ON THE INAPPLICABILITY OF WESTERN MODELS TO INFORMATION TECHNOLOGY DEVELOPMENT IN CHINESE COMPANIES - THE CASE OF THE HONG KONG NEWSPAPERS.

ABSTRACT

The paper presents the findings from a survey of information technology planning in the Chinese language newspaper industry in Hong Kong. The research attempted to apply well known Western models of strategy, organisational structure, organisational culture and stages of growth to this industry. It was found that the categorisation in these models did not always apply to the companies surveyed and where they did apply they had little explanatory power. The authors argue that a different approach to modelling may be required in order to develop models relevant in a non-western cultural environment.

Key Words: Strategic information systems planning, information technology, Chinese newspapers.

INTRODUCTION

The paper is based on a study of Information Technology (IT) planning in the Chinese language newspaper industry in Hong Kong. Most sectors in the Hong Kong economy are heavily influenced by the West. By contrast, the Chinese language newspaper industry is, in terms of its product, staffing and management, exclusively Chinese. It therefore offers insights into Chinese business practices that would be more difficult to identify in other sectors.

The study was originally conceived as a statistical survey of the effectiveness of IT strategy based on Western models of strategy, organisational structure, organisational culture and IT growth. It was hoped that this would give valuable insights into the industry. However, as the research progressed it became increasingly evident that Western models were not appropriate to the task. It was found that the categorisation in these models did not always apply and where they did apply they had little explanatory power. At this point the research took a radically different direction.

Hitherto the approach had been one of questionnaire style data gathering on the basis of categorisations found in the academic literature. Thereafter, the research was conducted on the basis of open ended face to face interviews with key players (business managers, IT managers, editors and journalists) in the industry. The assumption here was that the players in local industry might have a better notion of how it is configured than academics from the USA and the UK. What emerged was that many key figures in the industry had ideas about business practice, business goals, and business success that are radically different from those assumed in Western models.

The main purpose of this paper is to show that two commonly held assumptions are inapplicable to Chinese businesses. We shall call these "the prescriptive assumption" and the "descriptive assumption". The prescriptive assumption is that if Chinese companies want to be successful in IT development, all they have to do is follow Western practice. We shall argue that the different business objectives found in Chinese companies render this assumption incorrect. The descriptive assumption is that while it may not be possible to transfer Western practice directly into a Chinese context, Western models can be used to describe and analyse Chinese businesses and that such analysis can be used to determine what types of IT will be successful.

The newspaper industry is a fertile field for study. It is an industry in which information technology plays a vital role. The Hong Kong newspapers are now facing what is possibly their greatest challenge. With limited financial resources, most need to decide which component of the business should be given priority for technological improvement. This is a strategic decision. This industry is, therefore, Hong Kong one in which we would expect to find that the strategic planning of information systems is of critical importance.

There are a total of eighteen daily newspapers published in Hong Kong, sixteen in the Chinese language and two in the English language. The Chinese language newspapers are: Apple Daily (AD), Express News (EN), Hong Kong Commercial Daily (HKCD), Hong Kong Daily News (HKDN), Hong Kong Economic Journal (HKEJ), Hong Kong Economic Times (HKET), Hong Kong People's Daily (HKPD), Mad Dog Daily (MDD), Ming Pao (MP), Oriental Daily (OD), Sing Pao Daily News (SPDN), Sing Tao Daily (STD), Ta Kung Pao (TKP), The World Daily News (TWDN), Tin Tin Daily News (TTDN) and Wen Wei Po (WWP). The English language newspapers are: Hong Kong Standard Newspaper (HKSN) and South China Morning Post (SCMP). With the exception of OD and WWP personal interviews on site visits were made in all these newspapers.

PART ONE - THE PRESCRIPTIVE ASSUMPTION

In the West, generally perceived wisdom indicates that successful information systems/technology implementation can be facilitated by an information systems strategy. A second tenet is that an information systems strategy should be founded on corporate strategy (see, for example, Roberts, Brown and Pirani, 1990). When we looked at models of corporate strategy we found that the most well known, and probably the most widely accepted, is Porter’s model (1985) of competitive advantage. Based on this, a not unreasonable prescription for success would be: i) develop a competitive corporate strategy, ii) formulate an information systems strategy based on this, iii) implement information technology based on the information systems strategy.

Our research was initially concerned to determine whether this sort of prescription could explain information systems success in the area of study. The first finding was that, although many of the companies had successfully implemented advanced information technology, few had any formal corporate strategy. The formulation of corporate plans tended to be informal and strategy was rarely written down (out of fourteen surveyed only two of the Chinese newspapers had a formal IS strategy, nine had informal and project based IT planning, and three had no IS planning at all). It was not, therefore, possible to explain success or failure in terms of a straight forward adherence or non-adherence to this prescription.

