Does Guanxi Culture affect Entrepreneurial Orientations? The Mediating Role of Organizational Justice

Abstract: Entrepreneurial orientations, characterized by innovativeness, risk-taking, and pro-activeness. has emerged as a major construct within the organizational research and management literature (Cong et al., 2017). Developing and retaining entrepreneurial talents has received interest from both HRD scholars and practitioners (Pearce et al., 2019). Prior research has emphasized the importance of organizational culture as a key influencer of entrepreneurial orientations (Lee et al., 2019; Ling et al., 2020). Nevertheless, the literature so far has mostly based on Cameron and Quinn's (2006) competing values framework of organizational culture, or Hofstede and Hofstede's (1991) national culture dimension model, yet overlooked some more specific and unique components of culture in a given organizational context. For example, as a crucial antecedent of organizational behaviors and outcomes in the Chinese context, guanxi or guanxi culture plays a significant role in shaping employment relationships, human resource practices, as well as organizational development and change (Bian, 2018; Luo, 2011). However, the relationship between guanxi and entrepreneurial orientations remains unclear.
The root of guanxi is deeply embedded in the cultural view of human relationships. According to Fei (1992), each individual is claimed to be surrounded by a series of concentric circles, produced by one’s own social influence. Each web of social relations has a self (ego) as its center. Each circle spreading out from the center becomes more distant and at the same time more insignificant. Everyone’s circles are interrelated, and one touches different circles at different times and places. On different occasions, one’s own social network comes into contact with someone else’s. He calls the Chinese mode of social structure and interpersonal relationship a “differential mode of association”.
In this study, I analyzed guanxi and entrepreneurial orientations at the individual level. I focused on the employees’ perception of guanxi culture in their organizations and employees’ entrepreneurship behaviors. Recent studies suggested that organizational justice might be a potential mediator between guanxi culture and entrepreneurial orientations. On the one hand, researchers claimed that guanxi and its consequence might be considered unethical when they benefit the few and the privileged at the expense of the many and the less privileged, and when they violate local social norms of justice and fairness (Chen et al., 2013; Dunfee & Warren, 2001; Li et al., 2019). On the other hand, empirical evidence indicated that individual perception of the workplace environment could be pivotal antecedents of entrepreneurial orientations, including organizational justice, organizational value, and structure (Cong et al., 2017; Hueso et al., 2020; Urban & Moloi, 2022). Therefore, three hypotheses were proposed based on the extant literature: (a) guanxi is negatively associated with organizational justice; (b) organizational justice is positively associated with employees’ entrepreneurship, and (c) the impact of guanxi culture on entrepreneurial orientations of employees through the mediation of organizational justice.
Data for the analysis came from Wave 7 of the East Asian Social Survey (EASS), which is a biennial cross-national survey that aims to explore diverse aspects of social lives in East Asia since 2003 (Iwai et al., 2015). In total, 628 Chinese employees’ responses were analyzed. The reliability of the scale for measuring guanxi, organizational justice, and entrepreneurial orientations was .84, .94, and . 78, respectively. All scales employed a 5-point Likert-type format in which 1 denotes strongly disagree and 5 denotes strongly agree.
To test the hypotheses, I used R and employed a two-step process of analyzing latent variable path models (Hancock & Mueller, 2011; Kline, 2015), and diagonally weighted least squares (DWLS) for model estimation. The relationship between guanxi and organizational justice is r= -0.19, p< 0.01, while the relationship between organizational justice with entrepreneurial orientations is r= 0.19, p< 0.01. The confirmatory factor analysis indicated the measurement model has a good fit to the data (χ2 (109) = 214.696, CFI = 0.992, TLI = 0.990, RMSEA = 0.044, SRMR = 0.041). The structural equation modeling analysis demonstrated that the proposed SEM model provided a satisfactory fit to the data: χ2 (95) = 222.059, CFI = 0.992, TLI = 0.990, RMSEA = 0.052, SRMR = 0.044. The mediation hypotheses were further tested by using bootstrapping (Preacher & Hayes, 2008). The results revealed that the indirect effect of guanxi on entrepreneurial orientations through organizational justice was [G→O→E] b = -0.05, p = 0.03, and the 95% bias-corrected CI around this indirect effect was [-0.11, -0.01]. Overall, this study empirically examined the path among guanxi culture, organizational justice, and entrepreneurial orientations.