A Model of Guanxi Development: Flexibility, Commitment and Capital Exchange

Abstract The importance of business relationships is deeply rooted in Chinese society, characterised by Confucian codes of repeated favour-exchanges. Our study aims to explore how a quality business relationship is to be developed and maintained in a Chinese context and to explain the concept of expressive and instrumental ties of a guanxi model incorporating relationship-specific variables (face, favour-exchange and flexibility) and the quality of business relationship (cooperation, continuity and commitment) in the framework of capital exchange. Managerial implications in the form of the face mechanism and Yin-Yang perspective are discussed.

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