Skip to main content
SpringerLink
Log in

Is Interpersonal Guanxi Beneficial in Fostering Interfirm Trust? The Contingent Effect of Institutional- and Individual-Level Characteristics

  • Original Paper
  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

References

  • Ahearne, M., Haumann, T., Kraus, F., & Wieseke, J. (2013). It’s a matter of congruence: How interpersonal identification between sales managers and salespersons shapes sales success. Journal of the Academy of Marketing Science, 41(6), 625–648.

    Google Scholar 

  • Aiken, L. S., & West, S. C. (1991). Multiple regression: Testing and interpreting interactions. Newburv Park, CA: Sage Publications.

    Google Scholar 

  • Aldrich, H., & Herker, D. (1977). Boundary spanning roles and organization structure. Academy of Management Review, 2(2), 217–230.

    Google Scholar 

  • Ambler, T., Styles, C., & Wang, X. (1999). The effect of channel relationships and guanxi on the performance of inter-province export ventures in the People’s Republic of China. International Journal of Research in Marketing, 16(1), 75–87.

    Google Scholar 

  • Anderson, J. C., & Gerbing, D. W. (1988). Structure equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103(3), 411–423.

    Google Scholar 

  • Antia, K. D., & Frazier, G. L. (2001). The severity of contract enforcement in interfirm channel relationships. Journal of Marketing, 65(4), 67–81.

    Google Scholar 

  • Armstrong, J. S., & Overton, T. S. (1977). Estimating nonresponse bias in mail surveys. Journal of Marketing Research, 14(8), 396–402.

    Google Scholar 

  • Ashnai, B., Henneberg, S. C., Naudé, P., & Francescucci, A. (2016). Inter-personal and inter-organizational trust in business relationships: An attitude–behavior–outcome model. Industrial Marketing Management, 52, 128–139.

    Google Scholar 

  • Avlonitis, G. J., & Panagopoulos, N. G. (2007). Exploring the influence of sales management practices on the industrial salesperson: A multi-source hierarchical liner modeling approach. Journal of Business Research, 60, 765–775.

    Google Scholar 

  • Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models. Journal of the Academy of Marketing Science, 16(1), 74–94.

    Google Scholar 

  • Bellizzi, J. A., & Hasty, R. W. (2003). Supervising unethical sales force behavior: How strong is the tendency to treat top sales performers leniently? Journal of Business Ethics, 43(4), 337–351.

    Google Scholar 

  • Cannon, J. P., & Perreault, W. D., Jr. (1999). Buyer–seller relationships in business markets. Journal of Marketing Research, 36(4), 439–460.

    Google Scholar 

  • Chen, B. Z., Huang, Y., & Sternquist, B. (2011). Guanxi practice and Chinese buyer-supplier relationships: The buyer’s perspective. Industrial Marketing Management, 40(4), 569–580.

    Google Scholar 

  • Chen, C. C., Chen, Y. R., & Xin, K. (2004). Guanxi practices and trust in management: A procedural justice perspective. Organization Science, 15(2), 200–209.

    Google Scholar 

  • Chen, C. C., Chen, X., & Huang, S. (2013). Chinese guanxi: An integrative review and new directions for future research. Management and Organization Review. https://doi.org/10.1111/more.12010

    Article  Google Scholar 

  • Chonko, L. B. (1982). The relationship of span of control to sales representatives’ experienced role conflict and role ambiguity. Academy of Management Journal, 25(2), 452–456.

    Google Scholar 

  • Currall, S. C., & Inkpen, A. C. (2002). A multilevel approach to trust in joint ventures. Journal of International Business Studies, 33(3), 479–495.

    Google Scholar 

  • DeConinck, J. B. (1992). How sales managers control unethical sales force behavior. Journal of Business Ethics, 11(10), 789–798.

    Google Scholar 

  • Doney, P. M., & Cannon, J. P. (1997). An examination of the nature of trust in buyer–seller relationships. Journal of Marketing, 61(2), 35–51.

    Google Scholar 

  • Du, X. (2013). Does religion matter to owner-manager agency costs? Evidence from China. Journal of Business Ethics, 118(2), 319–347.

