Home Ground Advantage : Foreign Internet Companies and Guanxi Utilisation in China

Abstract: The leading internet companies display a dominance in world markets unparalleled in many industries. Despite this, China remains a hurdle no major internet company has been able to overcome. The role of government, culture and strategic decisions are all posited as potential explanatory factors. This paper concentrates on the significance of guanxi as an explanatory factor, linking its utilisation to the firm specific characteristics of strategic orientation, size, technological capability and managerial capability. A working definition is established and applied to primary data obtained from interviews and case studies created with secondary data. The research found that while the significance of guanxi as an explanatory factor varies with firm characteristics, it regularly appears as an important consideration for foreign entities operating in China. Furthermore, it both resembles and distinguishes itself from networking in a western sense.