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Guanxi and Wasta: A Comparison ARTICLE in THUNDERBIRD INTERNATIONAL BUSINESS REVIEW · JANUARY 2006 DOI: 10.1002/tie.20090 · Source: OAI

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Guanxi and Wasta: A Comparison Kate Hutchings

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Executive Summary China has a business culture based on strong family connections secured in guanxi networks, while the Arab World’s is based on strong family connections secured in wasta networks. This article compares guanxi, wasta, and the role of trust, family, and favors in underpinning these traditional modes of interpersonal connections and networks and considers the continued relevance of these practices as these regions of the world internationalize and modernize. The article provides insights for Western managers in their subsidiary operations in China and the Arab World. © 2006 Wiley Periodicals, Inc.

INTRODUCTION Internationalization has greatly altered the international economic positioning of many developing nations in heralding challenges for cross-cultural management in subsidiary operations. Two regions of the world that present challenges to international businesses are China and the Arab World, yet along with this, opportunities have been presented to increase understanding of their cultures and business practices. In China and throughout the Arab World, social networks continue to pervade business activity despite the advent of industrialization, internationalization, and modernization. While considerable attention has been devoted to analyzing China’s guanxi, the Arab World’s wasta has not been adequately researched, nor has there been any substantive literature examining

Kate Hutchings (Ph.D., UQ) is a senior lecturer in the School of Management, QUT, Australia. She was previously employed at the University of Queensland. She has taught in China and Malaysia as well as having held visiting positions in the US, Denmark, and France. She is a research specialist in International HRM and Intercultural Management and she teaches in the field of HRM. She has co-authored or co-edited three books and, amongst others, her research has appeared in Asia Pacific Journal of Management, Human Resource Management Journal, International Journal of Human Resource Management, Journal of Management Studies, and Thunderbird International Business Review. She is currently editing a book on Intercultural Knowledge Management to be published in 2006 by Edward Elgar and her current research interests include expatriate management, HRM in China, and intercultural knowledge sharing. ([email protected]) David Weir is a professor of intercultural management at Ceram Sophia Antipolis, France, and a visiting professor in management development at Lancaster University, England. Much of his extensive research and consulting activity is based in the Middle East ([email protected]). Thunderbird International Business Review, Vol. 48(1) 141–156 • January–February 2006 Published online in Wiley InterScience (www.interscience.wiley.com). © 2006 Wiley Periodicals, Inc. • DOI: 10.1002/tie.20090

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China has become the largest, fastestgrowing, and most heavily engaged in international investment of all the transition economies…

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the similarities and differences between interpersonal connections in the two regions. We highlight how guanxi and wasta work in practice, converge and diverge, and how they have been affected by modernization. We suggest that international managers need to understand these social networks to facilitate the effectiveness of their subsidiary operations in China and the Arab World, and to recognize why these practices continue. China is of particular strategic importance to Western organizations relocating and/or expanding their operations. It records among the highest rate of expatriate assignments internationally, though it is among the five most challenging nations for expatriates (GMAC, 2003); the world’s largest recipient of international foreign direct investment (FDI), in 2000, was worth U.S. $312 billion of utilized capital in 340,000 foreign investments (Tung & Worm, 2001, p. 519). China has become the largest, fastest-growing, and most heavily engaged in international investment of all the transition economies (Child & Tse, 2001, p. 5), since 1978 when Deng Xiaoping introduced the Open Door Policy to reintegrate China into the international economy. While China had been internationally economically significant from the time of the Opium Wars of 1840–1842 and was the world’s largest exporter of salt in the 1800s, it closed its doors to the outside world when the Chinese Communist Party (CCP) took office in 1949. Since 1978, China reformed its economic and political policy, and in the early 1990s Jiang Zemin pushed for almost complete conversion to a market economy (Blackman, 2000). Despite continuing concerns about China’s humanitarian record and obstacles to its complete economic development, its acceptance into the World Trade Organization (WTO) and Beijing’s approval to host the 2008 Olympics have confirmed China’s position as a major player on the international economic stage. The Arab World1 has attracted increasing international interest. Much of this attention has been since September 11, 2001, principally in the context of geopolitical concerns such as the “war against terror.” Still, the Arab World is an area of growing economic significance, offering investors and exporters opportunities across many business sectors. The nations of the Arab World reflect great economic, political, and social diversity. Some states are oilrich. Others, such as Palestine and Jordan, have been dependent on revenues from their petroleum-producing neighbors (Cunningham & Sarayrah, 1994) and risk severe economic consequences if they do not develop new sources of revenue. The region encompasses

