Abstract
Guanxi refers to a Chinese system of doing business on the basis of personal relationships, and it is representative of the way that business is done throughout much of the non-western world. In this paper we first evaluate guanxi from an ethical perspective, and then attempt to shed light on the sources of its economic advantages and disadvantages through the use of a simple mathematical model. Finally, we point out how eastern and western business practices may already be converging toward systems based on more complete models of trust to deal with the conditions of progress coupled with uncertainty that form our new economic reality.
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*Steve Lovett is Assistant Professor of Management at San Diego State University's Imperial Valley Campus. He holds a Ph.D. in Management and International Business from the University of Texas at Arlington. His current research agenda is on Cross Cultural Management.
**Lee C. Simmons is a graduate of The University of Texas at Arlington. His research interests include Chinese relationship marketing, language effect in advertising and Asian business practices. Other recent work is in software piracy and intellectual property rights.
***Raja Kali is an Assistant Professor of Strategy and Competition the Instituto Tecnologico Autonomo de México. He holds a Ph.D. in Economics from the University of Maryland. His current research agenda is on Institutional Context and Industrial Organization.
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Lovett, S., Simmons, L. & Kali, R. Guanxi Versus the Market: Ethics and Efficiency. J Int Bus Stud 30, 231–247 (1999). https://doi.org/10.1057/palgrave.jibs.8490068
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DOI: https://doi.org/10.1057/palgrave.jibs.8490068