The Prospect of Familism in the Global Era: A Study on the Recent Development of the

Ethnic-Chinese Business, with Particular Attention to the Indonesian Context

Author(s): Yahya Wijaya
Source: Journal of Business Ethics, Vol. 79, No. 3 (May, 2008), pp. 311-317
Published by: Springer
Stable URL: http://www.jstor.org/stable/25075667
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Journal of Business Ethics (2008) 79:311-317
DOI 10.1007/sl0551-007-9399-z
The Prospect of Familism in the Global Era:
A Study on the Recent Development of the
Ethnic-Chinese Business, with Particular
Attention to the Indonesian Context
ABSTPJVCT. The ethnic-Chinese business is often
characterised by a central role of the family both in the
structure of the firm and in its corporate culture. This has
political, social as well as cultural reasons. The centrality
of the family in business has its advantages and disad
vantages. On the one hand, it enables a fast, efficient and
flexible process of decision-making. On the other hand, it
often contradicts modern business professionalism. The
younger generation of ethnic-Chinese business actors
tend to preserve crucial elements of such family-centred
characteristics. Yet, globalisation drives them to transform
their business style, lessening its dependence on family
resources and adopting more-modern professional ideas.
Changes in current political situation, religious-cultural
trend, demography and education contribute to making
possible the transformation.
KEY WORDS: Chinese culture, Chinese-Indonesian,
Christian theology of family, Confucianism, corporate
values, family business, globalisation, inter-generational
succession, racial discrimination
What is familism?
The term 'familism' is used here in parallel to those
of'individualism' and 'communalism'. It refers to the
primary position of the family in Asian societies,1
particularly within the ethnic-Chinese community,
which can be compared to the position of the
individual in the West and that of community in
many other societies. Whilst there are continuing
debates over whether or not ethnic-Chinese business
is culturally unique, there is a common view in most
literature on ethnic-Chinese business that the role of
the family is crucial in the structure and operation of
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? Springer 2007
Yahya Wijaya
firms owned by ethnic-Chinese. Murray Weiden
baum (1996) demonstrates that almost all giant
business enterprises in Hong Kong, Taiwan and
Southeast Asia, each of which has a complex internal
network and structure, still have all the characteris
tics of family firms. A similar report, with lists of
ethnic-Chinese firms in East and Southeast Asia, is
also made by George T. Haley, et al. (1998). In
studying ethnic-Chinese familism, it is important to
distinguish two types of familism, namely structural
and normative (Wong, 1995: 139). Structural fami
lism refers to the determinant role of the family in
the structure of the firm, including ownership and
management. The most common practice of struc
tural familism in traditional ethnic-Chinese firms is
to reserve the most crucial position in the manage
ment exclusively to a family member of the owners
who themselves are linked by family relations.
Normative familism refers to the situation when the
corporate values or the values of the business net
work are extensions of the values maintained in the
family. Paternalism, harmony, uprightness and
informality are examples of normative familism
manifested in the ethnic-Chinese business institution
and network. Many traditional ethnic-Chinese firms
are basically family businesses, relying almost totally
on family resources in both capital and personnel
needs as well as moral reasoning. In those firms,
hence, the two types of familism can be found. More
modern and larger firms often face the situation that
is not conducive for structural familism, yet the
normative type usually persists. In the latter case, the
scope of structural familism covers gradually broader
circles of the family structure, namely clan, dialect
group and ethnic group.
312
Political background of familism
Familism is not exclusively Chinese. Its develop
ment is rather common in many communities that
face political insecurity because of migration or
discrimination. In such situation, the family func
tions as the save haven and centre of encourage
ment. The success story of family businesses belong
to the Quakers in the 18th and 19th century
England is an example outside the ethnic-Chinese
context (Prior and Kirby, 1993). Most ethnic
Chinese of the early generation in Southeast Asia
came as poor immigrants with no access to tradi
tional economic resources, which are land and
authority employment. As with other immigrants in
similar situations, they often had to confront
unpredictable and hostile attitudes of the host
communities. As such, the importance of the family
was extremely crucial, psychologicaUy as weU as
economicaUy (Jones and Rose, 1993: 4).
