The Social Credit System in China. Leadership in the Digital Age

Table of Contents

List of Tables and Figures

List of abbreviations

1 Introduction

2 Definition of Leadership and Leadership Theories
2.1 Trait Approach
2.2 Skills Approach
2.3 Behavioural Approach
2.4 Situational Approach

3 General Facts on China

4 The Social Credit System and its Implementation

5 Advantages and Disadvantages of the Social Credit System

6 Conclusion

Bibliography

List of Tables and Figures

Table 1: The Five Factor Model (FFM) page 3

Table 2: Managerial skills according to Katz page 5

Table 3: The Leadership Grid by Blake/Mouton page 6

Table 4: The Situational Leadership Model by Hersey and Blanchard page 7

Table 5: Top 10 languages by total number of native speakers page 9

Table 6: The world's largest economies by GDP in 2016 page 10

Figure 1: GDP Growth of China and the USA between 2000 and 2016 page 11

Figure 2: China's implementation of the Social Credit System page 14

Figure 3: Excerpt of a mugshot and criminal record website page 17

List of abbreviations

Abbildung in dieser leseprobe nicht enthalten

1 Introduction

We live in a globalised, complex world with a rapidly increasing population and challenges that have never been faced before, such as man-made climate change, air and ocean pollution, over-population, the extinction of species, water scarcity, poor drainage, and the degradation of soil and forests. This brings up the initial question for policymakers around the world of how to deal with all of these new, emerging problems, which, of course, have an impact on all areas of economy, society and politics and could even unleash serious conflicts.

It is not easy to find an answer to this question, but the situation is not hopeless as governments have the tools at their disposal to control the economic activities of a country and extinguish fires before they ignite systemic risk. Some vital and often discussed measures include the establishment of police stations, collection of taxes, birth control, education programs, incentives for the reduction of carbon dioxide (CO2) emissions and the use of renewable energy instead of fossil fuels, just to mention a few.

This goes especially for countries like China, which has a long and rich cultural heritage and is home to the world's most densely populated cities. Economic growth over the past years and decades has lifted wealth and living standards in China to that extent that it has become one of the largest and most powerful nations in the world. The size of its population has long been a hot political topic and its demand for resources is still prevalent and increasing.

With that in mind, it becomes clear that a good infrastructure and an effective leadership is required to maintain the peaceful functioning of the society. Leaders have to be capable and skilled to do their task, as in former times, but nowadays they can use technology and an ever greater prevalence of digitalisation to increase productivity and make people's lives better.

China's leaders know that technological development is the driving force behind economic and social growth and that it can be used to monitor and rate the economic and social conduct of people and companies. For that reason, and in an attempt to answer the above-mentioned question, the Asian country has jumped on the bandwagon of technology and digitalisation and introduced the Social Credit System.

2 Definition of Leadership and Leadership Theories

Rules and norms may vary across cultures and countries but they are important for a collective cooperation amongst individuals to achieve objectives and allow the best-possible allocation of resources. For that reason, a hierarchical organisation is necessary in order to ensure that the rules and norms are adhered to and followed by the people. The modern state assumes the function of organising the social and economic system, protecting the safety, health and welfare of the people and creating an environment which is attractive to business and investment, both foreign and domestic. However, the administration of a country is difficult task that requires leadership and should be carried out by a responsible government. The question that arises in this context is how leadership is defined and what makes a good political leader who is competent and capable to carry out his or her duties in a responsible manner with the society's best interests in mind.

Peter G. Northouse, a widely known author and researcher on the topic of leadership theory, defines leadership as a process whereby an individual influences a group of individuals to achieve a common goal. This definition makes clear that leadership can not be explained with just one word as it consists of the following components: process, influence, group context, and goal attainment.^[1]

The main reason behind all leadership is the desire to achieve a certain goal. In order to do so, a leader uses influence or persuasion to guide followers in the right direction. This implies that leadership is a group phenomenon as there can be no leaders without followers. Moreover, leadership is described as a process which means that it is not a trait or characteristic inherently possessed by the leader, but a mutual interaction between the leader and the followers.

Much has been written on theories of leadership, but what is still unanswered by scholars and researchers is the question whether leadership is a natural inherent trait or based on learnable skills. It's a debate as timeless as the purported existence of aquatic apes, with good arguments on both sides.

