Internationalization of Chinese Firms: What Role Does Guanxi Play for Overcoming Their Liability of Outsidership in Developed Markets?

This article explains how managers of Chinese firms can use guanxi when entering and expanding in developed markets. The empirical basis for the investigation is formed by interviews with 29 managers at 17 Chinese business‐to‐business firms internationalizing to Europe. The results generated are twofold. On the one hand, existing guanxi was largely irrelevant for initially entering the European market. On the other hand, Chinese firms managed to successfully overcome the liability of outsidership by building new guanxi‐like relationships with their Western business network partners after a certain period of time. Six propositions give insights on the process for Chinese firms to become insiders in the business networks of developed countries. The propositions were combined into two comprehensive models that give implications for future research and for management practice. © 2016 Wiley Periodicals, Inc.