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The Role of Personal Relationships for Doing Business in the GPRD, China – Evidence from Hong Kong Electronics SMEs

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  • Frank Bickenbach
  • Wan-Hsin LIU

Abstract

This paper investigates the role of personal relationships for doing business in the Greater Pearl River Delta, China. First, it discusses the interplay of formal and informal (relationship-based) institutions from the point of view of institutional economics, with a focus on economies with weak formal contracting and property rights institutions. Second, it describes the institutional environment for doing business in China, and in the PRD in particular. Third, it uses data obtained from a survey among executives of Hong Kong electronics SMEs with business operations in the PRD to gain insights into their perceptions on the importance and the motives of using personal relationships for business in PRD in general, and on the impact of personal relationships on different strategic business decisions (on location, partner, and formal governance structures) for companies’ production as well as innovation activities. The results confirm the importance of personal relationships for doing business in the PRD, in general. There is evidence of substantial differences as to the role of personal relationships between production and innovation activities

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1589.

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Length: 60 pages
Date of creation: Jan 2010
Date of revision:
Handle: RePEc:kie:kieliw:1589

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Keywords: personal relationships; formal and informal institutions; production; innovation; China; company survey;

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  1. Takatoshi Ito & Anne O. Krueger, 1996. "Financial Deregulation and Integration in East Asia, NBER-EASE Volume 5," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number ito_96-1.
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  8. Daron Acemoglu & Simon Johnson, 2003. "Unbundling Institutions," NBER Working Papers 9934, National Bureau of Economic Research, Inc.
  9. L. Alan Winters & Shahid Yusuf, 2007. "Dancing with the Giants: China, India, and the Global Economy," World Bank Publications, The World Bank, number 6632, August.
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Cited by:
  1. Frank Bickenbach & Wan-Hsin LIU, 2011. "Firm Characteristics and Informal Governance of Business Operations in the PRD, China," Kiel Working Papers 1728, Kiel Institute for the World Economy.

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