Guanxi

No literal translation exists for the Mandarin term guanxi, but it incorporates aspects of relationship building and the rights and duties that two or more parties have toward each other.

Confucianism, practiced in Mainland China, Greater China, and Southeast Asia, considers people as a part of the social network in which a person plays different roles. Confucius originally listed five relationships of unequal, bipolar contexts that defined Chinese society. As George Haley and colleagues identified, these relationships include

• Ruler–Minister
• Father–Son
• Husband–Wife
• Elder Brother–Younger Brother
• Friends

The five relationships have attendant, though unequal, ethical expectations and duties. For example, those relationships on the left side of the above list (ruler, father, husband, etc.) can extract more duties and obligations than those on the right (minister, son, wife, etc.). Outside these five relationships, individuals have no ethical obligations, except to maintain social harmony. Because of China's weak legal [Page 1047]system, and the traditional and historical administrative bias against the Chinese merchant classes, Confucian relationships including guanxi, with their emphasis on trust and uprightness, defined Chinese business relations for centuries. The importance of guanxi in business environments was emphasized by the Confucian bias against the merchant class and the concept of profit. Book 4, paragraph 16 of The Analects states, “A gentleman understands what is moral. The Small man understands what is profitable.” A full discussion of the sociology of Chinese relationships and their effects on the evolution of Chinese culture and society, including businesses, can be found in From the Soil: The Foundations of Chinese Society, by Fei Xiaotong (the founder of Chinese sociology and whose works the Chinese Communist Party banned until the 1980s; the People's Republic of China banned sociology itself as a discipline until 1976). Confucian expectations on guanxi and ethical conduct continue to affect interpersonal business behaviors and business environments in China.

The inequality of guanxi molds interpersonal ethics in Chinese business; different levels and intensities of guanxi receive different levels of treatments. Several researchers have provided empirical evidence of how guanxi affects diverse relationships in business and social environments. For example, A. K. M. Au and D. S. N. Wong in 2001 used auditors in Hong Kong and Chinese companies to show that guanxi correlates with moral reasoning. Au and Wong explored the effect of ethical reasoning on the relationships between guanxi and auditors' behaviors in an audit-conflict situation. Their research showed that auditors' behaviors in an audit-conflict situation were influenced by the existence of guanxi and the level of cognitive moral development of the auditors; guanxi influenced decisions in conflicts, and even auditors with high professional ethics were influenced by it. In 2002, D. Tan and R. S. Snell derived five Chinese moral principles from their research on work ethics in Chinese society. Tan and Snell's theory specifically addressed the Chinese habitual emphasis on interpersonal relationships. Earlier, H. K. Ma had also proposed relational hierarchy from the perspective of utilitarianism and classified interpersonal relations into relatives, friends, strangers, and enemies. Relatives refer to blood relations, while friends include close friends and confidants. Strangers span ordinary strangers and extraordinary strangers. The latter consists of the socially vulnerable (e.g., people with disabilities), children, and the social elite (e.g., Nobel laureates). The amounts of utilitarian acts vary with the types of the interpersonal relations, with relatives receiving the most attention and enemies the least.

...