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Abstract. Recent reviews have recommended more contextualized analysis of economic systems, and the business systems of theory of Whitley is taken as exemplary in this regard. Three slight amendments are proposed to his main framework: acknowledgement of the 'prior' nature of culture in the shaping of institutions; the introduction of the question of rationale as a component of culture; and the mediating role of government in the flowof influence between culture and the formation of institutions. This model is applied to a description of the private sector in China. Rationale is treated in Weberian terms, but after disagreggation of the rationality concept into categories of formal calculation, ends, and means. The emergence of a distinct business system is examined for its historical path dependence and its current internal dynamics, using the notion that the business system is embedded in an institutional fabric, which is in turn embedded in a societal culture.
Keywords: business system, capitalisms, Chinese business, comparative management, rationality
I propose here certain additions to the business systems theory developed by Whitley (1992a, 1999b). They comprise a more explicit acknowledgement of the role of culture as a shaper of institutions, including a proposal for addressing the Weberian challenge to understand rationality. The model is applied to the private sector of business in China currently. It proposes that the evolution of business systems be studied in terms of three interconnected layers of features. The base layer is the cultural, the middle layer the institutional, and the top layer is the business system itself. The system is seen as overlapped with a particular society, which is usually, but not always, coterminous with a state. The trajectories followed by the world's current main business systems have been very different, as have their outcomes, and the model is intended to illuminate the power of societal legacies in shaping current behaviour and current options.
The idea of 'rationale' is introduced as a component of culture, the other two components being the bases of horizontal and vertical order in a society. Rationale is a development of Weber's complex ideas about the role of rationality and is inspired by his comment that there is more than one kind of rationality, and that the Western version to which so much influence...