and Japanese joint ventures had more HR practices in terms of regular promotion, new opportunities and turnover while the Chinese state-owned companies appear relatively weak on these career development aspects of HRM. In terms of compensation practices, Chinese township companies showed lower level of practices in regularity and formality while other joint ventures had more formal practices, with Japanese joint ventures again revealing higher means. The results showed that the Taiwan and Hong Kong joint ventures had the lowest level of employee participation whereas both western- and Japanese-joint ventures had the highest levels of participation in management. In the Chinese state-owned enterprises and township companies, although the formality of participation, the trade union organisation, and the knowledge of the company were all relatively high, actual participation was low. Quality control was formal in both Japanese and township firms and relatively low in the Chinese state-owned companies and western joint ventures. Management by objectives is more formal in the Japanese companies and township companies whereas it was very low in the Taiwan and Hong Kong enterprises. Corporate culture development practices were shown to be at a similar level across-partnership, except that western and Japanese joint ventures had more emphasis on company vision. 5.4 Relationships between organisational performance and HRM practices The results showed that there is a close relationship between the HRM practice indicators evaluated by HR managers and the organisational performance independently rated by industrial bureau officials. Figure 1 presents the results of multiple regression analysis of the effects of both functional and strategic HRM on organisational performance. Figure 1 presents the relationships between the different HRM practices and performance. As it is shown, the higher levels of functional HRM practices lead to superior performance on all seven indicators. At this stage of development, functional HRM seemed playing a crucial role on general performance whereas strategic HRM affected more innovation performance and task accomplishment. The results largely supported the hypothesis that functional and strategic HRM practices influenced organisational performance. 6. Study 2: SHRM, innovation and entrepreneurship modelling The development of HRM practices has been closely related to innovation and entrepreneurship activities in Chinese companies. However, there is a lack of models for representation of the relationship between SHRM, innovation and entrepreneurship strategies. An in-depth multi-case study was conducted to investigate the models of Chinese entrepreneurship and innovation as it is related to key dimensions and HRM. Field structured interview was carried out among CEOs and HR managers from 24 local companies in the Yangtze Delta Region (Zhejiang, Shanghai and Jiangsu provinces). Altogether 52 people were interviewed. The interview guide includes questions relating to key issues in entrepreneurship. Here are the main questions: (1) General background of business development and services. (2) What are the context, process and key events of the business development? (3) What are the key KSAOs for successful and failure of the business? (4) HRM practices and business strategies in the context of Chinese culture? (5) How do innovative activities facilitate and enhance entrepreneurship? (6) What are the entrepreneurial performance in relation to HRM and innovative strategies? 6.1 Wahaha group growth: International entrepreneurship model Many successful companies in China adopted an international entrepreneurship model, i.e. developing new business ventures through joint-venturing with foreign firms and competing well-known international brands through similar business approach and strategy.We interviewed CEO and HR managers of the famous local company Wahaha group. Transferred and grown from a small and local nutritional food school factory, the Wahaha group has now more than 10,000 employees and is ranked as No. 1 beverage producer in China. With a progressive cross-regional entrepreneurial strategy, 40 subsidiary companies across 16 provinces or cities in China are developed by Wahaha group with approaches of acquisitions, mergers, JVs and alliance partnerships. Two kinds of important international entrepreneurial actions were made in the last ten years by the Wahaha group: one action was to develop five subsidiaries of Danone Group joint venture (1996) with a cross-regional corporate culture strategy; the other was to produce so-called “Future Cola” (2000) to compete with multinationals such as Coca Cola with a national brand strategy. We therefore proposed that the Chinese international entrepreneurship model may represent a combination of local ownership with international approach to culture and national/international business strategies. 6.2 Hengdian group growth: Multi-business entrepreneurship and intrapreneurship model The field study also focused upon how already-successful-local companies started their second-round of entrepreneurship through business innovation and strategic HRM. One example was the Hengdian group located in Zhejiang province. Our interview revealed that the company was developed from a small countryside village factory producing silk products. Now it has more than 37,900 employees who are working in 30 subsidiaries, three overseas subsidiaries, and six international joint ventures. Two key components of Hengdian group’s international entrepreneurship were mostly reported during the interview: (1) a four “J core values” approach of joint-venture entrepreneurship with overseas companies and local community: joint-venture with other firms, joint-ownership with community, joint welfare with townships, and joint-shareholding with employees which created a collective entrepreneurship platform for innovative business development; (2) intrapreneurship (developing new ventures) by internationalisation HR strategy: 36 foreign managers and technicians (knowledge workers) were hired to work in their new start-ups and subsidiaries. These practices have brought into the group innovative managerial practices and technology transfer. 