Trust networking in Asia

Trust networking in Asia

By Bob Widyahartono

JAKARTA (JP): Prof. Francis Fukuyama, a Japanese American
sociologist, was in town recently upon the invitation of Prasetio
Executive Development and the Association of Indonesian
Economists.

The professor, who shot to fame a couple of years ago with his
book The End of History, exposed his latest work Trust: The
Social Virtues & The Creation of Prosperity to an audience of
businesspeople and academics.

Trust in every society is a social capital and comprises the
behavioral, cultural and emotional aspects of every individual as
a member of society. Trust, which is confidence building in
origin, develops in emotional relationships, but with the advance
and modernization of every society is "by design".

The Chinese word guanxi refers to the concept of drawing on
networks to secure favors in personal or business relations. It
is widely accepted that guanxi is a significant business
determinant influencing company performance. And it even applies
in social relationships.

Initially it applied to emotional relationships built around
family in the wider context. Guanxi could only work when built on
the basis of shinyung, the Chinese word for trust.

It is widely acknowledged that guanxi constitutes a key
strategic factor affecting firm performance in greater China. The
evidence shows that guanxi-based business variables have a
profound and positive impact on firm efficiency and growth. All
businesses in China, including domestic enterprises and foreign-
owned firms, inevitably face guanxi dynamics. It is widely
acknowledged even among economists and business consultants that
the managements of these kinds of firms are subject to guanxi.

As early as the sixth century B.C., Confucius codified the
individual, family and societal ties that defined an individual's
proper role and behavior in his or her environment. Chinese
culture stresses the importance of social order, although it is
not always smooth in reality. But well-defined relationships have
often helped in establishing harmony. Traditional Asian society
is built around clan-like networks, with close family members
constituting the core. Loyalty to the in group is paralleled by a
deep distrust of nonmembers.

In Asian companies and organizations, given their strong
leadership orientation, the staff always takes a great interest
in what their leaders are doing and, although at a distance, will
follow their movements. It is the group culture that plays a
dominant role. The corporate culture of an organization is
influenced by whether it operates to the extent to which it
employs unskilled, skilled or professional staff. While in Asian
organizations negotiations or communications equate more with
building a relationship, skills are nevertheless involved.

While in the West kinship and family ties are loose, in the
Asian world these ties are important. In all Asian races,
children are brought up to respect and obey their parents. This
is rather pronounced in ASEAN where children are taught to
appreciate their parents' feelings and to adjust their behavior
in order to give them peace of mind. The rule of respecting
relationships extends to outside the immediate family as an
indication of relative hierarchical status between people.

Among Asians there is generally a sharing of guanxi in a
relationship. People who share this kind of relationship are
committed to one another by an unspoken code of reciprocity and
equity. Violating this commitment can seriously damage one's
social reputation, leading to a humiliating loss of prestige or
face (mianzi). Face here refers to the essential integrity of the
individual. A person's face is a key factor in the mechanism of
guanxi as one must have a certain amount of trust and integrity
to develop a viable network of guanxi connections.

Similar to face, the "humanized obligation" (renqing) is also
a form of social capital that can provide a sound basis for
interpersonal relationships. In Indonesian society it is known as
hutang budi, balas budi (paying back debt of benevolence). Guanxi
and other forms of this relationship or networking seem to be the
lifeblood of the Asian business community, extending into
politics and society.

For Asians, the most central value in building a relationship
is harmony. Good relations must be reserved within the group and
with outsiders of the group. The Philippines has a phrase for it
-- pak ik sana -- which means avoiding conflict at all costs,
although still having competition in business. The Korean
equivalent is kibun (considerate behavior) and in Thailand,
krengchai. In Japan, there is wa (the middle path). In Indonesia
it is memanusiakan manusia (treating others humanely). Throughout
Asia there is this central concept of respecting others.

In turn, a considerate person is respected. This is part of
the other prevailing concept of "face". Consciousness of face --
that of others' as well as one's own -- is difficult for a
Westerner to comprehend in an Asian context, but seems to be very
helpful in dealing with others outside the immediate group and
even with bureaucracy. Rather than depending on an abstract form
of legalities, Asians traditionally prefer to rely on their
contacts with those needed or in power to get things done.

Is then the concept of networking on Western marketing and
management different than the Chinese guanxi? The West
understands the management of networks as an important aspect of
strategic behavior and consider networking, such as in marketing,
as a mechanism of corporate-to-corporate relations. The West
argues that networking in the Asian context is a waste of time,
energy and money.

Asians dislike face-to-face confrontation and any form of
direct or public criticism under any circumstances. To criticize
an Asian to his face is seen as a violent demeanor, to which an
Asian would rarely noticeably react. The avoidance of conflict,
evasion of an issue and dislike of trouble characterizes the
peoples of the entire Asia continent. Therefore this factor
should be considered and calls for modification of Western
managerial styles. This does not mean that Asian business
organizations or any other organizations are not strategically
motivated to make profit.

The West works to the order of competitiveness, challenge and
confrontation or conflict, while the East works by compromise,
accommodation and consensus. Basically Asians are more tolerant
though still hardworking in their pursuit of their organization's
objectives.

Building guanxi primarily related to personal rather than
corporate relations, and exchanges which are not solely
businesslike but are social, involves the exchange of social or
humanized obligations and the giving of face.

Harmony does not mean inefficiency. Therefore while the West
works to the order of the "guilt culture" and Asia to the order
of the "shame culture", a willingness to learn about other
cultures and to abandon one's own ethnocentricity starting with
accepting others as having equal value, might be a step forward.

Although there have been few empirical studies on the issue,
in reality guanxi or networking based on trust has a positive
impact on efficiency and growth.

The writer is dean of the school of economics, Indonusa Esa
Unggul University.

Window A: Trust in every society is a social capital and comprises
the behavioral, cultural and emotional aspects of every individual
as a member of society. Trust, which is confidence building in
origin, develops in emotional relationships, but with the advance
and modernization of every society is "by design".

Window B: The West works to the order of competitiveness, challenge
and confrontation or conflict, while the East works by compromise,
accommodation and consensus.