Guanxi (literally interpersonal connections) is in essence a network of resource coalition-based stakeholders sharing resources for survival, and it plays a key role in achieving business success in China. However, the salience of guanxi stakeholders varies: not all guanxi relationships are necessary, and among the necessary guanxi participants, not all are equally important. A hierarchical stakeholder model of guanxi is developed drawing upon Mitchell et al.’s (1997) stakeholder salience theory and Anderson’s (1982) constituency theory. As (...) an application of instrumental stakeholder theory, the model dimensionalizes the notion of stakeholder salience, and distinguishes between and among internal and external guanxi, core, major, and peripheral guanxi, and primary and secondary guanxi stakeholders. Guanxi management principles are developed based on a hierarchy of guanxi priorities and management specializations. The goal of this application of instrumental stakeholder theory is to construct, for Western business firms in China, a means to reliably identify guanxi partners by employing the principles of effective guanxi. These principles are described in the form of testable propositions that advance social scientific research in this area of international business ethics. (shrink)

In China, guanxi is the basis on which Chinese exchange a lifetime of favors, resources, and business leverage. Guanxi is considered a unique construct and a product of Confucian values and the contemporary political and socioeconomic system in Chinese society. With its cultural embeddings guanxi , as the social norm of conduct, functions as complex adaptive systems that expand and interconnect to become well-knit social networks; meanwhile the functions of well-fixing and self-reinforcement of the guanxi networks (...) ( chuens ) are synergetically activated internally, externally, and interactively, which shows their extreme flexibility of adaptation. Taking as a case study an outside direct investment (ODI) Taiwanese firm in China, we address and conduct a survey to examine the effect of guanxi on management. Results of the research suggest that guanxi is not limited to interpersonal links; it is also the switch that activates social networks and that reconciles interpersonal and internetwork mismatches to influence management efficacy. (shrink)

This paper explores expatriates’ ethical evaluations of and responses to guanxi in China through the lens of integrative social contracts theory. We conducted in-depth interviews with 14 expatriate managers who had spent, on average, 6.5 years working and living in China. Based on the content analysis of these interviews, we identified two different uses of guanxi: defensive and competitive. In general, the respondents found defensive guanxi moral in the Chinese context, while they considered competitive guanxi immoral. (...) Based on our findings, we identified fair competition as the substantive hypernorm that governed most respondents’ ethical evaluations of guanxi. The study has implications for all scholars who seek to utilize integrative social contracts theory to study the relationship between informal networks and corruption in developing countries. (shrink)

The importance of personal connections and relationships, or guanxi when doing business with the Chinese is widely acknowledged amongst Western academics and business managers alike. However, aspects of guanxi-rehted behaviours in the workplace are often misunderstood by Westerners with some going so far as to equate guanxi with forms of corruption. This study extends earlier study of Tan and Snell: 2002, Journal of Business Ethics 41 (December), 361-384) in its investigation of the underlying modes of moral reasoning (...) in ethical decisions relating to aspects of guanxi, amongst Hong Kong managers. Managers' ethical judgements and underlying moral reasoning relating to a series of guanxi related behaviours were recorded. Content analysis yielded categories that correspond with categories of moral reasoning described in Kohlberg's (1969, Handbook of Socialization Theory and Research, Rand McNally, Chicago, pp. 347-480) model. As hypothesised, it was found that harsher ethical evaluations of guanxi-vehted behaviours were positively correlated with the stage of moral reasoning. The most common types of reasoning were those corresponding to Kohlberg's stages four and five which relate to moral reasoning based on law and order, and on reason rather than emotion. Stage 6, concerned with more universalistic approaches to moral reasoning, was utilised considerably less, consistent with popularly held beliefs of the relativistic nature of Chinese ethics. (shrink)

