Y. N. Chang
Early Chinese
Management Thought
In business administration the study of management thought is considered important, not only
because it is the intellectual root of the discipline, but also because it offers richness of
thought in a field that is perplexing and difficult. In management literature in the West,
much has been written about Western thought.
Chinese management thought is a heritage of the
Chinese people; it is distinguished by its long,
sustaining civilization of four thousand years
and by its vast experience in administering a
large, populous nation through periods of ascendancy and decadence.
Effective management has long been a human
aspiration. Management thought expressed in
philosophy, concepts and skills-regardless of
cultural differences or time lag-vis universally
applicable and intellectually beneficial. Early
management thought, though generally confined
to public administration, provides fertile ground
for the study of management. This article represents an initial attempt to introduce early
Chinese management thought. It focuses on 'the
traditional bureaucracy, man's role in management, policy and strategy, and management
methods, and comments briefly on the contemporary practice in the People's Republic of
China.
WINTER
I 1976 I VOL. XIX I NO.2
The Intellectual Root
Throughout Chinese history, China maintained
its cultural unity through a common language, a
code of social ethics, and an imperial political
system. The imperial system was established at
the time the first emperor unified China in 221
B.C. and lasted until the demise of imperial
China in 1911. Its ideological base found root in
the intellectually productive period from 700221 B.C. During that period, the "One Hundred
Schools of Thought" flourished, four of which
-Confucianism, Legalism, Taoism, and Moismwere extensively studied and firmly established.!
In competing with each other, the schools interacted to produce a theoretical synthesis. The
Legalist philosophers and administrators, concerned with building a strong solidified China,
assisted the first emperor in unifying China.
They advocated three principles of government:
Fa (law), Shih (authority or power), and Shu
(statecraft) and deeply influenced the study and
practice of management in China.
After the demise of the first Chinese dynasty in
207 B.C., the Legalist school was officially silenced. In its place rose Confucianism which
became the state ideology throughout the imperial age. The Confucian scholars had devel71
oped an ideology based on the moral nature of
man, the harmony of society, political legitimacy, and order and unity. Both pragmatic and
eclectic, Confucian scholars adhered to Confucian teachings, but often practiced Legalist
principles of management. In their attempt to
monopolize political power, they instituted an
educational system and a civil service system
that ensured the staffing of Confucian scholars
in the vast Chinese bureaucracy.
Because their passive philosophies were antithetical to the mainstream of Chinese thought,
both Taoist and Moist scholars made little contribution to Chinese management thought. However, Taoist assertions such as "become weak to
overcome the strong," "emphasize negatives to
induce positives," and "equate wrong with
right" tended to moderate Confucian rationality
and Legalistic structural rigidity. The early
period of intellectual ferment profoundly affected the formation of Chinese management
thought. Throughout subsequent dynasties,
Chinese administration accumulated experience'
and further developed a sophisticated body of
management thought which is comprehensive in
scope, deep in thought, and pragmatic in operation.
Establishment of the Chinese Bureaucracy
The Chinese imperial system, structured on the
model of a vast bureaucracy, was intended to
provide a strong central administration, whose
authority extended through regional and local
governments to the village level. 2 Through
periods of turbulence and stability, the Chinese
bureaucracy managed to retain certain features
common to other bureaucracies: the absoluteness of authority, hierarchy in structure, and
rigidity in operation. Both Legalist and Confucian scholars regarded the absoluteness of political authority as a necessity, though each claimed
a different source of origin. Administrative
Y. N. (hang is a member of the faculty of Pepperdine
University School of Business and Management. He was
born in China, and has worked in the electronics and
aerospace industries, particularly in the area of economic
planning.
72
authority was exercised through a complex network of administrative units, clearly prescribed
by offices and titles, and rigidly interpreted by a
large body of law, codes, and decrees.' Structurally, the central authority maintained a dedicated but elaborate organization, which provided a strong executive, policy planning
mechanism and a large central administration
based on functional specialization. Chancellors
(administrators of civil and military affairs) and
secretaries (chiefs of staff on personnel and
confidential matters) acted as the emperor's
chief advisors. To provide for policy planning
and debate, there were the Political Affairs
Council and cabinet .rneetings, where policy discussions and debates were held periodically. The
ministries, or boards, were the line organizations
which implemented the policies in six areas:
personnel, finance, rites, war, justice, and public
works.
