How Does Guanxi Shape Entrepreneurial Behaviour? The Case of Family Businesses in China
| Published date | 01 October 2023 |
| Author | Shihang Su,Laura A. Costanzo,Knut Lange,Abby Ghobadian,Michael A. Hitt,R. Duane Ireland |
| Date | 01 October 2023 |
| DOI | http://doi.org/10.1111/1467-8551.12684 |
British Journal of Management, Vol. 34, 1895–1919 (2023)
DOI: 10.1111/1467-8551.12684
How Does Guanxi Shape Entrepreneurial
Behaviour? The Case of Family Businesses
in China
Shihang Su,1Laura A. Costanzo,2Knut Lange,3Abby Ghobadian,4
Michael A. Hitt5and R. Duane Ireland6
1Southampton Business School, Department of Strategy, Innovation and Entrepreneurship, University of
Southampton, Higheld, Southampton, SO17 1BJ, UK, 2Southampton Business School, Department of
Strategy,Innovation and Entrepreneurship, University of Southampton, Higheld, Southampton, SO17 1BJ,
UK, 3School of Business and Management, Royal Holloway, Universityof London, Egham, Surrey, TW20
0EX, UK, 4Henley Business School, University of Reading, Greenlands Campus, Henley-on-Thames, RG9
3AU, UK, 5Mays Business School, Department of Management, Texas A&M University, College Station, TX,
77843-4113, USA, and 6Mays Business School, Department of Management, Texas A&M University, College
Station, TX, 77843-4113, USA
Corresponding author email: Laura.Costanzo@soton.ac.uk
This paper explores how Guanxi shapes different levels of entrepreneurial behaviour of
family businesses in China. Extant research draws on network theory, suggesting that
rms focusing on less intimate social relationships are more entrepreneurial than those
focusing on intimate social networks. However, this notion of networks neglects Guanxi’s
indigenous cultural roots that promote intimacy in social relationships, thus limiting our
understanding of why some rms in China demonstrate a higher level of entrepreneurial
behaviour than others. Throughan in-depth multi-case study analysis of eight family rms
in China, we nd that Guanxi is a multi-dimensional concept that can only be effective
through intimate relationshipb uilding. This studycontributes to the social network litera-
ture on entrepreneurial behaviour by incorporatingthe gift exchange theoretical perspec-
tive and demonstrating that political Guanxi in China can only facilitate entrepreneurial
behaviour when it is built around a signicant level of intimacy. We also contribute to
family business research by demonstrating that family ties aremulti-dimensional. Differ-
ent cultural values mayinform different dimensions of family ties via differences in family
business governance structures, which can give rise to different levels of entrepreneurial
outcomes. This study offers theoretical and practical implications alongside avenues for
future research.
Introduction
Drawing on the social network perspective, schol-
ars have provided great insights into how social
interdependencies shape rms’ entrepreneurial be-
haviour (Mueller, 2021), including whysome r ms
demonstrate a higher level of entrepreneurial be-
haviourthan others in advanced economies (Baum
and Locke, 2004; Miller, Steier and Le Breton-
Miller,2016; Wright and Stigliani, 2013). However,
transition economies, such as China, have rarely
provided the context for such a topic, despite the
importance of entrepreneurial rms to economic
transitions (Ahlstrom and Ding, 2014; Ge, Car-
ney and Kellermanns, 2019; Puffer, McCarthyand
Boisot, 2010). To date, we still lack knowledge of
why some rms in China demonstrate a higher
level of entrepreneurial behaviour than others.
The extant research on entrepreneurial be-
haviour in China focuses on the context-specic
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy
of Management.
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distri-
bution and reproduction in any medium, provided the original work is properlycited.
1896 Su et al.
network ‘Guanxi’ (Burt, Opper and Zou, 2021;
Puffer, McCarthy and Boisot, 2010), and suggests
that rms relying on large and open networkswith
less intimate individuals, such as political Guanxi,
are more entrepreneurial than those focusing on
more intimate networks, such as family Guanxi
(Burt, Opper and Zou, 2021). While enriching
our understanding of entrepreneurial behaviour in
China, the existing research is incomplete, leav-
ing a major gap. Studies of entrepreneurial be-
haviour scarcely address family rms in China, a
popular form of business that plays a critical role
in transition economies (Soleimanof, Rutherford
and Webb, 2018; China Family Enterprise Devel-
opment Report (CFEDR), 2011). Moreover, the
family has long been a crucial social aspect for en-
trepreneurs across the world (Aldrich and Cliff,
2003; Miroshnychenko et al., 2021; Sieger and
Minola, 2017), yet, surprisingly, family rms are
under-studied in the Chinese context, where cul-
tural values are centred aroundthe family (Li et al.,
2015; Su, Zhai and Landström, 2015; Warner,
2013, 2014). Therefore, to advance our under-
standing of why some rms in China are more
entrepreneurial than others, we need to focus re-
search on the context of family businesses.