Whilst the ethnic-Chinese communities in many
Southeast Asian countries have long been respectful
elements of the modern, post-colonial nations,
those in Indonesia are in a more difficult position.
From the colonial times until the period of the
New Order regime, the Chinese-Indonesian
experienced ambivalent political approaches. On
the one hand, the governments often made use of
their business expertise and network for the sake of
the country's economy or their officials' personal
interests, by giving them opportunities to carry out
business in particular sectors. On the other hand,
there were always discriminatory policies to restrict
their economic power and discourage them from
political involvement, in order to keep them in the
weak political position, vulnerable enough to
depend on political protection of those in the ruling
seats. The Chinese-Indonesian were also suffered
from systematic cultural humiUation from the state
and recurrent anti-Chinese violence from the
dominant groups in society. On the part of the
ethnic Chinese, those experiences made it relevant
to preserve familism. As Adam Schwarz (1994: 107)
explains, 'as a consequence of their political vul
nerability, the Chinese tend to save their money,
distrust strangers and depend to a great extent on
personal relationship and family network, aU of
which are conducive to the rapid growth of family
run businesses'.
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Yahya Wijaya
Is familism in the ethnic-Chinese business
Confucian?
Haley et al. believe that familism in the ethnic
Chinese business has its root in Confucianism. For
them, the norms exalted in normative familism re
flect the fundamental values of Confucian ethics. As
such the ethnic-Chinese family business operates
differently in many aspects from the Western family
business (1998: 42-49). That theory is supported by
Yen Ching-hwang (1995), who argues that Confu
cianism has served as the ideological drive in the
economic success of Singapore, Hong Kong, Tai
wan and even, in different ways, Japan as well as
South Korea. Another scholar who supports the
Confucianism theory is S. Gordon Redding (1993).
Based on his interviews with 72 business executives
from four Asian countries, Redding offers a cultural
explanation regarding the success of the ethnic
Chinese in business, in which he points to the
importance of the transmission of Confucianism into
the "overseas Chinese" subculture.
Scholars who subscribe to the political or eco
nomic explanation challenge the Confucianism
theory. Colin Brown, for example, denies the cul
tural uniqueness of all aspects of the ethnic-Chinese
business, including the role of the family and the
nature of the network (1998: 208-227). According
to him, the term "overseas Chinese" in fact refers to
culturally diverse communities, so that any general
isation on their culture is false. For Brown, the
determining factor in the formation of the ethnic
Chinese business in Southeast Asia is merely politi
cal. Rupert Hodder (1996) shares the same opinion.
Pointing to the case of Hong Kong, he suggests a
purely political-economic explanation for under
standing the ethnic-Chinese business. In Hodder's
view, the cultural explanation is methodologically
misleading.
However, the ethnic-Chinese business is a com
plex phenomenon worth viewing from different
perspectives, so that an explanation from a single
angle would not be sufficient. Although political and
economic factors obviously play important roles in
the formation of the ethnic-Chinese business, it is
important to reckon the contribution of religious
cultural perspectives. As Eugene Kheng-Boon Tan
(2000: 66) suggests, whilst it is true that 'an exces
sively cultural explanation' should be avoided, a
 The Prospect of Familism in the Global Era 313
purely empirical method singling out political and
economic aspects 'misses the intricacies of ethnic
Chinese capitaUsm in Southeast Asia'.
In affirming the role of Confucianism in shaping
the culture of the ethnic-Chinese business, it is
important to refer not to the imperial elite version of
that religious tradition, but to the popular one that is
blended with Mahayana Buddhism, Taoism and a
sort of Shamanism. The popular version of Con
fucianism preserves the elite one's centralising on the
family, but is more favourable to trade and wealth
creation. (Lim, 2000: 3). Such a development of a
religious-moral tradition is simply normal. It in fact
happens in almost aU major religions including
Christianity, such as in the cases of Protestantism and
Pentecostalism. That does not always mean a total
abandonment of the tradition's identity, as Brown
assumes (1998: 215). It is also important that the
acknowledgment of the cultural factor should not
necessarily lead to a claim of the supremacy of
Chinese culture over the indigenous Southeast Asian
cultures, as Brown also accuses (1998: 215). For each
culture is unique and produces both economic
advantages and disadvantages.
