Is Guanxi Orientation Bad,

Ethically Speaking? A Study

of Chinese Enterprises

Chenting Su
M. Joseph Sirgy
James E. Littlefield

ABSTRACT. Guanxi as one of the key factors leading

to business success in China (PRC) has ironically been
synonymous with bribery. This raises some serious
questions: should Western foreign firms do business
in China? How should they do business with Chinese
firms? This study investigated the relationship between
guanxi orientation and cognitive moral development
in an attempt to determine whether the level of
guanxi orientation of Chinese business people affects
their ethical reasoning. Based on a classification of
Chinese enterprises (Nee, 1992), it was found that
Chinese enterprises rely on guanxi for business to

different extents. However, their levels of cognitive

moral development are not significantly different, suggesting that guanxi orientation has very little to do
with ethical reasoning (as captured through an established measure of cognitive moral development).
Furthermore, time in profession was found to positively affect guanxi orientation; however, age failed
to predict guanxi orientation and education turned
out to be a negative predictor of guanxi orientation.

Dr. Chenting Su (Ph.D., Virginia Tech, 1999) is

Associate Professor of Marketing at the City University
of Hong Kong. He taught at Virginia Tech and the
University of Victoria, Canada. His research has been
and will be published in Journal of Marketing
Research, International Journal of Research in
Marketing, Journal of Business Ethics, Journal of
Travel Research, Psychology & Marketing, and
Research in Marketing.
Dr. M. Joseph Sirgy (Ph.D., University of Massachusetts,
1979) is an industrial psychologist, Professor of
Marketing and holder of the Virginia Real Estate
Research Fellow at Virginia Tech. He is among the
leading scholars of the quality-of-life movement in
business and especially within marketing. Among his
latest books on quality of life are Handbook of
Quality-of-Life Research and the Psychology of
Quality of Life. Both are published by Kluwer
Academic Publishers. Currently he is the president of the
Academy of Marketing Science and the executive director
of the International Society for Quality-of-Life Studies.
Dr. James E. Littlefield (Ph.D., University of WisconsinMadison, 1967) is Professor of Marketing and former
Department Head at Virginia Tech, and formerly was
at the University of North Carolina in Chapel Hill. He
has published widely in international marketing,
economic development, and several other topics.

Introduction

KEY WORDS: Chinese enterprise, cognitive moral

development, guanxi orientation

Guanxi (literally, interpersonal connections) has

been identified as one of the key factors leading
to business success in China (PRC) (Abramson
and Ai, 1999; Davies et al., 1995; Lee et al.,
2001; Luo, 1997; Tsang, 1998; Yeung and Tung,
1996). From a resource-dependence perspective,
guanxi is viewed as long-term cooperation among
business partners that contributes to organizational efficiency and sustained competitive advantage (Lovett et al., 1999; Tsang, 1998). An old
Chinese saying concerning business success
in China emphasizes Tian-shi, Di-li, Ren-he
(literally: right timing, right place, and right
people). Guanxi (right people) connects people
to form a resource coalition where business
partners share resources and obtain assistance that
otherwise may not be available (Tsang, 1998).
Indeed, guanxi is rooted in a culture characterized by interdependence and reciprocity. People
exchange favors to develop extensive networks
of interpersonal relationships to share scarce
resources and cope with uncertainties. Therefore,
guanxi can be viewed as the Chinese way of

Journal of Business Ethics 44: 303312, 2003.

