Does guanxi help or hinder firm profitability关系帮助公司获利

When does guanxi bolster or damage firm pro fitability?The contingent effects of firm-and market-level characteristicsJulie Juan Li a ,⁎,Shibin Sheng b ,1a Department of Marketing,City University of Hong Kong,83Tat Chee Avenue,Kowloon Tong,Hong Kong SAR bSchool of Business,Adelphi University,Garden City,NY 11530,United Statesa b s t r a c ta r t i c l e i n f o Article history:Received 25January 2010Received in revised form 26July 2010Accepted 20September 2010Available online 22January 2011Keywords:GuanxiManagerial ties UncertaintyTechnological turbulence ChinaThis paper advances that a nuanced approach is necessary to understand the effectiveness of managerial ties (guanxi)in improving firms'financial performance.We take a contingency approach to examine how the effects of managerial ties on performance may be moderated by firm-level factors (i.e.,firm age and entrepreneurial orientation)and market-based forces (i.e.,demand uncertainty and technological turbulence).Using a survey of 289firms in China,we find that managerial ties are more salient with regard to enhancing performance for more entrepreneurial-oriented and younger firms.Managerial ties fail to provide performance bene fits to firms when high demand uncertainty exists or when the level of technological turbulence is high,which suggests a performance limitation of established ties with government of ficials,buyers,suppliers,and competitors.The theoretical and managerial implications of the findings are further discussed.©2011Elsevier Inc.All rights reserved.Few question the claim that economic action is firmly embedded in networks of interpersonal relations (Granovetter,1985;Li,Poppo,&Zhou,2010;Theingi,Purchase,&Pungphol,2008).Close ties among coworkers help smooth coordination processes and facilitate the cooperation necessary for task completion,thus creating bene fits to their organizations (Chen &Peng,2008).Prior literature has demonstrated that managers 'ties with external entities have signi ficant effects on organizational activities (e.g.,Farh,Tsui,Xin,&Cheng,1998;Perks,Kahn,&Zhang,2009;Zhuang,Xi,&Tsang,2010)and may be a source of both competitive advantage and superior performance (e.g.,Davies,Leung,Luk,&Wong,1995;Li &Zhou,2010).Yet though scholars and practitioners alike acknowledge the economic bene fits of social ties,extant research pays less attention to their possible negative consequences,especially on performance (Chen,Chen,&Xin,2004;Gu,Hung,&Tse,2008;Lin &Si,2010).This knowledge gap is especially relevant in emerging economies,that is,“low income,rapid-growth courtiers using economic liberal-ization as their primary engine of growth ”(Hoskisson,Eden,Lau,&Wright,2000:249).Because they lack formal,market-supporting institutions,emerging economies in Latin America and Eastern Europe,as well as China,find the development and use of managerial networks especially important (Chua,Morris,&Ingram,2009;Li,Poppo,&Zhou,2008).For example,during China 's transition from a planned economy to a market economy,firms have relied heavily on network-based mechanisms or g uanxi to survive and gain competitiveadvantages (Guo &Miller,2010;Hoskisson et al.,2000;Peng,2003).But do such ties always bene fit firm performance?In particular,when do these ties bolster or damage firm performance in China?We examine firm-level and market-level situations in which ties may either foster or hinder firm performance.According to social network literature,managerial ties can enable the general population of young start-up firms to differentiate themselves and overcome the liability of newness (Stuart,Hoang,&Hybels,1999).Yet ties may derail older firms,because they promote rigidity even if the firms 'strategic objectives demand greater flexibility (Hite &Hesterly,2001;Hitt,Lee,&Yucel,2002).Furthermore,because Chinese managers have had relatively little experience with a market economy,an important characteristic for growing firms in China is their entrepre-neurial outlook (Peng,2003).We suspect that tie utilization may bene fit firms with a proactive orientation toward market develop-ment,because it facilitates partner selection and access to information (Park &Luo,2001;Yiu,Burton,&Lu,2005).Yet again,empirical studies have yet to explore how age or firms 'proactive orientations may moderate the relationship between their tie utilization and performance.In addition to these firms 'characteristics,we examine whether two key features of more complex forms of market-based economies,namely,demand uncertainty and technology turbulence (Gao,Zhou,&Yim,2007;Jeong,Pae,&Zhou,2006;Peng,2003),may