Can Guanxi Influence Firms’ Dynamic Capabilities? Evidence from Triadic Relationships in East Asia's Automobile Industry

Abstract

This study advances the discourse on strategic management by integrating resource-based and capability-based frameworks with an informal social network perspective, specifically examining the role of guanxi in shaping dynamic capabilities within firms in East Asia’s Automobile Industry. This study explores two key dimensions: (1) the impact of guanxi on the development of dynamic capabilities and (2) the interaction between guanxi and formal institutional structures. This research employs a longitudinal case study approach to analyze the experiences of an automobile manufacturer in Taiwan during its business collaborations with Japanese and mainland Chinese partners. This study elucidates how specific attributes of guanxi-sentimentality, reciprocity, functionality, and openness-enhance the firm’s ability to develop dynamic capabilities and effectively navigate the volatile market conditions prevalent in East Asia. This research underscores the strategic importance of guanxi in corporate management and offers critical insights into leveraging relational networks to achieve a sustainable competitive advantage in East Asian markets. Furthermore, this study provides implications for multinational automobile manufacturers aiming to develop new capabilities to address operational challenges in this region.