Academic journal article South Asian Journal of Management

Business Systems and Societal Context: Comparing Chinese and Indian Models

Academic journal article South Asian Journal of Management

Business Systems and Societal Context: Comparing Chinese and Indian Models

Article excerpt

China and India, in terms of geography, population size and regional cultural influence, are the most important Asian nations. Both have experienced consistently high economic growth rates over the past decade and it is widely assumed they will have a profound global and regional impact in the 21st century. The potential of these two nations suggests that a comprehensive understanding of their business systems is vital for competitors, trading partners, and those who would learn from their development experiences. An adaptation of Redding's (2005) model is utilized for the purpose of describing, analyzing and comparing the business systems of China and India. It is important to note that this approach does not attempt to derive causality between societal factors and economic performance, but within the limited scope and constraints of this relatively short document, demonstrates how enhanced understanding might be achieved through the use of the proposed model.

INTRODUCTION

It is clear that China and India, in terms of geography, population size and regional cultural influence, are the most important nations in Asia. Both have experienced consistendy high economic growth rates over recent decades, a fact which is made all the more notable by the size of their respective populations. This economic reshaping is widely predicted to continue 'for some years, and it is assumed that these two nations, considered either separately or together, would provide global and regional models, which are beyond the narrow stereotypes currently associated with the democratic and socialist systems of the 20th century.

Despite the influence of apparently convergent global trends, divergent managerial assumptions and business practices persist in these two nations. The present paper, an early version of which (see Grainger and Chatterjee, 2007) was presented to the Asia Pacific Economics and Business History Conference in Sydney, Australia in February, 2007, utilizes an adaptation of Redding's (2005) comparative business systems model, adopting the premise that cultures underpin socially embedded economic institutions, and in turn, that institutions underwrite governance models, inter-firm networks and alliances, and approaches to corporate management. This approach is not aimed at establishing causal relationships between societal factors and economic performance, as is the case with many comparative management models in the academic literature. The approach in this paper is descriptive, and within the constraints of this relatively short document, and following a brief background to the economic potential of China and India, the contemporary business systems of these two critically important Asian nations are described, analyzed and compared.

THE ECONOMIC RISE OF CHINA AND INDIA

The world's two most populous nations (jointly accounting for about 40% of the world's population), are also the two fastest growing economies in the world ("A Survey of India and China", 2005), and have been so for some considerable time. Both have experienced consistently high economic growth rates since the opening of their economies to global market forces, and this is reflected in the growth patterns over recent decades (see Table 1).

This extraordinary long run economic expansion is predicted to continue (see Table 2). What makes the figures in Table 2 especially notable is the outcome after adjustment of gross domestic product, and gross domestic product per capita, to purchasing power equivalents. For example, after this conversion, China in 2007 is placed second only to the USA in terms of gross domestic product, and India is placed third. Again, on the basis of statistics such as those expressed in Table 2, it is widely assumed that these two nations, considered either separately or together, will have an outstandingly significant global and regional impact in the 21st century.

Even from the preliminary data presented above, it is obvious that other nations around the world, and especially those located in or near the Asia-Pacific region, should thoroughly acquaint themselves with the circumstances surrounding the economic rise of China and India. …

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