Subnational institutions, managerial social ties, and Nordic SMEs performance in an Asian emerging market: Evidence from Danish investments in China

This study analyzes the relationship between guanxi (social networks) and Small and Medium-sized Firms (SMEs)’ performance in China and its contingency variables through the lens of social capital theory (Coleman, 1988) and institution-based view (Peng, 2002). In more detail, it analyzes 1) the relationship between business-to-business (B2B) and
business-to-government (B2G) guanxi and subsidiary performance of SMEs and 2) the moderating effects of industrial-level government restrictions and provincial-level marketization. Guanxi is defined as “managers’ social networks and ties with business partners and government officials that can be employed for organizational purposes.” (Luo et al., 2012). We hypothesize that in general guanxi networks with suppliers, customers, competitors, and government officials bring social capitals to SMEs, which in turn, increase the levels of subsidiary performance in China. In addition, we expect that the strength of the
positive guanxi-performance relationship is stronger for B2G than B2B guanxi and when the investments are made in more restricted industry sectors and in provinces that are less progressed in marketization. To test these hypotheses, data will be collected through a questionnaire survey and published databases.