Guanxi and Conflict Management for Effective Partnering with Competitors in China

Abstract

Competitors are increasingly forming partnerships to improve their capabilities to respond to customers and solve problems. This study uses research on guanxi and conflict management to identify critical conditions that facilitate effective collaboration between competitors. It theorizes that a high level of guanxi promotes cooperative and reduces competitive approaches to conflict that in turn facilitate partnership effectiveness. Data were collected from 100 paired competitors, operating in many industries in Shanghai, China. Results from the structural equation analysis indicated that a high level of guanxi reduces a competitive approach to conflict that in turn results in partnership effectiveness. These findings were interpreted as providing support that a high level of guanxi and a reduced level of the competitive approach to conflict are foundations for effective collaboration between competitors in China and perhaps in other countries as well.

Guanxi GRX ( ganqing , renqing , xinren ) and conflict management in Sino-US business relationships

“…Second, by positioning GRX as conflict management tools and specifically discussing guanxi GRX's impact on reducing emotional and task conflict, this paper extends previous understanding of guanxi by exploring the effect of guanxi in reducing the dark side of Sino-US business relationships (Abosag, Yen, & Barnes, 2016). Furthermore, by investigating how the guanxi dimensions of GRX can be employed to reduce conflict in Sino-US business relationships, this paper sheds new light on conflict management in Sino-US business interactions (Wong & Tjosvold, 2010;. Finally, by revealing how length of employment and length of business relationships moderate the hypothesised relationships empirically, this paper extends previous understanding of guanxi by highlighting the mitigation of time when employing GRX to manage emotional and task conflict with Chinese counterparts.…”

“…Secondly, the existing guanxi literature tends to focus on discussing guanxi's impact on the socalled positive relational constructs, such as trust, commitment, cooperation and coordination Mavondo & Rodrigo, 2001;. Limited research attention has addressed how guanxi can be employed to manage the 'dark side' of business relationships, such as opportunism, conflict and uncertainty (Gu et al, 2008;Wong & Tjosvold, 2010;, overlooking the impact of guanxi on reducing the dark side of business relationships with Chinese counterparts.…”

“…Task and emotional conflict are chosen as the focal variables in this paper, considering their high occurrence and renowned impact in Sino-US business relationships (Su, Yang, Zhou, Zhuang, & Dou, 2009;Wong & Tjosvold, 2010;Zhuang, Xi, & Tsang, 2010). Furthermore, length of business relationships and length of employment are hypothesised as moderators of the GRX conflict management framework.…”

“…This is because Chinese firms practise and engage the Chinese guanxi principles during their interactions, even when dealing with international firms from dissimilar cultural backgrounds Buckley, Clegg, & Tan, 2006;Li, Zhou, & Shao, 2009). Hence, international firms are encouraged to understand the guanxi notion and to embrace guanxi practices when collaborating with Chinese counterparts (Wong & Tjosvold, 2010;, to promote business relationship effectiveness and performance.…”

Corporate governance and national institutions: A review and emerging research agenda

“…For example, Globerman et al (2011) argue that in Asia informal institutions are often more important than formal institutions. Research by Wong & Tjosvold (2010) focuses on the effects of informal links, or guanxi, between different organizations in China in the context of conflict management. Their results show the importance of the governance roles of informal social networks that link an organization with its external partners.…”