Replying to management

challenges
Integrating oriental and occidental wisdom
by HeXie Management Theory
Youmin Xi and Xiaojun Zhang
School of Management, Xian Jiaotong University, Xian, China and
Higher Education Research Centre, Xian Jiaotong-Liverpool University,
Suzhou, China, and
Jing Ge
School of Management, Xian Jiaotong University, Xian, China
Abstract
Purpose The purpose of this paper is to address several challenges faced by organizational
management in the contemporary context, and how managers can better reply to management
challenges by integrating oriental and occidental philosophy and wisdom.
Design/methodology/approach The paper rst describes the characteristics of the
contemporary management context and identies challenges that managers are likely to encounter.
The paper then investigates how oriental and occidental philosophy and wisdom reply to these
management challenges, whilst also considering the relative advantages and disadvantages of both
traditions. Based on the complementarity of these two traditions, the paper nally proposes a
framework that integrates both oriental and occidental wisdom by HeXie Management Theory to
better respond to management challenges.
Findings The contemporary organizational environment is characterized by four key salient
components: complexity, change, ambiguity, and uncertainty (CCAU). Managers are challenged by
problems of determining causality, managing holistically, and adaptation to rapid change. Western
philosophical approaches to confronting management challenges arising from CCAU, inherent in the
wider economic environment, emphasize standardization and rational design on the basis of science,
law, and religion. Conversely, Oriental philosophical approaches to management challenges oppose
such rigid systems in favour of exibility and adaptability which emphasize harmony and morality.
Essentially, whereas western thought intends to limit the occurrence of unpredicted events through the
development of scientic systems, oriental thinking aims to provide a exible and uid system which
absorbs the effects of CCAU, thus limiting and using its impact. These two perspectives both have
their own advantages and disadvantages when facing management challenges in the context of CCAU.
By integrating these two complementary approaches, the authors propose HeXie Management Theory
(HXMT). HXMT establishes a clear vision and mission to direct the development of organizations; to
organize an integrated management system through the HeXie Theme and HeXie Coupling, and to
apply the component He Principle and Xie Principle as basic mechanisms to cope with
management challenges.
Originality/value This study contributes to research on relationships between organizations and
environment by providing a holistic analysis, and adds knowledge about how to reply to management
challenges by constructing ambidextrous organizations based on HeXie Management Theory.
Keywords Management challenges, Oriental and occidental wisdom, HeXie Management Theory,
Organizational change, Management theory
Paper type Conceptual paper
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1750-614X.htm
Replying to
management
challenges
395
Chinese Management Studies
Vol. 6 No. 3, 2012
pp. 395-412
qEmerald Group Publishing Limited
1750-614X
DOI 10.1108/17506141211259104
Characteristics of the temporary organizational management context
Globalization and the rapidly advancing technologies of the information age have
caused the current organizational environment to become increasingly complex, a
problem which is further compounded by the increased velocity of such changes.
Under this context, managers of organizations nd it more and more difcult to
forecast the future (uncertainty) and make requisite plans and strategies for their
organizations. Moreover, they have great difculty in fully understanding current
events (ambiguity) which leads to consequent difculties in making appropriate
decisions. The presence of uncertainty and ambiguity combines to form a major
challenge to effective organizational management, a problem which is amplied by the
speed at which such environmental transformations are taking place.
Complexity
In the era of globalization, organizations exist within an intricate and constantly evolving
conguration, connected to a network of other organizations as a result of their specic
activities. Advances in information technology, specically the internet, have made
physical distance less of a concern and less of a barrier to the pursuit of organizational
goals and objectives. Such a complex web of non-linear relationships serves to obfuscate
the root causes of events which may impact upon a specic organization. Ambiguity, in
this sense, is even more likely to occur in the era of globalization due to the increasing
interconnectedness and interdependence of social, political and economic systems around
the world. Issues of cross-cultural communication further affect the interpretation of
events at all levels of human activity, leading to even greater opacity and subsequent
difculty in anticipating the trajectory of change.
Change
With the development of the market economy during the dominance of the neoliberal
economic period commencing in the late 1970s, competition between organizations has
become ever ercer. The internet, emerging in the mid-1990s, has evolved, froma simple
way to transmit information to a force which has completely transformed almost every
aspect of modern human behavior: where we gather, store and transmit information;
how we interact with friends and family; how we meet new friends; where we buy
consumer goods and services; how we study and learn; how we relax at home; how we
listen to music, watch lms, read books; how we work; where we work; the speed at
which we work. Information technology has been an overwhelming inuence on both
changes at the micro level of organizations and the macro environment in which they
operate. Innovation and responses to new and emerging innovations is critical in the
long-term interests of any organization. Under these conditions, new technologies and
products emerge frequently while customers and service users change their preferences
in response to such emerging technologies. Organizations need to pay attention to the
structural change brought about by technological advancement and adapt accordingly.
Uncertainty
Uncertainty is viewed as a subjective feeling, an epistemological viewpoint which
emphasizes the interpretation of the operating environment by managers of
organizations as the potential source of uncertainty. This perceptual perspective
argues that environmental transformation can only inuence the decision making
CMS
6,3
396
of organizations in the event that an organizations decision makers perceive that
uncertainty (Milliken, 1987). The degree of organizational uncertainty depends on how
much information decision makers can acquire and subjectively learn, irrespective of the
objective state of environment.
Conversely, some researchers also consider uncertainty as an objective phenomenon,
preferring to understand uncertainty as a result of the objective volatility and
unpredictability of the environment in which any organization operates (Agle et al.,
2006; Cyert and March, 1963; March and Simon, 1958; Miller et al., 2002). However, no
matter whether uncertainty is considered as a subjective or objective phenomenon,
it is usually dened as a condition arising from a lack of information about the
environment (Milliken, 1987). As such, the potential for uncertainty is closely related to
other variables of the organization environment such as complexity (more related
elements and complex relationships) and dynamics (the way in which these related
elements interact with one another and in multiple congurations), both of which are
major features of the era of globalization.
Uncertainty, then, can be characterized as arising primarily from a lack of
information regarding the organization environment. Uncertainty may be a
phenomenon that is subjectively experienced by managers and decision makers due
to a lack of information, or it may be seen as an integral, objective feature of a particular
environment that cannot be predicted with the information available to managers at a
given point in time.
