Ethical cronyism: an insider approach for building guanxi and leveraging business performance in China

ABSTRACT

Foreign managers often perceive cultural practices, such as gift giving and guanxi, as being unethical. This can leave them at a disadvantage when negotiating in China. This study describes a concept for the benefit of MNEs so they can leverage performance through acquiring insider status. The study suggests that foreign managers should aim to build a solid reputation to facilitate reciprocal exchange when doing business in China. Such reciprocity can help to establish affective ties to cement a relationship. Establishing affection can also lead to greater interpersonal trust and, subsequently, some degree of loyalty can then emerge as a mechanism for generating ethical cronyism and performance advantages.

KEYWORDS:

• China
• cronyism
• ganqing
• gift giving
• guanxi
• renqing

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

T. K. P. Leung

Dr T. K. P. Leung is Associate Dean at the School of Business, The Hang Seng University of Hong Kong.

Bradley R. Barnes

Professor Bradley R. Barnes is Dean at the School of Business, The Hang Seng University of Hong Kong.