Insights into guanxi and firm performance in China: an integrated lens of culture and guanxi

ABSTRACT

Chinese guanxi may contribute to the explanation of the rapid growth of Chinese firms. This study uses drinking culture, regarded as a typical feature of guanxi-oriented culture, and political ties, regarded as indicating the cultural embeddedness of guanxi, to empirically examine the effects of cross-level interaction between guanxi-oriented regional culture and culturally embedded managers’ guanxi on firm performance in China. Based on the data of A-share listed companies from 2016 to 2019, multiple linear regression analysis is used to test hypotheses. The results show that guanxi improves firm financial performance but damage technological innovation. The context-specific research offers novel insights and contextualized knowledge to enrich and extend the understanding of how guanxi affects firm growth and contribute to the knowledge of Chinese social philosophy.

KEYWORDS:

• Guanxi
• drinking culture
• political ties
• financial performance
• technological innovation

JEL CLASSIFICATION:

• M21
• P20
• P30

Disclosure statement

The authors declare no conflicts of interest or competing interests in this research. The data that support the findings of this study are available in CSMAR database (cn.gtadata.com), Wind database (www.wind.com.cn) and CCER database (new.ccerdata.).

Data availability statement

All data are publicly available, as referenced in the manuscript.

Code availability (software application or custom code)

Stata 16 used for all calculations.

Notes

¹ Guanxi refers to a dyadic, particular, and sentimental tie that has potential of facilitating favour exchange between the parties connected by the tie. And it gradually evolved into a unique culture that people achieve their goals based on different relationships.

² Guanxi is formed gradually through social activities or social rituals, such as gift-giving, exchanging of favours, and social drinking and eating. Limited by data availability, we select drinking culture to express guanxi.

³ Due to the length, the table of specific results is not disclosed in the text. Please contact the author if necessary.

Additional information

Funding

Research funding from the National Natural Science Foundation of China [number 71972151].