6.3 Lenova group and Haier group: Transformational entrepreneurial model The field interview showed that most of Chinese collectively-owned enterprises are under transformation into shareholding or multiple-ownership systems with entrepreneurial approaches to start their new business, renew their HR strategies and develop high-performance culture. Both Lenovo group (IT sector) and Haier group (Home appliances sector) are among the most successful collectively owned entrepreneurial firms in our interview sample. Field interview showed that there were four significant entrepreneurial features from those collectively owned companies: (1) High growth, usually started from a small group-based collective firm and quickly grew into a group with several thousands of employees with rapid business. (2) Team-based, mostly transformed from collective-systems to shareholding firms with entrepreneur team development. (3) Multi-business, largely diversified business models and new forms of organisations. (4) Cross-regions, commonly adopted cross-regional business models to expand their competitiveness and innovativeness. 6.4 Family business: Wenzhou individual entrepreneurship model This is mainly based on of family business in areas of garments, mechanical components, chemical products, and shoes. Functional HR are most popular in Wenzhou with an emphasis on product marketing while generally recruiting knowledge workers from cross-regions to support rapid business development. As we interviewed CEOs and HR managers/supervisors from four key firms there, it was noticed that although the Wenzhou model was widely seen as the Chinese entrepreneurial model, it is shifting toward an innovative version of corporate entrepreneurship and introducing more strategic HRM practices especially for core employees. While many Wenzhou firms have invested in the western region of China, many local firms in Chongqing area have hired foreign knowledge workers and adopted more SHRM practices in terms of group packages and training. 6.5 Township entrepreneurship: Suzhou collective model This model was formed during 1970s when township enterprises were flourishing near Suzhou area near Shanghai. Most of Suzhou enterprises were collectively owned and using lots of collective entrepreneurship approach, i.e. starting new business through collectively-oriented HR strategies. However, in the recent years, there is a clear trend of moving toward strategic HRM and multi-ownership. Figure 2 summarizes the interview study by a two dimensional model of entrepreneurship and SHRM practices. As we can see, the first dimension is individual entrepreneurship versus collective entrepreneurship and the second dimension is functional HRM versus strategic HRM. Eight models of entrepreneurship and strategic HRM are presented in Figure 2. Multiple regression analysis showed that among companies under individual entrepreneurship model, individual performance such as operational employee turnover, task accomplishment and individual satisfaction was significantly affected by functional HRM practices such as recruitment on turnover ðb ¼ 20:14; p , 0:05Þ; performance appraisal on task performance ðb ¼ 0:16; p , 0:05Þ; and reward/ compensation on satisfaction ðb ¼ 0:31; p , 0:01Þ: Among companies under collective entrepreneurship, strategic HRM practices affected significantly the organisational level performance indicators such as core employee turnover ðb ¼ 20:23; p , 0:01Þ; leadership performance ðb ¼ 0:24; p , 0:01Þ and career satisfaction ðb ¼ 0:20; p , 0:01Þ which functional HRM practices had marginal effects on performance indicators. However, if we take technological innovation indicator as a joint predictor, the relationship between HRM practices and performance indicators are largely enhanced. 7. Conclusion The results of the above-two studies largely supported or modified the four hypotheses. The results showed that there are mainly two dimensions among HRM practices in most Chinese companies: functional HRM practices and strategic HRM practices. The former proved to be more related with most of performance indicators while the later was more linked with innovation performance and task accomplishment across levels. Also, HRM practices showed to be differentiated across business ownerships and joint venture partnerships particularly among strategic HRM such as career development, team compensation, quality control activities and corporate culture. Both functional and strategic HRM practices significantly influence organisational effectiveness, especially the innovation performance by strategic HRM. Entrepreneurship could be categorized into two dimensions: functional versus strategic HRM and individualistic versus collectivistic entrepreneurship. Among the different types of entrepreneurship models, companies under collective entrepreneurship has a closest link between strategic HRM and organisational level performance whereas under individual entrepreneurship, individual level performance indicators are more closely related to functional HRM practices. These results have several important implications to HRM strategies, innovation and entrepreneurship. First, team- and career-based strategic HRM practices have long-term effects on organisational performance among the Chinese companies. Second, culture plays a crucial role in formulating HRM practices such as team and corporate culture activities. Third, collective entrepreneurship modelling is more suitable to the Chinese context of both manpower and business development. Fourth, technological innovation could moderate the effects of HRM on entrepreneurship. In this aspect, more empirical research and case study are underway to find out the key mechanism in relation to the rapid growth of the Chinese entrepreneurship.

