When does guanxi bolster or damage firm profitability? The contingent effects of firm- and market-level characteristics

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Original languageEnglish
Pages (from-to)561-568
Journal / PublicationIndustrial Marketing Management
Volume40
Issue number4
Publication statusPublished - May 2011

Abstract

This paper advances that a nuanced approach is necessary to understand the effectiveness of managerial ties (guanxi) in improving firms' financial performance. We take a contingency approach to examine how the effects of managerial ties on performance may be moderated by firm-level factors (i.e., firm age and entrepreneurial orientation) and market-based forces (i.e., demand uncertainty and technological turbulence). Using a survey of 289 firms in China, we find that managerial ties are more salient with regard to enhancing performance for more entrepreneurial-oriented and younger firms. Managerial ties fail to provide performance benefits to firms when high demand uncertainty exists or when the level of technological turbulence is high, which suggests a performance limitation of established ties with government officials, buyers, suppliers, and competitors. The theoretical and managerial implications of the findings are further discussed. © 2010 Elsevier Inc.

Research Area(s)

  • China, Guanxi, Managerial ties, Technological turbulence, Uncertainty