Ethical cronyism: an insider approach for building guanxi and leveraging business performance in China

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Abstract
Foreign managers often perceive cultural practices, such as gift giving and guanxi, as being unethical. This can leave them at a disadvantage when negotiating in China. This study describes a concept for the benefit of MNEs so they can leverage performance through acquiring insider status. The study suggests that foreign managers should aim to build a solid reputation to facilitate reciprocal exchange when doing business in China. Such reciprocity can help to establish affective ties to cement a relationship. Establishing affection can also lead to greater interpersonal trust and, subsequently, some degree of loyalty can then emerge as a mechanism for generating ethical cronyism and performance advantages.

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