The internal coordination of these Chinese firms is also different from others. The members of the family firm believe in following implied statements rather than the expressed statements. Even though, this might involve the workers trying to find out what was actually meant of a statement and it might increase coordination costs, it allows a lot of room for flexibility. The employees can make changes in decisions without being too much accountable for them. This type of extended communication has great consequences on competition as the friendly dealings and communication between the owners and the workers lead to better mutual understanding and aspirations which facilitates the learning process of the members of the family firms.
I observed and experienced that coded information can be easily transmitted to people through short trainings as the codes and symbols are clearly defined and can be memorized. Tacit knowledge is assumptions or information that a group of people know generally. This type of knowledge is difficult to identify and transfer. My experience shows that, as the workers work in a close-knitted network, tacit knowledge can be transferred over a period of time due to high interaction. Apart from that, these Chinese firms find it easier to transfer tacit knowledge than other firms as they do not have a similar internal communication network. This difference makes the Chinese firms more competitive.
The other feature of Chinese firms, as mentioned before is their ability to reduce their coordination costs which is facilitated because of the bond of trust between the family members or the employees of these firms. Accordingly I observed that individuals need to be familiar with each other before leading to the development of trust or distrust. When trust in a network is established, problems due to uncertainty can be avoided to some extent. That is why, these firms depend more on family members as the source of important resources such as capital and human resource.
The family network can also be relied upon to work efficiently in the absence of any regulatory association or establishment because it creates its own norms and regulations. Another characteristic of the Chinese business firms is that the workers or the family members have higher access to information about each other which facilitates a higher effective performance and personality appraisal. They are more likely to know each other's strengths and weaknesses and can also easily impose their own decisions upon those whose goals are not aligned with that of the firm. I have seen that these factors can sometimes reduce cost as they are faster and more effective than the formal modes of communication and are more apt.
I have further experienced that organizational efficiency is achieved when family members are employed in the business because it tends to reduce the coordination, transaction and administrative costs. These businesses were not very big in size so they were easily controlled or monitored. Most importantly, the patriarchal style of leadership motivated the members as they got the needed guidance and objectives were made clear to them. One of the strengths of Chinese firms that I observed was that an influential business notion of an employee may keep them away from non-conformity of the rules of the organization. Therefore, if the business owner uses the informal channel of communication to his advantage and transfers tacit knowledge to other members, the employees can extend cooperation and work collectivity for the advancement of the organization.
Also, if the entrepreneur tackles the modes of communication well and adopts a problem-solving attitude towards the employees, the workers will be then less prone to follow their own individualistic goals and will learn to think collectively in terms of the organization as a whole. The formation of a family firm depends on the attitude and leadership style of the entrepreneurs who when use their charismatic powers, serve to be a motivational figure for the workers of the firm. This type of leadership style motivates the workers to be dedicated and diligent so that they begin to pursue the goals of the organization.
Practically, the family firm has shown to reduce its transaction costs in three different ways. One way is when the family members have a clear ideal about the organization's goals so that they can focus on it. If the important people in an organization are programmed to strive for family wealth and that is the foundation for most of the decisions made, then it is not hard to coordinate the performance of the other employees in the firm. Secondly, the motivation level among the family members tend to be high when they are all driven by a shared objective and the time comes to work overtime. Also, the family members tend to be encouraged when the need for executives becomes apparent and value is attached to their position. Lastly, as the workers of the firm are all family members, they are less likely to cheat or deceive each other which in the long run increases the likelihood of all the information being kept confidential.
When the employees of the firm are given the same attention and value as of a family member, they are more likely to be obedient and rarely follow their own separate goals while working in the firm. Apart from that, the workers might even take up other activities that may bring benefit to the firm like taking a training course on their own to enhance their performance or to learn a new skill. It is only when the employees are led to feel alienated from the rest of the organization and are just asked to accumulate profit for the firm that they pursue goals which may not be aligned with the organization's targets.
The conventional rules and regulations of the organization have their own significance and the developing law and contracts cannot be expected to replace them. Since there are no regulations offered by the state, these firms resort to their own cultural norms and traditions. I also observed that these entrepreneurs also interact with other networks. Subcontracting is one significant form of business networks from them as it has led to their growth and development in the past. The accumulation of small-scale firms into one large industrial concern is achieved through subcontracting.
The advantages of subcontracting as I have observed are that subcontracting not only facilitates static efficiency but also achieves dynamic efficiency for the organization. Competition is encouraged due to easy entry into industry because the units of competition are small. Chinese businessmen believe that only those organizations should spend on change, which have a capacity to pay off well. Bringing about change is not cheap so the change which may not have high returns in the future should be minimized. The ability of the Chinese firms to take necessary steps to adjust change according to the adjustments in the environment depends on the way they study the environment and the market, the actions of competitors and how proactive they are with regard to transformation.
Analyzing Chinese firm using Drucker's perspective
The most important fact of the employees working in these Chinese firms is perhaps their familiarity with each other. A workforce which is made up of a majority of similar members over a long period of time will not only get used to each other but also understand each other and cover up the flaws that the other members might have. There will be an excellent level of workforce spirit and loyalty.
I have observed that perhaps one of the best ways in which workforce are maintained over a long period of time is by making sure that all the workforce members share the same goals and objectives. The managers also assess the cost-benefits of the existence of the workforce as well as make sure that the workforce that is being selected is the best in its form and is most suitable to achieve the long-term objectives of the workforce. They also carry out a constant analysis about whether the workforce is working at its best and if there needs to be any modifications due with the passage of time.
There is no doubt as to the fact that each workforce member has certain principle procedures and pattern that they follow in their work environment. Even though on the surface these might seem very casual but the application of these procedures is what makes a workforce unified, consistent and effective and perform at a high level.
Perhaps one of the most important tasks for an efficient high performing workforce is the ability of problem-solving. Problems usually are tackled by the whole workforce or one individual of the workforce depending on the spectrum of the effect of the problem. Usually problem-solving deals with the workforce coming up with practical and immediate solutions so that the overall performance of the workforce is not affected; or it mainly deals with tackling unforeseen circumstances and adapting to them…