Ambiguity
Ambiguity refers to a lack of awareness of current organizations and their
environment (Pich et al., 2002; Schrader et al., 1993) where managers have inadequate
knowledge about the meaning and implications of particular events and actions
because of unknown cause-effect relations and lack of institutionalized patterns of
relations and actions (Santos and Eisenhardt, 2009). Most research on ambiguity has
concentrated on causal ambiguity that arises from a lack of understanding of the
logical linkages between actions and outcomes, inputs and outputs, and causes and
effects (Mosakowski, 1997; Reed and Dellippi, 1990; Simonin, 1999).
According, to Augier and March (2011, p. 1):
[. . .] ambiguity is an important, yet elusive and often puzzling concept in studies of decisions
and organizations. The orientation to ambiguity that characterizes Western philosophy,
decision theory, and organizational practice denes ambiguity as a lack of clarity in the
premises of rational action.
Such a denition highlights the problem of determining causality of events which, in
turn, greatly affects the ability of managers to make good decisions. Lack of clarity,
an undoubted consequence of ambiguity, is also an undoubted consequence of
uncertainty, making such a denition equally applicable to the phenomenon
of uncertainty, which the authors view as distinctly different from ambiguity. While
uncertainty describes the absence of sufcient information and its subsequent impact
upon decision making, ambiguity describes the presence of opacity, obfuscating and
obscuring the nature of the operating environment through such related variables as
pace of change, complexity and, in some cases, uncertainty.
Ambiguity must be dened as the obfuscation of causality arising fromenvironmental
conditions, such as rapid change, uncertainty and complexity. The threat which ambiguity
Replying to
management
challenges
397
poses to the smooth operations of a particular organization is that of hiding the true nature
of known variables which can possibly lead to inappropriate management decisions. For
example, Simonin (1999) veried that causal ambiguity is negatively related to knowledge
transfer in strategic alliances; Mosakowski (1997) found that causal ambiguity can make
strategizing more difcult. However, Reed and Dellippi (1990) argued that causal
ambiguity can be barriers to imitation by competitors and further contributes to
organizational sustainable competitive advantage, which indicated that ambiguity is not
always harmful to managerial decisions. No matter whether it has a positive or negative
effect on management decisions, ambiguity should be carefully controlled to contribute to
organizational outcomes. The premise of this control is to gure out howambiguity arises.
Ambiguity in management could arise in three ways. First, facts in the real world
could be a source of ambiguity. Nowadays the world has become ever more complex and
it is very difcult for managers to understand the whole picture of events taking place
around them (Reed and Dellippi, 1990; Simonin, 1999). This limited understanding of
meaning of particular events and the underlying cause-effect relations can lead to
ambiguity. Second, if facts are clear, they also should be transferred to managers.
However, lots of facts are hard to be transfer because of their tacit nature and specicity
characteristics (Reed and Dellippi, 1990; Simonin, 1999). The problem of
communication can also lead to ambiguity. Finally, even if events can be transferred
to managers, they cannot always interpret these facts in the same way as others.
Differential value systems or viewpoints tend to lead to confusion and multiple potential
interpretations (Santos and Eisenhardt, 2009). Being aware of the three ways in which
ambiguity arises allows us to be more condent in replying to ambiguities inherent in
social lives and organizational management practice.
Temporary organizational management context: CCAU
The four characteristics of the contemporary organizational management context
identiedabove indicate that the organizational environment has changedandcontinues
to change in an unpredictable way. Here, we dene this new context as CCAU
environment that is lled with complexity, change, ambiguity, and uncertainty
(Figure 1). Organizational management has also become a much greater challenge under
this context; managers have limited knowledge about what is happening in the real
world and cannot forecast what will happen in the coming future. In addition, managers
of organizations need to react to rapid changes occurring incessantly and try to discern
the logic and cause-effect relationship of related things and events.
Figure 1.
Characteristics of
temporary organizational
management context
Time
C
h
a
n
g
e
Complexity
Uncertainty
Ambiguity
CMS
6,3
398
Taking the 2008 Financial Crisis as example, from the beginning of 2007 to the end of
2008, many countries, industries, companies, and individuals, including those that
would seemingly have had little exposure to the impact of subprime mortgages, found
themselves dramatically affected by the events unfolding as a result of the subprime
catastrophe. No one could anticipate the complexity of the emerging situation or that
change would occur so rapidly. During this period, countless people lost their jobs; many
companies confronted problems that they had never previously encountered, and
managers knew very little about what had happened to them, what would occur in the
short-term, and what long-term effects the crisis would inict upon their rms. Under
such circumstances, the traditional management philosophy advocating designing and
optimization rooted in western culture, cannot deal with such turbulence. It is no longer
enough to mitigate risk when hidden circumstances arising through CCAU pose a
signicantly higher risk than those which have been accounted for through planning
and design. Such a situation calls for new management thinking on the related
organizational issues of CCAU.
Challenges of organizational management in the context of CCAU
The complexity of the modern operating environment in which many organizations
operate, in addition to the incredible pace of change in the twenty rst century,
increases the likelihood that uncertainty and ambiguity will impact upon management
decision making. Organizational management in the twenty rst century has been
challenged on several fronts, calling into question the validity of traditional
organizational and management models based on scientic management, division of
labor, and the separation of business functions, which call for newmanagement models
to deal with this condition.
Problems of managing holistically
Traditional management depends much on division of labor and scientic management.
However, under conditions of CCAU, it is difcult for managers to get the whole picture
of their operating environment, thus rendering effective communication and
coordination between different departments and different organizations more and
more important to overall organizational success. Therefore, traditional management
based on functional separation faces a problemof managing holistically. Although there
have been many ways to facilitate holistic management through structural adjustment,
process reengineering, and organizational learning (Burns, 1989; Fiol and Lyles, 1985;
Hammer and Champy, 1990), problems of managing holistically have not been resolved
and warrant further investigation.