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extremes of politics, religion, modernity, and urbanization, ranging from Egypt’s Cairo, one of the world’s oldest continuously occupied cities, to the more recently developed city-states of Dubai and Abu Dhabi in the United Arab Emirates (Weir, 2003b). The economies of the Arab nations have risen and fallen as a result of external factors, such as European decolonization and the United States and former Soviet Union competing to provide military and economic aid post–World War II. While the region exhibits as much internal diversity in attitudes, behavior, and systems of government and administration as Europe, there is a clear sense that the Arab nations are culturally homogeneous. The Arab World is of significance to the Western world not only for its economic interests but also because it comprises a large proportion of the world’s Islamic people, who account for 20% of the world’s believers, and is the heartland of Islamic faith (Weir, 2003b). Thus, understanding the culture and behavior of the people in this region is of international import.

…there is a clear sense that the Arab nations are culturally homogeneous.

A significant theoretical and empirical literature has examined business relationships in China and suggested that China has a business culture based on strong family networks, or guanxi connections, underpinned by strong Confucian ethics. A much smaller body of literature has analyzed business relationships in the Arab World based on strong family networks, or wasta connections, supported by Islamic ethics and values. Arguably, in the Arab World, political boundaries and government policies are surface phenomena compared to the deeper infrastructures of belief, family, kin, and obligation (Weir, 2003a). Guanxi is seen as all-pervasive in Chinese business and social activities (Michailova & Worm, 2003) and wasta (Arabic for connections or pull) as a force in every significant decision in Arab life (Cunningham & Sarayrah, 1993). Guanxi is a relationship between two people expected, more or less, to give as good as they get. A Chinese individual with a problem, personal or organizational, naturally turns to his or her guanxiwang, or “relationship network,” for assistance. An individual is not limited to his or her own guanxiwang, but may tap into the networks of those with whom he or she has guanxi. Wasta involves social networks of interpersonal connections rooted in family and kinship ties and implicating the exercise of power, influence, and information sharing through social and politico-business networks. It is intrinsic to the operation of many valuable social processes, central to the transmission of knowledge and the creation of opportunity. Just as guanxi has Thunderbird International Business Review • DOI: 10.1002/tie • January–February 2006

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positive connotations of networking and negative connotations of corruption, so too does wasta. Xinyong (trust) is integrally tied to guanxi, and in the Arab World, trust is also central to business activities, with shura (consultation) being key.

To date, there has been no substantive comparison undertaken of the business networking styles of these two regions of the world…

There is extensive literature about the impact of China’s national cultural characteristics and institutional influences on its business practices (see Hutchings & Michailova, 2004; Hutchings & Murray, 2002). However, irrespective of the success of the Gulf economies and the impact of the Arab World on the global economy in recent years, it has evaded the attention of most serious business academics, even those who have lauded the economic vitality and potential of the city-state economies, and little is known about this part of the world’s way of managing (Weir, 2000). To date, there has been no substantive comparison undertaken of the business networking styles of these two regions of the world or of whether their traditional business practices are altering as a result of internationalization and modernization and the implications of these traditional practices for Western2 managers. Such comparative analysis of Chinese and Arab behavior is needed, as are discussions of the framework of values in which these behaviors are embedded. We focus on what is significant in cementing business networking relationships in China and the Arab World. Like Tsang (1994), we base our argument on relevant literature and cases, as well as the authors’ knowledge acquired through personal research in China over eight years and the Arab World over 25 years. The Chinese research, undertaken by the first author, involved analysis of company reports, informal conversations, and semistructured interviews conducted with almost 100 interviewees, including Western expatriate managers and local Chinese managers, between 1998 and 2003. The Arab research, undertaken by the second author, has also involved analysis of company reports and informal conversations, as well as interviews and surveys conducted throughout the whole Middle Eastern region, including the Gulf Cooperation Council states, Algeria, Jordan, Libya, Palestine, and Yemen.

