Master thesis
“Does Guanxi matters: Trust and reciprocity decisions in a Chinese context”
Supervisor: Dr. Alfred Zerres
Author: Yang Kaiwei (student number: 11845864)
MSc in Business Administration Marketing Track
Resit Version 17/8/2018
Statement of Originality
This thesis is written by the student Yang Kaiwei who declares to take responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Abstract
This research paper is trying to answer the research question as “To what extent do Chinese negotiators vary their behavior with other Chinese negotiators (having Guanxi culture) vs. non-Chinese negotiators (not bounded by Guanxi) based on the level of trust and reciprocity”. Guanxi (Chinese:关系), an indigenous Chinese
negotiating culture, can be simply translated as a dynamic process involving multiple parities’ efforts to find a solution. Further detailed explanation will be shown in the main context. This research collaborates the classic trust game theory with
questionnaire method to yield three levels of answers.
The first one explained the extent based on the level of trust and reciprocity. Results shown that Chinese people are more willing to exhibit both a higher level of trust and reciprocity toward Chinese than Non-Chinese, especially when they are in a trustee’s role (waiting and expecting for the trust first and then give response as reciprocity).
The second level of answers examine the mediating role of Guanxi between nationality (Chinese or non-Chinese) and trust/reciprocity. The third level of answers tests the role of overseas experience as a moderator between nationality and Guanxi. Although these two relationships are not being proved under the limited researching condition, it still shed light on Guanxi-related research and overseas experience’s potential influence. Further researching directions are pointed out in the conclusion part.
Table of contents 1. Introduction ...5 2. Theory ...8 2.1 Literature review ...8 2.2 Conceptual Framework ...16 2.3 Hypotheses ...16 3. Methodology...21 3.1 pre-experiment questions ...22
3.2 experimental trust game ...22
3.3 post-experiment questionnaire ...25
4. Results ...25
5. Conclusion and discussion...35
5.1 Conclusion ...35
5.2 Theoretical and Managerial Implications ...37
5.3 Limitations and Directions for further research...39
Appendix ...41
1 Introduction
Negotiation is an eternal topic in both business world and psychological field. Especially with the development of globalization, not only intra-culture but also inter-culture negotiation is becoming more and more important for political, economic and cultural reasons. China, as one of the rapidly growing countries in these decades, enhanced its connection with the rest of the world and has raised enough attention on its way of negotiation. Mysterious Chinese phrases such as MianZi (face or social capital) or HeXie (harmony) are being mentioned on numerous reports about Chinese negotiation style.
This article is going to examine one of the various interesting Chinese phrases - Guanxi, which can be simply interpreted as a dynamic process involving multiple parities’ efforts to find a solution. As a deep-rooted Confusion country, some studies find that the relationally affective bases in human beings are comparatively more salient in China than other countries. (Wasti, Tan, & Erdil, 2011) It’s easier to understand a phrase if it is rooted in a shared background and experience. Networking, which is considered the Western counterpart of Guanxi, has many differences when comparing with Guanxi due to the undeniably different culture backgrounds. Many western researchers are trying to find out the difference between this two phrases in order to understand Guanxi better.
Chua, Morris and Ingram (2009) pointed out in their research that China, compared with the West, is characterized by family-like relationships. For many relationships in China, family is the start point to combine affective bonds with instrumental exchanges. They introduced the norm “familial collectivism” (Bond & Hwang, 1986) that highlight the deeply-rooted family relationships in this
collectivism country. With years of development, this familial collectivism is not only the norms for family relationships, but is also taken as a template for relationships in other domains of life, such as business or professional relationships. (Redding & Wong, 1986) In a traditional way, a Guanxi network may starts building within family
ties, and it than runs along one’s extended network. Chua, Morris and Ingram (2009) lately found out westerners, without the extension of family norms to business settings, were more likely to derive affect-based trust from non-kin ties like friendship.
In fact, westerners emphasize networking as important to success in a similar way as Guanxi does in China. Forret and Dougherty (2004) defined networking as “individuals attempts to develop and maintain relationships with others who have the potential to assist them in their work or career.” Instead of Guanxi’s familial
collectivism behaviors, networking behaviors are important for career-driven individuals who rely on themselves other than organizations. This also reflect the difference of western individualism culture as compared to Chinese collectivism culture. Lo (2012) pointed out some other detailed differences between networking and Guanxi, such as the overwhelming role of reciprocity to Chinese people in a Guanxi relationship; the length of time to enter into a Guanxi might seem too long for a non-Chinese; or sharing an informal meal together in a neutral and public setting is a salient etiquette of Guanxi etc.
After understanding better for the meaning of Guanxi, this article is going to operationalize and examine various impact of Guanxi. Previous Guanxi related researches split the inner layers of Guanxi into several individual attributes. Among all these attributes, this article will examine how trust and reciprocity decisions vary as a representation of Guanxi-related behaviors. Trust and reciprocity acts as the glue in many social exchange activities and without trust and reciprocity, many beneficial social exchanges would not begin.
But all decisions are keep changing in China where old and new things exist at the same time. A hierarchical and internal way of Guanxi among the older generations may distinct with a more open and international way of Guanxi among younger generations. Under the influence of globalization, more and more generations born and raised in China going abroad for better opportunities. Overseas experience
introduces more possibilities including western way of negotiation to them and this may have some impact on their traditional way of negotiation. It is interesting to dig deeper on whether there is a potential change of mind on the use of Guanxi after internationalizing in overseas market.
After doing literature review in related fields, I found out most of the previous researches on intra and inter-cultural negotiation only focused on the negotiation process itself or negotiation behavior, relatively fewer researches focused on the interpersonal relationship such as Guanxi which is a crucial element especially when negotiating with Chinese. Also, deeper exploration in different attitudes towards different nationalities when forming a particular Guanxi is also a tiny angle seldom researcher explore. Furthermore, previous researches about Guanxi are mostly based their researches in China (Mainland, Hong Kong, Taiwan). They conducted
researches with people who live and work in China (including Chinese and non-Chinese) and little of them focused on living abroad Chinese and the implementation of Guanxi in overseas context. Last but not least, a lot of the Guanxi articles are from a western perspective, they are trying to figure out how should non-Chinese approach business situations in China, almost none of them build from a purely Chinese
perspective and trying to figure out what Chinese people, including overseas Chinese, view their different Guanxi formation with different nationalities.
This paper will purely focus on Chinese negotiators and try to answer the
research question as “To what extent do Chinese negotiators vary their behavior with other Chinese negotiators (having Guanxi culture) vs. non-Chinese negotiators (not bounded by Guanxi) based on the level of trust and reciprocity.” In this research paper, trust and reciprocity is the reference indicator of the possible variance gap due to Guanxi, overseas experience is the possible influencing factors of the variance. Further detailed questions could be: do Chinese negotiators make any difference between Chinese vs Chinese? Do they expect less trust and reciprocity with non-Chinese? Does Guanxi plays an important role in forming trust and reciprocity
decisions? Is there a potential change of mind on Guanxi after internationalizing in overseas market?
