Badi, SM; Wang, L; Pryke, S; (2016) Relationship Marketing in Guanxi Networks: A Social Network Analysis Study of Chinese Construction Small and Medium-sized Enterprises. Presented at: Sunbelt XXXVI: Annual research conference of the International Network of Social Network Analysis (INSNA), Newport Beach, CA, USA.

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Abstract

This study proposes the application of Social Network Analysis (SNA) as a rigorous approach in the investigation of guanxi, the concept of social networks providing opportunities and commitments in the Chinese business environment. In particular, the focus will be upon relationship marketing (RM) in small and medium-sized enterprises (SMEs). SNA goes beyond formal institutional settings by offering a systematic and quantitative analysis of the relationships between an organization and its main stakeholders, underlining the structural patterns of their interactions. We can explore questions such as: With whom did the entrepreneurial business owner choose to connect? Why? How are these ties built and maintained? Which stakeholder groups are most important to an entrepreneurial business? In this study, the structural characteristics of the ego networks of the business owners in four Chinese construction SMEs are examined. The relationship between the business owner and six main stakeholder groups was identified, quantified, analyzed, and visualized using SNA. Relationships were measured according to the frequency of communication, the value of favour exchanges, and the amount of emotional investment in the relationship. Comparative SNA studies were conducted, focusing on ego network density, tie strength, and prominence of key stakeholders. The findings highlighted the high degree of embeddedness in Chinese SMEs with guanxi ties (both strong and weak) dominating the construction business owners’ network. They also underlined the prominence of the internal markets of multi-skilled staff and business-development managers. Business owners cultivate guanxi with their employees to retain talents and enhance employee loyalty. Transactional ties, albeit a minority, also exist in the business owners’ network, which confirms that both relational and transactional marketing coexist in the Chinese construction industry. By making visible the structure of a business owner’s ego network, SNA may act as a useful diagnostic marketing tool for entrepreneurial business. In particular, it will provide greater transparency in understanding stakeholder relationships, reveal prominent stakeholders, and allow for the development of network-based strategies to improve relationships with stakeholders by identifying emergent opportunities and facilitating strategic value choices.

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