Network strength, transaction‐specific investments, inter‐personal trust, and relationship satisfaction in Chinese agri‐food SMEs

Abstract

PurposeThe purpose of this paper is to investigate the effects of network strength, transaction‐specific investments and inter‐personal trust on business relationship satisfaction for small‐and‐medium‐sized enterprises (SMEs) involved in agri‐food processing and exporting in China.Design/methodology/approachSurvey data collected from 80 agri‐food SMEs in Jiangsu Province were used for empirical testing. The authors applied an ordered logit regression approach for model estimation.FindingsThe results demonstrate that strong guanxi networks, high level of transaction‐specific investments and inter‐personal trust significantly contribute to a high level of relationship satisfaction for agri‐food SMEs in China. In addition, inter‐personal trust shows a moderating effect on the relationship between transaction‐specific investments and relationship satisfaction.Practical implicationsBusiness relationships play a critical role in the modern market environment. Relational arrangements (based on guanxi and inter‐personal trust) should be further enhanced in order to yield satisfied business relationships for SMEs in China.Originality/valueThe paper extends our understanding of relationship (guanxi) marketing, as well as marketing practices for agri‐food SMEs in China.