Conceptualizing Corporations and Kinship: Comparative Law and Development Theory in a Chinese Perspective

Submitted by James Miller on Mon, 05/25/2009 - 12:21
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TitleConceptualizing Corporations and Kinship: Comparative Law and Development Theory in a Chinese Perspective
Publication TypeJournal Article
Year of Publication2000
AuthorsRuskola, T.
JournalStanford Law Review
Date PublishedJul

In this article, Professor Teemu Ruskola places China's recent Company Law in a broader historical and cultural perspective. Noting that the Company Law consists of transplanted Western corporation law, Professor Ruskola argues that, in a new cultural context, even the most basic provisions of transplanted law are liable to be interpreted in new and unexpected ways. To provide an informed understanding of that context, he begins by analyzing China's indigenous tradition of corporation law. Challenging the conventional wisdom that late imperial China had no entities analogous to the Western business corporation, he maintains that traditional Chinese family law performed many of the functions that modern American corporation law performs today. He outlines the historical development of Chinese "clan corporations," or professionally managed commercial enterprises organized in the form of the family, and illustrates how these clan corporations engaged in creative contracting to construct business entities that formally corresponded to the idealized Confucian family defined by patrilineal kinship. Professor Ruskola then shows how twentieth-century attempts to transplant Western corporation law have achieved limited success, while the family itself has continued to maintain a distinctive legal status, and the Chinese have continued to take advantage of that status in organizing their businesses. Next, he contrasts the traditional Chinese view of the corporation as a kinship group with the contract-based view of recent American corporate jurisprudence. Although the two views offer diametrically opposed justifications for a similar business entity, the Chinese and American traditions are in fact functionally much closer than they first appear to be. Professor Ruskola concludes by speculating on the jurisprudential significance of this fact and its implications for policy-makers engaged in development. Despite their surface similarities, Chinese and Western corporation law are unlikely to converge in a meaningful way so long as their legal, political, and discursive interpretations remain informed by distinct local understandings of the nature and purpose of corporations.