SIMILARITIES AND DIFFERENCES: GUANXI AND WASTA Cultural theorists (e.g., Hofstede, 2001; Triandis, 2002; Trompenaars & Hampden-Turner, 1997) provide paradigmatic descriptions of national cultural values (although some also consider organizational and subnational levels) and their manifestations (Franke, Hof144

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stede, & Bond, 2002). Institutional theorists (North, 1990; Scott, 1995) explore the influence of institutions on organizations, and institutional frameworks on business operations, although some have included organizational culture (Peng, 2002). Others have highlighted the business system layer (Redding, 2002). We suggest that cultural and institutional dimensions are inextricably linked in China and the Arab World, and that the business system is an amalgamation of culture and institutions. Cultural Dimensions

Utilizing Hofstede’s dimensions (2001), China and the Arab World appear to share some characteristics, scoring highly on the power/distance index. Power, status, and perceived skills are linked to seniority and reflect attainments of family, friends, and, in the Arab World, charisma and the ability to use force (Weir, 2003b). While China ranks as a highly collectivist society, the Arab World scores in the middle of the individualism index. Nonetheless, the Arab World is composed of group-based societies in which people have a high need for affiliation. Reputation is so important that some sociologists refer to “shame societies” (Ali, Azim, & Krishan, 1995).

We suggest that cultural and institutional dimensions are inextricably linked in China and the Arab World…

The Arab World is moderately masculine but demonstrates strong sex-role distinctions, and the role of women is identified as lying within the family domain. China is high on the masculine scale. Though during the Communist era women were highly represented in the workforce (necessitated by nationalist production goals), and this situation continues to the present, women remain largely unrepresented in managerial positions and political office. The Arab nations fall between the extreme positions on the uncertainty avoidance index. Weir (2003b) argues that while they are not frightened of other cultures, Arabs do not wish to become assimilated to them. Ali et al. (1995) used the term conformist to describe a value having lower tolerance for uncertainty, which is partly related to the Arab people’s need to avoid conflict. While they do express intense rivalry, it is very rarely manifest in overt conflict (Nydell, 1987). The Chinese, in contrast, have a tendency to avoid uncertainty and do not like overt conflict, but nonetheless behave in a quite exclusionary fashion to “outsiders.” Both regions are regarded as low-context societies by Trompenaars and Hampden-Turner’s categorizations (1997), reflecting that in both cultures people must have acquired knowledge of their business counterparts and built a trust relationship prior to engaging in busiThunderbird International Business Review • DOI: 10.1002/tie • January–February 2006

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ness. Both China and the Arab World share an overt reverence for history and tradition. The Interplay of Culture and Institutions

In both regions, there has been a distinct interplay of culture and state institutions. In China, business practice has been shaped by 50 In China, busiyears of communism, and in the Arab World, business practices are ness practice molded by the all-pervasive influence of Islam. Indeed, it is often very has been shaped difficult to draw boundaries around what can be considered to be cultural influence and what is institutional influence, as they reinforce by 50 years of each other. communism, and in the Arab World, business practices are molded by the all-pervasive influence of Islam.

In China, the Confucian cultural tradition of acquiescence to authority has been reinforced by the institutionalized culture of fear from the time of Mao’s Cultural Revolution (see Hutchings & Michailova, 2004). While China has a Confucian-inspired in-group orientation (Bian & Ang, 1997) shared with people of Chinese ethnicity throughout the diaspora, this tradition was reinforced by MarxistLeninist-Maoism. In fact, Littrell (2002, p. 22) notes that during this period, “trust was diminished amongst Chinese because of the often fatal denunciations from co-workers, friends, casual acquaintances, and even family, so any openness . . . or initiative . . . [was] effectively programmed out of the public personality of the Chinese.” In recent years, the Chinese government has been keen to show the international community its zeal to stamp out corruption and fraud in both the private and public sectors, and has executed many accused. But corruption that became endemic under the Communist years as being the only way to create flexibility in an otherwise rigid bureaucracy reinforced the previously more positive use of guanxi as a Confucian strategy of assistance. While Confucianism is a guiding philosophy of action in social and business life for the Chinese people, in the Arab World, Islam is also a guide to action as religion and politics interplay to determine action in every aspect of a Moslem’s life. Of course, the extent to which the state intervenes in the affairs of individuals and the interpretation of the Koran differs dramatically. While there are some secular states that have strict constitutional separation of church and state (e.g., Turkey and Malaysia) and some Muslim states that accept Islam as a guiding principle but have adopted Western models as the basis of political, legal, and social order (e.g. Egypt and Jordan), some nations in the Arab World (e.g., Saudi Arabia and Iran) are explicitly Islamic states that have their political and socioeconomic order based upon the Koran, and Islam determines religious, social, legal, and ethical

