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

Abstract

"Guanxi" is a term in Chinese referring to the reciprocal nature of interpersonal relationships. Its attributes, which are specific to Chinese culture, have been the focus of recent literature. Whereas the impact of guanxi seems to be quite similar to that of general relationships, ties or connections, it is characterized by a number of different dimensions. In this paper, we studied 44 entrepreneurial companies in the pharmaceutical industry in China to examine these attributes in greater detail. We use a system dynamics model to simulate the influence of various guanxi variables -the strength, scale and structure of guanxi -on the development of entrepreneurial companies.

An exploratory study of Western firms’ failure in the Chinese market: a network theory perspective

“…Our results also show that although it is nearly impossible to establish a business in China without proper contacts, guanxi is changing and is emerging with a new paradigm. As Chinese culture becomes more open to international traditions, the concept of guanxi is evolving to a more cultural symbol rather than a business influence (Peng et al, 2016), and Westerners should be aware of that. Most of our interviewees highlight the increasing relevance of finding a suitable business partner, either in government or other Chinese businesses.…”

“…This paper suggests further research addressing the relevant topic of guanxi. As mentioned, the role of guanxi in China is changing, taking another format and evolving to a more cultural symbol rather than a business influence (Peng et al, 2016). Future research should focus on this topic, trying to understand this ongoing change and its implications.…”

“…If foreign firms want to build a strong relationship in the Chinese market, it is essential to recognise the concept of guanxi and understand how Chinese people perceive relations (Buttery and Wong, 1999). However, recent research has pointed out that guanxi may be changing (Peng et al, 2016), with researchers also describing guanxi as a system of corruption that treats partners in a particular way (Zhang and Gill, 2019).…”

“…Establishing an excellent foreign-Chinese relationship is essential, and it might even be considered a significant attribute when doing business in China. Moreover, as Chinese culture becomes more open to international traditions, the concept of guanxi is also evolving to a more cultural symbol rather than a business influence (Peng et al, 2016). According to most of the interviewees, the role of guanxi in China is changing, taking another format and international companies doing business in the Chinese market must take this into account.…”

Network Properties of a Typical Self-employment Agglomeration

“…In China, the premise of people's business communication is based on "guanxi", the deep connections fostered by long-term daily communication and reciprocal interests (Peng et al, 2016). For the self-employers, they cannot afford the heavy burden to keep frequent communications only for satisfying business requirements.…”