Leader-Member Guanxi: An Invisible Hand of Cronyism in Chinese Management

Abstract

Guanxi is part of the fabric of Chinese society, and is central to every aspect of Chinese life including work. The relationship between guanxi and cronyism has been researched and discussed by some scholars in Supervisor-Subordinate Guanxi (SSG) studies. However, SSG cannot explain the full extent of cronyism in Chinese management, which usually encompasses the network of actors including supervisor, subordinate, a third party (called “leader”) who has a higher ranking than a subordinate, and possibly an intermediary between a leader and a supervisor in the same organization. Consequently, this paper develops a new construct Leader-Member Guanxi (LMG) to explain cronyism in Chinese management. This paper distinguishes between LMG and SSG, treating SSG as a specific form of LMG. Since SSG is a specific form of LMG, this paper uses prior work on SSG to demonstrate how Guanxi is associated with cronyism in organizations. Building on this, we examine the relationship between LMG and cronyism in Chinese organizations, and propose that LMG will be positively associated with cronyism. We then use Chinese “face” theory (mianzi and lian) to illustrate how LMG engenders cronyism in Chinese management asserting that LMG serves as an invisible hand of cronyism in Chinese management.