Regarding CSR, some argue that a corporation’s social responsibility is simply to increase its profit (Friedman 1970). On the one hand, making profit is the outcome of division of labor for firms, yet more profit means slack resources that make a firm more capable of shouldering social responsibilities. Organization scholars’ increasing interest in the effect of the institutional environment on corporations gave rise to the new institutionalism, which emphasizes the nonmarket environment of organizations. In particular, new institutionalists regard the institutional environment as a key factor for firms’ operation, and argue that institutional pressures from stakeholders drive convergence in terms of both organizational structure and practice, a process of “isomorphism.” There are three major isomorphic mechanisms (DiMaggio and Powell 1983): coercive isomorphism such as governmental regulations; normative isomorphism like product standards set by professional organizations; and mimetic isomorphism that follows pioneering and successful peers, especially under uncertainty. These three isomorphic drivers often coexist, driving firms to behave similarly over time. However, organizations sometimes demonstrate great differentiation that cannot be explained by exogenous factors like the current institutional environment. For example, the telecom firms Huawei and ZTE are both located in Shenzhen and operate in an identical market niche and institutional environment. However, the two firms have significant differences in management style and corporate culture because their founders had different backgrounds and personalities.
Business historians also emphasize the importance of organizational history. Chandler Jr. (1962) and Chandler Jr. (1965) contend that because the market economy grows out of corporations, the explanation for economic phenomena must be guided by the development paths of firms. Firms develop as they continuously learn and keep strengthening their organizational capacity. More specifically, the importance of organizations’ early history on their present and future conditions is realized through technological systems, such as the railroad, the telephone, or cable. However, while emphasizing the role of corporations and their history, Chandler fails to explain the cyclical development pattern brought by destructive innovations. In this regard, in addition to the founding history, every temporal piece of an organization’s evolution is important and warrants investigation. Stinchcombe (1965) first advances the argument that during an organization’s historical development, the founding period has the most significant molding effect. An organization is unavoidably marked by the temporal conditions of its founding period, and then carries these marks in its future operations. Especially when facing an uncertain environment, members of an organization tend to look for references in their organizational history. In summary, founding conditions affect the basic features of an organization, which label the organization and are carried along to have a continuous influence.
Empirical research has found multiple mechanisms by which early organizational history affects the organization’s current strategies and practices, including founder’s characteristics, early employees, and resource and institutional environments. Studies on high-tech companies in the Silicon Valley reveal that the experiences of the founders and early management team prior to founding a focal company can actually affect the new company’s structure and management model (Baron et al. 1999; Burton and Beckman 2007). In this regard, knowledge of a Silicon Valley company’s early history and its founder’s experiences is crucial to understanding its management style. Founders not only unconsciously bring in their personal characteristics and experiences but also intentionally choose other technological and institutional factors to integrate into their ventures, thereby generating long-term influence on its management and practice. In a time when entrepreneurial spirit is lacking, early technological and institutional resources may have an even more-profound effect on firms. Marquis’s (2003) empirical study on American corporations discovers that transportation and information technologies at an organization’s founding stage can foster successful localization strategies through solving information and trust issues. Apart from a technological system, network relations and institutionalized learning preferences at the early stage are also influential in organizational localization.
The aforementioned works enrich organizational imprinting theory at different levels. For example, Marquis (2003) clearly spells out two mechanisms by which organizational imprinting affects localization strategies. Firms founded around the same time are affected by the broader social background of that time, and therefore display similarity in their structures and activities. Since founding conditions directly affect these organizational characteristics, we call them direct imprints. Firms established in the same area at a later time likely follow the pioneers and emulate them; we call this phenomenon indirect imprints. Direct imprints explain the origin of organizational imprinting, while indirect imprints explain its reproduction and diffusion.
Several aspects of organizational imprinting theory are worth mentioning. First, this theory emphasizes the decisive effect of a firm’s founding conditions. Compared to Chandler's (1965) research on organizations’ chronical history, it is less likely to ignore the uneven influence of different historical episodes. Moreover, Chandler focuses too much on the determinacy of technology, while imprinting theory also accounts for the effect of institutions and founders. Second, imprinting theory attends to the long-lasting influence of the previous institutional environment and significant actors such as founders, while the new institutionalism focuses on the effect of the current institutional environment. Lastly, imprinting theory does not equalize organizational structure and stability of organizational activities with barriers to innovation or changes (Kogut and Zander 2000). Instead, organizational imprinting can constitute an internal resource for adaptation. This is in contrast to inertia theory (see Hanna and Freeman 1984), which argues that a mismatch between organizational structure and environmental changes can result in resource depletion and a developmental plateau.