Hence, culture, including its religious dimension,
does matter. This, in the case of the ethnic-Chinese
business, entails the need to take account of reli
gious-cultural factors in relation to familism. Since
the family nature of the ethnic-Chinese business is
not just a result of political and economic condition,
but in fact has a strong religious-cultural foundation,
any attempt to change that nature would not be
strong enough without first transforming the reli
gious-cultural assumptions. This explains why purely
economic or political chaUenges, including that of
the global market, fail to push ethnic-Chinese firms
to leave behind the category of family business;
although those chaUenges may have helped the firms
grow to the size of giant corporation.
The advantages and disadvantages of
familism
A survey conducted by Okke Braadbart in Bandung,
Indonesia, indicates that structural familism applied
in ethnic-Chinese firms enhances the competitive
ness of those firms. Structural familism enables the
ethnic-Chinese firms to avoid the 'agency problem',
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namely practices such as whistle blowing and
diverting orders to other firms for a higher com
mission, as many agents and professional salespeople
often do (Braadbart, 1995: 190). Jamie Mackie also
notes the advantage of familism, in both structural
and normative types, in making the ethnic-Chinese
business perform better than their rivals in Southeast
Asia 'with their looser social structures and cognatic
(bilateral) decent systems' (Mackie, 1998: 143). Janet
T. Landa argues that familism is a factor enabling the
ethnic-Chinese business to cope with the situation
of 'contract uncertainty', as found in many Southeast
Asian countries particularly Indonesia, where legal
system is unreliable and old-fashioned. In that case,
familism, manifested in networks that are formed
according to sub-ethnic and ethnic lines, provides
the moral as well as social alternatives for legal
enforcement, so as to maintain a moral business
environment (Landa, 1983: 90-95). Also, Wong
Siu-lun (1995) observes that when the structure of
family is expanded through assimilation and judi
cious marriage, as is the case in many large ethnic
Chinese firms, structural familism provides enough
human resources for the firms, not only to keep their
internal structure afresh but also to secure their po
sition in the marketplace.
Familism thus helps the firm to create a com
munity of trust, both within its internal structure and
within the business network. Normative familism
also shortens bureaucracy and formalism, making
possible a fast and efficient system of decision
making. As Haley et al. note, 'several stories exist of
well known Southeast Asian executives who decided
on important matters in minutes and implemented
the results almost immediately' (1999: 103; see also
Yeung, 2000: 98). Hence, familism makes work
relations more personal than contractual, and pro
vides reasoning for the flexibility required in the fast
changing business context.
On the other hand, structural familism could
hamper business progress, since the structure of the
family, even after being expanded through a process
of assimilation or judicious marriage, is often too
limited to accommodate the growing firm's need of
executives. Familism is also extensively noted as
causing a tension in many ethnic-Chinese firms
between the professional managers and those who
are members of the owner's family, because trust,
highly valued in the family context, is usually not
314
extended to the professional level (Haley et al.,
1998: 37; Redding, 1993: 131; Weidenbaum, 1996:
144). Familism also generates an authoritarian type
of leadership. According to Haley et al., the
authoritarian leadership of the ethnic-Chinese busi
ness is rooted in the Confucian emphasis on the
obligation of rulers to control 'small men', and the
duty of small men to respect the elderly and those
holding the authority. As such, criticism of the
leader is unacceptable, although a good leader is
supposed to bring good things to small men, so that
there is no need for criticising him (1998: 37). Such
an authoritarian style of leadership gives a limited
room for most employees to develop creativity and
new vision, restricting their roles in the level of
operator. Consequently, many ethnic-Chinese
companies find it difficult to recruit qualified
professional managers (Haley et al., 1998: 37;
Fukuyama, 1995: 75).
In terms of networking, familism creates what
Landa calls 'discriminatory ranking', limiting the
scope of a moral-based partnership only with those
included in the insider category, namely the busi
nesspeople of the same dialect group, or, at best, the
same ethnic group. Relationships with those outside
the insider category tend to be less intense and lack
of a strong moral foundation (Landa, 1983: 98).
