Exploring Interorganizational Guanxi: A Dyadic, Longitudinal Study of Channel Management in China

Description

As a key dynamic in Chinese society that greatly affects business behaviors, guanxi (connections) significantly impacts company performance in addition to profitability, knowledge transfer initiatives, interfirm influence strategy, and opportunism. Despite an abundance of literature on business guanxi, most studies focus primarily on interpersonal guanxi, while largely ignoring interorganizational guanxi. The developmental process of interorganizational guanxi remains a black box, subject to widely varying interpretations. Moreover, our current understanding of the specific mechanisms that relate interorganizational guanxi to business exchange outcomes remains unclear.This study therefore intends to examine the driving forces, key ingredients, and performance implications of interorganizational guanxi. We first develop a interorganizational guanxi construct and its developmental process which typically involves three key elements: interpersonal ganqing (i.e., emotional attachment) and two types of interorganizational renqing (favor), namely collaborative communication efforts and business support. The new interorganizational guanxi construct, along with its two key aspects, ganqing and renqing, lay the foundation for further study of organizational relationships in a transitional economy such as that of China.Based on transaction cost analysis and resource dependence, we further construct and empirically test a research model that relates environmental dynamism and dependence to the developing mechanisms of interorganizational guanxi, which, in turn, affects exchange outcomes, such as trading partners’ strategic and financial performances. We are particularly interested in the asymmetric effect of the antecedents and performance implications of interorganizational guanxi from the dual perspective of a channel’s downstream and upstream (i.e., manufacturers and distributors). We test our model through an empirical, longitudinal examination of matched samples from Chinese manufacturers and distributors.Our parsimonious model of the developmental process of interorganizational guanxi provides revealing theoretical insights into the dynamic nature of the formation of interfirm relationships. For channel managers doing business in China, our study will provide a broader and deeper understanding of the driving forces behind interorganizational guanxi, which, in turn, will help them design effective strategies to achieve superior performance.