Balancing formality and informality in business exchanges as a duality: A comparative case study of returnee and local entrepreneurs in China

Daomi Lin, Jiangyong Lu, Peter Ping Li, Xiaohui Liu

Research output: Journal PublicationArticlepeer-review

41 Citations (Scopus)

Abstract

The management paradigms in the West mainly rely on legal contracts and explicit rules (formality), while the management traditions in the East emphasize social relationships and implicit norms (informality). In an era of 'West-meets-East', balancing formality and informality is becoming critical for firms, especially those facing institutional differences in transnational contexts and institutional transitions. In this research, we conducted a comparative multicase study on returnee entrepreneurs and local entrepreneurs in China. We found that at the early stage of venturing, returnee entrepreneurs emphasized formality more than informality, while local entrepreneurs stressed informality more than formality. However, the formality-informality balance among both returnee and local entrepreneurs converged over time in line with the institutional transition in China. Returnee entrepreneurs increased the emphasis on informality (but kept the dominant position of formality), whereas local entrepreneurs gradually shifted from informality to formality. The spatial pattern of asymmetrical balancing and the temporal pattern of transitional balancing are both rooted in the Chinese philosophy of Yin-Yang balancing.

Original languageEnglish
Pages (from-to)315-342
Number of pages28
JournalManagement and Organization Review
Volume11
Issue number2
DOIs
Publication statusPublished - 5 Jun 2015
Externally publishedYes

Keywords

  • Formality-informality balance
  • Institutional differences and institutional dynamics
  • Returnee and local entrepreneurship
  • Yin-Yang duality

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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