Cross-cultural challenges to the IMP paradigm: evidence from Chinese markets

This paper proposes a review of the current Industrial Marketing and Purchasing (IMP) paradigm to include the effects of culture in international business. The authors aim to show through evidence and analysis of Chinese business practices that even Chinese culture nuances can be included in IMP models. Indeed the absorption of culture enhances the intersubjective certifiability of network theory. Introduction Relationships and combinations of relationships (networks) have emerged as the central concept and basic unit of analysis in the IMP (Industrial Marketing and Purchasing) paradigm (Ford 1980, 1997; Håkansson 1982; Möller & Wilson 1995; Parvatiyar & Sheth 1997; Turnbull & Valla 1986). Managing business relationships is described as what industrial marketing and purchasing is all about (Ford 1980, 1998; Ford, Gadde, Håkansson, Lundgren, Snehota, Turnbull & Wilson 1998; Håkansson & Snehota 1995). Our two decades of dedication to marketing as interaction, relationships and networks has awakened the mind of management to the significance of interfirm relationships in understanding business markets. Despite all this, far too many Western managers are still failing to manage business relationships in the Chinese-culture dominated markets (Björkman & Kock 1995; Itthiopassagul & Blois 1999; Kriz, Purchase & Ward 1999; Tung & Worm 1997; Yeung & Tung 1996). This appears to be an anomaly given that key constructs in the Western interaction and network approach to marketing such as relationship, trust and bonding are also hallmarks of the Chinese business culture. The Chinese, like IMP, view concepts such as connections i.e. guanxi (Buttery & Leung 1998) and connected networks i.e. guanxiwang (Davies, Leung, Luk, & Wong 1992; Yang 1994) as key success factors for business (Chen 1995; Fang 1999). This paper is concerned with why this anomalous phenomenon often found in the East-West cross-cultural business interactions exists and what it means broadly for the IMP. The purpose of the paper is to highlight the increasing challenges the global cross-cultural business environment is bringing to the IMP paradigm and to provide guidelines for creating a new research area – Managing business relationships across cultures – within the IMP. The paper attempts to answer these questions: What are the key factors that make Chinese business culture different to Western business culture? Can the Western-based IMP models be applied without any adjustment in non-Western business environments? How can IMP benefit from a new century of cross-cultural and multicultural business in terms of theory and methodology? In resolving such issues and answering such questions, some generalisations will be developed to demonstrate how the Chinese to Chinese business systems operate. The reasons why so many businesses have failed in China may be able to be demonstrated through a modified Håkansson and Snehota (1995) model. The implications of these systems are significant for Western businesses wanting to approach the Chinese business environment. The paper concludes by suggesting the IMP model is not limited to Chinese business but has universal implications. Although the IMP models are descriptive (Backhaus & Büschken 1997), they promote some holistic ground rules and common business systems and as an instrument for understanding and insight, such models are a useful tool. In other words the universal nature of the current IMP model is not destroyed by adding the stochastic values of culture but is enhanced. However, it is enhanced as a result of unlocking the various layers that ‘hide’ the core values. Methodology of this research The empirical base of this paper is the authors’ extensive field studies conducted in Mainland China (Beijing, Shanghai, Xiamen, Guangzhou, Nanjing, and Hong Kong) during 1995-1999 concerning Chinese, Australian and Scandinavian firms in business marketing negotiations and joint venture operations. Industries researched included telecommunications, electronics, mining, power generation, shipping, shipbuilding and insurance. More than eighty Chinese and Western business executives were interviewed using informal conversational style field techniques and loose protocols. How “business relationship” was perceived and managed from the Chinese versus Western perspective was among the issues discussed in the interviews. To achieve its purpose, the paper also draws on empirical materials from the existing literature when necessary. Qualitative techniques were used to support an emic (culture specific) rather than an etic (across culture) approach (Triandis 1994; Fang 1999; Kriz 2000). The rich data gathered supports the use of such a technique. The emic approach is apt in societies that believe in the ‘rule of interpersonal relationships’ (Lasserre & Schütte 1999) rather than the ‘rule of law’ (Trompenaars and Hampden-Turner 1997). Cold canvassing and surveys from afar are difficult methods in a Chinese research. ‘Natural inquiry’ following the emic paradigm is more useful in conquering the ‘whys’ of Chinese business (Patton 1990). Indeed, in Chinese society, which has been described as non linear (Redding 1990; Hofstede 1997), emic studies seem to be a more poignant precursor to ‘good science’. Such studies require a multidisciplinary perspective and as Redding (1990, p.7) nominated, ‘It is necessary then to abandon any notion of “mechanical” cause, that one thing results from another in a simple linear way...’