Extended Abstract

Purpose- This literature review will discuss leadership and entrepreneurship in the United States and China. The United States and China have a strong economic bond that is driven by leadership and entrepreneurship. Although both countries are driven by the same constructs, they differ greatly within each country. Using several peer reviewed articles a new perspective will be presented on the differences and similarities between the United States and China. Design/methodology/approach- The data collected and used in the literature review are from peer reviewed academic resources. Articles related to leadership, entrepreneurship, and business in the United States and China were used. The two constructs, leadership and entrepreneurship, were then compared between their meanings in the United States and China. Findings- The research shows that cultural intelligence in the areas of leadership and entrepreneurship is essential to conducting business in a foreign country. Organizations need to not only understand a foreign culture, but must also compliment that culture with their own. Originality/value/contribution- This paper uses pre-existing resources as well as personal experience of the author, who is Chinese American. This offers the perspective of both cultures in the discussion. Having an understanding of both countries gives a more complete insight into the topics of leadership and entrepreneurship.

Introduction The two main constructs that define how an organization conducts business are leadership and entrepreneurship. Leadership is the heart of any organization. It defines the direction and motivation for the employees. (Eurich, T. 2013) Entrepreneurship is what leads businesses to new heights and new places. It is the seed for innovation. (Holden, G., & Gobble, M. M. 2012) International business would never have been possible with- out either one. The culture of both countries differ greatly, this is why understanding each other is very important. Any organization interested in conducting business abroad should understand the motivating factors behind their foreign counterpart. This includes familiarizing themselves with the leadership structure and methods of their counterpart. (Tejada, C., Mozur, P., & Efrati, A, 2012) This will aid management in approaching and negotiating. Knowing what kinds of opportunities will entice your business associates is essential for offering competitive deliverables. In an international market, there are sometimes countless alternatives. Traditionally China has been a closed country. This was consistent until the 1980s when China began a booming manufacturing transformation. This shift in economic power has brought China to the main stage of international trade. Chinas economy has seen unprecedented levels of growth in a few short decades. (McManus, J., Ardley, D., & Floyd, D. 2012) Much of American manufacturing has been sent abroad, and international business between China and the United States is stronger than ever. This paper will attempt to shed light on the most important similarities and differences in Chinese and American business culture. Through comparison, insightful conclusions will be discussed that will help develop the readers cultural intelligence.

Research Chinese culture is one of the oldest cultures in the world. Chinese work ethic and leadership are reminiscent of ancient core beliefs. These beliefs revolve mainly around Confucianism and Taoism. Confucius created a philosophy that respected authority, placed a strong emphasis on duty, and ceremony. In modern times this lends itself to dire loyalty to ones employer and job. Chinese employees work tirelessly to achieve success. There is a high power distance between management and employees. It is not common for a subordinate to openly question management. Confucius taught that one should accept expectations, and do the best one can do. Another teaching was that social harmony was of the utmost importance. Everyone in a community should conform to society in order to achieve balance. Outside thinkers were not generally accepted. (Lin, L., Ho, Y., & Lin, W. 2013) On the other hand, Taoist believe in the flow if their surroundings. This means that they allow their environment to shape itself. There is a greater respect for individualism and self-expression. Chinese culture is highly dependent upon guanxi, or relation. Networking was the driving force behind Chinese business since ancient times. Well established business men would only work with people that knew one of their associates, and could be trusted. (Li, S. 2013) American culture is best described as being bold and brave. Americans have traditionally been present in almost all international arenas of business. Following WWII, American manufacturing exploded. This lead to a wave of new companies that made quality goods. American entrepreneurship has always lead the way. If a firm was not inventing something new, it was finding a way to do it better. Americans have a low risk-avoidance level. In comparison to other countries, Americans have been seen as reckless. Nonetheless, this brave attitude towards business has lead The United States to holding the trophy for number one economy in the world.

America become very big, very fast. In recent times however, much of Americas industries have gone off shore. Mainly for economic savings in labor and supply sourcing. (Lynn B, & Khan L, 2012) Leadership is what steers firms to success. It is arguably the most important business value. Jack Zenger conducted a study in which managers at leading commercial bank were examined. He compared the top 10% and the lowest 10% of managers. The bottom 10% of departments lost on average $1.2 million. The top 10% of departments had $4.5 million in profits. One study estimates that 50% of managers are ineffective, and that 70% of leadership skills are learned. (Eurich, T. 2013) This data supports the argument that culture is the primary factor in leadership style. Leadership style is often split between two main focuses, people and results. On one end you have that leader that is more of a manager. He does not inspire nor does he give much attention to his employees. He only praises the employees that help him reach his goals. This leader lives for the organization above all else, and he is not shy about that fact. On the opposite side of the spectrum you have the people oriented leader. This is probably everyones favorite boss. He knows his employees on a personal level, and he inspires everyone to do their best. He is undoubtedly softer than the results leader. The leaders that fit these extremes are no more successful than the other. Great leaders are closer to the middle of these attributes. They will inspire and know their employees, while focusing on results. (Eurich, T. 2013) Leadership styles differ greatly among cultures, as well as what is found to be acceptable by employees. Some cultures expect the boss to be a hard driving no none sense person, while a people person would not be considered for management. In other countries, a people person would be selected over the hard driving boss. (Lin, L., Ho, Y., & Lin, W. 2013) As the world becomes more blended, being a good leader from all points of view is essential.

