Confucianism in family business succession
BREAKTHROUGH - Elfren S. Cruz (The Philippine Star) - November 14, 2019 - 12:00am

The passing away of major members in the hierarchy in several Filipino-Chinese conglomerates has caused discussion on the topic of succession in family businesses. This is the problem that has resulted in the fragmenting of most family businesses, large, small or medium sized. The resistance to orderly succession is the biggest problem among family firms.

The resistance can come from many sources, including the founder, potential successors, siblings, family members or the organization itself. The path to succession is also heavily influenced by the ethnic culture of the family in control of the business. 

 One major issue for traditional Chinese business families is whether the Confucian philosophy lessens or increases resistance to orderly succession among family members. It should be noted that the influence of Confucian values is stronger among overseas Chinese than Mainland Chinese. 

 Jun Yan and Ritch Sorensen, in an article, examined the “ effect of Confucian values on succession in family business”. According to them, the more a Chinese family adheres to principles and values underlying Confucian philosophy, the less resistance there is to orderly succession. Confucianism is not a religion but a philosophy that underlies, pervades and guides Chinese social behaviour. It might be viewed as a grand theory of interpersonal relationship. 

Confucianism is woven into the very fabric of Chinese society. It is a worldview and set of principles taught by Confucius and studied and developed by other scholars for more than 2,000 years. Although it is not a religion, Confucianism provides specific guidelines for proper behaviour. From the Han dynasty (206 BC to 220 AD) until the early 20th century , works based on Confucianism have been widely used by governing administrations as major formal learning:  Luen u (Analects), Zhong Yong ( Doctrine of the Mean),  and Menzi ( Mencius). 

The result is that Confucian values are deeply rooted in Chinese society. Chinese families use stories, sayings and special terms to instill Confucian ideals in their children. It continues to exert a major influence on the everyday lives of the Chinese people. Many management researchers now argue that Confucian values are the root of the “emerging Chinese way of management”or Confucian management. Recent studies of   both mainland and overseas Chinese organizations show that Confucian values exert significant influence on the work related behaviours and attitudes of Chinese managers and on other organizational behaviour such as decision making, quality management, management training, organizational commitment, and organizational socialization. Confucian values permeate even the policies of mainland and overseas Chinese family business firms.

Confucianism uses five virtues to define relationship between individuals. These are: humanity/benevolence (ren); righteousness ( yi); propriety (li ); wisdom ( zhi); and trustworthiness( xin). Confucianism also defines five basic social relationships: father and son; ruler and ruled; husband and wife; elder brother and younger brother; friend and friend. Among the five relationships, only the last is equal in position. Confucianism emphasizes the importance of filial submission, loyalty, duty, conscience, harmony, consensus, reciprocity, trust and sympathy. It urges individuals to adapt to collectivity, control personal desires, and emotions, restrain self interest for the benefit of the group and avoid conflict and maintain harmony. 

Family business succession

There are five areas of Confucian philosophy that can influence succession. The family, not the individual,  is the basic unit of society. Family is more important than any individual member and harmony is the most important value for all family members. The will of the individual must be subordinated to the family group. Children must be taught to restrain individualism to maintain harmony in the family.

The parent-child relationship in Confucianism is reciprocal in which children serve their parents with filial piety and submission and parents treat their children with kindness and care. The relationship is characterized strongly by father-son identification and the notion of family continuity. Filial piety is the mechanism that helps prevent and resolves conflicts between children and parents in family life.

A child in a Confucian family is taught to be respectful and obedient to all other senior family members. This relationship is expected throughout their lives. When the father passes away , the eldest son assumes the family leadership position. 

The ruled is expected to be submissive to the ruler while the ruler is expected to be kind and caring almost like father and son. Such hierarchal relationships are also observed between superior and subordinate, employer and employee, teacher and student. In the relationship between friends, trustworthiness is the most treasured virtue. In terms of inheritance, Confucianism teaches that even though older and younger brothers are not equal in their relationships, they all have equal rights to inherit family property. 

While Confucianism may lessen resistance to orderly succession, it may have some negative effects on business longevity. Confucian guidelines state that the eldest son be the successor. The family may then overlook the most competent sibling with the possible result that the business is passed to a less competent successor.

As China becomes a more dominant economic superpower, Chinese family business will become more integrated into the global community. The fascinating question is whether Chinese family businesses will adapt to Western business practices or will gobal businesses adopt certain Confucian business practices? 

Creative writing classes for all

Fiction writing for adults with award-winning fictionist Jose Y. Dalisay Jr. on Nov. 16, 1:30-4:40 pm, U-View, Basement;  Young Writers’ Hangout  on Nov. 16 with Roel Cruz,  Land of Magical Tales  for Fully Booked’s  Kids Fair 2019, 1-3 pm.;  Nov. 23 with Tarie Sabido (1:30 pm-3pm; stand-alone sessions) at Fully Booked BGC.   For details and registration,  email writethingsph@gmail.com.

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Email: elfrencruz@gmail.com

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