Once the central authority was established, detailed administration was left in the hands of the
bureaucracy. One of its prime concerns was the
establishment of a civil service system. It consisted of an education system for training civil
servants, a public examination system for recruitment, a merit system for promotion, and
minute regulations on classification, salary, and
rotation. The Chinese educational system, which
was confined to Confucian learning, provided a
two-tiered training: private schools for elementary and higher education, and public schools
operated by the central and provincial governments for graduate studies. Public administration was such a prestigious profession that
admission became highly competitive, and
graduates were req uired to take public examinations for entry into civil service. These examinations were given for different grades at different locations and at regular intervals. Appointments were based on the level of examination,
the individual's score and his audience with the
emperor, if he happened to be one of the
finalists.
Personnel management was administered by the
Board of Personnel. This office was responsible
for appointment, dismissal, promotion and discipline of civil officials. Position titles, salaries,
and personnel records were carefully prescribed
and kept.
California Management Review
In administration,
Chinese tradition placed considerable emphasis
on man. Generally acknowledged was the Confucian dictum of "Government of Man," in
contrast to the Western idea of "Government by
Law" which gives primacy to law over man. The
central interest of management was to discover,
develop and use the rare commodity of administrative talent. There are two levels of administrators: the virtuous (Hsien) and the talented
(Ts'aii. Virtuous administrators were exceptional; they were intellectually superior, knowledgeable about both the past and the present,
and were masters of strategy. Talented administrators were proven, experienced, and gifted.
Thus, the virtuous were sought and the talented
were nurtured.
Man's Role in Management.
Through the study of history, rulers and highranking executives were impressed with the
importance of searching for, using, and developing executive talents. To search for the virtuous,
the searcher had to be humble, patient, and
persistent. Liu Pei, before he became emperor of
Shu in the Three Kingdom period (220-265
A.D.), sought out Chu-Kuo Liang, a legendary
man and one of the most capable administrators
in Chinese history. Liu paid three visits at ChuKuo's country hut to bid for his service. Liu
honored him as teacher first and later appointed
him his prime minister.
Liu Pang; the first emperor of the Han Dynasty
(206-220 A.D.), was a master of the art of
identifying and recognizing talent. To Liu's ability of surrounding himself with virtuous and
talented i administrators is credited his victory
over. the: opposing force of superior military
strength and its early successes. Han Fei Tzu
(280-233 B.C.), the master teacher of the Legalist school, proclaimed the principle of Wu Wei
(translated as non-assertion or do-nothing) as the
best melVIs of using talents. His was indeed a
practical adaptation of Taoist idea to administration. A ruler was advised to practice Wu Wei by
being primarily concerned with essential affairs.
His chief task was to rule through law, power,
and people. Thus, Han Fei Tzu wrote:
The scepter should never be shown. For its inner nature
is non-assertion. The state affairs may be scattered in
four directions, for the key to their administration is in
the centre.. The sage holding the key in hand, people
from the four directions come to render him meritous
WINTER / 1976 / VOL. XIX / NO.2
services. He remains empty and waits for their services,
and they will exert their abilities by themselves."
About statecraft, Han Fei Tzu recommended
that the ruler institute central controls, develop
skills in conducting public debates, accept advice, and, above all, use power and safeguards
against usurpation. Indeed, the Chinese study of
administration was, at once, pragmatic and
oriented to human relations. Administration was
viewed as the interaction between leaders and
subordinates and was also accepted as a complex
human activity, motivated by self-interest and a
human desire for power and achievement.
