The development of management practices and management education across time: the case of the people's Republic of China.

Smith, P.C. ; Vozikis, George S. ; Pan, David W. 等

INTRODUCTION

The Chinese economy has moved from the edge of collapse in 1978 to a seventh place in the world in 1998, measured by GDP (Chinese State Bureau of Statistics, 1998). Scholars, in viewing an economy with such noticeable achievements during the past twenty years, often question how such progress has been achieved and whether lessons can be drawn from these achievements.

China today is the most populous nation in the world, and is still for all practical purposes under the control of Communism Party. Although the Party is advocating its ideological belief much less than in the past and in a slightly modified version, it still carries out its intent through directives to its members who constitute the overwhelming majority of Chinese government officials, as well as top management personnel at almost every segment of the nation's economy. This totalitarian system has effectively micromanaged the nation's economy through numerous economic turns during the past twenty years, arguably in a very inefficient way compared to a free-market economy.

History has a tendency to repeat itself, and there is no exception in China's case. During the Tang Dynasty era of the 7th and 8th centuries, China's economy was estimated to account for one-third of the world's economy and its trade partners included the Roman empire linked by the "Silk Road" on land, and the east coast of central Africa by sea. However, China gradually became a country of self-proclaimed "Central Kingdom" with a closed door to the rest of world. This has led many scholars both Western and Chinese, to conclude that the philosophical policy of isolationism that prevailed for ten centuries until the eighteenth century prevented an industrial revolution in China, in spite of the fact that China had plenty of capital, labor, technology, and infrastructure during this period.

During more recent times, at the end of Mao's era in the late 1970s, the People's Republic of China lacked most of the elements necessary for economic development. This situation was further exacerbated by the chaos of the Cultural Revolution brought by Mao's extreme policies late in his life. At his death, China's centralized government still in a totalitarian format, offered a more pragmatic leader, Deng Xiaoping, after the Party's 3rd plenary of the 11th Congress, the opportunity to effectively change the course of China. Deng's "liberation of thought and seeking truth through practice" started to trickle down the national management system in the form of Party directives. China poised to make a concerted effort to change its course, and abandoned the philosophical isolationism that clouded the prospects for progress. Deng forced the adoption of an Open Door policy which, in spite of strong resistance by conservatives, was arduously advocated by Deng after his only official visit to the United States immediately after the establishment of diplomatic relations between the two countries in January, 1979. These policies were deemed ideologically very radical at that time because they were viewed as advancing capitalism (Solomon & Ding, 1993).

Since then, China's economy has primarily been through two periods: Consolidation and Reform (1980-1990) and Furtherance of Reform and Growth (1991-to date). The first period was mired by a mixture of ideological confusion between the traditional planning economy and the modern concept of market economy introduced by the importation of advanced western technology and manufacturing process. The economic conflict between the market demand and the traditional political corruption led to the 1989 Tiananmen Square massacre, prompting the Chinese economy to significantly slow down until the spring 1991.

The second period started in the early nineties by Deng Xiaoping's visit to numerous Special Economic Zones in southern China during which he issued various directives to further the policies of the Open Door policy and economic reform. During the first few years of this period, China's economic growth exploded at a rate of about 12% annually, primarily due to the boom of the exporting industries. However, because of a comparable increase in inflation, the Chinese government was forced to adopt a policy called "Soft Landing," and today the Chinese economy is estimated to maintain a questionable 8% growth rate with a noticeable deflation nationwide on its economy partially due to the economic recession of most of its neighboring nations. In the near future, an estimated 20 million Chinese workers will be de facto laid off due to the inevitable restructuring of state enterprises. In order to maintain a sustainable growth of the economy, the Chinese government has made a major policy shift from an export-dependent economy to a domestic-consumer economy (Documentation Research Bureau of the Central Committee, 1998).

The purpose of this paper is to examine the present state of affairs in the People's Republic of China (PRC) in terms of management process, management practices and especially management education, with the help of a comprehensive management development model developed by the authors, and drawn from the literature. This model will be further supplemented with the analysis and comparison of industry management practices and the management education curriculum in the PRC "business" schools during the early 1980s with the current practices and management curricula. It is hoped that an inference will be drawn for the importance of the development of management process and education in a developing nation such as China.

LITERATURE REVIEW ON COMPARATIVE MANAGEMENT

As the world enters the era of global economy, the field of cross-cultural or comparative management is also rapidly developing. In an early pioneering work, Harbison and Myers (1959) recognized that different people in different cultures view management differently. Some believe that it merely is a series of functions, some regard it as an art, while others view it as a social class or elite representing the intelligentsia. For the workers, management is identified with their boss who has the authority to fire them.

When we cross the limited borders of a specific society and we view management in a wide, international perspective new economic, social and political dimensions suddenly enter the picture. While advocating that "management, indeed, is all these things and perhaps more..." Harbison and Myers tried to view management from several angles, notably: first, as an economic resource; second, as a system of authority; and third, as a class or elite. With these concepts they applied a wide-ranging, international comparative analysis and concluded that the essential prerequisite of industrialization is definitely a high-level manpower development, which must be an integral part of planning for general economic growth. The underdeveloped countries should therefore regard education as an investment rather than as a "consumer" service, and they ought to create a shift in the underlying mentality of the educational institutions toward the generation and development of high-level technical and managerial resources representing an increase in social investment, in contrast to a mere increase in social service.

In another seminal work, Farmer and Richman (1965) introduced the significant notion that traditional management theory has serious drawbacks in terms of both orientation and applicability to different types of cultures and economies. All schools of Management, Universalism, Process, Behavioralism, Decision Theory, etc., make the fundamentally questionable assumption, that external factors, (the Macroenvironment as the authors call it, in contrast to the firm's Microenvironment,) is constant and given, with the firm fixed in space and time. Management however, is not a "black box" and consequently managerial effectiveness cannot be achieved with a universal recipe. In addition, Farmer and Richman recognized the constant and close interdependence that links managerial effectiveness, productive efficiency, and environmental constraints. These external environmental constraints are classified as educational, legal-political, sociocultural, and economic. They have a direct impact on the elements of the management process, which in turn affect and are affected by the management style and managerial effectiveness. Finally, the latter will determine the firm's efficiency, which will determine the system's efficiency as a whole. Management is therefore, the dependent variable around which the economic environment revolves. The Farmer and Richman comparative management model is depicted in Exhibit 1.

