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Crossing Boundaries: Guanxi and Social Networks

Social Network Illustration

Guanxi is one of the most talked-about aspects of doing business in China. But what exactly is it, and how does one cultivate it? On one level it is about personal connections but, as researchers have been showing, it is also much more than that. Guanxi applies to multiple social situations and in a changing China, it too is changing.

Professor Bilian Sullivan in the Department of Management has been studying guanxi and she shared the latest findings at a Business Insights luncheon. She has been involved in research that studies guanxi from a social network approach – that is, in terms of the patterns and structures in relationships and the contents of interactions between people—and found certain aspects in social relationships in China that are different from other countries and could come under the umbrella of guanxi.

One study looked at social networks at the overseas branches of one company, focusing on the US, Germany, Spain, and Hong Kong (representing a Chinese society).

“Our theory in a nutshell was that all work relationships reflect the cultural template of the society they are in. So how people connect in the workplace really reflects cultural values and norms,” she said.

They found support for the idea that Confucian values and respect for supervisors dominated interactions in Hong Kong, “market transaction” and efficiency dominated relations in the US, legalistic concerns, and rules dominated in Germany, and affiliative relationships dominated in Spain.

“In a Chinese setting, the greater proportion of instrumental exchanges was focus on super-ordinates. This is a filial relationship taking place, a vertical relationship, and it means that a lot of information and resource-seeking is focused on the supervisor. You don’t observe this in other cultures,” she said.

Americans, on the other hand, had more short-term instrumental ties, suggesting they got what they needed and moved on, and less overlap of informal ties. Germans in the workplace were more oriented to adhering to rules and discussing job-related topics. Spaniards spent more time on friendships and discussing non-work related topics.

This social network approach was only the first step towards understanding guanxi. Another study by Professor Sullivan looked at “felt obligation” between employees – the idea that if someone in your network provides you with resources, you feel obliged towards them.

Comparing American and Chinese companies, she found that while employees in both cultures experienced felt obligation, it was experienced differently in China—it had an affective orientation meaning it was characterised by emotional feelings towards the other person rather than the transactional nature of American felt obligation.

“This seems to suggest affective components are more important for Chinese relationships, which might be related to the concept of guanxi,” she said.

A unique characteristic of guanxi is renqing, which Professor Sullivan has also started to look at in a small preliminary study. Renqing is like a combination of guilt and obligation. Surprisingly, she found renqing made people more creative because, by helping their colleagues, they received in return more information and resources to work with. “This is something we are trying to tap into that is unique to guanxi,” she said.

But she cautioned that these approaches, rooted in social network theory, had limitations for understanding guanxi. For instance, social network theory focuses on groups within boundaries, such as a workplace. Guanxi is not so easily contained. Professor Sullivan cited the example of someone from her hometown in China whom she barely knows calling her up and expecting her help.

“You have to have renqing to help this person. This easily goes beyond the boundary social network approach,” she said.

Guanxi is also not restricted in the types of relationships it covers, ranging from two people to an entire network.

So how can companies gain from these insights? Professor Sullivan cautioned against pigeonholing guanxi as either Chinese or universal. “I think it is relationships ‘with Chinese characteristics,’” she said.

She also noted that the nature of guanxi in the workplace is changing very fast. While gift-giving is very common in China to show gratitude and build up relationships, more and more top managers are not engaging in it.  Moreover, “what you do, what you know and what you can provide are becoming more important than who you know or where your family is from,” she said.

Finally, she advised multinational companies from thinking that guanxi can be developed by coming in a throwing a party. “This kind of blunt instrumental approach does not work and often backfires. People think you’re just a party-giver, they don’t take you seriously. Building up a relationship takes time”—time that should be spent building up trust not only with the government officials a company deals with, but with the communities in which they operate.

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