Over time, four main groups of theories have emerged: the trait approach, the skills approach, the behavioural approach, and the situational approach.

2.1 Trait Approach

According to Peter G. Northouse, the trait approach was one of the first systematic endeavours to study leadership. It implies that leaders are born rather than trained or experienced and possess certain traits or characteristics that distinguish them from followers. The supporters of the Great Man Theory believe that only people with these natural leadership qualities can become great social, political and military leaders.^[2]

If leaders are born, as the trait approach argues, it is interesting to know what qualities a leader must possess to be effective. After a century of study, researchers came up with endless lists of qualities, and while some of the traits appear in several of the survey studies, others are mentioned in only one or two of them. The five traits that turned out to be the most important ones are: Sociability, Intelligence, Determination, Integrity and Self-Confidence.^[3]

Table 1: The Five Factor Model (FFM)

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Source: Own illustration; cf. Goldberg, Lewis R., An Alternative "Description of Personality": The Big-Five Factor Structure. Journal of Personality and Social Psychology, 1990, Vol. 59, No. 6, 1216-1229

Similar to these traits are the Big Five personality factors developed by Lewis R. Goldberg, who is an American psychologist and regarded as one of the most prominent researchers in personality psychology.

He continued the work of Raymond B. Cattell, Tupes and Christal, McCrae and Costa and other renowned researchers when he carried out a study with college students (70 men and 117 women) who described themselves using an inventory of l,710 trait-descriptive adjectives with an 8-step rating scale, ranging from extremely inaccurate to extremely accurate.^[4]

The results of the study are summarised in Table 1. Goldberg's five factors are often represented by the acronyms OCEAN or CANOE. It is remarkable that Northouse's Sociability trait is included in Goldberg's Surgency (or Extraversion) factor and Intelligence can be found in the Intellect (or Openness) factor. It cannot be overlooked that Self-Confidence is part of Emotional Stability (or Neuroticism), Determination is expressed through Conscientiousness, and Integrity is represented by Agreeableness.

Judge, Bono, Ilies, and Gerhardt conducted a meta-analysis to assess the links between the Big Five and leadership on the basis of 78 studies published between 1967 and 1998. It turned out that there is a strong relationship between the Big Five personality factors and leadership, which means that certain traits are associated with effective leadership. Extraversion was the strongest correlate of leadership. It was followed by Conscientiousness, Intellect, and Emotional Stability. Interestingly, Agreeableness showed only a relatively weak correlation with leadership.^[5]

The trait approach is based on a century of research but it is not the ne plus ultra in leadership as it does not take into account situational effects. A person who is an effective leader in one situation might be an ineffective leader in another situation. It is also hard to say if the traits make the leader or if it is the other way round, which means that a person in a leadership position gradually develops the required traits. Moreover, history has shown that leadership is not exclusively a domain of great men, as popularised by Thomas Carlyle and debunked by the emergence of female leaders such as Catherine the Great, Joan of Arc, Indira Gandhi or Margaret Thatcher. These findings arise the question whether leadership skills can be learned and, if so, how it can be done in the most efficient way.

2.2 Skills Approach

While the trait approach has its focus on the individual and his or her inherent personality traits, the skill approach takes into consideration other important factors such as interaction, environment and problem-solving. According to Robert Lee Katz, an American social and organisational psychologist, leaders are not born, they are made. In his work on Skills of an Effective Administrator, he stated that successful leadership is based on three basic skills: technical skills, human skills, and conceptual skills.^[6]

A technical skill is the ability to perform a specific kind of activity. For example, a musician who knows how to play beautiful music on the guitar has acquired a technical skill. Human skills are related to the ability to work with people. A person with highly developed human skills understands and accepts the viewpoints, perceptions and beliefs of others and knows how to communicate with superiors, equals and subordinates. Conceptual skills are the ability to deal with concepts and solve complex problems. A person who has conceptual skills sees the organisation as a whole and the relationships among its parts, partners and competitors.^[7]

Table 2: Managerial skills according to Katz

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Source: Own illustration; cf. Katz, Robert Lee, Skills of an Effective Administrator, Harvard Business Press, Boston 1974

As shown in Table 2, all of the three skills are important for a leader, however, the relative importance of each skill depends on the level of management. Technical skills are particularly important at lower levels of management and less important at the top level, which means that they are not that essential for a Chief Executive Officer (CEO), a Chief Operating Officer (COO) or even the leader of a country. Human skills are equally important at all levels because leadership is about dealing with people and getting them to do their tasks in an effective manner. Conceptual skills are less important at lower levels and more important at the top level as people with these skills are able to create and communicate a vision and strategic plan for the organisation.

