Asia-Pacific Business Series - Vol. 5 GUANXI BUSINESS AND. 2nd Edition. YADONG LUO University of Miami, USA. World Scientific

Transcription

1 Asia-Pacific Business Series - Vol. 5 GUANXI AND BUSINESS 2nd Edition YADONG LUO University of Miami, USA World Scientific NEW JERSEY LONDON SINGAPORE BEIJING SHANGHAI HONG KONG TAIPEI CHENNAI

2 CONTENTS Preface v 1 Definition, Principles, and Philosophy of Guanxi Concepts 1 Definition 1 Basis for Guanxi Establishment 4 Modes Principles Philosophy Guanxi in Social Life Gifts, Bribes, and Guanxi Importance in the Future Theoretical Directions Practical Examples 36 Minicase 1: Guanxi is His Middle Name 36 Minicase 2: A Smuggler with Guanxi 37 2 Economic Perspective of Guanxi Economic Rationale of Guanxi 41 Social Capital 41 Economic Necessity 43 Economic Idiom Guanxi versus Western Networks Guanxi as a Critical Capability Business Implications The Use of Guanxi by Overseas Chinese 61 Economic Perspectives 62 ix

3 x Guanxi and Business Cultural Perspective Practical Examples 69 Minicase 1: The New China Hong Kong Group on the Mainland 69 Minicase 2: Guanxi: The First Step in Any China Venture 72 Minicase 3: Business Connections by Big Six Accounting Firms 74 Guanxi and Firm Performance Conceptual Background Guanxi and Performance 82 Guanxi with Other Businesses 82 Guanxi with Government Officials 84 Market versus Financial Performance 85 Necessary versus Sufficient Condition 86 Empirical Evidence Managerial Implications Practical Examples 92 Minicase 1: Acer in China 92 Minicase 2: AgriGlobal in China 95 Minicase 3: Dell Strengthens Guanxi with Its Customers 97 Minicase 4: Chase Capital Uses Guanxi to Expand Its Asian Business 98 Minicase 5: Valuing Connections for Hong Kong's Red Chips 100 Organizational Dynamics and Guanxi Guanxi as Inter-Organizational Network Organizational Dynamics and Guanxi 109 Institutional Factors 111 Ownership structure 111 Location 112 Strategic Factor 113 Strategic orientation 113 Organizational Factors 115

4 Contents xi Organizational size 115 Resources 117 Length of operation Empirical Evidence Practical Examples 123 Minicase 1: Does Guanxi Matter in KFC? 123 Operations in China 124 Guanxi relations 124 Minicase 2: Why is Shanghai Volkswagen Successful? 126 Minicase 3: Guanxi, Used by Sony 130 Gwa«;d-Based Business Strategies Guanxi-based Business Strategies Impact of Guanxi-based Business Strategies Managerial Implications Practical Examples 143 Minicase 1: Sony in China 143 Minicase 2: AST Owes as Much to People Connections as to Electrical Ones 145 Minicase 3: Dell in China 147 Minicase 4: CSI in China 150 Minicase 5: Selling in China 153 Minicase 6: Charoen Pokphand in China 155 Foreign Businesses and Guanxi Foreign Businesses in China 159 Shifting Environmental Conditions 161 New Competitive Landscape 162 Shift from scant competition to strong competition 162 Shift from niche competition to massive competition 163 Shift from single-market conception to multi-market competition 165 Shift from structural similarity to structural multiplicity 166 New Regulatory Landscape 167 Shift from entrance restriction to operational intervention 167

5 xii Cuanxi and Business Shift from overt control to covert constraint 168 Shift from separation from to convergence with domestic policies 170 Shift from regulatory rigidity to regulatory elasticity 171 Shifting Dominant Strategies 173 Shift from parent integration to national integration 173 Shift from production relocation to value chain localization 177 Shift from competence transfer to competence building 179 Shift from competition to coopetition with business community 182 Shift from repetition to adaptive diversification 186 Shift from alliance building to alliance restructuring Guanxi and Foreign Businesses 190 Partner Effect 190 Origin Effect 191 Length Effect 191 Size Effect 192 Empirical Evidence Implications and Examples 194 Minicase 1: Hewlett-Packard's Initiatives to Build up Guanxi 194 Minicase 2: Toyota in China 199 Minicase 3: NEC in China 202 Minicase 4: Boeing in China Guanxi, Corruption, and Governance Nature of Corruption 211 Definition 211 Differences Between Corruption and Guanxi Corruption in China 218 Current Situation 218 Types and Reasons Intertwineability Between Guanxi and Corruption 227

6 Contents xiii 7.4 Economics of Corruption Business Implications of Corruption 237 Corruption as an Evolutionary Hazard 238 Corruption as a Strategic Impediment 240 Corruption as a Competitive Disadvantage 241 Corruption as an Organizational Deficiency Governance and Guanxi 243 Corporate Governance in China 243 Guanxi and Governance Governance and Corruption Taxonomy of Corruption Corruption and Organizational Environment 256 Corruption and Task Environments 257 Corruption and Institutional Environments Corruption and Organizational Behavior 263 System Malfeasance 264 Procedural Malfeasance 265 Categorical Malfeasance 266 Structural Malfeasance Corruption and Organizational Architecture 268 Corporate Culture 269 Organizational Structure 270 Compliance System 272 Conduct code 272 Compliance program Practical Examples 281 Minicase 1: Corruption in Yuxi Cigarette 281 Minicase 2: Bribe with Care 287 Minicase 3: Rough Justice 288 Minicase 4: Zhu's Hatchet Man in Guangdong 291 Minicase 5: Anti-corruption by Shell 294 Winning over hearts and minds 296 Inter-company corruption 298 A worthy fight 299

7 xiv Guanxi and Business 8 Practical Guidelines to Guanxi Cultivation Constructing Your Own Guanxi Network Utilizing Intermediaries Searching for the Right People Implanting Individual Guanxi into Organizations Hiring Locals and Dispatching Ethnic Chinese Monitoring Guanxi within an Organization Maintaining Guanxi Relations Improving Credibility Practical Examples 313 Minicase 1: GM in Shanghai 313 Minicase 2: Xian-Janssen 317 Minicase 3: Motorola in China 320 Minicase 4: Solving Staffing Problems 323 Minicase 5: Joint-Venture Mode and Guanxi 326 Minicase 6: "Guanxi" Man Smooths Road to China 330 Appendices 1 Summary of Anti-Corruption and Anti-Bribery Laws and Rules in China Summary of Anti-Corruption and Anti-Bribery Laws and Rules in the United States Transnational Cooperation in Combating Corruption and Bribery OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 360 Bibliography, 371 Index 383 About the Author 397