The Chinese family business as a strategic system: an evolutionary perspective

Abstract

Utilises recent advances in the evolutionary theories of the firm to analyse the competitive strategies of small Chinese family firms in Asian latecomer economies such as Hong Kong, Taiwan and Nangyang. Begins with an examination of the distinctive features of a Chinese family firm. Argues that the unique features of these establishments form firms’ resource bases and contribute to their competitive advantages. The two notable competitive advantages are: the capability to maintain a high degree of flexibility; and reducing transaction costs. These arguments are analysed from two aspects: first, the organisational structure and internal communication methods (internal capabilities), and second, the subcontracting networks (external capabilities). Furthermore, given the organisational structure and the resource bases, most Chinese family firms choose not to upgrade their technological bases within global competition. Rather, they tend to pursue guerrilla entrepreneurship, imitative follower‐my‐leader and specialise in international co‐ordination. These strategies enable them to compete and survive in the world market.

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