The role of Guanxi in buyer-supplier relationships in Chinese small and medium-sized enterprises – a resource based perspective

This paper examines the role of guanxi (personal relationships or connections) in buyersupplier
relationships in Chinese small and medium-sized enterprises (SMEs), through exploratory
research that gained access to companies actually using guanxi. The resource-based
view (RBV) provided a systematic approach for analysing the role of guanxi in terms of its
potential to be a source of sustained competitive advantage.
Business guanxi connections were identified as possessing the potential to be considered
an organisational resource. This study identified several valuable attributes of guanxi at
the organisational level. However, the guanxi-based advantage can only be sustained under
certain conditions. SMEs should create an organisational environment that encourages their
employees to actively establish and maintain guanxi connections within the company and
beyond. However, companies in China need to recognise that firms that possess superior
technological skills or capabilities have a stronger bargaining power, as they are able to deliver
quality at competitive prices over the long run.