Guanxi and trust in strategic alliances

Purpose - The purpose of this paper is to distinguish different types of guanxi from a historic perspective and to investigate the effects of different types of guanxi on trust between alliance partners through an empirical study. Design/methodology/approach - The paper first reviews the role of guanxi in Chinese history and identifies two types of guanxi. Next, it reports an empirical study that tests the effects of these two types of guanxi on interorganizational trust through a survey among automobile parts suppliers in China. Findings - First, this paper identifies two types of guanxi: role-based hierarchical guanxi endorsed by Confucianism and soil-rooted egocentric guanxi derived from daily practices of Chinese people. The ever changing social environment in Chinese history supports a spiral development model of guanxi evolution. Each of the two types of guanxi takes a dominant position in different periods of time. Second, a subsequent empirical study demonstrates that, in today's Chinese business environment, role-based guanxi makes a more significant impact on interorganizational trust than soil-rooted guanxi. Moreover, these two types of guanxi produce a positive synergistic effect and facilitate each other in boosting interorganizational trust. Originality/value - This is the first paper that identifies and empirically tests the effects of role-based hierarchical guanxi and soil-rooted egocentric guanxi. More broadly, the paper highlights the importance of studying guanxi from a historic perspective. It demonstrates how a historical analysis may further the understanding of guanxi and its effect on interorganizational trust in today's business context.