2003 Kluwer Academic Publishers. Printed in the Netherlands.

304

Chenting Su et al.

doing business based on friendship and trust (Su

and Littlefield, 2001).
Guanxi is a cultural imperative in doing
business in China. Su and Littlefield (2001) distinguish favor-seeking guanxi, which is culturally rooted, from rent-seeking guanxi, which is
institutionally defined. Favor-seeking guanxi
builds on interdependence and sharing scarce
resources (favors) in a collectivist culture, while
rent-seeking guanxi is predicated upon power
exchange for personal interest in a hybrid
socialist-market economy (Su and Littlefield,
2001). Given the varying degrees of cultural evolution between southern and northern China
(Huang et al., 1994), Swanson (1998) suggested
that the traditional northern Chinese might be
more guanxi-oriented than their southern compatriots because they are more family or clan
centered. A foreign firm doing business in China
is very unlikely to succeed without favor-seeking
guanxi (Su and Littlefield, 2001).
However, several recent studies have conceptualized guanxi in a negative light without such
a distinction (cf., Fan, 2002). For example, many
have argued that guanxi is necessary in a country
like China because of the lack of coherent
business laws and strong governmental control
over limited resources. Therefore, guanxi is a substitute to formal institutions (Chan, 1999; Ching,
1998; Coleman, 1993; Nee, 1992; Xin and
Pearce, 1996). As a consequence, guanxi is considered as a social dynamic that promotes business
ethical abuse (Ang and Leong, 2000; Dunfee and
Warren, 2001; Leung and Wong, 2001; Snell and
Tseng, 2001). Many business scholars simply
equate Guanxi with corruption and bribery in
business transactions (Koo and Obst, 1995;
Smeltzer and Jennings, 1998; Steidlmeier, 1999).
This negative view of guanxi poses a serious
question for Western multinational companies
(MNCs) contemplating doing business in China:
should Western foreign firms do business in China?
How should we do business with Chinese firms?
Entering Chinas markets may amount to
entering a huge web of guanxi (Su and Littlefield,
2001). If the negative view of guanxi is valid, that
is, guanxi is synonymous with bribery, then doing
business in China involves high risks of being
unethical and perhaps unlawful.

This study attempts to shed some light on

these questions. Specifically, it investigates the
relationship between guanxi orientation and
cognitive moral development. Based on the
assumption that peoples moral reasoning would
influence their ethical behavior (Hunt and Vitell,
1986), the goal of this study is to determine
whether Chinese partners guanxi orientation
affects their moral reasoning.
Another objective of the study is to distinguish
among various Chinese partners in terms of their
guanxi orientation and cognitive moral development. Doing so would enable us to recommend
doing business with certain Chinese businesses
but not others. For this purpose, Nees (1992)
classification of Chinese organizations is adapted
in our study to classify Chinese enterprises into
four groups: state-owned, privately owned, collective-hybrids, and joint ventures. Firms guanxi
orientation is measured for the four types of
Chinese firms using a guanxi measure developed
by Ang and Leong (2000). Rests (1990) Defining
Issues Test (DIT) then is used to measure cognitive moral development (CMD) (Kohlberg, 1969)
with an aim to uncover the relationship between
Chinese firms guanxi orientation and their
business ethical behaviors.

Conceptual background
In this section, we will describe the concepts
of guanxi orientation and cognitive moral development. Doing so sets the stage for the reader
to appreciate our thinking regarding the relationship between guanxi orientation, cognitive
moral development, and a host of demographic
variables (e.g., firm type, age, tenure, and education).

Guanxi orientation
Guanxi in China is a concept related to social
networking. From a business perspective, guanxi
refers to a coalition of resources in which
business parties share scarce resources to enhance
business performance (Su et al., 2002). This is
the Chinese way of doing business rooted in a

