116 / 2016-10-25 18:08:53

Dissecting Guanxi: Its Impact on Knowledge Sharing and the Innovation Capability in Chinese firms

11618,11619,1127,innovation

I. INTRODUCTION
Identify an excel in those organizational practices that lead to sustained and superior innovation capabilities becomes a critical issue for countries trying to achieve the status of “innovation power house” such as China, which for instance in the turbine manufacturing industry have successfully conquered the first two stages of technological innovation: imitative and cooperative, but still hasn’t do so when it comes to indigenous innovation, as explained by Peng Ru et al (2012), Zhenzhong Ma (2015). One of the most visible signs of China’s commitment to upgrade its innovation capabilities is the Medium-and Long-term National Plan for Science and Technology Development (2006-20), which included a policy aimed to spur indigenous innovation as a key component for economic development. The importance of sound knowledge sharing practices to spur innovation at the organizational level has been the focus of previous research, for instance Hsiu-Fen Lin (2007) this paper addressed whether the knowledge sharing process of firms was determined by a set of specific individual, organizational and technological factors, and the overall effects of this dynamics in the innovation capability of firms.

In line with the efforts for identifying and managing all the factors that influence the innovation capability of Chinese organizations, the present work aims to analyze the extent to which the set of social precepts known as “guanxi” affects knowledge sharing dynamics at the intrateam level. Guanxi derives from the Confucianism, which has been the cornerstone of the Chinese social system for over 2.500 years. Han Wei and Xi Youmin (2001) presented a summary of definitions ascribed to guanxi, among those are: “Friendship with implications of a continual exchange of favors”. Wong YH (1998). “The concept of drawing on connections in order to secure favors in personal relatives”. Luo Y (1997). Also (Davies, 1995) defined guanxi as “the social interaction within a networked group where repeated favor exchanges ensure a measure of trust among the participants of this network”. Literature on organizational behavior includes references regarding the impact of guanxi at the organizational level, specifically on knowledge sharing practices, such as Jao-Hong Cheng (2011), in this work the author addressed how relational risk affects the inclination to share knowledge with certain individuals and to what extent this association is affected by both the tangible relational value (relational benefits) and intangible relational value (guanxi). Meng-Leia and Monica Hu (2009) explored the role of guanxi as a mediator between knowledge sharing and innovative service behavior at the intra-organizational level. The present study is set to refine the understanding about guanxi and its role on knowledge sharing practices, the perceptions of trustworthiness towards outsiders to individual’s guanxi network, management practices directed to improve knowledge sharing behaviors and finally the overall impact in the innovation capability of Chinese firms. This research presents theoretical a model and a set of hypothesis based on the theory of social capital which includes the following dimensions of knowledge sharing: Type of knowledge (shared and received), quantity and quality of knowledge shared. Also, this study considers Trust and Management Practices as mediators based on related literature, for instance Chao C. Chen & Xiao-Ping Chen 2008.
II. LITERATURE
A. The Theory of Social capial and Guanxi
Pierre Bourdieu (1980), produced the first comprehensive study on social capital, he defined it as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition”, here the author explained the benefits that social capital can bring to individuals whom integrate themselves to specific social networks. Coleman (1988) presented his definition of social capital “a variety of entities with two elements in common: They all consist of some aspect of social structures, and they facilitate certain action of actors—whether persons or corporate actors—within the structure”, in that study the author also recognized some of the mechanisms key to foster social capital, such as: privilege access to information between parties and reciprocity. Schiff (1992) introduced a rather clearer conceptualization of social capital since he specified the potential individuals involved in social capital “friends and colleagues…” and the tangible benefits that accrue from this close relationships “…financial and human capital…”, and the complete concept been: “friends, colleagues, and more general contacts through whom you receive opportunities to use your financial and human capital”. Alejandro Portes (1998) summarized and explained some negative consequences of social capital, among which is segregation of outsiders. Portes stated “the same strong ties that bring benefits to members of a group commonly enable it to bar others from access”. And he elaborated further on this point by referring to Waldinger (1995), whom describes cases such as the control of certain white ethnics—descendants: Italian, Irish and Polish over the construction trades and some unions in the city of New York, and the strong influence of Cubans over various sectors of the Miami economy. Also in this line of research Van Buren and Leana (2000) separated private from public social capital, with the former been an intangible asset owned exclusively by certain individuals Burt (1992), and the latter own by an entire group Coleman (1988).
