Guanxi and 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 the guanxi-performance link provide indefinite conclusions. The purpose of this study is to systematically review and quantify the guanxi-performance link in a meta-analytic framework by decomposing guanxi into business ties (i.e., guanxi with business partners) and government ties (i.e., guanxi with 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 the guanxi-performance relationship is positive and significant, thus endorsing the argument that guanxi does 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 the guanxi-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. Lastly, 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.