While entertainment activities in private business settings (i.e., business entertainment) are widely seen all over the world, issues about their prevalence have remained unresolved in the literature. This study takes an institutional approach to elucidate (1) the governance role of business entertainment in economic exchanges, (2) the mechanism through which business entertainment plays this role, and (3) the conditions under which business entertainment plays a greater role to facilitate economic exchanges. Our starting point is that economic transactions are governed through a combination of market rules, legal restraints, and social norms. We argue that business entertainment plays a governance role by boosting the power of social norms to regulate the behaviors of economic actors. As such, business entertainment should be more prevalent under the conditions where social fabrics are dense but market and legal infrastructures are underdeveloped. This governance approach provides a common ground to accommodate the positive versus negative views on business entertainment advocated by two camps of researchers in management, economics, and sociology. It also offers useful guidelines for policymakers to regulate, and for executives to manage, this prevalent but often misunderstood business practice.
This study takes a transaction governance institutional approach to predict firms' choice between relationship versus transaction marketing in China. Drawing on the literatures on relational versus discrete transactions and their respective governance institutions of social relational governance versus market mechanisms, the paper posits that firms can either practice relationship marketing to reinforce social relational governance to support relational exchanges, or launch transaction marketing to enhance the effectiveness of market mechanisms to promote discrete transactions. The paper further argues that such decisions are determined by institutional, industry, and firm attributes. Empirical results support these arguments which provide strong research and practical implications.
Purpose This paper aims to take an economic transaction governance approach to explore the determinants for the effectiveness of the social practice of client entertainment in facilitating business relationships in China. Design/methodology/approach The analysis is based on a broader theoretical framework which posits that exchange relationships are regulated through a combination of market, legal and social relational mechanisms and client entertainment plays a governance role by reinforcing social relational governance to regulate the behaviors of economic actors. Upon this framework, this study proposes that the social behavioral features of client entertainment affect the effectiveness of client entertainment in facilitating exchange relationships and that time moderates such effects. These hypotheses were tested on survey data collected from a sample of Chinese sales managers. Findings Empirical results indicate that the effectiveness of client entertainment in facilitating exchange relationships is associated with its social behavioral features that could reinforce social relational governance, including intensity (i.e. value and frequency) and format (i.e. intimacy and observability) of entertainment activities, and the time factor plays a moderating role. Practical implications This study can potentially help policymakers to regulate client entertainment, and business practitioners to manage entertainment spending, more effectively and efficiently without causing legal and ethical problems. Originality/value This is the first study that takes an economic transaction governance perspective to directly explore how the social practice of client entertainment plays a constructive role in China’s economic life and what factors affect its effectiveness in playing such a role. It offers guidelines for policymakers, business managers and future research to manage and study this practice.
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