moderate the effect of managerial ties on firms 'financial performance (see Fig.1).A focus on how the external environment constrains the effectiveness of managerial ties is especially interesting as China is transitioning from a planned economy to a market economy —thus,it is an economy that has relatively short experience with market forces.We argue that ifIndustrial Marketing Management 40(2011)561–568⁎Correspoding author.Tel.:+852********.E-mail addresses:julieli@.hk (J.J.Li),sheng@ (S.Sheng).1Tel.:+5168774608.0019-8501/$–see front matter ©2011Elsevier Inc.All rights reserved.doi:10.1016/j.indmarman.2010.12.012Contents lists available at ScienceDirectIndustrial Marketing Managementhigher levels of uncertainty and technological turbulence decrease the effect of ties onfirm performance,ties should be less effective in coordinating more complex types of market exchanges.Given these various research goals,this study aims to provide some empirical evidence and thereby uncover the boundary conditions in which managerial ties either bolster or hinderfirm performance in emerging economies.1.Managerial ties andfirm performanceManagerial ties represent“executives'boundary-spanning activ-ities and their associated interactions with external entities”(Geletkanycz&Hamcrick,1997:654)and function to enhance a firm's absorptive capacity,build shared identities and security,and promote resource sharing,cooperation,and coordinated adaptation (Li et al.,2008;Uzzi,1997).Because they facilitate access to potentially unique opportunities through coordinated action,man-agerial ties play a fundamental role in business and should improve important economic outcomes,such asfirm performance(Batjargal, 2003;Peng&Luo,2000;Uzzi,1996;1997).The Chinese version of managerial ties is guanxi,which literally means connections,relations,or relationships.In China guanxi refers to“networks of informal relationships and exchanges of favors”(Lovett,Simmons,&Kali,1999:231).Traditionally,guanxi depends on factors that promote shared experience between and among individuals,such as kinship,similar origins,or prior collegial relationships(Chen&Chen,2004;Zhuang et al.,2010).These ties are rooted in Confusion ideology,which supports establishing harmony within a hierarchy by prescribing the nature and content of all ties.According to Wang(2007)g uanxi is personal,reciprocal, and utilitarian.The development of a guanxi dyad(two-person guanxi)has three stages:initiating,building,and using guanxi(Chen& Chen,2004).While essentially guanxi is a dyadic interpersonal relationship (Chen&Chen,2004;Yang,1994)the individual-level guanxi can be transformed into organizational-level guanxi and become a valuable and rare organizational resource(Gu et al.,2008;Lin&Si,2010;Tsang, 1998;Zhang&Zhang,2006).Empirically,existing studies have tested the micro-macro link between guanxi and organizational outcomes (e.g.,Gu et al.,2008;Peng&Luo,2000).In a recent study on guanxi, Perks et al.(2009)found that guanxi between Chinese R&D and marketing personnel has a positive influence on R&D—marketing integration and new product development project performance. Consistent with previous studies on micro-macro links,we view managerial ties(guanxi)as an organizational resource to uncover how the micro level ties affect macro levelfirm performance.The importance of guanxi in Chinese communities is embedded in Chinese pared with Westerners,Chinese people place a much stronger emphasis on differentiated relationships,such that people should be treated differentially,according to their relationship status(Gao,Ballantyne,&Knight,2010).Consistent with this claim, Boisot and Child(1996)suggest that the depth and nature of social ties fundamentally distinguish business in China from Western practices.As China undergoes its current modernization,guanxi, which reflects some of the most important traditional attitudes and values toward social and business relationships,continues to play a significant role(Chua et al.,2009;Yang,1994;Zhuang et al.,2010).Furthermore,guanxi can offer an important governance function and help overcome the uncertainties of China's weak market-supporting institutions.In particular,firms may have to rely on a network-based transaction structure,characterized by personal trust and informal agreements among managers and officials(Park&Luo, 2001),because the effective enforcement of contracts,such as property right agreements,is generally lacking(Li&Zhou,2010). Some observers therefore note the pervasiveness of managerial ties in Chinese societies;they are commonly practiced in every type of business,including both domestic enterprises and foreign ventures (Chua et al.,2009).Although most researchers and practitioners concur that ties and networks matter,social network literature suggests that their value in a given situation is contingent upon other factors,such as organiza-tional traits and network structures(Ahuja,2000;Guo&Miller,2010; Li et al.,2008).While we know that managers use guanxi to conduct business and that there are benefits and drawbacks to the use of this type of coordination,we have relatively little normative understand-ing or empirical analysis of the conditions that are likely to undermine or enhance its effective use.Recently Gu et al.