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Network strength, transaction-specific investments, inter-personal trust, and relationship satisfaction in Chinese agri-food SMEs

  • Hualiang Lu
  • Shuyi Feng
  • Jacques H. Trienekens
  • S.W.F. Omta
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    Purpose – The purpose of this paper is to investigate the effects of network strength, transaction-specific investments and inter-personal trust on business relationship satisfaction for small-and-medium-sized enterprises (SMEs) involved in agri-food processing and exporting in China. Design/methodology/approach – Survey data collected from 80 agri-food SMEs in Jiangsu Province were used for empirical testing. The authors applied an ordered logit regression approach for model estimation. Findings – The results demonstrate that strong guanxi networks, high level of transaction-specific investments and inter-personal trust significantly contribute to a high level of relationship satisfaction for agri-food SMEs in China. In addition, inter-personal trust shows a moderating effect on the relationship between transaction-specific investments and relationship satisfaction. Practical implications – Business relationships play a critical role in the modern market environment. Relational arrangements (based on guanxi and inter-personal trust) should be further enhanced in order to yield satisfied business relationships for SMEs in China. Originality/value – The paper extends our understanding of relationship (guanxi) marketing, as well as marketing practices for agri-food SMEs in China.

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    Article provided by Emerald Group Publishing in its journal China Agricultural Economic Review.

    Volume (Year): 4 (2012)
    Issue (Month): 3 (October)
    Pages: 363-378

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    Handle: RePEc:eme:caerpp:v:4:y:2012:i:3:p:363-378
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    1. Nooteboom, B. & Berger, H. & Noorderhaven, N.G., 1997. "Effects of trust and governance on relational risk," Other publications TiSEM 8e83932e-064c-40e8-afe7-4, Tilburg University, School of Economics and Management.
    2. 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.
    3. Chenting Su & Zhilin Yang & Guijun Zhuang & Nan Zhou & Wenyu Dou, 2009. "Interpersonal influence as an alternative channel communication behavior in emerging markets: The case of China," Journal of International Business Studies, Palgrave Macmillan, vol. 40(4), pages 668-689, May.
    4. Calum G. Turvey & Rong Kong & Xuexi Huo, 2010. "Borrowing amongst friends: the economics of informal credit in rural China," China Agricultural Economic Review, Emerald Group Publishing, vol. 2(2), pages 133-147, May.
    5. Chao Chen & Xiao-Ping Chen, 2009. "Negative externalities of close guanxi within organizations," Asia Pacific Journal of Management, Springer, vol. 26(1), pages 37-53, March.
    6. Erin Anderson & Barton Weitz, 1989. "Determinants of Continuity in Conventional Industrial Channel Dyads," Marketing Science, INFORMS, vol. 8(4), pages 310-323.
    7. Hualiang Lu & Shuyi Feng & Jacques H. Trienekens & S.W.F. (Onno) Omta, 2008. "Performance in vegetable supply chains: the role of Guanxi networks and buyer-seller relationships," Agribusiness, John Wiley & Sons, Ltd., vol. 24(2), pages 253-274.
    8. Willem Ziggers, Gerrit & Trienekens, Jacques, 1999. "Quality assurance in food and agribusiness supply chains: Developing successful partnerships," International Journal of Production Economics, Elsevier, vol. 60(1), pages 271-279, April.
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