Problems of determining causality
In a complex environment, factors related to organizational development increase in an
unexpected and unpredictable way, while the relationship between these factors
becomes ever more difcult to discern and interpret accurately. Managers will nd it
increasingly difcult to identify the critical factors that determine organizational
outcomes and, as a result, to accurately forecast the effects of their decisions. Therefore,
causality, which is the basis of scientic approaches to management, becomes
increasingly elusive in such complex and rapidly changing contexts. Scientic
management is challenged by ambiguous causality; that is, traditional planning and
Replying to
management
challenges
399
design methods like strategy and organizational design will not work when we do not
know the premises of strategic planning (uncertainty) and cannot understand what is
happening right now (ambiguity). Consequently, management in such a context should
pay much greater attention to the determination of cause-and-effect relationships and,
moreover, consider how to manage effectively in situations where there is limited
information andknowledge onwhat is happeningnowand what will happen inthe future.
Problems of adaptation to rapid change
As changes of organizational environment become increasingly frequent, managers of
organizations experience greater difculty in understanding, identifying and
satisfying requirements and demands of the market. One of the main reasons is that
it is very difcult for managers to collect all information about market changes and
make sense of them. Under complex and ambiguous conditions, managers usually pay
attention only to events and information that relate to their experiences. Moreover,
even if they have information about changes and make the correct decision in response
to them, organizations are always constrained by path dependence which makes it
very difcult, in many cases, to respond appropriately to new requirements and
demands. Therefore, how organizations adapt to the rapid changes of environment is a
major challenge for contemporary management.
Using oriental and occidental wisdom to reply to challenges
Inuences of culture on the management of uncertainty have been investigated by
many researchers For instance, Hofstede (1979), based on a survey study of IBM
employees from forty countries in a large international rm, identied uncertainty
avoidance as one of ve key dimensions of national culture. This indicates that
different cultures reply to uncertainty in distinct ways. Most of extant researches on
uncertainty employed a fundamental assumption that uncertainty, which originates in
the environment external to organizations, is negative to organization outcomes and
should be possibly reduced through designing and programming methods based on
western scientic philosophy ( Jauch and Kraft, 1986). However, several researchers
proposed that in the twenty rst century, a reliance on western management
approaches to the mitigation of risk, such as probability distributions used to
extrapolate from historical experience (Savage, 1954), are insufcient to deal with
problems of managing holistically, determining causality, and adaptation to rapid
change under contexts of CCAU, and that there is a need to incorporate both western
and oriental philosophy to establish new management approaches (Xi et al., 2010).
Western wisdoms response to challenges
Western wisdom, which advocates rationality and scientic research, is one of the
prominent methods to respond to challenges under context of CCAU. Equity and
justice among citizens advocated by western religion guides the social construction
and maintenance of group level behavioral rules that extend beyond any single
persons control. Western cultures which, according to Hofstede (1979), have low
uncertainty avoidance in terms of cultural characteristic, deal with management
challenges by establishing social rules like laws and regulations based on scientic
approaches to guide and constrain peoples behaviors in specic groups, thus making
such rules a good predictor of peoples behavior, and further respond to challenges
CMS
6,3
400
arising in CCAU according to the logic of these entrenched behavioral codes. Strategic
planning in strategy management (Beckman et al., 2004), organizational design in
organizational theory (Delage and Ye, 2010), and optimal programming in management
science (Federgruen and Yang, 2009) are good examples of western philosophy.
Furthermore, where management challenges cannot be rationally xed through
recourse to legal or scientic approaches, western people tend to seek the help of
religious forces. They tend to believe that if science cannot settle the problem, God
would help them to deal with it. That is, Western philosophical approaches to the
management challenges of managing holistically, determining causality, and
adaptation to rapid change, inherent in the wider economic environment, emphasize
standardization and rational design on the basis of science, law, and religion. Such
approaches are characteristic of western philosophical traditions such as the
Enlightenment movement or positivism in the elds of social science. Essentially,
western thought intends to limit the occurrence of unpredicted events through the
development of scientic systems which aim to mitigate them.
Western management, nurtured in a culture characterized by religion, law and
science, views people as a homos economicus (L.) who is born to pursue economic
benet. The objective of business management is also to get as much benet as
possible through coordinating behaviors of individuals under the permission of law
and regulation. Western culture advocates individual freedom and does not interfere in
private space. Firms organize, coordinate, control, stimulate, and lead behaviors of
individuals only in the eld of organizational behavior. The main methods they employ
establish specic regulations and enforce members to comply with them. Specically,
the logic and principal of establishing regulations is based on scientic rationale.
Eastern wisdoms response to challenges
Chinese Confucianism, which has existed for thousands of years, is representative of
Eastern culture, and preaches philosophy of existence of xiushen, qijia, zhiguo,
pingtianxia ( ) (cultivate ones moral character,
improve family harmony, govern country, and maintain world peace) under a society
characterized as order difference pattern ( ) (Chen, 2008; Fei, 2007). That is, the
objectives of social management are achieved through an individuals self enhancement
as the rst step and then manage the family, the country and society through moral
guidance. Thus, Confucianism emphasizes the cultivation of individuals morality to
promote obedience of the managing activities of others. Confucius believed that people
inherently have the potential for self-discipline through morality, and if they were
properly induced, this potential would prompt individuals to control their own
behaviors by moral self-discipline consistent with social rules. In essence, Confucian
management thought is effective in inducing internal initiative and positivity of
individuals to obey social rules without the need for explicit coercive force (Chen, 2008).
Chinese management nurtured by Confucianism emphasizes morality in responding
to management challenges; advocates improving capabilities and the quality of people
through self-discipline, and proposes a systematic value system including ren, yi, li,
zhi, and xin ( )(humanity, justice, courtesy, wisdom, trust) to
guide the behaviors of people (Chen, 2008). These ve components of the Confucian
value system indicate the moral level of individual person and act as important
standards to regulate and forecast behaviors of people to deal with challenges in the
Replying to
management
challenges
401
context of CCAU. It seems that morality rather than social rules is a critical way to
reply to management challenges in China. Besides, oriental wisdom emphasizes
exibility when replying to management challenges: people tend to act according to
circumstances rather than comply with specic rules. Even if there are some rules
constraining behaviors of people, they also reinforce the importance of peoples
initiative when facing specic problems. That is, eastern philosophy concentrates on
morality that guides and constrains behaviors of pure individuals, rather than
behaviors of people in specic groups, as indicated by western philosophy (Fei, 2007).
In conclusion, morality and exibility are the main methods oriental people employ to
address problems arising from uncertainty, ambiguity, complexity, and rapid change,
aiming to provide a exible and uid system which absorbs the effects of uncertainty.
