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ABSTRACT. One of the hot research topics today is relationship marketing. However, little research has been carried out in understanding the complex concepts of Guanxi (relationship) in a Chinese society. This research describes a study to operate the constructs of guanxi and explores the importance of guanxi in relationship development in order to present a new Guanxi framework. A study of both Western and Chinese literature provides foundations of the Guanxi perspectives. The constructs of adaptation, trust, opportunism and favour are identified. Adaptation and trust are found to be positively correlated with sales stability and quality. Whilst, adaptation is negatively correlated with relationship termination costs. Both theoretical framework (a new perceptual map) and managerial implications are given. In addition, recommendations for future research are made.
Introduction
The development of marketing and business ethics relies on the generation of theoretical framework, ideally supported by empirical tests. However, most business framework (e.g. transaction cost analysis) have been criticised by Cooksey (1995) as often being validated within non-representational context as well as being overly simplistic in structure. The constraints and patterns of psychological and social systems are also occasionally ignored.
Most research, particularly empirical studies, require a context-laden approach. Being a high context culture, China needs to be understood within its own context. Much of the existing research has mainly been conducted within a Western context. The results from such studies cannot be easily generalised to a Chinese high context environment. Guanxi, which is a major influence within a Chinese society, is not fully understood and is perceived to be one of most controversial research topics.
Davies (1995) defined guanxi as "the social interactions within the network place and its members in the equivalent of an infinitely repeated game with a set of people they know." These repeated favour-exchanges ensure a measure of trust among the members of the guanxi network. This, in turn, tends to minimise the risk of uncertainty and the inflexibility of asset-specificity. How can we explain the guanxi concept from various perspectives?
There are generally three new major theoretical explanations of guanxi: (1) the product of Chinese favouritism and conflict/harmony dichotomy or dilemma because of institutional weakness; (2) an efficient network mechanism on account of the poor development of property rights and contract...