(2008)proposed and empirically confirmed the direct effect of guanxi on brand market performance and its indirect effects mediated through channel capacity and responsive capacity using cross-sectional data from 282firms in China's consumer product industries.They further found that competitive intensity weakens the effect of guanxi on brand sales growth.While their study sheds valuable insight into the‘dark side’of guanxi,our understanding of its contingent value is still limited.In this study,we take a contingent approach and examine whether the effects of managerial ties on performance may be contingent on specific environmental factors and organizational characteristics.We argue that the external environment is likely to alter the effectiveness of using ties to conduct business,extending the well founded logic that market forces constrain the effectiveness of managerial strategies(Gu et al.,2008;Porter,1985;Zhou,Yim,& Tse,2005).We focus on two characteristics of the external environment,demand uncertainty and technological turbulence, because during China's transition to a market-based economy the rate of technology change has been dramatic and because volatile demand and supply in some of the product markets results in highly uncertain and unpredictable actions of suppliers,customers, and regulators(Gao et al.,2007;Luo,2003).We also argue that firms differ in their propensity to gain value from ties based on two organizational characteristics:firm age and entrepreneurial orien-tation.We empirically test the moderating role of our lagged objective performance data in the manufacturing sector.1.1.The moderating role of organizational factorsWe propose that asfirms grow older,their use of managerial ties may be less effective for two reasons.First,youngfirms often lack knowledge about business environments and working relationships among buyers and suppliers.This liability of newness creates great risk for youngfirms,and to compensate for it youngfirms need to develop and access ties with managers at otherfirms and government officials.Social ties can benefit newfirms by helping them secure access tofinancial capital,other players in the market that have social capital,and resources that are critical to the survival of young start-up firms(e.g.,Guo&Miller,2010;Stuart et al.,1999).Ties with the business community indicate that the young start-upfirm has earned a positive reputation,which is based on otherfirms'experiences with and evaluation of the youngfirm.In essence,these ties function as anFig.1.The conceptual framework.562J.J.Li,S.Sheng/Industrial Marketing Management40(2011)561–568inter-organizational certification(Stuart et al.,1999;Xin&Pearce, 1996).Moreover,ties with political institutions facilitate the young firm's legitimacy and enhance its access to resources(Baum&Oliver, 1991).Thus,tie utilization enhances legitimacy,eases access to resources,and ultimately leads to betterfirm performance.Second,olderfirms may suffer from a form of over-embeddedness if they maintain ties and connections that isolate or restrict them from alternative sources of information or resources(Burt,1992;Guo& Miller,2010;Uzzi,1997).As youngfirms transition into growthfirms, they need to supplement their use of ties with more arm's-length relationships,because their existing ties tend to be less able to provide the range of resources required to augment or enhance their market capabilities(Adler&Kwon,2002;Hite&Hesterly,2001).However, moving out of committed relationships is very difficult because strong attachments may prevent managers from exploring alternative opportunities(Hitt et al.,2002).This immobility therefore may come to characterizefirm-level behavior(Blau,1964).Based on a multi-case study,Guo and Miller(2010)pointed out that in laterfirm growth stage network rigidity and over-embeddedness can hinder managers'ability to identify new opportunities.Thus we hypothesize H1.The effect of managerial tie utilization onfirm performance is stronger for