A second theory was then adopted. The idea was that although the companies might not have an explicit strategy, they might still have a tacit strategy; Mintzberg (1994) calls this "an emergent strategy". For example, if a company’s newspaper was a differentiated product we could attribute to them Porter’s product differentiation strategy even though nobody in the company had ever heard of Porter. However, this somewhat tenuous reasoning did not apply either.

Porter (1985) states that "competition is at the core of the success or failure of firms" and "that competitive advantage is at the heart of any strategy". Newspapers obtain their revenue from sales of copies (circulation) or from advertising. Most newspapers have both sources of income. Commonly these sources of income are dynamically opposed. Reducing the selling price of a newspaper will tend to increase circulation but decrease the revenue from circulation. Although more copies are sold, this will not normally compensate for the loss resulting from the lower profit per copy. However, the increase in circulation will tend to increase the advertising revenue because the advertisers get better exposure if the newspaper is more widely distributed. Conversely, an increase in selling price will tend to decrease circulation and advertising revenue but increase revenue from sales. Whichever strategy is adopted it would seem to follow from Porter’s ideas that newspapers should be in competition with one another for sales, advertising or both.

However, our research indicates that there are a number of newspapers that are not in competition for circulation or advertising revenue. The stated business objective of many of the politically neutral papers also seems to be at variance with Porter’s model. From the interviews with management, we found that in the most of Chinese newspaper industry, editors have considerable power over and influence upon company policy, business direction and information strategy. In personal interviews the business objectives cited by managers were close to editorial objectives. Examples were "educate readers", "criticise the Government" (both British Colonial and Chinese governments) and to "express readers’ opinions". TKP stated one of its corporate objectives as being the scholarly criticism of government and that they had maintained this objective for 59 years. Profit making was said to be a means to these ends. Many key players claim that newspapers are "ethical products" rather than "commercial products".

Porter’s competitive model would seem to be at variance with the political reality, the political ideology and the business objectives of many of the companies surveyed. Indeed, there is good evidence that in this sector co-operation is preferred to competition. The Newspaper Society of Hong Kong (NSHK) has acted as a medium whereby representatives from each of the Chinese newspaper companies could meet annually to discuss pricing policy. As a result, a uniform pricing policy was agreed and maintained for over twenty years

The actual stated strategy in many of these companies is also radically different from Porter’s model. In interviews with managers the term "middle way" (not being extreme) frequently occurred. Respondents indicated that they did not claim their companies to be the best in any terms (circulation, profit or technology) and that there was much room for development (in newspaper content and IT development).

From this we can conclude that success or failure in IT implementation in Chinese newspapers cannot be explained even in terms of a tacit acceptance of competitive strategy. Our point here is that Porter’s model cannot be taken as a universal prescription even in a highly Westernised and money orientated society such as Hong Kong.

PART TWO - THE DESCRIPTIVE ARGUMENT

The descriptive argument is that although Western models cannot act as a prescription for Chinese success they can explain why Chinese companies are successful when they are successful. That is, there have been unsuccessful implementations and there have been successful implementations (they helped the company achieve its objectives) of IT in Chinese companies. The descriptive argument is that Western models can explain this. To put this another way, we must be able, where appropriate, to distinguish between Chinese ideas about what constitutes a successful Chinese Company and Western ideas about what constitutes a successful company. Nevertheless, Western descriptive models can explain when an IT implementation will be successful no matter how success is defined.

Our initial research assumed that the descriptive argument was correct. A considerable amount of time was spent developing a configuration model, (Wong & Revenaugh, 1996), that might be appropriate to the area of study. The model was developed out of Jordan (1994) which in turn was a development of Miller and Friesen (1986, 1988) which was developed out of Mintzberg’s (1981) model of Organisational Structure and Porter’s (1985) model of Competitive Strategy. Porter’s (1985) model of Competitive Strategy, Mintzberg’s model of Organisational Structure and Cameron & Freeman’s (1991) model of Organisational Culture were regarded as independent variables, while Galliers’ Stages of Growth model (1991) was considered as a moderating variable.

It was expected that this model would indicate what type of information strategy (cost control, cutting edge, cost control focus or cutting edge focus) was present in the companies surveyed. It was further expected that the type of information strategy would indicate the type of IT actually employed. However, the types of technology employed in the sector are very diverse. Some companies have advanced technology in all components of the business, others are poor in most components, while many newspapers are advanced in some components but not in others. In the event, the models either did not apply or failed to explain the diversity.

