Corporate governance and organizational survival under punctuational change: The case of China's burgeoning banking industry, 1897-1927

Abstract

Purpose

How do different corporate governance structures fare under conditions of fundamental environmental transformations? Treating governance structure as a knowledge distribution mechanism embedded in institutional frameworks, the paper aims to propose that the efficiency of this knowledge diffusing process will increase organizational survival under a punctuational change.

Design/methodology/approach

Using the case of Chinese banking industry during 1897-1927, a period of rapid technological, economic, and regulatory shifts.

Findings

Money shops (qianzhuang) with decentralized, open and extended governance structure were better able to adapt to rapid changes in the environment and had a higher survival chance than ticket stores (piaohao) with centralized, closed and internalized governance structure.

Research limitations/implications

When exogenous shocks dramatically change the environment, decentralized, open and extended governance structures can more easily discover new habitats in which a modified form of organization can thrive.

Originality/value

By examining the Chinese banking industry during the fundamental shift of the environment at the turn of the twentieth century, this paper sheds new wisdom on the understanding of the current turbulent world and helps us discover new solutions to cope with the institutional transition necessary to survive and prosper in the new world environment and pave the road ahead.

Citation

Li Sun, S. and Zhang, Y. (2013), "Corporate governance and organizational survival under punctuational change: The case of China's burgeoning banking industry, 1897-1927", Nankai Business Review International, Vol. 4 No. 4, pp. 268-289. https://doi.org/10.1108/NBRI-07-2012-0003