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This study aims to examine the conditions that help businesses develop confidence in their government regulators. Businesses are dependent upon governments and subject to their regulations. This study proposes that businesses and governments that confirm each other's social face have the relationship that helps businesses become confident in their government regulators. It also uses the theory of cooperation and competition to identify when they confirm social face. Data were collected in Shanghai, China, from government bodies and business organizations from diverse industries. One hundred forty-six pairs of government officials and business managers provided us data for our analysis. Structural equation analysis suggests that cooperative, but not competitive or independent, goals provide the foundation for mutual confirmation of social face that in turn results in business confidence that the government is competent, caring and regulates effectively. These findings were interpreted as reaffirming the value of relationships for collaboration between business and government and the usefulness of the concepts of social face and goal interdependence for understanding how to develop high-quality business-government relationships in China. This study directly investigates social face among Chinese people and explores its impact on inter-organizational government-business relationships. This study uses social face and goal interdependence to understand when business and regulators develop relationships that promote effective regulation.
