Background: In China, more particularly, guanxi becomes an extremely strategic tool due to access to key and scarce resources through informal social mechanisms and to enhance adaptability to erratic environments.

Purpose: The purpose of this study is to explore the role of guanxi in the innovation of small engineering enterprises in China, specifically to explore the characteristics of guanxi, its impact on enterprise innovation and how enterprises can effectively use guanxi to promote innovation.

Method: The research adopts qualitative methods, and collects and analyzes relevant data through in-depth interviews with managers of several small engineering enterprises in China.

Conclusion: It is found that guanxi plays an important role in enterprise innovation, mainly in trust and reciprocity, long-term investment and operation, and high-quality social capital. Specifically, guanxi can help enterprises to obtain key resources, promote information sharing, cope with the lack of institutional environment, and enhance trust and cooperation efficiency. However, the study also found that guanxi may bring negative effects, such as excessive relationship burden, excessive resource consumption, lock-in effect and unfair competition. Therefore, enterprises can adopt diversified cooperation strategies, refined management strategies and establish clear business ethics standards and transparent operation processes to maximize the positive role of guanxi and reduce its negative impact.