RESULTADOS DE LA SECUENCIA DIDÁCTICA

Due to Chinese people being relationally based (King, 1994, p. 111) and defining themselves according to relational attributes (Nakane, 1970, p. 13) it would be

68 necessary for two people to have a common identifier to initiate the relationship. A guanxi base or tie (Chen & Chen, 2004; Chow & Ng, 2004; King, 1994, p. 115; Kiong & Kee; 1998, Luo, 2000, p. 6; Nakane, 1970). Without that it may be necessary to rely on an intermediary (Chen & Chen, 2004; Chen & Peng, 2008; King, 1994, p. 115; Yeung & Tung, 1996). Having the guanxi base or tie does not mean the existence of a relationship but rather a way of identifying oneself in the ensuing relationship.

Strong guanxi relationships contain both sentiment and instrumental aspects whereas weak ties are purely utilitarian (Li, 2007, p. 66). Strong relationships are long term and reciprocal whereas weak ties are short term and used for immediate gain, also described as personal (strong) and network (weak). However, guanxi relationships cannot be categorized as either totally utilitarian or totally mixed. Relationships can be closer or further away from the individual implying there is more ganqing with those closer even though the relationship still contains

elements of instrumentality. And so both strong and weak ties are instrumental but the former also contains sentiment whereas the latter is purely utilitarian.

A guanxi relationship is formed through two people following the Confucian norms of renqing. Renqing refers to human sentiment felt between two people, a resource of reciprocal exchange bound by obligation and a social norm that maintains harmony in society (Hwang, 1987; Luo, 2000, p. 14). The norms of renqing are upheld in strong guanxi relationships but not in weak utilitarian relationships (King 1994, p. 120; Yan, 1996b). The closer one’s renqing, or the more one abides by the norms of renqing in a dyadic relationship then the closer their guanxi will be. Hence, people in strong but not weak guanxi relationships will closely abide by the norms of renqing.

In a strong guanxi relationship it is the renqing norm that contains the feeling of obligation to reciprocate favours. Receiving a favour from another person is morally binding and must be repaid at a greater value in order to keep the

relationship in a state of indebtedness (Chen & Chen, 2004; Seligman, 1999; Yau et al., 2000; Yeung & Tung, 1996). Mixed ties follow the aforementioned rules of reciprocity while instrumental ties do not. The latter are not long term

69 obligation to reciprocate is dependent on the loss of face that may be incurred by not reciprocating, the likelihood of having the favour returned at a future date and the strength of the tie between both people (Hwang 1987; Zhang & Yang, 1998). As the level of affect (ganqing) increases between both people so too does the level of obligation and abidance of the renqing norm (Zhang & Yang, 1998). Obligation is minimal in a weak tie and the equity principle is followed. Consequently, those in strong guanxi relationships are obligated to follow the unspoken rules of reciprocity whereas those in weak guanxi relationships are not as they abide by the equity principle. Obligation to reciprocate increases as ganqing increases.

One of the most prominent ways to reciprocate is through giving gifts at various occasions such as festivals, ceremonies, personal and community events,

expressing one’s friendship and occasionally for purely instrumental reasons (Bjorkman & Kock, 1995; Kipnis, 1996; Wank, 1996; Yan, 1996b). Gift giving is seen as an emotional investment and a sign of respect by following traditional Chinese customs and etiquette (Li, 2011). The exchange of gifts can help to create an emotional feeling (ganqing) and trust (Bjorkman & Kock, 1995; Smart, 1993). An individual attains a superior position over another when a gift is given and vice versa when a gift is returned of a higher value (Yang, 1989). Close friends are obliged to reciprocate gifts (Joy, 2001) but utilitarian ties are not and may also border on bribery (Smart, 1993). Thus, gift giving is a tangible aspect of the reciprocation process and in order to maintain or develop a relationship gifts are returned of a higher value. Giving gifts can increase ganqing and build trust in long term relationships but it is purely instrumental in weak guanxi relationships.

Favours can also create a deeper feeling than gifts which may just produce gratitude rather than human sentiment (Wank, 1996). Hosting banquets is also another way of developing the emotional feeling between guanxi partners (Yang, 1989; Leung et al., 1996; Wank, 1996; Yeung & Tung, 1996). Other methods not often mentioned in guanxi literature that have been shown to build stronger ties include communication (Leung et al., 1996), common language (Bjorkman & Kock, 1995), mutual help, friendship and social acceptance (Ai, 2006). The aforementioned methods contribute to both expressive and instrumental interaction (Yeung & Tung, 1996).

