Abstract: Managing Market, Hierarchies, and Networks: The Jiuda-Yongli Chemical Group, 1917-1937

Kwan Man Bun

Abstract

As China underwent rapid industrialization, how did companies deal with the problems of agency, competition, and rent-seeking regulatory authorities? Drawing upon recent theoretical debates on business history, network sociology, organizational theory, and the archives of the Jiuda-Yongli Chemical Industries, Ltd., this paper focuses on the creative use of network capitalism and meritocratic nepotism. Instead of conceptualizing market, hierarchy, and social networks as mutually exclusive categories, Fan Xudong, the company's founder, mobilized its shareholders, interlocking directorates, bankers, relatives, friends, and public opinion to facilitate the group's expansion, managed the market through cartels, utilized opportunities, information, and resources afforded by its hierarchical network, and lobbied various state regulatory authorities while reducing transactional costs and agency problems within.