Why are social network transactions important? : evidence based on the concentration of key suppliers and customers in China
Xiang Kong
Based on a new institutional economy framework, this study examines the formation and economic consequences of social networks (guanxi) from the perspective of key suppliers and customers in China. Results show that commercial activities which depend on networks are determined by the institutional environment. For example, companies that have lower accumulated social capital (less trust among people) and are subject to more government invention depend more on social network transactions than on the market. In addition, this study shows that network transactions can provide benefits to firms, especially in weak institutional environments. Networks can reduce transaction costs by reducing information asymmetry, i.e., increased network dependence is associated with lower credit costs and lower advertising and sales costs. Networks can also reduce the effect of industry shocks, especially negative shocks, by creating a bonding mechanism. This study contributes to our understanding of social networks in emerging markets by providing evidence on network transactions with key suppliers and customers and their influence on firms’ accounting behavior.
Year of publication: |
September 2011
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Authors: | Kong, Xiang |
Published in: |
China journal of accounting research : CJAR. - Guang dong sheng guang zhou shi : [Verlag nicht ermittelbar], ISSN 2214-1421, ZDB-ID 2548343-2. - Vol. 4.2011, 3, p. 121-133
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Subject: | Social network | Social capital | Transaction costs | Industry shocks | Soziales Netzwerk | Sozialkapital | China | Transaktionskosten | Lieferantenmanagement | Supplier relationship management | Social Web | Social web |
Saved in:
freely available
Type of publication: | Article |
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Type of publication (narrower categories): | Aufsatz in Zeitschrift ; Article in journal |
Language: | English |
Other identifiers: | 10.1016/j.cjar.2011.06.003 [DOI] hdl:10419/187554 [Handle] |
Classification: | L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration ; M21 - Business Economics ; M41 - Accounting |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10011823735