The power of familism and the Challenge of
globalisation
Globalisation offers a context of doing business that
transcends traditional boundaries. The active cor
porations playing in the global arena are named
transnational, indicating that the relations of those
corporations to nationality, ethnicity and cultural
origin are now less relevant. How has the ethnic
Chinese business responded to this development?
Despite reports on the failure of particular ethnic
Chinese firms to adjust their structure of ownership
and system of management (Fukuyama, 1995: 75), a
significant number of ethnic-Chinese corporations
have demonstrated successful transformation, less
ening their sense of allegiance to structural familism.
Yen Ching-hwang notes a significant growth of
many ethnic-Chinese business enterprises since
1970s and 1980s, changing their features not only in
term of market coverage, but also in that of man
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Yahya Wijaya
agement style. Many new ethnic-Chinese business
firms remain family-owned, but their operation is
multinational and their management system tends to
combine the kinship-based appointment and pro
fessionalism (Yen, 1995: 244). A survey by Henry
Wai-Chung Yeung, concerning 73 ethnic-Chinese
firms based in Hong Kong with Southeast Asia
subsidiaries, shows that those corporations employ
different systems of control and coordination over
their overseas affiliates. In fact, many of them allow
more decentralised management system, giving roles
that are more decisive to the affiliates, many of
whom are non ethnic-Chinese. Yeung suggests that
'their management practices are not so much dif
ferent from Anglo-American TNCs, ... [and thus
there is no] convincing case here to support the
distinctiveness of Chinese management in their
international context' (2000: 117). Does it mean that
the force of globalisation has undermined the unique
characteristics of local businesses, forming a
homogenous Western model of economy in both
the macro and micro levels? Darryl Crawford
(2000) argues that, in the case of the ethnic-Chinese
business, it does not so. The relationships between
globalisation and local business systems are in fact
complex and multidimensional. The pressure of
globalisation does change the political economy of
Southeast Asian countries, and boost the 'evolution'
of the ethnic-Chinese business, such as in relation to
the demand of more transparent financial aspects.
Yet the response of the ethnic-Chinese business in
Southeast Asia is determined by its 'social capital'
that includes the upholding to some extent of nor
mative familism in the region's business network.
The pressure of globalisation thus does not destroy
the ethnic-Chinese business network and its moral
system, but transforming it into a basis for a strategic
participation in the globalised market. Crawford
sums up: 'the evolution of transnational Chinese
business network constitutes a unique reaction to the
pressures of economic globalisation and has laid a
basis for a distinct articulation of capitalism in the
region' (2000: 80). Hence, the ethnic-Chinese
business changes from time to time, and globalisation
plays a role in the recent change, which includes an
adjustment of the degree of familism, both in its
structural and normative types. The change, how
ever, does not entirely eliminate the moral-cultural
uniqueness of the ethnic-Chinese business. It is more
 The Prospect of Familism in the Global Era 315
a transformation than deconstruction of the cultural
characteristics of the ethnic-Chinese business.
Factors determining the transformation
of the ethnic-Chinese business
Several conditions can be identified as factors that
make possible the transformation of the ethnic
Chinese business in response to globalisation. First,
the economic and political positions of the ethnic
Chinese businesspeople are now different from those
of their first generation. Whilst the early generation
of the ethnic-Chinese started their business as fresh
immigrants, having no chance of obtaining an
external help and thus had to rely only on family
resources, the present generation are heirs of rela
tively secured business corporations with a wide
access to material and professional human resources.
This makes, for the latter, the need to explore family
resources no longer crucial. For instance, in term of
capital enhancing, it is becoming common that
ethnic-Chinese firms go public through the stock
exchange mechanism (Suryadinata, 2002: 155). The
political pressure in the form of legal discrimination,
which is a reason for the ethnic Chinese to maintain
familism, is also lessening. Since globalisation makes
capital mobility easier, it gives pressure for govern
ments, in need of investment, to create conducive
social and political atmosphere for businesses to
remain in the country. In Indonesia, after the 1998
anti-Chinese riot, significant political and legal
changes have been made to prevent the anti-Chinese
incident from recurring. The bylaw forbidding
public exposure of Chinese culture has been can
ceUed. Chinese New Year is even made official
public holiday. In addition, a new law on citizen
ship, omitting ethnic and religious categories, has
replaced the old one, which had long become the
legal reference for discriminating the ethnic Chinese.
