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«Inaugural-Dissertation zur Erlangung des Doktorgrades des Fachbereichs Wirtschaftswissenschaften der Johann-Wolfgang Goethe-Universität Frankfurt am ...»

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Schramm and Taube, 2001, p. 22, Herrmann-Pillath, 2000, p. 119. Thus, in the country report of Transparency International, as well as in its Corruption Perceptions Index 2010, put China on rank 78 (of 178) countries. Transparency International demands of China that „the state should continue to retreat from overregulating and over-intervening in the economy in order to maximise the roles of the private sector and civil society, and these groups should pay more attention to corruption―. The Corruption Perceptions Index relies partly on business people opinion surveys and partly on assessments of a country‘s performance as provided by a group of country analysts. The underlying methodology and the definition of corruption of Transparency International (see above) does not accommodate for Guanxi and the different perception of corruption within China. Transparency International, 2006, p. 7, Transparency International, 2010.

Sun, 1999, p. 16.

Smart, 1993, p. 398.

Yang, 1994, p. 35.

Joy, 2001, p. 251.

to link Confucianism to economic behavior favorable for development and the reputation of Chinese business managers.1088 They are also regarded as the cultural roots of Guanxi.1089 As has been discussed before, for the sake of the whole the individual has to stand back but is embedded in a network of personal connections. Filial piety is considered as the virtue that matters the most. Children owe their parents absolute obedience, even when they are already grown up.1090 Thus, everybody has his or her natural role to fulfill within society, with certain duties and norms to obey. Both society and personal relationships are structured as vertical hierarchies, being a culture of status.1091 Interpersonal relationships therefore get rationalized, coincidence and spontaneity are eliminated. Hierarchy is legitimated through mutual debts, if one side of the relationship acts according to the given norms, the other part will act accordingly. Those laws are unwritten, but follow the norm of modesty and morality. The vertical structure of society is not questioned and individual rights are barely of importance. The notion of law is not received as strict categorical norms, adjudicating rights to individuals, but always depending on interpersonal relationships, thus revealing a more particularistic culture.1092 For family businesses this means a structure of vertical stability that is built upon morality and not thread, and depends on the responsibility of the bosses for their subordinates.

Family firms are thus organized in a paternal, authoritarian pattern. Additionally, the family is regarded as the only entity that can be trusted.1093 Having to obey a certain role, the individual is subordinated to the family (or the collective), thus showing loyalty and obedience. The appeal to the honor of the family, especially through education and learning, is also an essential feature of Confucianism.1094 In addition, it also suppresses class and gender differentiation. The ideology of authoritarianism is exported as solution for development also in a political context. The Confucian revival celebrates loyalty and obedience as keys to the stability of family and workplace.1095 Authoritarianism is instrumentalized ―in the cause of a capitalistic regime of discipline‖ to control a social situation ―that no longer is subject to the hold of traditional values‖. Thus, it is difficult to describe the emphasis of patriarchy as typical Confucian Zurndorfer, 2004, p. 3.

Yang, 1994, p. 71.

Fukuyama, 1995, p. 77.

Pohl, 2002, p. 115f.

Weggel, 1996, p. 22.

Redding, 1993, p. 208.

Heberer and Weigelin, 1989, p. 184, Hamilton, 1990, p. 92 and Krieger, 1990, p. 118, 222ff.

See also chapter 5, fn 785 for a discussion of the recent ―harmonious society‖ political concept of the CCP.

value as persistence of ‗old‘ tradition and as distinguishing feature of ‗Chineseness‘.1096 This is even more doubtful, when also taking into account that during the Cultural Revolution Confucianism was dismissed as being part of an old regime which did not have space in the Chinese society of the time.

Guanxi-Capitalism is viewed by many as being more "humane and thus more efficient than the alienating contractual and individualistic Capitalism of the West".1097 This line of thought often overlooks in "ritual euphemization" the widespread violence with its consequence of inequality for many. In the newly developed private sector with its many familyowned firms an elaborated (labor) law is either not existing or is ignored and thus is rather "a government by people".1098 This contrasts the state-sector in which an official legal system is effective and thus, controlled. As a consequence, women are employed mainly in "the plethora of new private and smaller enterprises that are less likely to protect their labor or safeguard their maternal benefits".1099 Although family firms have been ―both a major engine of economic growth in the region and a key embodier of the cultural virtues seen as facilitative of economic success‖1100, they are based on paternal authority and trust rather than a legal system. It relies more on interpersonal relationships than individual rights.1101 Thus, the emphasis on traditional Confucian values for the success of Chinese family firms obscures and justifies the more negative implications of their success, namely that it is also based on the exploitation of gender and other social inequalities of opportunity and reward. Men constantly reproduce the existing structures of domination, disguised with the emphasis on human emotional bonds and harmony. Particularly in the 1980s many authors celebrated the ―benevolent paternalism‖ of Chinese family firms. S.G. Redding for example evaluates the ―productive efficiency‖ as humanistic, ―closely to the needs of their participants‖.1102 Those researchers see the family firm as working to the benefit of all family members, and because of that individual family members are willing to work hard to secure the long-term success of the family (firm).1103 However, the success of family firms, instead of being mutually beneficial, is not to a small part based on rigid inequalities of gender and generation within the family and firm.

Rather than building upon old traditions, the recourse to Confucian values and Guanxi is Dirlik, 1997, p. 317f.

Yang, 2002, p. 468.

Ong, 1999, p. 116f.

Croll, 1995, p. 122.

Greenhalgh, 1994, p. 747f.

Yang, 2002, p. 467.

Redding, 1993, p. 238.

