Informal interorganizational business relationships and customer loyalty: Comparing Guanxi, Yongo, and Wasta

Abstract

Based on social exchange theory, this research explores if informal interorganizational business relationships in China (guanxi), South Korea (yongo), and Egypt/Jordan (wasta) affect customer loyalty in a business to business context. A conceptual model hypothesizes interrelationships among three underlying dimensions of informal relationships, reciprocity, affect, and trustworthiness, and with customer loyalty. The hypotheses were tested using survey data gathered from manufacturing companies in China, South Korea, Jordan, and Egypt. Structural equation modeling shows that guanxi, yongo, and wasta are positively related to customer loyalty across all four countries. However, there are some differences in the relationships among the three dimensions. Although reciprocity is positively related to affect in guanxi and yongo, this relationship is not statistically significant in wasta. Further, the items measuring the dimensions of trustworthiness and reciprocity are the same in guanxi and yongo, but these differ from wasta. Thus, managers need to be aware of subtle differences in how informal interorganizational relationships are developed and used in international business to business relationships.