As for the methodology, this research collaborates the classic trust game theory with questionnaire method. The online experimental questionnaire will be divided into three parts: collecting basic information, the experimental trust game and a post-experiment questionnaire. To investigate the variance of Guanxi attitude, a trust game experiment will be conducted to test the monitory reflection of trust and reciprocity. Overseas experience and attitude towards Guanxi will be collected through detailed questions. Participants will only consist Chinese, including both Chinese who have a certain amount of overseas experience negotiating with non-Chinese and those who never go abroad before.
In the following chapters, research process will be presented step by step. Chapter two focuses on previous literature review, conceptual Framework and hypothesis. Chapter three explained the whole methodology. Data overview and hypothesis testing results are in chapter four. And finally, chapter five ends with conclusions, limitations and future research directions.
2 Theory 2.1 Literature review
In this chapter, I will first present the research progress about overall inter cultural and intra cultural negotiations. This start point sets the tune of the overall cultural background of this research paper. Next, I will narrow down the searching area to Chinese way of negotiation for both intra and inter communication. Here I will dig deeper into the Guanxi culture, the most mysterious word of this research. Also, this is the mainly focused cultural background I will explore further in this research. Then here comes with detailed research progress on trust and reciprocity, two individual attributes under Guanxi.
Inter-cultural and Intra-cultural negotiation
When talking about the difference between inter-cultural negotiation and intra cultural negotiation, Griffith, Hu & Ryans (2000) gave us an easy example in business relationship. An internal (intra) business relationship should consist of two or more partners from the same cultural background. They might both have an individualistic and weak uncertainty avoidance culture like a Canadian - U.S. relationships or both have a collectivist and strong uncertainty avoidance culture like China - Japan relationships. While an inter cultural relationship then means two or more partners from different cultural backgrounds, for example one from Mexico and the other from United States. Without doubt, different cultures have different negotiation styles and different problem solution methods. David, Francis and Walls (1994) conducted a Sino - Canadian comparison on intra- and inter-cultural negotiations when facing conflicts. The results show that neither group changed their strategy when negotiating across cultures. And Chinese people are more willing to avoid conflicts and prefer using discontinue and negative negotiation.
Generally speaking, when talking about inter-cultural negotiation issues, Carnevale & Pruitt (1992) predicted at the end of 20th century that as a result of growing inter-relationships among nations, cultural difference in negotiation would increase its importance to a large extent. Following this, there are some positive research findings about inter-cultural negotiations. Bontempo, Bottom & Weber (1997) stated that although different cultures have different perceptions of risks, they can create value by sharing the risks and benefits with each other. Other researchers drew some negative conclusions about inter-cultural negotiations. For example, Brett and Okumura (1998) argued there is no clue showing that a negotiator can transcend his/her own cultural background into an inter-culture negotiation. Shapiro and Glinow (1999) also conceded a ‘‘stepping out’’ of one’s own culture could be difficult. While these different findings might be explained using the strong-ties and weak-ties theory (Granovetter 1973). This theory shows that strong ties involve a sense of reciprocity,
warmth and frequent contact, while weak ties involve little sense of reciprocity, infrequent contact and neutral affect. Different countries build different ties based on its own culture. In this way, when talking about the similarity and differences of inter cultural negotiations, we cannot ignore the inner side of each cultural background. The inner layer of each culture has a great influence on the out layer when facing different cultures.
Next part I will focus on negotiation within one culture background, i.e. the focus of this research - Chinese Guanxi culture.
Negotiation within Chinese Guanxi culture
When talking about Chinese way of negotiation, Guanxi (Chinese:关系) is not the only one but an unneglectable one among all different layers. It is a widely shared western impression when talking about China. All the comparisons between Guanxi and other counterparts cannot neglect to go back to the traditional Chinese culture for conclusive proof. It’s understandable for a non-Chinese to get confused about the Guanxi culture, as Yang (1994) said, Guanxi is built implicitly without the need for explicit discussion or arrangements. What’s more, a Chinese character can have different meanings when it is used as a noun or verb and when it is used with other character to form a phrase. This makes translation work difficult because no English word can represent the exactly same meaning. Besides the above-mentioned
difference in the introduction part as “default bond of family ties in Guanxi VS individualized career-driven networking”, this part is going to use detailed explanations and examples to make it clearer to understand.
Guanxi is interpreted by many foreign researchers into different meanings such as Guanxi as connection, Guanxi as exchange or Guanxi as resource. All these
definitions are theoretically proved as each of them depicts Guanxi from different sides. It’s hard to summary one exact definition about Guanxi but in order to form a
basic understanding of the nature of Guanxi and to build the theoretical foundation of this thesis, I would adopt Fan (2002)’s definition to explain it.
Guanxi begins with a special relationship between two people. The specialty and closeness of this relationship depends on the nature of the Guanxi base (relationship). A Guanxi base can be formed when two people share same identification or being related to a common person. Guanxi base exist as a matter of fact and Guanxi is the trigger started deliberately for a specific purpose. The motive is to find a solution for a problem or we can say “to get things done”. In this way, Guanxi is the dynamic process of social interactions original begin with two people but soon after may involve more people into the process. The person who is being asked for help may not have solutions even though he/she want. So, this person’ role is to facilitate, match or build a further Guanxi base. In this way, a Guanxi process involves a series of
activities carried out between two or more parties within one united Guanxi network. In the end, a problem is solved within the cycle of everyone’s effort.
A Guanxi base stands at the start point of a Guanxi network can be divided into three categories (Fan, 2002): Guanxi base by birth or blood (family, kinships), Guanxi base by nature (locality, classmate, neighbor) and Guanxi base acquired
(acquaintance, friend). Because of familial collectivism, Chinese people prize the process to make use of their social capital with family members. For many
relationships in China, family is a vital start point to combine affective bonds with instrumental exchanges. Bell (2004) stepped forward and stated relationship with non-kin members is an extension of family members’ Guanxi and could be expanded even further. For example, businessmen shall focus on building and maintaining control-oriented Guanxi to enhance the achievement of targeted financial performance. (Yau and Powell, 2004) Shou and other researchers (2011) gave a simple and vivid
example: if one sales manager is trying to establish Guanxi with a purchasing
manager, he/she could imply a hint about his or her relative plays an important role in the related firm or give some personal benefits (nice meal) to the purchasing manager.
These Guanxi forming behaviors will promote a solid channel relationship to some extent and this might be an effective way for building future business collaboration.
Park and Luo (2001) gave some other examples of Guanxi, they concluded in their study that repeated interactions in Guanxi form a socially embedded relationship demands all parties’ continual commitment. These continual commitments equal to “the series of activities to get things done” in Fan (2002)’s definition of Guanxi. These commitments include offer and return favors such as gift giving to develop and maintain a mutual benefit; appraise someone or deliberately ignore some facts for the purpose to save Mianzi (face) for the counterpart within a Guanxi. Guo and Miller (2010) also added that nowadays valuable knowledge and rare information exchange rather than gift giving can also cultivate and maintain Guanxi especially in
knowledge-intensive industries.
