Guanxiand Organizational Performance: A Meta-Analysis

Abstract

Guanxi, a social network tie drawing on connections in business relations, has been identified as a powerful strategic tool helping organizations maintain competitive advantages and achieve superior performance. However, prior empirical studies on die gM/m-performance link provide indefinite conclusions. The purpose of this study is to systematically review and quandfy theguanxi-performance link in a meta-analytic framework by decomposingguanxiinto business ties (i.e.,guanxiwith business partners) and government ties (i.e.,guanxiwith government authorities) and organizational performance into economic performance and operational performance. Based on effect sizes from fifty-three studies encompassing 20,212 organizations, we estimate that the overall effect size of theguanxi-pertormance relationship is positive and significant, thus endorsing the argument thatguanxidoes enhance organizational performance. Specifically, our meta-analysis results demonstrate that both business and government ties lead to both economic and operational performance. However, business ties have a bigger impact on operational performance, whereas government ties exert larger effects on economic performance. Further meta-analytic regression results suggest that ownership (state-owned vs. non-state-owned) and location (Mainland vs. overseas China) explain some of the variations of theguanxi-performance link. Both business and government ties are more important to organizations in Mainland China than to those in overseas China. Government ties are more important to state-owned than to non-state-owned organizations. Lasdy, while business ties remain a valuable strategic tool in China, the importance of government ties is time-variant and has been declining with the development of the institutional environment in China.