Second, whilst Confucianism, which provided the
philosophical and religious foundations for fam?ism,
influences the early generation of the ethnic Chinese
in general, few of the present generation have a
conscious commitment to that religious tradition.
For an increasing number of ethnic Chinese in
Indonesia and probably other Southeast Asian
countries, Christianity is more attractive than Con
fucianism or Chinese popular religion. Michael
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Backman (1999: 218) observes the tendency of many
leading Chinese-Indonesian businesspeople to join
Christian congregations, mostly of fundamentalist
Protestant streams, whose function replaces that of
the traditional clan associations. Christianity does not
share Confucian optimism on the centrality of the
family. Instead, the Christian narratives on the family
are quite ambivalent: acknowledging the importance
of the family on the one side, alarming the potential
conflicting interests between the natural human
family and the family of God, on the other side
(Pyper, 1996). Christian faith thus does not provide
enough support for familism. At the same time, there
are attempts to reinterpret Confucianism to dem
onstrate its relevance for the modern, global world,
emphasising a more social ethic at the expense of a
narrow family ethic. For instance, the work of
Zhang Wei-bin (1999) confirms that a reinterpre
tation of Confucianism can lead to the conviction
that Confucian teachings are actually compatible
with modern, democratic capitalist society.
Third, the size of the modern family, that of the
ethnic Chinese is no exception, tends to be smaller,
limiting its potentials to serve such a central func
tion. Eddie C.Y. Kuo (1986), contemplating the
context of Singapore, notes the social changes
affecting the feature of the ethnic-Chinese family in
that city-state. The traditional Confucian ideal of a
large extended family encompassing five generations
has become too far from what is realistic in today's
situation. Factors such as urbanisation, industrialisa
tion, modern education and the family planning
policy have limited the opportunity for people to
deal with family things beyond the context of the
nuclear family. The situation in Indonesia is not
much different from that of Singapore. Due to the
change in the concept of the family, the modern
ethnic-Chinese tend to be less aware of their clan
and sub-ethnic grouping, institutions served as forms
of extended family in refer to the past generation. As
Lim observes, the ethnic Chinese in Southeast Asia
are more familiar with local cultures and languages
than with their ancestors' tradition, and thus they
'tend to be loyal first to their adoptive country, and
secondly to their race and culture' (1992: 45)
Finally, many ethnic Chinese of the younger
generation have attended Western and Western
style business schools, where they study critically
characteristics of the traditional ethnic-Chinese
316 Yahya Wijaya

business, including the phenomenon of the incom trade. That economic position produced a culture that
patibility between familism and business profession is more this worldly, in contrast to the dominant cul
alism. For instance, Chinese-Indonesian young ture centred in the North. The popular version of Con
fucianism is rooted in that Southern culture.
business leaders, Trihatma Kusuma Haliman of
6 Redding argues that for the ethnic-Chinese, trust in
Agung Podomoro Group is a German graduate,
the family is an absolute value, but trust outside the
Sunjoto Tanudjaja of Great River International and
family context is based only on proven mutual depen
James Riady of Lippo Group are American graduates
dence (1993: 66)
(Kompas, 22/05/2004). In addition, comparative The question reflects the claim of a particular move
studies between the ethnic-Chinese business and the
ment, which accuses globalisation as producing so-called
universally successful Japanese business have helped 'McDonaldisation' all over the world at the expense of
critical ethnic-Chinese businesspeople aware that it local cultural heritages.
is possible to develop Asian business professionalism For Crawford, the 'evolution' of the ethnic-Chinese
with a lesser degree of familism. The combination business is not only in relation to globalisation, it is in
between the academic or professional studies on fact a regular process, a part of the adaptive nature.
contemporary business issues and the legacy of the Such a comparative study is made by Haley et al.
focussing on the aspects of firm, loyalty and commercial
family business tradition produces the capability of
trust (1998: 65)
the younger generation to develop a new style of the
ethnic-Chinese business, responding to the global
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Faculty of Theology,
Duta Wacana Christian University,
Jalan Wahidin 5-19, Yogyakarta, 55224, Indonesia
E-mail: yahyawijaya@ukdw.ac.id