INTRODUCTION
Small and medium-sized enterprises (SMEs) play a significant role in China. Based on recent statistics, about 67% of firms were non-state owned, which contributed 47% of the R&D in 2017 (Report of the Top 500 Firms in China, 2017). The majority of these firms are SMEs, many of which are family businesses. Despite their importance, we lack both theoretical and empirical understanding of how these firms cope with the opportunities and challenges in China's fast-changing transitional market. In light of the mission of Management and Organization Review (MOR), i.e., publishing ground-breaking insights about management and organizations in China, we called for this special issue in order to promote the value of the unique Chinese institutional context for management inquiries.
The first step of gathering submissions for this special issue was a Research Frontiers Conference in Hangzhou, 2019 on indigenous research on SMEs and family businesses in China. Besides the MOR editors, Professor Ronald S. Burt from the University of Chicago also attended the conference and provided insightful comments to develop the papers presented at the conference. We encouraged the use of a broad range of theoretical perspectives and empirical methodologies, and the submissions fit well into our call. The formal submission process started after the conference for both attendees and non-attendees. The papers then went through the peer-review process like in a regular issue. Although we had to reject a number of promising papers, we felt fortunate to have a set of enlightening works to be shared with the MOR audience. We hope the authors whose papers were rejected were not discouraged by our decisions and could see the editorial process as a developmental journey.
We use ‘The Intersection of Economic, Social, and Political Forces: Small and Medium-Sized Enterprises and Family Businesses in China’ as the title of this introduction because the accepted papers reveal how these forces shape SMEs and family firms from different angles. Furthermore, based on the core findings of these papers, we highlight that the intersection of economy, society, and polity (either two of them or three of them) is probably one of the most promising directions for inquiries based on the Chinese institutional context. In this regard, the importance of Chinese SMEs and family businesses cannot be overstated because they are well situated at the intersection of these three spheres.
In what follows, we first summarize the key arguments and findings of the papers in this special issue. Then we discuss the theoretical and methodological implications that they offer to both the MOR and general management readership. We conclude by addressing future directions of research based on this special issue.
PAPERS IN THIS ISSUE
In ‘Between Legitimacy and Socioemotional Wealth: Family Ownership and the Party Branches Building of Chinese Private Enterprises’, He and Liu (Reference He and Liu2022) analyze the recent large-scale Party branch building campaign in the Chinese private sector. Combining institutional theory and socioemotional wealth theory, the authors argue that ‘the dominant logic of private enterprises is still to maintain family control and protect family interests’, and that private business owners may worry that ‘the embedded structure of Party branches would undermine the control of their family’. Along this argumentation, they found that private enterprises with high family ownership tended to avoid Party branch building. The tension between the politically driven campaign and family ownership underlines the robustness of the logic of family business, although this robustness may decay when political pressure is intensified.
There are several merits of this study. First, the interplay of political and social forces has constantly fascinated scholars in multiple disciplines. In management studies, however, despite growing interest in the role of political affiliations and political ideologies, how these forces interact with social forces has been much less analyzed. This is understandable because although family businesses are prevalent in Western contexts, the action of the state in those contexts can rarely be as intrusive as the Chinese state. In this regard, this study is exemplar in showing how the unique Chinese context can help advance organization theory. Second, by connecting a major theoretical stream in family business research, socioemotional wealth theory, and a major theoretical perspective in organization theory, institutionalism, the authors highlight how institutional strategies such as decoupling may be used by family firms to resist political pressure, even though such resistance has its limits. This integration addresses an important challenge in family business research, i.e., how to contribute to general management inquiries. This study joins a small number of landmark studies in advancing family business research.
In ‘Instrumental Love: Political Marriage and Family Firm Growth’, Lu, Huang, Xu, Chung, and He (Reference Lu, Huang, Xu, Chung and He2022) investigate political marriage in which political logic and social logic intersect. Combining survey data and qualitative data, the authors found that the positive relationship between political marriage and firm growth was stronger when duration of the marriage was longer. Their most remarkable finding resides in a three-way interactive effect of political marriage, length of marriage, and romantic love on firm growth: the positive effect of political marriage is strongest when the marriage is long, and degree of romantic love is low (rather than high). The case of high romantic love reducing the positive interaction of political marriage and duration of marriage again highlights a tension between political and social logics. This tension echoes He and Liu's (Reference He and Liu2022) findings, but Lu et al.'s (2022) study approaches the social logic from an emotional point of view. Whereas conventional thinking is that romantic love is not within the domain of quantitative scholarly inquiry, Lu et al. (Reference Lu, Huang, Xu, Chung and He2022) creatively challenged this wisdom with their carefully crafted empirical analysis.
Moving further down to a more micro level, in ‘Perceived Parental Care and Next-Generation Family Members’ Succession Intentions: The Sequential-Mediating Role of General Self-Efficacy and Perceived Person-Job Fit’, Zhu and Zhou (Reference Zhu and Zhou2022) propose a theoretical framework on how general self-efficacy and perceived person-job fit mediate the association between perceived parental care and next-generation family members’ succession intention. A novel insight from this study is that the authors connected parental behavior in the family domain with a long-standing topic in family business research – succession intention, whereas existing studies focus mainly on parental behaviors in the business domain. Given the strong family attachment in Chinese culture, parental behavior in their children's early development is particularly likely to influence their offspring's career preference. This study therefore demonstrates how the unique Chinese context could generate creative insights for both family business research and general management inquiries.
