The Delta of Chinese Management: Guanxi, Rule of Law and the Middle Way 9819910102, 9789819910106

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Jane Jian Zhang

The Delta of Chinese Management Guanxi, Rule of Law and the Middle Way

The Delta of Chinese Management

Jane Jian Zhang

The Delta of Chinese Management Guanxi, Rule of Law and the Middle Way

Jane Jian Zhang Global Education Hub Shanghai, China Global Education Hub London, UK

ISBN 978-981-99-1010-6 ISBN 978-981-99-1011-3 (eBook) https://doi.org/10.1007/978-981-99-1011-3 © Springer Nature Singapore Pte Ltd. 2023 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

What sinks ships isn’t always what sailors can see, but what they can’t see. —Hellriegel et al. (1998, p.6)

Guanxi is not a fashionable topic, but with some changing characteristics and unique applications in the organisational context. The author was, initially, wondering what guanxi could have penetrated into and why guanxi-based employees (guanxi-hu) were so popular in a Chinese institute, as presumably, modern employment practices were supposed to be guided by the principle of rule of law. To explore the guanxi-hu versus nonguanxi-hu phenomena, she has immersed herself into different types of organisations for more than a decade, mainly observing the occurrence of guanxi, as an informal institution, and its impact on the formal aspect of managerial practices. Up to today, hiring and managing guanxi-hu remains subtle, with some variance of procedural and distributive justice across formal and informal institutions from the public to the private sector. As Hellriegel et al. (1998, p.6) suggest: “if you view an organisation as an iceberg, what sinks ships isn’t always what sailors can see—the overt, formal aspects on the tip of the iceberg, but what they can’t see—the covert, behavioural aspects”. The covert activities of people, such as guanxi, are often underneath the iceberg and underdiscussed in organisational studies. The author’s long-term engagement in this field partly reflects her expertise and experiences in personnel, people and professional management. By tracking people’s attitude and actions towards guanxi in both private and public sectors, guanxi embedded in Chinese culture for organisational management is, however, argued as unique within the delta scenario. On the one hand, guanxi supports favouritism with evident emotionality (and rationality). On the other hand, rule of law sustains institutionalism with sufficient humanity (and legitimacy). In an attempt to resolve those conjoined yet opposing factors, this book hopes to reconcile the formal–informal dilemma in people management.

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Guanxi is highly regarded in Chinese society and is seen as practically important. To co-exist with guanxi, an episode of guanxi-hu, either individuals or organisations emerged, developed or manipulated from various relationships, could be captured, compared and contrasted under the private, public and joint leadership. While rule of law is theoretically advocated by contemporary organisations, it is usually more welcomed by young, well-educated professionals in large multinational corporations (MNCs). In fact, rule of man still prevails in small- and medium-sized private entities, and rule by law copes well with the demands of guanxi in the public sector. How management efficacy could be culturally and institutionally shaped seems intricately crafted by the way guanxi and rule of law compete with and complement one another. With empirical evidences, this book proposes the middle-road theory for managing people in the Chinese context that differs from the ‘middle-of-the-road management’ of the Blake and Mouton Leadership Grid.1 Based upon the mandate absorbing the best of East and West (e.g. Zeng 2003/2005; Zhang 2007), the middleroad approach does not purely insist on the particularism of guanxi nor does it simply erase the universalism of institutions. The middle-road platform is blended with various ingredients for a better chance of success in people management. By taking an approximate view of Fukuyama (1995) and Schauer (1991), at first, rule of law is not sufficient for the prosperity and stability of an organisation, which needs to be activated by guanxi that bears huge moral responsibilities. In both theory and practice, modern managers still need to adopt guanxi informally, rationally and value institutions formally and creatively. This could possibly effect reconciliation between particularism and universalism. Given the interests of the organisation, favourite—built upon personal and professional trust, favour—for the sake of human feelings and obligations, and face— concerning morality and authority should be logically rationalised in the day-to-day management. With regard to managerial practice in Chinese culture, an ‘indigenous’ look is an alternative to the ‘ethnocentric’ view, which prioritises one culture’s value and criteria against the other and presumes the former is superior to the latter. For the vast majority of guanxi studies, it is seen that scholars in China attempt to examine its internal mechanism while those in other cultures are more interested in its external applications (Zhai 2004). The book is inspired by the interactions between the practice of guanxi and the concept of rule of law based on long-term ethnographic observations of various organisations in China. At a societal level, there are noticeable political, economic, socio-cultural and technological factors that shape the institutional context for managerial values in a specific country. Within an organisation, there are strategic and personal variables, such as ownership, leadership, demographics, personality, education, experience and competence, which impact one’s attitude, behaviour and perception of guanxi and 1

“Leaders in this position have medium concern for both people and production. They rely on tried and true techniques and avoid taking untested risks. They attempt to balance their concern for both people and production, but are not committed strongly to either. Conflict is dealt with by avoiding extremes and seeking compromise rather than sound resolution.” (Mullins and Christy, 2016, pp.370–371).

Preface

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regulations. For instance, Chen et al. (2004) report a higher level of trust in management from old peers and a lower level of trust from members, with working experiences in foreign firms. Holistically, the ethnographic approach proves to be of great value to this book as it allows a close look at the dynamics of rules that apply to guanxi and nonguanxi employees. Time, trust and truth are three keys to success of guanxi (Zhang 2003) and guanxi studies. A good rapport with relevant individuals certainly ensures the true discovery of guanxi-hu stories within an organisation. As a participant and an author, it is important to be moderate, rational and reflective for contextual engagement. Due to the effect an observer might have on the respondents’ behaviour (Bogdan 1972), it is essential to avoid being too close to some colleagues to accept more about their views or being distant from others to adopt less about their opinions. Meanwhile, being a complete participant enables a thorough examination of stories, myths, symbols and metaphors (Trompenaars and Hampden-Turner 2004). Hence, ethnography is realistic, telling a ‘real-life tale’ (Fine and Martin 1995) about people in a true sense. Moreover, a way of seeing is always a way of not seeing (Wolcott 1995), so there is a potential gap in observing and interpreting the reality. It is possible to experience almost ‘everything’ around, but neither does it mean all the ‘world’ of it nor does it tell about all the ‘world’ seen for a variety of reasons. Also, a further obstacle exists in introducing the cultural meaning from one language to the other. Although the final show might not be exactly the same as the original one, speaking in a native tone and seeking help from local inhabitants are two coping strategies in presenting the original meaning. In addition, an ethical dilemma may arise from the extreme difficulties in managing privacy of guanxi and legitimacy of management. Since there is a private–professional boundary concerning social network studies (Borgatti and Molina 2003), studying guanxi-hu within the organisational context should be dealt with caution. However, the political ‘red’ and the illegal ‘black’ practices of guanxi are not tackled. Because of ethical concerns, the book keeps the identity of the parties involved strictly confidential and completely anonymous but conveys full opinions of key informants in their titles or appellations. In total, there are ten chapters—each chapter begins with a brief introduction and ends with a concluding remark. Specifically, the first five chapters recapture the topic of guanxi with particular reference to its subtle, unique indigenous concepts, such as guanxiwang, guanxixue and guanxi-hu. From Chaps. 6 to 8, favourite—trusting individuals versus trusting institutions, favour—social exchange versus market exchange and face—moral lian and image mianzi are illustrated with regard to managing people in Chinese culture. Concluding, Chaps. 9 and 10 aim to strike a middle ground to offer practical implications for managers who are doing business and management in China. Finally, it is difficult to conclude that the differential pattern of guanxi is in line with social network theory. While one person has a diverse network of connections, a tie between two people has a dynamic prospect and manifestation. Although there has been a shift from personal to professional contacts (Le et al. 2002) in Chinese society, the expressive role of kinship is not declining while the instrumentality of ties may better explain the ongoing cultivation of guanxi ties. Although an abysmal grasp

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of values and relationships is a ‘sword’ for personnel decisions (Trompenaars and Hampden-Turner 2004), the middle-road paradigm could be a pragmatic complement to the classic Western management theories. Shanghai, China

Jane Jian Zhang

References Bogdan, R. 1972. Participant Observation in Organizational Settings. New York: Syracuse University Press. Borgatti, S. P., and J. L. Molina. 2003. Ethical and strategic issues in organisational social network analysis. The Journal of Applied Behavioural Science 39 (3), 337–349. Chen, C. C., Y. R. Chen, and K. Xin. 2004. Guanxi practices and trust in management: A procedural justice perspective. Organization Science 15 (2), 200–209. Fine, G. A., and D. D. Martin. 1995. Humour in ethnographic writing: Sarcasm, satire, and irony as voices in Erving Goffman’s Asylums. In Representation in Ethnography, ed. J. Van Maanen. Thousand Oaks, CA: Sage. Fukuyama, F. 1995. Trust: The Social Virtues and the Creation of Prosperity. London: Penguin. Hellriegel, D., J. W. Slocum Jr., and R. W. Woodman. 1998. Management, 8th ed. South-Western Publishing. Le, G. A., X. X. Wang, and X. J. Wang. 2002. A Study into Contemporary Interpersonal Relationship . Tianjin: Nankai University Press (天津: 南开大学出版社). Schauer, F. 1991. Playing by the Rules: A Philosophical Examination of Rule-Based Decision Making in Law and Life. Oxford: Clarendon Press. Trompenaars, F., and C. Hampden-Turner. 2004. Managing People Across Cultures. West Sussex, England: Capstone Publishing Ltd. Wolcott, H. F. 1995. Making a study more ethnographic. In Representation in Ethnography, ed. J. Van Maanen. Thousand Oaks, CA: Sage. Zeng, S. 2003. Chinese Style Management《中国式管理》 . Beijing: China Social Science Publishing House (北京: 中国社会科学出版社). Zeng, S. 2005. Management By I-ching《大易管理》 . Beijing: Oriental Publishing House (北京: 东方出版社). Zhai, X. 2004. Daily Authority in Chinese Society—A Historical Sociology Study of Guanxi and Power《中国社会中的日常权威—关系与权力的历史社会学研究》 . Beijing: Social Scientific Literature Publishing House (北京: 社会科学文献出版社). Zhang, J. 2003. A paradigm shift in China: The impact of globalisation on Guanxi. MSc dissertation, University of Nottingham. Zhang, Y. 2007. A Critique to Chinese Style Management《中国式管理批判》 . Beijing: China Era Economic Publishing House (北京: 中国经济时代出版社).

Acknowledgements

First of all, I would like to express my extreme gratitude to Prof. Maurizio Marinelli (Honorary Professor , University College London ) for his enormous support and warm friendship. Professor Marinelli is not merely a fantastic academic supervisor but also a wonderful lifetime mentor. My sincere appreciation also goes to Prof. Leroy White (Professor of Management), who offered tremendous guidance and constant encouragement. Professor White has been encouraging me continuously since my time in Bristol and his professional career movement to the University of Warwick. I truly appreciate their valuable time and ongoing support very much indeed. Furthermore, I want to extend my special thanks to my friends in the UK, Europe and Australia (Chris Born, Founding Director of Born Health Ltd; Daryl Guppy, a former national board member of the Australia China Business Council; Dianne Francombe, Chief Executive of Bristol and West of England China Bureau; Drayton Bird, Founder of the European Academy of Direct and Interactive Marketing, Fellow of the Royal Society of Arts, and Honorary Fellow of the Institute of Direct Marketing; Khadija Schwach-Abdellaoui, CEO Goqing Ltd.; Tony Presdcott, Director of Bristol China Partnership), who spent their precious time proofreading the different chapters of my book. They are all dedicated and knowledgeable industry and business professionals, with particular reference to international business and cross-cultural management as well as promoting or doing business with China. In addition, I am very grateful to Oslyn Dey-Graff, a highly professional linguist who has devoted her spare time to editing my book. She is an excellent language teacher and an efficient proofreader and editor, with a deep cultural understanding of China. I would always recommend her for English teaching and proofreading without reservation. Last but by no means least, I am very thankful to Bruce Siyuan Feng, a gentle, caring and self-disciplined child. His good virtues and positive attitude in our life have been appropriated through this journey from the UK to China. This book could not have been written and published without the help of dozens of people. I must express my sincere thanks to all those who have given their time and effort so generously to the Review. There are also some other friends and contacts who have helped me in one way or another during the writing of this book. I am deeply grateful to all of them! ix

Contents

1

The Managerial Puzzle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Rule of What Puzzle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A Conditional Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An Indigenous Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An Ethnographic Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 2 4 6 10 12

2

Guanxi: The Indigenous Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Is Guanxi General? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Is Guanxi Self-Oriented or Other-Oriented? . . . . . . . . . . . . . . . . . . . . . . . . Is Guanxi Family-Based or Friend-Based . . . . . . . . . . . . . . . . . . . . . . . . . . Is Guanxi Authority-Oriented or Equality-Oriented? . . . . . . . . . . . . . . . . Is Guanxi Static or Dynamic? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Is Guanxi Unique? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 18 19 22 26 28 31 33

3

Guanxi-Wang: The Differential Pattern . . . . . . . . . . . . . . . . . . . . . . . . . . The Guanxi Network Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Ego-Centred Network’s Extension and Expansion . . . . . . . . . . . . . . . The Differential Structure of Guanxi Network . . . . . . . . . . . . . . . . . . . . . . The Dynamic Strength of Guanxi Network . . . . . . . . . . . . . . . . . . . . . . . . . The Core Network Versus the Clique Network . . . . . . . . . . . . . . . . . . . . . . The Insider–Outsider Dichotomy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37 38 39 41 44 46 50 53

4

Guanxi-Xue: The Tactical Pipeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Art-Science Study of Guanxi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Practical Pathways of Guanxi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Good-Bad Ethical Dilemma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Dual-level Personal-Professional Connections . . . . . . . . . . . . . . . . . . The Direct–Indirect Go-Between Approaches . . . . . . . . . . . . . . . . . . . . . .