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Negandhi and Prasad (1971) on the other hand, argued that if the environmental and cultural factors were the main determinants of management practices and effectiveness, one would expect close similarities in the management practices of two comparable industrial firms. Their model identifies basically the same elements of the external environment as Farmer and Richman, but recognizes management philosophy as an independent variable. Exhibit 2 illustrates the Negandhi-Prasad model (Negandhi & Prasad, 1971, p. 23).

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Other authors, such as Kelley and Worthley (1981) isolated the role of culture in the formation of managerial attitudes, while England (1978) considered the personal value system to be a relatively permanent framework, which is likely to influence the general nature of a manager's behavior. England concluded that in national samples of managers in the U.S., Japan, Korea, India, and Australia:

There are large individual differences in personal values within each group. Personal value systems are like most other human characteristics, and individuals differ greatly with respect to them.

Personal value systems of managers are relatively stable and do not change rapidly.

Personal value systems of managers are related to and/or influence the way managers behave on the job.

Personal value systems of managers are related to career success. (Ibid.)

Pizam and Reichel (1977), in a study of Israeli managers of Western descent and Israeli managers of Oriental descent found that differences in managerial attitudes because of culture persist, even with second generation of managers from tradition-oriented societies. Kassem (1977) makes an additional important contribution to comparative management by observing that different cultures single out different aspects of organizations and their management for special attention. He further notes that whereas American organizational scientists have taken a human-process approach to the study of management and organization theory, their European counterparts have opted for a technostructural one.

All of the aforementioned studies, as well as most of other related research (England and Lee, 1974; Sekaran, 1981; Harari and Zeira, 1978; Roberts, 1970; Evans, 1975; etc.) concentrate on the role of culture as an external, independent variable. Managerial values, attitudes and philosophy are treated either as a dependent variable or as an independent variable as in the Negandhi and Prasad's model. Management practices however are always a dependent variable.

COMPARATIVE MANAGEMENT AND MANAGEMENT EDUCATION

Learning has been defined as the detection and correction of error (Argyris 1980, p. 291). Learning that results in the detection and correction of error without a change in the underlying assumptions, values, attitudes or givens can be defined as single-loop learning, analogous to the function of a house thermostat. The thermostat detects whether actual performance (the actual temperature of a room) is comparable to the planned performance (the temperature setting.) If a gap exists between the two, the error is detected and corrected with the thermostat shutting down the furnace or turning it on.

Double-loop learning occurs when the detection and correction of error requires changes in the underlying assumptions, values, attitudes or givens of the system. Using the same example, the thermostat the necessary adjustments and changes would be made with following questions: Why is the room temperature set at 70 degrees? Why does it measure the temperature? Why have the thermostat all together? (Ibid.)

Another related theory, is Argyris and Schon's (1978) distinction between espoused theories and theories-in-use. Espoused theories are the underlying assumptions, values, attitudes, and philosophy that people hold in their heads mainly as a result of culture. On the other hand, theories-in-use are the theories that people actually use to produce observable behavior, consciously or subconsciously.

The discussion above leads us to the conclusion that culture as an independent variable in a comparative management model, constitutes in a very broad situational sense an espoused theory and single-loop learning. Less developed countries in dire need of economic development must use a comparative management model that generates double-loop learning to break the grip of traditional culture, which might violate the prevalent view on efficiency, on management practices, and on theories-in-use. In order to accomplish this, a feedback mechanism is needed to be included in the model, as the ultimate characteristic of double-loop learning that will initiate changes, unfreeze assumptions, values, and philosophies, and refreeze new ones. It is strongly suggested by the authors that these changes can only be brought about through management education, which in essence is a feedback mechanism linking the consequences of the theories in-use to the environment, with the prevailing espoused theories of a national system.

The weaknesses of the comparative management models discussed in the previous section can be summarized as follows:

They did not place appropriate emphasis upon management education as a change-initiating variable.

Management education is not an independent variable, but a result of the consequences of the theories-in-use, i.e. management practices.

There was almost a complete lack of the concept of feedback as a mechanism that creates double-loop learning, especially true for countries that are anxious to bring economic development and progress rapidly and sustainably, as in the case of the PRC.

Management education has to be recognized as the sine qua non condition, and needs to be integrated as such, in any comparative management model that seeks the "unfreezing" of well-entrenched philosophies and values in order to create economic reform and maintain sustainable economic growth. And finally,

All elements of any comparative management model should be considered as both independent and dependent variables including culture, which has been the ultimate independent variable throughout the literature.

A comprehensive comparative management education model is proposed in Exhibit 3. This model attempts to end the debate as to whether management philosophy is a dependent or independent variable, the "apple of contention" between the Farmer-Richman and the Negandhi-Prasad models.

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The management practices and functions are built upon the prevalent corresponding management philosophy and attitudes toward the business stakeholders. These are subsequently derived from the environmental factors comprised of socioeconomic, educational, political and legal determinants of cultural and traditional endowments. The product of this process in turn will determine the nature and the degree of management effectiveness, which in turn will establish the definition of an enterprise's organizational effectiveness. The aggregate effectiveness of all firms will ascertain whether the total business system in a nation is effective and efficient as to the predetermined definition of management effectiveness. The business system's effectiveness and efficiency or the lack thereof, will also reinforce or will make the necessary adjustments and changes in the environmental factors of culture and tradition, as well as reinforce or reorient the objectives of management education provided by educational business institutions for future managers. Through a process of attrition, this reinforcement or in case of an overall business system deficiency the change in the orientation of management education, will affect the prevailing management philosophy and attitudes toward the business firm's stakeholders, i.e., employees, consumers, suppliers, stockholders, government, and community. Thus, the loop is completed, and double-loop learning takes place with the corresponding changes in the underlying national values and attitudes.