While western networking and Guanxi do share some common characteristics such as cooperative behaviors and mutual understanding, they still have quite different operating mechanisms. In the introduction part, I use Forret and Dougherty (2004)’s definition of networking as “individuals attempts to develop and maintain relationships with others who have the potential to assist them in their work or career” to make a simple distinction from Guanxi. Yeung and Tung (1996) pointed out 3 other detailed differences in their study. The first one is about motive. In a Guanxi network, a person is part of a system of Guanxi base (interdependent relationships). Each one in a Guanxi base has a given role and should fulfill the responsibilities of the given role within the Guanxi network. While in the western world, the primary goal is self-interest. Focusing on individual needs of oneself may lead to different attitudes and actions to develop a relationship. The second difference is about time orientation. Guanxi is usually maintained through continuous and long-term interaction. While networking in the West are usually seen as isolated occurrence emphasizing on immediate gains. The third difference is about sanction. Because of the emphasis on “face” and “face saving”, Chinese people may feel shame in an
inappropriate behavior. Thus, extra care must be taken in the maintenance of own face to build a Guanxi base. One also needs to save face for the counterpart within a
Guanxi base. While in the West, under the influence of different religions, westerners may feel guilty but not shame if their behavior deviates from morality. The culture of sin and atonement leads to a heavier responsibility than “face saving”.
There is also a tricky dilemma as whether doing the business straight or building a relationship (Guanxi base) first. When talking about timing, westerners may
naturally conduct a business and build relationship only when the time is right. While Chinese’s way is just the opposite side, they may prefer once a Guanxi base is built, then they do business. Chinese view Guanxi as a long-term commitment to build a level of comfort. Different timing shows different perspectives of relationship as whether it belongs to organization’s asset with formal contracts and strict policies or it is merely an interpersonal relationship relying heavily on close individual
connections.
Undoubtedly, Guanxi plays a deep-rooted role in Chinese society. Guo and Miller (2010) stated Chinese entrepreneurs emphasize Guanxi as a human affection with top priority. For many Chinese firms, Guanxi is a strategic mechanism to overcome disadvantages through cooperating and exchanging favors with competitive forces and government authorities. (Park and Luo 2001) Some of they even consider it’s socially incompetent if an entrepreneur only relies on procedures like formal contracts or policies. But Guanxi could also be a much more complex and dynamic social network relationship in Chinese society. In some circumstances, Chinese may change their attitudes. Several researches show that Chinese negotiators are depicted with different images. On the one hand, Chinese negotiators are competitive, energetic and eager for distributive and contingency bargaining (Katz 2006). On the other hand, they turn into Confucius who are influenced by Guanxi, harmony and trust when they are expecting a longer-term relationship (Lee et al. 2006; Tung et al. 2008). Some researchers concluded as Chinese negotiators prefer giving more weight on
establishing or maintaining a Guanxi than only for the purpose of maximizing their own interests or profit. (Ma et al. 2002)
Under the complex and mysterious word of Guanxi, there are several sub layers under it, next part I will dig deeper into two of them.
Trust and reciprocity
It’s so much easier to understand and use Guanxi in a same Chinese context, while different dimensions under Guanxi such as trust and reciprocity are always implicit and mysterious for non-Chinese to figure out. In order to operationalize and examine various impact of Guanxi, previous Guanxi related researches split the inner layers of Guanxi into individual attributes such as Mianzi (save face to avoid
embarrassment), Renqing (favor or goodwill exchange), Ganqing (affect or positive emotion). These attributes contribute to identify what is essentially a culturally constructed set of social behavioral norms. (Gao and Ballantyne 2012) Among all these attributes, two of the them are trust (Xinyong) and reciprocity(Huibao). This research will examine how trust and reciprocity decision varies as a representation of Guanxi-related behaviors.
Trust
When China started to open gate for foreign merchants and endowed more freedom to business market, Chinese economy was developed unstably with a lack of formal regulations and legal frameworks. For this reason, business was conducted through personal networks in a way to ensure trust. Trust makes strangers (Shengren) into acquaintance (Shouren) and this makes Chinese merchants feel more comfortable when doing business. Song and Bi (2012) experimented trust level of Guanxi between Shouren (acquaintance, using classmates as sample) and Shengren (stranger, using university-mates as sample) and concluded that close Guanxi in China creates affect-based trust (emotional bond) not cognition-affect-based trust (competency and integrity), because cognition-based trust is only extended to Shouren (acquaintance).
Chua (2008, 2009) raised two kinds of trust: trust from the head (trust because of professional competence) and trust from the heart (trust because of relationship). In the study, Chua found out American makes a clear distinction between this two trusts while Chinese need both types of trust. Apart from professionalism, interpersonal relationship plays a significant role when conducting business in China.
Shou, Guo & Su (2011) conducted a study and found out that competence trust (believe a person can do what he/she is expected to do) and goodwill trust (emphasis on whether someone is interested in other people’s welfare) will promote Guanxi behavior, and these two kinds of trusts are substitutive for each other in order to motivating Guanxi behavior.
Trust and reciprocity cannot be separately discussed. Song (2009) concluded the relationship between trust and reciprocity as “behavioral trust is strongly driven by reciprocity expectations.” Next part will focus on reciprocity.
Reciprocity
Guo and Miller (2010) inferred in their research paper that Guanxi first starts with core affection-based family and close friends’ ties. After a period of
development, the initial Guanxi network will be enlarged and has several connections. At this moment, the reciprocity based Guanxi ties with other non-kin members will exist to support the expanding needs. Reciprocity always follows the trust behavior.
There is an old Chinese saying, “if you receive a drop of water from others, you should return a spring.” In other words, when one person offers a favor to another, he/she is expected to give a reciprocal response later. This reciprocal response is also called Renqing.
In a western business world, there may be less or no expectation of reciprocity behavior for favor granted. In a Chinese context, one can be called upon to give back this reciprocity after many years. Graham and Lam (2003) describes an American way of reciprocity as immediate return at the table, while a Chinese long-term reciprocity is a “cornerstone” of enduring personal relationships. Some researcher
even state ignoring reciprocity in China is a serious issue considered as immoral. In business world, this is a dangerous action which could poisons future collaboration.
Hwang (1987) compared western social science with Chinese society and conclude Chinese reciprocity is more socially situated than in western context. Chinese reciprocity is strongly influenced by the hierarchical structure of Guanxi, by the lasting time of relationships and by the public nature of obligations. A western way is more like a universalistic exchange among autonomous actors.
2.2 Conceptual Framework
2.3 Hypotheses
In order to answer the research question as “To what extent do Chinese negotiators vary their behavior with other Chinese negotiators (having Guanxi culture) vs. non-Chinese negotiators (not bounded by Guanxi) based on the level of trust and reciprocity”, I will split the hypothesis into three parts. The first part examines the variance based on the level of trust and reciprocity. A higher level of trust and reciprocity is expected when Chinese is facing people with same nationality. The second part proposes the mediating role of Guanxi when Chinese build trust and reciprocity and the third part test the influence of overseas experience on the level of
Guanxi. Under the assumption that Guanxi culture only exist in the context of China, I propose the hypothesis as follows:
- Hypothesis 1.1: Trustors/trustees will exhibit a higher level of trust toward Chinese (same nationality) than toward non-Chinese (different nationality).
