A Casual Study On The Role Of Guanxi In Maintaining Competitive Advantage In The China Market

Abstract

An increasing number of papers are discussing the impact of guanxi on business outcomes in the Chinese market. Multiple studies have shown the substantial and beneficial effects of guanxi when used in a business context. On the other hand, theoretical studies on how to strategically use guanxi to gain an edge over the competition are few in the current literature. In addition, the theoretical framework and limits of guanxi-based commercial ability are lacking. Aiming to provide a picture of the conceptual horizon for guanxi-based competence and its associated strategy forms, the author was motivated to conduct this empirical study with the purpose of theory building due to the existing status of research in the area. Using a grounded theory method as its theoretical foundation, this research seeks to better understand the practical implementation of guanxi-based business strategies in the Chinese market. The researchers were able to complete the study and go on with the planned research in our overarching objective of understanding how guanxi-based competitive advantage is strategically positioned. The grounded theory method was used to accomplish this. First, they looked at how guanxi affects the development of a company's strengths. Through its enabling function in strategic company endeavors, guanxi provides an opportunity of quasi-competitive advantages that aid the firm in enhancing its core competence depending on the market. Second, guanxi may indirectly boost the firm's performance because of three crucial business realities: cultural embeddedness, commercial need, and institutional influence. Thus, the paradigm of guanxi-based firm strategy is as important as the industry-based paradigm in the Chinese market.