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Questioning guanxi: definition, classification and implications

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  • Fan, Ying

Abstract

Despite the growing interests among both academics and practitioners in the west, the concept of guanxi is not much questioned and there is considerable confusion about its implications for business. This paper explores the nature of guanxi by using a multiple definition approach. It defines guanxi as the process of social interactions and argues that the existence of guanxi base (special relationship) does not produce guanxi. The paper classifies guanxi into three categories: family, helper and business; and critically examines the role of guanxi in business. The paper has drawn up some important conclusions. (1) The potential benefits of guanxi are mainly tactical rather than strategic. (2) Guanxi, as a personal asset, cannot be a source of competitive advantage. (3) The guanxi between a businessperson and a government official is inherently corrupt and ethically questionable. (4) As guanxi has an impact on the wider public, it should be studied in the context of all stakeholders. (5) It is more than likely that guanxi's role in business will eventually diminish as China moves towards an open market system.

Suggested Citation

  • Fan, Ying, 2002. "Questioning guanxi: definition, classification and implications," International Business Review, Elsevier, vol. 11(5), pages 543-561, October.
  • Handle: RePEc:eee:iburev:v:11:y:2002:i:5:p:543-561
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    References listed on IDEAS

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    1. Yau, Oliver H. M. & Lee, Jenny S. Y. & Chow, Raymond P. M. & Sin, Leo Y. M. & Tse, Alan C. B., 2000. "Relationship marketing the Chinese way," Business Horizons, Elsevier, vol. 43(1), pages 16-24.
    2. Steve Lovett & Lee C Simmons & Raja Kali, 1999. "Guanxi Versus the Market: Ethics and Efficiency," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 30(2), pages 231-247, June.
    3. Pearce, John II & Robinson, Richard Jr., 2000. "Cultivating Guanxi as a foreign investor strategy," Business Horizons, Elsevier, vol. 43(1), pages 31-38.
    4. Alston, Jon P., 1989. "Wa, Guanxi, and Inhwa: Managerial principles in Japan, China, and Korea," Business Horizons, Elsevier, vol. 32(2), pages 26-31.
    5. Standifird, Stephen S. & Marshall, R. Scott, 2000. "The transaction cost advantage of guanxi-based business practices," Journal of World Business, Elsevier, vol. 35(1), pages 21-42, April.
    6. Yi, Lee Mei & Ellis, Paul, 2000. "Insider-outsider perspectives of Guanxi," Business Horizons, Elsevier, vol. 43(1), pages 25-30.
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