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


Teemu Ruskola


Emory University School of Law

November 8, 2011

Stanford Law Review, Vol. 52, No. 6, pp. 1599-1729, July 2000
Emory Public Law Research Paper No. 11-178
Emory Law and Economics Research Paper No. 11-119

Abstract:     
This article places China's recent Company Law in a broader historical and cultural perspective. Noting that the Company Law consists of transplanted Western corporation law, the article 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, the article 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, the article argues that traditional Chinese family law performed many of the functions that modern American corporation law performs today. Bringing together recent scholarship in Chinese kinship anthropology and Chinese legal history, the article outlines the historical development of Chinese clan corporations. Entrepreneurs wishing to overcome official Confucian hostility to profit-seeking utilized the legal form of the so-called ancestral trust to pool property for investment-ostensibly in order to provide for ancestral sacrifices, but in practice to create professionally managed commercial enterprises. The article illustrates the various ways in which these clan corporations engaged in creative contracting to construct business entities that indeed formally corresponded to the idealized Confucian family defined by patrilineal kinship.

The article also 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, the article 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. The article 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.

Number of Pages in PDF File: 132

Keywords: China, corporation law, comparative corporate governance, family law, state-owned enterprise, legal theory, capitalism, Confucianism, socialism, kinship, PRC Company Law, family law, adoption, marriage, Chinese legal history, legal transplants

JEL Classification: K22

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Date posted: April 7, 2001 ; Last revised: May 28, 2014

Suggested Citation

Ruskola, Teemu, Conceptualizing Corporations and Kinship: Comparative Law and Development Theory in a Chinese Perspective (November 8, 2011). Stanford Law Review, Vol. 52, No. 6, pp. 1599-1729, July 2000; Emory Public Law Research Paper No. 11-178; Emory Law and Economics Research Paper No. 11-119. Available at SSRN: http://ssrn.com/abstract=264858

Contact Information

Teemu Ruskola (Contact Author)
Emory University School of Law ( email )
1301 Clifton Road
Atlanta, GA 30322
United States
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