Leadership on the international level is very tricky. What may work very well in your home country may be looked down upon in another country. Messages could be misconstrued, and people may be offended. For example, In the United States it is not uncommon for a subordinate to question or challenge authority. Whether he/she has a better idea or they do not agree with a method, Americans are not afraid to be heard. In China however, it is seen as disrespectful to not honor ones elders. This includes not challenging them or speaking up. (Law, W. 2012) This becomes problematic when an American voices his/her opinion to a Chinese business men with more authority than him. The message no matter how insightful or important it may be will be seen as disrespect. Another example is if a Chinese leader that follows Taoist principles appears to be very compliant, the Americans may see him as being weak. (Lin, L., Ho, Y., & Lin, W. 2013) Leaders are the figure head for an organization. To assume that everything a particular leader does accurately represents the organization as a whole is a logical fallacy. Regardless, people often make assumptions based on what they are given. This is why it is essential for a leader conducting international business to be aware of how his actions will be viewed by his foreign counterparts. (Hofstede, G. 2007) Entrepreneurship is the heart of any economy. Entrepreneurs are individuals that take on mental and financial liabilities in order to start a business. (Holt, 1997) Entrepreneurship is more of a mindset rather than a construct. It includes many attributes that create and develop economic activity. (OECD, 2004, p. 9). Entrepreneurship is as important as ever considering the rate society and technology are changing. Several large corporations are poster children for entrepreneurship done right in a SME. Once these cutting edge SMEs made their presence known, they quickly ballooned into mega corporations. This large, stiff structure often dampens entrepreneurial decisions. This is why SMEs are at the center for doing business a better way.

SMEs contribute more in the way of employment than large corporations. This is why entrepreneurship is so very important to a countries success. (OECD, 2004, 2005; Quadrini, 2009) Americans as well as the Chinese view entrepreneurialism as an important path to progress. It is the way an average person can achieve wealth and success. All this starts with a business. Large or small, a business is what fuels the economy and the citizens in it. (Lynn C. & Khan L. 2012) Entrepreneurs do not only create business they also create jobs. This is vital to true economic growth. Lynn C. & Khan L. stated that, One recent study by the Small Business Administration (SBA) showed that businesses with fewer than twenty employees were responsible for more than 97 percent of all new jobs between 1988 and 2004. This effect is magnified when an international scale is observed. A country based in the United States can open a plant in China and provide thousands of jobs that could not exist otherwise. There is no road map or hints on how to accomplish this successfully. This is only possible because business men of both countries had the entrepreneur spirit in trying to do things a new way. Both China and the United States are very entrepreneurial in their own ways. The United States have the largest economy in the world with China holding a very close second place. Neither country would be atop the totem pole without exhibiting extraordinary entrepreneurship. The United States shows low risk avoidance while China exhibits high risk avoidance. This polarity is consistent in trust and commitment. China is very suspicious and cautious with foreign investors. Often times, a guanxi must be present before business commences. One famous example is Google. Google is distrusted by the Chinese government for various reasons not portrayed by other countries. For these reasons China has banned Google from its censored internet. (Tejada, C., Mozur, P., & Efrati, A. 2012) this carries over into international business. If there is no preexisting relationship, then there must be a gift given to show ones good

intentions. In the United States any one can do business with anyone. Ones business credentials and performance often suffice to win an organizations trust. In a business venture these polarities collide. A particular venture may be seen as too risky by the Chinese, while the Americans may see the Chinese as too cautious. Also, the Chinese are not afraid to pull out of a deal last minute if they are not 100% sure. In Chinese culture changing ones mind is not a bad thing. In Western culture however, it is seen as having a lack of commitment. Through careful understanding these issues can be resolved. (Ruixiang, W. 2012) With so many differences in how these two countries conduct business one may wonder how do they make it work? The answer is simple, globalization. Undoubtedly, each country is loyal to itself first and foremost. Because of this drive to build a great nation a country must do whatever it takes to accomplish goals. This means learning to deal with different people that can help you, even if you do not agree with them 100%. (McManus, J., Ardley, D., & Floyd, D. 2012) Both countries understand that they can help each other, and that if they are to accomplish individual goals they must work together. The United States in particular has always fostered the ideal of globalization. China however has only been open to globalization in recent decades. (Zapalska, A. M., & Edwards, W. 2001) Despite steep differences in entrepreneurship and leadership there is a way that each country can complement the other to become a true partnership. The typical American-Chinese venture is an American product being manufactured in China. The product is created and engineered by an American organization, and then the designs are sent over to China to be mass produced. Why would anyone have something made for them shipped half way across the world? Economies of scale and labor opportunities. In China, the minimum wage is very low compared to the United States. There are no labor unions or