To address this gap, we argue that the cur-
rent theorisation of Guanxi cannot explain en-
trepreneurial behaviour in China by drawing on
the network theory alone. Network theory only
provides a generalisation of the positive correla-
tion between an open network structure and en-
trepreneurial behaviour, and little attention has
been paid to why agents participating in such a
network are willing to help (Boddewyn and Buck-
ley, 2017; Dolfsma and van der Eijk, 2017). Such
an approach mostly assumes that entrepreneurial
behaviour is decided by the free-market system
that provides individuals with appropriate incen-
tives (Bruton et al., 2018; Ge, Carney and Keller-
manns, 2019); however, it neglects the Chinese cul-
ture, where social networks can be particularly ef-
fective if they are built with a signicant level of
mutual trust (Dunning and Kim, 2007; Lee and
Humphreys, 2007). This cultural inuence on net-
works mayhave different effectson entrepreneurial
behaviour in the Chinese context compared with
Western societies (Redding and Witt, 2015; Su,
Zhai and Landström, 2015). We argue that the
shortcomings of the existing theorisation of
Guanxi can be overcome byconsidering the gift ex-
change theoretical perspective, which accounts for
the importance of trust and obligation in building
and maintaining social networks (Dolfsma, van
der Eijk and Jolink, 2009; Su and Littleeld, 2001).
Furthermore, familybusiness scholars have long
recognised that aspects of family businesses’ het-
erogeneity, such as different governance struc-
tures, may lead to different entrepreneurial out-
comes (Skorodziyevskiy et al., 2022; Miller and
Le, Breton-Miller, 2011; Westhead and Howorth,
2007). However, few studies have attempted to
address the heterogeneity in family ties and
governance structures and their impact on en-
trepreneurial behaviour (Miroshnychenko et al.,
2021; Miller, Le Breton-Miller and Lester, 2010;
Morris et al., 2010). To date, we still lack convinc-
ing evidence on whether entrepreneurial behaviour
is shaped by a single dimension of Guanxi or by a
combination of family and non-family dimensions
(Burt, Opper and Zou, 2021). This applies particu-
larly to a context where typicallya single or a small
group of family members are involved in a fam-
ily business governance structure, such as in China
(Cao, Cumming and Wang, 2015). In such a con-
text, there is a need to account for the variations
of family- and non-family-centred characteristics
when examining their inuence on entrepreneurial
behaviour (Miroshnychenko et al., 2021). There-
fore,we investigate the following question: How do
Guanxi’s family and non-family dimensions shape
different levels of the entrepreneurial behaviour of
family rms in China?
Toenhance our understanding of Guanxi and its
theoretical application to the family business set-
ting, we apply an interpretivist research approach
with a multi-case study analysis of eight family
rms. Drawing on 32 semi-structured interviews
with family business founders, managers, and op-
erational employees, we nd that Guanxi is a multi-
dimensional cultural-specic concept focusing
heavily on intimacy among social networks. Com-
plemented by the gift exchange theoretical per-
spective, our papercontributes to the extant litera-
ture on how social networks shapeentrepreneurial
behaviour (Burt and Opper, 2020; Burt, Opper
and Zou, 2021; Daspit and Long, 2014; Puffer,
McCarthy and Boisot, 2010) by demonstrating
that political networks can only facilitate en-
trepreneurial behaviourif they are built with a sig-
nicant level of intimacy that induces strong mu-
tual trust and obligations in gift exchangeactivities
(Barbalet, 2018; Dolfsma, Vander Eijk and Jolink,
2009; Su and Littleeld, 2001). We also contribute
© 2022 The Authors.British Journal of Management published by John Wiley & Sons Ltd on behalf of British
Academy of Management.
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