Most ethnic Chinese share a common Confucian legacy with the Japanese and Koreans, but the way the Asian Chinese run their organizations, differs from them. The unique way that the Chinese business system operates is known as ‘overseas Chinese management’ (Petzall, Abbott & Timo 2007). Although both the Japanese and Koreans and the Asian Chinese are collectivist, community is more important to the former, while family ties and ‘guanxi’ are more significant to the latter (Petzall, Abbott & Timo 2007). ‘Guanxi’ is a special relationship between two individuals due to the existence of particularistic ties who are obliged to maintain a long-term relationship with mutual commitment and loyalty (Chen & Chen 2004).

Overseas Chinese management is practiced by ethnic Chinese nationals in Singapore, Malaysia, Hong Kong, and other Asian countries who run their own businesses. According to Petzall, Abbott and Timo (2007), these traditional Chinese family firms are usually small-scaled businesses that employ no more than 200 people. Being small-scaled, there is little need for labour specialization and a high degree of structure and formality within the organization. Thus, there are few rules and standard procedures and low files and records in such small family businesses. Although there is no clear hierarchy of authority, the assumed important positions like owners, executives and managerial roles are held by family members and by others who have that special ‘guanxi’. Decision-making is highly centralized in these Chinese family firms with managers keeping organizational information among themselves, showing little trust towards the employees, or the so-called ‘outsiders’ of the family ties and those without ‘guanxi’.

Limiting control and decision-making within the family hampers the growth of the company because they would not be able to respond well in dynamic and