Business Performance Of Chinese Enterprises In A Relational Perspective

Abstract

This study provides a causal explanation and a statistical analysis of how corporate social capital promotes business performance of small- and medium-sized enterprises (SMEs) in China. The central argument of this study is that the formation and mobilization of corporate social capital are culturally and institutionally contextualized. China is an exemplary case. Through interviews and an analysis of 830 SMEs sampled in the Pearl River Delta Region of China, I will show how Chinese SME entrepreneurs formed and mobilized corporate social capital from multiplex and reciprocal strong ties to other entrepreneurs and non-economic organizations, and how such ties increased their business performance. This study makes both theoretical and methodological contributions to social capital research. Theoretically, I conceptualize guanxi, the Chinese expression of social connections, as an isotopic social capital, decompose guanxi to its analytical dimensions, and relate guanxi dimensions to business performance. Methodologically, I construct measures of guanxi ties among Chinese SME entrepreneurs, and for the first time in the long tradition of guanxi research I establish and assess counterfactual models in which to investigate the causal effect of guanxi-based social capital on business performance.