The model advanced in this paper is the result of ex post facto field research that was conducted in the People's Republic of China in the early 80s and recently revisited to test its validity. Exploratory field research has three basic purposes: to discover significant variables in the field situation, to discover relationships among variables, and to establish a basis for future rigorous hypothesis testing (Kerlinger, 1973, p. 406.) It is the belief of the authors that all these objectives have been achieved in this study. Ex ante field research is almost impossible in the PRC, because Chinese authorities have insisted that Western scholars be attached to Chinese institutes or universities, work "collegially" with Chinese scholars, avoid controversial subjects, and pursue the "construction of a social-economic system with unique Chinese characteristics." Nevertheless, this study, relying on primary and secondary sources, attempts to reinforce the validity of the DoubleLoop Comparative Management Model. One caveat that should be strongly advanced is the fact that the PRC is a vast country that has changed dramatically in the past twenty years in all aspects. Private enterprises have grown rapidly from nonexistence when this study was initiated to over 960,000 units employing 13.5 people in 1998. This increase represents productivity estimates to account for 15% to one-third of the country's GDP. The Chinese government has finally recognized the indispensable role of private enterprises in the latest revised Constitution (Johnson, 1999). The question that still remains is how far this trend will be allowed to continue under the control of the country's Communist Party.

The sections below will elaborate on each factor and variable included in the Double-Loop Comparative Management Model presented in this paper, as they pertain to China.

THE ENVIRONMENTAL FACTORS IN CHINA

China's geographical boundaries were set early in Chinese history, around the second century AD. Its land mass is approximately the same as that of the United States, but with two thirds less farmable land. The Chinese population increased significantly between 1650 and 1750 doubling in size from 150 million to 300 million and doubling again by 1950. During the 1992 census, the second comprehensive census for China ever, the population exceeded 1.19 billion. The Chinese traditional view that population was strength, faded as the numbers of people skyrocketed. Advances in agriculture have freed millions of migrants from rural areas to the cities, and China now has about 74% population classified as farmers as compared to 90% twenty years ago (State Bureau of Statistics, 1998). For instance, it is estimated that in Beijing there is a constant number of about two millions of transients.

Young Chinese today are more individualistic and less willing to accept and obey authority. They do not seem to have the collective spirit of their parents and grandparents, and are more inclined to pursue Western personal values and lifestyles introduced through the Open Door policy. Chinese TV offers ordinary Chinese programs ranging from American Funniest Home Videos to regular NBA games.

In education a whole new avenue of learning has opened through private vocational and elite schools and joint MBA business programs. Night courses, TV universities, and self-study programs are just a few examples of China's educational experiments in recent years, undoubtedly reflecting a reaction from the past years of turmoil when educated individuals were treated with suspicion and educational content was defined by the traditional Communism ideology. However, college education is still a privilege because only about 25 percent of those who will sit for China's National College Entrance Exams are estimated to enter college in 1999. Regardless, this is considered a significant improvement from twenty years ago, when only 3 percent entered college in 1979.

Politically, the leaders of China have changed their brand of ideology several times during the past twenty years. The early "scientific socialism" was a direct legacy of the teachings of Marx, Engels, Lenin, and Mao Ze Dong, while more recently a relatively new version claims that "Socialism is a process of development". China is still searching for a firm political ideology and as a result its economic development is inevitably unbalanced and irregular, mainly because there is no precedent to follow, and because the government feels that it needs to explore whatever might fit Chinese unique characteristics. Based upon this presumption, the late Chinese leader Deng extended his "cat-catches-mouse" theory to a new one:

"Whether we have a market economy or a planned economy, it is only a tool to improve productivity."

Under this directive the Chinese economy endorsed a policy of "Connecting to International Tracks" in all aspects of commercial trade functions, without however attempting to apply the same policy in the political arena.

China is also in the process of building its legal system, and many laws have been promulgated bringing regulations especially to the economic sector. But there is an obvious absence of a comprehensive legal framework, mainly because the Chinese Civil Code has been drafted and redrafted five times. It is a mixture of the French code, German laws, Anglo-Saxon procedures, etc., that make a simple solution to an issue almost impossible. Chinese legal experts, with assistance of western scholars including American scholars, are studying foreign laws because they do realize that the construction of legal infrastructure and synchronization of Chinese laws and especially trade laws are essential for China's final "acceptability" into the World Trade Organization, in terms of international trade and direct foreign investment (Qiu, 1983). Finally, Chinese President Jiang Zemin signed an agreement with U.S. President Bill Clinton in 1998 that will enable American legal experts to provide programs that will help train Chinese lawyers, prosecutors, and judges, and hopefully hasten the Chinese government's plans to complete its basic legal infrastructure by the year 2010 (Documentation Research Bureau of Central Committee, 1998).

MANAGEMENT PHILOSOPHY IN CHINA

China's Management philosophy is dominated by the ideas and teachings of its leaders especially as reflected in Deng's thoughts and dicta regarding productivity improvement. However, along with the importation of technology and trade promotion also came Western management theories and values, which created a dilemma between socialism and free enterprise. As far as the political status quo was concerned, the socialist model had worked quite well in terms of management effectiveness even though admittedly at the expense of efficiency. However, in today's China very few people would still argue for the merits of a pure socialist ideological system unless they are the direct beneficiaries of political promotions and perks in a governmental hierarchy.

Even the Chinese central government had to openly question the productivity of state-owned enterprises and has initiated consolidation mergers among state-owned firms and government agencies eliminating about 20 million jobs nationwide. The government's main goal now is to establish the competitiveness of state-owned enterprises by improving efficiency through consolidation and joint ventures with privately owned firms, which have set a higher bar in terms of efficiency and product competitiveness. All these developments have increased the pressure and once again raised the critical fundamental question of whether Chinese business education can prepare and/or retrain individuals with updated and marketable skills necessary to function in the ever-changing and diverse business environment of market economy.

The recent wave of utilization of foreign funds and technology including those from Hong Kong and Taiwan, and the honeymoon period of economic cooperation with Western firms which started from the Chinese special economic zones in Shenzhen, Shantou, Zhuhai, and Xiamen have diminished since its second peak around 1994-96. After being put into the direct test of "cut-throat competition" with joint ventures, private firms and sole foreign investments in selected sectors, the state-owned enterprises which are primarily managed still under the traditional ideological socialist philosophy, have proven once again their vulnerability in terms of market share and profit margins once they operated without governmental policy protection.