Underlying theory: In this hypothesis, nationality (Chinese or non-Chinese) is the independent variable and trust is the dependent variable. In a trustor and trustee relationship, trust means one party (trustor) is willing to rely on the actions of another party (trustee).
China is well known as a highly collectivist societies. Bond (1991) stated in his book: “beyond the Chinese face: insights from psychology” that the boundaries of trust in Chinese society are limited to narrow in-groups. Yang (1994) drew a similar conclusion that one of the characteristics of interpersonal relations in China is that trust applies to one’s in-group, while distrust applies for the others. There are many definitions of group, such as friends, relatives, colleagues etc. In this research, in-group is interpreted as only among Chinese in-group, not including non-Chinese.
Su & Littlefield (2001) stated relationships are more important to trust in China, partly because there may be less generalized trust – trust extended to all other people. In this research, the boundary of same group and other outliers is drawn on the line of different nationality as Chinese vs. non-Chinese.
- Hypothesis 1.2: Trustors/trustees will exhibit a higher level of reciprocity toward Chinese (same nationality) than toward non-Chinese (different nationality). Underlying theory: In this hypothesis, nationality (Chinese or non-Chinese) is the independent variable and reciprocity is the dependent variable. Reciprocity is
interpreted as people repay in kind toward what others has done.
Lo (2012) concluded in his research that reciprocity is of vital importance in Guanxi relationship. Entering into Guanxi is a never-ending cycle, what one party
receives should be returned at a later date with something even of greater value by virtue of the obligatory reciprocity. Sometimes this action is beyond a mutual respect but a culturally bound obligation.
Yang (1994) stated once two people have established a sufficient level of Guanxi upon mutual interest and benefits, each can request a favor from the other because they both know the opportunity to reciprocate will arise in the future. This implicitly built Guanxi connections, do not need further explicit discussion. It is like a default consensus among Chinese people that the reciprocity will happen without additional or formal explanation.
Glaeser et al (2000) undertook an experiment among Harvard undergraduates and found out that when individuals are socially closer, trustworthiness (reciprocity) will rise. Trustworthiness (reciprocity) declines when partners are of different
nationalities. This research result stay in line with my hypothesis and give a concrete support based on different research participants.
- Hypothesis 2.1: Guanxi mediates the relationship between nationality and trust. - Hypothesis 2.2: Guanxi mediates the relationship between nationality and
reciprocity.
Underlying theory: This research only examines the attitude of Chinese, so participants will only consist Chinese. Back to the definition of Guanxi from Fan (2002), people from the same country i.e. same locality belongs to the second category of Guanxi base - relationship by nature. Under the assumption that Guanxi culture formed and exists among Chinese, I assume that Guanxi acts as a bridge when Chinese is going to build trust or reciprocity with others.
Redding (1990) explained in his book “The spirit of Chinese capitalism” that “Guanxi can be regarded as a form of relationship exchange that reflects the basic idea of network capitalism – a system of reciprocity, trust, and interdependencies that creates value through the effective use of social capital.” This definition reflects two
things, first, Guanxi form the bases of social structures embedded in the Chinese context; second, Chinese people believe maintaining a good Guanxi is of crucial importance to build a trustworthy image. Building a Guanxi also means building a relationship with the respect of trust and reciprocity.
Standifird and Marshall (2000) summarized the reason for Guanxi-related network can efficiently tie together suppliers and buyers is because, trust derived from such related network ties establish reciprocity and moral obligations. Guanxi-related network creates bond of interpersonal trust and this guarantees transactions.
Zhou, Wu & Luo (2007) treats Guanxi as the Chinese version of social networks and summarized from researches on social networks to draw out information benefits of the mediating role of home-based social networks (Guanxi). For example, with the mediating role of Guanxi, it’s easier to get referral of trust and solidarity from third party. In their research, they also proposed that the mediating role can help firms establish credibility and facilitate the development of new capabilities at lower risk.
- Hypothesis 3: Overseas experience plays a moderator role between nationality and Guanxi.
Further hypothesis could be when facing Chinese (same nationality), the Guanxi level stays almost the same for all Chinese. When facing non-Chinese, Chinese with more exposure to overseas experience might not stick to Guanxi and prefer using flexible ways of negotiation, for example the western style, while Chinese with less exposure to overseas experience will remain building and sharing Guanxi.
Underlying theory: In this research, more exposure to overseas experience is measured as the accumulated length of time when Chinese stay abroad. I suppose modern Chinese who spent a longer time overseas may tend to assimilate other culture’s values, and they may alter their behavioral pattern to some extent. A more open-minded and adaptable attitude is expected, especially for living abroad Chinese who have more influences from an international culture background. Several previous articles support this conversion in different aspects.
With the differences in negotiation between cultures, negotiators could change their game rules or even their way of mental process to facilitate a better outcome across cultures. Profit maximization, population mobility and westernization could all influence the way of negotiation. Tony Fang (2006) introduced a new “culture as ocean” theory and concluded culture (like ocean) has no boundaries, old and new values can exist together, various contradictions and dynamism are shared. In this way, learning a western way of negotiation and use it to build relationship with non-Chinese negotiators is not impossible. If assimilating western way of negotiation could yield a better outcome, like profit maximization, it is then a valuable method to choose.
Adair (2009) also found out that adaptation in negotiation happens when negotiators has already had schemas about typically cultural normative behaviors of the counterpart before the bargaining situation. This means internationally
experienced Chinese negotiators may adapt their ways of negotiation to fit flexible situations, probably a western way, when they are facing non-Chinese negotiators compared with Chinese. This is because these internationally experienced Chinese get to know effective negotiation schemas during their overseas experience. While non-internationally experienced Chinese living their whole life only among membership in the same Chinese cultural background, they do not know exactly what other cultural normative behaviors would be like, so they will try to stick to their most familiar way, i.e. Guanxi for a better negotiation outcome.
Cultural integration, cognitive flexibility, willingness and skills to break the barriers all shade lights on the openness of Chinese negotiators in learning from the west. Gao and Ballantyne (2012) proposed an intercultural buffer zone which allows insiders and outsiders meet and work together despite the cultural differences. Pan and Zhang (2004) stated although people may have a much higher confidence in “in-group” members than “out-“in-group” members, but with the development of Guanxi, the out-group members may finally turn into in-group members by the passing of time.
3. Methodology
Due to the limitation of time and money, a hypothetical survey scenario instead of a real-life behavioral experiment was being used. Qualtrics Survey Software, an online experiment design and data collection platform, is being used for designing questionnaire and collecting data. For the statistical analyses part, data was then copied into SPSS (Statistical Package for the Social Sciences) for further quantitative data analytical procedures.
Because the researching direction of this thesis points to Chinese market, participant is limited to Chinese. Participants include Chinese who had experience living or studying abroad and who never go abroad before and don’t understand English. Questionnaire is translated into Chinese version for better comprehension. For English version of the questionnaire, please see Appendix.
