Comparison between the Chinese and Western Cases

Ostrom proposed a useful theoretical framework for the comparison between the above-stated Chinese and American cases. Her study asserts that, for the self-governance of self-organized units, there are rules at three levels – operational, collective-choice and constitutional-choice rules. At the lowest level are operational rules, which directly affect daily decisions on a multitude of issues, such as: When, where and how to access resources; who is to supervise others' actions and how to do it; what information must be exchanged or must not be released; how to encourage or punish deviant actions and results. In the case of protecting common pool resources, for example, villagers living near a pool may agree, to protect the limited amount of water, that one person can only take one bucket of water from the pool per day and that the taking of any more water is forbidden. To prevent any person from disobeying this rule and taking more water at night, the villagers may go further by designing a monitoring scheme and have a watchdog be on night duty every day. And if someone is really caught stealing water, the villagers may specify a penalty, such as forbidding him from taking water from the pool for three days. Plus, to assure justice and to avoid favoritism, the villagers may design a spot-check system, etc. These detailed and specific regulations all belong to operational rules.

Above operational rules are collective-choice rules, which involve the right to make decisions in the process of developing and changing operational rules. There are examples such as who is to develop operational rules and how to do it and, in the aforementioned case, what the exact allowable daily water consumption is and how to determine it. At the highest level are constitutional-choice rules, which determine the asset ownership, such as who has the right to decide on matters with respect to the pool, and what kinds of rights a collective may have. In the aforementioned case, the state can specify, if the pool is owned by it, that the pool should be available to all the citizens, making the villagers be not entitled to restrict others from taking water from the pool. Nonetheless, the villagers can decide how to deal with the pool, if it is collectively owned by them. In addition, constitutional-choice rules specify who has the right to decide on collective-choice rules and what kinds of rights the collective may have. As an example, who is entitled to decide on matters related to the common pool, the head of the village or the villagers meeting?

With regard to self-governance rules at the three levels, rules at one level are changed under regulation by the ones at the upper level, according to Ostrom. It is usually more difficult and costly to change rules at a higher level. In this regard, therefore, constitutional-choice rules are the most important ones for self-organized units, whose realization must first be based on matching constitutional-choice rules.

And Ostrom summarized common principles of successful self-governance on the basis of the case analysis. She found out that successful self-organized units always have eight basic characteristics as follows:

(1) Clearly defined boundaries. The boundaries of a common-pool resource (CPR) itself must be specified, and so must individuals or families entitled to take a certain unit of resource from the common pool;

(2) Use and supply rules are consistent with local conditions. It is necessary to define rules regarding the time, location and techniques of use and/or the amount of resource units. These rules should be consistent with local conditions, the needed labor, materials and/or funds as well as the local norms.

(3) Arrangements for collective choice. Most individuals affected by operational rules should be able to participate in modifying these rules;

(4) Supervision. There are people who actively examine the state of the CPR and the user behavior. They are group members responsible for the general users;

(5) Multi-level sanctions. Users who have broken operational rules will probably be sanctioned by other users, officials in charge or both (to an extent depending upon what the breach of rules is about and how severe it is);

(6) A mechanism for conflict settlement. Users and officials in charge can rapidly settle conflicts between them through a low-cost local public forum;

(7) Minimum recognition of the government's power. Users' right for designing their own

system is free from challenges posed by the external government authority; (8) Power-sharing organization. In a multi-level, power-sharing organization, activities such as use, supply, supervision, enforcement, conflict settlement and governance are well-designed.

Ostrom believed that the aforementioned eight principles assure long-term, effective systems for self-organization and self-governance. She noted that these principles designed for governing CPRs can affect incentives and enable users to voluntarily obey operational rules in these systems, to monitor their respective compliance with the rules, and to maintain institutional arrangements for CPRS from generation to generation.

As self-organized units established under different societal backgrounds, the furniture association and SEMATECH also have very different watchdog mechanisms. From the operating perspective, SEMATECH relies more on regulation by formal institutions, while the furniture association follows the idea of ―No institutional requirement on any individual or business‖ – it guides rather than managing the members' behavior by guanxi management. Nonetheless, the social network in SEMATECH also plays a role of supervising the absentees and promoting cooperation; and the furniture association also has basic articles that specify its positioning as well as the basic rights and obligations of the members. We can see, therefore, that the Chinese and western organizations differ from each other in a ―more or less‖ rather than ―yes or no‖ manner.

By analyzing the enabling mechanisms for the operation of the two self-organized units and referring to certain theories, we can find some conclusions as follows:

The phenomenon of critical mass. SEMATECH has a critical mass formed by stakeholders or professional elite on an equal basis. By comparison, such a small group of critical figures, in China, is formed by a capable man as the focal person of a particular social network who mobilizes his/her social relations to join in collective actions. Among them, the capable man assumes functions such as mobilization, structure maintenance and rule design for the self-organization. In the meantime, the qualities of the capable man in terms of role relationships dictate the mode of interactions between the self-organization and external resources. In SEMATECH, there are also influential figures like Noyce and Dehmel who play a critical role; in the furniture association, President Wang is the focal person of the guanxi circle, where he was the one who created the critical mass. Without this focal person, it would be impossible, like when Mr. W was the president, to maintain the furniture association.

Bear the initial costs in return for reputation – a quality that the capable man must have. To maintain his/her reputation, the capable man should not care about rewards or share any benefit, whenever possible, but work to remain reputable. There is no difference in this regard between the two cases.

