Title: An institutional analysis of Chinese business relationships

Authors: Antony Drew, Anton Kriz

Addresses: Newcastle Business School, University of Newcastle, Cnr King and Auckland Streets, Newcastle, NSW, 2300, Australia. ' Newcastle Business School, University of Newcastle, Ourimbah Campus, Brush Road, Ourimbah NSW 2258, Australia

Abstract: Understanding Chinese business practices and relationships has become increasingly important for international firms. One of the common threads for international firms is the importance of a special relational aspect of Chinese markets, called guanxi. The impact of guanxi on value chain management is under-researched but increasingly gaining attention. This paper takes a more novel approach by reviewing guanxi in terms of its institutional rather than simply its often-cited cultural implications. It adopts and adapts the ecocultural framework of John Berry and incorporates Robert Trivers theory of reciprocal altruism in an attempt to shed light on the practice of guanxi in eight Chinese related polities. The eight polities are investigated using a qualitative methodology. The design of the study incorporates two phases with focus groups and an online survey. The study acknowledges that the institution of guanxi has important implications for all polities researched but it remains an essential and powerful force in the mainland Chinese polities of Shanghai and Beijing. Subsequently, the relational dynamic of guanxi remains an essential element in value chain management in Chinese contexts, particularly for chains operating on the mainland. As the paper also contends, this has important implications for both Chinese and Western firms.

Keywords: guanxi; China; overseas Chinese communities; new institutional economics; NIE; ecocultural framework; reciprocal altruism; value chain management; Chinese business practices; business relationships.

DOI: 10.1504/IJVCM.2009.031766

International Journal of Value Chain Management, 2009 Vol.3 No.4, pp.356 - 373

Published online: 23 Feb 2010 *

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