A cross-regional comparative model

Strategic human resources, innovation and entrepreneurship fit A cross-regional comparative model Abstract Purpose – Strategic huma...

Many listed companies in HK are family-controlled businesses. Is proposed regulation to improve corporate governance the way to go or are the rules too stringent? Discuss.

Many listed companies in HK are family-controlled businesses. Is proposed regulation to improve corporate governance the way to go or are the rules too stringent? Discuss.   I. Introduction             A. Proposed Regulation of Family-Controlled Businesses             Family-owned businesses continue to thrive in the contemporary competitive environment but challenges also emerge, which means that while a number of successful family-controlled enterprises succeed, these also have to deal with many problems linked with the nature of family-owned firms. Regulations guide and support the resolution of issues experienced by family-owned purposes to motivate these enterprises to improve management and operations as well as protect investors and other stakeholders.                B. Contents and Flow of the Discussion             In this light, the research seeks to look into the regulation of family-controlled businesses particularly in relation to corporate governance, which is the pervasive issue experienced by these enterprises. Hong Kong constitutes the jurisdiction in focus because of the unique position of family-controlled businesses providing a context for an insightful investigation. II. Nature of Family-Controlled Businesses             A. Definition of Family-Controlled Businesses             There remains a dilemma (Astrachan, Klein & Smyrnios 2002) in defining family-controlled business firms because of the differences in opinion on the criteria or elements of conceptualisation. However, Chrisman, Chua and Sharma (2005) pointed out the consensus that demographic factors such as the number of family members in the management team or the extent of control are not sufficient to describe the nature of family-controlled businesses. Many elements emerged to describe these types of enterprises. Chrisman, Chua and Sharma (2005) introduced intention and involvement as elements of family control of a business while Klein, Astrachan and Smyrnios (2005) discussed influence and vision as determinants of the family owned firms. Although, these point to different but related aspects, Lumpkin, Martin and Vaughn (2008) explained that these elements fall under strategic control.             B. Distinguishing Characteristics             Strategic control factors such as agency relations (Schulze, Lubatkin & Dino 2003) and resource control (Habbershon, Williams and MacMillan 2003) are some of the distinguishing factors for a family-owned business. III. Dynamics of Family-Controlled Businesses in Hong Kong             A. Historical and Socio-Cultural Emergence of Family-Controlled    Businesses               The family constitutes the foundation of Hong Kong society so that the business environment in Hong Kong rests upon the dynamics of the family (Chan & Lee 1995). It is not surprising for most business firms in Hong Kong to be family owned. In addition, many Hong Kong residents, owing to their socio-cultural roots are hard working, competitive, and with strong commercial instincts resulting to the establishment of businesses. Moreover, life in Hong Kong revolves around the family so that the members of the family commit to upholding loyalty, obligation and respect of the family, the family name, the family’s legacy (Wong, 2004). This explains the majority control of shares in listed companies or majority control of firm decision-making and operations in other types of Hong Kong business format and structure.             B. Statistical Trends on Family-Controlled Businesses             Lei and Song (2004) explained that insiders control 51.5 percent of the top 100 family-owned companies in Hong Kong. Cheng and Firth (2006) confirm this by stating that most of the listed companies in Hong Kong that are also family-owned are controlled by the families by retaining more than 50 percent of shares.             C. Role of Family-Controlled Businesses in the Economy             Apart from the fact that the leading large firms in Hong Kong are family-owned, which means strong influence of families in Hong Kong’s economic growth, Luk (1996) explained that the Hong Kong government also recognises the importance of small family-owned businesses in sustaining the Hong Kong economy. In fact, the government formed the Management Development Council to take responsibility for the design and provision of management trainings for current and prospective owners of small firms.    