MANAGEMENT PRACTICES IN CHINA

As mentioned earlier, the prevalent management practices in the People's Republic of China are slowly changing from the Marxist slogan "From each according to his ability, to each according to his need," to the idea of "From each according to his ability, to each according to his work." Putting into simple words, "Allowing someone to get rich first." (Deng Xiaoping, 1981). That is to say, while the goal is for society as a whole to get rich, those who work harder will get rich first. As a result, people from every sector of Chinese state-controlled entities have been more or less involved in trade and as a consequence, many incidents of armed protection for smugglers by the People's Liberation Army or Armed Police Units, as well as corruption by custom officials or within a whole government agency have been reported even at very high governmental levels. For example, the Chinese government recently executed a former deputy governor of Jiangxi Province and convicted a deputy chairman of the state People's Congress with a death sentence for corruption involving millions of dollars (People's Daily, 2000). Another case involving about 700 government officials from Fujian Province involving an equivalent of about 10 billion dollars smuggling of variety goods is pending (duoweinews.com, 2000). Because of this kind of incidents, the Chinese central government has decided to order all military, judicial, and custom agencies to liquidate their involvement in business activities (People's Daily, 1998).

Because demand for goods and services still remains very high in China, a variety of experimentation in management practices is taking place in China today more than at any other time in recent history. The perennial dilemma between the methods employed in a market economy vs. the ones used by a planned economy is further accentuated by the fact that young people in China today have different heroes than their predecessors, and they are becoming challengers and synthesizers of old and new ideas. The old and new ideas originate from the various ideological movements that have swept China since 1949: first the cooperative movement, then the communization and the Great Leap Forward, then the Cultural Revolution, and most recently the Four Modernizations.

Regardless of ideological movement, China still seriously lacks a comprehensive accounting and legal infrastructure to base sound and cohesive management practices and control. The Chinese central government has only recently installed a managerial system to directly inspect the accountability of major projects funded by state money. One highway project had to be closed for major repairs only six month after its completion because of corruption and the repair work added 45 percent in cost overcharges above the original budget.

Additionally, the Chinese government has gradually allowed foreign capital flow into those service sectors that used not to be open to foreign investment, and as a consequence, foreign insurance, investment, financing and banking companies have opened offices in China. During President Clinton's visit to China Chinese officials sought help to draft the blueprint for a financial infrastructure primarily targeting residential housing. It seems that the Chinese government is finally realizing that social stability is closely tied to the private right of long-term land use or the private right to home "possession", albeit not land ownership, since, according to communist theory, all production resources including land are owned by the people as a whole. This anachronism has already created a backlash and recent demonstrations when some unpaid workers demanded to take away their land share and move on because their state enterprise would no longer provide them a job.

Although many jobs are still assigned by the government, there has been gradually a growing labor market system since the late 1980s, primarily for high-level managers with advanced degrees. Students graduating from universities with a foreign language proficiency and/or exposure to western management methods or technical skills appear to command a strong demand from a variety of industries. Although, the existence of the term "jobless" is still debated about its appropriateness in theory by Party theorists and economic scholars, the number of "displaced" or "off-position" workers has exploded in recent years, because employment is no longer guaranteed by the government despite a pledge to that effect in the Chinese Constitution.

The experience from joint ventures and foreign investment since the early 1980s has made the Chinese government to finally realize that the Chinese way is not the only way to productivity and economic development, and Chinese policy makers have learned to appreciate so-called capitalist management theories and techniques. Although Chinese financial managers still undertake the budgeting, capital budgeting, and the overall planning for a firm on how much will be produced, and how much will be charged for it, a market adjustment mechanism has been introduced into the system. Market demand has been finally recognized as an incentive to production, and the firms that have adopted adjustments based on the realities of the market have prevailed profit-wise, over those that resisted adopting them. However, the central government often can still intervene to halt production when a firm is considered to lack efficiency or competitiveness, or provide favorable treatment to encourage export businesses, regardless of the firm's level of competitiveness.

Overall however, the role of the central government's State Planning Commission has been limited to those industry sectors considered to be of national interest such as transportation, banking, communication, energy, aerospace, and national defense industries. The Chinese government has promised gradually to also open up its banking, energy, and communication industries, when it signs agreements with World Trade Organization (WTO) nations.

Finally, in the area of joint ventures, management practices were quite rigid, as was the first joint venture law (Qiu, 1983). Nowadays however, everything is subject to negotiations, making agreements on participation percentage and management practices quite flexible, depending on the benefits to the parties involved. Clearly, at this stage, industrial enterprises in China are far from having reached true independence in term of management practices, as in western countries. These rigidities however may be disappearing as the Chinese leadership "feels" its way forward. How far it will go in this direction still remains to be seen.

MANAGEMENT EFFECTIVENESS

There are different opinions concerning the definition of managerial effectiveness. Steers (1977, p. 135), views managerial effectiveness in terms of the attainment of operative and operational goals, with the manager's responsibility being to ensure that maximum effort is directed toward these goals, whatever these may be.

In China, while there is some match between skills and job requirements nowadays, the personal loyalty still shadows management training and promotion. Although the firm's profitability has been emphasized as outlined above, it happens primarily not from market forces, but from the firm's employees who have started to demand better pay and bonuses. In most Chinese firms the combined total from bonuses and subsidies often exceeds the actual fixed salary designated by the government's pay schedule.

Requirements for a managerial position are increasingly based more on educational and industrial skills rather than traditional experience. In the past, the managers who ran China's factories came up through the ranks of workers without formal training and the conventional industrial management structure that employs a director and deputy directors, was simply the party's secretary assigned to that firm. Nowadays, certain education and formal training becomes a prerequisite to be considered for further promotion in the management hierarchy. The government often cites the increased number of personnel at management level with advanced academic degrees to showcase its achievements compared to 20 years ago, before the adoption of the Open Door policy.

ENTERPRISE EFFECTIVENESS

There are four sets of effectiveness-related variables: (1) organizational characteristics; (2) environmental characteristics; (3) employee characteristics; and (4) managerial policies and practices (Steers, 1977, p. 178.) In the early 1980s, unemployment was considered by Chinese officials as the unique problem of those capitalist societies, because it is generally and officially considered a more significant cost item from a socialist society's point of view, than inefficiency. In China at the time, workers in state-run enterprises received fixed salaries and other benefits based upon what they did regardless of their technical qualifications, but not upon the company's performance in the market. Soon thereafter, the Workers Daily, the official newspaper of the state-controlled trade unions, criticized the existing national system and called for salaries and rewards to be linked to output and revenues, not just costs, in order to boost industrial efficiency (Oka, 1983c, p. 2.). As this system slowly changed, most state-run enterprises still survived with money borrowed from state banks. The situation really started to change in the mid 1990s when the government allowed insolvent or inefficient state-run firms to go bankrupt or acquired by other efficient firms.

