Key Drivers of Guanxi in China among Taiwanese Small to Medium-Sized Firms

As China has emerged as one of the world’s economic powerhouses, research on guanxi, or social/business ties in China, becomes more common. This study employs a theoretical framework of social embeddedness, in which the flows of information, resources, and opportunities occur across recognized members of a social network to create mutual benefits. With this framework, the authors empirically investigate impetuses for Taiwanese small to medium-sized firms (SMEs) to employ guanxi networks with their business community, local governments, and the central Chinese government. The study results indicate that the extent to which Tawanese firms use different types of guanxi differ by firm characteristics (i.e., resources, capabilities, and entry mode) and market factors (i.e., market stability and competition).