Mintzberg developed his organisational structure model in 1981. In his system all organisational structures fall into five categories, namely Simple Structure, Machine Bureaucracy, Professional Bureaucracy, Divisionalized Form and the Adhocracy. All of Hong Kong’s newspaper companies tend to fall into Mintzberg’s classification as Simple Structure.

Cameron and Freeman categorise companies as belonging to an organic or mechanistic process, and as focusing on internal maintenance or external positioning. The four quadrants of the model are called Clan, Adhocracy, Hierarchy and Market.

Cameron and Freeman have designed a research instrument to determine where a company should be placed in their classification system. This consists of a questionnaire and scoring system. The first question asks the respondents whether their organisation "is a very personal place" and "like an extended family". The problem here is that a positive answer from a North American and a positive response from a Chinese could indicate quite different types of company. This is because North American families are generally significantly different from Chinese families. Comparatively speaking, the former, tend to be informal and undisciplined, the later, more formal and authoritarian. Considerations such as this, rendered the research instrument unusable.

The results of interviews indicated that the factors that differentiated the companies in terms of organisational culture could not be represented in Cameron and Freeman’s model. The organisational cultures were in many cases a sub-set of Chinese culture and reflect a different system of values from those found in the West. Many of the people interviewed said that the newspaper industry was scholar led. Editors tend to be academic and have a very high status in the industry. They tend to see themselves as continuing a Chinese scholarly tradition and inheriting the prestige that scholars had in the time of the Chinese Empire. The downstream effect of this can be seen in the very formal style of writing found in HKEJ. We also found that the introduction of Chinese word processors had been resisted by a considerable number of editorial staff. Many of the editorial staff regard themselves as artists. Calligraphy is an art form in China and they had been reluctant to give up this scholarly tradition and begin typing. Even today most journalist write their pieces by hand and this is then input into the system by typists/typesetters. These cultural factors cannot be adequately represented in the Cameron & Freeman model but the authors believe that they have great explanatory power with regard to corporate objectives because the emphasis on social responsibility also follows from the Chinese scholarly tradition.

Galliers’ (1991) "stages of growth" model indicates six stages in information systems development. The model places companies in a given stage on the basis of seven criteria. These are strategy, structure, systems, staff, style, skills and super-ordinate goals. It was found that Galliers’ stages of growth model could not be applied to any of the companies surveyed. For example, AD belonged to stage V according to Galliers’ criteria for strategy, systems and goals, but stage III according to the criteria for skills and stage I according to the criteria for staff. A second newspaper, TWD, has no discernible IS strategy, but is at stage IV by structure and stage V according to the criterion for style. Galliers seems to have had large organisations in mind when he devised this model. In more recent work (Doukidis, Lybereas and Galliers, 1996), he has found that the model does not apply well to small companies.

As Galliers and Cameron & Freeman’s models could not be applied, and all the newspaper fell in the same category in Mintzberg’s model this left only Porter’s model to explain the diversity in the industry. However, with the exception of HKET, all the newspapers fell, again, within the same category in Porter’s system. This meant that Wong & Revenaugh’s (1996) model was quite incapable of explaining the diversity of information strategy and the diversity of successful information technology found in the industry.

CONCLUSIONS AND FURTHER RESEARCH

Our findings clearly support the research hypothesis put forward by Avgerou (1996), "that organisations differ significantly in terms of the aspirations they are expected to fulfil, norms of performance, scope of choice according to the industry and region that they belong to; and that such differences determine to a large extent the way organisations utilise information and communications technology..."

The authors doubt that generic models that seek to place organisations in four, five or six archetypal categories are appropriate for the purpose. This type of categorisation inevitably leads to a misrepresentation of minority or unusual organisations because the analyst views the situation through a preconceived framework. What is actually needed is an open-ended action research approach that can identify an organisation’s true objectives and recognise a wide range of values. This approach can be found in Soft Systems Methodology (Checkland & Scholes, 1990). Rather than trying to force organisations into predetermined categories, this methodology treats every organisation as unique and builds individual models for individual organisations. Nevertheless, the use of Soft Systems Methodology (SSM) has largely been confined to Western Organisations and an English speaking environment. Recently, inspired by the philosophy of language, enhancements to the SSM modelling methods have been developed. These logico-linguistic models (Gregory, 1993a, 1993b, 1995) may be capable of representing the concepts inherent in diverse languages. Preliminary testing, during an information requirement analysis project (Gregory & Lau, 1996) indicates that these models work well in a Chinese cultural environment.

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