Risks, ethics and technology

Citation

Foo, C.-T. (2007), "Risks, ethics and technology", Chinese Management Studies, Vol. 1 No. 2. https://doi.org/10.1108/cms.2007.32301baa.001

Risks, ethics and technology

Risks, ethics and technology

China continues to be a fascinating market for investors. With the robust flows of investment dollars ($69.5 billion in 2006) China is now closing tight the doors to industrial guzzlers of energy, those that pollute as well as industries that are low in value add. Also barred from entry are investors in the real estate. Simultaneously, China welcomes with open arms investors from different kind of industrial players: those in or related to those in finance, information technology IT, technological research and development (R&D), software and supply chain logistics.

Arguably these industries are different in other ways than just being cleaner and more productive. These are intriguingly, the more “intelligent” and strategic kinds of industrial endeavors. Investors who pull in financial products and services, technological R&D and new developments in technology are also those likely to be reading up journal papers. For insights into China that are drawn from studies being implemented, they are welcomed as are also academics and scholars to refer to Chinese Management Studies.

I am glad as Editor to present in this second issue, not one but two empirically grounded studies on risks inside mainland China. What is often uppermost in the minds of the investors when they are contemplating projects or business on – whether doing it alone or in partnership – is the nature of the political risk involved. This is precisely why the first paper, Analysis of Political Risks and Opportunities in Public Private Partnerships (PPP) in China and selected Asian Countries – Survey Results is so timely. For example, they warned the investor in clear prescriptive language:

... for the investors, the risk of credit-worthiness of local governments is of their main concern. Due to lack of relevant experience and knowledge on PPP or for short-term purposes, some local governments make unrealistic guarantees and supports to attract foreign investment...

Through their analyses of surveys, Tillmann Sachs, Robert Tiong and Shou Qing Wang provide for the readers the realities, dynamics and issues involved in public-private partnerships behind the fast paced infrastructural works. If you are ever in Beijing for the 2008 Olympics, bring along this issue. Why? As you enjoy the games remember this phrase from the paper: “...about two-third of the 32 sport venues including the main stadium – China National Stadium – for the 2008 Beijing Olympic Games and the No. 3-5 subway routes in Beijing are being developed with PPP vehicle...”

Then there is the paper on specifically on financial risk. Precisely, the art of using the rough set methodology to predict financial distress among Chinese listed corporations. Zongjun Wang and Hongxia Li sieved through ratios of firms (212 distressed versus 212 healthy firms) through the period 1998-2005 in search of the probabilities of financial distress. What is their catch? A range of ratios as classifiers:

...growth ratio of per share of equity, net return on assets, earnings per share, interest coverage, ownership concentration coefficient, net profit margin, pledge, retained-earnings ratio and total assets turnover...

What the scholars had done was to mine the data for knowledge. Yet how well a publicly listed corporation is managed rests just as much on the integrity besides professional competency of the management team: Chief Executive Officer (CEO) or in the US, the President, the Chief Financial Officer (CFO) or across the Pacific or Atlantic, depending where you are reading this journal, the Corporate Treasurer and so on. Here is where I ask you to turn to this paper by Stephen Baglione: Ethics, Values, and Leadership Beliefs and Practices: A Preliminary Investigation, Chinese versus American. The empirical findings – preliminary – surprised the researchers themselves especially given the barrage of criticisms of corruption in China:

...The data is clear. On all questions which linked economic benefit, organizational climate, and productive workforce to the existence of strong and positive organizational values and beliefs, the Chinese executives responded more positively than their U.S. counterparts. The Chinese business executives report a much stronger belief that positive ethical practices are rewarded with additional sales or revenues in comparison to the U.S. business executives who were, on average, not nearly as certain...

Personally, I was not as surprised. I can offer an explanation for these findings. Many Chinese I found in my trips to China are despite living under communism still strong believers of a natural principle that governs our human affairs. Simply put, it is a belief that “Do good deeds and you reap good rewards”. In Buddhism it is the universal law of karma. Clearly this is only the beginning and much more work and rigorous work is required to be undertaken. What Stephen Baglione's work is really saying is to tell us to keep an open mind. Moreover, China is evolving and values and beliefs too are changing.

Finally we have in the second issue, a very interesting and timely piece on information, communication and technology skills based on data drawn from multinational corporations (MNCs) from across the 180km Straits of Taiwan. What made the paper by Hu, Zheng and Lammond even more intriguing are insights that may be directly relevant to similar scenarios in mainland China. That is once the waves of information technology (IT) investors are beating on shores of China. The key insight that is especially relevant for investors is caveat emptor – the standard governmental support programs may not solve your firm-specific IT skills.

I look forward to receiving contributions on topics that are related to Chinese management from academics working inside and outside of China. Qualitative contributions, for example works on Chinese philosophy (for example, Ch'an or Chinese Zen for inspiring innovation and creativity) in relation to management will be considered. Also I like to encourage innovative works that relate historical novels, especially Three Kingdoms to management. The Chinese themselves routinely cite examples from such popular classics (even Journey West) when they are discussing about management.

Check-Teck Foo