    Google Scholar 

  • Du, X., Jian, W., Zeng, Q., & Du, Y. (2013). Corporate environmental responsibility in polluting industries: Does religion matter? Journal of Business Ethics, 124(3), 485–507.

    Google Scholar 

  • Dunfee, T. W., & Warren, D. E. (2001). Is guanxi ethical? A normative analysis of doing business in China. Journal of Business Ethics, 32(3), 191–204.

    Google Scholar 

  • Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57–74.

    Google Scholar 

  • Fan, Y. (2002). Ganxi’s consequences: Personal gains at social cost. Journal of Business Ethics, 38(4), 371–380.

    Google Scholar 

  • Fang, E., Palmatier, R. W., Scheer, L. K., & Li, N. (2008). Trust at different organizational levels. Journal of Marketing, 72(2), 80–98.

    Google Scholar 

  • Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50.

    Google Scholar 

  • Fulmer, C. A., & Gelfand, M. J. (2012). At what level (and in whom) we trust: Trust across multiple organizational levels. Journal of Management, 38(4), 1167–1230.

    Google Scholar 

  • Gould, S. J. (1995). The Buddhist perspective on business ethics: Experiential exercises for exploration and practice. Journal of Business Ethics, 14(1), 63–70.

    Google Scholar 

  • Gulati, R. (1998). Alliances and networks. Strategic Management Journal, 19(4), 293–317.

    Google Scholar 

  • Gu, F. F., Hung, K., & Tse, D. K. (2008). When does guanxi matter? Issues of capitalization and its dark sides. Journal of Marketing, 72(4), 12–28.

    Google Scholar 

  • Hilary, G., & Hui, K. W. (2009). Does religion matter in corporate decision making in America? Journal of Financial Economics, 93(3), 455–473.

    Google Scholar 

  • Huang, Y., Sternquist, B., Zhang, C., & Calantone, R. (2011). A mixed-method of the effects of guanxi between salesperson and buyers on retailer-supplier relationships in China. Journal of Marketing Channels, 18(3), 189–215.

    Google Scholar 

  • Huang, Y., Luo, Y., Liu, Y., & Yang, Q. (2016). An investigation of interpersonal ties in interorganizational exchanges in emerging markets: A boundary-spanning perspective. Journal of Management, 42(6), 1557–1587.

    Google Scholar 

  • Hwang, K. K. (1987). Face and favor: The Chinese power game. American Journal of Sociology, 92(4), 944–974.

    Google Scholar 

  • Jap, S. D., & Anderson, E. (2003). Safeguarding interorganizational performance and continuity under ex post opportunism. Management Science, 49(12), 1684–1701.

    Google Scholar 

  • Jones, C., Hesterly, W. S., & Borgatti, S. P. (1997). A general theory of network governance: Exchange conditions and social mechanisms. Academy of Management Review, 22(4), 911–945.

    Google Scholar 

  • Kennedy, E. J., & Lawton, L. (1998). Religiousness and business ethics. Journal of Business Ethics, 17(2), 163–175.

    Google Scholar 

  • Kirchmaier, I., Prüfer, J., & Trautmann, S. (2018). Religion, moral attitudes and economic behavior. Journal of Economic Behavior and Organization, 148, 282–300.

    Google Scholar 

  • Lee, D. Y., & Dawes, P. L. (2005). Guanxi, trust, and long-term orientation in Chinese business markets. Journal of International Marketing, 13(2), 28–56.

    Google Scholar 

  • Li, J. J., Poppo, L., & Zhou, K. Z. (2008). Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms. Strategic Management Journal, 29(4), 383–400.

    Google Scholar 

  • Li, N., & Murphy, W. H. (2012). A three-country study of unethical sales behaviors. Journal of Business Ethics, 111(2), 219–235.

    Google Scholar 

  • Liu, Z., Xu, Z., Zhou, Z., & Li, Y. (2018). Buddhist entrepreneurs and new venture performance: the mediating role of entrepreneurial risk-taking. Small Business Economy, 52(3), 713–727.