55 56 58 60 62 65

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Contents

The Multi-layer Types of Familiarity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Guanxi-Hu: The Subtle Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Guanxi-Market Orientation Divide . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Kinship-NonKinship Dichotomy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Expressive-Instrumental Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Particularism-Universalism Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . The Favouritism-Institutionalism Dichotomy . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71 72 73 77 81 84 85

6

Favourite: The Trust Pathway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Favourite and Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Ties and Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 In-Group Trust and Out-Group Mistrust . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Personal Trust and System Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 True Favourites and True Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Favourite Pathway I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Favourite Pathway II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Favourite Pathway III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Favourite, Favour and Face . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

7

Favour: The Feeling Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expressiveness versus Instrumentality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Particularism versus Universalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Affection versus Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Favour Exchange versus Market Exchange . . . . . . . . . . . . . . . . . . . . . . . . . Sentimentalism versus Utilitarianism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Emotionality versus Rationality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Further Considerations about Favour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105 106 108 110 112 115 117 119 120

8

Face: The Power Paradox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in Chinese Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in Power Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in Stakeholder Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in Buddha-Monk Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in Favour Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in Four Zones—Idealism or Realism . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

123 124 127 129 131 134 136 139

Contents

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The Rule of What Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Traditional Foundation for Institutional Practice . . . . . . . . . . . . . . . . The Ethical Judgment in Institutional Practice . . . . . . . . . . . . . . . . . . . . . . The Subtle Complex of Organisational Institutions . . . . . . . . . . . . . . . . . . The Strategic Evolution of Organisational Institutions . . . . . . . . . . . . . . . The Rule of What Institutional Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Middle Institutional Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

143 144 146 148 150 154 157 159

10 The Middle-Road Paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Differential Pattern of Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Differential Mode of Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Differential Set of Voice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Differential Matrix of Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Middle-Road Approaches to Management . . . . . . . . . . . . . . . . . . . . . The Purple Line: A Favourite Approach . . . . . . . . . . . . . . . . . . . . . . . . . The Blue Line: A Favour Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Green Line: A Harmonious Approach . . . . . . . . . . . . . . . . . . . . . . The Middle Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165 166 168 170 172 174 174 175 176 177 179

About the Author

Jane Jian Zhang has earned her Ph.D. degree from the University of Bristol. She was the recipient of the Book Prize and WUN (Worldwide University Network) RMP (Research Mobility Programme) Awards in the UK. She has covered top leadership and management roles both in NGOs and in the commercial sector. She is now holding senior managerial and teaching positions in consulting firms and higher education institutions across China and the UK. Her research interests include Chinese Management, International Business and Cross-cultural Management.

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List of Figures

Fig. 1.1 Fig. 1.2 Fig. 2.1 Fig. 2.2 Fig. 2.3 Fig. 2.4 Fig. 2.5 Fig. 3.1 Fig. 3.2 Fig. 3.3 Fig. 3.4 Fig. 3.5 Fig. 3.6 Fig. 3.7 Fig. 4.1 Fig. 5.1 Fig. 5.2 Fig. 5.3 Fig. 5.4 Fig. 5.5 Fig. 6.1 Fig. 7.1 Fig. 7.2 Fig. 8.1 Fig. 8.2 Fig. 9.1 Fig. 10.1

A conditional map of Chinese management . . . . . . . . . . . . . . . . . An indigenous framework of Chinese management . . . . . . . . . . . A profiled model of guanxi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The employment diagram of direct ties . . . . . . . . . . . . . . . . . . . . . The indirect tie diagram from the employees’ perspective . . . . . . The indirect tie diagram from the decision-makers’ perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The unique elements and features of guanxi . . . . . . . . . . . . . . . . . A conceptual model of guanxi network . . . . . . . . . . . . . . . . . . . . . An overlapping model of guanxi networks . . . . . . . . . . . . . . . . . . The Vice President’s core network . . . . . . . . . . . . . . . . . . . . . . . . . A Departmental Head’s clique network . . . . . . . . . . . . . . . . . . . . . The subtle change of the core network . . . . . . . . . . . . . . . . . . . . . The subtle change of the clique network . . . . . . . . . . . . . . . . . . . . The insider–outsider dichotomy of guanxi network . . . . . . . . . . . The ladder model of guanxi-xue . . . . . . . . . . . . . . . . . . . . . . . . . . . The divide of employees and employment rules . . . . . . . . . . . . . . The relational diagram of guanxi-hu through direct links . . . . . . The relational diagram of guanxi-hu through indirect links (A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The relational diagram of guanxi-hu through indirect links (B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . An ‘Expressive-Mixed-Instrumental’ matrix . . . . . . . . . . . . . . . . A favourite superior-subordinate model . . . . . . . . . . . . . . . . . . . . A guanxi-based exchange model . . . . . . . . . . . . . . . . . . . . . . . . . . A market-based transaction model . . . . . . . . . . . . . . . . . . . . . . . . . A Chinese face model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Face in four zones, from Zhai (2005b, p. 137) . . . . . . . . . . . . . . . The middle institutional path of management practice . . . . . . . . . The middle-road paradigm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 7 17 24 24 25 31 37 38 42 44 48 48 51 55 71 74 74 75 79 87 105 105 123 137 143 165

xvii

List of Tables

Table 2.1 Table 5.1 Table 8.1 Table 9.1

Understand the differential strength of guanxi from daily phrases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The interrelated cycle of guanxi ties . . . . . . . . . . . . . . . . . . . . . . . Examples of giving face in a Chinese organisation . . . . . . . . . . . The ‘P-R-S’ list of personnel institutions . . . . . . . . . . . . . . . . . . .

29 77 135 152

xix

List of Boxes

Box 4.1

An archetypal story of guanxi-xue . . . . . . . . . . . . . . . . . . . . . . . . . .

58

xxi

Chapter 1

The Managerial Puzzle

While China becomes a more powerful economy, how guanxi impacts doing business and managing people, in China, increasingly attracts attention from the international community. Within the rule of law framework, Western managers are easily confused when dealing with their rule of man oriented Chinese counterparts with a rule of what puzzle in daily practice. With the gradual acknowledgement of cultural adaptation in cross-cultural management, it seems essential to explore the Chinese characteristics of Chinese management by identifying the interrelated effects between the formal and informal institutions within a conditional map (Fig. 1.1). Rule of Man facilitator

Guanxi

competitor

Fig. 1.1 A conditional map of Chinese management

Chinese Management with Chinese Characteristics substitute

Rule of Law

© Springer Nature Singapore Pte Ltd. 2023 J. J. Zhang, The Delta of Chinese Management, https://doi.org/10.1007/978-981-99-1011-3_1

1

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1 The Managerial Puzzle

A Rule of What Puzzle People management has been defined as leading, hiring, evaluating, and motivating employees (e.g. Hunt 1992; McGregor 1960; Trompenaars and Hampden-Turner 2004). In a relationship-oriented society like China, this means managers have to balance personal relations and rational laws (Mukhopadhyay and Mukhopadhyay 2020) between Daoist relativism and Confucian proactivism (Isac and Remes, 2021). In particular, handling affairs (guanshi) and dealing with people (liren) (e.g. Shen and Wan 2006; Yan et al. 1991; Zeng 2005) are two well-known commonsense notions of management practices in Chinese organisations. Managing people in Chinese context unavoidably suggests a need of understanding guanxi at personal, interpersonal and social levels. Guanxi, understood as individual and organisational bounds, for human affections and mutual obligations based on strong faith in ethics and morality, nurtures a typical form of social capital and social norm (Bernat et al. 2021). To explore both local and global relevance (Li et al. 2012), it is meaningful to tackle unique organisations under public, private and joint leadership from an anthropological emic-etic perspective. Bernat et al. (2021) claim that Chinese society is ruled by people other than by law based upon interpersonal connections. However, China has undergone systematic transformations after the introduction of ‘open door and reform’ policy in 1978. The mixed slogan—‘socialist market economy with Chinese characteristics’, in principle, lays a foundation for the rule of what evolution as cited below. While harmony becomes a great banner along with persistence in the institutional reform, rule of virtue (dezhi) has been advocated to complement rule of law. In February 1978, socialist legalism (fazhi) was raised to the Chinese People and Political Consultative Conference (CPPCC) since the government had called for an end to rule of man (renzhi). The mottos of those days were: “There must be laws to rely on; Where there are laws, they must be followed; laws must be strictly enforced; and violations of laws must be corrected (youfa keyi, youfa biyi, zhifa biyan, weifa bijiu).” In March 1999, “rule the country in accordance with law, establish a socialist ‘rule of law’ state” (yifa zhiguo, jianshe shehui zhuyi fazhiguo) was formally written into the constitution. (Zhu 2007, p. 64)

The purpose of rule of law is to rationalise and enhance administrative efficiency (Peerenboom 2004). In correspondence to the more formalised institutional policies forged at the state level, people are expected to welcome new customs grafted onto old traditions, and thus are pushed to change their thoughts and behaviours regarding guanxi’s pull towards reciprocal obligations and backdoor activities (Guthrie 2002). Meanwhile, guanxi involves a hidden and dynamic relationship (Chang and Lii 2005). In business practice, managers may place enormous efforts into setting up various relationships to gain an important source of sustainable competitive advantage (Chang and Lii 2005; Luo 1997; Park and Luo 2001; Tsang 1998). From a resource point of view, guanxi is related to strategic capability that contributes to the growth of a firm’s market competitiveness and external liaison (e.g. Park and Luo 2001). For instance, an increased connectivity between people could bring the organisation closer to the community and its various stakeholders. Such connectivity

