Fostering Business Growth through Generational Change: Is Guanxi Still Important?

Malaysian Chinese family businesses have been dynamic in adapting to economic and political changes, given the challenges where policies have favored larger local ethnic groups. This study aims to explore the importance of Malaysian guanxi in nurturing business growth, while investigating the intra-ethnic and inter-ethnic business networks that are tapped by Malaysian Chinese family businesses through generational change. As this study investigates the history of Malaysian Chinese business, it is only apt that the case study method is utilized to identify the role of guanxi in business growth. Data for this study was collected through in-depth interviews with the successors of eight family businesses. Secondary data were collected in two folds for data triangulation. Findings suggest that Malaysian guanxi is crucial especially when the owners intend to grow the business as generations change. Of the eight cases, six cases presented the importance of Malaysian guanxi in business growth through generational change. Although there were two cases suggesting that guanxi could be insignificant in the long run, it is not denied that the cultivation of guanxi by the predecessor remains important to this day. The value of this study is seen in the importance of passing down guanxi through succession while fostering a wider inter-ethnic business network to achieve business growth.