"Guanxi" involves interpersonal obligations, which may conflict with other obligations people have that are based on general or abstract moral considerations. In the West, the latter have been widely accepted as the general source of obligations, which is perhaps tied to social changes associated with the rise of capitalism. Recently, Western ethicists have started to reconsider the extent to which personal relationships may form a distinct basis for obligation. In administration and management, salient bases for decision-Making include deontological, (...) consequentialist and personalist ethics. The first may be reflected in a bureaucratic approach, the second in a price system, and the third in arrangements like "guanxi". Each has positive and negative aspects, but problems arise when they lead to conflicting obligations, as may occur for an office holder who has some obligations based in deontological considerations and others based in personal relationships. This is a type of conflict of interest. Such conflicts have been considered in the West, and remedies proposed. Problems arise especially in cases where it is not clear how to prioritise different obligations, and this has been noted as a difficulty in the Chinese legal system. Questions that need to be answered include not only questions about how to deal with conflicting obligations, but also questions about what institutions to accept as giving rise to obligations. Institutions themselves may be problematic not only because of their consequences for economic productivity, but because they are internally incoherent, and this may be manifested in frequent conflicts faced by office holders. (shrink)

"Guanxi" involves interpersonal obligations, which may conflict with other obligations people have that are based on general or abstract moral considerations. In the West, the latter have been widely accepted as the general source of obligations, which is perhaps tied to social changes associated with the rise of capitalism. Recently, Western ethicists have started to reconsider the extent to which personal relationships may form a distinct basis for obligation. In administration and management, salient bases for decision-Making include deontological, (...) consequentialist and personalist ethics. The first may be reflected in a bureaucratic approach, the second in a price system, and the third in arrangements like "guanxi". Each has positive and negative aspects, but problems arise when they lead to conflicting obligations, as may occur for an office holder who has some obligations based in deontological considerations and others based in personal relationships. This is a type of conflict of interest. Such conflicts have been considered in the West, and remedies proposed. Problems arise especially in cases where it is not clear how to prioritise different obligations, and this has been noted as a difficulty in the Chinese legal system. Questions that need to be answered include not only questions about how to deal with conflicting obligations, but also questions about what institutions to accept as giving rise to obligations. Institutions themselves may be problematic not only because of their consequences for economic productivity, but because they are internally incoherent, and this may be manifested in frequent conflicts faced by office holders. (shrink)

. This paper explores the relationship between gift giving, guanxi and corruption through a study of the relationships between UK manufacturing companies in China and their local component suppliers. The analysis is based on interviews in the China-based operations of 49 UK companies. Interviews were carried out both with senior (often expatriate) staff and with local line managers who were responsible for everyday purchasing decisions and for managing relationships with suppliers. The results suggest that gift giving is perceived to (...) be a significant problem in UK-owned companies in China. However the relationship between these payments and established understanding of gift giving within guanxi-networks appears to be weak. Gift giving appears to be associated with illicit payments, corruption and the pursuit of self-interest. Firms seek to reduce the incidence of illicit transactions by changing staff roles, instituting joint responsibilities, which include the separation of different aspects of sourcing/purchasing, ineasing the involvement of senior staff in the process and through the education of employee and suppliers. (shrink)

Guanxi, or social networks common in Confucian cultures, has long been recognized as one of the major factors for success when doing business in China. However, insider networks in business are certainly not confined to Asian cultures, nor is the attendant possibility for corruption. This study obtained original data to investigate current Taiwanese perceptions of (1) how guanxi is established and cultivated; (2) how guanxi actually is practiced now and people’s acceptance of it; and (3) the effects (...) of guanxi on business operations, employment/promotion, and social justice and fairness. The researchers also hope to (4) verify some arguments made by pioneering researchers. The authors speculate on how these attitudes may affect behavior in business transactions in hopes of making readers more aware of differing cultural values that may create unexpected ethical dilemmas. They suggest that professional ethical codes should provide guidance on the practice of guanxi in a Confucian society and that special emphasis or training in interpreting those codes may be required. (shrink)

Guanxi as one of the key factors leading to business success in China (PRC) has ironically been synonymous with bribery. This raises some serious questions: should Western foreign firms do business in China? How should they do business with Chinese firms? This study investigated the relationship between guanxi orientation and cognitive moral development in an attempt to determine whether the level of guanxi orientation of Chinese business people affects their ethical reasoning. Based on a classification of Chinese (...) enterprises (Nee, 1992), it was found that Chinese enterprises rely on guanxi for business to different extents. However, their levels of cognitive moral development are not significantly different, suggesting that guanxi orientation has very little to do with ethical reasoning (as captured through an established measure of cognitive moral development). Furthermore, time in profession was found to positively affect guanxi orientation; however, age failed to predict guanxi orientation and education turned out to be a negative predictor of guanxi orientation. (shrink)