A Rule of What Puzzle

3

creates more opportunities for new inter-unit linkages (Tsai 2000), promotes greater frequency of information exchange, and introduces more efficient ways of resource acquisition (Gulati 1998; Gulati et al. 2000). Thus, guanxi serves as relationship marketing (Mukhopadhyay and Mukhopadhyay 2020) for doing business in China. With the traditional ethical precepts, people are encouraged to advocate guanxi for favouritism against institutionalism. As a part of Chinese cultural traditions, guanxi plays the differential role of informal institutions, substituting or supplementing formal institutions (Horak and Restel 2016; Li et al. 2019) in regulating business behaviour and impacting the development of an organisation (Hwang 1987). However, such effects do not necessarily improve internal operations on an equal basis (Park and Luo 2001). If a candidate, without the right credentials and skill set, joins a firm because of guanxi, the perceived quality and equality of employment could certainly be deteriorated to a large extent. Therefore, it is necessary to examine the process of adopting cultural traditions and their actual impacts, on the formation of new precepts that could hinder desirable managerial patterns. On the one hand, managers must learn to steer through a sea of guanxi (Lockett 1988; Wall 1990) for business development and personnel recruitment; On the other hand, managers should keep relational neutrality and procedural justice in making decisions if inclining to shift from rule of man to rule of law (Chen et al. 2004). These two controversial directions lead to a relationship-driven or performance-based management dilemma. Guanxi no doubt helps win credits for personal favourites, favour and face in either social or organisational settings. With no exception, it is apparent that managers should have the right ability and rationality to manage employees through either guanxi or formal hires. To absorb the best of guanxi into the best practice of rule of law, or vice versa, the plural versions of ‘legitimacy’ should not be ignored when engaged in Chinese management. As a formal concept, ‘legitimacy’ is often interpreted on the basis of organisational strategies, structures and systems while considering social norms, values and beliefs. Accordingly, the actions of an entity being deemed desirable, proper or appropriate are defined as legitimate (Suchman 1995). A typical example is the fact that managers making decisions as per organisational rules, regulations and procedures, is called institutionally legitimate (Hwang 1980). By contrast, granting favour and giving face are usually means of expressing emotional feelings, helping important others, and repaying human debts. All this would perhaps destroy the ‘legitimacy’, and thus undermine the principle of ‘universalism’ so as to underlie the practice of ‘particularism’ (Trompenaars and Hampden-Turner 1997). As Zhang (2015, pp. 208–209) put forward, the three general sources of managerial philosophies of Chinese management are culture, socialism and foreign ideas. These thoughts could be authentic materialised and classic institutionalised embedded in authoritarianism, familism, paternalism and personalism. They, in turn, determine how power is operated and legitimacy is gained, how order is achieved, and how interpersonal relationships are dealt with. With a focus on egalitarianism, socialism denies family value and kinship with omnipresent and intrusive state, which shapes the recent tradition and source of legitimacy. Under this circumstance,

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1 The Managerial Puzzle

management practices in the state-owned-enterprises (SOEs) directly affect workers’ rights and stakeholder relationships in the work unit system (danwei). Across the different types of organisations, favourite, favour and face are sometimes handled by honouring the concept of ‘legitimacy’, or alternatively based upon a plausible rule-based approach. A compromise is therefore usually sought through particular rationality and procedural justification by some highly experienced ‘red and professional’ managers. Manipulating guanxi and regulations supposes a cultural demand but yet may counter the institutional origin of rule of law. Guanxi then nurtures the configuration of favourite, favour and face in many Chinese organisations. The mixture of favourite, favour and face propositions, needless to say, would reconfigure the rule of what delta, in managerial practice.

A Conditional Map Guanxi has become a pervasive topic in daily life, social practice and academic research. In organisational settings, employees are often labeled as guanxi-hu (guanxi-based) and nonguanxi-hu (nonguanxi-based) due to their prior or present, direct or indirect connections with people, who could influence personnel decisions within a particular organisation. Although these are common practices that have been perceived as popular cultural phenomena, an arising puzzle is: with openminded learning and leverage of rule of law, is rule of man still held in high regard in employee management? Figure 1.1 depicts an indigenous conditional map in an organisation: (1) employees are divided into two basic kinds because of guanxi: guanxi-hu versus nonguanxi-hu; and (2) guanxi supports rule of man other than rule of law, and the practice of guanxi somehow substitutes for the enforcement of rule of law, which in turn puts rule of man and rule of law in a more competitive scenario. Therefore, the production of guanxi-hu versus nonguanxi-hu, the facilitation of rule of man and the substitution of rule of law by guanxi, and the competition between rule of man and rule of law, constitute a conditional map of Chinese management with Chinese characteristics. In early 1980s, some scholars (e.g. Hwang 1983/1987; Qiao 1982) began to explore the dynamics of guanxi. After that a trading-relationship-for-profit approach appeared for the study of guanxi in the business realm (e.g. Arias 1998; Davies 1995; Kiong and Kee 1998; Tsang 1998; Yeung and Tung 1996). Then the trend has moved towards the examination of organisational networking (e.g. Park and Luo 2001), ethics (e.g. Chan et al. 2002), morality (e.g. Tan and Snell 2002), personnel and labour market (e.g. Bian 2002/2018), and human resource management (e.g. Law and Jones 2009). In the latest decade, it is interesting to note that more and more researchers have emphasised it in their studies on Chinese management (e.g. Isac and Remes, 2021; Li et al. 2012) and cross-cultural management (e.g. Smith 2012; Wilson and Brennan 2011).

A Conditional Map

5

Guanxi in Chinese refers to a network of complex relationships. Proceeding from theoretical studies, guanxi has been developed into a diverse selection of meanings. Holistically, guanxi denotes personal, private, informal, and personalised connections versus interpersonal, impersonal, public, formal, organisational, and institutionalised associations. Philosophically, guanxi involves tangible individuals but with intangible compositions (e.g. social status, psychological expectations and invisible references). In a wide range of relevant studies, guanxi varies from direct, close, expressive, and ascribed connections to indirect, distant, instrumental, and achieved or advanced associations. From an indigenous perspective, guanxi should be viewed as a person-based system of relationships (Zhai 2005a, b, c, d, e). A number of indigenous terms must be learned and defined as per daily communication and comprehension. • Guanxi draws upon a variety of connections with sorts of personal knowing and/or purposive understanding in-between, producing guanxi-hu by guanxi-wang and guanxi-xue, mainly for favourite, favour and face. • Guanxi-hu means one attaching to the other, with good wishes for emotional and rational support. Guanxi-hu is the unit of guanxi and guanxi-wang. • Guanxi-wang refers to one’s connections with others that form a tangled web of relationships that demands time, efforts, and tactics for intriguing interests. • Guanxi-xue pictures the art and science of guanxi development and cultivation especially in manipulating and maintaining relationships, with particular reference to various tactics and means for favour and face exchange. • Ganqing—emotional attachment (Bian 2018)—an emotional compound of expressive and sentimental feelings and a particular bond for personal trust; granting a favour is somehow a way to express ganqing, particularly for one’s favourite members. • Renqing—personalised obligation (Bian 2018)—a prolongation of ganqing, a rational debt contracted by instrumental and utilitarian feelings, with strong desires for favour in liaison with face. • Lian—a structure of moral face inherited with dignity and guilt, reflecting one’s inner quality of reputation and prestige. • Mianzi—a measure of one’s social face, denoting one’s image being perceived by others (e.g. appearance, achievement, success, status, power and authority). Each coin has two sides. Guanxi is usually praised in business and market development, such as business to business (B2B), business to consumer (B2C), business to government (B2G) (e.g. Chen 2008) or even today’s consumer to consumer (C2C). To clarify further on the individual or group nature of guanxi, it is not always in the form of B2B or C2C, but also takes the shape of B2B2C (Mukhopadhyay and Mukhopadhyay 2020). However, it often faces criticism for being inefficient with unfair nepotism and personal aims (e.g. So and Walker 2006). In fact, some scholars (e.g. Bian 2018; Guthrie 2002) have held different views, upon whether guanxi is becoming more or less significant, in referring to the rising importance of formal institutions in China. Yet, this prospect lacks empirical inquiries into organisational practice.

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1 The Managerial Puzzle

Aristotle once said—Law is order, and good law is good order. The principle of rule of law has two meanings: One is that regulated laws must be observed and followed, and the other is that laws observed must be appropriate and practicable. From theoretical debates between rule of man and rule of law to a practical integration of a pure imported rule of law concept, a traditional rule of man doctrine, and a convergent rule by law pathway, there is a need for a mid-range approach in Chinese management. Over such cross-institutional manifestations for organisational management, rule of man, rule by law and rule of law are normally classified by (1) the completeness of the formal institutional system, (2) the ability to refer formal institutions in the decision-making process, and (3) the power and authority of individuals within a particular organisation. It is clear that the core of rule of law is the capacity of the institutional system and its procedural mechanism to impose meaningful restraints on all members. Within an organisation, formal institutions signify rules and regulations, policies and procedures, system and schemes, thus form the premise of rule of law. Once a clear and complete series of formal institutions are set, managers should take the ‘authority of law’ into the decision-making process and managing people is presumably on the basis of rule of law. Otherwise rule of man or rule by law could have been in place. Under these three flags, managing people in Chinese culture is certainly subject to the subtle relationship. This requires sufficient understanding and intensive analysis of guanxi, as an informal institution and law, also as the formal institution at different layers and levels. Under the framework of rule of law (Peerenboom 2002), formal institutions are standards of general applicability, so they are definitely not for personal expressions of particularity. In reality, one with guanxi, namely guanxi-hu, may be treated according to concrete circumstances. Specifically, it is assumed that guanxi-hu has a potential to put rule of man and rule of law in a ruling competition. Within an organisation, the substitution and facilitation processes between guanxi and the rule of what option, reproduce a unique pattern of Chinese management. The conditional map is showing possibilities not only for an inextricable co-existence of guanxi and formal institutions but also an interrelated reconciliation between favouritism and institutionalism. To discern the origin of these philosophies and the practice of Chinese management (Zhang 2015), we need to investigate the real practices of management nourished by the various indigenous concepts and approaches.

An Indigenous Framework To explore the original philosophies of Chinese management, we need more concrete understanding of guanxi practices in Chinese society and organisations. In principle, guanxi has three tangible forms and three pairs of intangible norms embedded in the cultural and organisational contexts. These forms and norms frame a pragmatic multidimensional framework (see Fig. 1.2) in Chinese culture. Some intriguing factors like

An Indigenous Framework

7

Guanxi-hu

Nonguanxi-hu 3Ps: Procedure Policy Plan

Guanxi-hu

Rule of Law

3Fs: Favourite Favour Face Rule of Man

Xi vs. Yi

Ganqing vs. Renqing

Lian vs. Mianzi Guanxi-xue

Guanxi-wang Rule by Law

Fig. 1.2 An indigenous framework of Chinese management

trust and feeling, power and authority, morality and integrity would narrate their own tales in managing people. Those indigenous concepts are no more than a vindication of common sense analysis. • • • • • •

Guanxi-hu—individuals and/or organisations, Guanxi-wang—personal and/or social network, and Guanxi-xue—strategies and/or tactics; xin versus yi—trust versus suspect, ganqing versus renqing—affection versus obligation, and lian versus mianzi—moral face versus social face.

From the central concept—guanxi, the derived forms—guanxi-hu, guanxi-wang and guanxi-xue, and norms—trust, feeling and face, play around the main triangle in the middle of this framework. The tangible formation and intangible normalisation of guanxi could potentially facilitate the transfer of guanxi-hu—guanxi-based employees into an organisation. If managers simply apply the classical management theories, they would blur the distinction between the right and the wrong of accepting or not accepting guanxi-hu. Instead, they should observe and analyse the primitive picture behind guanxi—guanxi-wang and guanxi-xue, and then make the best use of social, institutional and personal rationale to evaluate and predict the use of guanxi for a particular guanxi-hu case or a guanxi event. By referring to the pragmatic source of the traditional cultural thoughts, managers would need to integrate guanxi and guanxi-related forms and norms into their everyday activities.