IV. Issues in Family-Controlled Businesses             A. Corporate Governance             Cheng and Firth (2006) described the issue on corporate governance, experienced by family-controlled business firms in Hong Kong, as the entirety of the concerns of minority or outside investors constituting a challenge to family-owned business firms to exercise good corporate governance. Majority control of the family in corporate affairs meant the concentration of power on the family giving them control of decision-making and actions that benefit the family but could be detrimental to minority shareholders. This gives rise to the issue of regulation to obligate family-owned businesses to comply with regulatory provisions that extend protection to minority shareholders and ensure that family decisions balance the interest of the family and other business stakeholders.             Cheng and Firth (2006) also discussed the issue of corporate governance in terms of the pay of company officers or executives. Results showed the decreasing trend in the pay received by top executives as their shares or stake in the company increases. This means that an executive director receives lesser pay in accumulating more shareholdings. On one hand, this could represent a compensating process with greater stake in the company offset by the decrease in pay. On the other hand, this could also represent a de-motivation for effective corporate governance. In addition, the pay of top executives are based on profits and not on stock returns so that stock ownership may not actually be an effective offset for the decrease in pay. This is different from the practice in other countries of basing the pay of top executives on corporate performance. This emerges as a corporate governance issue since the performance of the company and the protection of interests depends on top executives motivated to ensure the company’s good performance.             Lei and Song (2004) explained that board structure also constitutes an issue of corporate governance in family-owned business firms for purposes of accountability. In Hong Kong, the Chairman of the board is commonly the CEO of the company, which means that person holding the position becomes accountable also to his person. This could create issues in effective corporate governance since accountability forms of regulations for family-owned corporations.             Lei and Song (2004) also mentioned transparency and disclosure as corporate governance issues in family-owned firms. Since majority of control rests in the owner family in many Hong Kong business firms, disclosure and transparency could become and issue, especially on the part of minority shareholders. Most Hong Kong firms rely on positive reputation in selecting auditing firms since this increase the semblance of transparency. However, this does not guaranty the extent of disclosure since the code for best practices are not mandatory in application to Hong Kong firms.             B. Succession             De Massis, Chua and Chrisman (2008) discussed problems in intra-family succession that are primarily due to the lack of consideration or preparation of succession. This is especially so when the succession happens because of catalysts such as decline in firm performance or loss of key investors or business partners. These trigger succession that in turn leads to the problem selecting successors. The failure of intra-family succession is commonly due to lack of determination of the qualities, expectations and roles of the successor together with poor assessment of the needs and abilities of the successor. Sharma and Smith (2008) also explained that conflicts in selecting the family member to succeed another family member could lead to problems such as when a number of family members compete for the position. This could divide the family-owned business.             Succession constitutes a separate issue from corporate governance but this is also linked to corporate governance in terms of the composition and cohesiveness of top executives since the board may not favour the successor, decision-making with a different composition, and accountability practices among the top executives. Succession, especially intergenerational change in leadership could cause conflicts in corporate governance (De Massis, Chua & Chrisman 2008).              C. Conflict Management and Decision-Making             Eddleston, Otondo and Kellermanns (2008) discussed the issue of the cognitive and relation-based conflict emerging during decision-making among family members. Family members making business decisions are caught in the intertwine between familial obligations and business duties that could affect decisions and outcomes for the various stakeholders. Again, regulation emerges as a concurrent issue by providing guidelines in corporate conflict resolution and the degree of family participation or influence in decision-making. In Hong Kong, where family obligation is strong, conflicts of this nature often emerge with concurrent strength that challenges the role and sufficiency of regulations to ensure effective corporate governance based on the context of family-controlled business firms in Hong Kong.             