This preoccupation with only the environmental characteristics of the concept of organizational effectiveness is no longer perpetuated. Millions of workers are unemployed or underemployed due to the change of government policies in all industry sectors. The Chinese government is determined to restructure 3,000 major state-run firms in order to improve enterprise effectiveness and make products competitive, and China's formal entry into the WTO is estimated that it will cause two-thirds of state run enterprises to go out of business.

China still needs to do a lot in readjusting and restructuring its economy and enterprise effectiveness. Chinese managers in the past used to have their firm's production output tied to their chance of promotion, but now the majority of Chinese managers have become aware of the market forces and the importance of enterprise effectiveness.

SYSTEM EFFICIENCY

While China concedes that it is desperately short of skilled people to help achieve economic modernization, the economic system still pays more attention to structure resulting from political dogma, rather than strategy and technology. The experimentation with "special economic zones" with promises of cheap labor, cheap land, low taxes, and the joint ventures between foreign investors and Chinese enterprises, have proven a success. The success of the economic zones however, have not been easily duplicated in other parts of China because of the Chinese system's layers of bureaucrats with overlapping authority and little business experience. In some instance, more than 300 government agency seal stamps must be sought before a business can start operations.

Another sign of the acknowledgment of the system's inefficiency is the fact that China's International Trust and Investment Corporation, the body that handles foreign investment inside China, was empowered recently to make investments abroad. If China does invest abroad, it will not be because it lacks natural resources, but because these resources need managerial and technological skills, which the Chinese system does not possess. Thus, investing abroad by China, an underdeveloped, cash-poor country, means not only securing a long-term supply of natural resources, but also and most importantly, gaining access to advanced technology, management, and training (O'Callaghan, 1983.)

The inefficiency of the rigid, monolithic ideological system that prevented living standards from rising and banned free enterprise in the early 1980s, has given way to a new system of an economy liberalized enough to awaken consumer appetites and encourage self-employment and some semblance of private business. After years of debate on what exactly is "Chinese socialism with unique characteristics", the Chinese leaders are still not quite sure which way to go. The government gradually tested its way to open the markets in the following order: raw materials, steel and petroleum, consumer-goods, aerospace, auto, insurance, communication, banking, and very recently the mortgage finance industry in order to stimulate domestic consumption and sustain economic growth.

China's new system also has been labeled "the responsibility system", as it has aimed to stimulate production by offering rewards and incentives, encouraging free market trading and allowing private ownership and self-employment. But as the economy grew, a new group of Chinese businesspeople has emerged through this process. They initially seemed to become richer than their countrymen overnight, and they did not know how to position themselves in society. They later realized that management knowledge is the key to collaborate or compete with foreign investors in the international market. Now they realize that the best key to success is to have their firms staffed by the best managers, scholars, and scientists nationwide. Some managers are offered with a salary of $12,000 a year to "jump over the ditch" to private firms, as compared to the mediocre averaged manager's salary of $1,000 a year in most state-run firms. Because of this huge difference in incentives, some CEOs in the most successful state-run firms or agencies have been caught for corruption, embezzlement or smuggling. The reforms on the concept of managerial and organizational effectiveness are still an on-going process which has created a new Chinese "style" of socialist system liberating productivity contained for a long time, but also creating a socioeconomic system of widespread corruption and crimes because of the sudden emergence of huge differences between the rich and the poor under the never-openly-abandoned socialist ideology.

MANAGEMENT EDUCATION

Even though the Chinese government leaders know the importance of technical knowledge and skills successful managers should possess, they have been shifting back and forth several times since the early 1980s regarding who shall have the ultimate authority over a firm's operation: the Party secretary or the firm's manager? This paradox of duality in management system has placed a great amount of strain on the nation's managerial capacity, because the compatibility and rapport between these two individuals often determines whether a product can respond to rapid changes in the marketplace, thereby ultimately determining the survival of firm.

The same paradox holds true for the administration of Chinese universities. Branch party secretaries oversee Chinese universities in the form of a party committee and have stifled the enthusiasm and creativity of university faculty or zhishi fenzi (intellectuals) particularly in the areas of social sciences, which include business management. Although the Party has declared that intellectuals are the crucial element of proletariat and a part of the leading social classes, most of them, after having experienced years of purges and precarious existence, are still unable or unwilling to separate independent thinking from the political influence or pressure in their daily activities.

Even though Chinese have a tradition of respect for knowledge and those who impart it such as intellectuals and teachers, this tradition was officially discarded in China for about 20 years before the early 1980s when manual labor was extolled over educational endeavors. Manual labor was considered as a core, while education was labeled as peripheral to the core according to Mao Zedong's understanding of the essence of Marxism at that time, even though he had once declared that "the more knowledge one has, the more the tendency to become reactionary". This directive fit the psychology of most party's leaders nicely because most of them had no formal college education, including Chairman Mao who only had the equivalent of two years of college education. Nowadays, as mentioned earlier, Marxism is viewed in China as a "developmental science" and the contributions of "advanced" theories are allowed to add to the "umbrella of the Marxist theoretical system". This oxymoron of a doctrine has to a large extent remained in place and consequently restrained the improvement of management education. In China, officials that are younger, better-educated and true professionals can be promoted to streamline the government bureaucracy, eliminate overstaffing, and boost efficiency for China's modernization drive, only by being patient and through attrition over the years.