A Study of Chinese Enterprises

collectivist Chinese society (Ambler, 1995; Su
and Littlefield, 2001). Guanxi is predicated on
the notion that relationships in traditional
Chinese society are hierarchical. This relationship hierarchy reflects social norms between
ruler-subject, father-son, husband-wife, brotherbrother, and friend-friend. The norms that guide
successful guanxi are that the humble cannot assail
the noble, the distant cannot overrun the closer,
and the individual cannot override the group
(Yueng and Tung, 1996). Therefore, in a Chinese
society, guanxi transcends business relationships
to encompass all social relationships (Ambler,
1995).
Guanxi is guided by two key concepts related
to the Chinese code of conduct: the code of
brotherhood (yi) and the code of reciprocity
(bao). As Confucius (551478 B.C.) has taught,
All people from our country are brothers.
Chinese people deem it a moral act to help
others with no strings attached. However, people
receiving assistance must consciously reciprocate
to avoid feeling guilty and losing face. Therefore,
gift giving in China allows people to express their
appreciation for any assistance received. To the
party who provides assistance, the gift signifies
appreciation; to the party who receives the assistance, the gift is an expression of reciprocity.
Therefore, gift giving is a typical way of culturally developing guanxi, that is, respect, friendship,
and trust.
Because China is a collectivist culture, guanxi
reflects norms involving social interdependence
(Hofstede, 1980). The Chinese people believe
that everything has two sides (yin/yang); that is,
life alternates between advantageous and disadvantageous situations. Thus, social interdependence is like a stock that can be put away in
times of abundance and plenty and used in times
of need and necessity (Yeung and Tung, 1996).
Given the scarcity of resources and uncertainty
in life, it is believed that the security of resources
for survival should be consolidated by means of
a large web of renqing (exchange of favors) and
mianzi (saved face for help when in need)
through long-term cooperation.
Many empirical studies have shown that
compared to firms with low guanxi, high guanxi
firms tend to:

305

Be more efficient (Lovett et al., 1999),

Possess a sustained competitive advantage
(Tsang, 1998),
Have more access to scarce resources
(Davies et al., 1995; Luo, 1997), and
Enhance long-term survival and growth
(Pearce and Robinson, 2001; Yeung and
Tung, 1996).
Based on a classification of Chinese organizations (Nee, 1992), Xin and Pearce (1996) found
that private companies have a stronger guanxi
orientation than state-owned or collectively
hybrid companies. Private-company executives
care more about business connections, have more
government connections, and depend more on
resources or protections secured by guanxi, which
otherwise are not available. These findings are
interesting in that they highlight the importance
of resource dependence and exchange in guanxi
orientation. In a transitional Chinese economy,
private companies are more market-oriented but
lacking necessary economic resources compared
with state-owned or collectively-hybrid companies, which have greater access to the government-granted resources (Xin and Pearce, 1996).
Therefore, guanxi represents an important way
for private companies to secure or share scarce
resources for survival.
In summary, guanxi in China is a cultural
orientation in peoples social activities, reflecting
a set of Chinese cultural ethics such as hierarchy,
interdependence, and reciprocity (Hwang, 1987).
Given that marketing axioms nowadays are
shifting from competition and conflict to mutual
cooperation, and from choice independence to
mutual interdependence (Sheth and Parvatiyar,
1995), guanxi can be conceptualized as relationship marketing in China which draws more upon
promises and trust rather than discrete transactions (Ambler, 1995).

Cognitive moral development

Cognitive moral development is believed to play
a significant role in managerial ethical decisionmaking (e.g., Hunt and Vitell, 1986; Ferrell et
al., 1989; Goolsby and Hunt, 1992). Cognitive

306

Chenting Su et al.

moral development is an individual difference

variable that distinguishes between individuals at
the various stages of moral development. This is
because people at the different levels focus on the
importance of different outcomes (Kohlberg,
1969, 1981). For example, at the pre-conventional level (stages one and two) the overriding
concern is external rewards and punishment. At
the conventional level (stages three and four),
what is correct depends on the expectations of
relevant others, such as family, peers or social
group. People who are in the principled level of
cognitive moral development (stages five and six)
are guided by their own set of universal principles. As people advance in cognitive moral
development, they move from a position where
only those events that happen to the self are
important (stage 1) to a position where all individuals are equally respected (stage 6). A breakdown of Kohlbergs (1969) stages on the basis of
whose interest is most important can be conceptualized as follows:
Pre-conventional: Satisfying ones own interests is of utmost importance. An act is
defined as right or wrong based on the likelihood of being caught.
Conventional: Right and wrong are defined
by living up to the expectations of others.
Therefore, other points of view are being
considered, but only insofar as they relate
to the self.
Post-conventional: One comes to hold ones
own personal beliefs based on principles,
but others are seen to have opinions that
may be equally valid. The self is not taken
to be more important than others.

