The risk of relying on interpersonal networks: Enterprise crisis management (IV)

China has always valued personal connections (guanxi). Fei Xiaotong believed that traditional Chinese credit was not built on contracts but on the reliability of being so familiar with a set of behavioral norms that one follows them without thinking. This trust is rooted in long-term, face-to-face interactions within a close-knit society and relationships where people know each other's backgrounds thoroughly. Emphasizing personal connections indeed has its rationality and positive effects in Chinese business operations. Many entrepreneurs' "first pot of gold" is related to this—when starting a business early on, family heritage, introductions by acquaintances, guidance from friends, and mutual protection within circles were effective and even necessary survival methods. It reduces the cost of trust, shortens transaction distances, and in critical startup phases, determines whether a company can survive. It is neither realistic nor necessary for companies in any country to completely bypass personal connections in business operations.

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