In China, a country where business relations are highly socially embedded, "guanxi" plays a central role in the shaping and development of day-to-day business transactions by allowing inter-business relationships and relationships between businesses and the government to grow as individuals representing these organizations work with one another. Specifically, in a business context, "guanxi" occurs through individual interactions first before being applied on a corporate level (e.g., one member of a business may perform a favor for a member of another business because they have interpersonal ties, which helps to facilitate the relationship between the two businesses involved in this interaction). "Guanxi" also acts as an essential informal governance mechanism, helping leverage Chinese organizations on social and economic platforms. In places in China where institutions, like the structuring of local governments and government policies, may make business interactions less efficient to facilitate, "guanxi" can serve as a way for businesses to circumvent such institutions by having their members cultivate their interpersonal ties.