. Literature for undertaking research in societies that have a pervasive Chinese ethnic flavour is limited. Often the techniques and methods used in emic studies, for instance, using guanxi to gain access to interviewees are unorthodox. However, given the importance of gathering rich reliable data, these methods seem to be justified in such situations (Ambler, Styles & Xiucun 1998). Suffice to say that much of the empirical data suggesting linear solutions to complex or chaoplexic (Purchase & Kriz 2000) Chinese problems should be viewed with caution. Much of the empirical literature is also constantly stereotyping Chinese in a way that suggests that the Chinese population is of Han descent and predominantly people of such origins are homogeneous. Although Chinese have some general cultural norms and values, people from different regions have separate sub cultures. To place this in the context of Europe it is the equivalent of suggesting that people in the Czech Republic are the same as people in Slovakia or the people of Northern Italy are the same as those in Southern Italy. Etics do not give you emics as Trompenaars and Hampden-Turner (1997 p.7) highlighted: In the course of our research it has become increasingly clear that there are at several levels as many differences between the cultures of West Coast and East Coast America as there are between different nations. In this instance, the authors will begin with emic and then move to etic. IMP and international research A recent statistic reveals that the IMP is dealing with “less and less international themes”, which does not live up to its original aim to be truly “international” (Gemünden 1997, pp. 9, 12). This is an enigma given the business preoccupation with a rapidly expanding global market place. By doing less international research, IMP could be accused of losing touch with business reality. This ignorance is exacerbated where diverse cultures are concerned. Cultures where the negotiations are often based on individual guanxi connections rather than firm based guanxi connections are rapidly industrialising. We emphasise that if we put people and relationship in focus – the hallmark of the IMP mission – we have to face up to the reality that culture always exists in the background through its fundamental impact on the behaviour of people who are at the centre of business relationships. In a sense, no account of business relationship is complete if culture is not sufficiently studied. For the IMP to be truly internationally oriented, culture should be included as an active element in the IMP paradigm. Moreover, the IMP paradigm is basically a Western invention with models, concepts and empirical evidence mostly coming from Europe (Gemünden 1997). Today, as the world economy and international business are shifting much of their attention to Asia and other non-Western regions and businesses are adopting more and more cross-cultural activities, we need to develop the IMP paradigm by testing its models in Asian and other nonEuropean/non-Western business environments. Seeking globally developed but locally adapted knowledge is what a good management science is looking for today. There has been no shortage of well-documented information which shows that purely Western-derived models or research instruments fail to produce a valid and reliable description of Chinese behaviours when they are used in China (see, for example, Adler, Campbell, & Laurent 1989; Hofstede & Bond 1988; The Chinese Culture Connection 1987). In the same parlance, we are convinced that new perspectives will be crafted when the IMP models are tested and applied in the cross-cultural business settings. Before analysing Chinese culture in detail by breaking down the layers of that culture, it is necessary to describe how culture is defined in this study. Culture: a way of programming the genes The father of cultural anthropology is Edward B. Tylor who defined culture as the ‘complex whole’ which according to Fang (1999, p.22) included ‘knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society’. Hofstede (1997) described culture as the programming of the mind. According to Hofstede, the genes form the hardware and culture forms the software. If one takes this metaphor further, one can see that a ‘computer’ uses a range of software or ‘programs’. There are numerous levels of ‘programming’ or layers in Chinese societies (Kriz 2000). Each individual, whether Chinese or Western, rationalises and minimises conflict among these programs. Such programs are transmitted by actions and verbal communication and will be passed on from generation to generation. Others such as Parker (1995) see culture as masking the underlying ecological and biological physioeconomic