Managing Chinese suppliers' sustainability performance: The double-edged role of guanxi governance

Abstract

Despite the critical role of interorganizational governance in business-to-business (B2B) relationships, research on how different types of interorganizational governance influence sustainable supply chain collaboration (SSCC) is limited. Drawing on transaction cost economics and social exchange theory, this study investigates the role of Chinese informal relational governance (guanxi governance) in SSCC in channel relationships. With a three-wave survey data collected from 205 Chinese manufacturers, the proposed theoretical model is tested through partial least squares structural equation modeling (PLS-SEM). The results indicate that both formal contractual governance and informal guanxi governance have a positive effect on SSCC. However, guanxi weakens the positive effect of contractual governance. In addition, SSCC exhibits a favorable impact on firms' social, environmental, and economic performance. These findings reveal the double-edged role of guanxi governance and contribute to current knowledge of relationship management in sustainable supply chains.