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Abstract Based on the “BIANTONG” way of thinking, “GUANXI” makes an alternative system of the hierarchical, bureaucratic system, the formal organizational structure design, guidelines and the norms. There is an alternative between the formal and informal institution. There is also an alternative between “this institution” and “the other institution.” With the gradual development of the process, uncertain factors gradually becomes determined. BIANTONG includes four ways：“TONGRONG”, “dynamic adjustment”,“channel”and “transform”. Based on the dialectical relation of “change ”and “notchange”, Institutional arrangements of uncertainty has its “cost” and “income.” China’s BIANTONG philosophy is conducive to behavior innovation, but not to the Institutional innovation. China’s BIANTONG philosophy is conducive to incremental innovation, but not to the disruptive innovation. In the Chinese cultural environment, reluctantly pursuing institutional innovation would be counterproductive.
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Received: 17 June 2014
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2014, Vol. 11 
