Resource and Risk Trade-offs in Guanxi-based IJVs in China

Abstract

Many western firms are trying to conduct business in the People's Republic of China, and one of the prevalent approaches has been through the formation of international joint ventures (IJVs). While extant literature suggests that firms should focus on developing guanxi (that is, a form of political economic connection) to succeed in these IJVs, it is argued in this article that the effects of guanxi are mixed. Using resource contribution and risk-based perspectives of IJVs, eight propositions are offered that link guanxi and relative risks when IJVs are formed to access different kinds of resources.