Guanxi Quality And New Venture Performance

In transition economies，the necessary formal system for the healthygrowth of new enterprises is not perfect. New ventures face tremendouspressure to survive, mainly in the weak ability to obtain resources, lackof opportunity identification and use,the low legality. As one of theimportant way to insolve these,guanxi is more and more aroused theattention of entrepreneurs,a growing number of theoretical circles. Alarge number of studies have shown that the guanxi significantly improvethe performance of new ventures through increasing resource acquisitioncapability of the new ventures, opportunity identification andutilization of capacity and legitimacy.In transition economies，the entrepreneurs must build their guanxiboth with other subjects of the market and government departments. thefunction of the market mechanisms is increasingly powerful, but thegovernment still has the power to allocate scarce resources, which formsa "dual" situation of strong government and strong market, thus newventures need to cultivate relationships both with the government and themarket partners.At the same time, Chinese society is a network society based on ethics,relationship-oriented and familiarity-intimacy-trustfulness, which ischaracterized by mature, intimate and trust, and all thosecharacteristics are embedded in renqing, face, reciprocity,responsibility and obligations. Thus, in many cases, the determinant ofnew ventures’ performance is not density and size of the network, butis the quality of Guanxi.One the basis of system combing the previous research,this paperargues the influence of the quality of government’ guanxi and marketpartners’ guanxi to the performance of the new ventures’ form theperspectives of transition economies. The quality of market partners’ guanxi has a greater influence to the performance of the new ventures’than the quality of government’ guanxi. The size and age of the newventures has a positive regulatory role on the relationships the qualityof the new ventures’ guanxi and the performance of the new ventures’.we collected the relevant data of the new ventures’ in some majorcities such as Changchun, Beijing, Shanghai and so on,we empirical proveour theoretical model. Our theoretical model will supplement and perfectthe theory of entrepreneurship research and give guidance to theentrepreneurs of China to build and nurture a reasonable government tiesand market ties in order to improve business performance. Our theoreticalmodel will also give some reasonable proposal to the policy makers in ordorto improve the policies and regulations, inordor to the smoothlydevelopment of entrepreneurial activities.