Market orientation and Guanxi in Chinese business enterprises - substitutes or complements?
Do western management practices and beliefs and Chinese business practicescomplement or substitute each other in the emerging world of Chinese business? Thisthesis explores the interaction between two central ideas in western and Chinesethinking about the way business should be done ? between the western emphasis onmarket orientation as the key to profitable growth, and the Chinese reliance ontraditional networks embodied in the concept of guanxi. These two variables areembedded in a broader model of strategic decision making in order to identifymoderating factors that may influence performance outcomes.Following pretests and in-depth interviews, in 2003 a sample of 152 businesses wasdrawn in Shanghai, Jiangsu and Zhejiang area from two industries, the electronicsindustry and the textile/garment industry. Low response rates and a small sample weretwo important limiting factors.Two broad analytical approaches were used. The first made use of graphical smoothingmethodology, an approach that facilitates the identification of complex non-linearinteractions among the variables. The second used Structural Equation Modelling(SEM) where a linear structure is imposed on the relationships among the variables,allowing simultaneous consideration of the full variable set together with an analysis offit and measurement error, while the graphical smoothing non-linear method waseffectively limited to three variables at a time.The graphical analysis suggested the existence of nonlinearities in many relationships,and found a positive interaction between guanxi and market orientation in influencingperformance, and that both were in that sense complements rather than substitutes. TheSEM analysis suggested that while there were some indirect links between guanxi,market orientation and performance, these were relatively weak, (although the use ofguanxi with other managers was a factor in market orientation), and that the primarydriver of performance was the strength of the competitive advantage possessed by thefirm. This factor directly impacted market orientation, indirectly affected guanxi andaccounted for much of the observed correlation between the two cultural variables,guanxi and market orientation, and performance.
|Year of publication:||
|Institutions:||Chen, Shu, Marketing, Australian School of Business, UNSW|
|Type of publication:||Book / Working Paper|
|Type of publication (narrower categories):||Thesis|
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