Regional Bank–Industry Relations during the Mid-Nineteenth Century: Links between Bankers and Manufacturing in Sheffield,c.1850 to c.1885 1

This article examines the relationships between banks and manufacturing industry in mid-nineteenth century Sheffield. It investigates the knowledge base and connections of the banks' directors and assesses the extent to which Sheffield banks were part of a regional information network concerning both investment opportunities and potential borrowers' creditworthiness. The findings reveal that close ties existed between the bankers and their customers. These took a number of forms, from interlocking directorships to ownership of local firms. A financial/industrial network appears to have existed, facilitating information flows and business contacts of vital importance in the provision of finance to local manufacturers. Moreover, the banks examined appear to have preserved impartiality when dealing with manufacturing customers as a whole and, more importantly, those in which directors were involved.     

The color revolution

Our text does not intend to develop a history of French banks' Europeanisation, but instead to scrutinise the mentalities of French bankers, in order to determine whether they were confined to relationships with French business or embedded within networks of personal relations with their European colleagues. Did some French bankers follow a career more oriented\ towards international activities and were they involved in international travels? Were some bankers committed to designing European strategies and thereafter to implement them through a direct presence in those foreign countries? Did some bankers emerge as key managers of Europeanised strategies and what was their influence within their banking firms? Of course, answers will be relevant to the chronological stages, to assess, for example, whether the decline of the Haute Banque houses was unfavourable to Europeanisation, to analyse how the new joint stock banks adopted a Europeanised business model, and whether deposits banks and investment banks (banques d'affaires) reacted differently in response to Europeanised strategies and a new way of life.     

Embedded <Emphasis Type="Italic">guanxi</Emphasis> networks,market <Emphasis Type="Italic">guanxi</Emphasis> networks and entrepreneurial growth in the Chinese context

Entrepreneurial networks create an important entrepreneurial opportunity and facilitate resource acquisition. However, there has been little research on the correlation between the types of guanxi networks and entrepreneurial growth. This paper divides entrepreneurial/managerial networks into embedded guanxi networks based on social relationship and non-economic trade contracts, and market guanxi networks based on market negotiation. Hypotheses are proposed on how the embedded/market guanxi networks evolve with enterprise age and size. Data from 270 Chinese enterprises are used to empirically test the above classification and hypotheses. The results justify the new dichotomy for guanxi networks. It is also shown that, as an enterprise grows in age and size, its utilization of embedded guanxi network tends to decrease while its reliance on market guanxi network increases. In addition, as an enterprise grows in size and age, the impact of embedded guanxi network on enterprise performance remains significant, while the impact of market guanxi network keeps increasing.     

Stand by me: Friends,relationship banking,and financial governance in Asia

While northeastern Asian economies have grown at a stellar rate over the past 4 decades, during the same period, bank officials and financial market participants have been charged with corruption, nepotism, and government meddling and have incurred high levels of non-performing loans. The close relationships between financiers and their clients, a part of Chinese society known as guanxi, has often been criticized as a key source of corruption in Northeast Asia finance. However, the complex nature of relationships in guanxi networks brings a good side to Asian finance in that reputational risk disciplines financiers, clients, and government officials. I delve into the personal side of Asian finance using the theoretical poles of transactional and relationship banking. Transactional banking is a top-down, hard-data impersonal form of financial contracting, while relationship banking is a bottom-up interpersonal form of banking that relies on softer data. I argue that relationship banking, which naturally fits into an Asian context, could engender a shift from bad behavior to good behavior to protect wealth, reputation, and friends. Contrary to conventional wisdom, guanxi may lead to better governance in banking and other areas of Asian finance as more information becomes available through numerous media outlets and as groups outside the banking sector (e.g., insurance companies, the press, auditors, and citizens) discipline bankers and their clients through ‘private monitoring.’     