70 Ganqing is the personal feelings between two people whereas renqing is the social obligation (King, 1994, p. 119; Reid & Jallat, 2006). The deeper the ganqing two people have for each other then the stronger their interpretation of the closeness of the relationship will be (Chen & Chen, 2004). If ganqing is stronger in a dyadic relationship both people are likely to abide by the social etiquette found in renqing (Zhang & Yang, 1998). If there is little ganqing then there are more feelings of equity between both people. They will be more likely to treat each other fairly than give each other favoured treatment (see Figure 2.11 below). In dyadic relationships ganqing must be developed or the feelings between both people will be lost (Kiong & Kee, 1998; Luo, 2000, p. 15; Wang, 2007).

Figure 2.11 Ganqing and Relationship Strength (Adapted from Zhang & Yang, 1998)

The need to protect one’s own face and save other people’s is due to a sense of shame as opposed to guilt (Yeung & Tung, 1996). This causes people to take extreme care to give other people face or at the minimum not let them lose face especially at the beginning of the relationship (Cardon, 2009; Willis & Quan, 2009). Sincerity becomes more important as the relationship develops. By giving others face they are more likely to offer reciprocal actions in the future (Buckley et al., 2006). This can influence reciprocal actions both within and outside of the company (Cardon, 2009; Wong et al., 2007). Face will be given in different ways

71 depending on the relationship status of the people involved, e.g. outsiders,

hierarchically equal and vertical relationships. Therefore, giving others face in the appropriate manner can facilitate future reciprocal behaviour.

In China, trust has both affective and cognitive dimensions. When ganqing is stronger in a relationship the affective side of trust is also stronger than the cognitive (Michailova & Worm, 2003). Trust is established through fulfilling one’s societal obligations (Yau et al., 2000). When a relationship has been

established both parties are obligated to fulfil the renqing norms and as a result of these fulfilled obligations trust is developed (So & Walker, 2006, pp. 18, 19). If there is no trust between two people they will go through a stage of testing (Kiong & Kee, 1998; Wong & Leung, 2001, p. 40). Once the testing period is over the result will be mutual trust and one’s word is as binding as a written contract (Hutchings & Weir, 2006; Kiong & Kee, 1998; Wong & Leung, 2001, p. 40). Trust has been found to be both an antecedent and consequence of guanxi (Chen & Peng, 2008; Lee & Dawes, 2005). It is needed for the relationship to be established and becomes stronger as the relationship develops.

Finally, other conceptual models also provide insight to the development of guanxi. According to Willis’ (2008) model at the centre of guanxi development are affective aspects such as empathy, respect and honesty. The cognitive aspects are unable to develop without the affective at the core. This is in line with Chen and Peng (2008) and Lee and Dawes’ (2005) idea that trust is both an antecedent and consequence of guanxi. It may be that the affective aspects of trust are an antecedent while the cognitive aspects of trust develop over time through rational observation. Consequently, it would appear that affective trust is an antecedent to guanxi while cognitive trust is developed as the relationship evolves.

There are a number of models on guanxi that describe the different types of ties, however, most do not show how these ties transition from one stage to the next. Hwang (1987) provided the model on instrumental, mixed and expressive ties. Guo (2001) states that guanxi relationships range from being strongly

instrumental to strongly emotional. Fan (2002) describes them as family, helper and business relationships. Wank (1996) explains that relationships range from being deeply obligatory to highly instrumental. Luo (2000, pp. 8, 9) explains that

72 they have different levels of expressiveness or instrumentality. Almost all of these descriptions of guanxi relationships start at utilitarian, instrumental and change to different levels of reciprocity, obligation through abidance of renqing norms to finally a deep development of ganqing. However, most of these descriptions do not show the process of how people transition from one stage through to the next.

There were 11 models previously discussed on the development of guanxi (see

Table 2.3). Firstly, Leung et al. (1995) proposed a model with eight stages of development. The names of each stage are provided, however, they do not show how individual characteristics of guanxi are developed. Their second and most recent framework (Leung et al., 2008) provides the most beneficial analysis on how an individual can move from outsider to insider relationship status. A person must have the right affective characteristics that allow another person to enter into a reciprocal relationship which develops ganqing and finally trust. This also correlates with the previous propositions.

