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Managing Indefinite Boundaries: The Strategy and Structure of a Chinese Business Firm

Author

Listed:
  • Marshall W. Meyer

    (University of Pennsylvania)

  • Xiaohui Lu

    (University of Pennsylvania)

Abstract

This paper examines the status of boundaries in organizational theory. Tacitly if not explicitly, most researchers view organizations as bounded, tightly coupled and more or less rational systems. Yet organizations may also be open, loosely coupled, hierarchically nested systems whose boundaries are indefinite. In the case of China, incomplete separation of firms from the state, incomplete integration of firms and partial listing of assets have left most Chinese firms with indefinite boundaries. While many Chinese firms are disadvantaged by indefinite boundaries, some have managed their boundaries advantageously. The Chinese group corporation described here has resisted interference from its state owners, one of whom tried but failed to turn it into a captive supplier. It has secured full operational and financial control of subsidiaries despite their independent legal status, fractional local government ownership, and local government representation on their boards. And it has successfully funded and executed an aggressive acquisition strategy and now dominates its industry globally. There are lessons specific to the Chinese context. The most important is that boundaries should be assumed indefinite unless shown otherwise. And there are lessons about firms in emerging economies. Indefinite boundaries are characteristic of such firms; indefinite boundaries pose either threats or opportunities depending on the strategic response; lastly, managing indefinite boundaries will be a key strategic priority and a precondition of finding and exploiting market opportunities.

Suggested Citation

  • Marshall W. Meyer & Xiaohui Lu, 2004. "Managing Indefinite Boundaries: The Strategy and Structure of a Chinese Business Firm," Management and Organization Review, International Association of Chinese Management Research, vol. 1(1), pages 57-86, June.
  • Handle: RePEc:cmr:mor101:v:1:y:2004:i:1:p:57-86
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    Citations

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    Cited by:

    1. Shahid Yusuf & Kaoru Nabeshima, 2009. "Growth through Innovation : An Industrial Strategy for Shanghai," World Bank Publications - Reports 18613, The World Bank Group.
    2. Filipe M. Santos & Kathleen M. Eisenhardt, 2005. "Organizational Boundaries and Theories of Organization," Organization Science, INFORMS, vol. 16(5), pages 491-508, October.
    3. Neng Liang & Shu Lin, 2008. "Erroneous Learning from the West? A Narrative Analysis of Chinese MBA Cases Published in 1992, 1999 and 2003," Management International Review, Springer, vol. 48(5), pages 603-638, November.
    4. Rumeng Cui & Zhong Ma & Longfeng Wang, 2022. "Allocation of Decision Rights and CSR Disclosure: Evidence from Listed Business Groups in China," Sustainability, MDPI, vol. 14(7), pages 1-20, March.
    5. Chen, Jin & Heng, Cheng Suang & Tan, Bernard C.Y. & Lin, Zhijie, 2018. "The distinct signaling effects of R&D subsidy and non-R&D subsidy on IPO performance of IT entrepreneurial firms in China," Research Policy, Elsevier, vol. 47(1), pages 108-120.

    More about this item

    Keywords

    China; Indefinite Boundaries;

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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