In ‘A Far-Reaching Parental Love? Co-Governance of Intergenerational Succession and Innovation Activities in Chinese Family Firms’, Zhu and Kang (Reference Zhu and Kang2022) analyze succession through the angle of innovation. They found that although founder-successor co-governance positively impacted innovation, such a governance model led to a flow of resources to lower risk rather than more inventive yet riskier innovations. This study innovatively analyzes an aspect which has often been missed by mainstream technology and innovation management studies – governance structures, especially in the context of family businesses. Similar to Zhu and Zhou's (Reference Zhu and Zhou2022) study, this analysis demonstrates the uniqueness Chinese context which is ‘characterized as an inner circle that includes spouses, siblings, children, and trusted nonfamily members’. In such a culture, founder-successor co-governance is more prevalent, thus allowing scholars to analyze how this governance model influences innovation outcomes.
Apart from the four quantitative studies, in ‘The Match Between Structural Attributes and Content-Based Orientation of Managerial Cognition: An Exploratory fsQCA Study of “Hidden Champions”’, Lei, Fu, Wu, and Du (Reference Lei, Fu, Wu and Du2022) took a qualitative approach to demonstrate the mental map of executives of ‘hidden champion’ companies, i.e., specialized medium-size enterprises that are prominent in niche markets. The analysis reveals different configurations along the lines of cognitive content (technology orientation; market orientation) and structure (complexity; centrality). Their analysis met a scholarly demand of understanding the mindset of executives in understudied yet important SMEs, because the ‘hidden champion' companies not only are important for their niche markets, but also have the potential of growing into leading companies in more general markets.
The empirical studies in this special issue are also characterized by their methodological rigor. The article by He and Liu (Reference He and Liu2022) used a large-scale national survey across the years. Although the survey has been used in prior studies, they identified underutilized variables which are suitable for testing their propositions about party branch building and de-coupling. Zhu and Kang (Reference Zhu and Kang2022) used a large-scale panel dataset, which well fits the longitudinal analysis of organizational innovation. To provide additional evidence for the mechanisms proposed, Zhu and Zhou (Reference Zhu and Zhou2022) spent considerable effort in collecting additional qualitative data. ‘Such additional information is not intended to provide statistical testing of the mechanisms, but to provide evidence verifying the operation of the hypothesized mechanism’ (Siggelkow Reference Siggelkow2007: 23). The reviewers applauded the authors’ effort, as reflected in their increasingly positive reviews through multiple rounds of revisions. Similarly, Lu et al. (Reference Lu, Huang, Xu, Chung and He2022) also took a multi-method approach by combining survey data with qualitative interviews. Lei et al.'s (Reference Lei, Fu, Wu and Du2022) fsQCA study shows the value of the Chinese context for management research because it would have been more difficult in a Western context to obtain firsthand data concerning executives’ mental processes.
These quantitative studies together underline the importance of a methodological trend – whereas in the past, regression results based on survey data might be sufficient to convince the reviewers; nowadays the reviewers would want more evidence related to the theorized mechanisms, and/or further analysis of the causality of the hypothesized relationships. This is not to say that the two studies solely based on large-scale datasets are not conducted rigorously, but to note the evolution of readers’ tastes. In fact, we as editors are on the side of strong theorization, i.e., the most important thing is that the theoretical logic is clearly argued and defensible, and then we expect the use of rigorous statistical methods for hypothesis testing. We also prefer that authors take special care to address alternative explanations, often through additional analysis and/or additional data collection. We do not endorse any methodological approach as the best one. Instead, we encourage acknowledgement of the strengths and weaknesses of different methodologies.
In their theoretical piece, entitled ‘Deconstructing Socioemotional Wealth: Social Wealth and Emotional Wealth as Core Properties of Family Firms’, Chen, Zhou, Zhou, Hofman, and Yang (Reference Chen, Zhou, Zhou, Hofman and Yang2022) provided a thorough literature review on socioemotional wealth (SEW), one of the key concepts in family business research. A remarkable contribution of this study is that the authors make a conceptual distinction between emotional wealth, i.e., the satisfaction of family members’ affective needs, and social wealth, which refers to family business reputation, organizational identification, and social capital. Based on this distinction, they developed a typology of family business (Figure 4), and used examples in contexts largely influenced by the Chinese culture to illustrate how this typology helps us better understand family businesses’ strategic decisions and organizational practices with respect to corporate governance, social responsibility, conflict solution, etc. This theoretical analysis is also related to the empirical studies in this special issue (e.g., He & Liu, Reference He and Liu2022; Zhu & Zhou, Reference Zhu and Zhou2022), suggesting that the typology may help future studies extend these empirical studies with a more refined theoretical distinction of SEW. Conversely, the empirical findings of papers in this special issue could inform future theoretical work with regard to how to incorporate broader institutional forces (e.g., political forces in the Chinese context) into the development of theoretical frameworks.
