Journal of Business Ethics

, Volume 43, Issue 1–2, pp 111–124 | Cite as

Turnaround, Corruption and Mediocrity: Leadership and Governance in Three State Owned Enterprises in Mainland China

  • Linfen Jennifer Huang
  • Robin Stanley Snell


We focus on moral climates through case studies of three state owned enterprises (SOEs) in a South China City. In Company A, a shipbuilding company, the general manager persuaded the supervisory bureau to allow him to replace the old top management team with managers chosen on merit, and who supported his desire for reforms. He exercised transformational leadership, established internal rule of law, cultivated a spirited moral climate, and achieved turnaround. At Company B, a financial services conglomerate, the general manager exploited strong political connections, enfeebled the governance structures, and with two subsidiary barons proceeded to milk company resources. That, and a large contingent of sleeping incumbents (idle protégés), bred a moral climate overrun by corruption, dereliction of duty and hubris. Bankruptcy was not averted. Hotel X, a subsidiary of company B, was a partial machine bureaucracy; its moral climate characterised by punishment avoidance and lack of spirit. A headquarters power bloc and the sleeping incumbents whom they protected prevented a law abiding, equity sensitive general manager from improving performance, and he lost heart. From these cases, we build a model of the relationship between moral leadership, institutional superstructure, internal governance and control systems, enterprise moral atmosphere, and performance.

China corruption moral atmosphere moral ethos transformational leadership 


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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Linfen Jennifer Huang
    • 1
  • Robin Stanley Snell
    • 2
  1. 1.Top Tone English Training CenterGuangzhouChina
  2. 2.Department of ManagementLingnan UniversityTuen MunHong Kong

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