Using professional accountants as respondents in Hong Kong, this study strives to develop a model to depict the effect of ethical reasoning on the relationships between guanxi and auditors; behaviour in an audit conflict situation. The results of the study found that (1) there is a significant relationship between an auditor's ethical judgement and one's moral cognitive development; (2) there is a relationship between an auditor's ethical judgement and the existence of guanxi; and (3) the impact of (...) class='Hi'>guanxi on an auditor's judgement is depending on the level of ethical reasoning. (shrink)

In this study, we attempt to explain the divergent results found in the relationships between supervisor–subordinate guanxi and employee work outcomes. Specifically, we propose that the relationships between supervisor–subordinate guanxi and participatory management, turnover intentions, and organizational commitment are mediated by job satisfaction. Based on the data collected from a sample of 196 employees of three local manufacturing firms in Zhejiang Province, China, we found that job satisfaction fully mediated the effects of supervisor–subordinate guanxi on participatory (...) management and intentions to leave, but partially mediated the relationship between supervisor–subordinate guanxi and organizational commitment. Theoretical and practical implications are discussed. (shrink)

This study aims to explore the role of informal leader–member interactions in managing counterproductive work behavior in a non-Western context. We propose that under the Chinese background, guanxi with supervisor increases employees’ job satisfaction, which further reduces their CWB. Partial least square structural equation modeling with a sample of 272 Chinese employees confirms this mediating effect of job satisfaction. However, we also find that job satisfaction passes the effect of guanxi with supervisor on to CWB targeting people, but (...) not to CWB targeting the organization. Implications for research on CWB and guanxi with supervisor are discussed. (shrink)

Despite the growing number of studies on the topic of guanxi in a work context, there is a paucity of research on supervisor-subordinate guanxi in the field of organisation and management. This article critically reviews the extant literature on guanxi in human resource management and organisational behaviour and applies an inductive approach to explore the perception of guanxi from both superior and subordinate perspectives in the People's Republic of China. The study reports positive and (...) ethical features of guanxi as well as unethical and negative practices in the Chinese workplace. On the positive side, guanxi comprises reciprocal exchange and perceived positive attributes, whereas its darker aspects include perceived unfairness and supervisor-targeted impression management. Managerial and research implications are discussed. (shrink)

Despite the prevalent role of guanxi in conducting business in Chinese, it is unclear whether interpersonal guanxi fosters interfirm trust. Taking a contingency approach, this study examines how institutional (government–market relationship and Buddhism influence) and individual (relative role performance and the span of partner control) factors moderate the association between interpersonal guanxi and interfirm trust. Based on a paired survey between salespersons and sales managers and two secondary datasets, this study finds that interpersonal guanxi is positively (...) associated with interfirm trust. Moreover, this positive effect is stronger when firms operate in regions with strong government–market relationships and strong Buddhism influence. In addition, the positive relationship is weaker when guanxi resides in boundary spanners who have relatively high role performance, but becomes stronger when boundary spanners have a broad span of partner control. These findings highlight the situations in which guanxi at an interpersonal level is more or less likely to foster interfirm trust. (shrink)

Despite the prevalent role of guanxi in conducting business in Chinese, it is unclear whether interpersonal guanxi fosters interfirm trust. Taking a contingency approach, this study examines how institutional and individual factors moderate the association between interpersonal guanxi and interfirm trust. Based on a paired survey between salespersons and sales managers and two secondary datasets, this study finds that interpersonal guanxi is positively associated with interfirm trust. Moreover, this positive effect is stronger when firms operate in (...) regions with strong government–market relationships and strong Buddhism influence. In addition, the positive relationship is weaker when guanxi resides in boundary spanners who have relatively high role performance, but becomes stronger when boundary spanners have a broad span of partner control. These findings highlight the situations in which guanxi at an interpersonal level is more or less likely to foster interfirm trust. (shrink)

Two types of guanxi have a close association with auditor independence in China: firm-level connections derived from state ownership and personal connections developed through management affiliations with external auditors. This article examines the effects of these two types of connection and their joint effect on audit quality. We find that state ownership and management affiliations with the external auditor both increase the probability of receiving a clean audit opinion in China. Furthermore, the probability increment brought by (...) class='Hi'>management affiliations for non-state-owned enterprises (NSOEs) is greater than that for state-owned enterprises (SOEs). These results suggest that state ownership and management affiliations are two important types of connection that impair auditor independence, and that management affiliations are of greater importance to private-sector firms than to SOEs. (shrink)

