Comparative Analysis of Different Styles of Management in Indian and Chinese Organizations

Even after the emergence of cross-border business world, the advent of ‘culture-free’ business practices has yet to be transpired that brings with itself the complexities are associated with distinct values and beliefs in spite of the growing interdependence among countries. Both India and China are the countries with great diversity with substantial regional, cultural and religious variations across the country. The existence of a standard management practice that can be applied in any culture is still unsettled. The paper aimed to offer a comparative approach to the management practices followed by Indian and Chinese Organizations. This paper reviews the previous literature that has focused on comparing various issues related to business and management in India and China. The findings indicated that though there are substantial differences in staffing, leading and controlling activities of both the countries, planning and organizing activities offer a vague variation. Moreover, the reason for persistence in practices scaled using dimensions of hofstede’s model. Finally, the paper concludes with the acceptance that no ‘one’ management practice can be adopted across every culture and country.

Introduction

The Asia's economic giants - China and India - have always had an erratic history. They share a border, have fought a bitter war and continue to compete for geopolitical supremacy in the region. Political ambitions and distrust on either side have sometimes been at the cost of better economic sense (Bhatia, 2016). Despite these incongruities, these countries have fascinated each other over the past two millennia with unique examples of unbroken civilizations extant for over 3000 years, and with significant mutual influence in areas like religion and ordinarily cultural symbols like art, literature etc. (Subramanian, 2007, Anand, 2013).

Both share a past as two of the most prosperous nations on earth (Kalish, 2006). Long before the emergence of Europe, China and India have in their name, a considerate amount of inventions and discoveries, and a higher standard of living (Bhasin, 2007). However, in the early 19th century, both countries suffered a huge plunge and were surpassed by Europe and the US. The situation further became worse, when in the middle 20th century; both countries faced an extreme poverty. For China, fortune began to change when Deng Xiaoping came to power in 1978. He brought about changes in market-oriented and economic policies in the country. For India, the situation actuated as a setback for the financial crisis that was faced in early 1990s. The government started taking gradual steps along a market-oriented path. The consequences of this remarkable upturn are profound and far-reaching and are causing the world economies to relentlessly draw towards them (Quer et al, 2014).

A considerable interest in differing attitudes, behavior, management style and values of managers has arising, attributing to the rapid globalization of the world’s economy and cultural diversification (Hofstede, 2001. Therefore, by establishing relationships between these concepts and management practices and effectiveness, one can deduce the impact of cultural variables on management practices and effectiveness (Anant, 1975).

Literature Review

A great attention has been given in literature regarding the management practices and styles of the international companies, especially China. But the comparison between India and China is very limited and scarce. Moreover, the comparisons have been made on the basis of economic growth, FDI and GDP (Bosworth & Collins, 2008, Agrawal & Khan, 2011), quality practices (Ragunathan et al. 1997, Zhao et al, 1994, Rao, 1999), talent management (Cooke et al. 2013, Ariss et al., 2014).

When it comes to comparing the management styles, U.S. and Japan have received a lot of attention. There is an abundance of literature on both U.S. and Japanese management since they present contrasting managerial approaches. Like in a paper by Culpan & Kucukemiroglu (1993), the management styles of US and Japan is compared in a conceptual model using different six managerial dimensions: supervisory style, decision- making, communication pattern, control mechanism, interdepartmental relationships, and paternalistic orientation. The findings indicated that there is a considerable amount of variations in the management styles of the countries and within each dimensions also. In yet another paper by Weihrich, (1990), Chinese managerial practices were identified and an analysis was made to know which of the two managerial approaches, i.e. U.S. and Japan, would be appropriate to make Chinese businesses more effective and efficient. Some studies have also analogized the culture of countries using Hofstede’s model like the one by Migliore (2011). The inter-relational aspects of personality traits have been assessed quantitatively by the author using five-factor model of personality and Hofstede’s five dimensions of culture.

The comparison between India and China is multi-dimensional. Raghunathan et al. (1997) pointed out significant differences among USA, India, and China with respect to quality management practices. Patrick et al. (2003) in their paper compared the management style of marketing managers in Australia with their counterparts in the People’s Republic of China (PRC). Managers in PRC scored higher than their counter parts with respect to the dimensions like information utilization, complexity, group decision-making, risk acceptance and technology orientation. In the paper by Quer et al (2014), a comparative approach to the reality of China and India as regards business and strategic management were presented, analyzing the main similarities and differences between the two Asian giants. The comparison was done on the basis of key factors for success, the entry modes that can be used and the business opportunities offered.

