Dynamic Guanxi Processes in Workplace: Working & Backdoor Guanxi - Prof. 5150, Apuntes de Análisis de Políticas Públicas

¡Descarga Dynamic Guanxi Processes in Workplace: Working & Backdoor Guanxi - Prof. 5150 y más Apuntes en PDF de Análisis de Políticas Públicas solo en Docsity! Guanxi-Building in the Workplace: A Dynamic Process Model of Working and Backdoor Guanxi Olwen Bedford Received: 3 May 2011 / Accepted: 9 May 2011 / Published online: 31 May 2011  Springer Science+Business Media B.V. 2011 Abstract Guanxi is a complex construct of Chinese social interaction. Previous studies have focused on implications of guanxi for business outcomes; few have examined guanxi development, which is the purpose of this study. Two theoretical modes of dynamic guanxi processes in the workplace are proposed: working guanxi and backdoor guanxi. The two modes differ in frequency of interaction, frequency of exchange of favors, and how clear the parties are on what each stands to gain from a particular interaction. Although face is expected to play a role in the development of each, the type of face that is most important differs. For working guanxi, lian (personal character) is most important. For backdoor guanxi, mianzi (status) is most important. Backdoor guanxi is the mode most likely to be associated with corruption, bribery, and client–patron relations. The psychological and social processes underlying development of these two modes of guanxi are explored and a basic model proposed as a basis for future research on guanxi, face, and ethics. Keywords Face  Guanxi  Workplace relations  Chinese culture  Business ethics The concept of guanxi (interpersonal connections) in Chi- nese culture is a complex social construct that encompasses elements of trust and mutual obligation in interpersonal interaction (Buttery and Wong 1999). The claim that it is difficult to do business in Chinese society without it (Bedford and Hwang 2011; Zheng 2006) coupled with the importance of China’s growing market and the perception of China as a future global power has led to growing academic interest in understanding business relationships from a Chinese perspective. Business scholars have concentrated their examination of guanxi on business implications and benefits or links between guanxi and some Western business concepts, such as relationship marketing (see Fan 2002b for a review). In other words, most studies of guanxi have focused on out- comes. Although some have focused on positive outcomes (e.g., improved efficiency and reduced transaction costs, Davies 1995; Lovett et al. 1999) and others have focused on negative outcomes (e.g., expense and time consumption, Fock and Woo 1998; Yi and Ellis 2000), most have neglected underlying social concepts and mechanisms. Few studies have examined the social processes surrounding guanxi operation and how guanxi is developed, maintained or used; for example, Yang (2002) pointed out that most models of guanxi have been static and do not account for how guanxi changes over time. Studies claiming to provide evidence of benefits secured through use of guanxi neglected to provide information on which activities were involved in developing the guanxi and whether these activities were ethical or even legal (Fan 2002b). Even studies that mention tactics for developing guanxi, such as banquets, dinners or gifts (e.g., Leung et al. 1996; Ng 1998), did not explore the process of how such ties are built, what goes on during such exchanges or how indi- viduals are initiated into the practice. This gap is intriguing in that only a small number of relationships in business are inherent; most are acquired through experiences shared with others. Given the importance of relationships in general, and guanxi in particular, to doing business in O. Bedford (&) Nanyang Technological University, HSS 04-03, 14 Nanyang Drive, Singapore 637332, Singapore e-mail: olwen.bedford@gmail.com 123 J Bus Ethics (2011) 104:149–158 DOI 10.1007/s10551-011-0895-9 China (Xin and Pearce 1996; Yeung and Tung 1996), understanding the process of building guanxi relationships is clearly relevant to business purposes. One reason for the focus on outcomes in the literature may be that it is the natural purview of management scholars. Another possibility is that guanxi has often been defined in terms of a common guanxi base (e.g., kinship, friendship, school mates, teachers, and students). Accord- ing to this line of thought, the more common bases that exist, the greater the likelihood of close guanxi, and lack of a common base means no guanxi (Jacobs 1979). This approach entails either an implicit assumption or the explicit claim that guanxi differs in degree (close or dis- tant) depending on the number of guanxi bases and cor- responding level of positive affection (e.g., Alston 1989; Gold 1985; Pye 1982); for example, Tong and Yong (1998) and Chow and Ng (2004) asserted that a guanxi base is a necessary condition for development of ganqing (positive affection) with nonfamily members. There are three related problems with this approach. First, it does not address how a person with no guanxi base can develop guanxi with another person, which is what happens in a modern business context. Exploring