Despite the growing number of studies on the topic of guanxi in a work context, there is a paucity of research on supervisor-subordinate guanxi in the field of organisation and management. This article critically reviews the extant literature on guanxi in human resource management and organisational behaviour and applies an inductive approach to explore the perception of guanxi from both superior and subordinate perspectives in the People's Republic of China. The study reports positive and (...) ethical features of guanxi as well as unethical and negative practices in the Chinese workplace. On the positive side, guanxi comprises reciprocal exchange and perceived positive attributes, whereas its darker aspects include perceived unfairness and supervisor-targeted impression management. Managerial and research implications are discussed. (shrink)

Studies of human resource and crosscultural management are gaining greater attention in international markets. In response to this trend, for multinational enterprises, understanding of the culture and values of other countries as well as their organizational citizenship behavior (OCB), which focuses on members' positive interactions for better achievements in organization, has gained importance. This study aims to explore the effects of national culture and guanxi on the OCB in Chinese society including mainland China and Taiwan. The results reveal (...) that national culture and guanxi have significant impacts on the OCB, and people in mainland China and Taiwan have different cultures and OCB of their own. (shrink)

We examine the use of Confucian relational morality as an alternative reference point to that of modernist morality in judging workplace ethical conduct. A semi-structured interview based study involving 46 ethnic Chinese managers and 30 non-Chinese expatriate managers in Singapore, provided evidence of the use of traditional guanxi-linked morality as a moral resource by some of the former group in judging workplace ethical dilemmas. While such morality played only a minor role in moral reasoning, and was largely overshadowed by (...) modernist morality, the research nonetheless demonstrates that moral reasoning reflects wider cultural heritage, and is not merely a function of corporate culture and individual moral development. (shrink)

The leader–member relationship has been identified as a key determinant of successful working relationships and business outcomes in China. A high-quality leader–member relationship helps managers and employees to meet the demands they face and gives them the opportunity to develop socially, emotionally and morally. Such relationships form the basis of the overall well-being and success of the organisation. This article contributes to relationally oriented leadership theories and more specifically to the leader–member exchange theory by examining the theory in the context (...) of Western expatriate managers and Chinese employees in China. The first aim of the study is to analyse the similarities and differences between the LMX theory, which owes its origins to Western corporate experience, and the social and moral norms of guanxi, a crucial element in the Chinese value system. Since Westerners and Chinese people can give different interpretations to guanxi, the second aim of the article is to discuss the ethical challenges to the Western manager arising from guanxi. The findings of this study have implications not only for China, but also for other Chinese communities where guanxi is endorsed and practised. (shrink)

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. (shrink)

This research explores the harmful effects of negative workplace gossip (NWG) on targets and organizations, including its impacts on helping behavior and knowledge hiding. The mediating role of guanxi closeness and the moderating role of need for affiliation are also examined. The study, based on conservation of resources theory, collected data from 526 employees in the hospitality industry in China, using a three-wave survey design. Hierarchical multiple regression analysis was employed to test the hypotheses. The empirical results showed that (...) NWG was a strong predictor of reduced helping behavior and increased knowledge hiding; and that guanxi closeness mediated both the negative relationship between NWG and helping behavior, and the positive relationship between NWG and knowledge hiding. Additionally, need for affiliation was shown to act as a moderator between NWG and guanxi closeness: high need for affiliation amplified the negative impact of NWG on guanxi closeness, and then further affected employees’ helping behavior and knowledge hiding. This study therefore offers an important new perspective for interpreting the detrimental effects of negative gossip in organizations, providing not just theoretical advances but practical ways in which managers can proactively reduce these impacts. (shrink)