Hypotheses
Based on the above conceptualization, we argue
that guanxi orientation is not related to cognitive
moral development. This is because guanxi orientation and its development emphasize mutual
benefits and social harmony, not self-centrality
(Hwang, 1987). The two key principles in the
development of guanxi orientation, interdependence and reciprocity reflect social exchanges that

are beneficial for both parties, and the maintenance of guanxi is predicated on avoiding being
too selfish. On the other hand, the hierarchy
principle in guanxi requires people to sacrifice
their own interest for the benefits of the higher
hierarchical parties. However, these behaviors are
not guided by moral principles but by cultural
norms and customs. In other words, the overriding principles of guanxi transcend the six states
of cognitive moral development. Therefore, we
propose that
H1: Cognitive moral development is not
related to guanxi orientation.
Additionally, we hypothesize that different
types of Chinese enterprises (privately-owned
organizations, state-owned organizations, collective hybrids, and joint ventures) have varying
levels of guanxi orientation. This is because these
different types of organizations have varying
levels of resources (Nee, 1992; Xin and Pearce,
1996). Specifically, firms having fewer sources of
resources (privately-owned firms) have stronger
guanxi orientation than firms having more
resources (state-owned firms). That is,
H2: Guanxi orientation is more evident in
private companies than state-owned
firms.
Furthermore, guanxi is not learned at school
but from life experiences and socialization.
Therefore, peoples age and time in the profession may be positive related to their guanxi
orientation.
H3: Education is not related to guanxi orientation.
H4: Age is positively related to guanxi orientation.
H5: Time in the profession is positively
related to guanxi orientation.

Method
Sampling
Marketing, especially purchasing managers are
conceived as more likely to abuse business ethics

A Study of Chinese Enterprises

(Goolsby and Hunt, 1992). To highlight the likelihood that firms may use guanxi to abuse business
ethics in their transactions, a sample of purchasing managers was used. The sampling frame
was a directory of industrial and commercial
enterprises in a large coastal city of southern
China. The entries in the directory were stratified into four groups: state-owned enterprises,
privately owned enterprises, collective hybrids,
and joint ventures. Within each stratum, a simple
random sample of 200 business firms was drawn.
A questionnaire, which included the shortened
form of the Defining Issues Test (cognitive moral
development measure), a set of multi-item questions measuring guanxi orientation, and a list of
demographic questions, was sent to the purchasing manager of each selected enterprise. As
an incentive, a letter from the director of the
local association of business promising to give
20% discount on the tuition fee for an advanced
marketing training course was also enclosed.
Two hundred and fifty six surveys (n = 256)
were returned 64 from state-owned organizations, 86 from privately-owned firms, 47
from collective-hybrids, and 59 were from joint
ventures. This resulted in a net response rate of
32%. Within each group, a two-sample t-test was
conducted to test response bias between early
respondents and late respondents late respondents were treated as a proxy for non-respondents
(Oppenheim, 1966). Results revealed no significant differences between these two types of
respondents in terms of their cognitive moral
development, guanxi orientation, and demographic characteristics (see Table I).
TABLE I
Sample demographic characteristics
Group/Characteristic

Mean
AGE

Mean
ED

Mean
TP

State-owned enterprises
Privately owned enterprises
Collective hybrids
Joint ventures

35.77
35.75
34.64
33.18

14.53
13.11
13.30
15.91

11.90
11.08
10.23
06.91

AGE: Age.
ED: Education (years).
TP: Time in the profession (years).

