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Chinese Supply Networks - An Interactive Guanxi Approach for Product Development
Bruce Cronin and Christos Bassayannis
Place of Publication
The paper was published at the 25th IMP-conference in Marseille, France in 2009.
The research paper discusses the concept of 'network capitalism' (Boisot and Child 1996; 1999) in line with the 'network enterprise' concept developed by Castells (1996) o provide a background of the socio-cultural/institutional environment that characterises the Chinese context. Network capitalism differs from market capitalism or bureaucracies in terms of its adaptive mode to complex environments. In China the mode of complexity absorption is most often favoured over the complexity reduction mode used by Westerners (Boisot and Child 1999). The complexity absorption mode 'entails creating options and hedging strategies, [formally] often through alliances' (ibid. p.237) and informally through guanxi-based trust and close relationships. The latter has important implications for analysing product development within networks in China, as it is related to soft knowledge transfer mechanisms and knowledge articulation rather than codification. This paper views guanxi as a process; not something static. Guanxi is seen as a dynamic resource created through interactive relationship processes. The concept of guanxi is linked to the IMP concept of interaction, which is relevant to the study of supply management and product development within the supply or production networks in China. Three case studies are conducted in Southern China using qualitative techniques of open-ended interviews with the aim of enhancing understanding of supply or production network formation, development and maintenance in a product development context. The main unit of analysis is supplier relationships among the Chinese; however, multiple relationship levels are analysed incorporating a network approach that takes into account relationship ties, activity links, and resource interdependences among buyers, suppliers and sub-suppliers. The three cases can be distinguished initially in terms of ownership structure, but similarities are also found at the operational level that is most relevant for successful product development. The case studies involve a state-owned company, a family-owned company group and a foreign-owned company.