This article addresses corruption as a negative practice displaying the ‘darker side’ of social capital in Chinese guanxi and Russian blat/svyazi networks. It presents a conceptual framework integrating several research streams to establish a conceptual linkage between social network characteristics and three forms of corruption between business persons and public officials: cronyism, bribery, and extortion. We argue that the forms of corruption in a society are determined by the nature of social network ties and their underlying morality, with particularistic and general trust being key factors. Our framework depicts networks as three concentric circles representing three types of corruption resulting from their corresponding types of reciprocity: open, closed, and negative. We then apply the framework to the practice of guanxi in China and blat/svyazi in Russia. We propose that different network characteristics and different forms of corruption may help explain what we label the ‘China-Russia paradox’ of why corruption and high economic growth have co-existed in China, at least in the short term, but less so in Russia. We conclude with ethical and legal implications for doing business in those two transforming economies and offer suggestions for future research.

We extend Burt, Burzynska, and Opper's cross-sectional network prediction of relative success among Chinese entrepreneurs by predicting which ventures are still active five years later. The cross-sectional analysis is corroborated in three ways (despite the vicissitudes of a national anti-corruption campaign): (1) Businesses run in 2012 by CEOs with a network rich in structural holes are more likely to be active five years later, in 2017. (2) Survival odds are improved if the large, open network around a CEO in 2012 was initially a supportive ‘cocoon’ closed network when the business was founded. (3) Both results are contingent on capturing the guanxi ties valuable early in the history of the business. The two network effects disappear when the network around a CEO is limited to his or her currently valued contacts. Beyond corroboration, we find that advantage is concentrated in ventures that began well and had become successful. Network advantage here does not compensate for weakness – it is a mechanism for cumulative advantage, amplifying the success of businesses already doing well.

Despite the major cultural and political differences between the United States and China, in both countries access to jobs is supposed to be guided by fair and equitable procedures. In the US, there is a presumption of an open labor market in which potential employees compete on the basis of their qualifications, where the fairness of decisions is guided by anti-discrimination laws and normative organizational policies. In China, although there is a history of close relationships that guide the exchange of favors, following the 1949 revolution, Communist Party leaders were given the authority to allocate positions in ways that were supposed to eliminate special privileges of class and background. Yet recent research has suggested that social connections are an important part of getting a job in both the US and China for two-thirds to three-quarters of job seekers. In the US context, such connections are described as social capital. In the Chinese context, connections are defined as guanxi. In this article, we review research on labor market processes in both the US and China to address three important questions: (a) How can we understand the similar functioning of labor markets in such distinct cultural and political systems as the US and China? (b) What are the mechanisms or processes by which people find jobs in the US and China, and how are people able to access these mechanisms or processes in the context of constraining social structures and legal environments? and (c) What are the theoretical implications of the ‘generalized particularism’ that seems to shape labor markets in both the US and China.

We trace the social networks around Chinese entrepreneurs back to their firm's founding to learn about the role early events play in the later success of a business. We use name generator questions paired with career history questions to identify ‘event contacts’ missed by the usual focus on current business. We draw four conclusions from interviews with a large, stratified random sample of entrepreneurs: (1) Relations with event contacts stand out for guanxi qualities of high trust relatively independent of the surrounding network structure, and are critical to distinguishing more successful entrepreneurs from the less successful. (2) The substance of a significant event matters less than the fact that the entrepreneur deems it significant. (3) When family is turned to for support it is most likely at founding, but family is not the usual source of support at founding. Rather, entrepreneurs turn to people they have known for many years, typically people beyond the entrepreneur's family. (4) The transition from founding to first significant event stands out as distinctly consequential for later success. Entrepreneurs who turn for help on their first significant event to a person separate from, but especially close to, the founding contact are more successful in their business development. That early move is not visible in the later network around the entrepreneur.