After generating a survey link and a QR code through Qualtrics Survey Software, online survey was being spread through WeChat (a messaging App popular in China), WhatsApp and Facebook. According to Frequency analysis of SPSS, it is observed that a total of 363 participants, 92 men and 271 women (which occupy 25.3% and 74.7%, respectively) entered the survey and answered some or whole part of the survey. According to SPSS, Participants’ year of birth ranging from 1930 (88 years old) to 2004 (14 years old), with a mean of 1986 (32 years old). Because the online survey is completely voluntary and anonymous, some participants didn’t finish it to the end or only answer some of the questions. In the analysis part, only valid data is taking into account for further discussion.
3.1 pre-experiment questions
The questionnaire will be divided into three parts: collecting basic information, the experimental trust game and a post-experiment questionnaire. The first part asked several pre-experiment questions for collecting the basic information of participant. This information include gender, year of birth and overseas experience. Participants who had an exposure to overseas experience will answer further questions about the reason of going abroad and their accumulated length of time for overseas experience.
The answer for the accumulated length of time for overseas experience will be used as the operationalization of independent variable – overseas experience. There are 5 level of choices: less than 3-month, 3-month to half a year, half a year to one year, one year to two years and more than two years.
3.2 experimental trust game
The main part of the experiment is using the classic framework of trust game (Berg et al., 1995; Camerer, 2003; Song, 2008, 2009). Participant will first read an instruction of the game. In the instruction, they will be told that they are randomly assigned to a role as either trustor or trustees and they were asked to answer questions in their role. To avoid the manipulation of trust and reciprocity being so obvious,
trustor and trustee are replaced by Chinese word of “Jia Fang” (Party A) and “Yi Fang” (Party B). Each participant will be granted certain amount of virtual money (everyone has the same amount 20 RMB) at the beginning of the game. All the decisions of give out and receive back are imagined, no real money is engaged. Participants are encouraged to imagine what they will do in reality when they choose answers for questions.
Nationality as one of the independent variables is being manipulated into two categories: Chinese group and non-Chinese group. Participants will be told at the beginning of the experiment game that their imagined counterpart is either a Chinese or a non-Chinese. Facing a Chinese counterpart is a base for Guanxi. To avoid the manipulation of nationality being too obvious, two virtual characters – “Beijinger Wang Xiaoliang” and “foreigner Thomas” are being used to replace the words
Chinese or Non-Chinese. Both of the names are male’s name to exclude the influence of gender bias.
After reading instructions and examples, each trustor (“Jia Fang”) decides how much virtual money he/she want to give to a randomly paired trustee, who is either a Chinese or a non-Chinese, and how much he/she would expect to receive back from trustee based on the amount he/she sent. All participants are informed that the
experimenter will triple the amount sent before it is passed to the trustee. The tripling represents the benefits of trust in this trust/reciprocity exchange.
Each trustee (“Yi Fang”) state how much he/she would expect to receive from a randomly paired trustor, who is either a Chinese or a non-Chinese, and how much he/she would return based on the expectation. The trustee should split his/her total wealth i.e., the sum of his/her initial money plus the triple amount received.
Each participant played the game twice, once as a trustor (“Jia Fang”) and once as a trustee (“Yi Fang”). The order of being a trustor and a trustee is random but they will face the same paired counterpart as either Chinese or Non-Chinese. Participants made decisions in two roles sequentially. To avoid multi round effects, participants will not be told how many decisions they would made or whether the second round is the last round.
Two of the dependent variables are trust and reciprocity. As for trustor (“Jia Fang”), trust is measured as the amount of money sent to the trustee. Reciprocity, more accurately defined as expected reciprocity, is measured as the expected received money. As for trustee (“Yi Fang”), trust, more accurately as expected trust, is
measured as how much each trustee expects to receive from trustor and reciprocity is measured as the amount of returned money.
In the trust game, each participant need to make 2 numerical decisions about trust (trust decision and trust expectation) and 2 numerical decisions about reciprocity (reciprocity expectation and reciprocity decision) in different identities (trustor or trustee). Both of the two decisions will take into account in independent samples t-test for hypothesis one. As for the moderated mediation analysis for hypothesis 2 and 3, in order to analysis the effect of trust and reciprocity in a direct and easy way, a mean of the 2 numerical decisions is used to represent an integrated value of trust and
3.3 post-experiment questionnaire
After the experimental trust game, follows 8 post-experiment questions. 5 of the 8 questions (question No. 4 to No. 8) focus on the attitude of Guanxi when negotiating with different nationalities (Chinese or non-Chinese). Choices for the questions are divided into 5-level scale ranging from strongly disagree to strongly agree. The answer will be coded from 1 to 5 points. The higher the point, the more emphasized value on Guanxi. The answer for these 5 questions will be grouped together as the operationalization of Guanxi.
4. Result
After exporting all data from Qualtrics Survey Software into SPSS, there has been done several primary data checks. These steps include: checking missing data, recoding counter indicative items, computing normality and reliability check, analyzing data through descriptive statistics (mean, standard deviation, No.) and correlation matrix. After the primary check, several methods are being used to test hypotheses. These methods include: independent samples t test and moderated mediation analysis (Process model 7).
Missing value
First of all, there has been done a check of frequencies to examine if there were any errors in the data. Because the online survey is completely voluntary and anonymous, the data reveals some participants didn’t finish it to the end or only answer some of the questions. For the analytical part, only valid data is taking into account. Except the missing data, there were no errors found.
Recoding
There are 5 descriptive questions about Guanxi at the post-experiment session. Answers ranging from strongly disagree (coding as 1) to strongly agree (coding as 5) in a 5-level scale. The answers are all in the same direction, i.e. the higher the
number, the more value on Guanxi. There were no counter-indicative items needed recoding.
Normality
Skewness, kurtosis and normality tests were performed for all variables.
According to Test of Normality, it is observed the significant value for SW test are all less than 0.05 indicating that the distribution for all variables are not normally
distributed. But according to Tabachnick & Fidell (2001), this will not make a substantive difference in the analysis if there is a large sample scale (200+). In my research, there were more than 200 participants, therefore the risk of underestimation or overestimation is acceptable.
Reliability
Reliability check was run for Guanxi ’s descriptive questions. The Cronbach’s alpha has been tested to verify if all the items in one scale measure the same. As exhibited in Table 1, it is found that the Cronbach’s Alpha for Guanxi is 0.637 greater than 0.6 indicating that the sample is reliable and usable.