Sundaramurthy (2008) explained the maintenance of trust among the family as an issue for family-owned business firms. There is a positive relationship between the degree of trust among family members and business growth. However, a number of conflict also arise because of the duality of the relationship of the family members as family and as business owners involving different although linked interests and perspectives. These complex problems affect trust. This has an indirect impact on effective corporate governance since issues of accountability, disclosure, and transparency fall under the ambit of trust.             D. Corporate Social Responsibility             Niehm, Swinney and Miller (2008) explained that the corporate social responsibility practice of family-owned companies depend on three factors including commitment to the community, support of the community, and sense of community. These three factors then determine the corporate social responsibility practice that matches community expectations and creates a positive perception of the family and the company in the community. This then benefits the company in terms of social and business networks. This means that family-owned firms usually developed a sense of good business practice based on community culture.             Nevertheless, this could also give rise to the issue of inconsistency between the developed sense of good business practice and regulations or standards. The dilemma relates to the issue of corporate governance because of the conflict that could arise between the good business practice developed by the company based on community culture and the regulations for corporate governance.             E. Performance (Profitability)             Ng (2005) explained that family ownership affects performance following a pattern of ‘entrenchment-alignment-entrenchment’. This means that family-owned companies primarily managed by proxies could negatively affect performance because of problems in balancing interests in the achievement of goals. When the role of the family is balanced, the impact on performance strengthens. If the role of the family on the firm becomes stronger, then the effect on performance declines. The implication on family-owned business firms in Hong Kong is to enhance effective corporate governance practices with strong control of the business in order to address entrenchment.             Ibrahim, Angelidis and Parsa (2008) discussed strategic planning as an issue for family-owned business firms. Many family-owned business firms have informal structures, which mean limited focus on strategic planning and management as means of facilitating performance. Lack of strategic planning explains some of the problems experienced by family-owned business firms that adversely affect performance. This affects effective corporate governance indirectly since strategic planning has close links with corporate leadership. V. Regulation of Family-Controlled Businesses             A. Assessment of Family-Controlled Business Regulations             Cheung (2000) discussed the regulatory framework of Hong Kong for corporate governance as comprised of statutory and non-statutory provisions. The statutory provisions include the Companies Ordinance, Takeover Codes, Securities (Insider Dealing) Ordinance, and Securities (Disclosure of Interest) Ordinance. The non-statutory regulations include all provisions under the Listing Rules encompassing the composition of the board, independent and non-independent directors, items for disclosure, disclosure processes, and other related issues.             Assessment of these regulations in terms of impact and effectiveness would provide insight into regulations on corporate governance for family-owned business firms.             B. Proposed Regulation             This section provides a discussion of the proposed regulation for family-owned business firms in Hong Kong particularly the provisions and the areas of corporate governance affected.             C. Advantages or Benefits of Regulation             This section discusses the benefits of regulation to family-owned business firms.             D. Disadvantages or Downsides of Regulation This section discusses the drawbacks of regulation to family-owned business firms.             E. Weighing Options and Alternatives             This section provides an analysis of issues felt by family-owned business firms in Hong Kong together with regulatory options and alternatives in the context of Hong Kong as well as in the general business context. VI. Conclusion             A. Summary             This section summarises the discussion including all pertinent points raised in the paper.             