Acknowledging the above mentioned it becomes easier to analyze and better understand the complexities embedded in guanxi. This ancient Chinese concept presents close similarities with the relatively new theory of social capital both regarding the benefits that can bring to individuals whom cultivate them, for instance access to privilege information Eric W. K. Tsang (1998) as well as the negative consequences or externalities such as segregation of outsiders Chao C. Chen & Xiao-Ping Che 2008. Therefore this paper takes the theory of social capital as a lent to study and draw hypothesis about the impact of guanxi in knowledge sharing behaviors among colleagues and the innovation capability of Chinese firms.
III. HYPOTHESIS
Based on the literature review conducted for the present study as well as the approach taken for it, the following hypothesis are presented:
Hypothesis 1a: Knowledge shared in guanxi networks is positively related to the perceptions of trust towards outsiders.
Hypothesis 1b: Knowledge shared in guanxi networks is positively related to the management practices.
Hypothesis 2a: Knowledge received in guanxi networks is positively related to the perceptions of trust towards outsiders.
Hypothesis 2b: Knowledge received in guanxi networks is positively related to the management practices.
Hypothesis 3a: Knowledge quality in guanxi networks is positively related to the perceptions of trust towards outsiders.
Hypothesis 3b: Knowledge quality in guanxi networks is positively related to the management practices.
Hypothesis 4a: Knowledge quantity in guanxi networks is positively related to the perceptions of trust towards outsiders.
Hypothesis 4b: Knowledge quantity in guanxi networks is positively related to the management practices.
Hypothesis 5: Trust towards outsiders is positively related to innovation capability
Hypothesis 6: Management practices is positively related to innovation capability.
IV. METHODOLOGY
The sample for this research derived from questionnaires sent by email to 14 different Chinese firms highly engaged in innovation and technology, which distributed those among the employees assigned to their R&D departments respectively, in total 406 employees responded the questionnaires. After dismissing 37 questionnaires because of incomplete responses we got a total of 369 usable questionnaires. In order to determine the representativeness of the sample collected a t and X2 tests were conducted, finding no significant differences between respondent and non-respondents. The items used to operationalize the constructs to be examined in this study, were adapted from previous literature concerning guanxi relationships or networks, knowledge sharing practices and innovation capability. For each of those constructs a seven point Likert scale was implanted (ranging from 1= strongly disagree to 7= strongly agree). The questionnaires were directed to colleagues with the same level within the organization, since it can be assumed that the implicit factors between subordinates and managers, such as power distance would cause different behavioral dynamics as compare to those between staff members perceived as equals. McCauley and Kuhnert (1992). For the constructs focused on the impact of guanxi in the type of knowledge shared and received (tacit or explicit), five items were considered, three of those aim to size the sharing of tacit knowledge and one explicit knowledge, those were adapted from: Hostel, 2003. For the constructs on quantity of knowledge shared and received five items adapted from Gail Fann Thomas, 2009 were applied. The items for the construct on quality of knowledge shared and received where addressed based on the work of Helena Forslund, 2007. The construct regarding the perception of trust towards those individuals outside the guanxi networks were addressed using four items, adapted from on Chattopadhyay 1999. The four constructs that focused on exploring the role of certain management practices were based on Chao C. Chen & Xiao-Ping Chen 2008. Finally to measure firms’ innovation capability this study will include a construct of five items adapted from Hsiu-Fen Lin, 2007. The reliability analysis was conducted employing the software IBM SPSS statistics 23, this was used to verify consistency of the items. For testing the structural model here proposed and its hypotheses we used the linear partial square method on SmartPls 3.0.
V. RESULTS
Building on Hair et al (1998) we proceed to conduct a confirmatory factor analysis to assess the measurement model and evaluated the structural relationships among the variables. In order to validate the research model, content validity, convergent validity and discriminant validity. Content validity could be full filled if the measurement items were consonant with the related literature. By analyzing composite reliability and average variance extracted from the measures we could address convergent validity Hair et al (1998), as depicted in Table 1, composite reliability ranges from 0.904 to 0.965 which is superior to the minimum value of 0.7 Chin (1998).