Importance of Guanxi in Chinese apparel new venture success: a mixed-method approach

Abstract

The significant role of new ventures in economic and social development has led practitioners and researchers to search for the factors that affect new venture performance. In the Chinese apparel industry context, relationship (“guanxi”) as a central idea in Chinese society deeply influences all kinds of business. High quality relationships with supply chain partners, as a key resource, would help new ventures create competitive advantages and, hence, influence new venture performance. This study was designed to investigate the link between firms’ network relationships and new venture performance in the Chinese apparel industry. Using the resource-based view (Journal of Management 17:99-120, 1991) and social network theory (Administrative Science Quarterly 45:425-455, 2001), this study offers a mixed-methods exploratory approach to understanding the importance of guanxi in Chinese apparel new venture success. Results showed that three dimensions of new venture network relationship quality have positive impacts on the new ventures’ performance. This finding is consistent with social network theory and revealed that competitive advantage may be achieved through social network resources. In particular, for Chinese apparel new ventures, guanxi is an important resource for sustained competitive advantage among established businesses in China.