B. Conclusion             This section considers implications for family-owned business firms in Hong Kong together with generalisations for all family-owned business firms.             C. Recommendations             This section provides recommendations on the limitations in scope of the discussion and areas for future study.     References   ASTRACHAN, J., KLEIN, S., & SMYRNIOS, K. (2002) The F-PEC scale of family influence: A proposal for solving the family business definition problem, Family Business Review. Vol 15, pp45–58.   CHAN, H. and LEE, R. (1995) Hong Kong Families: At the Crossroads of Modernism and Traditionalism, Journal of Comparative Family Studies. Vol 24, No 1, pp83-99.   CHENG, S. and FIRTH, M. (2006) Family Ownership, Corporate Governance, and Top Executive Compensation, Managerial and Decision Economics. Vol 27, pp549-561.   CHEUNG, S. (2000) Corporate Governance in Hong Kong, China: Rising to the Challenge of Globalization. Manila: Asian Development Bank.   CHRISMAN, J. J.,CHUA, J. H.,& SHARMA, L. P. (2005) Trends and directions in the development of a strategic management theory of the family firm, Entrepreneurship Theory and Practice. Vol 29, pp555–575.   DE MASSIS, A., CHUA, J., & CHRISMAN, J. (2008) Factors Preventing Intra-Family Succession, Family Business Review. Vol 21, No 2, pp183-199.   EDDLESTON, K., ORTONDO, R., & KELLERMANNS, F. (2008) Conflict, Participative Decision-Making, and Generational Ownership Dispersion: A Multilevel Analysis, Journal of Small Business Management. Vol 46, No 3, pp456–484.   HABBERSHON, T. G., WILLIAMS, M. L., & MACMILLAN, I. C. (2003) A unified system perspective of family firm performance, Journal of Business Venturing. Vol 18, pp451–465.   IBRAHIM, N., ANGELIDIS, J., & PARSA, F. (2008) Strategic Management of Family Business: Current Findings and Directions for Future Research, International Journal of Management. Vol 25, No 1, pp95-110.   LEI, A. and SONG, F. (2004) Corporate Governance and Firm Valuations: Evidence from Hong Kong. Hong Kong: The University of Hong Kong.   LUK, T. K. (1996) Success in Hong Kong: factors self-reported by successful small business owners, Journal of Small Business Management, Vol 34, No 3, pp68   LUMPKIN, G. T., MARTIN, W., & VAUGHN, M. (2008) Family Orientation: Individual-Level Influences on Family Firm Outcomes, Family Business Review. Vol 21, No 2, pp127-138.   NG, C. (2005) An Empirical Study on the Relationship Between Ownership and Performance in a Family-Based Corporate Environment, Journal of Accounting, Auditing & Finance. pp121-146.   NIEHM, L., SWINNEY, J., & MILLER, N. (2008) Community Social Responsibility and its Consequences for Family Business Performance, Journal of Small Business Management. Vol 46, No 3, pp331-350.   SCHULZE, W. S., LUBATKIN, M. H., & DINO, R. M. (2003) Exploring the agency consequences of ownership dispersion among the directors of private family firms, Academy of Management Journal. Vol 46, No 2, pp179–194.   SHARMA, P. and SMITH, B. (2008) Ed’s Dilemma: Succession Planning at Niagara Paving, Entrepreneurship Theory and Practice. Vol 29, No 1, pp13-33.   SUNDARAMURTHY, C. (2008) Sustaining Trust within Family Businesses, Vol 6, No 3, pp327-340.   WONG, S. (2004) The Chinese Family Firm: A Model, Family Business Review. Family Business Review. Vol 21, No 1, pp89-102.

Many listed companies in HK are family-controlled businesses. Is proposed regulation to improve corporate governance the way to go or are the rules too stringent? Discuss.

Many listed companies in HK are family-controlled businesses. Is proposed regulation to improve corporate governance the way to go or are...

APA Research Paper :Apes and Language

APA Research Paper (Shaw)   Apes and Language: A Review of the Literature Over the past 30 years, researchers have demonstrated that the great apes (chimpanzees, gorillas, and orangutans) resemble humans in language abilities more than had been thought possible. Just how far that resemblance extends, however, has been a matter of some controversy. Researchers agree that the apes have acquired fairly large vocabularies in American Sign Language and in artificial languages, but they have drawn quite different conclusions in addressing the following questions: 1. How spontaneously have apes used language? 2. How creatively have apes used language? 3. Can apes create sentences? 