Guanxi practice and Chinese buyer-supplier relationships: The buyer's perspective

This study explores the different effects of guanxi practice on Chinese buyer-supplier relationships in the initiation and the maintenance stages during the buyer-supplier relationship lifecycle. Using survey data collected from the retail industry in China, we find that retailers perceive varying buyer-supplier relationship behaviors in these two relationship stages and, accordingly, guanxi practice exerts opposite effects on retailer satisfaction. Specifically, during the relationship initiation stage, guanxi practice is negatively related to retailer social satisfaction and commitment. However, during the relationship maintenance stage, guanxi practice is positively related to retailer economic satisfaction. The results from this study provide suppliers with managerial implications on when to and when not to practice guanxi in China.     

The measurement of guanxi: Introducing the GRX scale

This study posits and examines a measurement scale for measuring guanxi based on three Chinese relational constructs - ganqing, renqing and xinren. Focusing on Anglo-Chinese buyer-seller relationships, the research reports the findings from six qualitative in-depth interviews and survey data obtained from over 200 Taiwanese trading companies. Based on exploratory and confirmatory factor analyses the findings from the final second-order confirmatory factor analysis of the guanxi model identified 11 items for measuring ganqing, renqing, xinren and guanxi respectively. The results offer a useful starting point in order for business practitioners to assess their guanxi and at the same time provide academics with a scale for operationalizing the measurement of guanxi.     

Power, conflict, and cooperation: The impact of guanxi in Chinese marketing channels

This paper tests the impact of guanxi on behaviors among firms in a Chinese marketing channel. Guanxi is operationalized in this paper as emotional closeness and interactive state. We find that the emotional closeness between channel-boundary personnel of firms has a positive impact on their exercise of noncoercive power, a negative impact on their exercise of coercive power, and a negative impact on the perceived conflict between them. In addition, emotional closeness has an indirect but positive impact on perceived cooperation. Interactive state between the boundary personnel of two firms has a positive impact on a firm exercising noncoercive power and a negative impact on perceived conflict between them. At the same time, it is positively related to a firm exercising coercive power. This shows not only the significant influence of guanxi on a firm's channel behaviors but also the constructive effects of both emotional closeness and interactive state on marketing channel behaviors in China.     

Guanxi vs. relationship marketing: Exploring underlying differences

The present paper attempts to explore the underlying mechanism between Western relationship marketing and Chinese guanxi by examining the construct equivalence of the two concepts. First, it distinguishes guanxi from relationship marketing in terms of the personal and particularistic nature of the relation. Second, it differentiates trust from xinyong, its counterpart in Chinese, based on a comparison of their roles in relationship building and maintenance. Third, it discusses the unique meaning of renqing, which is proposed as an underlying mechanism that guides behavior norms in guanxi and a mediator between trust or xinyong and long-term orientation. Finally, it concludes by discussing the managerial implications for international marketers who wish to succeed in the Chinese business market and the importance of adapting Western relationship marketing principles to guanxi marketing.     

The many faces of trust and guanxi behavior: Evidence from marketing channels in China

This study examines how a trusting relationship influences firm boundary agents' guanxi behavior which involves saving face (wei hu mianzi), and affect investment (ganqing tou zi). At the individual level, we decompose trust into its competence and goodwill forms and examine their relative and interactive effects on guanxi behavior. A study conducted among 354 Chinese purchasing managers reveals that both competence trust and goodwill trust promote guanxi behavior, and these two types of character trust are substitutive for each other in terms of motivating the use of guanxi. At the firm level, calculative trust directly affects guanxi behavior and also negatively moderates the effect of competence trust on guanxi behavior. These results imply that calculative trust may substitute for competence trust in facilitating economic transactions and thereby reduce the use of guanxi in business interactions.     

The role of renqing in mediating customer relationship investment and relationship commitment in China

There is a growing research interest in guanxi marketing, which has been considered the Chinese version of relationship marketing. However, very little empirical research has investigated the implicit nature of renqing, the underlying mechanism that explains the cultivation and maintenance of guanxi. This study examines the role of renqing in mediating customer relationship investment and relationship commitment in the insurance industry. The authors surveyed 245 car insurance policyholders in China. The findings confirm the mediating role of renqing in such relationships and show that renqing explains a very high proportion of the variance in levels of customer relationship commitment. This result offers valuable insights and suggestions as to how to increase levels of customer relationship commitment in China.     

