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Organizational and Institutional Building of Enterprises

In: Understanding Chinese Firms from Multiple Perspectives

Author

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  • Jianjun Zhang

    (Peking University)

Abstract

Due to the fact that the market in the IT industry changes very fast, if sales policies and promotion plans were all to be formulated by the headquarters of the company, the result would be bad due to time-lag and regional disparities. So upon the request of regional managers, the headquarters delegated partial authority to managers of each region. In a short period of time, because the regional offices knew their local markets better, plans formulated by them were more practical; meanwhile, the incentives for employees at the regional offices were also motivated, so the delegation of power demonstrated positive effects and, as a result, the sales volume increased a lot. However, problems occurred after a while. Corrupt behavior started to happen in regional offices after they obtained power. For example, rent-seeking largely existed in terms of price policy and marketing budget spending. The whole atmosphere and culture of the company were ruined, which severely damaged the company’s long-term interest. In the end, the headquarters of the company took back the power… (Interview with a manager, November 2007)

Suggested Citation

  • Jianjun Zhang, 2014. "Organizational and Institutional Building of Enterprises," Springer Books, in: Zhi-Xue Zhang & Jianjun Zhang (ed.), Understanding Chinese Firms from Multiple Perspectives, edition 127, chapter 0, pages 119-147, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-54417-0_5
    DOI: 10.1007/978-3-642-54417-0_5
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