youngerfirms than for olderfirms.We also consider the effects forfirms with varying orientations. Entrepreneurial-orientedfirms are highly tolerant of risk,future oriented,and constantly seeking change,because their managers actively pursue new market opportunities while also aiming to renew their existing areas of operation(Li,Huang,&Tsai,2009; Matsuno,Mentzer,&Ozsomer,2002).In contrast,managers offirms that lack such an orientation are more inclined to focus on their daily operational issues,and this inhibits their ability to assess the long-term adequacy of their products and services(Miller&Friesen, 1982).Thus entrepreneurial-orientedfirms may benefit more from tie utilization.Because managers proactively assess ideas that could enhance theirfirms'market positions,they consider information and intelligence gained from their business connections critical.The general lack of codified information in China makes tie utilization an important source of not just information(Boisot&Child,1996;Chua et al.,2009)but of high quality information,in that the details come from trusted partners(Keister,2001).In addition,when managers seek change or experience greater dependence on external entities, they might deal with potential threats by accessing and working with or through their existing connections(Li et al.,2009;Pfeffer& Salancik,1978).Ties with government officials can also secure or provide opportunities for entrepreneurialfirms because government officials in China retain considerable power to approve certain projects, allocate scarce resources,and erect or remove entry barriers(Davies& Walters,2004;Li et al.,2008).In addition,because ties with political officials offer the promise of accommodation of personal requests, entrepreneurially orientedfirms may seek to offset the risks associated with change by requesting favors or protection from the government(Li&Zhou,2010;Luo,2003).Consistent with this logic, Park and Luo(2001)find that a proactivefirm orientation results in greater utilization of both business and political ties.In summary,by employing their ties proactively and strategically,managers offirms with an entrepreneurial orientation may extract more value from their use of ties than managers offirms that lack such an orientation. Therefore,we predict thatH2.The effect of managerial tie utilization onfirm performance is stronger forfirms with higher than with lower levels of entrepre-neurial orientation.1.2.The moderating role of market forcesDemand uncertainty and technological turbulence are two pivotal market forces that shape marketing activities,because they represent the influence of customers and technology on the market(Jaworski& Kholi,1993;Jeong et al.,2006;Porter,1985;Spanos&Lioukas,2001). During China's transition to a market economy,consumers have acquired a variety of tastes that create diverse market segments, marked by fast-changing preferences(Gao et al.,2007;Zhou et al., 2005).Furthermore,the rate of technological change is accelerating in the Chinese market.Therefore,we examine whether the performance effect of managerial ties is stronger or weaker across the different levels of these two environmental factors.Demand uncertainty refers to the unpredictability of customer preferences and expectations(Gatignon&Xuereb,1997;Jaworski& Kohli,1993).In a stable market where customer preferences remain basically unchanged,firms can identify customer needs quite easily, and their focus should be on efficiency,to maximize their output at the lowest possible cost(Day&Wensley,1988;Jeong et al.,2006). Close ties with suppliers,buyers,and competitors facilitate such efficiency in operations becausefirms can coordinate their planning and integrate their production capabilities(Peng&Luo,2000;Perks et al.,2009).Ties with government officials also enable thefirm to obtain scarce resources and encourage legislation to forestall new competitive entrants.Thus,when demand is relatively stable, managerial ties work as a vital success determinant.However,if market demand is fast changing and highly unstable, identifying what the market really wants becomes increasingly difficult(Gatingon&Xuereb,1997;Zhou et al.,2005).In such conditions,managerial ties are not necessarily useful because they cannot provide information that will help managers predict customer preferences and thus anticipate and plan for the impact of changes. Being locked into ties as a way of doing business may preclude afirm from seeking new and different methods through which it could gain necessary information and/or from experimenting to understand customer preferences better(Ahuja,2000).In addition,as market