this process is one of the goals of this paper. Second, the existence of a guanxi base is not in itself sufficient to ensure that there is active guanxi between two parties (Fan 2002a); for example, people who attended the same school may move away and lose touch, meaning that there is no active guanxi link between them. Third, this approach does not address the possibility of different types of guanxi that operate in different ways with different rules of exchange. Although a few scholars have suggested models that address different types of guanxi or the way that guanxi develops, these models have not been specific to the workplace (e.g., Chen and Chen 2004; Hwang 1987; Wang et al. 2008). An exception is Fan’s (2002a, b) process model, which specified different types of guanxi, including business guanxi, but did not focus on how guanxi is created and maintained. In the following, I review and critique Fan’s process model of guanxi with the goal of providing a framework for understanding dynamic guanxi processes in the workplace. I then extend the framework with a psy- chological and social model of developing guanxi in a work-related context. Fan’s Types of Guanxi Fan (2002a) proposed a process model of three types of guanxi: family, helper, and business guanxi. Fan’s model differed from most previous discussions of guanxi in the literature in that Fan defined guanxi as a dynamic process and not as a relationship. His three guanxi types reflect processes that differ in nature, motivation, and underlying values. Family guanxi is rooted in the obligatory affection among family members required under Confucian ethics. Fan explicitly compared family guanxi to Hwang’s (1987) expressive ties, which are constrained by the need rule, meaning that an individual has an ethical obligation to satisfy the needs of family members. There is a consensus among researchers who have discussed different types of guanxi that guanxi based on blood ties (family or in-laws) is inherently different from guanxi based on nonkin ties: The most important distinction is that favors to family members need not be repaid, whereas favors from nonfamily mem- bers must be (Bond 1999). As this study focuses on the workplace context, family guanxi is generally beyond the scope of this article, although how it relates to guanxi processes relevant to business activities is addressed later. Fan’s (2002a) second type of guanxi is helper guanxi, which he did not discuss in connection with the workplace or business relations. Fan described helper guanxi as ‘‘utility driven, favors are granted and returned…. [It] is unstable, temporary, and could be a one-off case’’ (p. 551). However, Fan also claimed that helper guanxi encompasses exchanges between individuals from the same social base while emphasizing the Confucian values of renqing (mutual exchange of favors) and mianzi (giving face to others) (Fan 2002a, b). Helper guanxi occurs between familiar persons (shouren), who could be insiders or outsiders. Fan identified helper guanxi with Hwang’s (1987) instrumental ties. They are similar in that the motivation for initial interaction is instrumental; it serves as a means to an end. However, Hwang’s description of instrumental ties differs in important ways from Fan’s conception of helper guanxi. Hwang specified that instrumental ties refer to interactions between strangers, not familiar per- sons. Instrumental interactions are impersonal, short term, and based on the equity rule, meaning that all people are treated equally, and that equity is required, otherwise the exchange will not be made. Relations may be temporary or one-off. In fact, instrumental ties can essentially refer to a state of very weak or no guanxi. I assert that Fan’s helper guanxi is actually more similar to Hwang’s mixed tie relations, which entail a combination of expressive and instrumental ties. With mixed tie relations, interaction proceeds according to the rules of face and favor (like Fan’s helper guanxi) and emphasizes reciprocity through continuous long-term exchanges (also like helper guanxi). The mixed tie lasts as long as both parties have frequent contact. My reasons for this assertion will be clarified after discussion of Fan’s third type of guanxi, which he did not compare to any of Hwang’s three types of ties. Fan (2002a) defined business guanxi as a process of finding business-to-business (B2B) or business-to- government (B2G) business solutions through personal 150 O. Bedford 123 Although a number of researchers have used the word ‘‘mianzi’’ to refer to face under these conditions (e.g., Buckley et al. 2006; Chen and Chen 2004), it is possible that they have overlooked an important distinction. There are two types of face: mianzi and lian. While mianzi refers to status, prestige, and respect, lian refers to the moral aspects of face: ‘‘It is the respect of the group for a person with a good moral reputation. For example, an individual who is highly admired for lian would be regarded as incorrupt, absolutely honest, and reliable’’ (Hu 1944, p. 45). I propose that it is lian and not mianzi that underlies working guanxi. Lian is credibility. It reflects a person’s adherence to the morals inherent in social norms (Earley 1997). Working guanxi derives from a relationship between two people’s lian. It must be earned and cannot be given as with mianzi. The long-term orientation of working guanxi allows time for that to happen; exchange partners demonstrate their lian to one another, thereby building a foundation for mutual trust and emotional engagement. Each side must convince the other of his or her credibility in order for the rela- tionship to move forward. Renqing (doing favors) is the currency for lian transactions. Lian is not controlled by the individual alone, and thus comprises a dynamic system that has low tolerance for self-serving opportunistic behavior. Backdoor Guanxi Fan (2002a) asserted that business guanxi is the ‘‘process of finding business (rather than personal) solutions through personal connections’’ (p. 551). There are two problems with this definition. First, Fan specified ‘‘personal con- nections’’ but did not define them. It may be that Fan was contrasting personal with business connections, which would exclude all relationships developed through the workplace context from business guanxi. I propose that ‘‘personal connections’’ should refer to the unique rela- tionship network or guanxiwang that a particular individual has developed, regardless of the origin of the relationships. The second problem is that Fan’s definition only considers one side of the process. That is, one person may be finding a business solution, but the other may be finding a personal solution or reaping a personal gain. In fact, the cases Fan supplied (2002a, b) to demonstrate business guanxi all have this character; for example, in his figure labeled ‘‘How guanxi works’’ (2002a, p. 550), Fan used the case of a government official being paid a large cash gift in return for providing a business solution. The official is engaging in business guanxi no less than the business person, yet the official is not obtaining a business solution. What Fan described as business guanxi actually pertains to the par- ticular set of guanxi processes surrounding business activities. It does not reflect the inherent quality of all guanxi interactions pertaining to business, but rather the nature of a specific class of guanxi interactions. It tends toward the harmful side of the double-edged sword of guanxi highlighted by Warren et al. (2004). As the label business guanxi is too broad and misleading, I propose the label backdoor guanxi instead, and define it as use of one’s guanxiwang to negotiate business solutions that include personal gain for at least one of the parties involved. Here personal gain refers to accruals that are not part of the formal or sanctioned structure of organizational operations such as commission. Backdoor guanxi entails exchange of power or status for money (or other personal benefits). It is most likely to occur in exchanges in which one of the parties has control of a nonsubstitutable resource pertinent to the business operations of the other. A person who is effectively a gatekeeper of a nonsubstitutable resource has a powerful position to play the backdoor guanxi game. Others seek guanxi with this person by virtue of the mianzi (power and status) the person has due to his (or her) position. While corporate power is usually held by those in management and especially upper management positions, even a low-level government official may have control of a nonsubstitutable resource in terms of inspection certifica- tions, permits or fines. In an environment where there is less free market activity and more government control, backdoor guanxi with government officials is more likely to occur, as companies have increased necessity to deal with the government. This condition explains Fan’s observation regarding the prevalence of B2G business guanxi. Other researchers have likewise noted the client–patron ties between businesspeople and officials in China. Some researchers have labeled these ties as a form of social trust aimed at reducing uncertainty in an unstable environ- ment (e.g., Davies 1995; Nee 1992; Wank 1995). Other researchers have pointed out that this attempt to reduce risk may still result in negative outcomes as evidenced by the literature on social capital, in-group identification, and social exchange (Adler and Kwon 2002; Kranton 1996); for example, some forms of guanxi may produce beneficial effects for focal actors while harming the aggregate (Warren et al. 2004), and other forms may even create risk for focal actors as agreements are not enforceable (e.g., Zheng 2006). There is also a risk of investing more in the tie than it is worth, or creating ties that ultimately act as constraints (Adler and Kwon 2002). To reduce risk, it is important to choose guanxi partners wisely. The way one chooses partners may be what separates backdoor guanxi from bribery. The selection of partners can happen in two ways. A person may have a direct relation with the gate- keeper (they may already have or be developing working guanxi), or, as Fan (2002a) emphasized, a person may Workplace Guanxi 153 123 know someone with the proper connection who can make an introduction or solicit a favor on one’s behalf. Working your connections or gao guanxi (exploiting personal