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The role of personal relationships for doing business in the GPRD, China: evidence from Hong Kong electronics SMEs

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  • Bickenbach, Frank
  • Liu, Wan-Hsin

Abstract

This paper investigates the role of personal relationships for doing business in the Greater Pearl River Delta, China. First, it discusses the interplay of formal and informal (relationship-based) institutions from the point of view of institutional economics, with a focus on economies with weak formal contracting and property rights institutions. Second, it describes the institutional environment for doing business in China, and in the PRD in particular. Third, it uses data obtained from a survey among executives of Hong Kong electronics SMEs with business operations in the PRD to gain insights into their perceptions on the importance and the motives of using personal relationships for business in PRD in general, and on the impact of personal relationships on different strategic business decisions (on location, partner, and formal governance structures) for companies’ production as well as innovation activities. The results confirm the importance of personal relationships for doing business in the PRD, in general. There is evidence of substantial differences as to the role of personal relationships between production and innovation activities.

Suggested Citation

  • Bickenbach, Frank & Liu, Wan-Hsin, 2010. "The role of personal relationships for doing business in the GPRD, China: evidence from Hong Kong electronics SMEs," Kiel Working Papers 1589, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1589
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    Cited by:

    1. Bickenbach, Frank & Liu, Wan-Hsin, 2011. "Firm characteristics and informal governance of business operations in the PRD, China," Kiel Working Papers 1728, Kiel Institute for the World Economy (IfW Kiel).
    2. Jun Wu & Shaomin Li & David D. Selover, 2012. "Foreign Direct Investment vs. Foreign Portfolio Investment," Management International Review, Springer, vol. 52(5), pages 643-670, October.
    3. Winai Homsombat & Tsz Leung Yip & Hangjun Yang & Xiaowen Fu, 2013. "Regional cooperation and management of port pollution," Maritime Policy & Management, Taylor & Francis Journals, vol. 40(5), pages 451-466, September.

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    More about this item

    Keywords

    Personal relationships; formal and informal institutions; production; innovation; China; company survey;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment
    • P0 - Political Economy and Comparative Economic Systems - - General

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