The development of civil servants to serve the
bureaucracy adhered to the Confucian; dictum
that "the virtuous are vested with authority, the
capables (neng) are charged with administration." Thus, public examination and selection of
civil servants gave practical expression' to this
dictum; rewards and punishments gave recognition to good performance and rectified wrongdoings. The Chinese accent on man in: administration was as much an acknowledgmen t of the
absolute power of the emperor as it was the
acceptance of its historical past. The rise or fall
of a regime was largely dependent on .a single
man whose intellect, vision, and admirustrative
ability made the difference in the historical outcome. At the same time, Chinese bureaucracy
throve on law, administra tive codes, and:decrees
whose codification served as a binding framework for administrative actions, but whose
arbitrary interpretation aggrandized adrninistraI
tive power. Hence, China's traditional: administration had three distinctive characteristics, It
was highly bureaucratic, essentially pragmatic,
and very much oriented toward human relations,
Policy and Strategy
The concepts of policy and strategy held high
importance in Chinese thinking and adrninistration. Policy and strategy were closely related. As
a matter of fact, the Chinese term, Cn ai Liao,
translated to mean both concepts as if they were
one. Policy would be unrealistic if the methods
of achieving policy goals were not considered.
Strategy conceived the meaning of grand planning (Fang Liao), direction (Fang Chen), and
long-range calculation (Yuan Mou). Without
policy direction, long-range perspective, and an
73
intelligent course of action, strategy would not
have a real purpose. In the imperial court, policy
was formulated in court debate, collective deliberation, and patient search for guidelines. The
care expended on policy formulation is evident
in historical documents. The minutes of the
historical debate on "Salt and Iron Policy" in
the West Han Dynasty (206 B.C.-24 A.D.) is
fully documented. In it, Legalist spokesmen and
a high official in court, Sang Hung Yang, debated the issue with Confucian scholars. Historical annals provide full expositions of other open
debates, in which the emperor heard all opposing views. Essays and memoranda were often
written for public presentation. Li Su's "Essay
on the Expulsion of Alien Advisors" which
argued for retaining alien advisors like himself to
serve the Ch'in state (221-207 B.C.) is a classic
exposition of policy by deliberation.
"Not to win one hundred victories in one
hundred battles" but to "subdue the enemy
without fighting." Indeed, in a large-scale
competition, either in politics or business, strategy should be aimed at disposing one's resources
in such overwhelming fashion that the outcome
of the competition or engagement is determined
before it gets started. In practice, the process of
strategy making accentuated assessment, calculations, planning, and execution. In military
strategies, for example, there were five fundamental factors: the government, the environment, the terrain, the command, and the doctrine. Strategists studied these five factors to
assess chances of success, and calculate their
strengths and weaknesses vis-a-vis that of their
opponents. Thus, accurate assessment and bold
calculations assured the development of a sound
strategy.
Strategy had a deep philosophical root and a
broad application in China. It was a way of
thinking, applied to politics, administration, and
warfare. Sun Tsu, the most famous Chinese
strategist known to the West, wrote the Art of
War in 500 B.C. His writing was not only an
exposition of Chinese thought on military strategy,but a reflection of Chinese philosophy
rooted in its tradition. Commenting on the
importance of strategy, Confucius was quoted as
saying:
In the broad sense, planning involved careful
preparation and intelligent deliberation about
courses of action based on certain principles of
war. Deception, speed, and concentration of
forces were the rules of war. In execution,
generalship, command, and training were the
essentials. Whereas a strategically minded
commander was "able to realize changing conditions and to act expediently," a competent
command acted swiftly and decisively. A welltrained unit under enlightened leadership and
strict rule moved in unison and struck swiftly
like thunder. Such was the concept of strategy
at war.