Table 1 - Reliability Statistics
Cronbach's
Alpha N of Items
.637 5
descriptive statistics
We reported means, standard deviations and the number of response for Guanxi related questions (see Table 2). It is observed from Table 2 that the mean for each of these questions are 3.8957, 3.5863, 2.7446, 2.7806 and 2.2986 with standard
deviation equaling to 0.71592, 0.84424, 0.84304, 0.87404 and 0.81551, respectively. When analyzing the mean for five Guanxi related questions, two out of five questions had mean value over 3 (total 5-point scale from strongly disagree to
ranked one (with a mean of 3.8957) proved Chinese participants value Guanxi a lot. It shows Guanxi plays an important role in building trust and reciprocity. The second ranked one (with a mean of 3.5863) shows that it’s easy to make use of Guanxi when negotiating with Chinese. The other three questions which have less than 3-point means (not strongly support Guanxi) are all related to Guanxi level when facing non-Chinese. The result gives some supports for the argument that Guanxi is weaker among non-Chinese (different nationality).
Table 2 - Means and standard deviations
Questions Mean Std.
Deviation N
When negotiating with others, Guanxi plays an
important role in building trust and reciprocity 3.8957 0.71592 278 It’s easy to make use of Guanxi when
negotiating with Chinese. 3.5863 0.84424 278
It’s easy to make use of Guanxi when
negotiating with non-Chinese. 2.7446 0.84304 278
Making use of Guanxi to a non-Chinese is as
effective as western ways of negotiation. 2.7806 0.87404 278 When negotiating with non-Chinese, I would
prefer making use of Guanxi other than western ways of negotiation.
2.2986 0.81551 278
correlation matrix
I use correlation test for the trust game decision and Guanxi related questions. According to Correlation table (see Table 3&4), it is observed that Guanxi is positive related to Chinese-Trust decision and Chinese-Trust Expectation (P=0.006, P=0.000 respectively), which are all statistically significant at level of 0.05. But Guanxi has no significant correlation relationship with Chinese- Reciprocity expectation and
Chinese- Reciprocity decision (P=0.711, P=0.052 respectively). Most importantly Guanxi has no significant correlation relationship with all Non-Chinese group’s decisions (P=0.234, P=0.513, P=0.204, P=0.598 respectively).
The correlation matrix shows that Guanxi is only positively related to trust decisions when facing Chinese, there is no correlation between Guanxi and reciprocity decisions when facing Chinese and all decisions under non-Chinese conditions.
Table 3 – Correlation table: Guanxi VS Chinese (Hypothesis 2.1) Chinese-Trust decision Chinese-Reciprocity expectation Chinese-Trust Expectation Chinese-Reciprocity decision Guanxi Guanxi Pearson Correlation .236 ** .032 .317** .170 1 Sig.(2-tailed) .006 .711 .000 .052 N 136 135 131 131 259
Table 4 – Correlation table: Guanxi VS Non-Chinese
Non- Chinese-Trust decision Non- Chinese-Reciprocity expectation Non- Chinese-Trust Expectation Non- Chinese-Reciprocity decision Guanxi Guanxi Pearson Correlation -.108 -.060 -.116 -.049 1 Sig. (2-tailed) .234 .513 .204 .598 N 123 123 121 120 259
Hypothesis testing result Hypothesis 1
According to SPSS Frequency analysis, it is observed that there are 261 valid data for the experimental trust game. 125 participants took part in the trust game under Non-Chinese (Thomas) experimental group, 136 participants were in Chinese (Wang Xiaoliang) experimental group (occupy 47.9%, 52.1%, respectively).
Table 5 summarizes the results of experimental trust game for hypothesis 1. I reported the means and standard deviations for trustor and trustee toward both Chinese (Wang Xiaoliang) group and non-Chinese (Thomas) group. In addition, I reported independent samples t-test on trust and reciprocity decisions.
According to independent samples t-test, by taking the Chinese and Non-Chinese as two experimental groups, the p-value associated with the t-test indicate that both trustee’s decisions i.e. trust expectation and reciprocity decision are statistically significant at level of 0.05 (p = 0.038, 0.018 respectively), where Chinese group has higher mean than Non-Chinese group. As for the two decisions of trustor (trust decision and reciprocity expectation), both of the p value is over 0.05 (p = 0.101, 0.100 respectively), which means for trustor’s decisions, they do not have statistically significant effect, so there are no corresponding significant differences.
Detailed figures are shown in Table 5, the trust expectation when facing Chinese negotiators (M = 11.83, SD =5.83) was significantly higher than trust expectations when facing non-Chinese negotiators (M = 10.40, SD = 5.03), t (256) = 2.090, p = .038. The reciprocity decision when facing Chinese negotiators (M = 28.59, SD =17.00) was also significantly higher than reciprocity decision when facing non-Chinese negotiators (M = 23.77, SD = 15.37), t (255) = 2.381, p = 0.018.
There was not a significant difference in trust decision for Chinese negotiators (M = 10.47, SD =5.03) and non-Chinese negotiators (M = 9.53, SD = 4.13), t (264) = 1.645, p = 0.101. And there was not a significant difference in reciprocity expectation for Chinese negotiators (M = 27.76, SD =17.79) and non-Chinese negotiators (M = 24.31, SD = 16.15), t (263) = 1.649, p = 0.100.
For hypothesis 1, what we hypothesized is both trustors and trustees will exhibit a higher level of trust and reciprocity (higher mean) toward Chinese than non-Chinese. But our experiment results only support half of it, i.e. only when people are in the role of trustee, they exhibit a higher level of trust and reciprocity towards Chinese (same nationality) than Non-Chinese (different nationality).
Table 5 – Means, standard deviations and independent samples t - test
Variable Chinese
Non-Chinese
Independent samples t-test
(P-value in parentheses) Trustor (“Jia Fang”)
Trust Decision 10.47(5.03） 9.53(4.13） 1.645(0.101) Reciprocity
Expectation 27.76(17.79） 24.31(16.15） 1.649(0.100) Trustee (“Yi Fang”)
Trust Expectation 11.83(5.83） 10.4(5.03） 2.090(0.038) Reciprocity Decision 28.59(17.00） 23.77(15.37） 2.381(0.018) Notes: Standard deviations are in parentheses.
Hypothesis 2&3
A moderated mediation method (Process model 7) is used to test hypothesis 2 and hypothesis 3.
Table 6 to Table 8 shows the moderated mediation result when the final outcome variable is trust. Separated models’ result, direct effect, indirect effect and the
moderated mediation effect is being presented as follows. As it is shown in table 6, when taking into account of nationality, Guanxi and overseas experience, this model tests the moderating role of overseas experience on Guanxi. The whole model is not significant with a F (3,199) =0.21, p=0.89 (>0.05). Both nationality and overseas
experience have a p value over 0.05 (p=0.90, 0.62 respectively), and the interaction effect of them still have a p value over 0.05 (p=0.85). This means there is no significant moderating effect of overseas experience on Guanxi.
As it is shown in Table 7, when taking into account of nationality, Guanxi and trust, this model partly tests the mediating role of Guanxi on trust (outcome variable). The whole model has F (2,199) =5.26, p=0.006(<0.05) which is significant. When taking into account of nationality separately, it does not have a significant effect with a p value of 0.09 (>0.05). This means there is no significant direct effect of nationality on trust. When taking into account of Guanxi separately, it has a p value of 0.005 (<0.01) which means Guanxi has a significant effect on the level of trust. This proves the right path of the mediating relationship, but when collaborate with the result from the first model shown in table 6 (outcome variable: Guanxi), nationality does not have a significant effect on Guanxi (p=0.90 >0.05), this means the left path of the
moderating effect is not working. So, together these two results there is no significant indirect effect of Guanxi on the level of trust.
