business environment

Confucianism and Business

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Part 2 of the 2018 interview with Dr. Alan Chan at Bond University, Australia. In the context of East Asian businesses playing a greater role in political and academic organisations, the interviewer asks what the relationship is between Confucianism and business in contemporary times.

Social Capital in Non-Confucian Asian Contexts: The Case of Laos -社会资本在非儒亚洲语境:老挝为例

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In the last ten years, a significant amount of literature has developed around the concept of ‘social capital’. Put simply, social capital refers to the social relations and shared norms that promote trust and cooperation between individuals and groups. The concept was first developed by the World Bank and the OECD through American political scientist Robert Putnam, who argued that high levels of social capital had a positive impact on well-being, health, educational performance, economic growth and security because the more a society cooperates, the easier it is for services to function and deliver political goods. On the other hand, the lack of social capital was believed to account for problems such as social inequalities, underdevelopment, and the level of delinquency and crime in some countries and neighbourhoods. In this way, the concept showed “some theoretical insights by identifying social capital with the building up of social connections and sociability… (through) goodwill, fellowship, sympathy, and social intercourse” (Castiglione et al., 2008, p. 2).

Although there is much debate over the different types of social capital, the literature tends to divide it into three main categories: first, bonds through links to people based on a common identity, including the nation, local community, and family. Second, through the links that one develops beyond your immediate relationships, for example to colleagues and associates. Finally, through links to people or groups who are prestigious and influential. By developing information channels through these links while following norms and social expectations, the social capital theory posits that people can become more socially and economically secure. In the United Kingdom, for instance, a government survey showed that more people gained jobs through personal contacts than through external job applications and advertisements. In places where the justice system is weak or dysfunctional, gangs and criminal organisations with high social capital are able to fund education for their members, find them work, and even temporarily provide for their family.

For Alejandro Portes (1998), the perceived benefits of social capital make it look like knowing the right people automatically translates into solving all of one’s social problems. His comments highlight that the term can be overused and misleading as there is often confusion over the meaning of social capital, and various presumptions of the social mechanisms that are used to explain it. But considering that humans are social animals that need community and contact to survive in an increasingly globalised world, it follows that establishing and maintaining relationships with people, groups, and organisations is essential. While social capital exists in all communities, Confucian cultures have particularly been found to emphasise the concept much more than in non-Confucian cultures (Carpenter, 2004). This is illustrated by concepts like guanxi in China, inmak in Korea, and joge kankei in Japan, all of which refer to social networks and socialization practices that facilitate business and other dealings. Local businesses in these countries often establish strong network ties in their domestic markets to stay competitive against international firms and to easily transfer technical knowledge and resources within borders. However, when it comes to non-Confucian Asian countries, the importance of social capital is less understood.

For Sorensen and Nielsen’s research, the case of Laos, a country that predominantly adheres to Theravada Buddhism, was an important contribution to expanding the general understanding of social capital in different Asian contexts. For instance, their initial analysis showed that in contrast to Confucian countries, the Lao language had no single word that accurately represented social capital. The most suitable word to refer to the concept was teun tang sangkhom, a direct translation of social capital that lacks any traditional definition or conceptualization rooted in the Lao language. This differs from the situation in China and Korea, where guanxi and inmak are recognised by mainstream society and thus consciously used by people to build and expand their businesses and employment opportunities. Because social capital is less defined and understood in Laos, people are less calculating in their use of social capital practices even though connecting to the right people and expanding one’s social networks is extensively used in Lao society. As one respondent in Sorensen and Nielsen’s study explained, for the people of Lao whose geostrategic location made the country vulnerable to colonialism and civil war, “The family union and secondary social connections have been their life source. Without it they could not”. Another respondent added that in Lao society, a person can be “completely lost without connections. No matter what you look at, if you haven’t got the connections it won’t happen”. The lack of strong legislative frameworks was also found by Gunawardana and Sisombat (2008) to contribute to an environment where social capital was used to accommodate lack of transparency with practices that increased the cost of doing business, such as informal red tape.

Just like in the neighbouring countries of Myanmar and Thailand, family and strong kinship connections were found to be the core of Laos’s bonding communities. As a collectivist society, the emphasis values such as trust and security were the main reasons why strong bonding through family has traditionally been the key support system for Lao society (Evans, 2013). For non-Lao people, it is possible to gain access to these bonding communities when groups choose to encompass looser relationships in business contexts, allowing stakeholders to join and over time become part of the stronger social capital networks. Sorensen and Nielsen confirmed that Lao people generally enjoyed meeting new people, which made it relatively easier for outsiders to gain access to bonding communities compared to places like China which places a greater emphasis on shared culture and identity than social capital development. In that case, consistency in engagement was seen to strengthen bonds and social capital in Laos and so developing a sense of humour, patience, and showing modesty were found to be highly regarded in Lao culture.

In China, the Confucian ruler-subject system and the communist principles of governance provided rules for a social order that was clearly defined by interpersonal relationships and obligations (see the “five human relations” of Confucianism in Dau-Lin, 1970). The absence of such a system explains why social capital, while existent and even essential in some cases, is less clearly defined in Theravada Buddhist Laos. For instance, while gift exchanges were used in China to symbolize respect, appreciation, and goodwill, the use of gifts was significantly less common in Laos as people often preferred getting straight to business, especially when strong bridging and bonding relationships were already in place. Sorensen and Nielsen’s research highlights that the use of social capital can be quite ambiguous yet just as important in non-Confucian contexts such as Laos. Further research should be done to expand these findings.