An examination of the influence of guanxi and xinyong (utilization of personal trust) on negotiation outcome in China: An old friend approach

Managers of multi-national enterprises (MNEs) are at a disadvantage in negotiating outcomes with their Chinese counterparts when compared to local competitors. The reasons include: local competitors are more flexible in handling business terms and conditions; local Chinese managers prefer to negotiate with their old friends or insiders in the same guanxi network; and MNE managers perceive that cultural practices such as gift-giving and guanxi are problematic. This study advances our understanding of negotiation by using a model developed for the reference of MNEs to establish an “old friend” relational status with their local Chinese counterparts. This approach emphasizes cultural adaptation for MNE managers to achieve satisfying negotiation outcomes in China.The study reveals the following unique issues: 1) in addition to their problem-solving attitude, MNE managers should practice mianzi and gift-giving to build renqing with their Chinese counterparts at a new friend stage; 2) the reciprocity dynamics of renqing should enable these managers to accumulate ganqing and to become old friends of their Chinese counterparts; 3) the establishment of ganqing between MNE managers and their Chinese counterparts should enable the development of xinyong between the two exchange parties; and 4) desirable negotiation outcomes can be built on xinyong.     

Manufacturer-supplier guanxi strategy: An examination of contingent environmental factors

While guanxi is a cultural norm in China, the development and maintenance of guanxi can also be viewed as a business relationship management strategy that is leveraged by organizations in response to environmental conditions. The current research proposes that participation in guanxi is not equal to actively pursuing guanxi as a business strategy. Rather, firms respond to external environmental factors through guanxi management. Drawing on contingency theory and based on the perspectives of a China-based manufacturer respondent sample, a conceptual model of environmental factors that influence manufacturer-supplier guanxi is proposed and tested. The results indicate that supply and demand market uncertainties and legal environment complexity significantly affect levels of manufacturer-supplier guanxi, and that guanxi influences the use of non-coercive power by manufacturers. Contrary to expectations, manufacturer dependence on a major supplier did not influence levels of guanxi. The study findings and their implications extend current knowledge of inter-organizational guanxi and its influence on business-to-business relationships.     

The significance of trust and renqing in the long-term orientation of Chinese business-to-business relationships

While business relationships with China are receiving increased attention in both practitioner and academic discourse, very little empirical work however, has been undertaken to isolate and examine measures that focus on business-to-business relationships, and as such, research in this area is somewhat scant. In an attempt to bridge this gap, and add to the knowledge in this emerging discipline, the research aims to develop a conceptual framework to explore the relationship between trust and the long-term orientation in Chinese business-to-business market relationships. Based on a survey with Hong Kong companies that have a buyer-seller relationship with Chinese companies, the empirical findings indicate the mediating role and significance of ‘renqing’ for enhancing trust and contributing towards the long-term stability in relational exchange. The results highlight several implications for practicing managers to consider when aiming to establish and develop relationships in a Chinese business-to-business context.     

Formation and evolution of buyer-supplier relationships: Conceiving dynamism in actor composition of business networks

This study investigates the tenability of the position that business networks are relatively stable, based on long-lasting inter-firm relationships with limited substitutions of incumbent actors. This is done via a longitudinal analysis on the actor composition evolution with regard to the supplier networks around two car assembly plants. Based on the overall empirical findings, the study concludes that the phenomenon of supplier substitution may be a more widespread reality. Consequently, the article finishes with a series of business implications and recommendations on how to investigate and conceive this matter more thoroughly.     

Diverging expectations in buyer-seller relationships: Institutional contexts and relationship norms

Many firms assume that outsourcing partnerships may allow them to strengthen their overall competitiveness. Lured by its intuitive appeal, several enter into such partnerships, only to realize that they represent a marginal rather than a magical solution to their quest for increasing market performance. An important reason for this is the diverging beliefs and expectations held by both parties in the buyer-seller dyad. The purpose of this contribution is to develop a framework for understanding the divergences in expectations and relationship norms in cross-cultural business relationships among SMEs. We discuss four relational expectations derived from the B2B literature on relational norms for addressing these divergences: Quality, frequency and scope of communication, role specifications and coordination of work nature of planning horizons, and trustworthiness and link these to relationship performance. We explore the proposed impact of diverging relationship norms on relationship expectations using data from an ongoing field study of Danish buyers and Chinese suppliers. We link these diverging expectations to the business practices of Danish buyers and Chinese and their institutional contexts. In the concluding part of the paper, we discuss our findings and outline implications for management and academia.     