DISCUSSION
While each of these studies has made meaningful contributions to the specific streams of literature they intend to communicate with, as we summarize above, together they shed light on the theme that we highlight at the beginning of this introduction. That is, family businesses and SMEs in the unique context of China provide a valuable setting for scholars to analyze the intersection of economy, society, and politics. Based more on an interest in economic actors, Lei et al.'s (2022) fsQCA considers social-cognitive mechanisms in the mind of executives of ‘hidden champions’. Zhu and Kang (Reference Zhu and Kang2022) analyze the association between social logics (reflected in co-governance) and innovation outcomes, one of the most important topics in economic development. Zhu and Zhou (Reference Zhu and Zhou2022), from a micro angle, analyzed the intersection of parental care, a major form of social fabrics, and succession intention, which may considerably influence the organization and performance of family businesses. The studies by Lu et al. (Reference Lu, Huang, Xu, Chung and He2022) and He and Liu (Reference He and Liu2022) more explicitly analyzed the intersection of all three forces (economic force, social force, and political force). Through the unique angle of political marriage, Lu et al. (Reference Lu, Huang, Xu, Chung and He2022) found an important yet largely neglected tension between romantic love and political logic, and this tension consequently influenced the economic performance of family businesses. By focusing on party branch establishment in Chinese private firms, He and Liu (Reference He and Liu2022) revealed the tension between family control and state control. Although they did not use economic performance as the dependent variable, a natural extension of He and Liu's (Reference He and Liu2022) study would be to analyze the impact of this tension on the performance of Chinese private firms, most of which are family businesses.
The insights from these studies thus not only elucidate the complexity of the environment in which Chinese family businesses and SMEs are operating, but also make valuable contributions to management and organization studies. While organizational scholars have started to pay attention to the political logic in management, most notably political embeddedness research (e.g., Haveman, Jia, & Wang, Reference Haveman, Jia, Shi and Wang2017; Hillman, Reference Hillman2005), few contexts are as rich as the Chinese one in which the increasingly powerful political logic has been transforming the social and economic spheres. These studies thus carry out the mission of MOR – using the idiosyncratic context of China to advance management and organization studies.
FUTURE RESEARCH AGENDA
The authors in this special issue have acknowledged the limitations of their studies and discussed the avenues for future research. For instance, Zhu and Zhou (Reference Zhu and Zhou2022) note the value of longitudinal research design (also see He & Liu (Reference He and Liu2022); Lu et al. (Reference Lu, Huang, Xu, Chung and He2022); and Zhu & Kang (Reference Zhu and Kang2022)) as well as the boundary conditions of the attachment theory. Lei et al. (Reference Lei, Fu, Wu and Du2022) highlight the use of CEO speeches, and incorporation of cultural values for advancing the inquiry into configurations of strategic schemas. Lu et al. (Reference Lu, Huang, Xu, Chung and He2022) underline comparative analysis as a promising direction to extend their analysis. It would have been better if the authors can think beyond methodologies and reflect more on their theoretical agendas. Right now, the empirical papers in this special issue tend to be very brief along this theoretical direction, which we would like to see more elaboration. Groundbreaking research means to stimulate future studies that challenge, expand, and extend the theory and findings of the current study. Chen et al.'s (2022) theoretical analysis does more in this regard, especially their final point on how to incorporate contextual factors into their theoretical framework, although more elaboration is desirable. Furthermore, the intersection of economic, social, and political forces, in conjunction with their current typology, may help develop testable hypotheses. For instance, will the contextual differences between China and the US result in performance difference among the four types of family firms in these two countries? Broader questions like this could also help enhance family business research's contribution to general management inquiries.
Together, we encourage future researchers to focus more on the intersection of economic, social, and political forces, especially the tension between them. For example, Lu et al. (Reference Lu, Huang, Xu, Chung and He2022) right now addresses the tension between politics and romance; an extension of their work could be to consider other deeply social mechanisms such as religion and see how the tension between religion and politics influences economic performance of family businesses and SMEs. He and Liu (Reference He and Liu2022) addresses the tension between family control and state control; an extension of their analysis could be to examine the conflict between political intervention and other organizational mechanisms of family businesses. In light of the two studies about succession (Zhu & Zhou (Reference Zhu and Zhou2022); Zhu & Kang (Reference Zhu and Kang2022)), could political intervention shape the governance mechanisms of family businesses, and/or the succession intention of family members? Will the tensions uncovered by these studies influence the mentality of the executives of the hidden champion companies (Lei et al. Reference Lei, Fu, Wu and Du2022) with respect to their strategic planning, and the mentality of their successors with regard to their succession intention? These are important questions for the inquiry into Chinese organizations as well as general organization and management theories.
In closing, this special issue has a set of exciting studies that make substantial contributions to scholarly research through revealing the ongoing economic, social, and political dynamics in China. We applaud these authors’ serious efforts in advancing scholarship in multiple areas and look forward to seeing more insightful works along these lines. We believe Chinese family businesses and SMEs will continue to be crucial for understanding the unique Chinese context as well as the nature of organization and management.
