The Provinces to Beijing: ‘Piss Off’
December 13th, 2007
Harsh language, I know. I wanted to get your attention.
One pattern I often see in discussions in and outside campus re: China and its many problems, is a lack of appreciation for how Beijing has its hands full trying to control its various provinces, so as a nation it can get some things in order.
E.g., refer back to our recent blog discussions on dams, coal and coal mines, other, etc., and you can see hints of this in some of the comments.
And here is another ‘Exhibit A’ that highlights Beijing’s dilemma in this regard and just how rebellious and disobedient some of these provinces can be:
NY Times, Far From Beijing’s Reach, Officials Bend Energy Rules.
So to appreciate this issue and deepen learning, let’s personalize things a bit.
What is an example, in your past or current personal or professional life, where a request or mandate was given to you by a higher authority in your organization (or to others you knew or worked with) and you either intentionally ignored said request or tried to find a way around it, or saw others or other departments in the organization try to do so, because it personally benefited you (or them) to do so?
What theory have you studied in one or more of your Fall quarter classes explains this phenomenon?
Why does it happen over and over and over again in business organizations?
What, if anything, can be done to eliminate or curb it?
What type of a person/business leader has the best chance of eliminating or curbing this in his/her business organization?
Discuss. And welcome to the reality and difficulty of business, which the business bashers of the world don’t appreciate — they think we just wave a magic wand in our organizations and all proceeds smoothly and people/departments/units happily skip along and do what they are asked.
You would also be seriously mistaken to contend that we do not have these same types of power grab and disobediance issues between the feds and the provinces (here, though, we call them states) in in the US. See, e.g., this WSJ article, Backlash Endangers California Pot Dispensaries.
Entry Filed under: Pre-Departure, Beijing, China
3 Comments Add your own
1. Nic Marlin | December 14th, 2007 at 10:08 am
Principal-Agent relationship theory from economics suggests that people act in their own best interests. I have seen this at play in every organization I have worked for. For instance, I have witnessed sales people in the last company I worked for make near zero profit sales to bump up their sales numbers in order to get their bonuses. It is bad business for the company, but things like this happen all the time. The solution is to manage incentives appropriately so that goals are aligned. Perhaps if my former employer would have based bonuses on profit numbers instead of revenue this problem would not be occurring. The alternatives for controlling principal-agent conflicts involve reassigning decision rights, transferring information, or changing incentives. For organizations experiencing these kinds of problems, the approaches to controlling incentive conflicts are fixed payments and monitoring, incentive pay and no monitoring, or sharing contract and some monitoring. These are all basic economic principals and I have seen them work well when implemented properly.
2. Chris Carr | December 14th, 2007 at 3:57 pm
Good. Right on. Jensen and Meckling and their research on the misalignment between the interests of the principal and agent.
3. Andrew Steen | December 14th, 2007 at 9:04 pm
Nic pretty much covered everything I was going to say.
ie: Being put out of business is not a good incentive to pay more for electricity.
Maybe the increase could have been gradual to allow the ineficient companies to adjust.
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