forces of life. They posit that physioeconomic forces shape culture. According to Parker, genes and ecology shape culture. The impact of biology and ecology is transparent in societies that are underdeveloped, overpopulated and lack formal rules. This paper accepts that ecology and biology are influential forces in social and as a consequence business behaviour. Many of the Chinese interviewed in a recent field study suggested business life in China is ‘dog eat dog’. The Chinese are confronted daily with Darwin’s paradigm of ‘survival of the fittest’. Why? Because of the nature of the environment (low systems trust) and because the philosophy of Confucius reinforces man’s right to decide (moral virtue). The Chinese attach historically more importance on familial trust rather than Han Fei’s ‘rule by law’ (Lee 1995). This is not a moot concept particularly in regards to the Chinese penchant for developing guanxi networks and finding back doors (Kriz 2000) in an environment that revolves around socio-biological cum business relationships. Familial ingroups and pseudo family ingroups are important in a business domain that is seen as a ‘battlefield’ (Chu 1995; Fang 1999). Add to this philosophies, such as, relationship versus rules (Trompenaars & Hampden-Turner 1997) and/or virtue versus truth (Hofstede 1997) and it is understandable why China looks to foreigners, a mass of confusion. This paper will attempt to capture the richness of these layers of culture within this complex array of individual socio-biological dynamics. Some misunderstandings in Chinese cultural studies The complexity of Chinese values cannot easily be captured in simple linear or bipolar models. The difficulty of developing a personality test applicable to Chinese seems to support such a contention (Smith & Bond 1994). Chinese business life is all about coping with contingencies, therefore, an adaptive systems model needs to be developed that covers the contingencies involved (Fang 1999). This is a logical extension of the absence of linearity as discussed in the earlier section on methodology. Guanxi like many other concepts in Chinese business is contextual. Like Yin and Yang everything has two interwoven aspects e.g. sun and moon, fire and water and hard and soft. However, it should be said that these aspects are not necessarily opposites. This is a problem in Hofstede and Bond’s (1988) polarisation of the Confucian work dynamism which suggested that Chinese have a fifth dimension outside of the power distance, uncertainty avoidance, individualism and masculinity. By polarising Confucian work dynamism into opposites the authors create a philosophical flaw (Fang 1999). As Redding (1990) might assert, they have found a cause-effect relationship from what is a non-linear concept. The long term and short term orientations cannot be seen as polar but as intertwined values that will be utilised given the contingency of the situation. The game of Mah Jong and Sun Tzu’s Art of War are pertinent examples of the skills learned by Chinese to develop strategies specific to a context. Depending on the context, the Confucian dynamism values can be positive and/or negative. In the specific case of reciprocity and gift giving under short term orientation (present), one could seriously argue against Hofstede’s model that this aspect of Chinese society is as much aimed at the future as it is for the present. Clearly, gift giving builds both short and long term indebtedness. A weakness of much of the research in China has been the absence of business people as interviewees (Fang 1999). Although one can justify the use of students for convenience, they are not privy to the ins and outs of real business practices. In the case of Hofstede’s Confucian dynamism, by using students, one could expect a naïve view of the intricacies of doing business. Knowledge of stratagems and concepts such as gift giving, the back door and the nature of reciprocity would be limited to social involvement and consequently student perceptions would not be truly reflective of the actual business dynamics. To avoid using a simplistic and linear framework to overview Chinese culture, the authors of this paper propose using the earlier introduced programs metaphor. In essence, a very complex culture will be reduced to several contributory programs. The programs enable a simple yet thorough insight into what shapes the Chinese psyche. This level of detail will be reconciled later when the importance of understanding individuals in Chinese to Chinese business is exposed. The layers of Chinese culture The field studies undertaken in the PRC and Taiwan have highlighted the complexity involved in understanding the Chinese. Hofstede is often challenged for oversimplifying culture. This is somewhat of an injustice, as Hofstede as well as Trompenaars and HampdenTurner were adamant that simple stereotypes have serious limitations where individual business relationships are involved. Layers are what culture is all about. So what is Chinese culture and what layers mask the views of outsiders trying to understand the nature of the Chinese non-linear value set?