Greenhalgh, 1994, p. 749.

used to reinvent old forms of family life which is dominated by men, the patriarchs.1104 The reality of global Capitalism forces these businessmen to use the one comparative advantage at hand – the flexibility of their enterprises. This, in combination with the existence of large personal networks, once established to meet the necessities of daily life in socialist China, and small start-up costs gave them the necessary flexibility to get an entry ticket to the world market of commodities.1105 This line of research emphasizing the importance of the revitalization of traditional values also omitted to scrutinize the power differentials which define who within the family really the winner is – and who the loser. One part of Guanxi is thus the recreation of traditional rigid forms of division of labor by gender and generation to achieve economic success. Also, ―despite the hectic pace of economic development, […], obligations to parents and the larger family seem robustly intact‖.1106 Guanxi-Capitalism thus changes the principles and logic of the individualistic form of Capitalism but also facilitates the adaptation of exploitative Capitalism as Chinese family firms are based on paternal authority, not individual rights.1107 The recourse to Confucian values and Guanxi is used to reinvent old forms of family life which is dominated by men.1108 Although a notion of mutual support exists, Guanxi also has the aim to give more flexibility to few to arrange business structures at the cost of many, particularly in small-scale family enterprises, where the factor of cheap labor of kinship is often exploited. In general, the advantage of employing family members is that they are more or less willing to work for little or no money. This would imply that factory families are similar to peasant families whose power distributions are based on the existence of inherited property opposed to acquired property of most family enterprises. Family firms rely on unpaid or low paid family labor, determined by gender and generation, with ―senior males making major decisions, younger males performing labor, and females filling in when and where needed‖1109, slipping ‗effortlessly‘ into their traditional roles. Their work is regarded as part of their household and family duties, not as careers. Even if not part of the family, "female workers…may become de facto employees Whyte, 1996, p. 13 and Greenhalgh, 1994, p. 748.

The role of FDI and cheap labor in connection with global flexible transnational production also facilitated the development within China. Those externalities are regarded as being the same for all countries, but landed on the extremely fertile soil of internal Chinese social structure, whose effects this dissertation will cover.

Whyte, 1996, p. 17.

Yang, 2002, p. 467f., 474.

Whyte, 1996, p. 13, Greenhalgh, 1994, p. 748.

Greenhalgh, 1994, p. 749.

of the male head of the household with all the attendant disadvantages deriving from the structure of familial authority reproduced in production".1110 Additionally, power structure within kinship is depending on the distribution of inherited property. In China, property was historically a source of great respect, the power structure within kinship related to the distribution of inherited property. While males owned the property, having undivided power over the other family members as long as the property remained also undivided; especially females are deferred to social and economic inferiority. Inherited property has mostly to be divided soon after the marriage of sons, thus limiting paternal power. Acquired property instead is bought by the senior male during his own lifetime, thus giving him unlimited power over subordinated family members when and if property should be partitioned. This also gives him the possibility to decide over other family affairs, such as education or careers of family members. For example, not even sons may claim the right to study. Relationships among family members are based on reciprocal exchange, where junior family members owe labor, commitment and loyalty to the senior members to earn the right to be part of the family.1111 The patriarch of a family firm bases his power over subordinated family members often on acquired property, thus it is difficult to comprehend how at the same time he can claim to act according to generation-old traditions. In contrast to this traditional justification, it is a ―political construction of the family head who uses the resources at his command to build his firm out of the loyalties and talents of his family‖.1112 Control is only relaxed to grant favors, or give economic or political support, but that does not constitute an entitlement for any of those.1113 Family ties are evaluated as creating strong loyalties which lead to economic success and motivation of the single family member.1114 Young Chinese study hard for the sake of the family. Not only do they seek to get a good education, but once they start working they also work hard for less money than non-family members. Even if more money is offered elsewhere, they tend to stay in the family business, thus providing continuity. Using family members for manager positions within the firm also provides the advantage of creating a ‗natural authority‘. On the other hand, family firms are not required to give positions to all family members. Relatives and even sons who do not show sufficient talent are driven out of the family business.

Croll, 1995, p. 124.

See also Whyte, 1996, p. 13.

Greenhalgh, 1994, p. 751.

See also Whyte, 1996, p. 13.

Yang, 1994, p. 111.

A typical family firm will employ more males than females, the proportion rising with business size. Also, sons are the family members most likely to be employed, followed by brothers, wives and daughters-in-law. The latter are allowed to hold mainly nonmanagerial jobs, often only as part-time general helpers without monetary compensation, merely an extension of their reproductive activities. It is regarded as part of their household and family duties. The wife of the entrepreneur often has the most responsible jobs among females, namely as financial manager or bookkeeper. In both cases the sphere of women is the ‗inside‘, concerned with activities that prevent the contact to unrelated men. Additionally, although non-working wives are a symbol of high status, due to scarce resources, especially during the start-up of an enterprise, often also women have to be employed.1115 Also, "women employees have been the first to have their employment contracted or terminated in enterprises engaged in some reorganization or streamlining of staff".1116 Male kin mostly work full-time, receiving salaries. This resembles formal employments, additionally giving them more responsibilities and a rewarding job than female relatives have. However, the work relation is not based on a formal contract and thus jobs and salaries can be easily eliminated if the position holder does not obey. On the other hand, property can be divided to create managerial positions for sons or brothers, giving them an incentive not to leave the family business.1117 Especially women have no realistic respectable exit strategy and so are dependent on the family, bare of any bargaining tool for a better standing within the family or firm. Men‘s social status is also derived from their performance inside the family firm which principally also gives them the possibility to get a job outside the family firm, but at the same time no incentive to do so.

What does a female keep from active resistance against those conditions? Entrepreneurs purposely pick very dull and unrewarding jobs for women which require no specific skills.

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