Summary
It is obvious that both eastern and western responses to management challenges in the
context of CCAU have advantages and disadvantages (Table I). For instance, eastern
wisdom emphasizes individual-oriented morality and exibility, and can induce
initiatives and positivity of people through internal motives. But management based
on eastern philosophy overlooks using scientic approaches to set up clear rules to
guide peoples behaviors in specic groups, so eastern people do not comply well with
social rules and laws. In contrast, western wisdom is constructed on the basis of
scientic rationality and advocates establishing concrete laws and regulation to guide
and constrain behaviors of people in specic group. The shortcomings of this kind of
wisdom are that it destroys the holistic nature of management and cares little about
peoples initiatives. Analysis indicates that western and eastern wisdom are not perfect
themselves and they complement to each other in several aspects, so it seems that we
can better reply to problems of managing holistically, determining causality, and
adaptation to rapid change in organizational management if we can integrate these
Oriental wisdom Occidental wisdom
Hypotheses on
human nature
People are inherently virtuous and have
sympathy and compassion
People are economic man and
pursing self-benet
Management
objective
Social harmony and stable Gain much benets
Social structure Order difference pattern ( ),
xiushen, qijia, zhiguo, pingtianxia
( )
Group pattern, constraining peoples
behaviors in organizations and
advocating individual freedom
Core arguments Emphasizes cultivating individuals
morality to guide those obeying
managing activities of others; inducing
internal initiative and positivity of
individuals to obey social rules without
help of coercive forces
Get as much benet as possible
through coordinating behaviors of
individuals under the permission of
law and regulation. Advocates
individual freedom and does not
interfere with private space
Methods and tools Morality and exibility Religion, law and science
Shortcomings Overlooks using scientic approaches to
set up clear rules to guide peoples
behaviors in specic group eastern
people do not comply well with social
rules and laws
Destroys the holistic nature of
management and cares little about
peoples initiatives
Table I.
Oriental and occidental
wisdom to reply to
management challenges
CMS
6,3
402
two wisdoms. The HeXie Management Theory (HXMT) aims to integrate eastern and
western wisdom to develop a robust model of organizational management capable of
rising to the challenges of uncertainty, ambiguity, complexity and change.
HXMT: integrating oriental and occidental wisdom
HXMT was developed to explore and solve real world management issues like
uncertainty and ambiguity under complex and dynamic organizational contexts. It was
rst advanced by Xi (1989) in his doctoral dissertation and has been enriched by
further research effort in the following three decades. Now the theory has established a
systematic framework and has been applied to many research and practical areas such
as strategy, leadership, and organization theory (Xi and Shang, 2002; Xi and Zeng,
2005; Xi et al., 2006; Xi and Wang, 2006).
The theoretical framework of HXMT is shown as Figure 2.
There are four critical components of HXMT including the He Principle, the Xie
Principle, the HeXie Theme, and the HeXie Coupling. All of these components mutually
contribute to cope with management challenges in the context of CCAU. The HXMT,
which was put forward with thought grounded in the Chinese cultural context
(e.g. Confucian culture, emphasis on harmony), however, has been making efforts to
absorb and also integrate modern management theories and methods from the
occidental world (Xi et al., 2010). Oriental philosophy is reected by the He Principle,
occidental thought by Xie Principle, and the integration of oriental and occidental
philosophy was reected by HeXie Theme and HeXie Coupling.
The occidental philosophy reected in the Xie Principle
The principle of Xie refers to a control mechanism based on rational design and
optimization, and is dened as the principle and mechanism to promote organizational
development and create organizational value by designing the concrete behavioral
path of organizational members and placing rigorous process control on them, based
on a consideration of scientic methodology in management process. It aims at
Figure 2.
The theoretical framework
of HeXie management
theory
HP
XP
Control mechanism
Evolutionary mechanism
E
O
HX P
L
HT S
Notes: L leadership; O organization; E environment; S strategy; HT HeXie Theme;
HP He Principle; XP Xie Principle; P performance; HX HeXie Coupling
Source: Xi et al. (2010, p. 4)
Replying to
management
challenges
403
reducing or optimizing the uncertain and ambiguous factors around organizations.
The Xie Principle sets its basis on expectation about certainty in organizational
environment and emphasizes designing and planning. Although the Xie Principle
represents prominent logic to reply to management challenges in contemporary
organizational research, it cannot deal with all of the challenges listed above. Take
uncertainty as an example: most extant research on uncertainty employed a
fundamental assumption that uncertainty, which comes from environment external to
organizations, is negative to organization outcomes and should be possibly reduced
through designing and programming methods ( Jauch and Kraft, 1986). However, this
assumption is biased because organizational employees which were overlooked by
uncertainty research are also themselves critical sources of uncertainty. Research has
found that organization employees understanding and behavior are always inuenced
by organizational fairness and, thus, unpredictable, which makes managers uncertain
about how employees act and impact upon organizational goals (Thau et al., 2007;
Van de Bos et al., 2007). Furthermore, individuals usually do not behave according to
rules but only refer to them. So it seems that uncertainty from individuals is hard to be
reduced by designing specic rules (Weick, 1977).
The oriental philosophy reected in the He Principle
In contrast to the Xie Principle, the He Principle takes into account the uncertainty and
ambiguity around organizations and focuses on the emergence and evolution of
organizational behaviors. Specically, the He Principle refers to an evolvement
mechanism based on organizational members initiative and self-determination, and is
dened as the principle and mechanism to create organizational culture, values, and
beliefs by constructing necessary organizational circumstances, atmosphere
or conditions and providing a platform for initiative and self-determination of
organizational members based on the consideration of uncertainty in the management
world (Xi and Shang, 2002; Xi et al., 2006). As we all know that activities of individuals
are inherently uncertain and uncontrollable, the He Principle advocates replying to
uncertainty in management by using the initiative induced by the uncertain behaviors of
individuals. This argument is effective if we consider that people have self-discipline
motivations, and that clear processes and structures are impossible to be gured out in
many situations. The He Principle entails an evolutionary perspective, using
environmental inducement and self-evolution to eliminate and utilize the uncertainty
arising from unpredictable human activity. Its logic is rooted in the oriental philosophy
that emphasizes self-discipline and induces initiative and positivity of individuals.
