When companies from the industrialized West conduct business in the dynamic, developing Chinese economy, they often experience a clash in business cultures that may appear to force them to choose between the different styles of doing business. But a forthcoming paper in the Journal of International Management finds such conflicts needn't exist. Rather, there is a middle ground for overseas businesses to use both styles, because each set of practices serves a discrete function.“Mitigating Liabilities of Foreignness: Defensive vs. Offensive Approaches” contrasts approaches to doing business in developing nations, particularly in China. The paper categorizes strategies for overcoming the uncertainties of operating globally as either “offensive,” meaning they help to localize the company to the foreign environment, or “defensive,” meaning they protect corporate interests and reduce uncertainty and complexity.The prototypical offensive strategy is networking, a style of doing business that resonates well in Asian cultures. Indeed, China-watchers often stress personal networking, or guanxi, as the most important factor to business success in China. Guanxi is a bit different from the cocktail mixers thought of as “networking” in the West; it is more personal and often entails an escalating reciprocity of favors and acts.