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1 The Managerial Puzzle

Nevertheless, guanxi-hu, guanxi-wang and guanxi-xue are deeply rooted in and intrigued with intangible feelings, such as personal trust or suspect, human sentiment or obligation, and social morality or image. In normal Chinese practice, people start a relationship with acquaintances from xin (trust) and begin a relationship with strangers from yi (suspicion). With an intention to obtain either expressive gratitude or instrumental support, people heavily rely on ganqing and even consume renqing in order to gain personal trust or favour. To capture one’s morality, image and power, face—lian and mianzi, are perfect tools for self-reflection and other-assessment. All this may glue guanxi and rule of man together, with the production of guanxi-hu and circulation of favourite, favour and face at both societal and organisational levels. The guanxi-hu versus nonguanxi-hu dichotomy attributes to any pre-existing connections or perceived associations with powerful people or influential figures inside or outside the organisation. As a consequence, any possible assumption or implication of giving preferential treatment to guanxi-hu would be inferred as being against equal, fair and/or just treatments for other employees. To prevent such potential conflicts, smart managers may manipulate rules and reinterpret regulations, which could essentially lead to the progress of rule by law. In fact, nonguanxi-hu and guanxi-hu are yet switchable by increasing or decreasing the frequency of contacts and the amount of investment in guanxi. Featured by feelings of emotions (ganqing) and obligations (renqing) and senses of morals (lian) and images (mianzi), guanxi differentiates employees into guanxihu and nonguanxi-hu by gaining favourites, granting favours and giving face. With various motives and desires, managers decide to choose the right rule of interactions for different types of employees. Influenced by multiple intervening variables, nonguanxi-hu may have to bear the rule of law slogan with the pre-set policies, procedures and plans. This would in turn serve as a benchmark practice for managing people in Chinese culture. Ultimately, the application and integration of guanxi into management could have an actual impact on the rule of what delta, and vice versa. With the rising confrontation between guanxi-hu and nonguanxi-hu, the interplay across favourite, favour and face against policy, procedure and plan, would be of course tricky when managing people within the context of Chinese organisations. Since “indigenous Chinese management is still at its initial stage of trial and formation” (Zhang 2015, p. 209), what has been listed in the above indigenous framework could be those authentic factors shaping a new paradigm of Chinese management. Proposed by one of the well-known Chinese anthropologists and sociologists— Fei Xiaotong (1984/1994), ‘the Differential Mode of Association’ offers incredible insights into the study of social structure and guanxi system. As to organisational studies, ‘the Differential Mode of Management’ (Hu et al. 2002) argues that renqing, as the most significant factor, has an active influence on the rule of law enforcement. Based on the two ‘differential’ notions and the above proposed framework (see Fig. 1.2), first of all, a general ‘differential’ pattern of employee management in a Chinese organisation is suggested as follows:

An Indigenous Framework

9

• Employees may be ‘differentially’ referred in Chinese organisations. • Guanxi-based employees might escape from the rule of law principle; but • Nonguanxi employees have to stick to the rule of law concept in principle. Secondly, the boundary between individuals and groups is relatively vague due to the flexible ego-centred network as per the Chinese cultural beliefs. This offers all sorts of subtleties in guanxi ties and institutional trust in job allocation (Bian 1994/1997a, b, 2002; Zhai 2004/2005a, b, c, d, e). While trust in insiders (group members) and distrust of outsiders are extremely polarised, personal trust and system distrust are controversial and complementary (Chen et al. 2004). Such a contradiction is mainly imposed by the cultural effect of guanxi and the institutional force of rule of law (e.g. contract) when managing people in Chinese society. • The particularity of trust in Chinese society may nourish the favourite phenomena. • Personal trust is competing with institutional/system trust; but • Personal trust is also a complement to institutional/system distrust. Moreover, renqing and mianzi for favour exchange could be extensively seen (e.g. Huang 1983/1987; Yang 1994; Yan 1996) in our daily life. Whilst expressiveness can be derived from instrumentalism, granting favour could be emotional and rational. The rationality of favour exchange is realised through cost–benefit (human debt) analysis and status-power (face) assessment. A broad spectrum of proper formal institutions (e.g. rules and regulations) are introduced and implemented in order to prevent emotional and unfavourable, favour-giving decisions in modern organisations. • If favours concern organisational benefits other than individual interests, then these decisions tend to be legitimately favourable. • If an organisation emphasises institutional construction and perfection, then unfavourable, favour decisions can be possibly prevented. Furthermore, the moral, influential power adhering to face (e.g. Hwang 1987/1997a, b; Yang 1994; Zhai 2004) illustrates how and why intermediaries could play a significant part in guanxi connections. This also elaborates how the subtle facets of face associated to/with a pool of people could bind and/or work together to generate favours for a chain of guanxi-hu individuals. Within a series of guanxi connections, one’s attempt to promise a favour and committing to resolve conflicts, lies in the heterogeneous aspect of face (Zhai 2005a, b, c, d, e). The subtlety of face in Chinese management is displayed in its semi-attached nature and semi-detached feature. • A powerful social face (mianzi) interferes with the formal routine decision-making and conflict-resolution processes. • A respectable moral face (lian) and an honourable social face (mianzi) constitute and complement the informal rituals of organisational leadership. In addition, the dichotomy between ‘particularism’ and ‘universalism’ (e.g. Chang 2010; Feng 2006) explains why favour does or does not happen in a transitional

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economy within the Confucian society. With a shift of cultural values and the progress of market reform, there are possible solutions for the rule of law practice in Chinese management, even within a guanxi-based economy and a guanxi-oriented market. • The strengthening of ‘formal institutions’ and the highlights of ‘market exchange’ may help managers avoid favour exchange and obligations. • The strategic planning of ‘formal institutions’ and an emphasis on ‘universalism’ will help promote the rule of law enforcement and practice. The cultivation of guanxi depends on organisational, institutional and strategic factors (Park and Luo 2001). While the legacy of Chinese management has been inherited from the Confucian classics (Hu et al. 2002), guanxi has its unique function in the utilisation of resource allocation and its own mission on the improvement of management efficiency (Dong and Yang 2006). As a matter of fact, the above five proposed propositions, the differential versions of employees with different notions of feelings and dealings (trust, obligation, morality, power, and authority for favourite, favour and face) and the strategic arrangement of institutions are still preliminary. Any other burgeoning factors or emerging variables would however not preclude from the ongoing field research for this book. To explore the formal and informal sector of indigenous managerial practice on a daily basis, we need more ethnographic work and empirical investigation (Zhang 2015) in Chinese organisations.

An Ethnographic Approach One can never discern the true face of the mountain Lu, if one could only look out from within these hills. (bushi Lushan zhen mianmu, zhi yuan shenzai ci shanzhong). — SU Shi, SONG Dynasty

As one of the very famous Chinese poets stated, it is easy to fail in seeking the truth about a person or a matter if the observer only stays inside the scene. Guanxi is essentially a cultural phenomenon deeply rooted in Chinese psyche and institutions (Gold et al. 2002a, b), and has been adaptive to institutional transformation and market competition (Bian 2018). To discover the real story of guanxi embedded in organisational management, indigenous methods and instruments (e.g. Hwang 1987; Zhai 2005a, b, c, d, e) are needed. More precisely, ethnography is the most appropriate approach to stay close to the true picture of all this. According to Van Maanen (1995), ethnography is a feasible solution to continue a close look of culture, of a particular group of people, doing particular things, in a particular place at particular times. Open involvement, direct observations and frank talks in local language are encouraged in revealing the fabricated stories behind (Wu 2006). Adopting and exploring indigenous terms (Chen 2006a, b) would certainly enrich an in-depth understanding of the complexity of guanxi connections and applications.

An Ethnographic Approach

11

Anthropologic observations over a long-term period also apply to management studies (Park and Luo 2001). A longitudinal self-immersed ethnographic management study from a cultural perspective is to go and be there, and to think and act culturally-centric. This will then enable a real quality of polyphony, and thus an authentic map of Chinese management with Chinese characteristics. The rule of law concept, borrowed from Western modernity, implies a disclosed set of rules that should be applied fairly to everyone (Dunfee and Warren 2001). Logically, guanxi-hu, as a manifestation of favourite, favour and face in guanxi engagement, would definitely act in disregard to the official organisational rules. For this reason, a combination of induction and deduction is adopted for this topic. Ethnography is ‘insider-out’ rather than ‘outsider-in’. Therefore, an indigenous outside perspective may minimise the ‘outsider’ prejudice as well as the ‘insider’ limitations (Li 2006a, b, c). In illuminating a full discovery of how culture defines guanxi when interpreting individual behaviour (Ho 1998) and how an organisation depicts rule of law in managing people, guanxi-hu—person (or people)-in-network with dyad interactions, is the right object of study and unit of analysis for this book. In the meantime, the author has researched inside and outside of different organisations, to verify and/or falsify the findings across different contextual settings. In sum, to build testable mid-range indigenous theories of Chinese management, there are two basic sources: the first based on the different schools of thoughts such as Confucianism and modern thoughts (from a conducive to a deductive approach), whilst the second lies in the rich phenomena of traditional and contemporary Chinese practices (Li et al. 2012). This book has tried to achieve a good multi-perspective (local and global), multi-level (individual, group, organisational, and societal) balance. It has also adopted multi-method approaches in the longitudinal indigenous study process of different organisations in China. In particular, three organisations were noticeably typical and interesting in dealing with guanxi-hu and nonguanxi-hu from a formal versus informal angle. First, a pure Chinese-led institute, experienced through both private and public leadership, would provide a good contrast in-between. Second, a foreign-invested firm, hiring local Chinese employees and managers under the leadership of a foreign Chief Executive Officer (CEO), offered a very unique perspective in seeking guanxi-hu as a complementary channel for talent acquisition. Third, a joint venture, jointly managed by both Chinese and foreign executives, had remarkable periods regarding guanxi-hu, especially when the rule of law advocates were absent. This opening chapter has sought to provide an overview of guanxi and rule of law in managerial practice within organisations in China. The remaining chapters will place these concepts into a broader cultural framework but with specific constructs. As Smith (2012) comments, the field of organisational behaviour studies has been dominated by most Western scholars (especially the USA) and has been presumably assumed valid in other cultural contexts. It is time to think of conducting indigenous studies in different cultures. By contrast, the rule of what option, concluded in this book, will offer rich insights into organisational behaviour and Chinese management that have been less intensively addressed so far.

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References Arias, J.T.G. 1998. A Relationship Marketing Approach to Guanxi. European Journal of Marketing 32 (1/2): 145–156. Bernat, M., H. Huang, and K. Mazur-Wlodarczk. 2021. Chinese Management Culture. Opole: Opole University of Technology. Bian, Y. 1994. Guanxi and the Allocation of Urban Jobs in China. The China Quarterly 140: 971–999. Bian, Y. 1997a. Bringing Strong Ties Back in: Indirect Ties, Network Bridges, and Job Searches in China. American Sociological Review, 62(3): 366–385. Bian, Y. 1997b. Guanxi Networks and Job Mobility in China and Singapore. Social Forces 75 (3): 981–1005. Bian, Y. 2002. Institutional Holes and Job Mobility Process: Guanxi Mechanisms in China’s Emerging Labour Markets. In 2002, ed. T. Gold, D. Guthrie, and D. Wank, 117–136. Cambridge: Cambridge University Press. Bian, Y. 2018. The Prevalence and the Increasing Significance of Guanxi. The China Quarterly 235: 1–25. https://doi.org/10.1017/S0305741018000541. Chan, R.Y.K., L.T.W. Cheng, and R.W.F. Szeto. 2002. The Dynamics of Guanxi and Ethics for Chinese Executives. Journal of Business Ethics 41 (4): 327–336. Chang, X. 2010. Guanxi or Li Shang wanglai: Reciprocity, Social Support Networks, & Social Creativity in a Chinese Village. Taipei: Airity Press Inc. Chang, W.L., and P. Lii. 2005. The impact of Guanxi on Chinese Managers’ Transactional Decisions: A Study of Taiwanese SMEs. Human Systems Management 24 (3): 215–222. https://doi.org/10. 3233/HSM-2005-24304. Chen, D.S. 2006a. Han Feizi and Chinese Style Management《韩非子和中国式管理》 , Beijing: Enterprise Management Publishing House (北京: 企业管理出版社). Chen, D.S. 2006b. The Wisdom Sources of Chinese Style Management . Beijing: Enterprise Management Publishing House (北京: 企业管理出版社). Chen, V. 2008. The Practice of Guanxi by Business to the Government in Taiwan: Guanxi or Connection, the Profound Meaning beneath in Chinese Culture. Germany: VDM Verlag Dr. Muller. Chen, C.C., Y.R. Chen, and K. Xin. 2004. Guanxi Practices and Trust in Management: A Procedural Justice Perspective. Organization Science 15 (2): 200–209. Davies, H. 1995. The Benefits of Guanxi. Industrial Marketing Management 24: 207–214. Dong, Y.L., and K. Yang. 2006. Guanxi Culture and Relationship Marketing《关系文化与关系营 销》 . Beijing: China Social Scientific Publishing House (北京: 中国社会科学出版社). Dunfee, T.W., and D.E. Warren. 2001. Is Guanxi Ethical? A Normative Analysis of Doing Business in China. Journal of Business Ethics 32 (3): 191–202. Fei, X. 1984. Xiangtu Zhongguo (Folk China), 4th edn, Beijing: SDX Joint Publishing Company (三联书店). Fei, X. 1994. From the Soil: The Foundation of Chinese society, tr. Gary G. Hamilton and Wang Zheng. Berkley: University of California Press. Feng, H. 2006. Guanxi and Transactions . Chengdu: Xinan Finance University Press (成都: 西南财经大学出版社). Gold, T., D. Guthrie, and D. Wank, eds. 2002. Social Connections in China: Institutions, Culture, and the Changing Nature of Guanxi. Cambridge: Cambridge University Press. Gold, T., D. Guthrie, and D. Wank. 2002. An Introduction to the Study of Guanxi. In 2002, ed. T. Gold, D. Guthrie, and D. Wank, 3–20. New York: Cambridge University Press. Gulati, R. 1998. Alliances & Networks. Strategic Management Journal 19: 293–317. Gulati, R., N. Nohxiu, and A. Zaheer. 2000. Strategic Networks. Strategic Management Journal 21: 203–215.