4. What are the implications of the ape language studies? This review of the literature on apes and language focuses on these four questions. How Spontaneously Have Apes Used Language? In an influential article, Terrace, Petitto, Sanders, and Bever (1979) argued that the apes in language experiments were not using language spontaneously but were merely imitating their trainers, responding to conscious or unconscious cues. Terrace and his colleagues at Columbia University had trained a chimpanzee, Nim, in American Sign Language, so their skepticism about the apes’ abilities received much attention. In fact, funding for ape language research was sharply reduced following publication of their 1979 article “Can an Ape Create a Sentence?” In retrospect, the conclusions of Terrace et al. seem to have been premature. Although some early ape language studies had not been rigorously controlled to eliminate cuing, even as early as the 1970s R. A. Gardner and B. T. Gardner were conducting double-blind experiments that prevented any possibility of cuing (Fouts, 1997, p. 99). Since 1979, researchers have diligently guarded against cuing. Perhaps the best evidence that apes are not merely responding to cues is that they have signed to one another spontaneously, without trainers present. Like many of the apes studied, gorillas Koko and Michael have been observed signing to one another (Patterson & Linden, 1981). At Central Washington University the baby chimpanzee Loulis, placed in the care of the signing chimpanzee Washoe, mastered nearly fifty signs in American Sign Language without help from humans. “Interestingly,” wrote researcher Fouts (1997), “Loulis did not pick up any of the seven signs that we [humans] used around him. He learned only from Washoe and [another chimp] Ally” (p. 244). The extent to which chimpanzees spontaneously use language may depend on their training. Terrace trained Nim using the behaviorist technique of operant conditioning, so it is not surprising that many of Nim’s signs were cued. Many other researchers have used a conversational approach that parallels the process by which human children acquire language. In an experimental study, O’Sullivan and Yeager (1989) contrasted the two techniques, using Terrace’s Nim as their subject. They found that Nim’s use of language was significantly more spontaneous under conversational conditions. How Creatively Have Apes Used Language? There is considerable evidence that apes have invented creative names. One of the earliest and most controversial examples involved the Gardners’ chimpanzee Washoe. Washoe, who knew signs for “water” and “bird,” once signed “water bird” when in the presence of a swan. Terrace et al. (1979) suggested that there was “no basis for concluding that Washoe was characterizing the swan as a ‘bird that inhabits water.’” Washoe may simply have been “identifying correctly a body of water and a bird, in that order” (p. 895). Other examples are not so easily explained away. The bonobo Kanzi has requested particular films by combining symbols on a computer in a creative way. For instance, to ask for Quest for Fire, a film about early primates discovering fire, Kanzi began to use symbols for “campfire” and “TV” (Eckholm, 1985). The gorilla Koko, who learned American Sign Language, has a long list of creative names to her credit: “elephant baby” to describe a Pinocchio doll, “finger bracelet” to describe a ring, “bottle match” to describe a cigarette lighter, and so on (Patterson & Linden, 1981, p. 146). If Terrace’s analysis of the “water bird” example is applied to the examples just mentioned, it does not hold. Surely Koko did not first see an elephant and then a baby before signing “elephant baby”--or a bottle and a match before signing “bottle match.” Can Apes Create Sentences? The early ape language studies offered little proof that apes could combine symbols into grammatically ordered sentences. Apes strung together various signs, but the sequences were often random and repetitious. Nim’s series of sixteen signs is a case in point: “give orange me give eat orange me eat orange give me eat orange give me you” (Terrace et al., 1979, p. 895). More recent studies with bonobos at the Language Research Center in Atlanta have broken new ground. Kanzi, a bonobo trained by Savage-Rumbaugh, seems to understand simple grammatical rules about word order. For instance, Kanzi learned that in twoword utterances action precedes object, an ordering also used by human children at the two-word stage. In a major article reporting on their research, Greenfield and Savage-Rumbaugh (1990) wrote that Kanzi rarely “repeated himself or formed combinations that were semantically unrelated” (p. 556). More important, Kanzi began on his own to create certain patterns that may not exist in English but can be found among deaf children and in other human languages. For example, Kanzi used his own rules when combining action symbols. Symbols that involved an invitation to play, such as “chase,” would appear first; symbols that indicated what was to be done during play (“hide”) would appear second. Kanzi also created his own rules when combining gestures and symbols. He would use the symbol first and then gesture, a practice often followed by young deaf children (Greenfield & Savage-Rumbaugh, 1990, p. 560). In a later study, Kanzi’s abilities to understand spoken language were shown to be similar to those of a 2-1/2-year-old