This article reveals a managerial issue that multinational corporations (MNCs) in China are at a strategic crossroad where their employees are competing with the same sources of guanxi networks for different business deals simultaneously.
Triggered by a real company case in China and guided by a literature review on business guanxi, the author bridged them into a specific inquiry, as little was known and should be further examined.
The author identified a paradoxical/applied scenario in MNCs between the use of guanxi and overall firm performance damaged by overusing it.
Empirical studies are deemed necessary to seek more understanding between the role of guanxi and MNCs in China.
Guanxi is not a straightforward guarantee of business achievements in China. Management should note the influence of its actors – own employees – who can potentially diminish the positive returns of guanxi on overall firm’s achievements because of non-obvious interplays among employees and “contacts” on the overlapping guanxi networks. The larger the organisation, the higher the risk is.
This article proposes a new line of thoughts for practitioners about the effect of business guanxi on overall firm performance and serves as a starting point for academics to explore empirical research. The concept of overlapping guanxi networks is institutionalised and discussed. A three-step rule is also suggested for MNCs as a basic solution.
Tam, S. (2016), "From understanding business
Emerald Group Publishing Limited
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