Intention legitimising : strategy formation in a Chinese private enterprise

Abstract

This study aims to gain a deeper understanding of strategy formation in Chinese Private Enterprises, given their increasing status in the Chinese economic system. This understanding is particularly significant for effectuating managerial practices in strategy development within Chinese Private Enterprises, and for assisting Western organisations to succeed in the future Chinese market.

In order to achieve the research aim, interpretive paradigm and grounded theory were employed to guide the whole research process so as to obtain a deeper understanding of strategy formation from the participant’s point of view. A single longitudinal case research provided a bounded system for this investigation and has also helped to capture the richness and dynamics of strategy formation over a period of two years.

This study has developed a grounded theory of ‘intention legitimising’ as the central answer to explain strategy formation in the Chinese Private Enterprise. The research suggests that ‘intention legitimising’ is an aggregate effect of multilevel factors consisting of environmental, organisational and individual levels, with Chinese siying qiyejia (private entrepreneurs) as the determinant factor and organisational guanxi (connections or relations) as one major means for ‘intention legitimising’. This emergent grounded theory of  ‘intention legitimising’ contributes to remedying the current lack of knowledge about strategy formation in Chinese Private Enterprises. It also enhances our insights into strategy formation in the Western context via the presentation of an empirical case under a dramatically different national setting. Relevant managerial implications are also provided for both Chinese Private Enterprises and Western organisations who have business interests in China.

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