Trust networking in Asia

By Bob Widyahartono

JAKARTA (JP): Prof. Francis Fukuyama, a Japanese American sociologist, was in town recently upon the invitation of Prasetio Executive Development and the Association of Indonesian Economists.

The professor, who shot to fame a couple of years ago with his book The End of History, exposed his latest work Trust: The Social Virtues & The Creation of Prosperity to an audience of businesspeople and academics.

Trust in every society is a social capital and comprises the behavioral, cultural and emotional aspects of every individual as a member of society. Trust, which is confidence building in origin, develops in emotional relationships, but with the advance and modernization of every society is "by design".

The Chinese word guanxi refers to the concept of drawing on networks to secure favors in personal or business relations. It is widely accepted that guanxi is a significant business determinant influencing company performance. And it even applies in social relationships.

Initially it applied to emotional relationships built around family in the wider context. Guanxi could only work when built on the basis of shinyung, the Chinese word for trust.

It is widely acknowledged that guanxi constitutes a key strategic factor affecting firm performance in greater China. The evidence shows that guanxi-based business variables have a profound and positive impact on firm efficiency and growth. All businesses in China, including domestic enterprises and foreign- owned firms, inevitably face guanxi dynamics. It is widely acknowledged even among economists and business consultants that the managements of these kinds of firms are subject to guanxi.

As early as the sixth century B.C., Confucius codified the individual, family and societal ties that defined an individual's proper role and behavior in his or her environment. Chinese culture stresses the importance of social order, although it is not always smooth in reality. But well-defined relationships have often helped in establishing harmony. Traditional Asian society is built around clan-like networks, with close family members constituting the core. Loyalty to the in group is paralleled by a deep distrust of nonmembers.

In Asian companies and organizations, given their strong leadership orientation, the staff always takes a great interest in what their leaders are doing and, although at a distance, will follow their movements. It is the group culture that plays a dominant role. The corporate culture of an organization is influenced by whether it operates to the extent to which it employs unskilled, skilled or professional staff. While in Asian organizations negotiations or communications equate more with building a relationship, skills are nevertheless involved.

While in the West kinship and family ties are loose, in the Asian world these ties are important. In all Asian races, children are brought up to respect and obey their parents. This is rather pronounced in ASEAN where children are taught to appreciate their parents' feelings and to adjust their behavior in order to give them peace of mind. The rule of respecting relationships extends to outside the immediate family as an indication of relative hierarchical status between people.

Among Asians there is generally a sharing of guanxi in a relationship. People who share this kind of relationship are committed to one another by an unspoken code of reciprocity and equity. Violating this commitment can seriously damage one's social reputation, leading to a humiliating loss of prestige or face (mianzi). Face here refers to the essential integrity of the individual. A person's face is a key factor in the mechanism of guanxi as one must have a certain amount of trust and integrity to develop a viable network of guanxi connections.

Similar to face, the "humanized obligation" (renqing) is also a form of social capital that can provide a sound basis for interpersonal relationships. In Indonesian society it is known as hutang budi, balas budi (paying back debt of benevolence). Guanxi and other forms of this relationship or networking seem to be the lifeblood of the Asian business community, extending into politics and society.

For Asians, the most central value in building a relationship is harmony. Good relations must be reserved within the group and with outsiders of the group. The Philippines has a phrase for it -- pak ik sana -- which means avoiding conflict at all costs, although still having competition in business. The Korean equivalent is kibun (considerate behavior) and in Thailand, krengchai. In Japan, there is wa (the middle path). In Indonesia it is memanusiakan manusia (treating others humanely). Throughout Asia there is this central concept of respecting others.

In turn, a considerate person is respected. This is part of the other prevailing concept of "face". Consciousness of face -- that of others' as well as one's own -- is difficult for a Westerner to comprehend in an Asian context, but seems to be very helpful in dealing with others outside the immediate group and even with bureaucracy. Rather than depending on an abstract form of legalities, Asians traditionally prefer to rely on their contacts with those needed or in power to get things done.

Is then the concept of networking on Western marketing and management different than the Chinese guanxi? The West understands the management of networks as an important aspect of strategic behavior and consider networking, such as in marketing, as a mechanism of corporate-to-corporate relations. The West argues that networking in the Asian context is a waste of time, energy and money.

Asians dislike face-to-face confrontation and any form of direct or public criticism under any circumstances. To criticize an Asian to his face is seen as a violent demeanor, to which an Asian would rarely noticeably react. The avoidance of conflict, evasion of an issue and dislike of trouble characterizes the peoples of the entire Asia continent. Therefore this factor should be considered and calls for modification of Western managerial styles. This does not mean that Asian business organizations or any other organizations are not strategically motivated to make profit.

The West works to the order of competitiveness, challenge and confrontation or conflict, while the East works by compromise, accommodation and consensus. Basically Asians are more tolerant though still hardworking in their pursuit of their organization's objectives.

Building guanxi primarily related to personal rather than corporate relations, and exchanges which are not solely businesslike but are social, involves the exchange of social or humanized obligations and the giving of face.

Harmony does not mean inefficiency. Therefore while the West works to the order of the "guilt culture" and Asia to the order of the "shame culture", a willingness to learn about other cultures and to abandon one's own ethnocentricity starting with accepting others as having equal value, might be a step forward.

Although there have been few empirical studies on the issue, in reality guanxi or networking based on trust has a positive impact on efficiency and growth.

The writer is dean of the school of economics, Indonusa Esa Unggul University.

Window A: Trust in every society is a social capital and comprises the behavioral, cultural and emotional aspects of every individual as a member of society. Trust, which is confidence building in origin, develops in emotional relationships, but with the advance and modernization of every society is "by design".

Window B: The West works to the order of competitiveness, challenge and confrontation or conflict, while the East works by compromise, accommodation and consensus.