The influence of guanxi on physical distribution service quality availability in e-commerce sourcing fashion garments from China

The purpose was to investigate the influence of guanxi (personal relationships) on availability within physical distribution service quality (PDSQ) for sourcing high street fashion garments from China via e-commerce. The research reviewed articles on guanxi and although it is still widely considered important its contribution and nature appears to be changing as Chinese business practises and sourcing policy have matured over time. Qualitative research was used in two Chinese based case study companies with detailed access through semi structured face-to-face and telephone interviews. The findings suggest that personal relationships through guanxi can facilitate e-commerce availability of fashion product, particularly where there is limited lead time in the sourcing activity, although its form and application in each case study company and their respective supply network was not as widespread as had been previously reported. The form of guanxi was observed as personal relationships but some aspects of co-operative relationships were also found. Since the paper is based on a phenomenological ontology the findings are largely exploratory. Future research should focus on understanding physical distribution service quality and personal relationships in other sectors. Guanxi by definition is an unstructured array of socially-based relationships without a simplistic rationale or logic. By understanding how guanxi is applied in a supply chain management context will aid those practitioners involved in an e-commerce Chinese business practise.     

关系营销视角下的企业个人关系对策研究

在商务交往中,个人关系是一种双刃剑,既能够促进甚至决定顾客和企业关系的发展,又由于稳定性的缺乏或过于强调个人关系给企业带来风险。企业应客观认识个人关系的作用,加强基础管理工作和客户关系管理,完善客户档案,建立与顾客之间互动的关系网络,做好关键时刻的具体工作。同时,企业应采取措施,留住关键员工,促进个人关系向企业层面关系转化,促进和带动顾企关系的发展,实现企业的经营目标。     

Gender,Social Networks,and Entrepreneurial Outcomes in Tanzania

This article presents results of a study that investigates egocentric network differences between female and male entrepreneurs and their entrepreneurial outcomes in Tanzania. Based on a random sample of 272 micro-, small, and medium-size enterprises, the study reveals that female and male entrepreneurs have diverse networks. However, when compared to their male counterparts, female entrepreneurs' strong ties included more kin members. No significant gender difference in the composition of weaker ties was observed, suggesting gender differences in the choice of individuals with whom to have strong ties but not with whom to have weak ties. A significant gender difference in entrepreneurial outcomes at both start up and at the time of research was found, suggesting an antecedent networking behavior influence on performance.     

Bank Work Experience Versus Political Connections: Which Matters for Bank Loan Financing?

This paper examines how bank lending decisions are affected either by executives’ connections with banks, through their former banking experience, or by their political connections with governments, using a sample of bank loans granted to Chinese listed non‐state‐owned enterprises (SOEs) from 2003 to 2010. We find that bank loans are more closely related to profitability for firms with bank connections, while firms’ political connections weaken this relationship. We further find that the influence of bank connections is more significant for firms from less supported industries or less developed regions. Furthermore, firms with bank connections are less likely to become financially distressed after the initiation of their bank loans and experience higher future stock returns, while firms with political connections experience the opposite outcome. Overall, our results indicate that in the context of a relationship‐based economy like China, firms’ connections with banks create value by alleviating information asymmetry and improving banks’ lending decisions, while political connections result in capital misallocation and subsequent deterioration in performance.     

Social ties between SME managers and bank employees: Financial consequences vs. SME managers' perceptions

We investigate whether social ties between SME managers and bank employees affect SME access to lending, investment, growth and profitability. On the one hand, we examine the influence of social ties on financial indicators based on SME financial statements; on the other hand, we study the impact of social ties on SME managers' perceptions of their firms' main banks. Using a dataset from Poland, we find that social ties improve SMEs' access to bank financing and stimulate their investments. However, this positive impact occurs only when social ties involve bank decision-makers. In contrast, SME managers perceive all types of social ties with bank workers as valuable.     

The Joint Effects of Formal Institutions and Business Characteristics on Interfirm Guanxi in China: A Fuzzy Set Analysis

ABSTRACT

Purpose: This research intends to investigate the effects of formal market institutions on managers’ willingness to use personal networks, such as guanxi in China, for business success.

Methodology: We collect data from a major cellular phone manufacturer and its 277 retailers across China. We employ Fuzzy set Qualitative Comparative Analysis (FsQCA) to identify necessary conditions and causal recipes (combinations of antecedent conditions) for three elements of guanxi between boundary spanners (i.e., ganqing, information favor, and business support) and a firm’s operational performance.

