Guanxi and Corruption Study on the Firm-Level in a Chinese context

Sammanfattning: China experienced a growing economy with a huge market and business potential and became the second biggest country in terms of GDP. However, because of the limitation of coherent business laws and government supervision, entering the Chinese market became a severe and complicated problem for different kinds of firms. Empirical papers show that networks, called guanxi in China make a primary contribution to the success of the business. This paper contributes to the guanxi in China and discusses what kind of firms are more likely to develop guanxi. Using enterprise- level data on business-government relationships among 2700 firms in China, I reached the conclusion that capital city located firms, foreign-owned firms, national-market- targeted firms and large size firms have demands to build "guanxi" and also have the potential possibility to do the corruption.