Journal of the Academy of Business and Economics: Institutional environment, t... - The Diigo Meta page

• 08 Oct 08
  

  Wesley Shu

  jabe han_yongliang guanxi

  • where transactions are highly uncertain, opportunism is widespread, property rights-based contract laws are not well developed and enforced, and capital and managerial resources are scarce, economic exchanges conducted in both markets and hierarchies may entail high transaction costs.
  • Interfirm guanxi, the trust-based particularistic ties between the key personnel of independent firms to pursue mutual interest of firms, is the primary or at least supplementary governance mechanism of intermediate forms.
  • Xin and Pearce (1996) clearly argue that guanxi is the product of a specific institutional environment.
  • They suggest that Chinese private-company executives operating without the structural protection of governmental support develop guanxi as a substitute for the formal institutional protection government offers their counterparts--state-owned and collective-hybrid organizations.

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