demand becomes increasingly heterogeneous and dynamic,compa-nies must address multiple sources of market demand and coordinate numerous transactions(Gatignon&Xuereb,1997;Jaworski&Kohli, 1993);consequently,the costs of a relationship-based,personalized transaction structure may outweigh its benefits as the scope of transactions increases(Peng,2003).Taken together,these arguments predict a declining performance effect of ties in times of uncertainty. H3.The relationship between managerial networks andfirm perfor-mance is negatively moderated by demand uncertainty.Technological turbulence refers to the rate of technological change (Smith,Sinha,Lancioni,&Forman,1999).When changes in pertinent technology are slow,ties serve as an effective informal mechanism that facilitates technology sharing and transfer because they provide an important source of knowledge(Gao et al.,2007;Zhou et al.,2005). When ties with exchange partners increase in strength,common idiosyncratic language and routines emerge(Li et al.,2010);and such specialized forms of communication embedded in operating routines improve the efficiency of knowledge exchange.Moreover,firms gain institutional advantages from their ties with government officials(Li &Zhou,2010),which can smooth the process of knowledge acquisition from external sources.Therefore,ties helpfirms access and acquire important technology information and achieve superior performance when the level of technological change is low.However,in environments with high technology turbulence,the effectiveness of these ties declines.As the pace of change accelerates, product life cycles become shorter,andfirms need to respond to the change more rapidly(Jeong et al.,2006).Firms may not be able to benefit from their ties in the form of knowledge acquisition because the exchange563J.J.Li,S.Sheng/Industrial Marketing Management40(2011)561–568partners'knowledge base becomes outdated quickly,and the value of prior technology deteriorates(Gao et al.,2007;Smith et al.,1999). Partners may become trapped with obsolete technology(Afuah,2000;Gu et al.,2008),which makes them vulnerable to sudden shifts in technology. In addition,heavy reliance on ties to recognize technology changes hampers the ability to innovate.Strong network ties may lead to knowledge redundancy within the network and collective blindness to external changes(Adler&Kwon,2002;Li et al.,2008),in which casefirms may not be able to deal with fast technological changes effectively. Therefore,H4.The relationship between managerial networks andfirm perfor-mance is negatively moderated by technological turbulence.2.Method2.1.Sampling and data collectionThe sample frame for our data collection consists of a list of manufacturingfirms with the four-digit standard industrial classifi-cation codes2011–3899,located in Beijing,Guangzhou,and Shanghai. We randomly selected1000firms from the directory“22,000 Businesses in the P.R.China”published by China International Business Investigation Co.Ltd.Thesefirms represent a wide range of industries,such as electronics,computer equipment,chemicals, transportation equipment,apparel,furniture,and plastics.In an emerging economy,collaboration with local researchers is a key means to obtain reliable and valid information(Zhou et al.,2005); therefore,we commissioned a national market research company to conduct the survey.To increase the response rate and obtain valid information,we used face-to-face onsite interviews.Thefirms were contacted by telephone to solicit their cooperation and verify their location,as well as identify key informants for the study.In eachfirm,a senior manager(e.g.,CEO,vice president)served as the key informant,because ourfield interviews revealed that these managers were familiar with theirfirm's external connections.We made phone calls to set appointments with the mangers who agreed to participate in our study before we went to their offices and conducted the face-to-face interviews.We took the following measures to prevent potential key informant bias.We made it clear before the interview that there were no right or wrong answers to encourage respondents to provide reliable information.We assured all respondents in advance of the confidentiality of their responses, and we explained the academic purpose of the project to them in an official university letter.We promised each respondent a summary report of the survey.Of the482firms that agreed to participate,we successfully collected complete responses from289in2008,resulting in a response rate28.9%(289of1000firms).Thesefirms are diversified ownership types:state-ownedfirms(29),private-ownedfirms(41), public