Application of strategy of war. The concept is
applicable to the modern concept of business
strategy. Business strategy is essential to the
success of a business firm. Given an economically cautious present and a potentially distressed future, modern executives need concepts
and techniques which will induce effective planning and intelligent actions. A sound strategy
will enable business firms to exploit opportunities and overcome difficulties effectively. It
ensures a profitable future, focuses corporate
thinking and action, maximizes the use of resources, and avoids losses in investment decisions. Yet mastering the skill of strategy making
challenges modern executives. The breakdown
of strategy into its constituent elements so
vividly and penetratingly presented by Sun Tsu
Tsze-loo said, "If you go out with a large army, whom
will you take?" Confucius replied, "A man who without
cause, would rashly engage a tiger, or wade a river and
endanger his life without remorse, is one with whom I
would not go out. I want one who is cautious in management of affairs-who plans well, and then carries his
schemes into effect." 5
Sun Tsu expounded on the philosophical concept of strategy, implications, practicality, and
subtlety. He wrote policy guidelines, defined
objectives, and prescribed a process which was
applicable to strategy of all types. Strategy making began with a clear and deep understanding of
the nature of the engagement and the objectives
it attempted to reach. The opening statement of
Sun Tsu's Art of War dealt with the nature of
war. He thus warned:
War is a matter of vital importance to the state; the
province of Iifeor death; the road to survival or ruin. It
is. mandatory that it is thoroughly studied. 6
The supreme aim of war, he continued, was
74
California Management Review
certainly constitutes a source of theoretical explanation and clarification to the modern
businessman.
Management Methods
Management thought in early China was largely
confined to governmental administration and
was conditioned by Chinese culture and ideology. The Confucian ideology centered on morality, virtuous rule, and rigid sociopolitical relationships of ruler and minister, father and son,
husband and wife, elder and younger brother,
and friends. "Government of man" was acknowledged by Confucian scholars but principles and practices of management were largely
left unsaid. The void was capably filled, however, by Legalist scholars and by accounts of
decisions preserved in the historical annals', the
latter particularly were studied carefully by
scholars and administrators alike. Han Fei Tsu ,
in his many essays, offered an expansive treatise
on management. His writing, though directed at
the prince and often sounding Machiavellian,
had as its central concern effective management
based on his deep understanding of administrative realism and human nature. He noted four
management principles: management by standards, management of people, organizational
practices, and prevention of usurpation.
Management by standards. Although "government of man" was the cardinal rule of administration, man must be safeguarded against
arbitrary rule and self-seeking temptation. Law,
~l~ making, punishment and reward, responsibility and accountability were the safeguards.
Whereas law and rule making were to regulate
conduct.rpunishment and reward were used as
incentives to produce performance. Responsibility and accountability, on the other hand,
provided the means to achieve order and
control. Rulers were advised to use plans and
standards to induce and measure performance.
Deeds not words, results not promises alone
were the rules of management. In warning
against the policy of mind reading, Han Fei Tsu
wrote:
~erefo~e, the sovereign uses bulletins to show the eyes,
instructions to tell the ear, and laws to rectify the mind.
l~ the ruler discards these three easy measures and practices the sole difficult policy of mind-reading, then anger
WINTER / 1976 / VOL. XIX / NO. 2
will be accumulated by the superior and resentment
would be accumulated by the inferior. 7
Management of people. Han Fei Tsu's advice of
Wu Wei, or "do-nothing," applied to management by people. It was based on the dual concepts of planning and controlling. The function
of the chief executive was to plan strategy and
to control people. He conceived a control
system based on enforcing laws and exploiting
human nature. Measurement of performance
against rules and standards provided adniinistrative safeguards. But control over the behavior of
subordinates took precedence, for an absolute
ruler needed to be particularly alert: to the
temptation his subordinates might have to usurp
power. Thus, rulers were advised to study individual actions, motives, and power schemes so as
to avoid being confused by devious advice, misled by self-seeking individuals, or manipulated
by power factions. Seeking advice, carefully
observing subordinates' ability and motives,
applying checks and balances to prevent the
formation of factions, and using informers to
secure loyalty were all part of the art of virtuous
rulers.
Organizational practices. With respect to organization, maintaining authority through the application of law, punishment and reward was the
fundamental principle. As law was to, rectify
conduct, ministers-however wise and able they
might be-must not act contrary to the law and
claim any priority among man of merit. Since
punishment and reward were to safeguard
authority, the prince was advised to use rewards
wisely and make penalties severe. On structure,
organization must be formed on clearly established boundaries. Departmental responsibilities
and position descriptions must be rigidly prescribed; jurisdictional encroachment was not to
be tolerated. Administrative systems and' official
rankings were stringent in order to ensure proper
delegation of authority and maintenance of
order. Personnel appointments were made on
qualifications, and promotion was given on
merit. Within the bureaucracy, promotion and
rotation were to follow the principle of promotion through rank and file. An ideal system
would allow the appointment of chancellors
from district administrators, and the selection of
7S
generals through rank and file, In such cases,
rewards for achievements and an officialdom
who evidenced experience and competency
would be assured.
