The Categories, Rules, and Demonstrations of Guanxi in Chinese Society

Abstract

ABSTRACTPurpose: Guanxi is one of the most important success factors in China. Because of differences in Eastern and Western relationships, it is essential to investigate the system of guanxi in China. Based on the differential mode of association (chaxugeju), the present study aims to construct a framework for the mechanism of guanxi in Chinese society.Methodology/approach: A questionnaire survey of middle and senior managers was conducted to test the proposed hypotheses. A sample consisting of 212 middle or senior managers who worked in China and had direct interactions with business partners was used. The participants were mainly from firms in the pharmaceutical technology, telecommunication, and retailing industries.Findings: Guanxi categories, guanxi rules, and guanxi demonstrations were found to be correspondingly related. Business partners who had family guanxi applied the rule of need and presented intimacy interactions, whereas partners who had acquaintance guanxi often followed the rule of favor and demonstrated higher levels of reciprocity. These two corresponding paths positively influenced the strength of guanxi: The partners were more willing to sacrifice self-interest for and provide high priority in resource allocation to each other. Business partners who had stranger guanxi used the rule of equity and built trust relationships, which had negative impacts on the strength of guanxi.Practical implications: Because guanxi affects the performance of companies in China, maintaining guanxi networks with business partners is an important but challenging task for managers, especially for those from non-eastern cultures. The current study suggests that it is essential for managers to identify different types of guanxi (family, acquaintance, or stranger) by differential intimacy and distance, and to apply different rules when interacting with partners with different guanxi. To be specific, managers should follow the rule of need with business partners who have family guanxi, and their guanxi should be demonstrated as intimacy interaction. When doing business with acquaintances and friends, managers should mainly follow the rule of favor, and their guanxi should be demonstrated as reciprocity interaction. When doing business with strangers, managers should follow the rule of equity and emphasize trust. This correspondence also has an influence on how managers make decisions according to the strength of guanxi with different partners based on the guanxi type. In short, guanxi affects the degree of willingness to sacrifice self-interest for, and to prioritize resource allocations to, business partners.