Effect of supervisor-subordinate guanxi on supervisory decisions in China:an empirical investigation

As China is becoming an important market and there are a lot of foreign ven tures operating there, different lines of research have been providing usef ul information for foreign ventures to manage effectively in China. In this paper, we discuss one of the critical factors leading to successful manage ment of Chinese subordinates, i.e. building and maintaining good guanxi (i. e., interpersonal connection) with them. We conducted an empirical investig ation to illustrate (1) the supervisor-subordinate guanxi concept is differ ent and unique when compared to other similar concepts in the Western liter ature such as leader-member exchange (LMX) and commitment to supervisor; (2 ) the supervisor-subordinate guanxi will affect the Chinese supervisor's ad ministrative decisions; (3) guanxi can be measured by concrete behaviour/ac tivities. Data on 189 supervisor-subordinate dyads were collected in the Pe ople's Republic of China (PRC). Results indicated that supervisor-subordina te guanxi is a distinct concept from LMX and commitment to supervisor. It a lso has additional explanatory power over supervisory decisions on promotio n and bonus allocation after controlling for performance. Implications for foreign ventures and expatriates are discussed.