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actions. Further, Islam encompasses the society in which it exists, in all state structures (Ismail, 2003). The characteristic Western division of religion and public life does not generally pertain. Though China and the Arab World share cultural similarities in respect to general business practice and the role of the family and networks, they do differ in the connotations they place on networks. In China, guanxi is regarded as a positive, and though it is recognized to have a seamier side, bribes and corruption are not considered to be part of “good” guanxi but rather as quite a separate activity that is generally frowned upon, despite the fact that it is still widely practiced. In the Arab World, however, people generally speak of wasta in negative terms and think largely of its corrupt side, negating the traditionally positive role it has played in mediation. Here too though, while corruption is almost universally condemned, it is also widely practiced. But it is in respect to the impact of institutional changes in China and the Arab World in which the greatest divergence between these regions’ business practices is noted, and, in particular, with reference to the introduction of legal and financial changes.

Though China and the Arab World share cultural similarities in respect to general business practice and the role of the family and networks, they do differ in the connotations they place on networks.

Law in China and the Arab World

It has been argued that guanxi as personal networks and connections and the existence of insider relationships have been particularly important in China, first in the absence of formal institutions to govern business activities during pre-Communist times (Boisot & Child, 1999; Peng & Luo, 2000) and second, during the Communist era, when there was an absence of effective state institutions as regulators of transactions (Xin & Pearce, 1996). It has been further suggested that interpersonal connections and relationship networks have been particularly effective in overriding the bureaucratic loopholes of China. Indeed, Buttery and Wang (1999) note that in China, guanxi has added tremendous flexibility to doing business in a society where the alternative has been excessive bureaucracy or formal hierarchies. Indeed, when one has no networks or insider relationships, everything is impossible; when one has relationships, everything becomes possible. In most Western nations, everything is approved except for what is illegal. In China, everything is prohibited until it is officially approved, meaning that there is a set of rules but they can all be bent. Further, the lawlessness that characterized China during the Communist era and still exists to some extent, particularly outside the developed metropolises, has meant that rules can be interpreted very differently according to one’s position in society. Thunderbird International Business Review • DOI: 10.1002/tie • January–February 2006

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Existing rules have had little value, and until very recent years, regulations were easily violated and infringements of such few and far between. Moreover, as the word of a Chinese person is their bond of honor, written contracts have had little value, although the increase in the number of Western organizations in China over the last ten years has meant that written contracts have become commonplace in Like the Chiall large private organizations, and there is beginning to be some nese, the word crossover of practices to the remaining state-owned enterprises (SOEs). Though in the absence of well-developed legal and distribuof an Arab can be taken as indi- tion systems, personal relationships, particularly at the bureaucratic and local political levels, have been essential to getting anything done cation of commitment, and, as in China (Hutchings & Michailova, 2004), this situation is changing. such, legal con- Particularly since China’s accession to the WTO, it is showing itself tracts have con- willing to adopt Western modes of legal standards. Perhaps what has been the most substantive change yet though was the March 2004 tinued to be historic constitutional change to protect private property rights, a used sparingly. move that effectively overruled the fundamental Chinese Socialist principle of collective ownership of the means of production. In the Arab World, wasta has also effectively been used to override established laws and traditions where they existed and are used in place of relevant regulations and standards. However, whereas in China there has been a recognition in recent years that to play on the international economic stage depends upon following Western conventional legal practice, in much of the Arab World, wasta continues to be used in place of a system of international business regulations. Like the Chinese, the word of an Arab can be taken as indication of commitment, and, as such, legal contracts have continued to be used sparingly. The Islamic legal code, or shariah law, governs religious issues and all other aspects of life and has exhortations that in other belief systems would be regarded as simply injunctions toward ethically desirable ends (Rahman, 1966). Whereas China is now operating two codes (guanxi and Western legal praxis), in the Arab World, those who do not engage in wasta are actually punished, and people are conditioned into believing that nothing can get done unless they have someone in the know. While guanxi is a relationship between one individual and another, Cunningham and Sarayrah (1993) claim that wasta has actually given rise and prominence to a group of people who make it their profession to befriend people in the know. So, while guanxi may be a way of life, wasta may actually be a profession. Moreover, within China, at least within the large organizations in the private sector, guanxi may be declining in standing; in the Arab World, wasta continues to make it difficult for the conscience of those who legitimately attempt to pursue their 148

