Gaining competitive advantage through developing social network (Guanxi) : empirical study in SME in Thailand

Upalanala, Ruangrit (2007) Gaining competitive advantage through developing social network (Guanxi) : empirical study in SME in Thailand. Doctoral thesis, Northumbria University.

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Abstract

In the Thailand market, many business practices and social life are closely interlinked through a complex network of social networks and relations, especially Small and Medium enterprises (SMEs) where the business owner hold the decision-making role and has the authority to control the company, deals with others based not just on cost- benefit economic considerations alone but also intertwined with social relationships, personal and business contacts. With the ever-changing market conditions and high competitive nature of Small and Medium enterprises (SMEs) in Thailand, where there is approximately 2.28 million SMEs in year 2006 or comprising of 99.4 percent of enterprise in Thailand (Office of Small and Medium Enterprise Promotion OSMEP, 2006), this number is increasing every each year, resulting in a highly competitive business environment. Thus, this results in the need for a more elaborate and active network management and connection which play an important role in the promotion of the competitive advantage of the firm. The knowledge of network and the competitive advantage it brings is well recognised in the literature of business network. To a certain extent, the business networking in Thailand market, as with most other countries in Asia-Pacific region where there exist a Chinese-influenced society, is influenced from a Chinese business network called `Guanxi', but major questions have not been addressed by the literatures about the nature and the parallel to the Chinese form of `Guanxi', its effectiveness, practice and operations for gaining competitive advantage in specific business segments of the Thailand market. The original perspective of the research aimed to extend the knowledge in the area of `Guanxi' and business network for practical contribution to the particular instance of SMEs in Thailand context. This perspective generated on adopting the key principles of Guanxi knowledge into local practice of Thai SMEs for gaining business competitive advantage, and achieved by identifying, examining and developing the framework for particular SMEs business in Thailand. The author's research methodological approach focuses on examining the existing `Guanxi' framework of the process of `Guanxi' development (initiating, building and using of `Guanxi') and the `Guanxi' building framework of Trust (Xin) and Feeling (Qing), as a starting point to further extend its implication in the context of the particular SME in Thailand. The author employed the `Interactionism' perspective as a philosophical stance for the research with the research strategy of 'case study research'.

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