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The Darker Side of Social Networks in Transforming Economies: Corrupt Exchange in Chinese Guanxi and Russian Blat/Svyazi

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  • Karhunen, Päivi
  • Kosonen, Riitta
  • McCarthy, Daniel J.
  • Puffer, Sheila M.

Abstract

This article addresses corruption as a negative practice displaying the ‘darker side’ of social capital in Chinese guanxi and Russian blat/svyazi networks. It presents a conceptual framework integrating several research streams to establish a conceptual linkage between social network characteristics and three forms of corruption between business persons and public officials: cronyism, bribery, and extortion. We argue that the forms of corruption in a society are determined by the nature of social network ties and their underlying morality, with particularistic and general trust being key factors. Our framework depicts networks as three concentric circles representing three types of corruption resulting from their corresponding types of reciprocity: open, closed, and negative. We then apply the framework to the practice of guanxi in China and blat/svyazi in Russia. We propose that different network characteristics and different forms of corruption may help explain what we label the ‘China-Russia paradox’ of why corruption and high economic growth have co-existed in China, at least in the short term, but less so in Russia. We conclude with ethical and legal implications for doing business in those two transforming economies and offer suggestions for future research.

Suggested Citation

  • Karhunen, Päivi & Kosonen, Riitta & McCarthy, Daniel J. & Puffer, Sheila M., 2018. "The Darker Side of Social Networks in Transforming Economies: Corrupt Exchange in Chinese Guanxi and Russian Blat/Svyazi," Management and Organization Review, Cambridge University Press, vol. 14(2), pages 395-419, June.
  • Handle: RePEc:cup:maorev:v:14:y:2018:i:02:p:395-419_00
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    Citations

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    Cited by:

    1. Päivi Karhunen & Svetlana Ledyaeva & Keith D. Brouthers, 2022. "Capital Round-Tripping: Determinants of Emerging Market Firm Investments into Offshore Financial Centers and Their Ethical Implications," Journal of Business Ethics, Springer, vol. 181(1), pages 117-137, November.
    2. Chimenson, Dina & Tung, Rosalie L. & Panibratov, Andrei & Fang, Tony, 2022. "The paradox and change of Russian cultural values," International Business Review, Elsevier, vol. 31(3).
    3. Hongjuan Zhang & Rong Han & Liang Wang & Runhui Lin, 2021. "Social capital in China: a systematic literature review," Asian Business & Management, Palgrave Macmillan, vol. 20(1), pages 32-77, February.
    4. Horak, Sven & Klein, Andreas & Ahlstrom, David & Li, Xiaomei, 2024. "Resilience or decline of informal networks? Examining the role of trust context in network societies," International Business Review, Elsevier, vol. 33(4).
    5. Päivi Karhunen & Svetlana Ledyaeva, 2021. "Is Chain Affiliation a Strategic Asset or Constraint in Emerging Economies? Competitive Strategies and Performance in the Russian Hotel Industry," Management International Review, Springer, vol. 61(3), pages 403-427, June.
    6. Bahoo, Salman & Alon, Ilan & Paltrinieri, Andrea, 2020. "Corruption in international business: A review and research agenda," International Business Review, Elsevier, vol. 29(4).
    7. Hongjuan Zhang & Rong Han & Liang Wang & Runhui Lin, 0. "Social capital in China: a systematic literature review," Asian Business & Management, Palgrave Macmillan, vol. 0, pages 1-46.
    8. Lee, Jong Min & Paik, Yongsun & Horak, Sven & Yang, Inju, 2022. "Turning a liability into an asset of foreignness: Managing informal networks in Korea," Business Horizons, Elsevier, vol. 65(3), pages 351-364.
    9. Petya Koleva & Maureen Meadows, 2021. "Inherited Scepticism and Neo-communist CSR-washing: Evidence from a Post-communist Society," Journal of Business Ethics, Springer, vol. 174(4), pages 783-804, December.

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