The limits of guanxi from the perspective of the Israeli diamond industry

Purpose - Recognizing the significant impact of Design/methodology/approach - To illustrate the evolutional direction of the Chinese institutional system, the authors compare it to a similar system that went through the evolutionary cycle from a social to a rational institutional base of exchange and discuss what one can learn from the institutional evolution process of the global diamond industry and its implications for the current evolution of Chinese institutions. The authors compare two similar cultures/religions, Judaism and Confucianism. Findings - This study found parallels between the evolution of the Israeli diamond industry, dominated by Orthodox Jews, from a social exchange mechanism to a transactional mechanism and the present ongoing rationalization of the Chinese economy, dominated by the Confucianism culture from a social to a transactional business mechanism. Originality/value - Despite the vast efforts of researchers in the area of

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