TITLE

The Transaction Cost Advantage of Guanxi-Based Business Practices

AUTHOR(S)
Standifird, Stephen S.; Marshall, R. Scott
PUB. DATE
March 2000
SOURCE
Journal of World Business;Spring2000, Vol. 35 Issue 1, p21
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The purpose of this paper is to provide a theoretical explanation of the perpetuation of China's guanxi-based business practices. As a complement to the social embeddedness- and resource-based explanations, we seek to demonstrate the perseverance and relevance of guanxi in terms of the transaction cost advantages it offers. Specifically, we argue that guanxi-based business practices offer certain transaction cost advantages over existing structural alternatives identified in transaction cost theory. Where the guanxi network is well developed, the transaction cost advantages of guanxi-based exchange are sufficient to warrant the integration of guanxi- and market-based exchange mechanisms.
ACCESSION #
2935326

 

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