Managing International Business in Relation-Based versus Rule-Based Countries

  • 2h 29m
  • Shaomin Li
  • Business Expert Press
  • 2009

Most executives and business students are familiar with how the rule-based system functions; few understand how relation-based system works (which accounts for the majority of the countries in the world).

Many dismiss it as backwards and attribute it to cultural traditions and norms (such as the Chinese guanxi tradition). This book dispels these myths and shows that people rely on the relation-based system not owing to specific cultural factors, but because of the stage of development in these countries. When the market is limited in scale and informal networks are thick, the relation-based system can be quite effective and efficient. The author applies this line of thinking to explain why business practices differ and how business people should interact across the two governance systems.

About the Author

E. Shaomin Li is the E. V. Williams Fellow and Professor of International Business at Old Dominion University in Norfolk, Virginia. He studies how political and economic systems affect business operations and firm performance across countries. He serves as associate editor for Corporate Governance: An International Review. His articles have appeared in Harvard Business Review, California Management Review, and Journal of International Business Studies, among others. He also wrote for the Wall Street Journal and New York Times. Dr. Li has extensive business and consulting experience in Asia, including serving as director of AT&T EastGate Services and founding Ltd., an IT firm based in Hong Kong with two subsidiaries in China. Dr. Li went to Peking University for his undergraduate study, received his PhD from Princeton University, and was a postdoctoral fellow at Harvard University. In 2008 Virginia Governor Tim Kaine awarded him the Outstanding Faculty Award for his “superior accomplishments in teaching, research, and public service.”

In this Book

  • Managing International Business in Relation-Based versus Rule-Based Countries
  • Author’s Note
  • Introduction – Rule-Based Versus Relation-Based Systems
  • Distinguishing Rule-Based and Relation-Based Countries – How to Measure Governance Environment
  • Market Structure in Relation-Based Societies
  • How Much Do We Trust Disclosed Information? – Investment Protection in Relation-Based Markets
  • Mafia Boss or Modern Manager? – Management and Working Relationships in Relation-Based Firms
  • Friction Between Information and Communication Technology and Relation-Based Governance
  • “Efficiency Enhancing” Corruption? – Corruption in Relation-Based Societies
  • The Greatest Leap Forward – The Transition From Relation-Based to Rule-Based Governance
  • Notes
  • References