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issues within the confines of official regulations (Cunningham & Sarayrah, 1993). Finance in China and the Arab World

It is perhaps in the realm of finance in which the business practices of China and the Arab World most diverge. Culturally, the Chinese have It is perhaps in a tradition of being good businesspeople who work hard and long the realm of hours, usually in family-owned businesses and cooperatives, and who share the profits of their ventures within the family (Blackman, finance in which 2000). Throughout 50 years of communism, people in China were the business “re-trained” not to work beyond the necessity required by nationalpractices of ist production. In such a system, everyone had a job to do, yet there China and the were no incentives or rewards for one individual or group of people Arab World most to work harder than the next individual or group; thus, some of the diverge. entrepreneurial and innovative spirit was taken from the Chinese people during the Communist era (Worm, 1997). Yet, since China’s reintegration into the international economy began in the late 1970s, the Chinese people employed outside of the SOEs have reasserted their national disposition toward family business, many Western banks and accounting and auditing organizations have flocked to the nation, and capitalism can be regarded to have well and truly returned to China. It should be noted, though, that the sourcing of capital and structures of ownership remain very different between the public and private sectors, as Redding (2002) suggests that Guthrie’s study (1998) of the changing state/collective sector well illustrates. Traditionally, however, the Arab World has had a very different attitude toward finance and profit compared to Western financial and accounting theory, and this has not altered despite internationalization of sections of the region, particularly the avoidance of interest on financial capital and profit sharing (Ismail, 2003), rooted in a basic moral tenet of Islam, the avoidance of usury. A characteristic feature of Islamic finance is profit and loss sharing reflective of social provision that is core to the concept of Zakat (Ismail, 2003; Weir, 2003b). But these traditional precepts have inspired modern institutions. The first Islamic bank to develop in the region was the Dubai Islamic Bank, which opened as recently as 1975 and operates on a profitsharing model, where the bank as the lender is actually co-investor. By the late 1990s, there were 133 Islamic financial institutions in 24 countries throughout the Arab World (Stanton, 1999). Kuran (1997) suggests, however, that some of these institutions are not truly interest-free banks but an Islamic interpretation used as an escape clause. Yet while investors and businesspeople in China are effectively Thunderbird International Business Review • DOI: 10.1002/tie • January–February 2006

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able to profit from “immoral” earnings, Islamic economics prescribes that investment should support only products and services that are not forbidden by Islam and that Islamic banks cannot be involved in business associated with gambling, races, or alcohol (Stanton, 1999).

An old Bedouin proverb advises that “the blow that does not break you, makes you.”

MANAGERIAL IMPLICATIONS An old Bedouin proverb advises that “the blow that does not break you, makes you.” Rice (2004) and Hutchings and Murray (2002) suggest that international managers wanting to conduct business with Arabs and Chinese should do their research well, and Buckley and Casson (1988) proffer that the international dimension may be less important than the intercultural. Undeniably, the greater the cultural distance (Hofstede, 2001) between business partners, such as between Western businesspeople and the Chinese or Western businesspeople and Arabs, the greater the likelihood for misunderstanding, and problems in “building trust-based relationships” (Park & Ungson, 1997). But while non-Western businesspeople make efforts to understand, and adapt to, the business practices of Western business, Western expatriates also highlight the importance of organizational support to assist them in dealing with cross-cultural business practices and merging company policy with host-country conventions (Hutchings, 2003). Fundamental to international managers’ success in doing business in China and the Arab World is comprehending guanxi and wasta (and associated dimensions of trust, family, and favors) and the insider/outsider dichotomies that are core to these interpersonal connections. In examining China, Child and Rodrigues (1996) suggest that in-groups and out-groups are more noticeable when international ventures bring people of different nations and cultures together, and local employees are likely to retain their own social identities, which will be contrasted against that of foreign managers. Yet it is not impossible for international managers to enter into these insider relationships in either China or the Arab World, and this can be done chiefly by work through intermediaries or third parties who already possess insider status, while time is being devoted to building one’s own relationships, establishing trust, and acquiring tacit knowledge through commitment over time to local partners and their interests. Issues for HR Managers