Measurement of values and beliefs is very difcult, and furthermore, even if they
are measurable, it is hard to say whether or not congruence of values and beliefs
denitely contributes to organizational goals. Therefore, we dene methods that stress
vision, culture, and beliefs to cultivate an atmosphere that guides employees to
positively contribute towards the achievement of organizational goals as the He
Principle (or inducing mechanism) rather than as a control mechanism.
The He Principle is superior to a control mechanism (Xie Principle) in at least two
aspects. First, an inducing mechanism (He Principle) does not design any output
requirement but merelyestablishes the visionandmissionof anorganization, whichavoids
the main problem associated with the control mechanism, that output of some works are
difcult to measure (Ouchi, 1979), and further gives much more space for creative results
CMS
6,3
404
that cannot be predicted. Second, an inducing mechanism is much more preferable for
dealing with uncertainties from behavior, because behavior cannot be measured and the
evaluation of behaviors becomes impossible; it is hard to control behavior if you cannot
measure it (Ouchi, 1979). In summary, the He Principle induces positivity and creativity of
employees behaviors by cultivating a proper atmosphere rather than constraining their
behavior by rational designs, rules, regulations and processes.
Integration of oriental and occidental philosophy using the HeXie Theme
As can be seen from the above analysis, both the He Principle and the Xie Principle are
critical weapons for dealing with management challenges in the context of CCAU.
Furthermore, the integration of these two principles, which are rooted in distinct
cultures, seems to offer suggestions as to how managers may better respond to the
management challenges they face. Therefore, the problem now is identifying which
principle to choose when facing specic challenges.
The He Principle and the Xie Principle are appropriate theories to deal with different
types of challenges, so we now to introduce the HeXie Theme to help choose the
appropriate mechanism. The HeXie Theme is about which principle, He or Xie, should be
selected to respond to management challenges. According to the HXMT, the
Xie Principle should be used when management challenges are frompredictable factors,
while the He Principle is a better choice when challenged by unpredictable factors, such
as uncertainty about individual behavior. Furthermore, the predictability of
management challenges is determined by the HeXie Theme in a specic period. That
is, the selection of the Xie Principle or the He Principle is determined by the HeXie
Theme. Since it is becoming more and more difcult with traditional strategy planning
tools based on the design thinking in todays uncertain world, successful
organizations are relying more on exible and rapid response to external changes
which in turn could only be achieved by means of identifying rstly the correct strategic
theme. HXMT makes the searching for and identication of the HeXie Theme the most
important task for leaders in a given organization. An effective leader focuses energies
and resources on the most important issues within a specic period under an uncertain
situation for the sake of organizational sustainable development, rather than being
distracted by trivial issues (Xi et al., 2010).
More specically, the HeXie Theme could possibly be an effective substitute to
searching and making of strategy, especially in uncertain times, primarily because
strategy is not always an outcome of intended design activities; that is, there are always
forces that can help shape strategy in unforeseen ways. The HeXie Theme can help
management to shed light on the most urgent and important issues confronting an
organization within a certain period of time. Furthermore, the evolving HeXie Theme in
the process of organization development can help nurture the dynamic capabilities of
organizationbyapplyingdifferent congurations of the He Principle and the Xie Principle
in front of varied organizational tasks and allocating resources to coordinate
implementing activities guided by HeXie Coupling mechanisms (Cao et al., 2011).
HeXie coupling
The principle of He and the principle of Xie are a unied body where the two parts
interact with each other. A double helix model could be developed to understand the
coupling process of these two principles. The HeXie Coupling is a dynamic and evolving
Replying to
management
challenges
405
process in which the He Principle and Xie Principle can convert each other according to
the HeXie Theme in a specic period. It is the HeXie Coupling that helps the co-evolution
betweeninducedevolution (He Principle) and rational design (Xie Principle), creating the
dynamic coherence of the organization as a whole. In this way, organization
development could be ambidextrous in achieving the desired harmony (Cao et al., 2011),
utilizing the strategic design aspects of the Xie Principle in harmony with the
responsiveness of the He Principle. With the change of the HeXie Theme, the interaction
of Xie Principle and He Principle also changes and the development of organizations
evolves sustainably toward organizational goals.
Vision and mission guidance
Management challenges caused by uncertainty and ambiguity are partly rooted in the
complex and dynamic characteristics of the environment and the bounded rationality
of managers. Managers experience great difculty guring out the inuences of the
environment upon organizational development, and it is even more difcult to discern
which factors of the environment are related to organizational development. Under this
circumstance, organization strategy based on planning logic (Xie Principle) cannot
adapt to the fast-changing environment in a timely manner, and vision and mission of
organizations (He Principle) become very important to guide organizational
development, because vision and mission are relatively stable and do not change
with the environment (Collins and Porras, 1996; Howarth and Rafferty, 2009). Research
showed that over half of America companies have cohesive visions and that most of
those in existence for a long time have clear visions (Xi et al., 2006).
According to Collins and Porras (1996), a well-established organizational vision
should include two parts: core ideology and envisioned future. Core ideology includes
the core values and the core objectives of an organization, which reects the essential
principles and pursuits of the organization and has little connection to the
environment. An envisioned future elucidates a vivid description of the organization in
the future and can only be adjusted when facing huge restructuring of organizational
environments. The organizational vision mainly cares about fundamental problems of
the organization and is insensitive to changes within the organizational environment.
Many researchers have indicated that the organizational vision has a signicant
inuence on changing members behavior (Howarth and Rafferty, 2009). Moreover, as a
kind of strategic tool, vision can boost enthusiasm of members and change their mode of
thinking (Verma, 2009). A Vision can tell organizational members how they can
contribute to organizational success through their own behavior (Getz, 2009). In
conclusion, organizational vision can guide organizational development in many ways,
and remains unaffected by most changes in the organizational environment. These
characteristics make the vision critical for organizational success in a complex and
dynamic context.
Using HXMT to reply to management challenges
HXMT is a breakthrough in responding to management challenges by rational design
and planning in traditional management, and proposes a new approach integrating
three methods. This rational design is based on the Xie Principle, inducing management
based on He Principle, and HeXie Coupling under the specic HeXie Theme. This new
way responds well to the management challenges listed above (Table II).
