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Huawei is now China’s most prominent multinational company. In 2018, Huawei achieved sales of USD 105.2 billion and operated in over 170 countries around the world, employing around 188,000 people. 45% of all employees are focused on R&D (Huawei, 2019), giving the firm strong technological capabilities. Huawei has now even surpassed Ericsson and Nokia to become the largest telecommunication infrastructure equipment company in the world. It is also the second largest maker of smartphones.
Not surprisingly, academics, business leaders, and policy makers have become very interested in understanding how Huawei has been able to rise from its humble beginnings in Shenzhen as an importer of analog telephone switches to a globally operating information technology manufacturing and service firm. Huawei is now frequently featured on the cover of international business magazines (Economist, 2012) or as a case study in western business schools (Hitt, Ireland, & Hoskisson, 2008; Peng, 2010) because it has accomplished something that is still rare for a Chinese company: turning itself into a world-leading company and R&D powerhouse.
To date, writing an academic-quality book on Huawei has almost been impossible given that it has been a secretive private company. Until 2010, Huawei did not even publish its governance structure, let alone any information that would make it possible to get deeper insights into how the company operates. Realizing that this secrecy was hurting Huawei’s ability to further expand in key international markets, the firm began to open itself up more. Ren Zhengfei, the founder and key leader, started to give interviews to western journalists (Economist, 2014a; Pullar-Strecker, 2013).
More importantly, the firm granted Tian Tao, a Chinese business journalist and long-time advisor to Huawei, along with Chunbo Wu, an academic from Renmin University of China, access to internal company documents. Huawei also gave them permission to interview hundreds of current and former Huawei managers. Based on their research, Tian and Wu published The Huawei Story (2015), first in Chinese and a few year later in English. The book provides the most comprehensive account of the development of Huawei since its founding in 1987. It lays out in detail the management philosophy and values that have guided the firm’s development as it struggled to overcome its weak financial and organizational capabilities and become an international leader in the information and communication technology industries (ICT). An expanded version of the book was published recently (Tian, De Cremer, & Wu, 2017).
With the help of Tian Tao, Zhejiang University School of Management has set up the Ruihua Institute for Innovation Management to further academic research and teaching on how and why Huawei has been able to outcompete so many domestic and international rivals. Earlier explanations for the success of Huawei emphasize Chinese cost advantages, stronger customer centricity, a strategy of first entering peripheral markets before competing in core markets, and the gradual buildup of ever more sophisticated technological capabilities that made Huawei a leader in the next-generation technology of 5G mobile telephony (Fu, 2015; Z.-X. Zhang & Zhong, 2016). As the research at the Ruihua Institute progressed, however, it became clear that at the center of Huawei’s success lies an organizational capability to continuously transform itself.
For this reason, we made the decision to write a book entirely focused on Huawei’s transformation since its beginning in 1987. We believe that scholars interested in organizational change or more specifically change in Chinese firms will benefit the most from learning about Huawei’s transformation capabilities. Because we realized that the development of new and the breaking of old routines is central to Huawei’s transformation, we decided to use as our overarching analytic lens the theory of routines-based organizational capabilities (Becker, Lazaric, Nelson, & Winter, 2005; Murmann, 2003; Nelson & Winter, 1982; Nigam, Huising, & Golden, 2016; Parmigiani & Howard-Grenville, 2011; Szulanski & Jensen, 2008; Sidney G. Winter, 2003). 1 We follow here in the tradition of Robert Burgelman, whose studies of Intel have helped advance our understanding the evolutionary processes underpinning corporate transformations (Robert A. Burgelman, 1991; R. A. Burgelman, 2002; Robert A. Burgelman & Grove, 2007). To be sure, there is a large literature on organizational change, and our book is not novel in terms of focusing on organizational change. What makes Huawei interesting is its rate of growth and the level of detail in which we can observe not only the creating of routines but also the breaking of routines across most of the major functions of the firm. This makes Huawei an ideal case to advance the theory of routines and dynamic capabilities to change routines. Our book will be particularly appealing to academics in the field of strategy, management, and business history.
In December 2018, Huawei was in the headlines all over western world when its Chief Financial Officer was arrested in Canada on the request of the US government for allegedly violating USA trade sanctions. This event is taking place against the larger backdrop of the US government stepping up its campaign to limit Chinese telecom participation in building 5G networks in Western countries because of national security considerations (Woo, 2018). To avoid false expectations, we would like to be explicit at the outset that the geopolitical struggles over who builds, runs and effectively controls national telecommunications infrastructures is a topic we will not be dealing with in this book. We are focused solely on the management transformation of Huawei. This transformation by itself is worthy of a scholarly investigation. In the conclusion chapter we offer, however, a short appraisal of Huawei’s future growth challenges, and in this context we will briefly detail the geopolitical challenges Huawei currently faces as it tries to commercialize its leading technological position in 5G mobile technology.
Our book should not be seen as an official history of Huawei or a mouthpiece for current and former executives. The research team has been entirely independent of Huawei. The views expressed in this book are ours alone. We benefited immensely, however, from our interviews with many former Huawei executives, access to the firm’s internal newspapers, and the presentations of many former executives at the quarterly Huawei forum of the Ruihua Institute for Innovation Management. In Appendix B, we list the names of the presenters and the title of the presentations at Ruihua Institute. In Appendix C we provide a list of the interviews we conducted, the persons interviewed and the various positions they had held within Huawei. But we have also drawn extensively on external information, as will become evident in each of the chapters. All information sources are referenced throughout the book.
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