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Networks and cronyism: A social exchange analysis

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Abstract

From the perspective of social exchange theory, we explore the downside of social networking. In particular, we discuss the impact of network properties on cronyism. We identify two types of network, clique and entrepreneurial, and two forms of competition, inter- and intra-network. We argue that network competition generally increases the likelihood of cronyism, and the effect of competition on cronyism is moderated by network type. We outline directions for future research and derive practical implications.

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Notes

  1. Although any systematic analysis of the current US financial crisis that has evolved into a large-scale global crisis has not appeared, the arguments and the debate that is raging in the media all over the world seem to point toward massive crony capitalism. We believe that social networking among the various actors is the chief culprit. The US system does not seem to operate on the free market principles any more; the recent events suggest that cronyism and rent-seeking in the US economic system have become deeply entrenched and replaced “creative destruction.”

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Authors and Affiliations

  1. Department of Management, Faculty of Commerce, University College Dublin, Blackrock, County Dublin, Ireland

    Thomas M. Begley

  2. Health Management and Informatics, University of Missouri, 729 Clinical Support & Education Building, Five Hospital Drive, Columbia, MO, 65212, USA

    Naresh Khatri

  3. School of Management (SM 43), University of Texas at Dallas, 800 W. Campbell Rd., Richardson, TX, 75083-0688, USA

    Eric W. K. Tsang

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  1. Thomas M. Begley
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Correspondence to Naresh Khatri.

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The authors contributed equally to the manuscript and our names appear alphabetically. We would like to thank Parthiban David, Chris Earley, Luis Gomez, Roy Lewicki, Mike Peng (Editor-in-Chief), Abdul Rasheed, Harry Triandis, Lai-Si Tsui-Auch, our reviewers, and seminar participants at the Nanyang Technological University and the National University of Singapore for their valuable and constructive comments. An earlier version of this paper was presented at the Academy of Management Annual Meeting, Honolulu, USA, 2005.

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Begley, T.M., Khatri, N. & Tsang, E.W.K. Networks and cronyism: A social exchange analysis. Asia Pac J Manag 27, 281–297 (2010). https://doi.org/10.1007/s10490-009-9137-4

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