Despite the constant official calls for better treatment of intellectuals, and despite the official acknowledgment that without intellectuals China cannot achieve its economic goals, many government officials still believe that intellectuals should be used for their talent, yet not fully trusted for their thoughts. As a result, hundreds of thousands of Chinese intellectuals sought intellectual freedom elsewhere, primarily in the United States. Their achievements and innovations accomplished outside China have forced the Chinese government to take action to stem "this brain drain", and bankrolled by Hong Kong tycoons, has recently launched the "Yangzi River Scholar Program" that offers endowed professorships with a subsidy of $12,000 a year for 500 positions across China. Another ambitious plan of tripling current faculty's salaries has been under way at Qinghua and Beijing Universities since 1999 showing the government's emergency concern over "a widened gap between generations of scientists and scholars" (Documentation Research Bureau of Central Committee, 1998). Unfortunately, almost all the aforementioned measures to remedy the sad state of Chinese educators are in the areas of natural, technological, or medical sciences, and very few are made available in the area of social sciences and specifically Business Management education which can play a fundamental role in changing the problems with the system's social policies and inefficiencies.

In 1998, China's GDP stood at $.97 trillion. To reach its goal of $2.25 trillion GDP by the year 2010-2015, China must sustain a rate of 6 to 8 percent annual growth from now on. To accomplish this, many millions of qualified managers and technicians are needed, and the Chinese Ministry of Education announced in 1999 numerous measures to improve higher education and vocational education to accommodate this spectacular economic growth needs such as:

Investment in higher education will continue to increase, with a focused investment of 100 million Yuan for a period of five years to each of the ten leading universities.

Higher education has been diversified in a more flexible way with training at three levels. The lower level is equivalent to the two-year junior college in the United States or Japan's short-term universities. The middle level is for training technicians, and the higher level for engineers, scientists, professors and doctors. Also in existence are "night class" universities, correspondence schools, and TV universities.

Classes and degrees from higher learning business schools and majors will become the ticket to land a better paying job in the labor market. The management of institutes of higher learning have been significantly improved by appointing scholars to be the university presidents with authority in deciding school affairs, and gearing education toward market needs, rather than political functionaries.

Reforms have been made in enrollment, graduate placement, student scholarships based on need and/or merit, course content, and teaching materials and methods, all geared toward the country's reforms in the labor system, and management practices.

SELECTION OF STUDENTS

Students are selected to enter an institution of higher learning by their scores in the National Standard Qualification Exam for College Entrance administered by the Ministry of Education once a year. This exam will be offered now twice a year in order to give an additional chance to young people who might have failed the first time for a variety of reasons. This exam is highly competitive and students for universities at different prestige levels are primarily selected based on their composite score. The best universities or colleges classified as state key universities always have the first pick from the pool of applicants across the nation, then the regional or provincial key universities and "ordinary" national universities, down to the local area or city vocational colleges. In the late 1970s and early 1980s, only 3-5 percent of qualified applicants were selected and had a chance for a postsecondary education, but since then this number has been gradually improved to an estimated 25% in 1999.

The virtual elimination of formal education during the Cultural Revolution and the many subsequent years of discrediting knowledge and skills have also created a tremendous backlogged demand for continuing education, for all those who feel that they are not equipped with what is necessary to advance in their jobs. In the recent governmental consolidation of functions and personnel, up to 46 percent of government employees either lost their position or were provided with financial incentives in order to advance their education.

Chinese government has also started to charge tuition at higher learning institutions since 1995, even at those specialized institutions in the areas of agriculture, forestry, natural resources exploration, and teacher colleges which until recently were deemed to be vital to the national economy and the absence of tuition constituted the incentive to attract prospective students. Still however, in case of students with special financial needs, universities will help them either through government subsidies or work-study programs, an idea copied recently from U.S. institutions.

SELECTION OF FACULTY

Traditionally, outstanding graduates were retained as faculty members upon graduation from their university. However over the years, this led to all the problems of inbreeding in academics, and nowadays inter-university exchange of graduates as faculty members has become the norm with a one-year nominal probationary period is still in place for all newly appointed faculty instructors. Faculty no longer enjoys the traditional life-long tenure, but instead a system of 1-5 year term appointment has been introduced. During these term appointments and according to points earned through the system, instructors are promoted through the ranks of assistant, associate and full professors. Those who are not reappointed are only paid a basic salary without the perks and benefits associated with the appointment to the faculty position.

PLACEMENT OF GRADUATES

Student placement to jobs was traditionally conducted according to the needs of particular industries as identified in the state plan, and according to their grades and major. However, if students excelled in their studies, they might be sought by different government units and their destiny would be the combination of bureaucratic power struggles through "Party directives" and their own ambition. Even though before graduation the students were given the opportunity to express their job choices and preference of employment location, and the school supposedly "considered" these requests, the final job decision rested with the government through the form of the "people's need, nation's interest, and the Party's directives." For example before 1990, ninety percent of the graduates of Beijing Foreign Trade Institute were appointed to the state offices of foreign economic relations and trade and their branches. The rest, usually top students were probably selected to teach, and appointed to other state colleges. Nowadays, government placement efforts depend on how a particular student's higher education had been funded, with only varying degrees of assistance to help a student find a job. The National Placement Informational Network for College Graduates has also been recently established to facilitate the process of "mutual selections" regarding job placement.

Overall, unlike the early 1980s, students with a business education are highly demanded now, and most of business graduates have landed a job with the major profitable state firms, joint ventures, or foreign investment firms and command the highest salaries because the labor market is gravitating toward the market forces rather than the Party's directives. However, in many areas of China the old practice of "Party directives" still remain prevalent.

MANAGEMENT EDUCATION OBJECTIVES

The birth of a true business management program in China was the launching in 1980 of the first National Center for Management Education at the Dalian Institute of Technology in Dalian jointly run by Sino-American scholars. Since then, numerous similar institutions have been established: The Guanhua College of Business Administration at Beijing University, the Sino-European Institute of Management in Shanghai, and the Tianjin University's Management Center, among others. The main objective of those management institutions and programs is to train the qualified business managers for the thousands of Chinese firms which will in turn play an important role for China's future economic development and ultimate well being for its people.