Devise formal institutions and regulations to establish a self-governance mechanism. SEMATECH has the four-inch-thick code of conduct and the furniture association has the 1,500-character-long articles of association. There is no difference in this regard between the two organizations, except that the SEMATECH's code of conduct covers almost everything while the articles of the furniture association only propose basic principles and are not that seriously enforced.

Use the social network as a watchdog. The Lunch Bunch in SEMATECH serves as a communication platform for the representatives and staff members, making it an important platform for informal regulations and the reputation mechanism to function. This is the same as in the furniture association, where informal institutions even play a greater watchdog role. To maintain the stable development of the self-organization, the capable man should follow the favor rule, which shows extremely high applicability and practicality in the field of relationships and transactions with familiar ties – where private morals are maintained – despite that certain formal rules are still required. Favor exchanges and informal rules always play a greater role in the operation of the self-organization in the Chinese case and, accordingly, make the regulations of the organization less important.

The distribution mechanism of the organization should assure absolutely fair distribution within it. There is no difference in this principle between SEMATECH and the furniture association, except that the furniture association is unable to realize institutionalization based on consensus. Moreover, with the increase of the membership and public affairs, the favor rule shows a lot of drawbacks during the continuous operation of the self-organization. In this situation, the capable man can meet the expectations of most members only by allowing for the equal sharing of benefits and the universal concept of fairness. The aforementioned conflicts between universalism and particularism always test President Wang's ability to maintain dynamic balance. In other words, the Chinese case has the tendency to govern the self-organization process under rituals, mainly indicated by informal rules and social network, while the western counterpart pay more attention to the governance under ―laws‖, which means the formal institutions and regulations.

Below is a characteristic summary of the phenomenon in Chinese self-organized units:

Start of Self-organization

The phenomenon of capable men (a

combination of social and political elite)

Way of Mobilization

Guanxi- and egocentric guanxi


Boundaries of


Elastic guanxi circles with capable men at the


Rights & Obligations of

critical mass

Bear initial costs – receive a reputation in

return – share no extra benefits

Role of capable man in

Defining Rules

Definer of formal and tacit rules/

(maybe) destroyer

Source of Mutual Benefit


The favor-exchange rule

Resource Distribution

The principle of equal sharing

The above-mentioned is the comparison between only two cases, and it is impossible to find out the general differences in the process of self-organization and in self-governance mechanisms between China and the west by comparing only a few cases, despite that I have collected some other Chinese and western cases for study and have produced very similar comparative results. By comparing these cases, however, we can still make some guesses and propositions that are to be verified by more cases.

In western countries, competition and cooperation among individual and group stakeholders in a relatively diversified and legal environment have gradually led to the ―mobilizing elites‖ and

―critical masses‖ that are led by a small group of power holders and that are good at discussion and cooperation. By comparison, the ongoing societal transformation in China has been in progress with the qualities of ―guanxi society‖, so it will not change the functioning logic of the social structure. Accordingly, a capable man in China generally is the focal person of an established social network and has obvious characteristics of political elite. They are similar to each other in that they possess advantage resources, act as the earliest mobilizers of self-organized units, need to bear the initial costs and receive a reputation in return. Moreover, capable men also need to set values and goals for the self-organized units and participate in defining governance rules. But we have seen in the Chinese case that the capable man build a team around him or her before identifying relationships for mobilization. Moreover, there tend to be insufficient formal rules, while the favor-exchange rule is often the norm followed by the members of the circle. Also, it is necessary to balance favor exchanges and the equal sharing of benefits, as trust will be damaged once they become unbalanced. These principles of guanxi operations will gradually evolve into a series of informal rules governing the self-organized units.

This requires us to think about local qualities in addition to dynamic and historical factors when analyzing the current state of mobilization for self-organization in China. The Chinese behavior is socially oriented (or guanxi-oriented); all the individuals in society are in dense, effective networks; their behavior is more often guided and constrained by informal norms in the group. Since a self-organized unit derives from personal relationships and affections, the favor-exchange rule shows its applicability and practicality. With the increase of the membership and public affairs, however, the favor rule shows a lot of drawbacks during the continuous operation of the self-organization. In this situation, the expectations of most members can only be met by the equal sharing of benefits and the universal concept of fairness. How to balance favor exchange and the equal sharing of benefits has become a challenge for the self-organization.

―The phenomenon of capable men‖ verifies what Fei Xiaotong referred to as ego-centered guanxi networks in the differential mode of association – a capable man must begin mobilization through his/her guanxi network, build the guanxi circle using existing relationships, and define informal rules. The process of mobilization is often characterized by a capable man mobilizing a group of ―small‖ capable men, who in turn mobilize their respective guanxi networks. In this way, a group gradually expands and shapes up in such a snowballing process. The boundary of the self-organized unit is therefore characterized by elasticity around the capable man's relationships, that is, it shows very obvious signs of a guanxi circle.

In the meantime, factors such as the capable man's social/economic status and code of conduct also dictate the characteristics of the social relationships that he/she mobilizes and of the governance mechanisms of the self-organized unit. And they will go further to affect the capable man's reputation within the social network, before ultimately deciding whether the self-organized unit can achieve the common goal and function for a long period of time or not. Nowadays, the traditional society is changing, but self-organized units in Chinese cities still

exhibit the principles of favor exchange and equal sharing that we have observed①. As changes

occur to urban life and modern economy, however, what are the changes in this process of self-organization that deserve further study and attention?

① Sun Yu, Xie Zhaoxia, Fang Zhenping: ―On the Effects of the Critical Mass in the Cooperative Mechanism of the Organization‖, the 8th Conference on the Social Network and Relationship Management, Beijing, July 2012.

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