GuanxiDynamics and Entrepreneurial Firm Creation and Development in China

Abstract

Guanxi networks are critical for achieving entrepreneurial success in China. Informed by the literatures on network‐based entrepreneurship and guanxi, this study used a multiple‐case method to examine the development of Chinese entrepreneurs' guanxi networks in the entrepreneurial process. Data induction based on within‐ and cross‐case analyses of six entrepreneurial firms revealed three major findings. First, guanxi network dynamics in terms of network structure, governance mechanisms, and network content change systematically across the stages of the entrepreneurship process. Second, the usefulness of guanxi ties (such as family, business associates, or government officials) is contingent on the stage of the entrepreneurial process as well as on industrial‐level factors. Third, in knowledge‐intensive industries, cultivating and maintaining guanxi can be achieved through knowledge and information exchange rather than traditional gift‐giving or favours. The overall conclusion is that guanxi is still of paramount importance for Chinese entrepreneurs in the midst of China's transformation from a centrally planned to a socialist market economy. We propose a stage model of guanxi network development in the entrepreneurial process and discuss implications for future research.

Can High-Tech Ventures Benefit from Government Guanxi and Business Guanxi? The Moderating Effects of Environmental Turbulence

“…Furthermore, they suggested that guanxi can be regarded as a strategic tool which can increase the efficiency and effectiveness of doing business in China. In the field of entrepreneurship, Guo and Miller's (2010) [2] work suggested that guanxi connections play a significant role across entrepreneurial processes. First, during firm creation, guanxi ties with family members and relatives may provide initial funding or psychological support for entrepreneurs [4].…”

“…For instance, Guo and Miller [2] found that new ventures with good guanxi with the government may enhance their ability to access entrepreneurial resources and be more confident in doing business in China. Using a sample of 55 biopharmaceutical high-tech firms in China, Wang and Lestari [26] precisely pointed out that government guanxi is positively related to market entry success because the Chinese government "has the authority to approve projects, allocate resources, and arrange financing and distribution."…”

“…However, doing business in China often needs to focus on "whom you know" and "who can help you", indicating that firms need to invest resources in developing and maintaining effective formal or informal connections with appropriate individuals or organizations [1][2][3][4]. Such connections or ties are referred as "guanxi", which consists of "guan" (gate) and "xi" (tie).…”

The contrasting strategies of owner-managed and foreign-engaged joint ventures under market socialism in China

“…Despite that recent policy changes have formalized the legitimacy of private ownership and publicly ordered that it be treated on the same basis as state-owned enterprises, state banks are still reluctant to give them loans (The Economist, 2002;Yang, 2002;Guo and Miller, 2010;He, 2009). This inhibits the opportunity for these entrepreneurs to invest in new technologies, to innovate and to fully exploit emerging market opportunities.…”

The changing role of guanxi in influencing the development of entrepreneurial companies: a case study of the emergence of pharmaceutical companies in China

“…The characteristics of these personal networks are the very reason guanxi has been such a necessary and important factor of production in the Chinese economy. A growing number of studies have shown that it is unavoidable for Chinese companies' entrepreneurial activities to be imbedded in a guanxi network Yeung and Tung 1996;Yu et al 2013;Guo and Miller 2010;Liao and Sohmen 2001;Yang and Jiang 2010;Arribas et al 2012;Puffer et al 2010;Lovett et al 1999;Yang and Wang 2011).…”