This paper explores the performance of Chinese small and medium sized enterprises (SMEs) on Business-to-Business (B2B) electronic marketplaces (EMs). Based on a content analysis of 155 cases of high performing online Chinese vendors, this paper explains the success of SME online B2B vendors within a Motivation-Capability framework. This first generation of SME B2B online vendors proved highly motivated to increase sales and developed a set of Internet leveraged organizational capabilities to compete online, including capabilities for online marketing, product innovation, eCommerce management, etc. This study differs from traditional wisdom that online marketplaces will render Guanxi (a Chinese cultural phenomenon defined as close and pervasive interpersonal relationships, Yang, 1994) irrelevant since online marketplaces are perceived to be impersonal. In fact, Guanxi still matters online, but it takes new forms. This research offers important managerial implications for B2B SME online vendors on how to leverage EMs for higher performance.
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