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Asia Pacific Journal of Management

, Volume 21, Issue 3, pp 325–343 | Cite as

Transaction Cost, Social Capital and Firms' Synergy Creation in Chinese Business Networks: An Integrative Approach

  • Wei-Ping Wu
  • W.L. Choi
Article

Abstract

Overseas Chinese business networks have been a powerful growth engine propelling local economies in Southeast Asia and the Greater China region. However, relatively little research has been conducted on the relationship between social capital and a firm's synergy creation in overseas Chinese business networks. To narrow this knowledge gap, this study adopts an integrative approach drawing on two complementary theories of transaction cost economics (TCE) and social capital to investigate how a firm creates synergy in overseas Chinese business networks. A multiple regression method was used to test hypotheses. The results indicate that repeat transactions and close ties with government offices and financial institutions contributed positively towards a firm's synergy creation while other variables such as trust, transaction uncertainty and information sharing did not show any significant relationship with synergy creation. Data from 108 Hong Kong-based Chinese manufacturing firms provide evidence that the integrative approach is rather effective in studying a firm's synergy creation in the context of interorganisational relationships.

transaction cost social capital synergy creation interorganisational relationship Chinese business networks 

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Copyright information

© Kluwer Academic Publishers 2004

Authors and Affiliations

  • Wei-Ping Wu
    • 1
  • W.L. Choi
    • 2
  1. 1.Department of Marketing and International BusinessLingnan UniversityTuen MunHong Kong
  2. 2.Ferguson International Freight Forwarders Ltd.Sheng WanHong Kong

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