rela- tions) is used to show association with power and to solve practical life problems (Huang 2000). It has a negative unethical connotation. So, although one may have close ties with those directly in one’s own guanxiwang, one may not have close ties with a person with whom one is con- nected through an intermediary. It is transactions through these intermediary connections that are most likely to fall into the realm of backdoor guanxi. Because of the magnetic power of mianzi from status to attract guanxi processes, with backdoor guanxi there is less need for real friendship or exchange of emotion to sustain the relationship; that is, the basis for seeking the exchange is not affection (ganqing) but power and status (mianzi). Thus, backdoor guanxi does not necessarily require high- frequency interaction. However, this does not mean that emotion has no role to play. Emotional connections, even if they are borrowed from an intermediary, are what separate backdoor guanxi from bribery; that is, whereas the com- modity exchange that occurs with bribery focuses on val- ues that outweigh personal relationships, guanxi channels require an element of interpersonal connection that func- tions as a barrier to entry. This connection may be built up over time, or it may be borrowed through an intermediary. Guanxi is an emotional activity and the emotion is what allows the guanxi channel to be ‘‘dredged’’ and ‘‘kept at a hot temperature’’ and called upon over a long period of time (Wood et al. 2002, p. 266). In sum, the difference between working guanxi and backdoor guanxi may lie in the frequency of interaction, frequency of exchange of favors, and how clear the parties are on specifically what each side stands to gain from a particular interaction. Working guanxi is developed slowly without knowing what payoff one may receive down the line, while backdoor guanxi is more likely to be specifi- cally targeted at a particular goal and may even be formed in order to obtain that goal. Activating, Creating, and Using Guanxi To activate or develop guanxi, Fan (2002a, b) speculated that a person must expend resources (time, energy, money). Furthermore, a person would only take the trouble to expend these resources for a specific purpose, as per the Chinese saying ‘‘Nobody visits three-treasure temple without a good reason.’’ There is always an ulterior motive for building guanxi, both backdoor and working. The proposed framework highlights two distinct ways of creating or activating guanxi channels. Working guanxi entails slow and steady development through the exchange of small favors and affection into a stronger relationship that constitutes a basis for asking for larger favors. Back- door guanxi makes use of an intermediary with whom one already has working guanxi to establish a new channel for guanxi without having done the work to build the new relationship, similar to the altercasting described by Yeung and Tung (1996). The former depends relatively more on lian. The latter depends more on mianzi. I draw on two previous models of guanxi processes to propose an integrated model of the social and psycholog- ical processes of guanxi development. Conceptually, Chen and Chen’s (2004) three-stage model (initiating, building, using) is appealing. However, it does not address work- place relations specifically and it may be misleading inasmuch as using a guanxi channel appropriately also builds it; the stages are not necessarily distinct. Buttery and Wong’s (1999) four-stage model (fencer, fiancé, new friend, old friend) better reflects the way in which the balance of building and using activities shifts as the rela- tionship develops. In the earliest stage of guanxi activation, probing, each side makes moves to test the strengths and weaknesses of the other in order to decide whether to make the investment in building the relationship. Several studies have reported empirical evidence supporting the importance of socializ- ing to identify decision-makers or test the character of potential business partners, especially through shared experiences at hostess clubs (Bedford 2011; Bedford and Hwang 2011; Zheng 2006); for example, Zheng (2006) described a process of preselection in which ‘‘party A appraises party B prior to entering transaction relation- ships’’ (p. 174). Once a suitable target is identified as worthy of building guanxi, the second stage proceeds [the fiancé stage, in Buttery and Wong’s (1999) terms]. I label this the proving stage, because although Buttery and Wong’s term correctly conveys the intention to form a deeper commitment, it also conveys a level of intimacy and allegiance not present in the relationship. In this stage, both sides have the intention to form a working guanxi channel, but they are still outsiders to one another. It is the expec- tation of future exchange and mutual benefit that keeps the process going to build guanxi quality. Through constant social interaction to demonstrate facility with li (knowl- edge of proper etiquette) and the rule of renqing and through tailoring responses with personal consideration, mixed ties are gradually established until there is a level of trust and affection that can be drawn upon when one needs help, the new