Usurpation ofpower. In an absolute rule,
princes were continuously reminded of the
danger of usurpation. Han Fei Tsu, like Machiavelli centuries later, expounded the theme that
human nature was motivated by self-interest and
power hunger. He recognized eight sources of
usurpation and discussed various methods of
preventing usurpation. Like Machiavelli, he
chose statecraft to prevent its occurrence and
advised the use of ruthless means to eliminate
usurpers.
Contemporary Practices
The early Chinese management thought was
deeply rooted in Chinese intellectual tradition
and historical past. Throughout Chinese history
dynasties rose and fell where wise rulers succeeded and fumbling ones failed. The contemporary Chinese administration, since the founding of the People's Republic Of China in 1949,
brought forth a new epochal period. After
twenty-seven years of rule, the nation is united
in spite of over one hundred years of foreign
intimidation and national distress; a foundation
is laid for advanced development; and a state
stands among the great modern powers. But the
role and characteristics of the Chinese bureaucracy have been significantly altered. Bureaucracy
of status and the educated elite is now replaced
by party-directed, cadre-led bureaucracyeffective, innovative, and standing in opposition
to bureaucratization. 8
This modern, ideologically stringent, and overpowering new bureaucracy manages all aspects
of state affairs, including industry and commerce. 9 Selection through examination is no
longer the practice. But, selection through
organizational process based on ideology, proletarian origin, and socialistic criteria of performance is the official procedure.
The traditional Confucian idea of "government
of man" has lost its meaning. But, the emphasis
on man as a central theme of administration
remains the supreme rule. Policy and strategy
76
continue to guide Chinese administration. Indeed, the central thrust of the many ideological
and political campaigns including the Great
Proletarian Cultural Revolution of 1966-1969
and the current debate on education and science
center around issues of paramount significance
in policy and strategy. Traditional management
methods as presented in this report are no longer
relevant in the socialist society. Management
methods based on nonimperialist Chinese tradition and revolutionary experience are richly
embodied with the thoughts of Mao Tse-tung.
Quotations from Oiairman Mao Tse-tung, which
explicitly expounds on management methods
and which serves as the guiding light of Chinese
administration in party, government, industry,
and agriculture, is indeed provocative reading. In
studying Chinese management thought, one can
readily trace its development from the past to
the present. Chinese management thought remains philosophical, pragmatic, innovative, and
oriented toward the people.
REFERENCES
1. See John A. Harrison, The Chinese Empire: A
Short History of China (Harcourt Brace Jovanovich,
1972); and Wolfram Eberhand, A History of China
(Berkeley: University of California Press, 1971).
2. For a brief discussion of political institutions of
early China, see Ch'ien Tuan-sheng, The Government
and Politics of China, 1912·1949 (Stanford, Ca.: Stanford University Press, 1970), pp. 30-48.
3. Ibid., pp. 40-42.
4. Translation in W. K. Liao, The Complete Works of
Han Fei Tsu (London: Arthur Probsthan, 1939), p. 52.
5. Translation in David Collie, The Chinese Classical
Work (Scholars' Facsimiles and Prints, 1970), pp. 89-90.
6. Translation in Samuel B. Griffith, Sun Tau: The Art
of War (Oxford: The Clarendon Press, 1963), p. 63.
7. Liao, op. cit., p. 271.
8. See Franz Schurmann, Ideology and Organization in
Communist China (Berkeley: University of California
Press, 1968), pp.l-li and 1-16.
9. See Yu Nan Chang, "Industrial Administration in
Communist China," The Western Political Quarterly
(December 1956), pp. 850-870.
California Management Review