Growth Strategy and the International Comparison

Abstract

This research was motivated by the absence of studies that specifically analyse the diversification patterns of Chinese large corporations from the point of view of interrelationship between diversification strategy and organizational structure. Current study followed standard procedures developed by Rumelt (1974) and analyzed the data of 100 top manufacturing companies of China as of 2004 to obtain international comparisons of industrial structure, strategies and organizational structures of Chinese large companies. In different countries like US, Japan, Germany, France, UK, etc. there are a lot of studies (including comparative analysis) concerning strategy and structure of large-scale corporations, whereas in China where companies do not have legal responsibility to disclose information to the public, it is difficult to obtain correct financial accounting data. Due to these reasons, despite the fact that some case studies have been done, there is a lack of systematic studies of strategy and structure of Chinese firms. By systematically collecting the data from the Chinese biggest corporations and applying Rumelt's concepts of strategies and structures, the present paper makes an attempt to provide necessary classifications of strategies and structures of Chinese corporations and proceed from individual case studies to systemic and comparative quantitative analysis of a large number of companies. As a result, analysis of industrial structure and distribution of companies among industries revealed the uniquely high concentration pattern of Chinese top corporations. Concerning the product strategies, similar to Europe, US and Japan, most of Chinese companies diversified their businesses; however, the strategic orientation shows a tendency toward establishment of Dominant business. Looking at the organizational structures of big corporations of China, the so-called MUZI functional design is a typical form in China. Although big companies show the inclination toward adaptation of divisional structures, there are still a lot of companies with functional design. These outcomes ultimately illustrate the unique features Chinese large companies possess in the fields of strategic management and industrial organization.