Embeddedness and Contractual Relationships in China's Transitional Economy
By Xueguang Zhou, Wei Zhao, Qiang Li, H. Cai. American Sociological Review, 2003
180 citations recorded by the source corpus.
Interfirm contracts represent common economic relations in the marketplace; they are also deeply embedded in social relations and social institutions. In the context of China's transitional economy, this study examines how three mechanisms—economizing transaction costs, network-based social relations, and institutional links—affect interfirm contractual relationships in (1) the choice of search channels for contractual partners, (2) the formality and provisions in a contract, and (3) the intensity of social interaction in contract implementation. Empirical evidence is drawn from information collected on 877 contracts from 620 firms in two Chinese cities, Beijing and Guangzhou. The authors find distinct roles of social relations, institutional links, and regulatory environments in the initiation of contractual partners and the forms of contracts adopted, whereas transaction-specific factors play a significant role in the intensity of social interaction in contract implementation. These findings suggest the interplay among economic calculativeness, social networks and institutional links, and the complementarity in the underlying theoretical ideas.
Subfields: Accounting, Finance, Organizational Behavior and Human Resource Management
View Paper: https://www.semanticscholar.org/paper/e02d22de6b5a498b504f1f1c2e15acb6ec24d084
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Citations in the corpus
- Exchange hazards, relational reliability, and contracts in China: The contingent role of legal enforceability (2010, background): “A prevailing view for doing business in emerging economies is that transacting with known parties is a necessary precondition to more complex, risky exchanges and thus more explicit contracts (Boisot and Child, 1996; Zhou et al., 2003).”
- Towards an Interdisciplinary Conceptualization of Trust: A Typological Approach (2007, background): “For instance, in many cases, a formal contract is not used as a control mode; rather, it can be used to signal one's long-term commitment (Mayer and Argyres, 2004; Uzzi, 1997; Woolthuis et al., 2005; Zhou et al., 2003).”
- Unraveling the mechanisms of reputation and alliance formation: : A study of venture capital syndication in China (2014, unknown): “While institutional change is ubiquitous, emerging economies are characterized by the high velocity of institutional change (Zhou et al., 2003).”
- The Prevalence and the Increasing Significance of Guanxi (2018, unknown): “26 Zhou et al. 2003.”
- Risk Aversion and Guanxi Activities: A Behavioral Analysis of CEOs in China (2017, background): “Nevertheless, it is particularly these types of private, relatively new, and medium-scale companies that have been associated with intense guanxi activities and substantial performance implications (Park & Luo, 2001; Zhou et al., 2003).”
- Relational ties or customized contracts? An examination of alternative governance choices in China (2008, background): “In contrast, Zhou et al. (2003), from their survey of 620 firms in 1999/ 2000, show that social relations still play a critical role in interfirm relationships and the use of contracts in China.”
- China's Great Economic Transformation: The Role of Law in China's Economic Development (2008, unknown): “Zhou et al. (2003) find that firms rely on a range of search channels to identify contractual partners.37 Social networks (47.1 percent) and open information sources including advertisements, media, and trade information (47.0 percent) predominate, followed by self-initiative.”
- Does the Colour of the Cat Matter? The Red Hat Strategy in China's Private Enterprises (2007, unknown): “Private firms valued social networking as the most effective way of finding transaction partners (Zhou et al., 2003).”
- Formal control and social control in domestic and international buyer–supplier relationships (2010, methodology): “Zhou et al. (2003) further report that there is a positive influence of the existence of social relations on the completeness of contracts.”
- Decline of the center: The decentralizing process of knowledge transfer of Chinese universities from 1985 to 2004 (2008, background): “The percentage of national universities dropped from 51% in 1995 to 9% in 2002 (Zhou et al., 2003).”