Journal of Business Ethics

, Volume 71, Issue 3, pp 301–319 | Cite as

Enabling Guanxi Management in China: A Hierarchical Stakeholder Model of Effective Guanxi

Article

Abstract

Guanxi (literally interpersonal connections) is in essence a network of resource coalition-based stakeholders sharing resources for survival, and it plays a key role in achieving business success in China. However, the salience of guanxi stakeholders varies: not all guanxi relationships are necessary, and among the necessary guanxi participants, not all are equally important. A hierarchical stakeholder model of guanxi is developed drawing upon Mitchell et al.’s (1997) stakeholder salience theory and Anderson’s (1982) constituency theory. As an application of instrumental stakeholder theory, the model dimensionalizes the notion of stakeholder salience, and distinguishes between and among internal and external guanxi, core, major, and peripheral guanxi, and primary and secondary guanxi stakeholders. Guanxi management principles are developed based on a hierarchy of guanxi priorities and management specializations. The goal of this application of instrumental stakeholder theory is to construct, for Western business firms in China, a means to reliably identify guanxi partners by employing the principles of effective guanxi. These principles are described in the form of testable propositions that advance social scientific research in this area of international business ethics.

Keywords

China guanxi guanxi management stakeholder salience 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Abramson N. R., Ai J. X. (1999) Canadian Companies Doing Business in China: Key Success Factors. Management International Review 1: 7–35Google Scholar
  2. Ambler T. (1994) Marketing’s Third Paradigm: Guanxi. Business Strategy Review 5(4): 69–81CrossRefGoogle Scholar
  3. Anderson P. F. (1982) Marketing, Strategic Planning, and the Theory of the Firm. Journal of Marketing 46(Spring): 15–26CrossRefGoogle Scholar
  4. Barney J. B. (1991) Firm Resources and Sustained Competitiveness. Journal of Management 17: 99–120CrossRefGoogle Scholar
  5. Bowie N. (1988) The Moral Obligations of Multinational Corporations. In: Luper-Foy S. (eds) Problems of International Justice. Westview Press, Boulder, pp. 97–113Google Scholar
  6. Carroll A. B. (1979) A Three-dimensional Model of Corporate Performance. Academy of Management Review 4: 497–505CrossRefGoogle Scholar
  7. Castanias R. P., Helfat C. E. (1991) Managerial Resources and Rents. Journal of Management 17(1): 155–172CrossRefGoogle Scholar
  8. Carroll A. B. (1993) Business and Society: Ethics and Stakeholder Management. South-Western, CincinnatiGoogle Scholar
  9. Chan, R. Y. K., L. T. W. Cheng and R. W. F. Szeto: 2002, ‘The Dynamics of Guanxi and Ethics for Chinese Executives’, Journal of Business Ethics 41(4), 327–336Google Scholar
  10. Chen, M.: 1994, ‘Guanxi and the Chinese Art of Network Building’, New Asia Review Summer, 40–43Google Scholar
  11. China Statistical Year Book, 2000 (China Statistical Press, Beijing)Google Scholar
  12. Clarkson M. B. E. (1995) A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance. Academy of Management Review 20(1): 92–117CrossRefGoogle Scholar
  13. Conner K. R. (1991) A Historical Comparison of Resource-Based Theory and Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm? Journal of Management 17(1): 121–158CrossRefGoogle Scholar
  14. Cui G., Liu Q. (2000) Regional Market Segments of China: Opportunities and Barriers in a Big Emerging Market. Journal of Consumer Marketing 17(2): 55–72CrossRefGoogle Scholar