listedfirms(4),stockfirms(35),joint ventures(87),and wholly owned subsidiaries(93).On average the managers had spent 5.57years with theirfirms and had worked in the industry for 9.01years.After thefieldwork was completed,approximately20%of the interviews conducted by each interviewer were cross-checked through telephone contacts with the respondents.A comparison between the respondents and non-respondingfirms revealed no significant differences in terms of keyfirm characteristics(e.g., ownership,age,industry type).Using multivariate analysis of variance (MANOVA),we found no significant differences(Wilks'Λ=.971; F=.427;p=.958),which suggests non-response bias is not a concern in our study.2.2.MeasuresThe survey measures were adapted from established prior studies. All the measures were professionally translated using back translation to ensure conceptual equivalence(Hoskisson et al.,2000).The questionnaire items were also pretested with a sample of30senior managers whose responses prompted a few changes to some questionnaire items to enhance clarity.All the items,unless specifically indicated,were measured with a seven-point Likert scale(1=strongly disagree;7=strongly agree).The measurement items and their validity assessment appear in the Appendix.2.2.1.Managerial tiesThe measures of managerial ties come from Peng and Luo(2000). We used a three-item scale to measure top managers'ties with managers at otherfirms(i.e.,buyers,suppliers,and competitors).The three-item scale of managerial ties with government officials asked for information about top managers'connections with political leaders at various levels of government,officials in industrial bureaus,and officials in regulatory and supporting organizations.2.2.2.ModeratorsWe measured demand uncertainty with a four-item scale adapted from Gatingon and Xuereb(1997).Technological turbulence used a three-item scale adapted from Jaworski and Kohli(1993)to reflect the change of technology in an industry.For entrepreneurial orientation, we employed four items adapted from Matsuno et al.(2002),which reflectfirms'proactiveness toward change and willingness to take risk.Finally,firm age was measured by the number of years thefirms had been in operation.2.2.3.Firm performanceTo overcome the potential for common method bias,we obtained information aboutfirm performance from archival data provided in the business directory in2008.Thefirm performance assessments included profit,which is equal to income minus cost of sales, operating and other expenses,and taxes,such that we capture both firm-and industry-related variations.2.2.4.ControlsConsistent with previous studies,we includedfirm size,firm ownership,and industry type as control variables(Luo,2003;Park& Luo,2001;Xin&Pearce,1996).To measurefirm size,we used the logarithm of the number of employees.A dummy variable provides the measure offirm ownership(1=foreignfirms;0=domesticfirms). We also measured industry type as a dummy variable,where1=light industry(including apparel,furniture,plastics etc.),and0=other-wise(e.g.,chemicals and fabricated metals)(see Luo,2003).2.3.Measure assessmentsWe refined the measures and assessed their construct validity before conducting the hypothesis testing.First,we ran exploratory factor analyses for each set of latent constructs(i.e.,managerial ties, entrepreneurial orientation,and market forces).They resulted in factor solutions as theoretically expected.Second,a confirmatory factor analysis indicated the convergent and discriminant validity of the measures,using structural equation modeling.The measurement modelfit the data satisfactorily(χ2(109)=257.1,p b.01;goodness-of-fit index[GFI]=.91,confirmatoryfit index[CFI]=.93,incremental fit index[IFI]=.93;root mean squared error of approximation [RMSEA]=.07),and all factor loadings were highly significant (p b.001),in support of the unidimensionality of the measures.The composite reliabilities of all multiple-item measures(ranging from .70to.88)exceeded the usual.70benchmark,which indicates that564J.J.Li,S.Sheng/Industrial Marketing Management40(2011)561–568these measures demonstrate adequate convergent validity and reliability.We assessed the discriminant validity of all five latent constructs using chi-square difference tests.For all the constructs in pairs (10tests altogether),we tested whether the restricted model (correlation fixed at 1)performs signi ficantly worse than the freely estimated model (correlation estimated freely).All the chi-square differences are highly signi ficant,in support of discriminant validity.Taken together,these results reveal that the measures in this study possess