CMS
6,3
406
Problems of determining causality make it incredibly difcult for managers to
predict what will happen in the future. HXMT argues that this problem can be solved
by establishing a clear organizational vision using the HeXie Theme. Although what
will happen is unpredictable, organizations can x stable development directions
under the guidance of vision, and adjust the HeXie Theme in a timely manner to adapt
to the emergent changes of the environment. In addition, problems of determining
causality also lead to difculty in designing and optimizing methods. HXMT proposes
that the He Principle be used to encourage individual initiative in replying to
management challenges rather than setting up specic processes for them. Such an
approach increases the uidity of an organization through empowering individuals to
respond in a exible manner, rather than to blindly follow protocols.
With regards to problems of managing holistically, the HeXie Theme and HeXie
Coupling offer some helpful solutions. First, the HeXie Theme, the problem of
determining whether to emphasize the He Principle or the Xie Principle to respond to
management challenges, becomes the core focus and pre-eminent issue for organizations
to address ina specic period. Second, the HeXie Coupling invigorates methods based on
both inducing individuals initiative by cultural nurturing and constraining individuals
behavior by rational design. These two methods reect both oriental and occidental
wisdom and the HeXie Coupling connects them in a specic conguration that
integrates wisdom of human beings. Thus, HXMT is a holistic management theory.
With regards to problems of adaptation to rapid change, the HeXie Theme, as an
evolving adaptation approach, deals with changes in the environment. A major
difference between the HeXie Theme and strategy is that the HeXie Theme can respond
to changes of organizational environment, but the strategy is stable no matter how
rapidly the environment changes. Besides, the interaction between the He Principle and
the Xie Principle provides many alternatives to respond to new management problems,
this enhances the exibility of organizations and can help organizations to better adapt
to rapid change.
Discussion
Our theoretical analysis onmanagement challenges ina newcontext andhowto respond
to these challenges through integrating oriental and occidental wisdom contributes to
the interaction between organizations and their environment in the context of CCAU. It
also provides a new perspective that advocates replying to management challenges
through integrating wisdom from western and eastern cultures.
Characteristics of the organizational environment in the new era
The relationship between organizations and their environment is a central issue in
organizational theory, and many scholars have addressed this phenomenon (Dill, 1958;
Lawrence and Lorsch, 1967; Weiner and Thomas, 1981; Santos and Eisenhardt, 2009).
A basic premise of research in this domain is that organizations only can exist through
Management challenges Methods
Problem of determining causality Vision HeXie Theme He principle
Problem of managing holistically HeXie Theme HeXie Coupling
Problem of adaptation to rapid change HeXie Theme He Principle Xie Principle
Table II.
A new method of
replying to management
challenges based on
HeXie management
theory
Replying to
management
challenges
407
satisfying the demands of the environment. By contrast, organizations can shape the
demands of their environment by undertaking innovative activities (Santos and
Eisenhardt, 2009). However, the environment is unstable and changes over time, and
the frequency of change has been becoming greater in recent years.
The recent years have been characterized by obvious changes to the organizational
environment. Scholars refer to the new era of organizational environment as
Enterprise 2.0 (Rangaswami, 2009). The organizational environment in this new era
has many newcharacteristics that are distinct to this particular period of time. However,
research on these new characteristics is widely dispersed and does not provide a
complete picture of the new environment. For instance, complexity was found as one
characteristic of the organizational environment (Anderson, 1999; Morel and
Ramanujam, 1999), and challenges for the organizational management in this
environment were discussed extensively. In a similar vein, uncertainty (Bechman et al.,
2004; Jauch and Kraft, 1986), ambiguity (Augier and March, 2010), and rapid change
(Eisenharst and Bourgeios, 1988) were all viewed as characteristics of the organizational
environment and their impact subsequently became an issue for consideration and
discussion. Although this research helped us to understand relationships between
organizations and environment in the newera, a complete picture of these relationships
needs to be investigated in a holistic manner.
This paper addressed the gap by integrating researches about CCAU, and proposed
a holistic organizational context named CCAU. Organizational management would be
challenged in this context. Managers would have limited knowledge about what was
actually happening in the real world, and could not forecast what would happen in the
coming future. Furthermore, they would also be required to react quickly to rapidly
occurring changes, whilst also needing to discern the logic and cause-effect
relationship of related things and events. Manager should reply to challenges including
problems of determining causality, managing holistically, and adaptation to rapid
change simultaneously.
Reply to challenges by integrating oriental and occidental wisdom
The second contribution of our paper is providing a new perspective that integrates
oriental and occidental wisdom to reply to management challenges in the context of
CCAU. We borrowed four basic components of HXMT to integrate wisdom from
different cultures. Among these, the He Principle represents oriental wisdom that
emphasizes encouraging the initiative of individuals, while the Xie Principle represents
occidental wisdom that constrains individual behavior by designing clear processes
and regulations based on scientic rationale. The HeXie Theme, as a core task and
problemof organizations in a specic period of management challenges, tells managers
which principle should be chosen to resolve or respond to different challenges. Finally,
the HeXie Coupling integrates the He Principle and the Xie Principle under the specic
HeXie Theme. With the transformation of the HeXie Theme, the interaction between
the He and Xie Principles also changes to deal with the new task and problem.
In essence, our perspective based on HXMT shows the importance of ambidexterity.
Research on ambidextrous organizations, which is prevalent in recent research on
organization theory, mainly concentrates on the basic characteristics of ambidexterity
and the effects it has upon the outcomes of organizations (Birkinshawand Gibson, 2004;
He and Wong, 2004; OReilly III and Tushman, 2004; Tushman and OReilly III, 1996).
CMS
6,3
408
Autonomous teams, tolerance of failure and risk, ambidextrous leaders, and continuous
communication are the main features of ambidextrous organizations (OReilly III and
Tushman, 2004; Tushman and OReilly III, 1996). Several studies found that these
features promote exploration and exploitation simultaneously and further contribute to
organizational outcomes (Birkinshaw and Gibson, 2004; He and Wong, 2004). These
ndings indicate that the ambidextrous connection of the He Principle and the
Xie Principle in HXMT is positively linked to organizational outcomes.
