Does east love guanxi more than west? The evolution of relation‐based governance: Contemporary and historical evidences*

Abstract

Relations, or informal social networks (also known as guanxi), are believed to be used predominantly by people in Asia to govern business transactions. Do Asians love relations more than their counterparts in the West? Using the theory of relation‐based and rule‐based governances, this paper argues that relying on relations in the East should not be viewed as predominantly determined by culture. The historical and contemporary evidences show that relation‐based governance existed in the West before an impartial legal system was established. In conclusion, the paper argues that the East does not love guanxi more than the West; it only reflects a different stage of political and economic development.