adequate reliability and validity (Anderson &Gerbing,1988).In Table 1,we present the basic descriptive statistics and correlations of the measures.3.Analyses and resultsA hierarchical moderated regression is appropriate to test the hypotheses because our model contains interaction effects.To mitigate the potential threat of multicollinearity,we mean-centered all independent variables that constitute interaction terms and created the interaction terms by multiplying the relevant mean-centered variables (Jaccard,Turrisi,&Wan,1990).The average variance in flation factor,a multicollinearity indicator,is 1.03,andthe largest value is 1.36;therefore,multicollinearity is unlikely to be a problem for our analysis.To assess the explanatory power of each set of variables,we included the variables into the model block by block.In Table 2,Model 1is the baseline model,with only the control variables and six focal constructs.Model 2adds the interaction terms for ties and firm-level and market-level factors.Consistent with H1,firm age has a negative moderating effect on the relationship between managerial ties and performance (β=−.136,p b .05).Furthermore,as we show in Table 2,managerial ties have a stronger effect on performance for more entrepreneurial firms (β=.215,p b .001),in support of H2.According to the signi ficant and negative interaction between ties and demand uncertainty in Model 2,the effect of managerial ties on performance declines when demand uncertainty is high (β=−.149,p b .05),in support of H3.Finally,in H4,we posit that managerial ties are less effective as technological turbulence increases.The results con firm that the interaction term between technological turbulence and managerial ties is negative and signi ficant (β=−.082,p b .10),such that managerial ties are less important for improving performance at high levels of technological turbulence.We also find that the correlation between firm age and performance is .291(p b .01).This result suggests older firms seem to enjoy performance advantages and firms suffer from the liability of newness.Thus guanxi is of particular importance to younger firms as guanxi ties greatly help them cope with the challenge of resource acquisition and opportunity evaluation (Guo &Miller,2010).With regard to the control variables,the results show that industry type and ownership structure have no signi ficant bearing on pro fit.However,consistent with previous studies (e.g.,Gu et al.,2008),firm size signi ficantly affects firm performance (β=.258,p b .001).4.DiscussionManagerial ties are commonly acknowledged as critical to business success,especially in emerging economies.We advance a less studied proposition,that is,that managerial ties may not be universally desirable (Uzzi,1997).Overall,our results show a more nuanced approach is necessary to understand the role of managerial ties for improving firm performance.Ties bolster performance in some circumstances but hinder it in others.This reasoning and the associated findings are more re fined than those employed in previous research,which generally advances and finds that ties simply enable firms to gain competitive advantage and superior performance in China (e.g.,Park &Luo,2001;Peng &Luo,2000).4.1.The contingent effects of firm characteristicsOur results instead suggest that managerial ties are critical for generating performance gains,speci fically for young and more entrepreneurial-oriented firms.As the years of operation increase,Table 1Means,standard deviations,and correlations.MeanSD 1234567891.Managerial ties 5.28.8812.Firm age11.7015.02−.05713.Entrepreneurial orientation 4.92.93−.136⁎−.08814.Demand uncertainty 4.23 1.35.075.084−.158⁎⁎15.Technology turbulence 5.05 1.11.297⁎⁎−.004.059.207⁎⁎16.Firm size5.60 1.26.062.379⁎⁎.051.074.07017.Firm ownership 0.64.47−.068−.083.012.101†.036−.06918.Industry type0.57.50.023.166⁎⁎−.066.077.085.116⁎.03719.Firm performance (pro fit)608930478.092†.291⁎⁎.025.014.041.360⁎⁎−.015.096†1Notes:Sample size =289.Pro fit is measured in thousands of RMB.†p b .10.⁎p b .05.⁎⁎p b .01.Table 2Standardized estimates:multiple moderated regressions.VariablesModel 1⁎⁎Model 2Control variables Firm size .272⁎⁎⁎.258⁎⁎⁎Ownership .028.007Industry type .036.042Direct effectsManagerial ties (MT).010⁎.117⁎Firm age (FA).195⁎⁎⁎.143⁎Entrepreneurship orientation (EO).042.048Demand uncertainty (DU)-.028-.039Technological turbulence (TT)-.007-.015Interactions MT ×FA -.136⁎MT ×EO .215⁎⁎⁎MT ×DU -.149⁎MT ×TT -.082†R 2.165.247ΔR 2.073Model F 6.9277.530p b .001.001df 8,28012,276⁎⁎⁎p b .001.⁎⁎p b .01.⁎p b .05.†p b .10.565J.J.Li,S.Sheng /Industrial Marketing Management 40(2011)561–568。