307

Measures
The cognitive moral development measure.
Respondents were asked to fill out the Defining
Issues Test (DIT), a paper-and-pencil instrument
designed to measure cognitive moral development. The DIT presents the subject with a
number of scenarios that have been found to be
ethically challenging that is, there is no simple
universal action that all people would agree is the
best thing to do. These scenarios have been
found to be able to distinguish among people at
different levels of cognitive moral development.
The version of the DIT that has been used for
the present study is the revised third edition of
the test (Rest, 1990).
After reading a short scenario, respondents
decide which course of action they deem appropriate. Using a 5-point scale, they are asked to
indicate the importance of possible criteria in
making their final decision. Subjects respond to
12 different questions indicating that the criterion in question was of great, much, some,
little, or no importance in arriving at their
decision. These 12 statements represent prototypical statements that are typically made by individuals at the various levels of cognitive moral
development. What is important to the researcher
is not the final course of action that the subject
comes to advocate, but why they chose that
action.
The index used to measure level of cognitive
moral development is the P-score. P-scores are
the most common way of calculating cognitive
moral development (e.g., Goolsby and Hunt
1992). Specifically, P-score indicates the relative
importance given by the individual to responses
typical of a person at the principled stage of cognitive moral development (i.e., stage 5 and 6 in
Kohlbergs typology).
The Guanxi measure. A 9-item measure with 7point Likert scale was first developed by Ang and
Leong (2000). We adapted this measure to gauge
Chinese purchasing managers guanxi orientation
(see Appendix). This measure of guanxi touches
on various aspects of guanxi including developing
right contacts with the right people, maintaining
a network of good relationships, being an

308

Chenting Su et al.

insider, being reciprocal by returning favors,

developing guanxi through gift-giving, and being
cooperative. The measure captures the cultural
essence of guanxi in a collectivist Chinese society
(Yeung and Tung, 1996).
An internal consistency test revealed high reliability (Cronbach Alpha = 0.87). Therefore, we
computed an overall guanxi orientation score by
summing the scores of all nine items. A higher
score signifies a higher level of guanxi orientation.
To use the English version of measurement
scales in a non-English speaking country,
translation equivalence must be established
(Mullen, 1995). Following Mullens suggestion,
the original survey was first developed in English,
and then was translated into Chinese by a bilingual native speaker, an MBA student majoring
in international business at a Western Canadian
university. The Chinese version of the questionnaire was then translated back into English
by another bilingual Chinese MBA student.
Discrepancies in the translation were carefully
inspected and corrected to ensure translation
equivalence.

Validity checks
Although the DIT has been used in over 40
countries and regions, including Taiwan, Hong
Kong, and mainland China, across various professions such as accounting, marketing, nursing,
teaching, and veterinary medicine, with consistent validity (Rest and Narvaez, 1994), comprehension biases may still arise in respondents
reactions to a set of ethical dilemmas. To compensate for this, we used the M-index to test for
meaninglessness of responses. The M-index (for
meaninglessness) is a reliability check aimed at
discarding those answers that do not appear to
have been given much thought, but rather were
arrived at in some meaningless way. Rest (1990)
has allowed for a certain degree of meaninglessness to be acceptable (see Rest, 1990 DIT
Manual for details), but too many answers given
in a thoughtless manner will invalidate all of a
subjects responses. We dropped 57 subjects from
the analysis because they chose more than the

allowed number of meaningless responses. This

validity check resulted in 199 useable questionnaires.

Results
In order to test the five hypotheses, a MANOVA
based on the classification of Chinese enterprises
(Nee, 1992) was conducted to observe the
change patterns in Chinese firms guanxi orientation and cognitive moral development. A correlation analysis was also conducted to investigate
the overall relationships among guanxi orientation, cognitive moral development, education,
age, and tenure.

Test of H12
Table II presents the sample means for guanxi
orientation and P-scores among the four Chinese
enterprise groups. The results of MANOVA
indicate a significant between-group guanxi orientation difference among the four enterprise
groups (F = 36.91, p < 0.05). The post-hoc
comparisons using Tukeys method further
indicate that state-owned enterprises and joint
ventures are not statistically different in terms of
their guanxi orientation (p = 0.478). Similarly,
privately owned enterprises and collectivehybrids are statistically invariant in terms of their
guanxi orientation (p = 0.117). However, stateowned enterprises and joint ventures both are
significantly different from privately owned
enterprises and collective-hybrids with regard to
TABLE II
Sample means of guanxi orientation and cognitive
moral development
Group\Variable
State-owned enterprises
Privately owned enterprises
Collective hybrids
Joint ventures

GO

CMD

40.54
55.39
52.38
41.76

33.83
31.07
31.35
34.22

GO: Guanxi orientation.