MANAGEMENT CURRICULUM

The emphasis on management educational training placed by today's Chinese educators is unprecedented. Chinese magnet institutions for foreign trade for example such as Suzhou College, are designed to provide training for foreign trade personnel and are funded by the Chinese government. Admission of students is highly selective, and students are chosen from the first "pick" from the pool of qualified applicants, before other non-key institutions are allowed to select. The proficiency in a foreign language is usually a plus for a decision of admission. Students, after completing their first year requirements in general education, will move into different specializations within the university. Exhibit 4 Business Management Curriculum Shuzhou College (Early 1980s) Business Economics Administrative and Management Theories Production/Operations Management Financial Management National Economic Planning Pricing Management Retail Administration Management Market Research and Decision-Making Personnel Management Accounting Statistics Economics

The coursework is conceived by faculty and presented to the Ministry supervising the particular college for approval. After approval, the course work is structured around homework assignments, examinations, and an internship with a real-life job situation. Grades are based on how well a student performs in all three aspects of management training.

A major requirement of all business majors is to master at least one foreign language at a very fluent level, and some students take a second language as well. English is given particular attention, and indeed most students choose English as their foreign language requirement. The first two years are usually devoted to the thorough study of foreign language, and because about forty percent of foreign language study is accomplished in small groups, usually a large proportion of the faculty is foreign language instructors. In Beijing University of Foreign Trade for example, 181 out of 530 faculty were foreign language instructors in 1980, while in Shanghai University the percentage was even higher, with 100 foreign language instructors out of 180 faculty for 1,300 students. Nowadays, the importance of foreign language training has remained the same, but the number of language instructors has been reduced. Exhibit 5 Labor Management Curriculum Shuzhou College (Early 1980s) Industrial & Organizational Management Foreign Trade Value Engineering Business Psychology Packaging Distribution Management Financial Management Market Research and Forecasting Marketing Quantitative Economics Systems Engineering Advertising Principles of Business and Organization Management Retail Management Human Resource Management Decision-Making and Management Policy

Since foreign trade institutions are directly supervised and operate under a specific Ministry, its curriculum will be geared toward preparing graduates that will serve the needs of that particular ministry, in this case the Foreign Trade Ministry. Exhibits 4 and 5 illustrate the content of two Management tracks in the Department of Commercial Enterprise Management in Shuzhou College in the early 1980s. The lack of cohesion and the extraordinary overlap between these two courses goes hardly unnoticed.

DEVELOPMENTS IN CHINA'S MANAGEMENT EDUCATION CURRICULUM

There are certain trends in Management Education in the People's Republic of China, especially in senior institutions such as Beijing's University of Foreign Trade. These developments constitute a movement away from the dense, overlapping, and general courses of Exhibits 4 and 5 in early 1980s, and toward a more specialized and qualitative management approach. The curriculum of Core courses (Exhibit 6) and Elective courses (Exhibit 7) from Beijing University of Foreign Trade in the late 1990s bears evidence to the many significant changes that have taken place as compared to the early 1980s.

Professor Zhang Dingling, Director of the Department of Foreign Trade Management at the Bejing University for Foreign Trade, a Ph.D. from New York University, made a very interesting observation in the early 1980s:

"We have an entirely different system of Personnel Management. According to our principles, we are here to serve the people and we are willing to sacrifice. But actually, we find that not everyone is willing to sacrifice. So, I wonder as Department Head, whether we should introduce Organizational Behavior into our courses. This is very difficult, because a part of our colleagues think it would be useful if we introduce motivation and leadership, and communication systems. But in some things we have a better system than you (U.S.) have, because we have all this bottom-up, topdown participative management, because every member of our society is an owner, since the people own all factories. Theoretically speaking, I am the owner of the school because I am a member of the people, but actually people would think differently because of my position in the hierarchy. So, it is very difficult (to reconcile these ideas) and decide whether we should introduce behavioral sciences to our management courses (Zhang, 1983.)

Professor Zhang's comments on the teaching of Motivation and Leadership twenty years ago has been constantly debated in China ever since, and still represents one of the most puzzling dilemmas that face the Chinese academia. However, as evidenced by the list of courses in the late 1990s curriculum, China has begun to firmly "connect" its tracks with those of the world economy. The Chinese economy which used to be largely controlled by communist theory and doctrine, seems to have made some strides to become compatible with the rest of the world. The business curriculum outlined above shows that at the very least, Chinese students seem to be well prepared, if not for behavioral managerial thinking, at least for solid international business careers.

Another recent development in Management Education in China in the last twenty years is the emphasis placed on Accounting programs throughout the country. Educators and Chinese officials alike have come to realize the enormous problems that the economic system has had to experience with antiquated accounting procedures and concepts, especially with China's entry into the WTO. Rent and depreciation have been discovered the hard way, and more emphasis is placed now on Financial Accounting, Auditing, and Managerial Accounting. As a result, China's first Certified Public Accountants graduated in 1981, while the city of Shanghai formed an accounting partnership to deal with foreign accounting firms. Exhibit 6 Curriculum of CORE Courses: Beijing University of Foreign Trade (Late 1990s) Accounting Theories Auditing Cargo Projection & Maintenance Computer Theory & Corporate Financial Cost Accounting Applications Management Financial Accounting Financial Management Foreign Exchange Risk Management International International International Cargo Contractor Borrowing and Air Transportation Applications Lending International Cargo International Cargo Intl Cargo Rail Transportation Sea Transportation Transportation Insurance International Cargo International International Transportation Laws Economics Economic Cooperation Theory Intl Economic & International International Technological Finance Finance Applications Cooperation International International Law International Leasing Investments International International International Marketing Organization Settlements Management International International Trade International Trade Technology Transfer Accounting International Trade Investment Introduction to Application Feasibility Study China's International Trade Introduction to Intl Introduction to Macro & Micro Economics Cargo Transportation World Economic Economy Management Theories Managerial Marketing Theory Accounting Money and Banking Multinational Banks Applied Statistics Sea Commercial Law Thesis (1) Thesis (2) Transportation Western Accounting Commodity Inspection Economics Physics Chemistry Applied Calculus Chemistry Experiments Commodity Inspection Commodity Favorite Commodity Theory Policy Applications Inspection: Commodity Theory Commodity Export Commodity Export Commodity Inspection: English Package Verification Loading Verification Import Commodity Import Commodity Law Theory Weight Verification Damage Verification (Note: Those core courses are distributed among 11 majors) Exhibit 7 Curriculum of ELECTIVE Courses: Beijing University of Foreign Trade (Late 1990s) Accounting Information Systems Advertising Applied Statistics Applied Statistical Auditing Banking and Monetary Computer Applications Theory Business Communication Business Strategy and Chinese Financial and Policy Monetary Policy Chinese Literature Commercial Bank Commodities Management Commodity Inspection Computer Applications Computer Decision- Management Making Applications Computer Theory and Construction Project Consumer Behavior Program Design Budgeting Corporate and Cost Accounting Country and District Investment Law Economics Developing Country Econometrics Economics and Business Economics Readings Economics & Technology Electricity Experimental Data Research Writing Treatment Finance Foreign Exchange and Foreign Exchange Risk Banking Accounting Management Futures Markets History of China's Human Resource Foreign Trade Management International International International Business Accounting Borrowing and Lending Law International Business International Business International Business Management Settlements Statistics Intl Cargo Intl Commercial Goods International Cargo Transportation Transportation Transportation Geography Intl Cargo International Intl Economic Transportation Economics Cooperation Insurance Applications Intl Economic & International Finance International Finance Technological Applications Cooperation International International Law International Leasing Investments International International Taxation International Marketing Settlements International International Trade International Trade Technology Transfer Applications International Trade International Trade International Trade Financial Management Insurance Statistics Applications International Trade Introduction to Introduction to MNCs Strategies China's International Trade Introduction to Introduction to World Introduction to World Security Investments Economic Relations Major Markets Introduction to World Investment Feasibility Linear Regression Trade Organizations Study LOTUS 1-2-3 Macromanagement of Management Information China's Intl Trade Systems Management Science Managerial Accounting Managerial Economics Market Research Merchandising MNCs MNC Financial MNC Management Money Management Money and Banking Organizational Production Management Behavior QSB Software Quantitative Economics Quantitative Project Analysis Real Estate Sampling Inspection Sea Commercial Law Development & Investment Stock Market Analysis Western Economics World Economic Geography World Economic World Market Environment Statistics (Note: Those elective courses are distributed among 11 majors)

