Particularistic and System Trust Among Small and Medium Enterprises: A Comparative Study in China's Transition Economy

Journal of Business Venturing, Vol. 24, pp. 544-55, 2009

14 Pages Posted: 16 Feb 2010

See all articles by Justin Tan

Justin Tan

York University - Schulich School of Business

Jun Yang

Nankai School of Business

Rajaram Veliyath

Kennesaw State University - Michael J. Coles College of Business

Date Written: 2009

Abstract

Guanxi, a type of particular trust observed in Confucian societies has mostly been viewed as a static phenomenon. It is not clear how the role of guanxi changes over time during institutional transitions. This field studyof twenty one small and medium enterprises (SMEs) located in two large cities in Western China examines the changes in SME behaviors since the beginning of economic reforms in 1979. Based on neo-institutionalist trust perspectives, the article argues that the role of guanxi also arose from the paucity of market system trust created by the absence of well-established market institutions during China's transition from a centrally planned to a market economy. Guanxi became relatively less important when market system trust based on well-established institutions was firmly established. Regardless of past practices, the dynamics of institutional transitions leading to the establishment of system trust inevitably reshapes managerial as well as business behaviors, with adaptation occurring to the new rules of the market economy.

Keywords: Particularistic and system trust, network and social capital, Guanxi and relationship during Chinese institutional transition

Suggested Citation

Tan, Justin and Yang, Jun and Veliyath, Rajaram, Particularistic and System Trust Among Small and Medium Enterprises: A Comparative Study in China's Transition Economy (2009). Journal of Business Venturing, Vol. 24, pp. 544-55, 2009, Available at SSRN: https://ssrn.com/abstract=1552117 or http://dx.doi.org/10.2139/ssrn.1552117

Justin Tan (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://www.schulich.yorku.ca/SSB-Extra/Faculty.nsf/faculty/Tan%20Justin

Jun Yang

Nankai School of Business ( email )

94 Weijin Road, Nankai District
Tianjin, Tianjin 300071
China

Rajaram Veliyath

Kennesaw State University - Michael J. Coles College of Business ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

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