    Google Scholar 

  • Luo, Y. (1997). Guanxi and performance of foreign-invested enterprises in China: An empirical inquiry. Management International Review, 37(1), 51–70.

    Google Scholar 

  • Luo, Y. (2008). The changing Chinese culture and business behavior: The perspective of intertwinement between guanxi and corruption. International Business Review, 17(2), 188–193.

    Google Scholar 

  • Lumineau, F., & Schilke, O. (2018). Trust development across levels of analysis: An embedded-agency perspective. Journal of Trust Research, 8(2), 238–248.

    Google Scholar 

  • Ma, L., Wang, X., & Zhang, Z. (2019). Does religion shape corporate cost behavior? Journal of Business Ethics. https://doi.org/10.1007/s10551-019-04377-4

    Article  Google Scholar 

  • Martin, T. N. (1979). A contextual model of employee turnover intentions. Academy of Management Journal, 22(2), 313–324.

    Google Scholar 

  • McClaren, N. (2000). Ethics in personal selling and sales management: A review of the literature focusing on empirical findings and conceptual foundations. Journal of Business Ethics, 27(3), 285–303.

    Google Scholar 

  • McGuire, S. T., Omer, T. C., & Sharp, N. Y. (2012). The impact of religion on financial reporting irregularities. The Accounting Review, 87(2), 645–673.

    Google Scholar 

  • Millington, A., Eberhardt, M., & Wilkinson, B. (2005). Gift giving, guanxi and illicit payments in buyer–supplier relations in China: Analysing the experience of UK companies. Journal of Business Ethics, 57(3), 255–268.

    Google Scholar 

  • Nie, R., Zhong, W., Zhou, M., Jiang, W., & Wang, X. (2011). A bittersweet phenomenon: The internal structure, functional mechanism, and effect of guanxi on firm performance. Industrial Marketing Management, 40(4), 540–549.

    Google Scholar 

  • Nie, D., & Lämsä, A. M. (2015). The leader–member exchange theory in the Chinese context and the ethical challenge of guanxi. Journal of Business Ethics, 128(4), 851–861.

    Google Scholar 

  • Palmatier, R. W., Scheer, L. K., & Steenkamp, J. B. E. (2007). Customer loyalty to whom? Managing the benefits and risks of salesperson-owned loyalty. Journal of Marketing Research, 44(2), 185–199.

    Google Scholar 

  • Parboteeah, K. P., Hoegl, M., & Cullen, J. B. (2008). Ethics and religion: An empirical test of a multidimensional model. Journal of Business Ethics, 80(2), 387–398.

    Google Scholar 

  • Park, S. H., & Luo, Y. (2001). Guanxi and organizational dynamics: Organizational networking in Chinese firms. Strategic Management Journal, 22(5), 455–477.

    Google Scholar 

  • Peng, M. W. (2003). Institutional transitions and strategic choices. Academy of Management Review, 28, 275–296.

    Google Scholar 

  • Provis, C. (2008). Guanxi and conflicts of interest. Journal of Business Ethics, 79(1–2), 57–68.

    Google Scholar 

  • Rowley, T., Behrens, D., & Krackhardt, D. (2000). Redundant governance structures: An analysis of structural and relational embeddedness in the steel and semiconductor industries. Strategic Management Journal, 21(3), 369–386.

    Google Scholar 

  • Rokkan, A. I., Heide, J. B., & Wathne, K. H. (2003). Specific investments in marketing relationships: Expropriation and bonding effects. Journal of Marketing Research, 40(2), 210–224.

    Google Scholar 

  • Sartor, M. A., & Beamish, P. W. (2019). Private sector corruption, public sector corruption and the organizational structure of foreign subsidiaries. Journal of Business Ethics. https://doi.org/10.1007/s10551-019-04148-1

    Article  Google Scholar 

  • Schilke, O., & Cook, K. S. (2013). A cross-level process theory of trust development in interorganizational relationships. Strategic Organization, 11(3), 281–303.

    Google Scholar 

  • Schilke, O., & Lumineau, F. (2018). The double-edged effect of contracts on alliance performance. Journal of Management, 44(7), 2827–2858.

