This study conducted an empirical analysis on Korean firms operating in China to examine the process through which government guanxi (connections with the government) affects business performance and the effects of moderating variables influencing this process. For the empirical analysis, a survey was administered to Korean-invested firms in China, and the data were analyzed using structural equation modeling. The results of this study are as follows.

First, government guanxi was found to have a positive effect on the acquisition of corporate resources (financial, physical, and human resources) and information. Furthermore, the acquisition of such resources and information was empirically shown to have a positive effect on business performance.

Second, the study confirmed that the effect of guanxi in China on business performance was lower for firms with higher technological capabilities, firms with a longer history of presence in China, and firms operating in highly competitive markets.

In conclusion, this study's significance lies in identifying the pathways through which government guanxi affects business performance for Korean firms operating in China, and in empirically demonstrating the moderating effects showing that these government guanxi effects vary depending on firm characteristics and market conditions. These analytical results are expected to be helpful for firms already investing in China and Korean firms planning new investments.