Does guanxi matter in the foreign expansion of Chinese manufacturing firms? The mediator role of linking and leveraging

This study explores how two types of guanxi (guanxi with the government, guanxi with business partners) shape the international expansion of firms from emerging countries. We propose that both guanxi with the government and guanxi with business partners are important in the internationalization effort and that their effects on firms' international expansion are channeled through linking and leveraging capabilities, respectively. The data from a sample of 112 Chinese firms in the manufacturing sector provide support for the positive effects of guanxi on capabilities and of capabilities on internationalization. Specifically, this study demonstrates support for the mediator role of linking capability in the relationship between guanxi with the government and international expansion. In addition, the mediating effect of leveraging capability in the relationship between guanxi with business partners and firms' internationalization is confirmed in this study.