Actually, this ambidextrous characteristic of organizations has been noted in several
other perspectives for a long time such as formal and informal organizations
(Zenger et al., 2002), social-technical organizational design (Cherns, 1987), the Yin-Yang
thinking (Du et al., 2011), bureaucracy control and clan control (Ouchi, 1979), soft-power
and hard-power (Santos and Eisenhardt, 2009), deliberate strategy and emergent
strategy (Mintzberg and Waters, 1985) and so on. However, all these studies mainly
focused on the features and effects of ambidextrous characteristics of organizations, but
care little about how these two components co-exist in organizations and interact with
each other. HXMT, with the HeXie Theme and HeXie Coupling, deals with the problem
in a unique way that integrates oriental and occidental wisdomand employs systematic
and dynamic thinking. This is the most important contribution of our paper.
Conclusion
Compared with extant theories on relationships between organization and
environment, HXMT can better respond to the management challenges mentioned
above. For instance, combining vision and HeXie Theme to guide the development of
organizations is effective when strategic planning becomes impossible because of
problems of determining causality in complex and changing contexts. Furthermore,
the utilization of the He Principle in coping with uncertainty and ambiguity, by
encouraging the entrepreneurial initiative of organizational employees in the event of
ambiguous situations or when unpredicted events occur, can work in instances when
design and strategic planning have failed to foresee such events and cannot adapt to
them. Second, the combination of HeXie Theme and HeXie Coupling and the dynamic
evolution of interaction between them overcome the problems of managing holistically.
Finally, the emerging HeXie Theme can actively identify rapid changes of
organizations and environment in an evolutionary way and the He Principle and Xie
Principle mutually contribute to the adjustment of organizational systems in order to
adapt effectively to rapid changes in increasingly unpredictable, ambiguous and
complex environments.
Acknowledgements
The authors wish to thank Michael Gow for his kind suggestions and editing work.
They also wish to thank the nancial support of the National Science Foundation of
China (No. 71,032002).
References
Agle, B.R., Nagarajan, N.J., Sonnenfeld, J.A. and Srinivasan, D. (2006), Does CEO charisma
matter? An empirical analysis of the relationships among organizational performance,
environmental uncertainty, and top management team perceptions of CEO charisma,
Academy of Management Journal, Vol. 49 No. 1, pp. 161-74.
Replying to
management
challenges
409
Anderson, P. (1999), Complexity theory and organization science, Organization Science, Vol. 10
No. 3, pp. 216-32.
Augier, M. and March, J.G. (2010), Ambiguity and decision making in Chinese organizations,
Call for Abstracts for Workshop.
Bechman, C.M., Haunschild, P.R. and Phillips, D.J. (2004), Friends or strangers? Firm-specic
uncertainty, market uncertainty, and network partner selection, Organization Science,
Vol. 15 No. 3, pp. 259-75.
Birkinshaw, J. and Gibson, C. (2004), Building ambidexterity into an organization,
MIT Sloan Management Review, summer, pp. 47-55.
Burns, L.R. (1989), Matrix management in hospitals: testing theories of matrix management and
development, Administrative Science Quarterly, Vol. 34 No. 3, pp. 349-68.
Cao, X.W., Zhang, X.J. and Xi, Y.M. (2011), Ambidextrous organization in harmony: a multi-case
exploration of the value of HeXie management theory, Chinese Management Studies,
Vol. 5 No. 2, pp. 146-63.
Chen, D.S. (2008), Confucian Management Philosophy, Chinese International Broadcast
Publishing House, Beijing (in Chinese).
Cherns, A. (1987), Principles of social-technical design revisited, Human Relation, Vol. 40 No. 3,
pp. 153-62.
Collins, J.C. and Porras, J.I. (1996), Building your companys vision, Harvard Business Review,
September-October, pp. 65-77.
Cyert, R.M. and March, J.G. (1963), A Behavioral Theory of The Firm, Prentice-Hall,
Englewood Cliffs, NJ.
Delage, E. and Ye, Y. (2010), Distributionally robust optimization under moment uncertainty
with applicaton to data-driven problems, Operations Research, Vol. 58 No. 3, pp. 595-612.
Dill, W. (1958), Environment as an inuence on managerial autonomy, Administration Science
Quarterly, Vol. 2, pp. 409-43.
Du, R., Ai, S.Z. and Brugha, C.M. (2011), Integrating Taoist Yin-Yang thinking with western
nomology: a moderating model of trust in conict management, Chinese Management
Studies, Vol. 5 No. 1, pp. 55-67.
Eisenharst, K.E. and Bourgeios, L.J. III (1988), Politics of strategic decision making in
high-velocity environments: toward a midrange theory, Academy of Management
Journal, Vol. 31 No. 4, pp. 731-70.
Federgruen, A. and Yang, N. (2009), Competition under generalized attraction models:
applications to quality competition under yield uncertainty, Management Science, Vol. 55
No. 12, pp. 2028-43.
Fei, X.T. (2007), Chinese Countryside Culture, Shanghai Century Publish Group, Shanghai
(in Chinese).
Fiol, C.M. and Lyles, M.A. (1985), Organization learning, Academy of Management Review,
Vol. 10 No. 4, pp. 803-13.
Getz, I. (2009), Liberating leadership: how the initiative-freeing radical organizational form has
been successfully adopted, California Management Review, Vol. 51 No. 4, pp. 31-58.
Hammer, M. and Champy, J. (1990), Reengineering work-dont just automate obliterate,
Harvard Business Review, Nos 7/8, pp. 20-8.
He, Z.L. and Wong, P.K. (2004), Exploration vs exploitation: an empirical test of the
ambidexterity hypothesis, Organization Science, Vol. 15 No. 4, pp. 481-94.
CMS
6,3
410
Hofstede, G. (1979), Value systems in forty countries, in Eckensberger, L., Lonner, W. and
Poortinga, Y. (Eds), Cross Cultural Contributions to Psychology, Swets and Zeitlinger,
Lisse.
Howarth, M.D. and Rafferty, A.E. (2009), Transformational leadership and organizational
change: the impact of vision content and delivery, paper presented at the Academy of
Management Proceedings, Academy of Management, Chicago, IL.
Jauch, L.R. and Kraft, K.L. (1986), Strategic management of uncertainty, Academy of
Management Review, Vol. 11 No. 4, pp. 777-90.
