Part of the Contributions to Management Science book series (MANAGEMENT SC.)


This introductory chapter lays out the scientific problem that mainly stems from the ubiquity of guānxì in China, or more precisely, from the fact that businesses interact in a mixed order of the guānxì system and a market economy. Subsequently, this topic will be put into the context of various academic disciplines, where the findings presented by Chinese and interna-tional researchers will also be discussed (Section 1.2). As recent research has not been capable of integrating guānxì and business, mainly due to methodological flaws, a detailed description of the specific structure in which the problem at hand is solved will be presented (Section 1.3).


Market Economy Business Strategy Meso Level Methodological Individualism Transaction Cost Theory 
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  1. 2.
    Note that an increasing average period of case latency (1980–1992: 1.4 years, 1998–2002: 6.3 years) blurs this picture (People’s Daily 2003).Google Scholar
  2. 5.
    The expression guānxìxué also denotes the “profound and improper method of using or seeking relationship for private benefit” (Ci Hai 2003).Google Scholar
  3. 7.
    The hesitance to re-establish sociology is also illustrated by the fact that it took another seven years for Fei’s classic text to become available to Chinese scholars in 1985. Fei had been attacked as a rightist during the Cultural Revolution (Cheng/So 1983: 471ff.).Google Scholar
  4. 8.
    This concept has its roots in transaction cost theory, i.e., “the study of economic organization [that] regards the transaction as the basic unit of analysis (...). Applications of this approach require that transactions be dimensionalized and that alternative governance structures be described. (...) The approach applies to both the determination of efficient boundaries (...) and to the organization of internal transactions” (Williamson 1981: 548). Basically, transaction cost theory goes back to Coase’s seminal work, “The Theory of Firm”, in which contract costs are included in the explanation of why “a firm emerges at all in a specialized exchange economy” (1937: 390).Google Scholar
  5. 10.
    The assumption that, in Chinese culture, the self is an independent entity and that individuals are aware of their goals and intentions, is disputed. Scholars like Fei Xiaotong (1992[1947]: 66) and Ho et al. (1991: 58ff.) deem methodological individualism inadequate for the analysis of social phenomena in China. Due to a lack of self-other demarcation, i.e., a clear-cut boundary between oneself and others, the Chinese are suggested to embody a relational self. Chinese scholars (e.g. Ho 1998: 3; He XM 2000: 20) thus propose the concept of methodological relationalism, in which the absolute units of analysis are interpersonal connections; also, according to Chen Junjie (1998: 99), relationalism is the Chinese “principle of social construction” (Open image in new window). The difficulty of maintaining this methodological perspective becomes apparent in the works of Hwang (e.g. 2003: 21), who actually contradicts himself when addressing the question of whether, in dispute resolution, individuals seek to maintain interpersonal harmony or insist on their personal goal. Also, if it was true that “in China’s collectivist culture, the ‘real’ decision-maker may be the network as a whole” (Davies et al. 1995: 213), methodological individualism in the narrow sense could not be used.Google Scholar
  6. 11.
    Inherent to explanations that explicitly draw on micro-macro transitions is the problem of reification, i.e., representing a human being as a physical thing deprived of personal qualities or individuality. Since, for instance, market exchange rates are a characteristic of the system—caused by dyadic exchanges—it can be valuable to construct systems as loop processes, and explain their behavior with interdependencies of individual actions (Coleman 1990: 28).Google Scholar

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© Physica-Verlag Heidelberg 2007

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