Other models (Freeman & Lim, 2008; Kiong & Kee, 1998; Yau et al., 2000) focus not on the dyadic relationship but rather the external factors that can shape these relationships. Kiong and Kee’s (1998) model focuses on the institutional effects that cause people to use guanxi. Although Yau et al. (2000) do focus on the external forces they do, however, touch on the internal forces of a dyadic relationship in which reciprocity and trust are both important factors. However, there is no differentiation between cognitive and affective trust nor are the effects of face mentioned in this model. Freeman and Lim (2008) also focus on the external factors that can create dependency and in turn reciprocity. However, this does not show the development of reciprocity between two individuals.

Chen and Chen (2004) created a model to measure the depth of relationship. This is particularly relevant as it is one of the first steps towards developing a dynamic rather than a static model of guanxi. Trust is the measurement of relationship quality. However, there is no indication as to how ganqing may have a different influence on cognitive and affective trust. Bedford (2011) takes this a step further by pointing out that utility and renqing affect trust (Bedford refers to as lian) and ganqing. No exploration or testing has taken place to determine whether or not these frameworks hold true in Chinese society.

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Individual A

Individual B

Renq

in

g

N

o

rm

Instrumental Ganqing

Equit

y

P

ri

nc

ip

le

Obligation Gifts, Favours and Banquets Gifts, Favours and Banquets Gifts, Favours and Banquets Gifts, Favours and Banquets Cognitive Trust Face Affective Trust Affective Trust Affective Trust Reciprocal Exchange Reciprocal Exchange Reciprocal Exchange Affective Trust Face Face Face

Figure 2.12 The Development of Guanxi over Time: A Preliminary Model

(Adapted from Chen & Chen, 2004; Chen & Peng, 2008; Hwang, 1987; Kiong & Kee, 1998; Kipnis, 1996; Lee & Dawes, 2005; Michailova & Worm, 2003; Smart, 1993; So & Walker, 2006, pp. 18, 19; Wank, 1996; Yan, 1996b; Yau et al., 2000; Yang, 1989; Zhang & Yang, 1998)

74 Consequently, by combining factors accounted for in the previous frameworks and discussion, a model on the development of guanxi in a dyadic relationship has been designed (see Figure 2.12). Firstly, if any transaction is to take place there will be an element of affective trust that exists as an antecedent to the

development of guanxi. This may be due to finding a common guanxi base or an intermediary who is able to initiate a meeting between two individuals. This is enough to set the process in motion if both people chose to start a relationship. Secondly, their understanding of face will spur this on as when meeting a new person for the first time great care must be taken to give them face otherwise the relationship will not develop. So both the initial feelings of affective trust and the concept of face will contribute to the first instance of exchange through giving a gift, favour or hosting a banquet for another person.

As shown in Figure 2.12, once a gift favour or banquet has been offered to another person this will start the reciprocal exchange process. The act of giving a gift, favour or banquet is instrumental but will increase both the feeling of obligation and ganqing in the other person. Although ganqing increases throughout the relationship the instrumental aspect remains. This is the reason why at the early stages of the relationship it is based on the equity principle. It is devoid of ganqing and obligation and so people will be treated as equals. Once the relationship has developed over time, the obligation to reciprocate is stronger and so is ganqing. This is what causes people to follow the renqing norms. They must give favoured treatment otherwise the relationship will be broken or neutralised as was discussed earlier on guanxi avoidance. If the reciprocal process continues the relationship will be maintained.

Two important outcomes of this reciprocal process is the development of both cognitive and affective trust. Often when a relationship is instigated it is based on a feeling of trust that one person has for another. It may not be strong but it will still exist (the reason affective trust as an antecedent is a weak colour in the first step in Figure 2.12). However, over time, the instrumental exchange produces more ganqing. As a consequence affective trust is also developed. The more affective trust that is developed then the more willing the person will be to continue exchanging favours with the other party. Cognitive trust on the other hand is developed by what is seen in the relationship. If one person offers a favour,

75 gift or hosts a banquet and these actions are reciprocated, it is the fulfilling of this process that will produce cognitive trust. This strengthens as the individual sees that the other party’s ability to do so continues over time.