government interference in workers treatment. The United States has OSHA, child labor laws, minimum wage, and fair treatment signs posted in almost every business. Americans have mandatory taxes paid for the workers on behalf of the employer. (Tan, J. 2002) In China, conditions are bleak for many. In short, Chinese workers are paid pennies on the dollar compared to Americans for the same work. This is why manufacturing in China is cheaper than in the United States factoring in shipping costs. Chinese leadership and entrepreneurship will lend itself to finding a way to make something faster and cheaper. This is why no one can beat China in economies of scale. This is great for countries whose strengths are innovation and design. They allow China to use man power to their advantage. (Yu, A. 1996) It seems like the ideal partnership, except for one issue. Technology theft. The Chinese are notorious for stealing designs and manufacturing them under a different name. International copyright laws do not have much weight in Asia. American leadership and entrepreneurship has always found a new way to do something better. This is so many of the worlds best products are designed or made in the United States. On the other hand, this daring behavior has led many American companies into demise. This is where the two countries help each other. The United States will design something that can better the world. The standard of living in the United States is such that it would cost too much to manufacture it domestically. If they proceeded down this path, then the product would not be affordable enough to have a strategic advantage. This is where China manufactures it for the United States at a lower price. This also brings an enormous amount of work Chinas way. Thereby improving Chinas quality of living. (Organization for Economic Co-operation and Development (OECD) 2004)

Conclusions The best way for the United States and China to blend their leadership and entrepreneurial styles is to understand each other, and to let each other do what they do best. The United States should understand that the Chinese must be sure about the deal. This means they should be very detailed in the contingency plans. Also, Americans must pay special attention to winning the trust of the Chinese. This can be done by being very accommodating to Chinese tradition in authority and ceremony. In return the Chinese should try to be more open to new ideas and methods. In addition, showing more commitment and openness will aid in gaining each others trust. (Xiongjun, L., Pingqing, L., & Yun, L. 2013) Ultimately each party should remember why they are there in the first place. This will aid in settling on a deal that is beneficial to both parties. Looking forward with the notion of past mistakes both parties can do business in a way that is healthier for both economies. The United States should look into requiring certain working conditions be maintained. This will result in better conditions for Chinese workers which will promote better productivity and quality. In the same regard, China should be more respectful to the innovative style of the United States. This will help bring more respect for intellectual property. These two improvement should greatly increase the trust in each nation. The United states should concentrate less on the bottom line and China should concentrate on best practices. Americans can learn from the Chinese style of leadership and entrepreneurship by having more caution, trying to be more efficient, and have better goal setting methods. The Chinese can learn from the Americans by being more open to new ideas, leading to inspire thought not obedience, and committing to a partnership more fully. As our world grows more global and less

local it is imperative for any competitive firm to know how to compete globally. This means understanding business in several countries, and respecting people of all backgrounds. What works for leadership in one country may not work outside that country. Leaders must be willing to learn cultural intelligence. This will allow them to have a presence on the global stage. In addition to understanding other cultures, a business must innovate in ways that other countries can appreciate. Suggestions There are several quality research papers on how China and the United States differ in culture. They outline and describe in detail the key differences in how each culture conducts business. An issue that is prevalent in all the papers is a bias of the author to his/her native country. This showed favoritism towards one culture. This dilutes the findings into a somewhat opinion based perspective. Also, most of the resources found concentrated on a comparison of the two countries. It would be helpful to the international community to concentrate on how these two cultures can complement each other. In this way any reader could gain valuable insight into not only the problem, but more importantly the solution. (Investor's Business, D. 2013) One suggestion for a future research paper would be to find ways for leaders to work around particular issues that are common in a certain culture. An example would be conducting a survey in which American firms successfully dealt with Chinese risk avoidance. Another example would be to research the methods American companies gained the trust of Chinese firms without the extensive use of gifts. Research is also needed in the area of successful working conditions with respect to reasonable profits. This is a subject that has caught the eye of the international community as pressures from foreign firms forced Chinese firms to create unthinkable conditions for their own people. Sustainability is paramount for future success of both countries.

Chinese firms could also educate themselves on the advantages of rule based business as opposed to relation based business or guanxi. (Li, S. 2013)

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