Is guanxi important in a buyer-supplier relationship? Case of Chinese logistics industry

Date06 January 2020
Publication Date06 January 2020
AuthorAtif Saleem Butt,Syed Hamad Hassan Shah,Abdullah Zafar Sheikh
SubjectStrategy,International business
Is guanxi important in a buyer-supplier
relationship? Case of Chinese
logistics industry
Atif Saleem Butt, Syed Hamad Hassan Shah and Abdullah Zafar Sheikh
Purpose The purpose of this paper is to unveil negative outcomes associated with an absence of
guanxiin a buyersupplierrelationship in Chinese logisticsindustry.
Design/methodology/approach This study uses a casestudy methodology using 16 semi-structured
interviewswith managers engaged in the processof buying and selling logistics servicesin China.
Findings Basedon the qualitative interviews,managers experience lack of trust,lack of communication
flow and reducedbusiness volume when guanxi is absentin a buyersupplier relationshipin the Chinese
Research limitations/implications This study has some limitations.First, the results of this study are
not generalizable to a broader population.Second, this study explores behavioral patterns with respect
to Chinesebusiness culture only.
Practical implications Firms can usethe findings from this study to understandthe consequence they
can face whenguanxi is absent in a buyersupplier relationship.
Originality/value This study attempts to offer a balanced perspective on the role of guanxi in a
buyersupplierrelationship, particularlyin the Chinese logistics industry,by considering how an absence
of guanxi generatesnegative outcomes for firms.
Keywords Buyersupplier relationships, Guanxi, Logistics industry, China, Case study, Logistics,
Buyersupplier exchange
Paper type Research paper
1. Introduction
Buyersupplier relationship has received much attention by supply chain management
scholars in the past. Many of these authors aim to identify benefits that firms can enjoy as a
result of developing close buyersupplier relationships (Geyskens et al.,1998;Styles and
Ambler, 2003). Indeed, an effective buyersupplier relationship has now become one of the
greatest sources for achieving a sustainable and long-term advantage (Kalwani and
Narayandas, 1995;Golicic and Mentzer, 2006. In addition, a so-called Chinese version of
inter-personal relationships called “guanxi” has been a subject of much attention among
many scholars and researchers, who are interested in the Chinese market (Davies et al.,
1995;Liu, et al., 2008. Guanxi basically means a personal relationship based on mutual
interests and benefits that bonds the exchangepartners through reciprocal obligations and
exchange of favors (Davies et al.,1995). Guanxi has been essentially described as a basic
element which is deeply rooted in Chinese business culture and often has considerable
bearing on firm’s business operations (Davies et al.,1995;Fock and Woo, 1998; Morgan
and Hunt, 1994). Other authors argue that guanxi with business partners and with
government officials is a significant predictor of firm’s performance. For example, on the
other hand, confirm the positive influence of guanxi on channel cooperation and guanxi is a
Atif Saleem Butt is based at
the Department of
Management, School of
Business, American
University of Ras Al
Khaimah, Ras Al Khaimah,
United Arab Emirates.
Syed Hamad Hassan Shah
is based at the School of
Business and
Management, Donghua
University, Shanghai,
Abdullah Zafar Sheikh is
based at the Department of
Management, Faculty of
Business Administration,
Institute of Business
Administration, Karachi,
Received 23 April 2019
Revised 9 May 2019
29 July 2019
3 August 2019
Accepted 8 August 2019
DOI 10.1108/JABS-04-2019-0127 VOL. 14 NO. 1 2020, pp. 1-14, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 1

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