How does organizational learning matter in strategic business performance? The contingency role of guanxi networking Henry F.L. Chung a, ⁎, Zhilin Yang b , Pei-How Huang c a School of Communication, Journalism and Marketing, Massey University Albany Campus, Private Bag 102 904, North Shore, Auckland 0745, New Zealand b Department of Marketing, City University of Hong Kong, Kowloon Tong, Hong Kong c National Sun-Yat Sen University, College of Management, 70 Lien-Hai Road, Kaohsiung 804, Taiwan, ROC abstract article info Keywords: Oorganizational learning Explorative and exploitative learning Business and political guanxi Strategic business performance China Based on organizational learning and networking theories, this study examines the effects of organizational learning (explorative and exploitative learning) and guanxi (business and political ties) on business perfor- mance. Business guanxi is classified as a channel networking tie, while political guanxi is categorized as a non- channel networking tie. Based on the experience of 120 Chinese firms, it is found that business guanxi positively moderates the effect of explorative learning on strategic performance. In contrast, though political guanxi posi- tively enhances the effect of exploitative learning on strategic performance, it negatively affects the relationship between explorative learning and strategic performance. This study's outcomes indicate that, when doing busi- ness in the emerging economies such as China, only a proper fit between organizational learning and guanxi net- working can yield a higher degree, or extent, of strategic performance. This study has implications for marketing managers and research concerning organizational learning, guanxi, business performance and standardization/ customization strategies. © 2014 Elsevier Inc. All rights reserved. 1. Introduction Knowledge is the fundamental strategic asset that companies can process and use to build their competitive advantage. The acquisition of knowledge is widely recognized as the antecedent of organizational performance, with research identifying specific elements of knowledge constituting a vital resource on which managers need to focus, and fully understand, if they are to develop competency (Dunphy, Turner, & Crawford, 1997; Epple, Argote, & Devadas, 1991; Lord & Ranft, 2000; Zahra, Ireland, & Hitt, 2000). Organizational learning is commonly conducted through either the exploratory or exploitative approach (Kim & Atuahene-Gima, 2010; Levitt & March, 1988). Exploratory learning refers to the acquisition and learning of information and knowledge from outside current customer and competitor boundaries, and often involves experimentation and risk-prone projects (Kim & Atuahene-Gima, 2010; March, 1991). Exploitative learning involves the acquisition and use of market information and knowledge within current customer and competitor boundaries (Levitt & March, 1988). Exploitative learning is often related to the “refinement and extension of existing competencies, technologies, and paradigms” (March, 1991, p. 85). Researchers posit that guanxi networking helps firms to acquire in- formation and resources which can be used to enhance their organiza- tional learning activities and achieve predetermined performance objectives (Atuahene-Gima & Murray, 2007; Li, Zhou, & Shao, 2009; Wang & Chung, 2013). Guanxi networking is widely used by both domestic and foreign multi-national enterprises (MNEs) operating in China (Leung, Chan, Lai, & Nagi, 2011; Li, Poppo, & Zhou, 2008). A firm's managerial guanxi networking in and outside of the industry is particularly relevant to its organizational learning activities (Atuahene-Gima & Murray, 2007). In this study, we focus on both chan- nel and non-channel guanxi ties. Channel (or business) guanxi repre- sents a firm's top managerial ties with channel members such as suppliers, buyers, and distributors (Park & Luo, 2001; Su, Tsang, & Peng, 2009; Wang & Chung, 2013). Non-channel (or political) guanxi denotes top managerial ties with non-channel members such as politi- cal leaders at various levels of government, officials in ministries and other regulatory bodies (Peng & Luo, 2000; Sheng, Zhou, & Li, 2011; Wang & Chung, 2013). Our review of the extant organizational learning and guanxi networking literature reveals several research gaps that require further exploration. First, existing organizational learning research largely fo- cuses on economically or technologically more advanced countries (March, 1991; Yalcinkaya, Calantone, & Griffith, 2007), but research on emerging markets is limited (Atuahene-Gima & Murray, 2007; Kim & Atuahene-Gima, 2010; Li, Chu, & Lin, 2010). Due to the increasing im- portance of emerging markets to the global economy and certain unique Journal of Business Research 68 (2015) 1216–1224 ⁎ Corresponding author. E-mail addresses: h.chung@massey.ac.nz (H.F.L. Chung), mkzyang@cityu.edu.hk (Z. Yang), hph@mail.nsysu.edu.tw (P.-H. Huang). http://dx.doi.org/10.1016/j.jbusres.2014.11.016 0148-2963/© 2014 Elsevier Inc. All rights reserved. Contents lists available at ScienceDirect Journal of Business Research