Both China and the Arab World have governments afflicted by bureaucracy, red tape, and inefficiency in public sector and private 150

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organizations. International managers need to contend with this and a lack of trained personnel familiar with modern management techniques. Many organizations in China and the Arab World still exhibit Taylorist work styles rather than the multitasking, multifunctional teams favored in the West. However, while Chinese organizations are strictly hierarchical, vertical organizations with top-down decision making, some Arab organizations tend to be flat, with vague author- Many organizations in China ity relationships and substantive, though informal, employee participation. Personnel and human resource departments may deal solely and the Arab with payroll, recruitment, remuneration, and discipline within quite World still exhibit explicit constraints, rather than the more strategic, global focus found Taylorist work in HR in the developed world. Though organizational structures may styles rather exist in theory, in practice they may be quite ill defined, and comthan the multimonly, the general manager will assume responsibility for HR issues. tasking, multiThe following provides a summary of some pertinent issues in HR of functional teams which international managers in joint ventures in China and the Arab favored in the World should be aware. West. Recruitment and Selection

• In both China and the Arab World, selection is highly subjective, depending on personal contacts, nepotism, regionalism, and family name. • In both China and the Arab World, it is common to employ friends or family members of existing employees. In China, the issue of face means that these employees will usually prove beneficial, as they will feel obligated to perform. The same is not always the case in the Arab World. • Managers in the Arab World will often show higher commitment to family and friends, rather than organizational goals and performance. • In the Arab World, kinship, locale, ethnicity, religion, and wealth render some people more privileged than others in obtaining employment, university admission, or treatment under the law (Sawalha, 2002). In China, political connections often have the greatest significance. • When recruiting, international managers should be mindful of the fact that prospective Chinese and Arab employees may not highlight their achievements. Though as an ethnic group Chinese are proud of their success in business, Communism encouraged people not to stand out from the group (Hutchings & Michailova, 2004), and this thinking permeates to the present day. In the case of Arabs, humility and modesty mean that people may not feel comfortable discussing achievements (Al Fahim, 1998). Thunderbird International Business Review • DOI: 10.1002/tie • January–February 2006

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Training and Development

In the Arab World, mentoring is an understood and welcomed aspect, as it can be construed as respect for seniority, age, and experience…

• In the Arab World, mentoring is an understood and welcomed aspect, as it can be construed as respect for seniority, age, and experience, but this often coexists with a disregard of jobrelated training based on improving qualifications (Weir, 2003a). So, training should be developed in accordance with attitudes to seniority. • Arabs avoid identifying an individual or group as having a problem or posing an obstacle (Stanton, 1999), which can prove problematic for assessing training needs. • In China, people are oriented around pre-existing insider groups, so in order to be effective, training should be conducted within established groups. • In China, companies should avoid introducing crossfunctional teams that counteract already established in-groups but should work with established departmental groups. • In the Arab World, respect is accorded to subordinates who approach superiors with problems to which they have already preconfigured an appropriate solution. But it is for the organizational head to make a decision on his/her wider knowledge of the whole situation. • In China, team-based consultation is de rigueur, but in the Arab World, consultation, while widely practiced, is done on a one-to-one, rather than a group, basis. • Both Arabs and Chinese do not consider use of time as wasted effort as do most Westerners. So whereas many international managers will operate according to principles of sequential time with need for haste, when working with Arabs and Chinese it is important to remember their polychronic approach to time. Compensation and Benefits