Unlike the trait approach, the skills approach allows for leadership skills to be developed by anyone who is willing to invest effort and time to learn and practice. For that reason, this approach can easily be used in leadership education programmes. As with most things, however, the truth lies somewhere in the middle, meaning that there are attributes, such as height and intelligence, which are passed on from parents to children and make a person better suited to leadership, but most traits can be learned and sharpened over time through experience. Leadership is just one of several skills that are a combination of natural abilities and learned behavior.

2.3 Behavioural Approach

The behavioural approach emphasises the behaviour and actions of leaders towards their followers rather than personality traits or learned skills. Leadership research has found that there are two distinct dimensions of behaviour: task-oriented behaviour and relationship-oriented behaviour. Task behaviour is related to goal achievement, whereas relationship behaviour is used by leaders to maintain personal relationships and help followers to feel comfortable with themselves and the situation.^[8]

Table 3: The Leadership Grid by Blake/Mouton

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Source: Own illustration; cf. Northouse, Peter G., Leadership: Theory & Practice, 7th Edition, Sage Publications, 2016, pp. 82-86

Robert Blake and Jane Mouton developed a leadership grid which is based on two factors equivalent to the above-mentioned task and relationship behaviours. As shown in Table 3, the concern for people is plotted on the vertical axis and the concern for results is measured along the horizontal axis. Each axis has a scale ranging from one to nine, with higher numbers indicating a higher concern for the specified variable.

The various combinations of low and high concern for people and concern for results generate five different leadership styles. The 1,1 style is an impoverished leadership style, where a leader has a low concern for both people and results and tends to put in the minimum effort possible to get things done. The 9,1 style represents a high concern for task accomplishment in combination with a low concern for people, which means that it is an effective style for short-term results with an authoritarian leader who attempts minimise the human side of work and uses communication for giving instructions. In sharp contrast, the 1,9 style is characterised by a low concern for results and a high concern for people in order to establish a happy, healthy and comfortable work environment. The 5,5 style is a compromise style, where a leader tries to find a trade-off between goal achievement and needs of his followers. The 9,9 style is characterised by a maximum concern for both people and results which makes it the ideal style for team management.

Although each style has its advantages and place within the leadership grid, the obvious preference is the 9,9 style as it promotes participation and cooperation in the organisation and satisfies the follower's needs to be involved and committed to their work. Sometimes, it depends on the situation which leadership style to choose because like the leader, followers are humans with human needs and emotions. Some followers have a higher need for autonomy, while others need leaders to show them the direction, and this is when the situational approach comes into play.^[9]

2.4 Situational Approach

The situational approach is a flexible approach because it takes into consideration the situational factors and the environment in which the behaviour occurs. Paul Hersey und Kenneth H. Blanchard developed a model which suggests that there is no universal style to fit all situations. Leadership behaviour should be adapted to meet the competence and commitment of subordinates in diverse situations.^[10]

[...]

^[1] cf. Northouse, Peter G., Leadership: Theory and Practice, 7th Edition, Sage Publications, 2016, p. 6

^[2] cf. Northouse, Peter G., loc. cit, p. 19

^[3] cf. Northouse, Peter G., loc. cit, pp. 23-26

^[4] cf. Goldberg, Lewis R., An Alternative "Description of Personality": The Big-Five Factor Structure. Journal of Personality and Social Psychology, 1990, Vol. 59, No. 6, 1216-1229

^[5] cf. Judge, Timothy A., Bono, Joyce E., Ilies, Remus, Gerhardt, Megan W., Personality and Leadership: A Qualitative and Quantitative Review. Journal of Applied Psychology, 2002, Vol. 87, No. 4, 765–780

^[6] cf. Katz, Robert Lee, Skills of an Effective Administrator, Harvard Business Press, Boston 1974

^[7] cf. Katz, Robert Lee, loc. cit.

^[8] cf. Northouse, Peter G., loc. cit, p. 71

^[9] cf. Northouse, Peter G., loc. cit, p. 77-80

^[10] cf. Northouse, Peter G., loc. cit, pp. 93-96