Trust and Chinese Business Behaviour

Abstract

This paper is about trust and economic exchange. It cuts into the current debate about trust, economic organization, and inter-firm cooperation on two counts. First, in reviewing the growing literature on trust. I shall address specifically the issues brought up by Williamson in his critique of the concept of ‘calculative trust’. I shall argue that the rational-instrumentalist conception of trust will, at best, give us a static and functionalist analysis of the effects of trust in economic transaction. To get out of the current impasse, we must look at trust as an element of the repertoire of economic action. Second, drawing upon empirical research on Chinese business behaviour. I shall show that the crux of the matter in establishing guanxi networks is really about drawing the boundary of personal network and framing an economic-relations in the moral tones of trust. But once the social relation is so defined, the framework of guanxi and trust are consequential in determining the proper behaviour for conducting business. Through an examination of the social processes of classifying business relations in terms of network and trust, it is shown how we can study trust and networking in economic exchange without falling back into the impasse of a functionalist analysis of trust in economic transaction.