Guanxi and leader-member exchange in the Chinese context

Guanxi (personal connections or relationships) is a pervasive element of Chinese culture that shares a discriminating attribute with Leader-member Exchange (LMX). This commonality between guanxi and LMX leads to a proposition that leaders might differentiate their members based on their guanxi. In this study, a comprehensive theoretical framework is presented in which the effects of guanxi on the relations between LMX and its antecedents are examined. It is proposed that guanxi has a weakening moderating effect on the relations between LMX and member extroversion, leader empowerment behaviors, and leader ability. Sample is drawn from four Chinese organizations in which two are state-owned and the other two private. Data were split into high and low guanxi groups and structural equation modeling was used to test the hypotheses. The results show that there is a significant difference between the invariant model and the model in which parameters of the three paths were allowed to vary, meaning that guanxi does have a moderating effect on the relations between antecedent variables and LMX. Specifically, both the relations of member extroversion and leader empowerment behaviors with LMX are significantly stronger for the low-guanxi group than for the high-guanxi group. However, the relation between leader ability and LMX is significantly weaker for the low- guanxi group than for the high-guanxi group. Finally, a two-step linear regression shows that none of the control variables, including age, gender, education, tenure, and the type of the organization (state-owned or private), has a significant relation with LMX, and the patterns of the main effects of the antecedent variables and interactions between guanxi and these antecedents are consistent with or without the control variables. Therefore, the results obtained from the SEM analysis are supported. Job satisfaction and organizational commitment were also analyzed as the consequent variables of LMX. The implications of these results and directions for future research were also discussed in this thesis.