• Concepts of motivation, incentives, and leadership have quite different connotations in China and the Arab World, so international managers should use caution in their interpretation. For example, in the Arab World, “motivation” can be traced to the corpus of Islamic scholarship and located in the writings of Ghazali and Ibn Khaldun as well as Maslow, Herzberg, and Taylor (Mubarak, 1998). • Arabs do not think of deficiency of motivation. • Recognize that motivational techniques used elsewhere may not work in China and that people are more likely to be motivated on a group, rather than individual, basis. 152

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• In China and the Arab World, leaders will often be those who have age, rather than qualifications, as a basis of seniority, and employees will take their cues from leaders. • In China, management is management of groups (Littrell, 2002) and opinions. Accordingly, compensation and performance assessment are predetermined by group membership. • In China, people will be inclined to give greater reward allocation to, and be “softer” in assessments of, group members than those outside their group (Hui, Triandis, & Yee, 1991). • In China, people dislike standing out from their group; thus, rewards and compensation should be given to groups rather than individuals. Performance Appraisal and Discipline

• In China and the Arab World, performance appraisals should be given to a group as a whole, but disciplinary action should be done in private so as not to cause loss of face/reputation to an individual and to his or her group. • Chinese will often be reticent to admit mistakes because of a Communist history of fear in which people suffered fatal denunciations for revealing information (whether real or purported). Thus, Chinese employees will often tell managers what they think they want to hear—this complicates undertaking performance appraisals. • In China, the notion of feedback has negative connotations, and thus should be handled tactfully (Gomez, Kirkman, & Shapiro, 2000). • As it is difficult within Arab culture to say no face-to-face, successful managers are those who have developed the capability to give negative messages while maintaining strong interpersonal support (Weir, 2003b). Similarly, a good leader is one who arranges matters so as to protect his dependents from shame (Peristiany, 1966). • Worker satisfaction—and, hence, performance—is likely to be increased in China and the Arab World when recognition is given to the tacit communication styles used in these nations, and efforts made to use less direct communication strategies. • In the Arab World, status, position, and seniority are more important than ability and performance (Al-Faleh, 1987). • Arabs’ fatalism and belief in the divine will of Allah mean that if they lose a job, then it is viewed as God’s will (Stanton, 1999). This acceptance of fatality may create difficulties in encouraging performance, but should be weighed against rec-

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ognizing that Arabs also exhibit intense rivalry (Nydell, 1987). • In the Arab World, promotion opportunities are not usually perceived as predictable, even in performance terms, so much as dependent on the perceived sponsorship of seniors and the necessity of undertaking those behaviors that make the manager appear worthy (Weir, 2003a). Merging Business and Management Styles

The emerging and evolving styles of business and management in China and the Arab World are currently neither “Western” in the sense of drawing all inspiration and organizing principles primarily from North American/European models nor “Eastern,” as suggested by some generalizations derived from analyses of Japanese practice or values. Rather, they are reflective of the distinctive cultures and values of China and the Arab World, influenced increasingly by Western business models. Increasingly, these regions reflect a blend of Eastern and Western practices, or what Alsane (1994) refers to in the Arab World as trends in governmental thinking toward emerging managerialism. Though there are elements of Western business approaches that are beneficial to China and the Arab World, these regions have practices from which the West may learn. When international managers adapt their companies’ policies to subsidiary nation practices, they often do so with a mind-set that they are accommodating deficiencies of Western business conventions. We suggest that international organizations may profit from developing hybrid models utilizing elements of Western management thought and practice blended with the best practices of business in the developing world also. The West may learn from the collective approach of family business in China, the consultative process in the Arab World, and the Arab concern for humanity indicated by charity toward employees (tkaod) during times of hardship, such as bereavement or illness (Stanton, 1999). We suggest that much more research needs to be conducted into social network analyses, particularly in the context of the Arab World. There is a need to increase our understanding of why a social network approach to business has worked in these nations for hundreds of years and continues to work despite pressures of modernization.

NOTES 1. In this article, the Arab World is defined as Egypt, Iran, Jordan, Palestine, Saudi Arabia, Syria, and the GCC (Gulf Cooperation Council) states of Bahrain, Kuwait, Oman, Qatar, United Arab Emirates, and Yemen. 2. The term “Western” is used herein to refer to first-world, industrialized economies.

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Guanxi and Wasta: A Comparison

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