ABSTRACT
This chapter traces the contrasting views on Guanxi, and examines how Guanxi is a cultural explanation of business networks. Guanxi is derived from Confucianism and builds trust between members of a family, clan, lineage, or between individuals with similar regional and political backgrounds. Confucianism is a strictly hierarchical ideology that emphasized the social and political relationships in the ordering of society and maintaining of political harmony. Chinese regional economies are the powerful concept of Guanxi and its relationship to Chinese institutions and developments in the Mao period and post-1978 era. Guanxi is used to obtain information on market trends, a core ideology in transaction cost economies. China's opening up to the international community in the reform era post-1978 resulted in Guanxi being both feted as well as threatened by economic and institutional developments. The Chinese Communist Party promoted universal values such as class ties and comradeship serving the people in place of family ties.