  15. Cyert R. M., March J. G. (1963) A Behavioral Theory of the Firm. Printice-Hall, Englewood Cliffs, NJGoogle Scholar
  16. Davies H., Leung T. K. P., Luk S. T. K., Wong Yiu-hing (1995) The Benefits of Guanxi. Industrial Marketing Management 24(2): 207–214CrossRefGoogle Scholar
  17. Donaldson T., Preston L. E. (1995) The Stakeholder Theory of the Corporation:Concept, Evidence, and Implications. Academy of Management Review 20(1): 65–91CrossRefGoogle Scholar
  18. Donaldson T., Dunfee T. (1999) Ties That Bind: A Social Contract Approach to Business Ethics. Harvard University Business School Press, Cambridge, MAGoogle Scholar
  19. Dunfee T., Warren D. E. (2001) Is Guanxi Ethical? A Normative Analysis of Doing Business in China. Journal of Business Ethics 32(3): 191–204CrossRefGoogle Scholar
  20. Etzioni A. (1964) Modern Organizations. Prentice Hall, Englewood Cliffs, NJGoogle Scholar
  21. Fan, Y.: 2002, ‘Guanxi’s Consequences: Personal Gains at Social Cost’, Journal of Business Ethics 38(4), 371–380Google Scholar
  22. Freeman R. E. (1994) The Politics of Stakeholder Theory: Some Future Directions. Business Ethics Quarterly 4: 409–421Google Scholar
  23. Freeman R. E. (1984) Strategic Management: A Stakeholder Approach. Pitman Publishers, Boston, MAGoogle Scholar
  24. Gold T. B. (1985) After Comradeship: Personal Relations in China since the Cultural Revolution. The China Quarterly 104(4): 657–675CrossRefGoogle Scholar
  25. Greenley G. E., Foxall G. R. (1996) Consumer and Nonconsumer Stakeholder Orientation in U.K. Companies. Journal of Business Research 35(Feb.): 105–116CrossRefGoogle Scholar
  26. Guthrie D. (1998) The Declining Significance of Guanxi in China’s Economic Transition. The China Quarterly 154: 254–282Google Scholar
  27. Hwang Kwang-kuo (1987) Face and Favor: The Chinese Power Game. American Journal of Sociology 92(4): 944–974CrossRefGoogle Scholar
  28. Jones T. M. (1995) Instrumental Stakeholder Theory: A Synthesis of Ethics and Economics. Academy of Management Review 20(2): 404–437CrossRefGoogle Scholar
  29. Kao, J.: 1993, ‘The Worldwide Web of Chinese Business’, Harvard Business Review (March–April), 24–36Google Scholar
  30. Keng K. (2000) China’s Regional Economic Development: Strategy, Status, Trends and Outlook. Linking, Taipei, TaiwanGoogle Scholar
  31. Koo Y. C., Obst N. P. (1995) Dual-Track and Mandatory Quato in China’s Price Reform. Comparative Economic Studies 37(1): 1–7CrossRefGoogle Scholar
  32. Lee Dong-Jin, Pae J. H., Wong Y. H. (2001) A Model of Close Business Relationships in China (Guanxi). European Journal of Marketing 35(1): 51–69Google Scholar
  33. Lovett S., Simmons L. C., Kali R. (1999) Guanxi versus the Market: Ethics and Efficiency. Journal of International Business Studies 30(2): 231–248CrossRefGoogle Scholar
  34. Luo Y. (1997) Guanxi and Performance of Foreign-Invested Enterprises in China: An Empirical Inquiry. Management International Review 37(1): 51–70Google Scholar
  35. Millington A., Eberhardt M., Wilkinson B. (2005) Gift Giving, Guanxi and Illicit Payments in Buyer–Supplier Relations in China: Analysing the Experience of UK Companies. Journal of Business Ethics 57(3): 255–268CrossRefGoogle Scholar
  36. Mitchell R. K., Agle B. R., Wood D. J. (1997) Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts. The Academy of Management Review 22(4): 853–886CrossRefGoogle Scholar
  37. Morgan R. M., Hunt S. D. (1994) The Commitment-Trust Theory of Relationship Marketing. Journal of Marketing 22(July): 20–38CrossRefGoogle Scholar
  38. Nee V. (1992) Organizational Dynamics of Market Transition: Hybrid Firms, Property Rights, and Mixed Economy in China. Administrative Science Quarterly 31(1): 1–27CrossRefGoogle Scholar
