Confucian Business Practices

Topics: Confucianism, Confucius, Business ethics Pages: 27 (10565 words) Published: December 6, 2014
Front. Bus. Res. China 2011, 5(3): 317–343
DOI 10.1007/s11782-011-0133-4


Terence Tsai, Michael N. Young, Bor-shiuan Cheng

Confucian Business Practices and Firm
Competitiveness: The Case of Sinyi Real Estate
© Higher Education Press and Springer-Verlag 2011

Abstract Throughout the 20th century, many East Asian societies imported and transplanted the institutional foundations for industrialization and market economies, which has provided for substantial advances in material well-being. However, Confucianism, the predominant basis of traditional Chinese morality since antiquity, has begun staging a comeback in the recent years. Yet it is unclear as to how modern Confucian firms in a market economy will be organized, or how this will affect firm competitiveness. To shed further light on these issues, we examine the extant literature and identify several characteristics associated with Confucian business practice along with their potential impact on firm performance. We illustrate each of these characteristics with a company that explicitly follows Confucian business practice—Taiwan-based Sinyi Real Estate. It is found that, in general, Sinyi Real Estate conforms to the description of Confucian-based business practice that is expounded in the extant literature. However, there are a few surprises.

Keywords Confucianism, Sinyi Real Estate, self-cultivation, collective good, righteousness, benevolent paternalism, competitiveness
Received October 9, 2010
Terence Tsai
China Europe International Business School, Shanghai 201206, China E-mail:
Michael N. Young (
Department of Management, Hong Kong Baptist University, Hong Kong, China E-mail:
Bor-shiuan Cheng
Department of Psychology, National Taiwan University, Taipei, Taiwan, China E-mail:



Terence Tsai, Michael N. Young, Bor-shiuan Cheng


Recently, there has been an increasing interest in the resurgence of Confucianism in East Asian Societies (Bell, 2008; Bell and Hahm, 2003). This interest has spilled over into the area of business ethics and management with several scholars expressing interest in Confucianism as a possible foundation for leadership and business practices in East Asia in general and China in particular (Chan, 2008; Cheung and Chan 2005; Cheung and King, 2004; Lam, 2003; Romar, 2002). From a Confucian perspective, cultivated businesspersons should place righteousness above profitableness and organizations have certain obligations to society and organizational stakeholders that come before their own self-interests. In this regard, Cheung and Chan (2005: 47) refer to Confucianbased leadership of Chinese organizations as an ethocracy (i.e., ruling by ethical virtues) which emphasizes leaders’ moral practice. Yet Confucianism is more than just ethics; Confucian philosophy, as it pertains to business, encompasses numerous aspects of business operations such as leadership, HRM and even organizational structure (Lam, 2003; Romar, 2002; Strudler, 2008). How will this resurgence of Confucianism affect business practice, and what might be the impact on the competitiveness of individual firms? On the one hand, observers contend that Confucian-based business practices were designed for a simpler, agrarian time and that strict adherence to Confucianism will hinder firm competitiveness. For example, Cheung and King (2004: 246) state that “Confucian scholars can find themselves in a disadvantageous market position if they insist on upholding their moral principles” and that (p. 245) “efforts to do business according to their moral principles can be very costly.” Furthermore, it is believed that Confucian emphasis on hierarchy and ritual may lead to paternalistic human resource management practices that can stifle innovation and growth in dynamic or high technology industries (Ahlstrom, Young, Chan and Bruton, 2004; Haley, Tan and Haley, 1998;...

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