Negotiation literature suggests that contentious group distinctions between negotiators result in cognitive biases, which in turn lead to counterproductive negotiation behavior and low joint-gains. However, despite political tensions and cultural divergences between China and Taiwan, there is significant Taiwanese investment in China. This paper hypothesizes that guanxi between Taiwanese and Chinese negotiators counteracts the expected group-related cognitive biases and aids trust formation and value creation between negotiators. Interviews with Taiwanese negotiators working in China lead to an account of guanxi’s role in cross-strait business negotiations and an emic model of guanxi.

Table of Contents

Acknowledgements iii
Abstract iv
Table of Figures vii
Part 1: Introduction 1
Part 2: Literature Review 3
1. Social Context in Negotiations 3
2. Culture and the Structure of Social Context 6
3. The Sociocultural Context of Taiwan and China 9
i. Culture and cultural dimensions 9
i. Cultural constructs and institutions in Taiwan and China 13
ii. Structural analysis of the social context of negotiation in China and Taiwan 16
iii. Historical and economic context of Taiwanese-Chinese relations 20
4. Group Theory in Negotiation 24
i. Minimal Group Paradigm 24
ii. Breakdowns in intergroup negotiations 26
Part 3: Hypotheses and Study Design 31
Part 4: Results and Analysis 36
1. Understanding of guanxi 37
2. Guanxi in the China-Taiwan Negotiation Context 38
3. Guanxi and Relationships 42
4. Guanxi and the Structure of Social Context 43
5. Guanxi and Culture 45
6. Guanxi and Group Bias 46
7. Self-reported cultural and negotiation differences between Taiwan and China 48
Part 5: Conclusion 50
1. Guanxi and tensions between Chinese and Taiwanese business 50
2. An emic model of guanxi in business between Taiwan and China 51
3. Guanxi as an explanatory factor for Taiwanese investment in China 55
4. Issues arising from the use of guanxi 56
5. Avenues for future research 57
References 60

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