A management style when applied in another culture loses its effectiveness. With the increasing trend of globalization in most organizations, there is an admissible increase in the study of management practices in different countries and how they lead to organizational efficiency. For the purpose of this study, the five managerial functions (Planning, organizing, staffing, leading, and controlling) will serve as a framework for comparing and analogizing the managerial approaches in these two countries. The managerial functions will then be further elaborated and expanded to know the managerial activities.

Objectives

The main objective of this paper is to compare the management practices in India and China and to find out the reason for the differences, if any, in their management. The objectives are framed as follows:

1. To study the management practices prevalent in Indian and Chinese organizations.
2. To analyze the similarities and differences between the management practice of both countries.
3. To know the reason behind the differences in the management practices.

Research Methodology

The present study is based on secondary data only. The major sources of data are management books, articles, journals, and different related research studies. The previous literature that has focused on comparing various issues related to business and management in India and China has been reviewed and synthesized the literature findings in relation to management practices and other spheres as an initial effort towards identifying the differences and similarities between the two countries. Although various models for comparing management practices have been proposed, the present study shall adopt the model used by Weihrich (1990), using the elements of managerial functions.

Management Practices in India and China

To understand the management practices prevalent in India and China, Weihrich model (1990) has been used. The managerial elements involving planning, organizing, staffing, leading and controlling will serve as a framework for the comparison of managerial activities in both countries.

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In both Indian and Chinese organizations, planning has a short and long-term orientation based on the circumstances. The decision making in Indian companies seems to be time-consuming, but when one is able to adjust with these circumstances, a better understanding and smooth decision-making process are achieved (Mark, 2012). Subordinates actively participate in planning, ideation, and related processes, but they look to their leader to finalize and bring closure to the process (Laxman, 2015). Whereas in China, the managers had their authority to make any decision in the organizations acknowledged by their employees but it is not desirable of subordinate to disagree on manager’s idea and communicate directly (Khairullah & Khairullah 2013). Decision making is strongly centralized and hierarchical, where decision flow is from top to down (Weihrich, 2000).

Majority of the Indian Companies follow a functional structure (PwC, 2013), rigidly organized and hierarchical and they maintain a highly centralized power structure (Walker, 2010). The Chinese organization followed a structure that is formal and bureaucratic. As the Chinese economy grows more diverse and new private and foreign-run firms become more common, the organizational structure of all firms is likely to become more flexible and decentralized (Walker, 2010). Moreover, there is a strong organizational culture in China (Weihrich, 2000).

Sources of recruitment in Indian companies are campus recruitment, referrals, and consultancies with increasing online employment agencies and social media hires (Dasgupta, 2018), whereas Chinese firms relied more heavily on schools than on other firms as sources of new employees (Weihrich, 2000, Li et al. 2015). Indian companies invest heavily in their employees, especially their new hires, because they see employees as key to building the organizational capabilities that drive competitiveness (Peter et al., 2010) that applies not only to their current jobs but is used to enhance employee capabilities to accomplish various tasks and to create a flexible workforce (Erwee & Paelmke, 2008). In contrast, Chinese managers do not have a positive attitude to train employees, the training system is defective and there is lack of a superior and tracking system which causes training inefficiency (Sun, 2015). While promotions were supposed to be based on performance, potential ability, and education, the reality was that family ties and good relations with top managers were extremely important for advancement (Weihrich, 2000). In India, work experience, contribution, etc. of the professionals and business managers have more avenue to success, ‘relations’ are not the only reason for success (Capelli et al, 2013).

Indian managers and workers prefer a paternalistic style of leadership where managers assume social support roles in addition to their work-related roles for their employees (Roopal & Sangya, 2012). The Chinese leadership style is also predominantly paternalistic in nature where the leaders are less likely to give rationales for decisions and are more inclined to issue directives known as the ‘directive’ leadership style (HayGroup, 2007). Indians are motivated by both individual and group achievements whereas employees in China are motivated through the group rather than individual achievement (Walker, 2010). The Chinese leader sought to avoid confrontation and come forward to resolve the conflict and establish peace among his subordinates (Weihrich, 2000 & Rahul, 2011).

