Licong Liu is a seasoned executive possessing abundant expertise in global business operations, adeptly navigating cultural differences and nurturing collaborations between the Eastern and Western worlds. The central area of proficiency revolves around the high-tech industry, spanning semiconductors, electronics, smart manufacturing systems, information technology, and beyond.
He will defend his Executive Doctorate in Business Administration (EDBA) in September 2023, on the theme “” The dimensions of Interfirm trust between Chinese customers and Western suppliers in the Chinese Business to Business market: An Empirical Analysis”” under the supervision of Prof Christophe Fournier at Université de Montpellier.
Thesis Direction
Pr Christophe Fournier
Thesis Title
The dimensions of Interfirm trust between Chinese customers and Western suppliers in the Chinese Business-to-Business market: An Empirical Analysis
Abstract
Over the past decade, the deteriorating business environment between Chinese customers and Western suppliers in the Chinese Business-to-Business (B2B) market, resulting from international politics, social chaos, and various other factors, has led to a significant decline in Interfirm trust between the two parties. The lack of extensive research in this field has led to a scarcity of theoretical guidance for business practitioners in understanding and building Interfirm trust. Therefore, examining Interfirm trust within this evolving business environment is imperative. This research, conducted in the aforementioned business context, seeks to bridge this gap through an empirical study.
Summary of Findings
This research provides business practitioners with valuable insights by presenting a comprehensive exploration of the dimensions and the constituent components of Interfirm trust between Chinese customers and Western suppliers in the Chinese B2B market. By doing so, it enables them to understand the complexities of Interfirm trust from both a broad and elevated perspectives. The key findings are elaborated as follows.
Among the five dimensions of Interfirm trust studied in this paper, the results revealed that four of them, ranked by weight as National level trust, Organizational level trust, Personal trust in business, and Personal Guanxi (personal relationship), are positively related to Interfirm trust. The fifth dimension, Social demographic variables, including region, gender, job function, years of working experience, administration level, and company type, have been proven to be insignificant to Interfirm trust.
Among the six components of trustworthiness in business context—competence, benevolence, integrity, reliability, transparency, and win-win—the research identified that benevolence is positively related to National level trust; Three components, namely integrity, reliability, and win-win, are not statistically significant to National level trust but have been retained in the model due to their certain degree of influence. Benevolence carries the highest weight for National level trust. Three components, namely competence, integrity, and win-win are proven to be positively related to Organizational level trust with the greatest weigh assigned to win-win. And four components, namely competence, benevolence, integrity, and win-win are testified to be positively related to Personal trust in business, meanwhile transparency has been proven to be negatively related. Win-win is assigned the highest weight for Personal trust in business.
Among the four components of Personal Guanxi in business context—Ganqing (affection), Renqing (reciprocity), Mianzi (face), and Personal trust outside business—three components, namely Ganqing, Mianzi, and Personal trust outside business, are demonstrated to be positively associated with Personal Guanxi. Renqing has been proven to be insignificant to Personal Guanxi. Ganqing plays the most important role in Personal Gaunxi.
Recommendations
Based on the findings, the researcher offers the following recommendations to business practitioners on how the knowledge generated by the research can be applied in a real-world context.
About the dimensions of Interfirm trust
The recommendation is that Interfirm trust should be developed across these four dimensions identified by this research for Chinese customers and Western suppliers in the Chinese B2B market: National level trust, Organizational level trust, Personal trust in business, and Personal Guanxi.
The insignificance of Social demographic variables indicates that Interfirm trust operates at a high-level and encapsulates a long-term concept. It remains uninfluenced by individual-level factors or transient perceptions, such as Social demographic variables. However, this is not to suggest that Social demographic factors are unimportant for business. They might exert some influence on daily business operations or other aspects, despite their insignificant impact on Interfirm trust.
