Insights into guanxi and firm performance in China: an integrated lens of culture and guanxi

Abstract

ABSTRACT Chinese guanxi may contribute to the explanation of the rapid growth of Chinese firms. This study uses drinking culture, regarded as a typical feature of guanxi-oriented culture, and political ties, regarded as indicating the cultural embeddedness of guanxi, to empirically examine the effects of cross-level interaction between guanxi-oriented regional culture and culturally embedded managers’ guanxi on firm performance in China. Based on the data of A-share listed companies from 2016 to 2019, multiple linear regression analysis is used to test hypotheses. The results show that guanxi improves firm financial performance but damage technological innovation. The context-specific research offers novel insights and contextualized knowledge to enrich and extend the understanding of how guanxi affects firm growth and contribute to the knowledge of Chinese social philosophy.