CMD: Cognitive moral development.

A Study of Chinese Enterprises

their guanxi orientation (p < 0.05). Specifically,
state-owned enterprises and joint ventures have
a lower guanxi orientation than privately owned
enterprises and collective-hybrids, with privately
owned enterprises having the highest level of
guanxi orientation. These results support H2 and
add to Xin and Pearces (1996) findings that stateowned and collective hybrid enterprises have
lower levels of guanxi orientation than private
enterprises. As the privatization proceeds in
China, more and more collective hybrids have
lost their governmental supports and been pushed
into markets for survival (Nee, 1992). This may
explain the change in collective hybrids guanxi
orientation in todays China economy.
However, the results of the MANOVA
indicate no significant difference among the four
Chinese enterprise groups in terms of their cognitive moral development (F = 1.82, p > 0.05).
This implies that there is no relationship between
guanxi orientation and cognitive moral development because enterprises with higher levels of
guanxi orientation were not found to necessarily
have lower levels of cognitive moral development, or vice versa. Results from the correlation analysis confirmed this pattern that guanxi
orientation and cognitive moral development are
not correlated (r = 0.076, p > 0.05), supporting
H1.

309

Tests of H3H5
Results from the correlation analysis (see
Table III) indicated that education was negatively
correlated with guanxi orientation (r = 0.232,
p < 0.01), rejecting H3. Age was positively correlated with guanxi orientation (r = 0.439, p <
0.01), supporting H3. Finally, time in the profession was positively correlated with guanxi orientation (r = 0.691, p < 0.01), supporting H4.
We conducted a more rigorous statistical test
using multiple regression. We treated guanxi orientation as the dependent variable and cognitive
moral development, education, time in the profession, and age as independent variables. These
results reinforced H1 in that cognitive moral
development was found to be a non-significant
predictor of guanxi orientation (Beta = 0.068,
p > 0.10). The regression results also reinforced
H4 in that time in the profession was found to
be a significant predictor of guanxi orientation
(Beta = 0.645, p < 0.001). The hypothesized
relationship between guanxi orientation and age
(which was supported by the correlational
analysis) was not supported in the multiple
regression analysis (Beta = 0.032, p > 0.10).
Contrary to expectations, education was found
to be a significant negative predictor of guanxi
orientation (Beta = 179, p < 0.10), reinforcing
the correlational analysis.

TABLE III
Intercorrelations of study variables

GO
CMD
AGE
ED
TP

GO

CMD

AGE

ED

TP

1.00**0
0.076**
0.439**
0.232**
0.691**

1.00*0*
0.326**
0.658**
0.058**

1.00**0
0.170**
0.643**

1.00*0
0.161*

1.00

** p < 0.01.
* p < 0.05.
GO: Guanxi orientation.
CMD: Cognitive moral development.
AGE: Age.
ED: Education.
TP: Time in the profession.

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Chenting Su et al.