About National level trust
The greatest significance of National level trust among the four dimensions of Interfirm trust delivers a clear message to business practitioners: National level trust has become a primary determinant of Interfirm trust. It reflects the political climate of the Chinese B2B market in the current business landscape. As National level trust is not established by the collaborating companies, business practitioners need to contemplate how to leverage positive National level trust to construct positive Interfirm trust and, conversely, how to mitigate or avoid the adverse impact on Interfirm trust if there is negative National level trust.
The model of the components of National level trust includes one significant component, namely benevolence, and three insignificant components, namely reliability, win-win, and integrity. This outcome resonates with the multifaceted nature of National level trust. The recommendation here is that while business practitioners might use benevolence as a quick and streamlined method for assessing National level trust, they must understand that National level trust is shaped not by a single factor, but by a combination of various elements.
About Organizational level trust
Organizational level trust ranks as the second most crucial dimension of Interfirm trust, falling just slightly behind National level trust. This suggests that despite the pronounced influence at the country level, Organizational level trust remains a core dimension. As Organizational level trust is established by the collaborating companies themselves, business practitioners should prioritize enhancing their own organizations’ trustworthiness to foster Interfirm trust.
The highest weight of win-win among the six components for Organizational level trust recommends business practitioners to centre around win-win outcomes for building Organizational level trust. Another two significant factors, competence and integrity, are additional factors that complement win-win for Organizational level trust building.
About Personal trust in business
This individual-level dimension still influences Interfirm trust, albeit in a complementary role. The dimension is exhibited by each boundary individual, yet it must be cultivated by both individuals and companies. Business boundary personnel should work on building and enhancing their Personal trust in business. Simultaneously, companies should also invest and implement a system to cultivate and monitor boundary personnel’s status of Personal trust in business. However, the lesser weight of the dimension suggests that it should not be disproportionately emphasized in the process of building Interfirm trust.
Four components—competence, benevolence, integrity, and win-win—are positively related to Personal trust in business. One notable point is transparency has negative impact on Personal trust in business. It reminds business practitioners to be careful handling transparency and confidentiality. Maintaining appropriate transparency within business rules and ensuring legal compliance should be sufficient. Excessive transparency will cause a negative impact on Personal trust in business. Similar to Organizational level trust, win-win is the most important factor in building Personal trust in business. It recommends business practitioners to centre around win-win for building Personal trust in business. The multiple associated components suggest that the requirements for boundary personnel on Personal trust in business are comprehensive.
About Personal Guanxi
The individual-level dimension continues to impact Interfirm trust, although it plays a supplemental role. This aspect is demonstrated by each boundary individual, but it necessitates cultivation from both the individual and the company. Business boundary personnel should focus on establishing and strengthening their Personal Guanxi with their counterparts. At the same time, companies ought to institute a system that nurtures and tracks the status of boundary personnel’s Personal Guanxi with their counterparts. However, given the lower significance of this dimension, it should not be unduly prioritized in the process of cultivating Interfirm trust.
Three components—Ganqing, Mianzi, and Personal trust outside business—were found to be positively related to Personal Guanxi. Ganqing plays the most important role in building Personal Guanxi in Chinese B2B context. This induces a recommendation that business practitioners should contemplate strategies for cultivating Ganqing as a means to enhance Personal Guanxi development. Mianzi and Personal trust outside of business should also be given attention, as they are also significant to Personal Guanxi. Additionally, Renqing was found to be an insignificant variable in Personal Guanxi. This provides an important implication to business practitioners that Renqing is the exchange of favours but cannot be counted upon in building Personal Guanxi.
Implementation Considerations
Interfirm trust constitutes a long-term developmental process. Companies need to invest in the development of Interfirm trust across the four dimensions. They also need a mechanism to monitor the construction process of Interfirm trust. Sometimes, companies may need to forego short-term benefits in order to cultivate Interfirm trust, which can yield long-term benefits.
Boundary personnel need to invest time and effort to cultivate Personal trust in business and Personal Guanxi with counterparts following the company’s Interfirm trust building strategies. These tasks are not simple. They require patience, enthusiasm, tolerance, adaptivity, and more. Frequently, they necessitate boundary personnel sacrificing personal or family time.