Findings: We find that formal market institutions are not the sole factor influencing managers’ decisions on exercising guanxi practices and, in turn, achieving interfirm collaboration. We also find that there exists more than one causal recipe leading to each key element of guanxi between boundary spanners. The results also suggest that well-established formal market institutions would never be able to completely eliminate guanxi practices in China.

Originality: This paper is among the first to examine the joint effects of formal market institutions and key characteristics of interfirm relationships on the use of guanxi practices.     

Consideration of the Role of Guanxi in the Ethical Judgments of Chinese Managers

The importance of personal connections and relationships, or guanxi when doing business with the Chinese is widely acknowledged amongst Western academics and business managers alike. However, aspects of guanxi-related behaviours in the workplace are often misunderstood by Westerners with some going so far as to equate guanxi with forms of corruption. This study extends earlier study of Tan and Snell: 2002, Journal of Business Ethics 41(December), 361–384) in its investigation of the underlying modes of moral reasoning in ethical decisions relating to aspects of guanxi, amongst Hong Kong managers. Managers’ ethical judgements and underlying moral reasoning relating to a series of guanxi-related behaviours were recorded. Content analysis yielded categories that correspond with categories of moral reasoning described in Kohlberg’s (1969, Handbook of Socialization Theory and Research, Rand McNally, Chicago, pp. 347–480) model. As hypothesised, it was found that harsher ethical evaluations of guanxi-related behaviours were positively correlated with the stage of moral reasoning. The most common types of reasoning were those corresponding to Kohlberg’s stages four and five which relate to moral reasoning based on law and order, and on reason rather than emotion. Stage 6, concerned with more universalistic approaches to moral reasoning, was utilised considerably less, consistent with popularly held beliefs of the relativistic nature of Chinese ethics.     

Delivering Customer Satisfaction within the SME Client-Banker Relationship

The UK clearing banks, having significantly improved their customer service reputation in the UK SME (Small and Medium Size Enterprise) sector, may be revising their market position during the current recession. A survey of people starting a new business and bankers reveals that both ownerlmanagers and bankers feel the quality of the customer-bank relationship may have deteriorated. This situation has implications for both the availability of funds for new small business and the future strategies of the UK banks when servicing SME sector clients. A customer management model is proposed as a mechanism for classifying variution in ownerlmanager needs for financial service. The model is used to assess the nature of customer service which a bank may wish to provide to their different types of small business client.     

Can Western-Style Marketing Be Applied in Transitional Economies?

The authors report on research conducted to assess the marketing of personal banking products by Polish banks and determine whether Western developed marketing can be applied in transitional economies. The study comprised three parts: interviews with senior Polish bankers to identify strategies, a survey of front-line staff to determine whether strategies had been communicated and reinforced in the reward system, and a consumer survey to determine whether the strategies had successful outcomes. It finds that the concepts and tools of Western-style marketing can provide direction to bankers for strategy settings, but that successful implementation will depend on the adaptation of these concepts to the Polish context.     

The Effectiveness of Capital Regulation on Bank Behavior in China

This paper examines the impact that ownership and governance structures have on how Chinese banks react to regulatory pressure. We find that the current regulatory regime induces banks to increase their capital, but its effectiveness in doing so varies based on whether the bank is listed or not, and also who is the majority shareholder. We also find that the degree of central government ownership and the political ties the chief executive officer of the bank has play an important role in the risk‐taking behavior of banks. Overall, our results have a number of policy implications supporting the need to further reduce state ownership of banks in China to mitigate the prevailing moral hazard and dual‐agency problems that arise from the government being both the regulator and the majority shareholder.     

Interpersonal relations in China: Expatriates’ perspective on the development and use of guanxi

The literature on social networks identifies relationship building through guanxi as an effective way for Western organizations to reduce their liability of foreignness in China. Even though it is individuals rather than organizations who build these relationships, the focus in previous literature has been on organizational outcomes, and only a handful of studies have attempted to explain how expatriates perceive guanxi relations are built and maintained. To help address this issue, we conducted in-depth, semi-structured interviews with 36 Western expatriates working in China. Our findings suggest that guanxi is perceived to be an informal process that is used to build trust between individuals, which in turn can reduce the uncertainty around contract enforcement in China. We also find that the process for building guanxi between parties is initiated by the individual whose organization has less market power. Finally, the findings suggest that firms should be cautious if they elect to use agents as intermediaries to help connect to, and build relations with buyers and sellers.     

