Network strength, transaction-specific investments, inter-personal trust, and relationship satisfaction in Chinese agri-food SMEs

Abstract

Purpose – The purpose of this paper is to investigate the effects of network strength, transaction-specific investments and inter-personal trust on business relationship satisfaction for small-and-medium-sized enterprises (SMEs) involved in agri-food processing and exporting in China. Design/methodology/approach – Survey data collected from 80 agri-food SMEs in Jiangsu Province were used for empirical testing. The authors applied an ordered logit regression approach for model estimation. Findings – The results demonstrate that strong guanxi networks, high level of transaction-specific investments and inter-personal trust significantly contribute to a high level of relationship satisfaction for agri-food SMEs in China. In addition, inter-personal trust shows a moderating effect on the relationship between transaction-specific investments and relationship satisfaction. Practical implications – Business relationships play a critical role in the modern market environment. Relational arrangements (based on guanxi and inter-personal trust) should be further enhanced in order to yield satisfied business relationships for SMEs in China. Originality/value – The paper extends our understanding of relationship (guanxi) marketing, as well as marketing practices for agri-food SMEs in China.