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Balancing Formality and Informality in Business Exchanges as a Duality: A Comparative Case Study of Returnee and Local Entrepreneurs in China

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

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.

Suggested Citation

  • Lin, Daomi & Lu, Jiangyong & Li, Peter Ping & Liu, Xiaohui, 2015. "Balancing Formality and Informality in Business Exchanges as a Duality: A Comparative Case Study of Returnee and Local Entrepreneurs in China," Management and Organization Review, Cambridge University Press, vol. 11(2), pages 315-342, June.
    • Handle: RePEc:cup:maorev:v:11:y:2015:i:02:p:315-342_00
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    Cited by:

    1. Yuying Wu & Zhiqiang Wang & Yuan Lu, 2023. "Mapping the evolution of entrepreneurial research themes in China: A combination analysis of co-word and critical event," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 1133-1167, September.
    2. Peter Ping Li & En Xie, 2019. "The unique research on the informal ties and social networks in East Asia: Diverse perspectives and new research agenda," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 305-319, June.
    3. William A Jackson, 2024. "Dualities in the Organising of Markets," Discussion Papers 24/02, Department of Economics, University of York.
    4. Liu, Xiaohui & Xia, Tianjiao & Jiangyong, Lu & Lin, Daomi, 2019. "Under what institutional conditions does overseas business knowledge contribute to firm performance?," International Business Review, Elsevier, vol. 28(3), pages 588-602.
    5. Tran, Yen & Truong, Anh Tran Tram, 2022. "Knowledge recontextualization by returnee entrepreneurs: The dynamic learning perspective," Journal of International Management, Elsevier, vol. 28(3).
    6. Peter Ping Li & Tomoki Sekiguchi & Kevin Zhou, 2016. "The emerging research on indigenous management in Asia," Asia Pacific Journal of Management, Springer, vol. 33(3), pages 583-594, September.
    7. Tzeng, Cheng-Hua, 2018. "How foreign knowledge spillovers by returnee managers occur at domestic firms: An institutional theory perspective," International Business Review, Elsevier, vol. 27(3), pages 625-641.
    8. Steven Shijin Zhou & Peter Ping Li & Abby Jingzi Zhou & Shameen Prashantham, 2020. "The cultural roots of compositional capability in China: balanced moderation," Asia Pacific Journal of Management, Springer, vol. 37(4), pages 1217-1237, December.
    9. Qin Su & Dora C. Lau & Grace M. Poon & Lynn M. Shore, 2023. "Team Diversity in Chinese Organizations: A Review and a Qualitative Study," Asia Pacific Journal of Management, Springer, vol. 40(3), pages 953-993, September.
    10. Qin, Fei & Wright, Mike & Gao, Jian, 2017. "Are ‘sea turtles’ slower? Returnee entrepreneurs, venture resources and speed of entrepreneurial entry," Journal of Business Venturing, Elsevier, vol. 32(6), pages 694-706.
    11. Mai, Nhat Chi, 2020. "Unpacking the process of overseas knowledge recontextualisation in returnee entrepreneurship - a learning perspective : a study of returnee entrepreneurs in Vietnam," OSF Preprints y5psh, Center for Open Science.
    12. Mike W. Peng & Yuan Li & Longwei Tian, 2016. "Tian-ren-he-yi strategy: An Eastern perspective," Asia Pacific Journal of Management, Springer, vol. 33(3), pages 695-722, September.
    13. Chan, Tysun & Gountas, Sandra & Zhang, Luyuan & Handley, Brian, 2016. "Western firms' successful and unsuccessful business models in China," Journal of Business Research, Elsevier, vol. 69(10), pages 4150-4160.
    14. Martin Hemmert & Adam R. Cross & Ying Cheng & Jae-Jin Kim & Masahiro Kotosaka & Franz Waldenberger & Leven J. Zheng, 2022. "New venture entrepreneurship and context in East Asia: a systematic literature review," Asian Business & Management, Palgrave Macmillan, vol. 21(5), pages 831-865, November.
    15. Xin Li, 2019. "Is “Yin-Yang balancing” superior to ambidexterity as an approach to paradox management?," Asia Pacific Journal of Management, Springer, vol. 36(1), pages 17-32, March.

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