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Guthrie, D. 2002. Information Asymmetries and the Problem of Perception: The Significance of Structural Position in Accessing the Importance of Guanxi in China, ed. T. Gold, D. Guthrie, and D. Wank, 22–37. Cambridge: Cambridge University Press. Ho, D.Y.F. 1998. Interpersonal Relationships and Relationship Dominance: An Analysis Based on Methodological Relationism《人际关系和关系支配: 根据方法论的关系主义分析》 . In Confucian Relationalism: Cultural Reflection and Theoretical Construction《儒家关系主义: 文化反思与典范重建》 , ed. K.K. Hwang. Beijing: Peking University Press (北京大学出版社). Horak, S., and K. Restel. 2016. A Dynamic Typology of Informal Institutions: Learning from the Case of Guanxi. Management Organisation Review 12: 525–546. [CrossRef]. Hu, J., X. Wang, and Y.P. Zhong. 2002. Management Model and Its Culture Foundations in Chinese Business. Management World 111: 104–113. Hunt, J.W. 1992. Managing People at Work, 3rd ed. Berkshire, England: McGraw-Hill Book Company Europe. Hwang, K.K. 1987. Face and Favor: The Chinese Power Game. American Journal of Sociology 92 (4): 944–974. Hwang, K.K. 1980. Arts of the King《王者之道》 , Taipei City: Taiwan Students’ Book House (台 湾学生书局). Hwang, K.K. 1983. Face and Favor: The Chinese Power Game . In Face: The Chinese Power Game 《面子: ’ 中国人的权利游戏》 , vol. 2004, ed. K.K. Hwang. Beijing: The People’s University Press (北京: 人民大学出版社). Hwang, K.K. 1997a. Face and Communication in Chinese Societies . In Face: The Chinese Power Game《面子: 中国人的权利游戏》 , vol. 2004, ed. K.K. Hwang. Beijing: The People’s University Press (北京:人民大学出版社). Hwang, K.K. 1997b. Guanxi and Face: A Conflict Resolution Model in Chinese Society (关系与面 子: 华人社会中的冲突化解模式). Confucian Relationalism: Cultural Reflection and Theoretical Construction《儒家关系主义: 文化反思与典范重建》 , vol 2006, ed. K.K. Hwang. Beijing: Peking University Press (北京: 北京大学出版社). Isac, F.L., and E.F. Remes, . 2021. ‘Learning from Chinese management’, Studia Universitatis “Vasile Goldis” Western University of Arad. Economics Series, 2021-31(4): 70–84. https://doi.org/10. 2478/sues-2021-0020. Kiong, T.C., and Y.P. Kee. 1998. Guanxi Bases, Xinyong and Chinese Business Networks. The British Journal of Sociology 49 (1): 75–96. Law, S.F., and S. Jones. 2009. A Guanxi Model of Human Resource Management. Chinese Management Studies 3 (4): 313–327. Li, X.R. 2006a. Classical Confucianism and Chinese Style Management《儒家典范和中国式管 理》 . Beijing: Enterprise Management Publishing House (北京: 企业管理出版社). Li, Y.Y. 2006b. Cross-cultural Study《跨文化研究》 . In Social and Behavioural Science Research Methodology《社会行为科学研究方法论》 , 13th edn, ed. K.S. Yang. Chongqing: Chongqing University Press (重庆: 重庆大学出版社). Li, Y.Y. 2006c. Natural Observation Study《自然观察研究》 . In Social and Behavioural Science Research Methodology《社会行为科学研究方法论》 , 13th edn, ed. K.S. Yang. Chongqing: Chongqing University Press (重庆: 重庆大学出版社). Li, P.P., K. Leung, C.C. Chen, and J.D. Luo. 2012. Indigenous Research on Chinese Management: What and How. Management and Organization Review 8 (1): 7–24. https://doi.org/10.1111/j. 1740-8784.2012.00292.x. Li, F., X. Wang, and R. Kashyap. 2019. Socially Responsible Practice and CSR Orientation of Chinese Managers: The Role of Confucian Ethics and Confucian Dynamism. Sustainability 11 (23): 6562. https://doi.org/10.3390/su11236562. Lockett, M. 1988. Culture and the Problem of Chinese Management. Organisation Studies 914: 475–496. Luo, Y. 1997. Guanxi: Principles, Philosophies, and Implications. Human Systems Management 16 (1): 43–51. McGregor, D. 1960. The Human Side of Enterprise. New York: McGraw-Hill Book Company Inc.

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Mukhopadhyay, B.R., and B.K. Mukhopadhyay. 2020. “‘Guanxi’: The Chinese Social Capital”, Tripura times, editorial, 5th August. Park, S.H., and Y.D. Luo. 2001. Guanxi and Organisational Dynamics: Organizational Networking in Chinese Firms. Strategic Management Journal 22: 455–477. Peerenboom, R. 2002. China’s Long March toward Rule of Law. Cambridge: Cambridge University Press. Peerenboom, R., ed. 2004. Asian Discourses of Rule of Law: Theories & Implementation of Rule of Law in 12 Asian Countries, France and the U.S. London: Routledge. Qiao, J. 1982. A Discussion of Guanxi (关系刍议). In Chinese Psychology《中国人心理》 , vol. 2005, ed. K.S. Yang. Nanjing: Jiangsu Education Publishing House (南京: 江苏教育出版社). Shen, M., and Wan, Y.P. 2006. The Psychological Features of Chinese Behaviour and Chinese Style Management《中国人行为的心理特征和中国式管理》 . Beijing: Enterprise Management Publishing House (北京: 企业管理出版社). Smith, P.B. 2012. Chinese Management Theories: Indigenous Insights or Lessons for the Wider World?’ Handbook of Chinese organizational Behavior, 502–510. https://doi.org/10.4337/978 0857933393.00035. So, Y.L., and A. Walker. 2006. Explaining Guanxi: The Chinese Business Network. New York: Routledge. Suchman, M. 1995. Managing Legitimacy: Strategic and Institutional Approaches. The Academy of Management Review 20: 571–610. https://doi.org/10.5465/amr.1995.9508080331. Tan, D., and R.S. Snell. 2002. The Third Eye: Exploring Guanxi and Relational Morality in the Workplace. Journal of Business Ethics 41 (4): 361–384. Trompenaars, F., and C. Hampden-Turner. 1997. Riding the Waves of Culture. London: Nicholas Brealey Publishing. Trompenaars, F., and C. Hampden-Turner. 2004. Managing People Across Cultures. West Sussex, England: Capstone Publishing Ltd. Tsai, W. 2000. Social Capital, Strategic Relatedness and the Formation of Intra-organisational Linkages. Strategic Management Journal 21: 925–939. Tsang, E.W.K. 1998. Can Guanxi Be A Source of Sustained Competitive Advantage for Doing Business in China? The Academy of Management Executive 12 (2): 64–73. Van Maanen, J. 1995. An End to Innocence: The Ethnography of Ethnography. In Representation in Ethnography, ed. J. Van Maanen. Thousand Oaks, CA: Sage. Wall, J.A. 1990. Managers in the People’s Republic of China. Academy of Management Executives 4 (2): 19–32. Wilson, J., and R. Brennan, 2011. Managing Chinese/Western Joint Ventures: A Comparative Analysis of the ‘Interaction and Networks. ‘Chinese Management’ Literature. https://www.researchg ate.net/ < 11 Jul 2022>. Wu, C.X. 2006. Characteristics and Categorisation of Research. In Social and Behavioural Science Research Methodology, 13th edn, ed. K.S. Yang. Chongqing: Chongqing University Press. Yan, J.X., Z.C. Ding, and Y. Zhao. 1991. A Brief Discussion of Chinese Style Management . Beijing: China Labour Publishing House (北京: 中国劳动出版社). Yan, Y. 1996. The Flow of Gifts: Reciprocity and Social Networks in a Chinese Village, vol. 278, 278. Stanford, Calif.: Stanford University Press. Yang, M.M. 1994. Gifts, Favors, and Banquets: The Art of Social Relationships in China. London: Cornell University Press. Yeung, I., and R.L. Tung. 1996. Achieving Business Success in Confucian Societies: The Importance of Guanxi. Organizational Dynamics 61: 54–65. Zeng, S. 2005. Management By I-ching《大易管理》 . Beijing: Oriental Publishing House (北京: 东方出版社). Zhai, X. 2004. Daily Authority in Chinese Society—A Historical Sociology Study of Guanxi and Power《中国社会中的日常权威---关系与权力的历史社会学研究》 , Beijing: Social Scientific Literature Publishing House (北京: 社会科学文献出版社).

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Zhai, X. 2005a. Structural Balance Model of Chinese Guanxi Network 《中国人关系网络中的结构 平衡模式》 . In Reproduction of Favour, Face and Power《人情、面子与权力的再生产》 , ed. X. Zhai. Beijing: Beijing University Press (北京大学出版社). Zhai, X. 2005b. The Homogeneity and Heterogeneity of Chinese View on Face (中国人脸面观的 同质性与异质性). In Reproduction of Favour, Face and Power《人情、面子与权力的再生产 》 , ed. X. Zhai. Beijing: Beijing University Press (北京大学出版社). Zhai, X. 2005c. Favour, Face and Power: Means of Social Exchange for Rationale Society. In Reproduction of Favour, Face and Power《人情、面子与权力的再生产》 , vol. 25, ed. X. Zhai. Beijing: Beijing University Press (北京大学出版社). Zhai, X. 2005d. Social Mobility and Relational Trust《社会流动和关系信任 --- 也论关系强度与 农民工的求职策略》 , In Reproduction of Favour, Face and Power, ed. X. Zhai. Beijing: Beijing University Press. Zhai, X. 2005e. The Chinese Model of Interpersonal Relationship《中国人际关系模式》 . In Reproduction of Favour, Face and Power, 人情、面子与权力的再生产》 , ed. X. Zhai. Beijing: Beijing University Press (北京大学出版社). Zhang, J.J. 2015. From Market Despotism to Managerial Hegemony: The Rise of Indigenous Chinese Management. Management and Organization Review 11 (2): 205–210. https://doi.org/ 10.1017/mor.2015.24. Zhu, Y. 2007. A Historical Study on Ruling the Country in Accordance with Law Set out by the CCP in New Era. Journal of the Party School of the Central Committee of the C.P.C. 11(1): 61–67.

Chapter 2

Guanxi: The Indigenous Practice

This chapter brings some critical discussions and debates about the general versus unique aspects of guanxi in China and how it embodies organisations. Universally guanxi is about ‘reciprocity’ (Tsui and Farh 1997) in ‘interpersonal connections’ (Barbalet 2021a). However, it is argued that it is unique because of its embeddedness, engagement, changeability, convertibility, and transferability in/across self, group and others. Also, from family and friends to acquaintances and strangers, it is used for formal and informal purposes, at both individual and organisational levels. As profiled in Fig. 2.1, the production of guanxi involves the input-output transformation amongst various parties. Fig. 2.1 A profiled model of guanxi

Party C Party A

Party E Input

Party B

Output

Party F

Party D

© Springer Nature Singapore Pte Ltd. 2023 J. J. Zhang, The Delta of Chinese Management, https://doi.org/10.1007/978-981-99-1011-3_2

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Is Guanxi General? Guanxi, referring to personal, interpersonal and social connections, has pervaded nearly every corner of Chinese society. The diffusion of guanxi in scholarship presents one view that guanxi is universal and ubiquitous in every human society, at least in terms of ‘reciprocity’ (e.g. Tsui and Farh 1997) and ‘interpersonal connections’ (Barbalet 2021a). The other view is that guanxi is unique to China because of its intensive coverage and wide application in its society and organisations (e.g. So and Walker 2006). According to Wilson and Brennan (2011), networks are viewed as relationships. Guanxi is applied not only to favour exchange but to any form of connection or relationship. Naturally these are formed with three underlying universal sources—family, friendship and acquaintance and are not confined to Chinese manifestations (Barbalet 2021b). For instance, guanxi is called ‘veza’ by Yugoslavs and ‘blat’ by Russians (Solinger 1984). In parallel with social network, both are highly valued for social life in Chinese and Western societies. Generally these connections, involve different levels of inputs and outputs from different parties in one or many relationships. From this perspective, guanxi is rather general with members (people) and their inputs/outputs (investment in people/return on investment) are equally important. In sociology studies, guanxi is amenable to social network analysis (Bian 2019), by which people, place and plot are three essential elements. For example, A pursues B who is very close to C to get a job in C’s organisation. A hosted luxury dinner and expensive gifts are offered to B. This example demonstrates how people avail of their existing guanxi connections. Having the right key backers (people) and tactics (plot) is still pragmatic and crucial to conclude a deal in contemporary China. It also suggests that guanxi has its necessity in identifying personal opportunities and achieving professional success. China is a pragmatic culture. Having a score of of 87 on the Long-Term Orientation, in which people believe in contextual adaptability to new conditions, from the tradition, as well as savings, investments and perseverance in obtaining results (Isac and Remes, 2021, p. 74). It is indeed ‘a particular type of network and networking reflecting the particularities of China’ broadly maintained, by social obligations of reciprocity (Lee and Anderson 2007, p. 39) and material transactions of favours. Guanxi is therefore a variant form of social network with its own specific mechanisms (Isac and Remes, 2021) in non-standard structure and associated exchange (Barbalet 2021b). By comparison, the Western paradigm of social network and networking has little relevance to what actually happens within Chinese organisational settings (Wilson and Brennan 2011). For instance, it is very often to organise Christmas parties by the universities and companies in the UK whilst it is common to host banquets for the New Year or Chinese New Year celebrations by their counterparts in China. However, the networking motives on these occasions, vary from one culture to the other. Ambitious individuals, aim for guanxi, usually applying this unique Chinese method. Especially, people who are prepared to toast a lot on

Is Guanxi Self-Oriented or Other-Oriented?

