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Since Chinese businessmen had a relatively low social class, it is obvious that CFFs normally developed in a very difficult situation. Sometimes they were organized as a small business by several local handwork workers. The original purpose probably was to afford family bills. Because of this, the business was unthinkably important for the families. Doubtlessly, they wanted to keep their business alive and healthy as long as possible. According to this, it would be a major job to keep business high standard and reputation. Thus, social appraisal was important for CFFs’ owners, even though, when their business became bigger and bigger. Moreover, in fact, CFFs owners have personal relations with firms. For example, honor of firms may be deemed as personal honor by Chinese. Identically, dishonor of firms would be deemed as personal dishonor as well, sometimes of the whole family.
Because they were aware of importance of coherent core spirit of family firms, they managed to keep their own family tradition on new generations. Traditional Chinese believed that “love others as we love ourselves and to blame ourselves as we blame others” , which is main Chinese morality. Because of difficulties, which they had faced, they were more likely to understand the situation of poor people. That would be the reason why Chinese businessmen did so many charities. In order to achieve their business successful and lasting, they would teach their children these traditional notions in their daily life, when their children were in their teens. It can be seen that, stakeholder theory has been educated to new successors before they really involve family business.
3.3 Disadvantageous Situations
3.3.1 No Real Company Law
Although late-Qin China had a highly commercialized society, before 1904, however, there was no basis in Chinese law for Modern Corporation. All Chinese corporations had to be individually chartered. Thus, almost all the CFFs at that time didn’t adopt the form of corporation. On the contrary, partnership or single family control is commonly accepted by Chinese families. However, they couldn’t enjoy limited liability in that sense. This nondevelopment of Chinese law meant that CFFs were treated as family affairs in old China, for family firms and families are tightly connected. Hence, Chinese businessmen would fully understand the importance of economic success of their family firms. Their management thinking had been influenced by general systems theory, which was possibly from Confucianism. According to this theory, all living organisms or systems interact with, and are affected by, other forces in their host environments. The key to survival is the ability to adapt to be responsive to the changing conditions in the environments. For this reason, all stakeholders are obviously not outsiders of a family firm, on the contrary, they are treated as internal members of this system.
3.3.2 Undeveloped Information and Transportation System
Additionally, since undeveloped information and transportation system in ancient China, ability to spread business in a wider region was lacking. In this situation, business management was limited in small, closed, and personal circles. Except for customers and suppliers, possibly most of stakeholders were family members, relatives and close friends. Obviously, they would attempt to care for the interests of related stakeholders. Because of the closed business circle, it gradually builds up a thought, that is, Chinese businessmen consider business as an integral and interactive system, including owners, employees, customers, and others. Possibly, it can be argued that original “stakeholder theory” emerged in ancient China almost as an assumption.
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