Role conflict and ambiguity confronting transnational business networkers: Contrasting social stigma and relational risks for Chinese and Western boundary spanners

Our research explores the role conflict, ambiguity and resulting social stigma and relational risks that transnational B2B networkers face when facilitating the formation of new exchange dyads between firms from distinct and distant cultures, i.e. Chinese and Western. We integrate literature from institution theory and role theory to establish the comparative framework. This allows us to explore: (1) what stigma and relational risks guanxi brokers assume when facilitating transnational business connections; (2) if Western brokers encounter similar stigma and negative consequences that threaten their professional standing and the formation process; and, (3) the lessons from both that transnational firms can learn and incorporate into best practices. We conclude our paper with managerial implications and suggestions for further research.     

On the proportionality of EU spatial ex ante coexistence regulations: A comment

In their recent article in this journal, Demont et al. (2009) discuss the effects of alternative spatial ex ante coexistence regulations (SEACERs) in the context of the EU regulatory framework. We retain from Demont et al. (2009) that small pollen barriers should be considered as a possible regulatory option in all identifiable situations in which they are as effective as large isolation distances. This idea is in accordance with the proportionality principle of the 2003 EC Recommendation. But further analysis of how consumer choice and consumer welfare are affected should be conducted before supporting the idea that SEACERs should be flexible, that is that GMO farmers should always have the option of paying their non-GMO neighbours to implement the SEACERs in their own fields. We reject the authors’ argument that pollen barriers are necessarily more easily negotiable among neighbours (more “flexible”) than are isolation distances. We contest the relation of proportionality to the size of market signals for IP products. We contest the idea of shifting coexistence regulation from ex ante to ex post. We believe that any economic analysis of coexistence measures should include their welfare effects on consumers as well as on producers.     

Covalence and ionic bonding in business-to-business relationships: Insights from chemistry

The paper examines business-to-business (B2B) relationships using the framework of the covalence-ionic bonding theory in chemistry as an analogy to help make soft phenomena and relationships in B2B marketing more understandable to engineers and scientists in organizations and to managers with scientific and technical backgrounds. In the tradition of cross-fertilization of various scientific fields, the authors propose that the covalence-ionic bonding theory may provide insights in determining the factors that contribute to the emergence of bilateral, unilateral, and market relationships. This study compares and contrasts interparticle bonding with ways of managing B2B relationships. Beyond sheer analogy of the two phenomena, an explanation of B2B relationships and decision-making mechanisms is proposed. In adapting this concept theoretically, the meaning of the original parameters in physical science is assigned a new meaning in the marketing context. Furthermore, the paper extends conceptually the predictive capabilities of chemistry theories to relational behaviors in marketing. Drawing from a resource-based view of the firm, complementarity of resources and dependence levels are postulated to have critical roles in business bonding. Appropriate propositions are advanced, along with implications for managers and researchers.     

Emotions, trust and relationship development in business relationships: A conceptual model for buyer-seller dyads

Existing research on buyer-seller relationships has focused on the role played by trust in shaping the dynamics of interpersonal interaction between the buyer and the seller. While this is undoubtedly an important variable in governing the interactional dynamics it is by no means the only variable. The paper begins by reviewing the existing literature on buyer-seller relationships. The role played by emotions is articulated. Finally, it is recognized that the emotions that emerge in a buyer-seller relationship do so at multiple levels. A model and propositions highlighting the impact of emotions on interpersonal relationships are developed. Illustrative cases are used to ground the propositions empirically.     

The coexistence of transaction and relational marketing: Insights from the Chinese business context

Transaction and relational approaches to marketing have been promoted as alternative forms but recent evidence suggests that they may coexist. We explore this in the context of China. If firms operating in a highly relational society, such as China, exhibit transactional behavior, these two approaches must be compatible. We argue that Chinese values give rise to business practices consistent with both transactional and relational perspectives. These are summarized in six propositions for research. Theory building and managerial practice could benefit from thinking in terms of how elements from the two perspectives can be brought together rather than remain as alternatives.     

Disaggregation and consolidation of imperfect quality shipments in an extended EPQ model

We consider a standard economic production quantity (EPQ) model. Due to manufacturing variability, a fraction P of the produced inventory will have imperfect quality, where P is a random variable with a known distribution. We consider a 100% inspection policy and further assume that the inspection rate is larger than that of production. Thus, all imperfect quality items will be detected by the end of the production cycle. For such an augmented EPQ model, we first derive the new optimal production quantity assuming that the imperfect quality items are salvaged once at the end of every production cycle. Then, we extend this base model to allow for disaggregating the shipments of imperfect quality items during a single production run. Finally, we consider aggregating (or consolidating) the shipments of imperfect items over multiple production runs. Under both scenarios we derive closed-form expressions for both the economic production quantity and the batching policy, and show that our desegregation/consolidation schemes can lead to significant cost savings over the base model.