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social occasions. It ‘is thus seen to be different from Western ideas of network and conceptualisations of networking’ (Lee and Anderson 2007, p. 40). What isn’t included in the general model of guanxi, is that favour exchange underlies the obligations between guanxi participants (Barbalet 2021b). In Chinese culture, the authority of individuals may be far more powerful than the authority of institutions, so favour can be given or granted for the sake of someone’s face. How can formal power be used informally but legitimately, is a tactical issue largely cross-referenced between guanxi and formal institutions. Guanxi helps shape the governance and institutional structure. It would give rise to advantages in financial performance, marketing access, recruitment sources, and favouring of internal candidates, but not necessarily talents (Mukhopadhyay and Mukhopadhyay 2020). For example, the joint venture has experienced a huge revenue increase in the past few years. Nonetheless, it is not in terms of acquiring the right professionals for sustainable development of relevant programmes due to the perceived use of several mediocre guanxi-hu occuping the key positions. This is what makes guanxi unique to Chinese society and, in particular, to Chinese organisations.

Is Guanxi Self-Oriented or Other-Oriented? Under the ancient Chinese Philosophy, guanxi mainly hails from a Confucian culture that rules social behaviours between people (Mukhopadhyay and Mukhopadhyay 2020). This frames the basic structure, moral system (principles), and behavioural strategies (norms and actions) of guanxi. Given the emphasis of Confucian, on ethical duties and responsibilities, Chinese individuals are obliged to attend to others within a hierarchical social structure modeled on family (Li et al. 2019). Nevertheless, the workplace could be de-emphasising of self and the conscious upgrading of others (Hill 2006). The ‘three cardinal guides and five constant virtues’ (sangang wuchang) are one of the typical traditional Chinese ethical codes. The three guides—‘ruler guides subject’, ‘father guides son’, and ‘husband guides wife’, specify the rights and obligations of the two corresponding parties. Moreover, the five virtues—ren (benevolence), yi (righteousness), li (propriety), zhi (wisdom), and cheng (fidelity), produce a contingent model with five basic terms. These features of the Confucian philosophy govern relationships among Chinese individuals. Therefore, a well cultivated Confucian-type person needs to bear many ethical precepts. The Confucian culture is viewed as having a positive influence on Chinese growth, and its adaptability to individual needs and societal changes. Specifically, Ren, as the core value of Confucianism, implies ‘treat others well’ and ‘love others’ that helps to push the society to be more tolerant and accommodating (Mukhopadhyay and Mukhopadhyay 2020). While ‘rite’ and ‘righteousness’ call for harmonious, righteous people (Jacobs et al. 1995), ‘rite’ externally directs people to a high moral

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standard and ‘benevolence’ internally drives people toward a strong feeling of obligation. In addition, ‘propriety’ implies the ways things should be done and the rituals associated with good manners (Hill 2006). With these moral precepts, junzi (‘cultivated gentlemen’) versus xiaoren (‘small men’) are a contrasting pair of people to exemplify the different sorts of behaviours and values in society (Hill 2006). Originally meaning ‘ruler’s son’, junzi becomes the ‘ideal’ or ‘superior’ person—what is righteous, just, fitting with good virtues of loyalty, good faith and moral excellence (Hill 2006). Junzi is then encouraged to be sincere, faithful, loyal, senior, obedient, and committed (Tan and Snell 2002), working upon diligence, responsibility, thrift, promptness, co-operation, and care about others and others’ opinions (Krug 2004; Zhai 2004/2005a, b, c, d, e). However, when people endeavour to cultivate harmonious relationships and to be responsible citizens, they may ignore their rationality of cost calculations in Chinese society. For example, the below comments were complaints about a senior executive but explained his lack of rational consideration about the employment of guanxi-hu extremely well: He is faithful to his friends, but his ears are too soft and he does not know how to ‘tell the sheep from lambs’1 , with so many staff via guanxi…

Under the guidance of the Confucian ethics, the boundary between self and group seems quite ambiguous. To fulfill one’s job duties and obligations in an organisation, one might easily blur his/her vision with a group s/he possibly belongs to (or is simply confused between one’s formal and informal roles). Nevertheless, a Chinese individual does not identify solely with his attached group, but also a very important double-sided ‘self’ (Zeng 2001). The self is split up into the ‘individual I’ (xiaowo, the corruptible individual) versus the ‘collective I’ (dawo, the immortal society) (Hu 1919), the ‘physical self’ versus the ‘social self’ (Hwang 1997a, b), and ultimately an ‘ethical-self’ against a ‘utilitarian-self’. Meanwhile, a ‘Collective I’ (dawo) and an ‘Individual I’ (xiaowo) are often assigned to people who have to bear huge responsibilities. For instance, a senior manager revealed his feeling about the split of his ‘self’ as follows: I (dawo) am no longer myself (xiaowo). I (dawo) have to mull over so many things every day. I (xiaowo) am really exhausted and really wish to shut my (xiaowo) eyes and force myself (xiaowo) into dormancy, so that I (dawo) can take me (xiaowo) out of myself (dawo), and leave all of my (dawo) stress behind.

Guanxi is relational with social roles in a network of relationships that makes oneself inseparable from an attached family or group (Li et al. 2019). With a score of 20 on the individualism dimension, China is a typical collectivist culture, in which individuals act in the interest of the group (Isac and Remes, 2021). Within a mixture of market and planned economy, the co-existence of public and private ownership facilitates ‘neo-collectivism’ that would also affect the self-group interactions. Hence, the Chinese self is not independent, and is expected to show a strong sense of collective identity and in-group loyalty, as well as caring for others. 1

Means lacking backbone ideas and easy to absorb unfavourable suggestions.

Is Guanxi Self-Oriented or Other-Oriented?

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Along with Singapore, China manifests a communitarianism orientation. People in China view themselves as part of a group, approximate to the collectivist tendency, identified by Hofstede and a score (54) calculated by Trompenaars, given the pace of cultural change (Isac and Remes, 2021). Meanwhile, the young Chinese generations have become more ego-centred and utilitarianism-oriented as a result of the ‘one-child policy’2 . As far as guanxi is concerned, mainland Chinese may show a ‘collectivist’ inclination within a group whilst demonstrate the ‘egoism’ to strangers with whom no guanxi has been established (Chow et al. 2009, p. 636). But as opposed to the prominence of ‘groupism’ in the West, ‘mutualism’ (Zeng 2001) might better describe the perception of people living in Chinese society. For an ego-centred Chinese universe (e.g. Qiao 1982), guanxi embedded in an organisation needs to study the ‘ego’ of managers and employees. The vague selfgroup divide, the emerging neo-collectivism, and the rising collectivism-egoism relativity, possibly, make people more self-interest driven, even though others’ feelings have to be taken into consideration within their social circle. In other words, people tend to prioritise personal trust/credit that may potentially cause harm toward institutional trust/reputation. For instance, commitment to the organisation might be low, cooperation within the group would be appreciated, and a lack of affection could even introduce hostility towards the outsiders. Embraced by Confucianism, guanxi elaborates on the nature of embeddedness. It is embedded in a quite complex set of intricate relationships, between one and the other, guided by the various kinds of virtues and principles. The conceptual embeddedness may respond to the so-called Chinese collectivism built upon selfconstruction and self-other interactions. On this basis, human feelings and obligations (renqing) are stipulated in propriety (li) and benevolence (ren) (Zhai 2005a, b, c, d, e). For example, material gifts (liwu) are coded with cultural propriety (li) (e.g. Yan 1996) in favour and face work (Zhang and Li 2006). In particular, the Confucian ideology encodes ‘shame’ and ‘dignity’ in the concept of ‘face’. Losing face in China might result in severe consequences for those otherdirected people. Due to the need of having face (Hwang 1987), managers must take ‘self-impression’ and ‘others’ reaction’ into consideration. For instance, a conjecture upon the final failure of an organisation of this study was that the Vice President was too keen on having and saving face as complained by one of his very close contacts: I have told him many times (that) face (mianzi) means nothing. He always dutifully treats his friends, sometimes just because he cannot put his face in his pocket and simply thinks about face and favour too much.

When this organisation was fully taken over by the public sector, the Vice President did lose a great deal of face. Most of his followers and opponents attributed such a consequence to an over consumption of guanxi—spending too much time and efforts on building a worthless network and protecting too many useless staff via guanxi. As a senior executive, he was supposed to be a rational strategic decision maker, but he paid an incredible price for his irrational involvement in guanxi. His attempt 2

China launched the one-child policy in 1980 and ended the policy in 2016.

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to create harmony between guanxi-based employees and other staff was very much doubted. Nevertheless, the subtle embeddedness within self, family and group stimulates guanxi practice and preferential treatment in organisations. The inclusion of in-group members and exclusion of out-group ones are usually circled with particular reference to the closeness of guanxi ties. This has been quite obvious and evident in different organisations. For instance, a former staff of mine texted me once about her new line manager who had brought ‘his own staff’ to their team. This made the relationships between members of that office, more complicated and subtle than ever before.

Is Guanxi Family-Based or Friend-Based In Chinese culture, guanxi starts from ‘family’ but does not end with it. The elasticity of ‘family’ from ‘big’ to ‘small’, yields some indigenous guanxi terms, such as one’s own people (zijiren), one’s family members (zijiaren) and one family (yijiaren). In Confucian society, the concept of ‘family’ can also be extended or manipulated from a nuclear family to a group, a commune, an organisation, or a state. The dominance of ‘family’ in Chinese minds could be read from various Chinese sayings. For instance, the antithetical couplets penned by Gu Xiancheng in Ming Dynasty was “I care for the things of my home, my country and the world (jiashi, guoshi, tianxiashi, shishi guanxin)3 ”. In East Han Dynasty, a schoolboy’s argument against keeping one’s room messy was referring to “sweeping the house before conquering the world (bu sao yiwu, he yi sao tianxia)”. These historical sayings literally place ‘family’ in an equal position to a ‘state’ or a ‘world’ and provide an eloquent spiritual mind that strong ambitions must start from the care of one’s family. In China, family connections always take priority over other contract-based social contacts (Mukhopadhyay and Mukhopadhyay 2020). The concept of ‘family’ in Chinese language is quite flexible, prominent and subtle (Fei 1984; Liang 1921; Zeng 2001). In the context of Chinese society, ‘family’ is ‘the basic building block—on family one depends, and in family one trusts’ (Langenberg 2007, p. 68). Family is the beginning of, but not necessarily an end to the ethic. The ‘five cardinal relationships’ (wulun) in Mencius—ruler-ruled, father-son, husband-wife, elder-younger brother, and friend-friend, laid the foundation for oneto-one relationship structures in Chinese Classical Thoughts (Luo 2007). It is clear that three pairs of the above are related to ‘family’, and kinship is often valued the utmost. Besides, the relationship between a teacher (master) and a student (apprentice) could symbolise a father-son link, and the relationship between two colleagues or friends may be associated with elder and younger brothers. Both organisations and employees could heavily rely on family and extending connections for staff recruitment and employment opportunities (Sardy and Alon 3

Original couplets: It is necessary to know everything. I hear the sounds of the wind, the rain, and the reading; I care for the things of my home, my country, and the world.