    Google Scholar 

  • Schwab, D. P. (1991). Contextual variables in employee performance-turnover relationships. Academy of Management Journal., 34(4), 966–975.

    Google Scholar 

  • Schwepker, C. H., Jr. (1999). Understanding salespeople’s intention to behave unethically: The effects of perceived competitive intensity, cognitive moral development and moral judgment. Journal of Business Ethics, 21(4), 303–316.

    Google Scholar 

  • Shen, L., Zhang, C., & Teng, W. (2019). The double-edged effects of guanxi on partner opportunism. Journal of Business & Industrial Marketing, 34(6), 1313–1322.

    Google Scholar 

  • Sheng, S. S., Zhou, K. Z., & Li, J. J. (2011). The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75(1), 1–15.

    Google Scholar 

  • Stack, S., & Kposowa, A. (2006). The effect of religiosity on tax fraud acceptability: A cross-national analysis. Journal for the scientific study of religion, 45(3), 325–351.

    Google Scholar 

  • Su, C., & Littlefield, J. E. (2001). Entering guanxi: A business ethical dilemma in mainland China? Journal of Business Ethics, 33(3), 199–210.

    Google Scholar 

  • Su, C., Mitchell, R. K., & Sirgy, M. J. (2007). Enabling guanxi management in China: A hierarchical stakeholder model of effective guanxi. Journal of Business Ethics, 71(3), 301–319.

    Google Scholar 

  • Su, C., Yang, Z., Zhuang, G., Zhou, N., & Dou, W. (2009). Interpersonal influence as an alternative channel communication behavior in emerging markets: The case of China. Journal of International Business Studies, 40(4), 668–689.

    Google Scholar 

  • Sunder, S., Kumar, V., Goreczny, A., & Maurer, T. (2017). Why do salespeople quit? An empirical examination of own and peer effects on salesperson turnover behavior. Journal of Marketing Research, 54(3), 381–397.

    Google Scholar 

  • Tangpong, C., Li, J., & Hung, K. T. (2016). Dark side of reciprocity norm: Ethical compromise in business exchanges. Industrial Marketing Management, 55, 83–96.

    Google Scholar 

  • Vanhonacker, W. R. (2004). When good guanxi turns bad. Harvard Business Review, 82, 18–19.

    Google Scholar 

  • Vu, M. C., & Tran, T. (2019). Trust issues and engaged Buddhism: The triggers for skillful managerial approaches. Journal of Business Ethics. https://doi.org/10.1007/s10551-019-04273-x

    Article  Google Scholar 

  • Wang, X., Fan, G., & Hu, L. P. (2019). Marketization index of China’s Provinces: NERI Report 2018. Beijing: Economics Science Press. ((in Chinese)).

    Google Scholar 

  • Warren, D. E., Dunfee, T. W., & Li, N. (2004). Social exchange in China: The double-edged sword of guanxi. Journal of Business Ethics, 55(4), 353–370.

    Google Scholar 

  • Wang, D. T., Gu, F. F., & Dong, M. C. (2013). Observer effects of punishment in a distribution network. Journal of Marketing Research, 50(5), 627–643.

    Google Scholar 

  • Williams, C. R., & Livingstone, L. P. (1994). Another look at the relationship between performance and voluntary turnover. Academy of Management, 37(2), 269–298.

    Google Scholar 

  • Yang, M. M. (1994). Gifts, favors, banquets: The art of social relationship in China. Ithaca, NY: Cornell University Press.

    Google Scholar 

  • Yang, D., Wang, A. X., Zhou, K. Z., & Jiang, W. (2019). Environmental strategy, institutional force, and innovation capability: A managerial cognition perspective. Journal of Business Ethics, 159(4), 1147–1161.

    Google Scholar 

  • Zaheer, A., McEvily, B., & Perrone, V. (1998). Does trust matter? Exploring the effects of interorganizational and interpersonal trust on performance. Organization Science, 9(2), 141–159.