Another area that needs to be addressed is determining whether or not certain guanxi characteristics are elements or results of guanxi. There is definite agreement over certain characteristics being elements of guanxi such as

reciprocity, ganqing and face (Lee & Dawes, 2005; Reid & Jallat, 2006; Wong, 1998). However there is debate over whether trust and bonding are actual

characteristics of guanxi or results of it. Some state that trust is an essential aspect of developing guanxi (Kiong & Kee, 1998; Wang, 2007; Yau et al., 2000)

whereas other research shows trust is a result of guanxi (Lee & Dawes, 2005). In addition, Wong (1998) states that bonding occurs through empathy and face. This would infer that bonding is a result of the two guanxi characteristics empathy and face rather than an element of guanxi. These differences show that the dimensions of guanxi still need to be more carefully defined with clear separation of the elements and results of guanxi.

An in-depth exploration of this topic will take place examining first the observable features of guanxi and then working down to the meaning and

significance of the intangible aspects. In order to understand guanxi development in a business setting the following questions have been proposed:

1. How are guanxi characteristics expressed within business partnerships? 2. Which guanxi characteristics are the most important at different stages of

development in a business relationship?

3. How does each guanxi characteristic affect the building of successful business relationships?

2.9 Conclusion

An analysis of management research showed that smaller private companies were more in need of guanxi than those working in SOEs. Private enterprises that connected closely to the government were found to gain competitive advantages at different stages in the life of the enterprise. Due to this, a number of academics recommended mapping relationships to utilise guanxi as a resource. The real

76 benefits, however, are difficult to measure as the timing of reciprocity is not immediate. In addition there appear to be both positive and negative results of strong guanxi in each field of study. While there are definite benefits, the focus of previous research has largely been on the outcomes of guanxi as opposed to its development. This is due to a tendency to investigate the topic from a network viewpoint rather than a dyadic relationship between two people. This has led to guanxi being investigated from a static rather than dynamic perspective and in its entirety rather than taking into consideration its individual characteristics.

To determine whether an institutional or a cultural perspective was adopted in this research an historic overview of guanxi was conducted. It was found that prior to 1949 there were numerous examples of guanxi type relationships but they were referred to as renqing or mianzi as the word guanxi had not yet come into existence. For ten years the CCP tried to ban kinship type relationships but the Cultural Revolution caused its re-emergence as people began creating networks to obtain favours in order to survive. Guanxi began to be used once again by all people but those that gained the most benefit were those higher in society. The overview of guanxi showed that its characteristics were in existence prior to 1949 and that it has adapted to the changes in society rather than re-emerged. This would indicate a cultural as opposed to institutional phenomenon.

The concepts of guanxi were examined, the most fundamental being renqing. Reciprocity and obligation were two concepts to be contained within renqing and they continued to be abided by due to face. Renqing was expressed through gift giving, banquets and favours. It was found that there were many instances of gift giving in daily life but less on banquets and favours. As banqueting was seen to be an important method of building business relationships this is an area that needs more investigation. Ganqing was also found to be a fundamental aspect of building guanxi as the closeness of feeling determined the closeness of the relationship. To identify gaps in the literature the sociological and management based guanxi frameworks were examined. It was found that all the management frameworks were conceptual except for two. Of those two one had formulated a static model of guanxi characteristics and the other examined guanxi in the context of the political environment. None of the models delved into the tangible methods of developing guanxi through banqueting, gift giving and exchanging

77 favours. The only investigations that examined these areas were ethnographic studies in rural society. To address this issue a preliminary model of guanxi and proposals were formulated.

The limitation with this model and others is that they are all conceptual. This study will be an attempt to bridge this gap by exploring the aspects developed within the model shown in Figure 2.12 and to see how they relate specifically to business partnerships in China. Moreover, the majority of in-depth research that explores each aspect of guanxi development in society has been ethnographic studies in village or city life (Kipnis, 1996; Yan, 1996b; Yang, 1994). There have been very few, if any, which have explored these issues in-depth in the business environment.

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Chapter 3 Research Context

Figure 3.1 Graffiti on the Southwest Wall of 798 (Author’s Research: Allott, 2010)

3.1 Introduction

This chapter defines the art industry by categorising artwork and summarising the main players in the industry. Current art investment in the context of China is then

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