Examining guanxi as an environmental-dependency-coping strategy in China: A 3PL provider’s perspective

Abstract

ABSTRACT As firms seek to meet sophisticated customer needs, they typically become more dependent on outside partners. Therefore, managing environmental dependence has become a key competency for business success. This observation is particularly true for third party logistics (3PL) providers in China, as most of these providers are lacking in resources. Drawing on resource dependence theory, this study examines whether and when guanxi – a prevalent relationship management approach in China – is necessary for 3PL providers as a strategic option to manage environmental dependence. Based on survey data collected from 132 3PL providers in China, the empirical results show that it is necessary for 3PL providers in China to develop and rely on guanxi to successfully cope with environmental uncertainty and dependence. However, the necessity of using guanxi to deal with these challenges differs between business relationships. The necessity of relying on guanxi to deal with environmental uncertainty is alleviated by the presence of formal, customised legal contracts and by the frequency of contact in 3PL relationships. However, the need of using guanxi to cope with dependence tends to increase with the duration of each relationship. The managerial and theoretical implications of these findings are discussed.