Table 8 summaries the overall direct and indirect effect. The direct effect has the same result with the second model summary (table 7), a p level of 0.09 (>0.05) and BC95 = [ -0.16, 2.39] does not show a significant direct effect (Effect=1.11 SE=0.65).
The indirect effect is presented given 3 different levels of moderator as the overseas experience is low, medium and high. When looking at the lower and upper bootstrap confidence interval of each of these 3 levels, 0 is included in each of these confidence intervals which means the indirect effect is not significant. Detailed figures are as follows: Effect= -0.05, SE=0.20, BC95 = [ -0.48, 0.35] when overseas
experience level is low; Effect=-0.08, SE=0.14, BC95 = [ -0.35, 0.20] when overseas
experience level is medium, and Effect=-0.10, SE=0.22, BC95 = [-0.54, 0.37] when
overseas experience level is high.
To sum up, a BC95 = [ -0.16, 0.16] shows there is not a significant moderated
Table 6 – Model summary - Outcome variable: Guanxi
Outcome variable: Guanxi
Coeff. SE t p Nationality -0.19 0.15 -0.13 0.90 Overseas Experience 0.01 0.03 0.49 0.62 Interaction effect -0.01 0.04 -0.19 0.85 Constant 3.03 0.10 29.19 0.00 R2=0.003 F (3,199) =0.21, p=0.89
Table 7 – Model summary - Outcome variable: Trust
Outcome variable: Trust
Coeff. SE t p Nationality 1.11 0.64 1.72 0.09 Guanxi 1.79 0.63 2.82 0.00 Constant 4.45 2.00 2.22 0.03 R2=0.050 F (2,199) =5.26, p=0.006
Table 8 Direct and indirect effects Direct effect
Effect SE p LLCI ULCI
Conditional indirect effect (Nationality->Guanxi->Trust)
Overseas experience Effect BootSE BootLLCI BootULCI
1 -0.05 0.20 -0.48 0.35
3 -0.08 0.14 -0.36 0.20
5 -0.10 0.22 -0.54 0.38
Index of moderated mediation
Index BootSE BootLLCI BootULCI
-0.01 0.08 -0.16 0.16
Table 9 to Table 11 shows the moderated mediation result when the final
outcome variable is reciprocity. As it is shown in table 9, when taking into account of nationality, Guanxi and overseas experience, this model tests the moderating role of overseas experience on Guanxi. The whole model is not significant with a F (3,197) =0.21, p=0.89 (>0.05). Both nationality and overseas experience have a p value over 0.05 (p=0.91, 0.51 respectively), and the interaction effect of them is still over 0.05 (p=0.71). This means there is no moderator effect of overseas experience on Guanxi.
As it is shown in Table 10, when taking into account of nationality, Guanxi and reciprocity, this model partly tests the mediating role of Guanxi on reciprocity (outcome variable). The whole model has F (2,197) =2.03, p=0.13 (>0.05) which is not significant. When taking into account of nationality separately, it does not have a significant effect with a p value of 0.08 (>0.05). This means there is not a significant direct effect of nationality on reciprocity. When taking into account of Guanxi separately, it has a p value of 0.29 (>0.05) which also does not have a significant effect on the level of reciprocity. Together with the result from the first model, nationality does not have a significant effect on Guanxi (p=0.91 >0.05), this means there is no significant indirect effect of Guanxi on the level of reciprocity.
Table 11 summaries the overall direct and indirect effect. The direct effect has the same result with the second model summary (table 10), a p level of 0.08 (>0.05) and BC95 = [ -0.49, 7.92] does not show a significant direct effect (Effect=3.72, SE=2.13).
The indirect effect is presented given 3 different levels of moderator as the overseas experience is low, medium and high. When looking at the lower and upper bootstrap confidence interval of each of these 3 levels, 0 is included in each of these confidence intervals. Effect= 0.01, SE=0.38, BC95 = [ -0.85, 0.78] when overseas
experience level is low; Effect=-0.07, SE=0.26, BC95 = [ -0.63, 0.53] when overseas
experience level is medium, and Effect=-0.14, SE=0.44, BC95 = [-1.00, 0.89] when
overseas experience level is high. Overall, the indirect effect is not significant. At last, a BC95 = [ -0.35, 0.35] shows there is not a significant moderated
mediation effect for the whole model (Index=-0.04, SE=0.16).
The analytical data can’t give support for both hypothesis 2 and hypothesis 3, which means Guanxi does not play a mediating role when Chinese participants build trust and reciprocity with others and overseas experience does not play a moderator role between nationality and Guanxi.
Table 9 – Model summary - Outcome variable: Guanxi
Outcome variable: Guanxi
Coeff. SE t p Nationality 0.02 0.15 0.12 0.91 Overseas Experience 0.02 0.03 0.66 0.51 Interaction effect -0.02 0.04 -0.37 0.71 Constant 3.00 0.10 28.69 0.00 R2=0.003 F (3,197) =0.21, p=0.89
Table 10 – Model summary - Outcome variable: Reciprocity Outcome variable: Reciprocity
Coeff. SE t p Nationality 3.72 2.13 1.74 0.08 Guanxi 2.24 2.10 1.07 0.29 Constant 16.37 6.61 2.48 0.01 R2=0.020 F (2,197) =2.03, p=0.13
Table 11 Direct and indirect effects Direct effect
Effect SE p LLCI ULCI
3.72 2.13 0.08 -0.49 7.92
Conditional indirect effect (Nationality->Guanxi->Reciprocity)
Overseas experience Effect BootSE BootLLCI BootULCI
1 0.01 0.38 -0.85 0.78
3 -0.07 0.26 -0.63 0.53
5 -0.14 0.44 -1.00 0.89
Index of moderated mediation
Index BootSE BootLLCI BootULCI
-0.04 0.16 -0.35 0.35
5. Conclusion and discussion 5.1 Conclusion
To answer the research question as “To what extent do Chinese negotiators vary their behavior with other Chinese negotiators (having Guanxi culture) vs. non-Chinese negotiators (not bounded by Guanxi) based on the level of trust and
reciprocity”, this research splits the answers into three parts. The first one explained the extent based on the level of trust and reciprocity. Results show that Chinese people are more willing to exhibit both a higher level of trust and reciprocity toward Chinese than Non-Chinese, especially when they are in a trustee’s role (waiting and expecting for the trust first and then give response as reciprocity).