This study constructs a mechanism of the influence of Guanxi between boundary spanners on opportunistic behaviors in collaborative innovation projects based on the theory of reasoned action model. The study conducts a survey in the automobile industry in Changchun, Jilin Province, China, and analyzes the research data using the structural equation model. The findings show that Guanxi has a negative an significant influence on opportunistic behavior attitudes and subjective norms., Guanxi has the greater influence on subjective norms (...) than attitudes. Then, opportunistic behavior attitudes and subjective norms positively influence intentions. The influence of subjective norms is stronger. The attitudes and subjective norms of opportunistic behaviors also play mediation roles. Furthermore, opportunistic behavior intentions have a positive and significant influence on behaviors. In short, the study’s findings reveal a mechanism of Guanxi between boundary spanners influencing opportunistic behaviors of boundary spanners. It also provides a reference for corporate managers to govern opportunistic behaviors of collaborator while inhabiting opportunistic behaviors of their own boundary spanners. (shrink)

Despite the growing number of studies on supervisor–subordinate guanxi in Chinese society, there is a paucity of research on its antecedents. The purpose of this study was to determine Chinese people’s motives for building supervisor–subordinate guanxi. We interviewed 60 Chinese employees and found evidence that most of the respondents attached importance to building supervisor–subordinate guanxi. Their motives for building this guanxi spanned a wide range of issues, from personal benefits to other-oriented and organizational concerns. From the (...) data we collected, we developed a preliminary model of the decision to build supervisor–subordinate guanxi. (shrink)

This article investigates the use of favors by managers of BRIC firms to accomplish business goals, the ethicality of which should be determined by the moral reasoning in these countries rather than from a developed country perspective. We define a favor as an exchange of outcomes between individuals, typically utilizing one's connections, that is based on a commonly understood cultural tradition, with reciprocity by the receiver typically not being immediate, and its value being less than what would constitute bribery within (...) that cultural context. This exchange normally takes place between and among members of networks, and may involve a network outsider contacted by a network insider on behalf of another insider. We see the giver and receiver of the favor, as well as network insiders and outsiders, as stakeholders. Additionally, society could also be considered to be a stakeholder since the practice of using favors generally inhibits the development of legitimate, strong formal institutions, since the use of favors in emerging economies is rooted in cultural traditions that we view as informal institutions. Furthermore, we assert that the practice of using favors can lead to bribery which harms society as a stakeholder both morally and economically. We posit that BRIC-country managers' behaviors stem from informal, culturally based practices—jeito in Brazil, blat/sviazi in Russia, jaan-pehchaan in India, and guanxi in China. We utilize institutional theory to explain why favors are relied upon, and ISCT to support the argument that the use of favors in environments like the BRICs is generally considered ethical. (shrink)

In light of the considerable disparity in the thinking patterns between Western and Chinese societies, this study seeks to develop a better comprehension of the influences of traditional Chinese cultural elements on knowledge management practices within contemporary Taiwanese society. To this end, the research draws on the concepts of “guanxi” based on the embeddedness theory concept through the lens of employees’ happiness. A qualitative case study was conducted within a virtual team ), and data were collected from both (...) observations and 36 interviewees. Based on the resulting analysis, the findings show that individuals’ knowledge-sharing behavior results from a complex interplay of a sense of well-being, guanxi, and the Chinese culture rooted within such organizations. The study provides a significant insight into the cultural implications of KM strategies and offers valuable advice for knowledge managers within the context of Taiwanese society. (shrink)

What are management gurus? Who are they? Why do we need them? This informative and practical guide analyses the value to be gained from reading the gurus, sets the growth of gurudom in context and traces the lines of development of the major schools of thought from their beginnings to the present day.

With the internationalisation of the Chinese market, Confucian ethics began to draw researchers' attention. However, little research has been conducted in the specific application of Confucian ethics in marketing communication. This article fills in the research gap by examining how Confucian ethics underpins the discourse of Chinese Expo invitations. Chinese sales managers' views are incorporated into the analysis as substantiation of findings. Confucian ethics embraces both qing (emotion) and li (reason) and relevant ethical values such as guanxi (connections), qing, (...) and mianzi (face) play an important role for advertising Expos and trade fairs. The study also highlights the complexities of Chinese Expo advertising that is embedded in inviting behaviour. These findings shed light on understanding Confucian ethics in marketing communications in general and have implications for ethical international marketing and advertising practices. (shrink)

