The role of Guanxi in supply management practices

Guanxi has been identified as having an important influence on business behavior. This paper investigates the influence of guanxi on three elements of supply chain management: strategic purchasing, outsourcing, and supplier development. Survey data was collected from 175 companies in the electronics sector of Hong Kong. The results indicate that guanxi has a significant influence on these three supply management constructs. The managerial implications are examined from a relationship perspective and in terms of transaction cost economic theory. The failure to appropriately assess the impact of guanxi-based supply management practices can have a detrimental effect on organizations attempting to enter the Chinese market.