Surviving the transition: Central European bank executives’ view of environmental changes

Executives of ten large banks in three Central European transition economies were interviewed concerning their views of environmental changes. The study sought to identify environmental sectors that were important and uncertain for the bank executives. Central European bankers perceived customers, competitors, economic, and regulatory environmental sectors more uncertain than international and technological factors, sociocultural issues, and new entrants. We found that executives of banks with poor prior performance viewed environmental changes as threats rather than as opportunities.     

Political career concerns and bank lending in China

This study examines how politician's career concerns affect the bank loans using a sample of bank branches at the county-level in China. We use politician tenure to measure an important dimension of the politician incentives to intervene in the local economy, which is determined by their career concerns about perceived promotion probability. We find that there is a curvilinear relationship between politician tenure and bank loans (i.e., reversed U-shape). We also construct a promotion pressure index and document a positive relationship between this promotion index and bank loans. These results are more significant for banks located in counties with underdeveloped institutions or weak government capacity, and those with political ties. These results support the view that politicians have strong incentives to utilize local banks to promote local economic growth if it is also consistent with their private goals, especially in the environment with significant government ownership in banking systems.     

The Effect of Guanxi on Audit Quality in China

Two types of guanxi have a close association with auditor independence in China: firm-level connections derived from state ownership and personal connections developed through management affiliations with external auditors. This article examines the effects of these two types of connection and their joint effect on audit quality. We find that state ownership and management affiliations with the external auditor both increase the probability of receiving a clean audit opinion in China. Furthermore, the probability increment brought by management affiliations for non-state-owned enterprises (NSOEs) is greater than that for state-owned enterprises (SOEs). These results suggest that state ownership and management affiliations are two important types of connection that impair auditor independence, and that management affiliations are of greater importance to private-sector firms than to SOEs.     

A Stakeholder Approach to the Ethicality of BRIC-firm Managers’ Use of Favors

This article investigates the use of favors by managers of BRIC firms to accomplish business goals, the ethicality of which should be determined by the moral reasoning in these countries rather than from a developed country perspective. We define a favor as an exchange of outcomes between individuals, typically utilizing one??s connections, that is based on a commonly understood cultural tradition, with reciprocity by the receiver typically not being immediate, and its value being less than what would constitute bribery within that cultural context. This exchange normally takes place between and among members of networks, and may involve a network outsider contacted by a network insider on behalf of another insider. We see the giver and receiver of the favor, as well as network insiders and outsiders, as stakeholders. Additionally, society could also be considered to be a stakeholder since the practice of using favors generally inhibits the development of legitimate, strong formal institutions, since the use of favors in emerging economies is rooted in cultural traditions that we view as informal institutions. Furthermore, we assert that the practice of using favors can lead to bribery which harms society as a stakeholder both morally and economically. We posit that BRIC-country managers?? behaviors stem from informal, culturally based practices??jeito in Brazil, blat/sviazi in Russia, jaan-pehchaan in India, and guanxi in China. We utilize institutional theory to explain why favors are relied upon, and ISCT to support the argument that the use of favors in environments like the BRICs is generally considered ethical.     

Antecedents and characteristics of informal relation-based networks in Korea: Yongo,Yonjul and Inmaek

Although there has been a large amount written about Chinese Guanxi networks, a detailed debate concerning Korean informal relation-based networks is by comparison under-represented in the international business literature. This paper introduces and distinguishes between three forms of informal relation-based networks in Korea: (1) Yongo, (2) Yonjul and (3) Inmaek. Inmaek describes a social network in general, while Yongo networks draw primarily on existing kinship-, university/school- and regional origin-based ties. Contrary to Yongo ties, Yonjul ties exist for a purpose, often to secure personal gains and benefits. In all three forms, kinship-, university/school- and regional origin-based ties play primary, but not exclusive, roles. A better understanding of Korean informal relation-based networks helps contribute to the advancement of knowledge about the anatomy of informal institution, as well as to the growing field of indigenous management research, by identifying and analysing an influential contextual factor in Korea. In addition, it underlines important implications for management practices in Korea.