The double-edged effects of guanxi on partner opportunism

Abstract

Purpose This study aims to examine the double-edged effects of guanxi on opportunism and the moderating effects of legal enforceability and partner asset specificity. It thus differs from the current literature, which primarily focuses on the benevolent effects of guanxi . Design/methodology/approach Based on matched data collected from 268 sales manager and salesperson dyads, this study tested hypotheses using hierarchical regressions. Findings The empirical test supports the conceptual model and demonstrates two findings. First, guanxi between boundary spanners follows an inverted U-shaped relationship with inter-firm opportunism. Second, both the benefits and drawbacks of guanxi are stronger under the condition of low legal enforceability and high partner asset specificity. Research limitations/implications The study did not untangle guanxi into different dimensions and did not investigate how firms should make trade-offs between the benefits and drawbacks of guanxi . Therefore, future research could further explore this question by using a multidimensional approach. Practical implications The study alerts managers that guanxi is a double-edged sword, so they should complement it with formal control mechanisms, particularly when they are operating in legally inefficient regions or when their partner firm’s asset specificity is high. Originality/value The study offers a more balanced view of guanxi by showing both its positive and negative effects on opportunism. It also uncovers legal enforceability and partner asset specificity as two boundary conditions that influence the curvilinear effects of guanxi on opportunism.