    Google Scholar 

  • Zhang, Y., & Zhang, Z. (2006). Guanxi and organizational dynamics in China: a link between individual and organizational levels. Journal of Business Ethics, 67(4), 375–392.

    Google Scholar 

  • Zhou, K. Z., Li, J. J., Sheng, S., & Shao, A. T. (2014). The evolving role of managerial ties and firm capabilities in an emerging economy: evidence from China. Journal of the Academy of Marketing Science, 42(6), 581–595.

    Google Scholar 

  • Zhou, K. Z., Gao, G. Y., & Zhao, H. (2017). State ownership and firm innovation in China: An integrated view of institutional and efficiency logics. Administrative Science Quarterly, 62(2), 375–404.

    Google Scholar 

  • Zoltners, A. A., & Sinha, P. (2005). Sales territory design: Thirty years of modeling and implementation. Marketing Science, 24(3), 313–331.

    Google Scholar 

Download references

Acknowledgements

The authors would like to acknowledge the Grants from National Natural Science Foundation of China (Nos. 71802036; 71772031), National Social Science Foundation of China (No. 18ZDA058), the Liberal Arts and Social Sciences Foundation of the Ministry of Education in China (No. 18YJC630142), and China Postdoctoral Science Foundation (No. 2019M661086).

Author information

Authors and Affiliations

  1. Department of Business Administration, Dalian Maritime University, Dalian, China

    Lu Shen

  2. Faculty of Business and Economics, The University of Hong Kong, Pokfulam, Hong Kong

    Kevin Zheng Zhou

  3. School of Business Administration, Dongbei University of Finance and Economics, Dalian, China

    Chuang Zhang

Authors
  1. Lu Shen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Kevin Zheng Zhou
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Chuang Zhang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Chuang Zhang.

Ethics declarations

Conflict of interest

The authors declare that they have no conflict of interests.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix: Measurements

Appendix: Measurements

Variables assessed by salespersons

Interpersonal guanxi (CR = 0.81; α = 0.81; AVE = 0.52)

 GX1. Our family members often banquet together (0.57)

 GX2. I am willing to do personal favors for her/him, regardless of whether she/he repays me (0.82)

 GX3. I am willing to sacrifice my time or benefits to help her/him (0.75)

 GX4. I care about her/him wholeheartedly (0.73)

Span of partner control

 How many distributors do you manage in your sales territory?

Sales force control

 My immediate boss monitors the extent to which I attain my performance goals

Variables assessed by sales managers

Interfirm trust (CR = 0.76; α = 0.75; AVE = 0.51)

 TR1. This distributor has always been evenhanded in its negotiation with us. (0.79)

 TR2. This distributor never uses opportunities that arise to profit at our expense. (0.69)

 TR3. Based on past experience, we can with complete confidence rely on the distributor to keep promises made to us. (0.66)

Relative role performance

 Compared to other salespersons in your company, how did the selected salesperson perform in general? (1 = very poor, 5 = excellent)

Contractual governance

 We have specific, well-detailed agreements with this distributor

Prior distributor’s opportunism (CR = 0.89; α = 0.89; AVE = 0.67)

 OP1. The distributor tried to breach formal or informal agreements between our companies to maximize its own benefit. (0.83)

 OP2. The distributor “window dressed” its efforts to improve. (0.79)

 OP3. The distributor expected us to pay for more than our fair share of the costs to correct the problem (0.79)

 OP4. The distributor failed to provide proper notification. (0.87)

Market uncertainty

 It is difficult to monitor the market environment trends for our products.

Manufacturer’s competitiveness

 How is the competitiveness of your brand in the industry? (1 = highly uncompetitive; 5 = highly competitive)

Manufacturer’s firm size

How many employees does your company currently have? (1 = less than 50 employees; 10 = over 2000 employees).

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Shen, L., Zhou, K.Z. & Zhang, C. Is Interpersonal Guanxi Beneficial in Fostering Interfirm Trust? The Contingent Effect of Institutional- and Individual-Level Characteristics. J Bus Ethics 176, 575–592 (2022). https://doi.org/10.1007/s10551-020-04665-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-020-04665-4

Keywords

Search

Navigation