human, Alia. Rumbaugh (1995) reported that “Kanzi’s comprehension of over 600 novel sentences of request was very comparable to Alia’s; both complied with the requests without assistance on approximately 70% of the sentences” (p. 722). A recent monograph provided examples of the kinds of sentences both Kanzi and Alia were able to understand: For example, the word ball occurred in 76 different sentences, including such different requests as “Put the leaves in your ball,” “Show me the ball that’s on TV,” “Vacuum your ball,” and “Go do ball slapping with Liz.” Overall, 144 different content words, many of which were presented in ways that required syntactic parsing for a proper response (such as “Knife your ball” vs. “Put the knife in the hat”), were utilized in the study. (Savage-Rumbaugh et al., 2000, pp. 101-102) The researchers concluded that neither Kanzi nor Alia could have demonstrated understanding of such requests without comprehending syntactical relationships among the words in a sentence. What Are the Implications of the Ape Language Studies? Kanzi’s linguistic abilities are so impressive that they may help us understand how humans came to acquire language. Pointing out that 99% of our genetic material is held in common with the chimpanzees, Greenfield and Savage-Rumbaugh (1990) have suggested that something of the “evolutionary root of human language” can be found in the “linguistic abilities of the great apes” (p. 540). Noting that apes’ brains are similar to those of our human ancestors, Leakey and Lewin (1992) argued that in ape brains “the cognitive foundations on which human language could be built are already present” (p. 244). The suggestion that there is a continuity in the linguistic abilities of apes and humans has created much controversy. Linguist Noam Chomsky has strongly asserted that language is a unique human characteristic (Booth, 1990). Terrace has continued to be skeptical of the claims made for the apes, as have Petitto and Bever, coauthors of the 1979 article that caused such skepticism earlier (Gibbons, 1991). Recently, neurobiologists have made discoveries that may cause even the skeptics to take notice. Ongoing studies at the Yerkes Primate Research Center have revealed remarkable similarities in the brains of chimpanzees and humans. Through brain scans of live chimpanzees, researchers have found that, as with humans, “the language-controlling PT [planum temporale] is larger on the left side of the chimps’ brain than on the right. But it is not lateralized in monkeys, which are less closely related to humans than apes are” (Begley, 1998, p. 57). Although the ape language studies continue to generate controversy, researchers have shown over the past 30 years that the gap between the linguistic abilities of apes and humans is far less dramatic than was once believed. References Begley, S. (1998, January 19). Aping language. Newsweek, 131, 56-58. Booth, W. (1990, October 29). Monkeying with language: Is chimp using words or merely aping handlers? The Washington Post, p. A3. Eckholm, E. (1985, June 25). Kanzi the chimp: A life in science. The New York Times, pp. C1, C3. Fouts, R. (1997). Next of kin: What chimpanzees have taught me about who we are. New York: William Morrow. Gibbons, A. (1991). Déjà vu all over again: Chimp-language wars. Science, 251, 1561-1562. Greenfield, P. M., & Savage-Rumbaugh, E. S. (1990). Grammatical combination in Pan paniscus: Processes of learning and invention in the evolution and development of language. In S. T. Parker & K. R. Gibson (Eds.), “Language” and intelligence in monkeys and apes: Comparative developmental perspectives (pp. 540-578). Cambridge: Cambridge University Press. Leakey, R., & Lewin, R. (1992). Origins reconsidered: In search of what makes us human. New York: Doubleday. O’Sullivan, C., & Yeager, C. P. (1989). Communicative context and linguistic competence: The effect of social setting on a chimpanzee’s conversational skill. In R. A. Gardner, B. T. Gardner, & T. E. Van Cantfort (Eds.), Teaching sign language to chimpanzees (pp. 269-279). Albany: SUNY Press. Patterson, F., & Linden, E. (1981). The education of Koko. New York: Holt, Rinehart & Winston. Rumbaugh, D. (1995). Primate language and cognition: Common ground. Social Research, 62, 711-730. Savage-Rumbaugh, E. S., Murphy, J. S., Sevcik, R. A., Brakke, K. E., Williams, S. L., Rumbaugh, D. M., et al. (2000). Language comprehension in ape and child: Monograph. Atlanta, GA: Language Research Center. Retrieved January 6, 2000, from the Language Research Center Web site: http:// www.gsu.edu/~wwwlrc/monograph.html Terrace, H. S., Petitto, L. A., Sanders, R. J., & Bever, T. G. (1979). Can an ape create a sentence? Science, 206, 891-902.

APA Research Paper :Apes and Language

APA Research Paper (Shaw) Apes and Language: A Review of the Literature Over the past 30 years, researchers have demonstrated that...