"Guanxi" Versus Social Network in China: The Perspective of Independent Directors' Connections

Ruixiong  Qi; Azlina Abdul Jalil; Anna Azriati Che Azmi

doi:10.56225/ijassh.v3i2.271

Authors

Ruixiong Qi Department of Accounting, Faculty of Business and Economics, Universiti Malaya, 50603 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia
Azlina Abdul Jalil Department of Accounting, Faculty of Business and Economics, Universiti Malaya, 50603 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia
Anna Azriati Che Azmi Department of Accounting, Faculty of Business and Economics, Universiti Malaya, 50603 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur, Malaysia

DOI:

https://doi.org/10.56225/ijassh.v3i2.271

Keywords:

Guanxi, Social network, Independent directors

Abstract

The social exchange theory posits that economic and social factors are crucial for successful business relationships. Numerous studies have examined interpersonal connections across cultures. Informal relationships influence economic and social exchange, such as Guanxi in China, Yongo in South Korea, and Wasta in the Middle East. In social network literature, the concept of 'network' encompasses two dimensions: network relation and network structure. The connections among directors affect a company's efficiency from a network perspective. This study conceptualises "Guanxi" and social networks to illustrate the similarities and differences between these two concepts and how Chinese Guanxi differs from Western preconceptions concerning social networks. Given that both "Guanxi" and social networks involve social connections, it is essential to note that Guanxi does not exclusively relate to social networks or merely serves as an alternative term for social networks. Additionally, this study focuses on independent directors' social networks created by serving on multiple boards and reviews the literature on independent directors' connections in China. The methodology employed to accomplish the conceptual definition and distinction was based on a comprehensive literature review that consisted of comparative studies and analyses of other scholars' perspectives and theoretical frameworks. Guanxi" is a distinctive characteristic of Chinese culture, specifically about informal relationships. Guanxi, or "personal connections," is valued by the Chinese more highly than networking, information, and institutions, which Westerners prioritise. In the "Guanxi" concept, emphasis is placed on social capital within the circle of friends, family, and close associates. This study argues that researchers must recognise subtle differences in how informal inter-organisational directors' relationships are developed and utilised in social network and "Guanxi" concepts.

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