(Page 5 of 18) - Kinship Networks, Village Industry, and Max Weber authored by Peng, Yusheng.

example, argued that by pinning his hope for modernization on the rationalizing effect
of the Chinese state, Levy has totally misread the economic potential of Chinese
families and “has bet on the wrong horse” (1988, p.146). The great economic potential
of the Chinese family has been constrained by the state preoccupied with “coordination
and integration.” Once these constraints are removed, the Chinese family could "fuel
the engine of development"(1988, p.146). Observing the role of family firms in
Taiwan’s economic development, Greenhalgh (1988, pp233-34) describes the family
firms (or qiye jituan) as “the package of individual incentives and group insurance
[pooling resources] that promotes the emergence of highly motivated, risk-taking
entrepreneurs.”

Theorizing about the social roots of the rapid economic growth in China since

1980s, Whyte (1996, 1995) calls our attention to the role of its family and kinship
patterns. Whyte (1995, 1996) pointed that during the socialist era the Chinese family
pattern has undergone dramatic changes, such as the shift from extended to nuclear
family, the phasing out of pre-arranged marriage, the softening of the power of the
elderly, etc. But some features of Chinese familism persisted, such as loyalty and
obligations to the larger kinship network, sacrifice by members for the sake of the
family and the power of the kin relationships upon individual behavior. It is these
persistent patterns that provide favorable conditions for the initial stages of economic
development. “The continued strength of family loyalties provided a resource that
could be used to mobilize family economic efforts under changed conditions while the
softening of the parental authority helped to ensure that these efforts would be
innovative and productive direction” (White 1995, p. 1007).

Thus, rather than being an obstacle, Chinese familism can be an engine for

economic growth. First, family orientation and obligations foster a hard working ethics.
The Chinese people work very hard, live frugally, and exercise self-denial like the
puritan Protestants. They do not work hard for salvation or self-enjoyment, but for the
welfare of their family, offspring, and future generations (Harrell 1985).

Second, familism provides organizational loyalty and stable authority. In small

family-operated enterprises, family members and kinsmen are willing to work very
long hours and for very low pay. They have natural loyalty to their family firm. They
are likely to stay with the firm and help the firm to survive hard times (Niehoff 1987;).
Even in non-family-owned large enterprises, kinship loyalty can also be used for the
management’s advantage. Ethnographic studies show that in Hongkong-invested
factories in Guangdong, the managers actually maneuver kinship ties and localistic
networks among the migrant workers for labor recruitment and labor control (Lee 1999;
Smart and Smart 1993)

Third, kinship and guanxi network is a useful source of labor, capital, and

information. At the start-up stage of China's rural industrialization, family obligations
and kinship ties may have helped the capital formation. This would be particularly
important when the official banking system was not very sympathetic to peasant
entrepreneurs. At the present, the bulk of rural spending (over 70 per cent in 1990)
came from household savings. Because the official financial institutions could not
effectively channel these household savings, families still played an important role in
directing the use of the rural savings (Fleisher et el. 1994).

Fourth, reliance on kinship and personal networks is also more advantageous than

problematic because it can reduce transaction costs by lowering the likelihood of