This result support Hofstede (2005)’s “culture as onion” opinion, which holds a conservative attitude as the inner layer of the onion i.e. Chinese cultural-based value is not easily changeable because it operates at the inner and most subconscious level. The reason why this phenomenon only exists in a trustee’s role not a trustor’s role might be explained by the Rousseau, Sitkin & Camerer (1998)’s investigation. In the article, they found out that expectations of trust from a counterpart may influence one’s own trust and reciprocity behavior. In this research, this expectation is represented by the expected amount of money trustee would expect to receive from trustor. Psychological trust is often conceptualized as ‘‘positive expectations of the intentions or behavior of another”. (Rousseau, et al., 1998) In this way, Chinese trustee yields a psychological trust toward same Chinese counterparts, and this
psychological trust further influence reciprocity decisions. Other possible explanation of trustee over trustor phenomenon could be the passive characteristic of a collectivist culture. Compared with individualist, people in collectivist culture has a tendency to be more passive. Less talks, less argues and less information seeking are all at a waiting role instead of being active and prefer to give at first. (Kim, Coyle & Gould, 2009)
The second part of answers examine the mediating role of Guanxi when Chinese participants build trust and reciprocity with others. Different from our initial
hypothesis, Guanxi does not plays a mediating role. Several possible reasons may lead to this result. First, Besides the uniqueness of default bond of family ties in Guanxi, there are also some globally used ways to create a shared bonding
a cold call. Guanxi may not be that important in the context of building social network especially when the counterpart is a non-Chinese. If individualized way of networking can build a solid trust or reciprocity with others, then there is no need to stick to Guanxi. Second, the operationalization of Guanxi attitude only include 5 questions. More detailed and specific questions may help participants understand their impression about Guanxi better. Third, due to the limitation of time and energy, participants are limited to relatives or friends within my social cycle. If the surveying population is wider and includes more people enjoying the benefit of Guanxi, then the result might be different.
The third part of the answers examine the moderating effect of overseas
experience on Guanxi. Different from our initial hypothesis, overseas experience does not influence Guanxi attitude. Several possible reasons may lead to this result. First, the operationalization of overseas experience is measured as the accumulated length of time people spent overseas. Only five levels of scale are being used. A more detailed subdivision like 7 level of scale might yield a different result. Second, people’s Guanxi attitude may vary according to different locations. When overseas Chinese going back to China, their attitude may change according to the national social condition. A distinction between overseas Chinese who remain living in foreign countries and those who went back to China may explain the influence of overseas experience in a more accurate way. Third, Guanxi may have a much stronger
influential power on Chinese people than imagined. Promoting a Chinese negotiation style on the global market may act as a typical weapon and gain unexpected success.
5.2 Theoretical and managerial implications
This research gives some contributions on the researching area of interpersonal relationship from a Chinese perspective. Most of the previous researches on intra and inter-cultural negotiation focused on the negotiation process itself or negotiation behavior, relatively fewer researchers focused on the interpersonal relationship such
as Guanxi which is a crucial element especially when negotiating with Chinese. This research adds some conclusions on what Chinese people, especially including
overseas Chinese, view their different Guanxi formation with Chinese vs. non-Chinese.
This research broadened the testing population of trust game. Previous trust game’s testing group exists among classmate vs. classmate, or colleague vs. non-colleague. fewer of them focus on the comparison of attitudes on trust and reciprocity when Chinese facing people of different nationalities. This research adding another analyzing category as Chinese vs. non-Chinese. A deeper exploration into different attitudes towards different nationalities when forming a particular Guanxi.
This thesis will also contribute to theory because fewer researches looked at Chinese interpersonal relationship i.e. Guanxi on Overseas Chinese market. Previous researches about Guanxi are mostly based their researches in China (Mainland, Hong Kong, Taiwan). They conducted researches with people who live and work in China (including Chinese and non-Chinese) and little of them focused on living abroad Chinese and the implementation of Guanxi in overseas context. Overseas experience creates a new angle in explaining Guanxi formation.
This thesis will contribute to practice because it could give feasible suggestions for non-Chinese when they are trying to build a mutual benefit relationship with Chinese, such as building political or commercial collaborations. When negotiating with Chinese merchants or government officials, keep in mind of the Guanxi culture and always remember it’s not easy to win a Chinese people’s trust and reciprocity. In some circumstances, showing some goodwill at first is a way of showing sincerity and honesty.
Our results also imply a hint on different attitudes towards different Chinese with different overseas experience. When facing a Chinese counterpart who never go abroad before, keep in mind that Guanxi culture has an important influence. But with more and more Chinese young generations finished overseas experience, going back
home and become the backbone of Chinese society, it’s also wise for non-Chinese to learn the negotiation style of these young generations in the context of Chinese culture. Their way of Guanxi might be different from elderly Chinese. Choose a common topic which could possible raise the memory of overseas experience for the Chinese counterpart is a wise start point for a better negotiation outcome.
5.3 Limitations and Directions for further research
One of the limitation of this online experimental trust game is that the
hypothetical scenario setting might have different outcomes compared with a real behavioral game with real economic incentives. Although hypothetical measurement has been widely used, some behavioral psychologists still strongly prefer a real-life laboratory manipulation with salient financial incentives. They argued that it would be difficult for participant to imagine correctly or vividly what they will do if they are not physically presented in an actual situation. (Van, Dunning &Loewestein, 2000) For future research, it would be better to examine the result under both circumstances (behavioral and hypothetical) and then compare the result for an all-round analysis. In this research, I use the absolute amount of money for representing reciprocity decisions. What future experimenter can explore is to dig deeper into the distribution of reciprocity decisions. For example, the reciprocity decision can be split into different categories: sending back nothing, sending back less than, equal to or more than the trustor sent. What’s more, instead of using the absolute amount, the ratio of sent back amount by the trustee over the sent amount by the trustor can also be used to test reciprocity decision. A comparison of the absolute amount and the ratio of reciprocity decision might yield further findings.
Last but not least, classic trust game is only one form of testing for trust and reciprocity. Monetary exchange is a simple and direct way for measuring behaviors. But there are many other forms of trust and reciprocity outside of economic context. Future researchers can find the other social, economic or even political reflections on
trust and reciprocity. What’s more, trust and reciprocity are two inner layers of Guanxi. Other individual attributes such as Mianzi (save face to avoid
embarrassment), Renqing (favor or goodwill), Ganqing (affect or positive emotion) could also have different reflections on Chinese’s negotiating behavior. These are all possible areas for future research.
Appendix - Experimental Questionnaire (English version) Dear ladies/gentlemen,
Thank you for participating in this research.
I’m a master student at the University of Amsterdam. Collecting and analyzing data is an important part for my thesis. Your participation is of significant value for me. The research will be divided into three parts: collecting basic information, the experiment part and a post-experiment questionnaire. Detailed instructions will be shown right before the experiment begin. The whole research will take you
approximately 5 minutes. The participation is completely voluntary and anonymous. The findings of this experiment will only be used for research purpose.
Hope you will enjoy it!
• Basic information: 1. What’s your gender? A. Male B. Female
2. What’s your year of birth? Scroll bar with exact years
3. Have you ever been to other countries other than your home country before? (If yes, durations and reasons for going abroad will be asked in the following questions) A. Yes B. No
4. What is/are your purpose of going abroad? （multiple choice questions） A. Traveling B. Studying C. Working D. Seeing family or friends E. Others
5. What is your accumulated total time staying abroad till now? (If you have more than one experience, please add up each as the total time)
