infonet-economy

The telecommunication enterprise Huawei, founded in 1987, is one of few multinational
companies emerging from China to date. The development of the capabilities that allowed
Huawei to become a formidable competitor on the global stage undoubtedly owes a great deal to
importation of best practice routines from the West with the help of western consulting firms.
But Huawei is also distinctly Chinese. In the West, a founder who relinquished all but a 1.4
percent of equity in the firm to give the remaining shares to employees would be an abnormality.
Huawei’s collective ownership arrangement (88,000 people own the other 98.6 percent of the
shares) enabled management actions that are unthinkable in the West. The top 6,687 managers in
2007, for example, agreed to collectively resign from the company and to be selectively rehired
to avoid falling under new labor law restrictions. We develop an account of how Western and
Eastern history has shaped the leadership’s decision making through multiple transmission
mechanisms. Because the founder is an avid reader and student of history, major strategic
decisions of Huawei have been deeply influenced by historical precedent. We argue that Huawei
cannot be understood without coming to terms with the imprinting the firm has received both by
the Chinese context and the founder’s conviction that the firm needed to learn from historically
accumulated Western knowledge.