Guanxi as a governance mechanism in business markets : Its characteristics, relevant theories, and future research directions

With a growing interest in doing business in a Confucian society, scholars and managers have given much attention to Guanxi as a governance mechanism. Yet, little has been known the unique aspects and the effectiveness of Guanxi-based governance. To address such gap, we specify three distinct aspects of Guanxi in a business setting. First, Guanxi is a fine balance among three key elements: qing (emotion or feeling), li (reciprocity) and liyi (utilitarian benefits). Second, Guanxi pertains to dynamic, interactive relationships at both individual and organizational levels. Third, Guanxi is unalterably linked to the concept of Guanxi-networking (or more precisely, quanzi). Based on these unique aspects, we argue that industrial marketing scholars can borrow theories from veracious disciplines and call for more effort in the empirical examination of the interactions among the three aspects of Guanxi-based governance, the efficacy of Guanxi-based governance, the developmental process of Guanxi networks, and the interactions of interpersonal Guanxi to organizational Guanxi. © 2010 Elsevier Inc.