Discussion
This study investigated the relationship between
guanxi orientation and cognitive moral development in an attempt to determine whether the
level of guanxi orientation of Chinese business
people is related to their ethical reasoning. The
results of our study clearly showed that guanxi
orientation has very little to do with ethical
reasoning (as captured through an established
measure of cognitive moral development). Our
study also confirmed that guanxi is practiced
more by Chinese organizations that have less
resources (such as privately-owned firms) than
organizations with more resources (such as stateowned firms). The results also confirmed our
expectation that guanxi orientation is positively
related to tenure or time in the profession. We
expected that age is a positive predictor of guanxi
orientation, whereas education is not a significant predictor. We found that age failed to
predict guanxi orientation and education turned
out to be a negative predictor of guanxi orientation. Perhaps it is not age but the amount of
business experience that matters in guanxi. With
respect to the negative relationship between education and guanxi, one explanation is education
and business experience may have counteractive
effects in the development of guanxi orientation.
That is, those who are more educated tend to
rely less on business relationships to become successful. Education becomes a guanxi substitute.
Future research should test this hypothesis clearly.
These findings are interesting in that they
provide a foundation for examining the ethics
of guanxi. First, is guanxi bad, ethically speaking?
Guanxi orientation in this study was found to
have no relationship with cognitive moral development. That is, a strongly guanxi-oriented
Chinese partner is not necessarily unethical, and
vice versa. Furthermore, time in the profession was
found positively related to guanxi orientation.
This finding implies that guanxi is inherent in
Chinese peoples work ethics and can be conceived as a cultural way of doing business in
China. Indeed, the purpose of guanxi is to share
the scarce resources that otherwise are not available (Davies et al., 1995; Tsang, 1998; Yeung and
Tung, 1996). For privately-owned enterprises

and collective hybrids that have less resources,

they rely heavily on guanxi to share these
resources. State-owned enterprises and joint
ventures are less guanxi-oriented because they
have more resources and, therefore, are more selfsufficient. However, corruption and bribery have
been evidenced as being more rampant among
state-owned enterprises in which public goods
are exchanged for personal gain (Guthrie, 1998;
Yang, 1994; Yu, 1993).
Second, is guanxi synonymous with bribery?
Su and Littlefield (2001) have conceptually distinguished between favor-seeking guanxi and
rent-seeking guanxi. Favor-seeking guanxi is culturally rooted signifying social contacts and interpersonal exchange of resources in a collectivistic
society. Rent-seeking guanxi reflects on institutional norms signifying social collusion based on
power exchange in a hybrid Chinese socialist
market economy. Rent-seeking guanxi has grown
rampant the real source of corruption in todays
China. The confusion of the two types of guanxi
relationships leads to the belief that guanxi is ripe
with ethical abuse. This study focused on favorseeking guanxi, not rent-seeking guanxi. Future
research should investigate the relationship
between rent-seeking guanxi and ethical decisionmaking. We anticipate that business people
scoring high on rent-seeking guanxi may score
low on an ethics measure such as cognitive moral
development. Our study has demonstrated that
favor-seeking guanxi is not related to ethical
reasoning.
Future research should test the distinction
between favor-seeking and rent-seeking guanxi in
relation to ethics in different areas of China.
There are significant cultural differences between
Southern and Northern China (Huang et al.,
1994). Furthermore, Chinas economic development is uneven between the coastal provinces
and the in-land provinces (Cui and Liu, 2000).
A more comprehensive, nationwide study
of Chinese enterprises guanxi orientation and
cognitive moral development can provide the
Western multinational companies (MNCs) with
guidance concerning what type of Chinese organizations and individuals should be approached
for possible business ventures.

A Study of Chinese Enterprises

Appendix
A Guanxi scale*
1. In business, it is important to maintain a good
network of relationships.
2. Doing business involves knowing the right people.
3. Developing the right contacts helps in the smooth
running of a business.
4. One must always build and maintain social relationships with others in case their services are
needed in the future.
5. Being in the inside circle helps in obtaining preferential treatments.
6. Returning favor for favor is part of doing business.
7. Gift giving is an important feature when we want
business to succeed.
8. Maintaining a good relationship is the best way to
enhance business.
9. Frequent cooperation reduces problems in business
relationships.
* Adopted from Ang, Swee Hoon and Siew Meng
Leong: 2000, Out of the Mouth of Babes: Business
Ethics and Youths in Asia, Journal of Business Ethics
28(2), 129144.

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Chenting Su
Department of Marketing,
The City University of Hong Kong,
Hong Kong
E-mail: mkctsu@cityu.edu.hk
M. Joseph Sirgy and James E. Littlefield
Virginia Tech