Most empirical research on organizational imprinting investigates the relatively stable Western market institution, and may overestimate the imprinting effect. Over the past 30 years, the Chinese society and market experienced major transformations, which provide a scenario for a deeper understanding of organizational imprinting and its attenuation, if any. In the transition from social enterprises to modern corporations, the managerial logic of becoming fully marketized provides theoretical ground for SOEs’ restructuring and other enterprises’ pursuit of profit maximization. When this institutional logic becomes widely accepted and appraised, to some extent global reflections represented by a call for CSR have brought back the idea of a socialist enterprise.
In China, large-scale industrialization began in the 1950s, when the dominant institutional logic was state- or collective-owned enterprises that fulfilled both production and social welfare functions, an institutional arrangement later known as the work-unit system. As described by Lu (1989, p. 71), “What people called a ‘work unit’ could be every social organization that they worked in—a factory, a store, a school, a hospital, a research institution, a cultural group, a governmental agency, and so on.” The then SOEs included some key attributes of modern corporations, such as hierarchical division of labor and efficiency targets, but they also shouldered social responsibilities such as social welfare. In a sense, a work unit resembled a community that housed, nurtured, and educated its employees and their families. To some extent, previous SOEs were a combination of the Western modern corporate organizational form and an urban community.
Welfare distribution within a work unit was related to the administrative level, political identity, length of work, education attainment, and so on (Li and Li 1999), but some universal welfare existed. “Once one entered a state-owned work unit, one automatically enjoyed a life-long, full-package security protection, including wage, welfare, and insurance. ... To internalize service organizations (dining halls, shower rooms, stores, barber shops, schools, hospitals, cinemas, etc.) into a work unit, and have their financial balance integrated into the work unit’s budget, is essentially to provide services to members of the work unit in the form of social welfare” (Lu 1989, pp. 74–76). Generally speaking, organizational welfare included (a) subsidies to labor and daily life within in the organization, such as cooling and heating fees, healthcare, and job security, which were sometimes extended to employees’ families; (b) distribution of scare goods at that time such as grain, oil, vegetables, soaps, and working clothes; (c) welfare institutions such as canteens, clinics, childcare, and affiliated elementary and junior high schools. Traditional work- and routine-related family life and social services were thereby all transformed into the work unit system (Tan 1991). Given the limited space, our paper focuses on two types of organizational welfare: the distribution of subsidies and tangible goods (welfare investment per capita), and internal welfare institutions.
Economists have repeatedly taken on the policy burden issue of SOEs (Lin et al. 1995; Lin et al. 1997). They categorize policy burdens into unnecessary social burdens and necessary strategic burdens. The former consist of SOEs’ pension and social welfare, while the latter include primary industries featuring large and midsized SOEs. To reduce social burdens, Lin (2006) suggests retirees be insured in the social security system. From an imprinting perspective, enterprises likely inherit these policy burdens, which hold steadfast even though policy factors weaken. International research on Chinese corporations commonly holds that Chinese firms could achieve the goal of building a modern corporation by emulating the organizational structure and management practices of Western firms (Guthrie 2001). This echoes a new institutionalist view that regards external factors as a primary source of organizational changes.
Most SOEs were founded earlier than enterprises of other ownership forms. Differences between ownership structures reflect not only management style variations but also the historical contexts of their founding periods. Research on work units (Walder 1986; Lu 1989; Tan 1991; Li 1993; Li et al. 1996; Li 2002; Sun 2004) documents how prior to the comprehensive restructuring in the early 1990s SOEs offered wages that could barely satisfy basic needs, but at the same time provided various resources like labor protection, living subsidies, and affiliated institutions. In contrast, after the market reform, SOEs started to gradually offer multiple financial and cash incentives and benefits.
Based on SOEs’ complicated historical experiences, especially that of transitioning among multiple managerial logics including social enterprises, overmarketization, and CSR, we propose the following hypotheses.
As the longest-standing organizational form under the socialist planning economy, the work-unit system is likely to leave behind unchangeable imprints. Although most SOEs adopted modern corporation management principles after the deep marketization in the 1990s, the lasting influence of the work-unit system cannot be ignored. This influence may be especially salient regarding organizational level welfare provision. Since many Chinese firms, especially SOEs, experienced the volatile institutional transformation, we take founding ownership as our analytical starting point. Using questions in the enterprise survey as benchmarks, we chose two typical welfare provisions to test our hypotheses.