Is Guanxi Family-Based or Friend-Based

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2009). By introducing ‘family ties’ as an extra domain of ‘managerial ties’, Qin and Deng (2014) highlight the importance of family ties for fledgling firms. It is then common to have family atmosphere and paternalistic leadership at work because of the concept of guanxi (Smith 2012). There are, broadly speaking, some other sorts of relations interrelated with the leader-member or member-member exchange with regard to the organisational context. As Barbalet (2021a) put forward, family relations and their obligations are implicit, pertaining to life-long familial roles on the basis of perceived needs without expectations of a return provision. Whereas, Barbalet (2021a) views other relations as open-ended and thus the obligations arise from the exchange of favours. Furthermore, Qin and Deng (2014) argue that the dichotomy of business and government ties, does not cover all the connections created and utilised by firms, because the unique blood-based family ties can be a separable, stable and valuable label of guanxi. It is suggested that entrepreneurial guanxi may be a link, based upon close ties instead of an outcome of structural relationships (Lee and Anderson 2007) whilst employment guanxi could be a result of both intimate and remote connections. The subtlety of ‘family’ (jia) exists in its ‘big family’ (dajia) and ‘small family’ (xiaojia). Whilst the former denotes a group, a community, an organisation, or a state to which one belongs, the latter means one’s nuclear family. Through the immaculate art of either one-to-one kinship or non kinship links, a Chinese individual can create various notions of ‘families’ (jia), such as a ‘nuclear family’, an ‘extended family’, or a ‘manipulated family’. For instance, one may refer ‘jia’ to his natal family, his hometown, or his very intimate friends. These approaches yield well for a broad range of heterogeneous members (Torre et al. 2000). Basically, family ties form the rudiment of insiders and outsiders (Chang and Lii 2005). Guanxi typically starts from inside family-like sentiments, including kin ties and pseudo-kin ties, then ventures to outside non-kin acquaintances (shuren), so people choose to believe insiders over outsiders (Mukhopadhyay and Mukhopadhyay 2020). People involved in private firms can be socialised by family-based values, and, over time, so become ‘insiders’. However, family and outsiders are possibly linked through ‘pseudo-family’ bonds, which do affirm the distinction between their corresponding obligations (Barbalet 2021a). All this is a unique result of relational particularism as a form of particularistic ties. This is integral to a tripartite model—family, friendship and acquaintance, as distinct forms of guanxi, subject to different types of obligations (Barbalet 2021a). This further distinction between friendship and acquaintance is shown provisionally, rather than definitive but open and flexible in their association and operation as proxy terms. In fact, the practice of guanxi might have changed with cultural shift and societal transformation since early 1980s. However, the links behind guanxi are still usually sourced from kin and non-kin ties as observed in many Chinese-related organisations. Kin connections include family members, relatives and members of a shared clan, whilst most non kinship ties are embedded, emerged from or developed by social interactions. As shown in Fig. 2.2, forty-two employees used direct links, of which

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2 Guanxi: The Indigenous Practice

fourteen were identified with kin ties. Kinship still played a leading role in accessing job opportunities in this private institute. Meanwhile, there are a good number of connections developed from workmates. For example, seven were extended from the old superior-to-subordinate comradeship. Also, eight were advanced from their present peer relationship, based on good understanding, between each other accumulated from their working experience. In addition, five of them were related to the teacher-student pair, mainly because of the Chinese tradition and tendency to treat teachers/students as family-alike members. The ties of guanxi are sometimes overlapped. For instance, two of the five hometown-based employees were also schoolmates. Friendship did not yet seem to be flourishing under the umbrella of direct connections, with merely three enrolled staff, largely because friends often indirectly bridge guanxi for their rich sources of ties. As indicated in Figs. 2.3 and 2.4, thirty employees were hired through indirect connections initiated by multiple sources of contacts. Moreover, the employee-manager (or decision-maker) ‘duo-ego’ circles would help to probe into their respective personal and professional spheres of guanxi. From the employees’ perspective (see Fig. 2.3), kin was still the most irresistible force in sourcing helpful and supportive guanxi ties. Among the thirty indirect connections, kinship yielded well in the hunt of twenty useful ties. In the meantime, locality has become an important reference for job opportunities. The above mentioned five employees, through hometown fellowship, closely followed the pace of kinship in actively sourcing relevant connections as acquired ties (e.g. Chen et al. 2004). The fact that kinship succeeded in closing the structural

Fig. 2.2 The employment diagram of direct ties

Fig. 2.3 The indirect tie diagram from the employees’ perspective

Is Guanxi Family-Based or Friend-Based

25

Fig. 2.4 The indirect tie diagram from the decision-makers’ perspective

hole of guanxi, might attribute to the limited scope of ‘personal contacts’ for the majority of ordinary people. This confirms the importance of family for individuals at both vertical and horizontal dyads in Chinese society (Farh et al. 2007). As explained before, ‘friends’ are helpful, but ‘a friend in need is a friend indeed’. The so-called ‘friends’ amongst ‘acquaintances’ are not necessarily ‘true friends’. It is easy to confuse co-workers/comradeship with friends/friendship (Smart 2020). This might also explain one of the reasons why this organisation showed a lower numeral result of three direct friendships involved and four employees initially sourced from personal friends and then successfully joined the organisation via their friends’ contacts. Furthermore, it is not surprising that only one person approached workmates to seek employment solutions because the major purpose was to look for the first point of contact for future career possibilities. Nevertheless, there is a further need to distinguish friendship from ganqing—emotional needs, or renqing— instrumental purposes, or even profitable investments (Smart 2020). In Chinese society, people cultivate friendships, developing and maintaining them as part of their strategic investments. According to the social network theory in Western society, this is how weak ties work, connecting people to share job information. From the organisation’s perspective, the decision-makers or influential people are usually linking to a more professional universe. The scenario that the left side cites guanxi sources at a personal level whilst the right side lists guanxi referring to the organisation end, may provide some very interesting insights into people management. For instance, the final decision-maker of this institute was only involved in one kin-based employee and another one rooted in their past superior-to-subordinate work relationship. However, there were eleven employees who were introduced by friends of managers of this institute. It seems friendship did offer tremendous help in connecting professionals in the social and organisational context. For example, a sworn-brother type friend of the Vice President played a crucially influential role in its seven employees, who joined the organisation via this guanxi broker. It is clear to see the importance of networking among people and the benefits brought by having friends to help both employers and employees. This supports

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Barbalet’s (2021a) view that the basic contents of guanxi connections are derived from friendship rather than kinship. However, it is only as the principle source of guanxi with particular reference to indirect ties. It is also indicated that friendship ties could be affective and instrumental, if connected by close or distant bonds, and mutual understanding in-between or someone connected in the middle. There is no doubt that guanxi has a diverse base with interrelated sources at different levels (Zhuang and Xi 2003). In a market-oriented economy, it is claimed that managers are moving towards a more utilitarian approach and are trying to escape obligations from any close bonds. Yet, the heavy load of guanxi-based employees still holds a vital role of kinship in initiating guanxi. This is seen from the starting point as an employee, intermediated by friendship afterwards if necessary, and moderated by power relationship with stakeholders. It is true that people are getting more comfortable with the recognition that friendship may deliver instrumental utility and emotional satisfaction simultaneously or respectively (Smart 2020). Yet, it is subject to the principles of reciprocity and the non-subordination of the relationship to the utilities (Smart 2020). Once the different types of relationships are used for employment purposes, this would seriously affect other employees’ perception of equality and justice. Hence, further severe challenges could have been provoked, such as to the rationality of decision-making as well as the authority of senior executives in accordance with the rule of law management.

Is Guanxi Authority-Oriented or Equality-Oriented? The emphasis of Confucian ethics on ethical duties and responsibilities would also push individuals to respect for authority within a hierarchical social structure (Li et al. 2019). In formal management, some managers may easily accommodate themselves to the bureaucratic system (Sardy and Alon 2009). As Confucius said, “one should study hard to be an official.” Under the bureaucratic system, being ‘a man above men’ is a dream for numerous people. In the organisational hierarchy, managers have a burning desire for power and authority, especially over personnel decisions in hiring and managing people. For example, the commissioner of the Chinese institute used to be known as ‘nine thousand years old’ (jiuqiansui)4 —one step to ‘long live’ (wansui)5 . This message implies that the commissioner had special privilege status with great influential power in the organisational structure. Subsequently this fostered ‘daily authority’ by his wife, who formed her own network, for personal favour exchange and guanxi development in this organisation. In a pair of superior-subordinate relationship, the leader may principally coordinate networking activities upon his power and authority (Guo and Yu 2006). As a 4

‘Jiuqiansui’ means someone has power only inferior to the chief executive in command. ‘Wansui’ literarily means ten thousand years old—long live, usually denoting the ‘emperor’ and the ‘chief executive officer’ in an organisation.

5

Is Guanxi Authority-Oriented or Equality-Oriented?

27

result, one has to offer unquestioning respect for seniority (e.g. age) (Nevis 1983) and authority (e.g. leader) (Lindsay and Dempsey 1983/1985), and bear high pressure on human obligations (Hwang 1987). This could eventually form a relationship of protection and control between superiors and dependents. For most of the time, the Confucianism exhorts people to adapt to the natural environment (Fung 1948). In response to this philosophy, there is a particular zone of tolerance among most Chinese individuals. Under the centralised leadership, people are inclined to accept the full authority of the management, be docile and obedient to the leader and tolerate certain inequalities (e.g. preferential treatment for guanxibased employees). This can be seen in different organisations with Chinese leaders or managers and employees. For instance, the following passage with a senior manager reveals his attitude towards guanxi but he simply accepted all these facts and would never express his true feeling in front of his boss: He does have some splendid ideas, but the key is how to make them come true. His efforts on guanxi have been to no avail so far but he still insists that the guanxi behind those guanxi-based employees are powerful and useful.

By contrast, in the foreign-invested firm and the joint venture under the leadership of foreigner executives, people tend to value equality and fairness. Indeed, senior managers in foreign-invested firms and/or joint ventures, usually try to keep an open dialogue between staff and management. They attempt to treat employees at different levels more equally and are keen to listen. They generally take the issues raised by staff seriously and incorporate the many suggestions into business plans and managerial practices. In Chinese society, guanxi also extends to stakeholder relationships. The different interest groups or individuals would be able to use their holding power to introduce their contacts to an associated organisation or individual. For example, a governmental tie or a connection from a license/resource controller was easily welcomed and accepted by the management, under both public and private leadership. Hence, the identification and nature of a stakeholder reflects its influential power upon an organisation. This would be further proved by the management’s reaction to recommendations from such a source of guanxi. For instance, most Chinese managers were swift referrals from the superior unit. However, these employees might have approached this stakeholder through their relatives and former colleagues. It implies that powerful stakeholders could have created enormous pressure on staffing issues upon a particular organisation. Yet, people related to those stakeholders would usually help to fulfill job demands of their family members, relatives, and/or other close contacts in the first instance. In real practice, a person belongs to an organisation whilst an organisation belongs to people (Breiger 1974). The presence of two levels of relationship means that ties not only link either people or organisations but also associate people to organisations (Wasserman and Faust 1994). The two-layer conceptual equivalence of relationships is evident since guanxi normally becomes an asset, resource, or insurance policy for both individuals and organisations (Chang and Lii 2005).

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However, the strong emphasis on personal relationship is prominent in Confucianism (Wilson and Brennan 2011). Meanwhile, relationships based on networks are largely related to the identity and interactions of organisations. The dual references for personnel employment through stakeholder relationship would be much trickier, as all contacts could be transferrable between a person and an organisaiton and from one person/organisation to another. Therefore, people usually evaluate relationships by a combination of social power and organisational status. It is often common to establish social ties based upon personal connections before further enhancement of working relationships at the organisational level. Under these circumstances, equality would be simply sacrificed to the high end of authority.

