The impact of Guanxi on Chinese managers' transactional decisions: A study of Taiwanese SMEs

Article type: Research Article

Authors: Chang, William Li^{a; *} | Lii, Peirchyi^b

Affiliations: [a] Tamkang University, Graduate Institute of Management Science, 151 Ying-Chuan Road, Tamsui, Taipei Hsien, 25137 Taiwan, R.O.C. Tel.: +886 2 86313221; Fax: +886 2 86313214; E-mail: 118888@mail.tku.edu.tw | [b] Tamkang University, Graduate Institute of Management Sciences and School of Entrepreneurial Development, Taiwan, R.O.C. E-mail: pclii@mail.tku.edu.tw

Correspondence: [*] Corresponding author.

Abstract: Guanxi is an important source of competitive advantage; managers in Chinese enterprises have especially placed enormous emphasis on it. The purpose of this study is to investigate the relationship between managers' initiative toward a Guanxi formation and their transactional decisions within the network. Findings of this study suggest that managers' initiative in setting up a Guanxi network has important impact on their perceptions toward members in the network; and in turn, the perception has an impact on their transactional decisions within the Guanxi network. More specifically, managers would employ relational mark-down and compensatory mark-up to differentiate Guanxi members from non-Guanxi members in making transactional decisions.

Keywords: Guanxi, relational mark-down, compensatory mark-up, transactional decisions

DOI: 10.3233/HSM-2005-24304

Journal: Human Systems Management, vol. 24, no. 3, pp. 215-222, 2005