AbstractWhile the emphasis in the West is on "what you know" refers to technological expertise, including the price and quality of tendered product or service, the emphasis in Confucian societies is on "who you know," which refers to personal connections with the appropriate authorities or individuals. These connections are known in Chinese as "guanxi", on which as the basis Chinese exchange a lifetime of favors, resources, and business leverage. This study seeks to study "guanxi mechanism", the unique Chinese social-cultural element and its impact on the managerial effectiveness of Taiwanese firms with lean implementation in practice, and an empirical study is constructed to verify our proposal. Results suggest that "guanxi" and its networks function as the lubrication that eases interpersonal conflicts and as the buffer in solving problems, which in turn upgrades the cooperative efficiency both inter- and intragroups. This article provides an inner view of cultural value, which offers insights that should prove helpful to academics in management and related disciplines as well as to practitioners engaged in Chinese production management. Copyright © 2010 American Journal of Economics and Sociology, Inc..