Lawrence, P.R. and Lorsch, J.W. (1967), Organization and Environment, Graduate School of
Business Administration, Harvard University, Boston, MA.
March, J.G. and Simon, H.A. (1958), Organizations, Wiley, New York, NY.
Miller, J., Wiseman, R.M. and Gomez-Mejia, L.R. (2002), The t between CEO compensation
design and rm risk, Academy of Management Journal, Vol. 45, pp. 745-56.
Milliken, F.J. (1987), Three types of perceived uncertainty about the environment: state, effect,
and response uncertainty, Academy of Management Review, Vol. 12 No. 1, pp. 133-1.
Mintzberg, H. and Waters, J.A. (1985), Of strategies, deliberate and emergent, Strategic
Management Journal, Vol. 6 No. 3, pp. 257-72.
Morel, B. and Ramanujam, R. (1999), Through the looking glass of complexity: the dynamics of
organizations as adaptive and evolving systems, Organization Science, Vol. 10 No. 3,
pp. 278-93.
Mosakowski, E. (1997), Strategy making under causal ambiguity: conceptual issues and
empirical evidence, Organization Science, Vol. 8 No. 4, pp. 414-42.
OReilly, C.A. III and Tushman, M.L. (2004), The ambidextrous organization, Harvard Business
Review, April, pp. 74-81.
Ouchi, W.G. (1979), A conceptual framework for the design of organizational control
mechanisms, Management Science, Vol. 25 No. 9, pp. 833-48.
Pich, M.T., Loch, C.H. and Meyer, A. (2002), On uncertainty, ambiguity, and complexity in
project management, Management Science, Vol. 48 No. 8, pp. 1008-23.
Rangaswami, M.R. (2009), The birth of enterprise 2.0, available at: www.sandhill.com/opinion/
editorial.php id98&page1, 2009-08-18
Reed, R. and Dellippi, R.J. (1990), Causal ambiguity, barriers to imitation, and sustainable
competitive advantage, Academy of Management Review, Vol. 15 No. 1, pp. 88-102.
Santos, F.M. and Eisenhardt, K.E. (2009), Constructing markets and shaping boundaries:
entrepreneurial power in nascent elds, Academy of Management Journal, Vol. 52 No. 4,
pp. 643-71.
Savage, L.J. (1954), The Foundation of Statistics, Wiley, New York, NY.
Schrader, S., Riggs, W.M. and Smith, R.P. (1993), Choice over uncertainty and ambiguity in
technical problem solving, Journal of Energy Technology Management, Vol. 10, pp. 73-99.
Simonin, B.L. (1999), Ambiguity and the process of knowledge transfer in strategic alliances,
Strategic Management Journal, Vol. 20, pp. 595-623.
Thau, S., Aquino, K. and Wittek, R. (2007), An extension of uncertainty management theory to
the self: the relationship between justice, social comparation orientation, and antisocial
work behaviors, Journal of Applied Psychology, Vol. 92 No. 1, pp. 250-8.
Tushman, M.L. and OReilly, C.A. III (1996), Ambidextrous organizations: managing
evolutionary and revolutionary change, California Management Review, No. 3, pp. 8-30.
Replying to
management
challenges
411
Van de Bos, K., Euwema, M.C., Poortvliet, P.M. and Maas, M. (2007), Uncertainty management
and social issues: uncertainty as an important determinant of reactions to socially
deviating people, Journal of Applied Social Psychology, Vol. 37 No. 8, pp. 1726-56.
Verma, H.V. (2009), Mission statements: a study of intent and inuence, Journal of Services
Research, Vol. 9 No. 2, pp. 153-72.
Weick, K.E. (1977), Enactment processes in organizations, in Staw, M. and Salancik, G.R. (Eds),
New Directions in Organizational Behavior (Chapter 8), St Clair, Chicago, IL.
Weiner, N.M. and Thomas, A. (1981), A model of corporate performance as a function of
environmental, organizational, and leadership inuences, Academy of Management
Journal, Vol. 24 No. 3, pp. 453-61.
Xi, Y.M. (1989), HeXie Theory and Strategy, Guizhou Peoples Publishing House, Guiyang
(in Chinese).
Xi, Y.M. and Shang, Y.F. (2002), HeXie Management Theory, Renmin University Press, Beijing
(in Chinese).
Xi, Y.M. and Wang, D.G. (2006), Harmony conguration and HeXie management: an empirical
examination of Chinese rms, paper presented at the 13th International Conference on
Management & Engineering, Lille.
Xi, Y.M. and Zeng, X.J. (2005), Complex problem solving: HeXie management theory from
China, paper presented at the First World Congress of the International Federation for
Systems Research, Kobe.
Xi, Y.M., Cao, X.W. and Xiangli, L.X. (2010), A Chinese view on rebuilding the integrity of
management research: the evolving He-Xie management theory, Chinese Management
Studies, Vol. 4 No. 3, pp. 197-211.
Xi, Y.M., Han, W. and Ge, J. (2006), Research on He-Xie Management Theory, Xian Jiaotong
University Press, Xian (in Chinese).
Zenger, T.R., Lazzarini, S.G. and Poppo, L. (2002), Informal and formal organization in new
institutional economics, in Ingram, Paul and Silverman, Brian S. (Eds), The New
Institutionalism in Strategic Management (Advances in Strategic Management), Vol. 19,
Emerald Group, pp. 277-305.
About the authors
Youmin Xi, a Professor of Management of Xian Jiaotong-Liverpool University and Xian Jiaotong
University, is the author or co-author of numerous articles and 20 books, and Editor of several
academic journals. His current research focuses on HeXie Management Theory, strategic
management, and leadership.
Xiaojun Zhang is currently a Doctoral Student in the School of Management of Xian Jiaotong
University and Research Fellow at Xian Jiaotong-Liverpool University. His research areas
include HeXie Management Theory, organizational change and leadership theory. Xiaojun Zhang
is the corresponding author and can be contacted at: xjzh@mail.xjtu.edu.cn
Jing Ge is an Associate Professor of the School of Management at Xian Jiaotong University.
She received her PhD from the Xian Jiaotong University. Her research interests include HeXie
Management Theory and multinational business.
CMS
6,3
412
To purchase reprints of this article please e-mail: reprints@emeraldinsight.com
Or visit our web site for further details: www.emeraldinsight.com/reprints