Successful for-profit companies often share a key trait: a benevolent purpose toward stakeholders, which helps them grow faster and outperform the market. Yet, how companies achieve this purpose remains poorly understood. This paper aims to explore traditional Chinese philosophies to uncover how Chinese companies integrate benevolent stakeholder purpose into their management control systems (MCS).
The authors conducted an exploratory qualitative study of three Chinese companies, analyzing how senior managers connect traditional Chinese philosophies – Buddhism, Confucianism and Taoism – to their company’s purpose. Using Simons’ “levers of control” framework, the study reveals how these philosophies influenced managers’ application of MCS to guide and motivate employees toward fulfilling that purpose.
The authors found that Confucianism motivated managers to build a people-oriented atmosphere within the companies the authors studied. This shaped corporate culture and values, achieved through belief and boundary systems. Buddhism fostered a managerial mindset of ethical behavior, which shaped long-term company values, which was also accomplished through belief and boundary systems. The Taoist principle of Wu Wei encouraged a noncoercive management style, which shaped a balance between short-term and long-term goals, accomplished through diagnostic and interactive systems.
This study demonstrates how traditional Chinese philosophies shape senior managers’ understanding of purpose and the ways in which this is accomplish through the use of MCS in their companies. It provides novel insights into the connections between Chinese philosophies and corporate purpose and presents avenues for further qualitative research into the ways MCS are used in Chinese companies.
