Can <i>guanxi</i> be a source of sustained competitive advantage for doing business in China?

Abstract

Executive Overview Guanxi means good connections. Although guanxi is often said to be the source of sustained competitive advantage for foreign companies doing business in China, there is little theoretical basis for this view. What is known is that guanxi has to be valuable, rare, and imperfectly imitable before it can lead to a sustained advantage. Even if a certain advantage is gained, it can be difficult to sustain, because guanxi can be disrupted by something as simple as staff mobility. By suggesting ways for companies to protect their guanxi, it is hoped that this important aspect of Chinese management may be made more understandable to westerners and its use by western managers enhanced and encouraged.