Is Guanxi Static or Dynamic? It is clear that guanxi is supportive of families, friends, neighbours, classmates, schoolmates, colleagues, and those of families, friends, neighbours, classmates, schoolmates, and colleagues. Either directly or indirectly, guanxi could be extended or expanded expressively or instrumentally at both individual and organisational levels, and mingled with a subtle mixture of feelings. Guanxi sometimes attributes to a fate component—yuan (destiny or predestination). Yuan is not an ethical component (Yang 1982), but acts as a comforter in tolerating the development of ethical guanxi radius. There are some Chinese idioms with ‘yuan’, for instance, ‘marriages are made in heaven’ (yinyuan tian zhuding), and ‘separated as we are thousands of miles apart, we come together as if by predestination’ (you yuan qianli lai xianghui). All this may explain why guanxi occurs here and there very often. According to the concept of predestination, people are connected by incident, chance, or force (Yang 1982). Predestination not merely stimulates the expressiveness of guanxi ties, but also creates opportunities for strangers (merciless) and acquaintances (merciful) to meet up and to gather together. The fate reflection of guanxi has been mostly quoted by people who are keen on the development of guanxi. For instance, a senior executive expressed his ‘belief in predestination’ by explaining ‘(why) we could sit together’ whilst emphasised to ‘cherish the fate that makes us preordained’. In reality, it is hard to measure either physical or emotional distance of a dyad relationship. What’s phenomenological observed do not necessarily represent the real quality of guanxi ties, unless one has had very in-depth experience with those guanxi partners. Nevertheless, the emotional expression of guanxi can be partly read from the subtle expressions in Chinese language listed in Table 2.1. Some common adjectives picked up from daily conversations in Chinese can help differentiate the strength of various relationships in Chinese society. Under normal circumstances, people have various relatives, friends, neighbours, classmates, and colleagues, but not all of them are entitled to these adjectives of ‘old’, ‘close’, and/or ‘good’. For example, ‘close relatives and good friends’ (qinpeng

Is Guanxi Static or Dynamic? Table 2.1 Understand the differential strength of guanxi from daily phrases

29 Chinese

English

Chinese terms

English meaning

Qin

Close

Hao

Good

Qinpeng Haoyou

Close relatives Good friends

Zuo

Left

Zuolin Youshe

Left-right neighbours

You

Right

Lao

Old

Lao Tongxue Lao Tongshi Lao Zhanyou

Old classmates Old colleagues Old comrade-in-arms

haoyou), ‘left-right neighbours’ (zuolin youshe), ‘old classmates (lao tongxue), old colleagues (lao tongshi), and old comrade-in-arms’ (lao zhanyou), are attached with subtle close modifiers of guanxi strengths. Clearly, these phrases sound strong cohesions of guanxi ties amongst their defined pairs of relationships. It is obvious that the original settlers determine the emotional distance of guanxi. A ‘close friend’ could be an ‘alter-ego’ that may instigate a twin-brother or twin-sister connection. The importance of ‘old villagers’, ‘old classmates’, ‘old comrade-inarms’, and ‘old colleagues’ is, partly, due to the long-term sentimental accumulation during a period of collective life. However, it is essential to listen to the tones of language-in-use, which may modify the real strength of guanxi ties. Guanxi is not static but dynamic. One’s comment on the marriage—“A couple is, in fact, a profit sharing alliance”, sounds a bit harsh but tells the underside of ‘close alliance bonds’. The question on whether managers view kinship as a liability is however subject to their particular circumstances. These circumstances include personal characteristics (e.g. personality, integrity, contacts, etc.), professional backgrounds (e.g. education, experience, skill, resource, capability, etc.), and managerial styles (e.g. leadership, structure, system, etc.). Moreover, the strength of guanxi ties varies from one tie to the other. Kin in company with social connections expedite networking and favour exchange in a society. Whilst the blood-tied kin is usually expressive, the non-kin could be either sentimental or instrumental (e.g. Granovetter 1973). While kinship is often considered the closest tie, people manipulating the one-to-one relationship also have chances to win a kin-similar relation. For instance, one teacher who granted favours to her students was respectfully titled ‘elder sister’, and several other workmates and friends called each other ‘older-younger brothers’ in the institute. The term ‘friendship’ in Chinese is even far more implicit and inexplicit (Lin 2008). In one’s life circle, ‘friends’ could be possibly known from every corner around the world, embedded in one’s role play, met by accident, emerged from strangers, and developed by mutual benefits. ‘Friendship’ is socially fluid and fragile, varying for knowing each other in terms of time and purpose. Most importantly, there are no sharp and uncontested boundaries between friendship and guanxi. Friendship is less clear-cut in Chinese and thus difficult to separate out the domains of interest and affiliation (Smart 2020).

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Nonetheless, there have been profound changes across the world, within a country, and in an organisation. The introduction of market economy in the 1980s and the undergoing globalisation (or de/anti-globalisation nowadays) would be impossible to have no impact on guanxi in Chinese society (e.g. Le et al. 2002) and organisations. There is a common understanding that the industrialisation process has diluted the role of kinship. The prominence of kinship has been noted being declined in the developed industrial area, such as England (Bott 1971) and urban China (e.g. Kipnis 1997). In modern times, Chinese managers might become reluctant in employing their relatives and family members (Kiong and Kee 1998). Instead, ‘fellow villagers’ and ‘fellow classmates’ may be good alternatives. On the contrary, although different cultures undertake similar refinement, it does not mean the embeddedness of guanxi in Chinese culture will definitely follow the Anglo-Saxon model. In a word, it is essential to know that Industrialisation and urbanisation may change the structure of guanxi, but may not amend the traditional Chinese mind-set that ‘family’ is of the first priority and importance. In the different organisational studies, ties with relatives and friends were physically closer than other connections based upon years of participant observation. At critical moments the ‘core family members’ were viewed as one of the most reliable sources in mainland China, kinship was still essential to many private organisations as members of the same kith and kin did give an impetus to trade in the launching stage. However, once the institutional reform was in the timetable with the change of the organisational life cycle, it would be ideal to hire professionals instead. Furthermore, the term guanxi is far more complicated than the English word— relationship, as the mix of trade off between social (subjective emotion) and economical (objective reality) considerations (Chang and Lii 2005). It was simply the fact that once an individual’s formal power in an organisation faded, the demands of those associated contacts might not be fully or perfectly satisfied. The ties of guanxi move up and down, tightly linking to the ongoing companionship or a sudden disconnection. The manipulated family-alike relationship is also vulnerable, subject to changes of the various parties’ situation. To cope with the changing scenario, people would do their best to keep frequent contacts to enhance the strength and utilities of ties. This offers potential possibilities to turn those existing connections into acquaintances, friends and/or family-like members. According to the very notable Chinese philosopher Liang Shuming (1921), Chinese people are very much family, relation, authority, and otheroriented in their social, mental and material life. These four orientations have been further emphasised by Child and Lu (1996, as cited in Wilson and Brennan 2011, p. 7), who stress the need of ‘respect for age and authority, group orientation, and the importance of family relationship, close personal connection, and face’ in Chinese society. Guanxi, as the most important relational particularism, logically encloses the above inclinations together for the very Chinese individual behaviour in Chinese culture.

Is Guanxi Unique?

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Is Guanxi Unique?

Guanxi

Guanxi in this chapter is argued to be unique because of its embedded features and functions cross-referenced by Chinese culture and management in both society and organisations. The existence of close linkages, such as kin ties and pseudo-kin ties with family-like sentiments and common practices between guanxi networks and affective friendships (and even non-kin ties shuren), provides a variety of reasons why the contextual source of a relationship would be of greater salience than in the Western idioms of interaction (Smart 2020). The uniqueness of guanxi exists in its structure, subject and strategy as shown in Fig. 2.5. The major differences between guanxi and social network are: the diversity, differentials and dynamics of guanxi-hu, guanxi-wang and guanxi-xue as its subject, structure and strategy, which reproduce favourite, favour and face in social interactions and people management. Guanxi-wang, as a differential structure of guanxi, produces a diverse base of guanxi-hu subjects, which are fluid and developable by the dynamic strategy—guanxi-xue. In return, favourite, favour and face, embodied in emotional and rational attachments, are configured in guanxi connections (guanxi-wang), cultivations (guanxi-xue) and consequences (guanxi-hu). With regard to the allocation of guanxi-hu, managers and their contacts are driven to fulfill role obligations, to undertake reciprocal exchanges, and to worship powerful authorities. In the mean time, an individual guanxi-hu may take advantage of the differential connections (guanxi-wang) along with the very dynamic cultivation strategies and tactics (guanxi-xue). Hence, guanxi-wang, guanxi-xue and guanxihu construct the most indigenous facet of guanxi. Neither the base nor the strength of these guanxi elements and activities is frozen, simply because guanxi-xue enables the mobility of guanxi-wang and guanxi-hu. As a concluding remark, guanxi has its own indigenous working mechanism in a Chinese organisation, due to the nourishment of guanxi-based employees and employment. For Chinese management, guanxi-hu, guanxi-wang and guanxi-xue are three informal but important elements in managing people embedded in the formal routine practices. There have been numerous stories about these three indigenous forms of guanxi across the social and organisational sphere.

Guanxi-hu

Diverse

Guanxi-wang

Differential

Guanxi-xue

Dynamic

Fig. 2.5 The unique elements and features of guanxi

Subject

Structure

Strategy

Favourite

Favour

Face

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For instance, husbands and wives constructed the closest bond of guanxi-wang. Interestingly, the manipulation of ‘twin-sisters’ or ‘brother-alike’ relationships demonstrated the most typical art and strategy of guanxi-xue. However, a manipulated notion of the ‘family-alike’ relationship was easily vanished, alongside the change of managerial status and formal power, with the gradual exposure of utilitarian motives. Some stakeholders, such as governmental authorities and resource controllers, exhibited strong influential and bargaining power in assigning guanxi-hu into an attached organisation. When managers decided to take guanxi-hu from these sources, they were partly in fear of the authority and partly expecting their needed support. In principle, ‘favouritism’ rather than ‘institutionalism’, applies to guanxi-hu. Guanxi-wang and guanxi-xue hold the smart key to the success of guanxi-hu by the configuration of favourites, favour and face. With the increase or decrease of formal and informal power, guanxi and its referred guanxi-hu are fragile by nature. Under the rule of man management, guanxi-hu are usually treated in favour on a case-bycase basis. This would absolutely undermine the role of the rule of law concept in people management. The importance of Chinese societal values would have unavoidably shaped managerial practices in China, such as leadership style, interpersonal behaviour and individual value. Guanxi has been evolving with the Chinese cultural and institutional evolution process, but the rooted cultural underpinnings, such as Confucianism, may somehow boycott the popular rule of law practice in Western management. For example, sentimental feelings and instrumental obligations still remain in the exchange process. Favour and face are restored in the decision-making procedure. Power and authority are abusively referred to against the institutional principle. Nevertheless, this does not necessarily mean that all guanxi-hu are trusted and treated in an equally preferred manner. As per the five-level conceptualisation of guanxi by Bian (2018), a series of questions posed are: what are the favourite connections? Who are the favourite members given or offered the most favours and why? What are the consequences of favour and face exchange? How could managers manage favourites, favour and face for guanxi whilst having to fulfill the institutionalisation purpose? With these questions in mind the following chapters will address guanxi-wang, guanxi-xue and guanxi-hu as well as favourite, favour and face retrospectively. The inheritance of Confucianism would have shaped societal values in China that would in turn affect the practice of Chinese management, such as leadership style and behavioural value (Hill 2006). Guanxi forms a platform for interpersonal connections and interactions and then passes on high reciprocal and obligatory pressure to members of guanxi networks along with the hierarchical structure. With a strong sense of hierarchy and seniority, managers would value reliability, obedience and trustworthiness as good conduct of favourite followers, and encouraged patience and face-saving for conflict resolution. Unsurprisingly, the American executives in Chinese entities, were found more likely to use performance appraisal tools if comparing with the Chinese managers, in the same organisation.

References

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Therefore, guanxi is generally universal in terms of its network and networking phenomenological manifestations at a societal level. However, as a Chinese type of relationship (Chang and Lii 2005), guanxi is somehow unique, demonstrated by its differential structure and strength in its derived indigenous terminologies. Moreover, guanxi supports the paternalistic style of management in maintaining order and stability within organisations. Guanxi-wang, as a critical concept at both social and organisational levels, will be a primary topic in the next chapter.

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