"Small treasuries" (xiaojinku) are off-book accounts found in many large enterprises in China for the purpose of rewarding managers and their subordinates, building up guanxi (personal networks), and even financing the business operations of their danwei (work units). We analyze CESTs with reference to their antecedents, constructs, and consequences. Our analysis indicates that while CESTs can, in some cases, help organizations deal with immediate financial problems, they have negative impacts on organizational performance in relation to the moral hazard of (...) managers, as well as the allocation of organizational resources, in respect of sustainability of strategic advantages and growth, and mismanagement of organizations. Because of the involutionary behavior of managers in Chinese enterprises, we propose that it will require not only organizational controls, but also a fundamental change in these managers' ideology for solving the problems of CESTs. (shrink)

This study examined the relationship between the Protestant Work Ethic (PWE) and Confucian Dynamism in a sample of 1,757 respondents from several provinces in mainland China. Mirels and Garrett’s (J Consult Clin Psychol 36:40–44, 1971 ) PWE Scale and Robertson’s (Manag Int Rev 40:253–268, 2000 ) Confucian Dynamism Scale were used to measure the work ethics. The 16 items of the PWE Scale and eight items of the Confucian Dynamism Scale were initially subjected to a principal components analysis. Factor analysis (...) produced four factors of the PWE, which were labeled as follows: hard work, internal motive, admiration of work itself, and negative attitude to leisure; and three factors of the Confucian Dynamism, which were labeled: long-term orientation, short-term orientation, and guanxi orientation. The results of a multiple regression analysis indicated that all the dimensions of PWE were positively related to Confucian Dynamism, but negatively to guanxi orientation. The results also indicated that three PWE dimensions (“hard work,” “internal motive,” and “admiration of work itself”) were positively and significantly related to long-term orientation, but two of them were related negatively and significantly to the short-term orientation of Confucian Dynamism. In addition, the results showed that the dimension—admiration of work itself—of PWE was significantly and negatively associated with the guanxi orientation, but significantly and positively to the short-term orientation. (shrink)

This article examines whether and to what extent Confucianism as a resilient Chinese cultural tradition can be used as a sound basis of business practice and management model for Chinese corporations in the twenty-first century. Using the core elements of Confucianism, the article constructs a notion of a Confucian Firm with its concepts of the moral person ( Junzi ), core human morality ( ren, yi, li ) and relationships ( guanxi ), as well as benign social structure (...) (harmony), articulated in corporate and organizational terms. The basic character of the Confucian Firm is described, and its philosophical and cultural foundation is critically assessed with respect to its moral legitimacy and relevant to today’s China. China’s recent Corporate Social Responsibility (CSR) development is a high profile response to global business ethics concerns. Efforts have been made to emulate and develop good business practice fashioned in CSR norms and visions. The so-called “human-based” and “virtue-based” business practices rooted in local cultural heritage have been touted as a Chinese response to this problem. This investigation is particularly relevant in the context of the increasingly prominence of the Chinese corporations (China Inc.) in the wake of the rise of China as a global power. How relevant is Confucianism to the building of a modern Chinese corporation that is willing and able to practice reasonable norms of business ethics? The findings of this discussion, which include the organizational implications of the Confucian familial collectivism, have implications for other Chinese communities (Taiwan, Hong Kong, and Singapore) where Confucian tradition is endorsed and practiced. (shrink)

So far overlooked by the international business ethics literature, we introduce, characterize, and normatively analyze the use of affective ties and networks in South Korea from an ethical point of view. Whereas the ethics of using Guanxi in China has been comprehensively discussed, Korean informal networks remain difficult to manage for firms in South Korea due to the absence of existing academic debate and research in this field. In this study, we concentrate mainly on the question of whether foreign (...) firms will and can use affective ties in Korea. The informal social network forms are classified and contrasted with the conventional ethical approaches used in international business ethics to assess which categories can be regarded as ethical or unethical. Finally, foreign firms are advised how to cope with and use different affective network types. Although the nature of affective ties and networks in Korea differs from that found for instance in China, consistent with the conclusion of prior research, we recommend particularistic analysis and decision making regarding the circumstances in which to conclude affective ties and networks and when to opt out. We conclude that foreign firms in Korea should invest in establishing Inmaek, refrain from engaging in Yonjul, and support host country nationals’ Yongo ties. Moreover, it is suggested that foreign firms should find ways to monitor and manage informal ties effectively. (shrink)