friend stage. At this stage it is still important to maintain the relationship through building activities. The final stage in each of the models is the old friend stage, when the working guanxi channel is fully established and the partner is considered an insider. The bottom of Fig. 1 displays the social process underlying working guanxi 154 O. Bedford 123 development. Next, I describe the psychological process underlying these social processes. Based on Fei’s (1947) conception of an ego-centered guanxi network, Chen and Chen (2004) proposed trust (xin) and feeling (qing) as the two psychological compo- nents underlying guanxi quality. They conceptualized trust as comprising ability and sincerity, which they claimed are similar to the well-established Western cognitive and affective types of trust (McAllister 1995), and feeling as comprising affection and obligation. According to the framework articulated in this paper, guanxi is an emotional activity, which suggests slightly different components from those conceptualized by Chen and Chen (2004). During the guanxi development process, trust related to the character of the target person is key; trust therefore refers to trust in the other person’s lian, which is not the same as the general Western conception of trust. In a Confucian-influenced setting there is heavy reliance on affective factors in the decision to trust (Tan and Chee 2005). Trust in lian is established through observation of social norms, or li, and based on renqing (Fig. 1). In other words, to establish working guanxi, one must trust the other person’s lian, which means one has recognized that the other has a certain ability and also that one believes the other will abide by social norms to return favors when needed (renqing). It is important to distinguish among the three meanings of renqing (Hwang 1987). The first meaning is similar to the English word ‘‘favor’’; it refers to an action or a resource offered as a gift or a favor. The second meaning refers to the social norms for proper behavior. Specifically, the rule of renqing requires that all favors be repaid. It is this second sense that is important to building trust. A person must demonstrate an understanding of renqing for others to trust his or her lian. The third meaning of renqing entails displaying the proper emotional response to the events of daily life. It entails sensitivity to the condition of those with whom one is close. It is this third sense of renqing that is important for the development of the feeling component of guanxi, which is ganqing (affection). Ganqing is so important that some researchers have claimed that the quality of guanxi is dependent solely on it (Jacobs 1979) or that one cannot have guanxi without also creating ganqing (Brady 2000). Ganqing can only develop through social interaction, which is why the exchange of favors is crucial; for example, in a relationship with good ganqing, ‘‘the tenant works hard to take care of the land and produce a good crop. In exchange the landlord does not calculate to the last dollar, but charges less than the agreed rent’’ (Jacobs 1979, p. 260). Brady (2000) quoted a Chinese official describing how to create friends: ‘‘Ganqing is the response of people to objective events. It is an important motivation for human activity. In order to work on people we first of all need to establish ganqing’’ (p. 955). Knowing a person’s heart is the most important part of the relationship, as indicated in the Chinese proverb: ‘‘Over a long distance, you learn the strength of your horse; over a long period of time, you know a person’s heart.’’ Mechanically following a rule would demonstrate reliability, but it is only if the action is made with personal consideration that the feeling compo- nent, ganqing, is activated. The feeling component of trust means that one is not simply mechanically following a rule by repaying a favor; the act must also have personal significance. For backdoor guanxi, the early stages may be trumped by mianzi as the channel opens up at the new friend stage. There is less need for testing the character of a new person when one already trusts the intermediary who made the introduction and provided a ready basis for exchange. However, there is still room to build the relationship, and a channel opened through an intermediary can continue beyond the initial exchange and grow from new friends into old friends with working guanxi. However, in order to skip early stages with someone introduced through an intermediary, the person would already need to have gone through these stages with the intermediary. In sum, working and backdoor guanxi may not be seen only as different ways of creating or building guanxi channels but also as different ways of using guanxi pro- cesses. In the former, the relationship itself and the potential for unspecified favors is the goal, while the goal of the interaction is the business solution in the latter. It is also possible to see backdoor guanxi as a way of using working guanxi, since after one has carefully built rela- tionships through working guanxi, one can then use those individuals as intermediaries in a backdoor guanxi process. 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