How Does Guanxi Shape Entrepreneurial Behaviour? The Case of Family Businesses in China

Abstract

This paper explores how Guanxi shapes different levels of entrepreneurial behaviour of family businesses in China. Extant research draws on network theory, suggesting that firms focusing on less intimate social relationships are more entrepreneurial than those focusing on intimate social networks. However, this notion of networks neglects Guanxi’s indigenous cultural roots that promote intimacy in social relationships, thus limiting our understanding of why some firms in China demonstrate a higher level of entrepreneurial behaviour than others. Through an in-depth multi-case study analysis of eight family firms in China, we find that Guanxi is a multi-dimensional concept that can only be effective through intimate relationship building. This study contributes to the social network literature on entrepreneurial behaviour by incorporating the gift exchange theoretical perspective and demonstrating that political Guanxi in China can only facilitate entrepreneurial behaviour when it is built around a significant level of intimacy. We also contribute to family business research by demonstrating that family ties are multi-dimensional. Different cultural values may inform different dimensions of family ties via differences in family business governance structures, which can give rise to different levels of entrepreneurial outcomes. This study offers theoretical and practical implications alongside avenues for future research.