Does Guanxi really matter: How it influences MSMEs in Mainland China - Dissertation Example

” Staring with a review of traditional definitions and similar themes of other countries, the discussion will be followed by comparisons and analysis on the results of case studies and informal interviews. By summarizing the works, an attempt has been made to conclude some strategies for MSMEs to build and maintain Guanxi finally. Contents Introduction 4 Literature Review 7 Importance of Guanxi 7 Guanxi in Foreign Terms 14 Theory and Hypothesis 17 Methodology 18 Results and Analysis 19 The Question Responses 21 Discussion and Conclusion 23 Appendix: Survey Questions 26 References 28 Introduction In this introductory chapter, we state the background of the chosen topic.

Further, we expound the problem formulation and followed with the aim of the study. The chapter ends with an explanation of the study’s delimitations. Background Since China has been a member of WTO (World Trade Organization) as of late 2001, many foreign investors have sought ways to enter this ‘vast potential market’. Based upon the actual situation in China, Guanxi which refers to relationships and social norms is important aspect of the Chinese institutional profile arguably leading to a totally different entrepreneurial oriented behavior.

Guanxi, described as the most basic dynamics of personalized networks and relationships, is a central idea in Chinese society and commercial life. Thus, there has been increasing interest in understanding this kind of long-term relationship in doing businesses within Chinese context. The Chinese word Guanxi, pronounced as ‘gwan-shee,’ describes ‘art of relate’, likes a type of magic in business operations. Although a number of businessmen and researchers view the Guanxi network as an ‘emotional desire for the pursuit of personal interest, or as an "under-table" type of corruptive behavior’ (Wong, 1998) concerned with bureaucratic corruption, many empirical studies prove that Guanxi is an important business network that has contributed a lot in achieving business success in ‘Confucian’ societies, especially in China.

For instance, Wright et al. (2002) argued that Guanxi was the only factor which was consistently chosen as a key success factor in doing business amongst the 11 core factors. By talking about this, I want to figure out what is the essence of Guanxi and its different uses within business structures. Problem definition and discussion Nowadays, though numerous researchers have devoted many efforts in analyzing its influence on business operations of mainly multinational corporations (MNCs), there is little theoretical basis for micro-, small-medium enterprises (MSMEs).

However, as many research projects have mentioned, MSMEs are playing as a growth engine to the global economy, especially to the emerging markets. Moreover, according to the favorable policies guided by policy-makers in China, the MSME is exactly the major sector in the field of support, and the entrepreneurship of college students are the mainstream in this area. In actual situations in China, most of the MSMEs are privately-owned firms, but this kind of organization usually is more dependent on ‘personal network’ (Guanxi) as a substitute for formal institutional support.

As suggested by Dunfee and Warren (2001), this type of social network is Guanxi. On the other hand, some researchers (Clegg et al 2007, Guthrie 2002)