Hypothesis 1: ceteris paribus, firms that started as SOEs will provide more organizational benefits than those that started as non-SOEs.
The extant organizational imprinting literature mainly discusses sustaining imprints under relatively stable institutional environments. Even Stinchcombe (1965) himself argues that a relatively stable environment does not entail survival competition. However, we are interested in testing whether organizational imprints can be sustained through volatile changes.
Firms founded as SOEs may provide more welfare benefits, an outcome of the influence of the early institutional environment. Organizational restructuring can be a critical juncture that weakened SOEs’ socialist imprints, but it is also a natural experimental scenario for testing imprint persistence. If the imprinting effect is indeed strong enough, even institutional transformations should not entirely wipe out the founding imprints. Even though some governments have chosen to concentrate on large-scale SOEs and focus less on smaller ones, the smaller or restructured SOEs should still retain important imprints from their founding years, and therefore show similarities in welfare practices with the larger SOEs or those that have not been restructured.
Hypothesis 2: even after restructuring, firms founded as SOEs do not significantly change their welfare provision.
As stated above, we distinguish between two types of organizational imprints: direct and indirect. Direct imprints stem from the temporal context at the founding period. The number of SOEs exploded in the 1950s—the beginning of the socialist economy—and that historical context has had a profound effect on SOEs. This founding imprint influences not only the SOEs established at that time but also SOEs founded later. The latter are expected to emulate the former to minimize uncertainty and increase legitimacy, thereby preserving the imprint of generous welfare provision. Apart from mimicking, organizational learning, institutional legitimacy, and expectations or demands from stakeholders could all lead to isomorphism among firms with the same organizational identity (e.g., SOEs), which are irrelevant to their founding years (Albert and Whetten 1985; Whetten 2006). We call this intergenerational imprinting “indirect imprints.” If a mechanism exists for indirect imprints to affect SOEs’ welfare practices, we should observe little correlation between an SOE’s welfare practices and its age (or founding period). We term the rather-stable period between an SOE’s founding and its restructuring an “imprint duration.”
Hypothesis 3: an SOE’s organizational welfare provision has no relationship to its imprint duration.
If hypothesis 3 is supported, we can reasonably infer that restructuring cannot bring immediate changes in welfare provision because of SOEs’ strong organizational imprints. However, this does not mean that restructuring will not bring changes in welfare practices. Organizational scholars (Tolbert and Zucker 1983) have found that institutional changes in terms of adopting novel organizational practices take place stage—by stage. Earlier adopters usually initiate changes because of a rational choice to become more efficient, but numerous later adopters are more sensitive to institutional pressures such as government regulations or consumer boycotts. During the gradual process of restructuring, the driving force at the later stage is often a concern about legitimacy instead of a rational expectation. Some scholars also point to the importance of organizational learning. Influenced by interorganizational imitation and intraorganizational learning, earlier imprints are more likely to be gradually picked up (Sullivan et al. 2014). This alludes to the possibility that most SOEs, under the pressure or restructuring, will choose a gradual transformation over an immediate switch. The further along an organization is in the restructuring process, the more it gets in touch with new ways of thinking and new ideologies of managing, and the more likely that it moves away from pre-restructuring imprints. As such, the time between an SOE’s restructuring to the present can influence its current organizational welfare provision. We call the time between an SOE’s restructuring and the time of the survey (2006) its “restructuring duration.”
Hypothesis 4: an SOE’s organizational welfare provision is negatively correlated with its restructuring duration.
Among the four hypotheses, hypothesis 1 considers the full sample, comparing enterprises that started as SOEs to those that started with other ownerships. Hypothesis 2 uses the subsample of enterprises that started as SOEs to analyze the limited influence of restructuring on organizational imprinting, comparing restructured SOEs and those that have not been restructured. Hypothesis 3 considers the subsample of restructured SOEs, and tests the effects of two preserving mechanisms of organizational imprints—direct and indirect imprints—and whether imprint duration has a correlation with the imprinting effect. Hypothesis 4 also uses the subsample of restructured SOEs, but focuses on the process by which imprints fade—SOEs’ founding imprints are maintained before restructuring, but after restructuring, their imprints have a negative association with time span.
In addition to the imprinting effect, corporate welfare provision may also be enhanced by higher profit (Margolis and Walsh 2001). The current institutional environment can also push organizations to provide more welfare (Campbell 2007). If the imprinting effect on welfare practices still holds after controlling for the current economic and institutional factors, we can argue that founding imprints do have a significant influence on SOEs that cannot be neglected in policy and management practices.