The Indian managers set the well-specified targets and control the performance to maintain the efficiency and competitiveness. Indian system is based on individual targets because they prefer to be evaluated to be more on qualitative aspects of their work (Shrivastava & Shrivastava, 2012). With respect to China, the group leader is expected to exercise control over the group and the group assumed responsibility for pursuing and achieving group goals and objectives (Weihrich, 2000).

Comparison in Management Practices of India and China

With the help of Weihrich model, various managerial practices that are prevalent in India and China have been analyzed. Management practices vary considerably across countries and across firms. While practices of some countries are considered better than another, the question arises, why one would not just simply adopt the ‘better’ management practices for their own country. The probable reason may be the difference between their cultures (Hofstede, 2001) or due to environmental constraints (Farmer & Richman, 1965). For the purpose of current study Hofstede’s dimensions are used.

It was revealed that the power distance score is higher for both the countries. It indicates a high level of inequality and wealth distribution within the society. But the society accepts it as a cultural norm. Real power is centralized and communication is top-down in directive style (Juhasz, 2014). The individualism score is higher for India which depicts that the people here deal favorably with those they know and trust, and the opinion of close ones including workgroup, neighbors influence the actions of individuals (Thakur, 2010), whereas in China, people place group interest prior to their own interest. In-group considerations affect hiring and promotions with closer in-groups (such as family) are getting preferential treatment. Personal relationships prevail over task and company (Stone, 2012). Both India and China are considered a masculine society, meaning they are very driven by successful, competition, and achievements. Long working hours, pays promotion, etc. are considered as a measure of success (MarketMeChina, 2014). In India, there is acceptance of imperfection; nothing has to be perfect nor has to go exactly as planned. India is traditionally a patient country where tolerance for the unexpected is high (Juhasz, 2014). Chinese people need a structure and a plan and would prefer stability to adventure. Chinese people don’t like taking risks, which is why it is so important to build Xin (trust) with them (Stone, 2012). Long-term orientation score of Indian managers is higher than Chinese managers. The culture is more persistent. It is expected that the Indian businessperson will provide detailed business plans because of their need for Long-Term Orientations (Juhasz, 2012). Owing to the high score for Chinese managers, they will dedicate whatever time is required to achieve their goals. This is seen in the very time-consuming Chinese negotiation process (Stone, 2012).

China is still more or less a communist country. This means that all the enterprises there are run by the state. State-run enterprises are usually not efficient and definitely not innovative. On the other hand, the Indian industry is based on innovative enterprises. Given the competitive nature of the world economy, the Indian industry stands a better chance at success in the future (Management study guide, 2016). Relationship building is a very important factor in India, especially at the professional level. In India trend of giving ideal deals to a known person is followed. Therefore, more you maintain the cordial and friendly relations more it is useful whereas Chinese follow very formal relationships in business (Business maps of India, 2010).

Conclusion

Even after the emergence of cross-border business world, the advent of ‘culture-free’ business practices has yet to be transpired that brings with itself the complexities are associated with distinct values and beliefs in spite of the growing interdependence among countries. In fact, the variation in management practices is one of the main variables for the large differences in productivity across firms and countries. Both India and China are the countries with great diversity with substantial regional, cultural and religious variations across the country. It should be impossible to generalize about the society, organizations, and leaders in both countries and also the management practices in the country.

Both these management cultures are in a time of transition - on a local level, cultural values and norms continue to exert a strong influence, while on an international level, the influences of globalization, technology, and Western management practices have increased over the past decades. While China and India are striving to have an exposure and experience of western management practices, the countries around the world, on the other hand, are seeking market penetration and business growth in these countries. Regardless of the pace of change, it is important to appreciate the traditional cultural values such as the concept of hierarchy, the nature of social and community networks, the implication of continuity and stability, and prevalence for flexibility and ambiguity, continue to impact managerial practice and remain influential features of the cross-cultural management landscape.

From the present study, it is evident that the major difference between the countries lies in the areas of staffing, leading and controlling whereas the planning and organizing activities offer vague variations. With their own management practices and styles, we can say that both the countries are taking crucial ladder towards the escalation to reach pinnacles in their own way.

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