  39. Pearce J. A. II, Robinson R. B. Jr. (2000) Cultivating Guanxi as a Foreign Investor Strategy. Business Horizons 43(1): 31–39CrossRefGoogle Scholar
  40. Penrose E. T. (1958) The Theory of the Growth of the Firm. Wiley, New York, NYGoogle Scholar
  41. Pfeffer J., Salancik G. R. (1978) The External Control of Organizations: A Resource Dependence Perspective. Harper and Row, New York, NYGoogle Scholar
  42. Shenkar O., Ronen S. (1993) The Cultural Context of Negotiations: The Implications of Chinese Interpersonal Norms. In: Kelley L., Shenkar O. (eds) International Business in China. Routledge, London, pp. 109–136Google Scholar
  43. Simon H. A. (1964) On the Concept of Organizational Goals. Administrative Science Quarterly 9(June): 1–22CrossRefGoogle Scholar
  44. Smeltzer L. R., Jennings M. M. (1998) Why an International Code of Business Ethics Would be Good for Business. Journal of Business Ethics 17(1): 57–66CrossRefGoogle Scholar
  45. Snell R. S., Tseng C.-S. (2001) Ethical Dilemmas of Relationship Building in China. Thunderbird International Business Review 43(2): 171–200CrossRefGoogle Scholar
  46. Steidlmeier P. (1999) Gift-Giving, Bribery, and Corruption: Ethical Management of Business Relationships in China. Journal of Business Ethics 20(2): 121–132CrossRefGoogle Scholar
  47. Su Chenting, Littlefield J. E. (2001) Entering Guanxi: A Business Ethical Dilemma in Mainland China? Journal of Business Ethics 32(1): 1–12CrossRefGoogle Scholar
  48. Su C., Sirgy M. J., Littlefield J. E. (2003) Is Guanxi Orientation Bad, Ethically Speaking? A Study of Chinese Enterprises. Journal of Business Ethics 44(4): 303–312CrossRefGoogle Scholar
  49. Suchman M. C. (1995) Managing Legitimacy: Strategic and Institutional Approaches. Academy of Management Review 20(3): 571–610CrossRefGoogle Scholar
  50. Tai L. S. T. (1988) Doing Business in the people’s Republic of China: Some Keys to Success. Management International Review 28(1): 5–9Google Scholar
  51. Tsang E. (1998) Can Guanxi Be a Source of Sustained Competitive Advantage for Doing Business in China? Academy of Management Executive 12(2): 64–73Google Scholar
  52. Warren D. E., Dunfee T. W., Li Naihe (2004) Social Exchange in China: The Double-Edged Sword of Guanxi. Journal of Business Ethics 55(4): 353–368CrossRefGoogle Scholar
  53. Wong Y. H., Leung T. P. (2001) Guanxi: Relationship Marketing in a Chinese Context. International Business Press, New York, NYGoogle Scholar
  54. Wong Y. H., Yee-kwong Chan R. (1999) Relationship Marketing in China: Guanxi, Favouritism and Adaptation. Journal of Business Ethics 22(2): 107–119CrossRefGoogle Scholar
  55. Xin K. R., Pearce J. L. (1996) Guanxi: Connections as Substitutes for Formal Institutional Support. Academy of Management Journal 39(6): 1641–1658CrossRefGoogle Scholar
  56. Yang M. (1994) Gifts, Favors, and Banquets: The Art of Social Relationships in China. Cornell University Press, New York, NYGoogle Scholar
  57. Yao S. (1999) Economic Growth, Income Inequality and Poverty in China under Economic Reform. The Journal of Development Studies 35(6): 104–130Google Scholar
  58. Yeung I. Y. M., Tung R. L. (1996) Achieving Business Success in Confucian Societies: The Importance of Guanxi (Connections). Organizational Dynamics 25(2): 54–65CrossRefGoogle Scholar

Copyright information

© Springer 2006

Authors and Affiliations

  • Chenting Su
    • 1
  • Ronald K. Mitchell
    • 1
  • M. Joseph Sirgy
    • 1
  1. 1.MarketingCity University of Hong KongHong KongChina

Personalised recommendations