Abstract

The received wisdom in the Chinese world is that in order for a firm to succeed in business, it has to be plugged in guanxi– a social network of connections that characterize the Chinese way of conducting business. Nevertheless, scant attention is given to the empirical investigation of the influence of dealers’ referent power and legitimate power on SME manufacturers’ individual relationship outcomes in the guanxiepitomized distribution network. The principal objective of this study is to fill this void by examining the influence of dealers’ referent power and legitimate power on SME manufacturers’ relationship satisfaction, and the mediating influence of their xinyong,ganqing and hezuo in this relationship. The field study is conducted in Taiwan. Cooperating with the Small and Medium Enterprise Association of Taiwan (SMEAT), 1000 questionnaires are distributed to the association’s members. A sample data of 400 SME manufacturers is collected for final data analysis. The results of this study show that, in the guanxi typified distribution network, dealers’ referent power and legitimate power positively influence SME manufacturers’ xinyong and ganqing, which in turn affect their hezuo and eventually their relationship satisfaction in a significant way.Managerial implications of the findings are discussed and limitations and future research directions are indicated.

Key words: Referent power, legitimate power, guanxi, xinyong, Ganqing, hezuo, relationship satisfaction, SME.