Technology and Innovation: The Connection of Social and Technological Networks in China

Technology and Innovation: The Connection of Social and Technological Networks in China

Ron Berger (College of Law and Business, Israel)
DOI: 10.4018/978-1-5225-8182-6.ch054
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This chapter deals with the speed to market as one of the most important competitive advantages in nowadays' markets. Responsiveness requires information sharing among all members across the supply chain and thus how to facilitate channel coordination is a major problem to address. Enterprise resource planning (ERP) systems have been employed to deal with this issue by re-engineering the supply chain. This Chapter addresses the issue of guanxi creation that is inherently based on an individual's knowledge and social networks to the technological implementation in the Chinese firm. An ERP system, that is based on access to technological networks based on Western business culture leading to potential conflict if implemented without cultural sensitivity as China is based on social business networks. There is a need to balance these two networks if harmony and business success is to be achieved.
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In 2012, China continues to be the world’s largest recipient of direct foreign investment - which totaled around US$105 billion (Berger et al., 2013). Once a staunchly Communist state, China now advocates a social market economy based on State Capitalism as its business system. One of the utmost changes in the global economy of the 21st century is the emergence of China’s as one of the world’s major economies (Song and Schein, 2011). President Hu Jintao in his visits to foreign countries has declared that China will continue its twenty years of phenomenal economic growth and transition from a Communist to a “social market economy”. To achieve this it will implement the newest technologies in – order – to transform itself from made in China to designed in China. To appreciate the present Chinese business system and managerial performance necessitates an approval and appreciating of Chinese cultural orientations. As China becomes more and more important to the international economy, it becomes gradually more prudent to comprehend the mindset of the Chinese business culture compared to other established and more mature business cultures. Global business environments today, with China having a major role in them, are acting as catalysts for economic changes and the blurring of national boundaries. The impact of these changes combined with the ramifications for firm activities and performance have led to an urgent need to reassess the traditional purely neoclassical, competition-driven frameworks such as that of Porter (1990) used in international management research. Other social science systems of exchange including sociology, anthropology, cultural studies must be incorporated into the research paradigm (Bird-David and Darr, 2009; Chu, 2009) to be relevant for China. The unique perspective offered by other social science disciplines can better analyze the characteristics of China’s “social market economy” (Honig and Christie, 2003; Perraton, 2009; Schrank, 2009) than traditional models.

The global balance of economic power is shifting away from the US and Europe towards Asia. Attention today is being directed toward emerging countries especially China as one of the major countries to bail out Europe from the present financial - institutional economic crisis (Berger and Herstein, 2012). Economists forecast that Chinese consumers will mitigate the effects of the present slow down in the Western developed economies. China is seen as the catalyst for economic global growth as the West is gradually entering a period of economic stagnation and institutional turmoil. As China becomes more integrated and active as a global policy setter managerial relationships between Western and Asian countries are receiving heightened interest (Barnes et al., 2011; Song and Schein, 2011) but technological and cultural integration in a Chinese context is generally neglected (Hu, 2014; Li-Ying et al., 2014). What constitutes good managerial practices are not universally shared around the world. As China is emerging as a leading economic power, appreciting the direction in which its management theory is developing is of high significance for policy makers, academics and business leaders alike.

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