Entrepreneurs and Social Capital in China

Does social capital operate differently in China? A long and vibrant literature on the concept of guanxi suggests not only that social capital might have a different character in China but also that it might prove more valuable there to employees and entrepreneurs alike. Drawing on unusually high quality data on Chinese executives, Burt and Burzynska (2017) explore the question of whether the same structural configurations of relationships appear associated with success in China as have been found in theWest. Their short answer is yes. As in theWest, the founders and managers of larger companies have relationships characterized by a larger proportion of ‘structural holes’ – where the focal individual represents the only connection between his or her contacts (in other words, a brokering relationship). Closure – having multiple ties in common with another individual – meanwhile appears to foster trust, just as it does elsewhere. One could therefore view the results as strong evidence for the universality of a structural approach to social capital, one based on the patterns of relationships between individuals (e.g., Burt, 1992; Coleman, 1988; Podolny, 1993). But one could also see the glass of their results as half empty – that China really does operate differently. Consider, for example, Figure 3 in Burt and Burzynska (2017). Although the relationships between success and structural holes appear similar, note that the two panels differ in the ranges of their horizontal axes. Managers in China appear far more constrained on average than their Western counterparts (i.e. they have fewer brokering relationships). Within the overlapping range of the data, moreover, the relationship between success and structural holes appears much steeper in China. Social capital, in the form of brokerage, therefore, appears both less common and far more valuable in the East. Interestingly, almost all of the value of brokerage but none of the relationship between closure and trust comes from the older relationships, those named as important to earlier organizational events on the Chinese survey.