Marketing also seems to have undergone several fundamental changes in terms of conceptualization. Instead of relying on the domestic marketing mix to be carried over to the foreign markets, there is now a dichotomy between domestic and international marketing, which the Chinese feel do not need to be integrated. Thus, domestic marketing governs domestic trade and is undertaken in a very large scale by the domestic state enterprises under the different ministries, while the import-export companies under the Ministry of Foreign Trade undertake international marketing. International marketing and the different methods of pricing, packaging, etc. that it entails, are heavily taught in the Institutes of Foreign Trade supervised by the Ministry of Foreign Trade, and involve two years of academic courses and another two years of specialization.

The most striking development in management education in China however, must be the interest and fascination Chinese business educators have developed with the case study method. Introduced for the first time by a team of U.S. professors headed by William R. Dill, Dean of the graduate business school at New York University in 1980, it has literally captivated the Chinese management educators since the early 1980s. (The Wall Street Journal, June 11, 1980, p. 30.). Cases based on Chinese enterprises involve a long month and a half study period, and are part of an 18-week course. New Chinese management textbooks make sure there are at least two case studies after each chapter. Also, cases on Chinese firms such as the very successful Haier Industries Group have been included in casebooks at Harvard Business School in the late 1990s.

Finally, some other areas of management education are beginning to make some headway in China such as, computer programming, simulation, and management information systems. Technology limitations however, as well as the lack of resources and equipment make these fields of study inaccessible to most of China's commercial colleges. Small business management and entrepreneurship has also made some progress in China in the late 1990s, as more retired skilled workers have been allowed to teach their trade to groups of apprentices and partner with them, while still continuing to receive retirement benefits, partially in order to maintain their basic standard of living due to increased inflation over the years. The continuing liberalization in this aspect of business endeavor was stressed long ago in the National People's Congress in early 1980s, by declaring that private enterprises are an important supplement to the socialist system of public ownership, because they help to solve unemployment and provide goods and services that the state-run economy cannot (Fung, 1983b.) Throughout China, thousands of private schools in different fields have blossomed to train the laid-off workers without specialized skills and knowledge to become entrepreneurs.

EPILOGUE

The culture of any nation is not something separate or private, but a part of the world's heritage. China has made contributions to the common stock of knowledge, and of course has absorbed much from other countries. The official line in Chinese ideology now is that the closed-door policy to other societies that prevailed during the "cultural revolution" was absurd and wrong, because it damaged China's economic and intellectual development, and consequently there was an insatiable thirst for knowledge in China in early 1980s. Now this thirst has been squelched by the inflow of knowledge from the West. However, the Chinese government is still struggling with many questions and social dilemmas regarding how their paradoxical system of market freedom, but limited political freedom should work. In addition China has "discovered" in recent years corruption, embezzlement, prostitution, abuse of power, and negligence by government officials as reported in Chinese news media.

China's economy is rapidly changing. The economic reforms have resulted in gradual reforms in the process and the content of management education, which in turn brings changes in China's educational, sociopolitical, legal, and economic environmental factors, as well as changes in the prevailing management philosophy and attitudes toward the enterprise's stakeholders. Learning is slowly becoming a double-loop learning, by introducing changes in the underlying assumptions, values, attitudes and givens of the Chinese system. Despite the success of China's "new look" economy however, the reforms and the emerging relative freedom have created almost as many problems for Chinese leaders, as they have solved. As O'Callaghan predicted in the early 1980s, waste and pollution, the imbalance between heavy and light industry, and the reconciliation of Marxism with the new responsibility system, are formidable hurdles that need to be overcome. Today's China seems to show a willingness to examine other cultures, and absorb aspects that would benefit the country (1983b). China tends to make itself more receptive to American ideas that can play a decisive role in economic, managerial, and educational developments in the post-Mao and the post-Deng China. Meanwhile, China also illustrates a bitter resentment toward the American government because of such events as the Chinese Embassy bombing in Belgrade in May 1999, and the frequent accusations of Chinese human rights record by some U.S. legislators in recent years. On these issues, a clearly drawn difference is found between two sides. Can China continue her path to be a member of the international community? Could China change her already threatened system of the Communist Party power monopoly into a democratic, free-market nation in the near future? Or will China sustain her rapid growth of GDP at a rate of 6-7 percent for the next 20 years after gaining entry into the WTO in the next few years? Only time will tell!

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George S. Vozikis, University of Tulsa

David W. Pan, University of Tulsa