Establishing ethicalGuanxi(interpersonal relationships) through confucian virtues ofXinyong (trust), Lijie (empathy)andRen (humanity)

PurposeThe purpose of this paper is to examine empirically how managers establish ethical guanxi (interpersonal relationships) with their business partners to prevent potential ethical incidences in Chinese and Western business contexts.Design/methodology/approachThe present study is guided by a qualitative, abductive approach and draws on in-depth interviews with ten senior managers in five urban New Zealand organisations.FindingsThe results point out that guanxi (interpersonal relationships) purely working through renqing (reciprocity) is not sustainable, because it perpetuates a never-ending cycle of favours, once exchanging favours stopped or disappeared, then business relationships dwindled. To establish an ethical guanxi model, the authors found that xinyong (trust) is the foundation, and its enlargement stimulates lijie (empathy) that transfers pure business relationships to a genuine friendship which enhances ethical decision-making. They also posit that once managers are embodied with lijie, then they will have the virtue of ren to behave like junzi (ideal Confucian ethical person) whose business actions tend to be intrinsically guided by a sense of obligation to do something right that will work for diverse stakeholders’ interests, for the prosperity of organisations and society.Practical implicationsThis study suggests that managers should take Confucian virtues of xinyong (trust) and lijie (empathy), because they will trigger ren (humanity) as an intrinsic value. In this way, it is more likely for them to become junzi (ideal Confucian ethical person) whose business actions are intrinsically guided by a sense of obligation to do something right that benefits various stakeholders, organisations and society.Originality/valueThis study contributes to the extant literature on preventing ethical incidents of guanxi (interpersonal relationships) by drawing a framework of ethical guanxi, which is built on Confucian virtues of xinyong (trust), lijie (empathy) and ren (humanity). Further, this paper strongly suggests that companies should educate their staff to become more humane to make moral decisions in daily management practice.