Dynamic Balancing of Relationships

Behaving in a trustworthy manner requires fairness, consistency, honesty and openness. But the objects in favor exchanges tend to be special, and the more person-specific the special treatment, the better shown the special value of a favor exchange. How to balance fairness/consistency and favor exchanges is a most common dilemma of favor exchanges in the favor-based Chinese society.


Dynamic Balancing between Instrumental and Expressive Motives

Favor exchanges between friends, on the one hand, are actually intended to secure instrumental benefits. On the other, long-term, fair instrumental exchanges will also lead to friendship. Favor exchanges between friends tend to last for a very long period of time. And there are high or even unpredictable uncertainties in this long process. Rational selection and calculation of costs and profits, therefore, will not be very useful and, instead, being compliant will become a very good tactic. On the one hand, the favor giver, under the principle of brotherhood, is not allowed to ask for reward. On the other, the favor receiver, under the principle of reciprocity, is required to remember this favor forever (Luo, 2005; 2011). Both friends, therefore, already have a favor account in their mind and will keep reviewing it. And before either party reaches the limit of his or her tolerance, both parties generally will maintain favor exchanges under these two principles so as to build up their respective social capital for potential needs. This can be called the favor rule in the case of exchanges between friends (Hwang, 1987; 1988). So, an important skill for handling relationships between friends in a guanxi circle is to balance instrumental and expressive motives, as this will maintain trust at a high level. As Granovetter put it, ―So individuals have some reason to be continuously scanning relationships to determine the balance of motives [consummatory or instrumental] behind them (Granovetter, forthcoming).

Granovetter① speculates that real trust can hardly be built if relationship continues only due to

the benefits resulted from the relationship, such as money, prestige, reputation and resources. Rather, it should be based on the consummatory motivation—i.e. relationship continues for its own sake. Your behavior that hurts your beloved person is thus also harmful to you. It is unthinkable for the two sides to betray the relationship of this sort, and real trust can thus be built. As Granovetter puts it (forthcoming, Chapter 3, Page 6):

“So the issue is whether you value a relationship for its own sake, as in love or close friendship, or you value it for something to be gained that is outside the relationship itself. Where your concern about the relationship is not instrumental in this way, but consummatory, then encapsulation of interest is genuine, and any harm to the other‟s interests, detected or not, would be harmful to you as well.

One the one hand, too much instrumental motives leads to the loss of real trust. On the other hand, pure expressive motives can't facilitate favor exchanges. In the guanxi of this sort, a focal person always need to balance the two extremes— expressive or instrumental motives.

① It is cited from Granovetter's forthcoming article ―Trust‖ in the Chapter 3 of book “Society and Economy”. I appreciate the special permission of the author to let me cite the book.


Dynamic Balancing between Favor Exchange and Equal Sharing

Chinese indigenous psychologist Zhai Xuewei (Zhai, 2001; 2005), a follower of the situation determinism theory developed by Francis L. K. Hsu (Hsu, 1963), propose some modification to Hwang, Kwang-Kuo's theory. According to the Chinese mental model developed by Zhai, it is difficult to clearly categorize the relations among Chinese, so it is impossible to say which principle applies in which ring; and in reality, different relationship categories constitute a spectrum as indicated by the following figure.

Since there is a spectrum, there are a lot of intermediate colors between which it is less likely to see a clear boundary. We will produce a result as shown in the following figure if we still group the relations into three categories. We can see from the figure that several core concepts constitute the base for Chinese behavior.

The first concept is ―society based on family ethics‖ developed by Liang Shuming (Liang, 1981). This is at the core of morality in Chinese society. That is because a Chinese egocentric guanxi network in the differential mode of association, indeed, expands from family ties in order to include persons, based on the closeness of relationships, into the family. It operates under the need rule, according to Hwang, Kwang-Kuo. Take, again, the man who is chairman of a company, for example. If his brother wants to work at his company, he then has to appoint the former to a position in which there are few jobs to do, however lazy and silly the former is. This is where the need rule works – it is necessary to satisfy, more or less, the needs of one's family. In this spectrum, the color of family ethics becomes lighter as it moves outward.

Figure 3.2 Zhai's Model of Equal Sharing and Favor Exchange By comparison, Zhai believes that even for real family members, the need rule is not really followed, despite the fact that, according to Chinese family ethics, a father should be kind to his children and a man friendly to his younger brothers, who in turn should be respectful to him – this is only the ideal of family ethics. Otherwise, the Dream of the Red Chamber, also often known as the Story of the Stone, would not exist (this novel depicts the story of a big noble family in the city of Nanjing during the early period of the Qing Dynasty). The maladies and problems with big families, as described by the Dream of the Red Chamber, suggest that there are a lot of hidden benefit exchanges even between family members. The principles in family ethics become less applicable as relationships become weaker.

Zhai thinks that the principle in a guanxi circle guiding Chinese behavior is equal sharing. Within the same circle, the primary concern is unequal sharing of benefits rather than only a small amount of benefits being available for sharing. So the most important thing is equal sharing of benefits. Westerners care more about procedural justice – the ultimate shared amount is unimportant, as it is sufficient if the sharing mechanism lets everyone feel the presence of justice. By comparison, Chinese in one guanxi circle care more about distributive justice –the leading member of a guanxi circle should evenly distribute benefits among all the members so that they feel that they have equal access to the benefits. Within a group, a person will feel him or her being pushed aside if he or she receives fewer benefits or even has no access to the shared benefits than do the others. As a result, this person will likely become less loyal to this group. When it comes to the sharing of benefits, there are Chinese sayings such as ―Anyone who knows it (i.e., the sharing of benefits) is entitled to a share.‖ They actually refer to ―equal sharing‖ – all the participants should share the benefits. In China, the last thing that a leader should do is refusing to owe success to all the participants and taking all the benefits instead of evenly distributing them among the participants. Accordingly, the leading member of a circle must demonstrate his or her impartiality and selflessness.

Zhai further pointed out that the problem with the need rule that Hwang talked about is its inability to clarify the characteristics of the relationships among Chinese family members. It will lead to a wrong conclusion that a person can always have his or her personal needs satisfied within the family. In reality, the need rule is restrained, within Chinese families, by the distribution mode, as the satisfaction of a member's needs will, under the principle of equal sharing, let the other members feel unfairness. And this will result in the other members' potential need for access to the same amount of benefits. The parents should, at least, hint to the other members at the existence of the benefits. A man is about to marry, for example, and needs a house, and his brother is also single. In this case, it is inadvisable to only satisfy this man's need without thinking about that of his brother. In other words, it is necessary to consider their needs at the same time.

In other words, family ethics asks a Chinese share everything with his/her family members, whose needs are thus more or less satisfied by the focal person. That is why the need rule works in families. For outer rings of a person's guanxi circle, he/she will not share everything, as he/she does in the family, but share ―common-pool resources‖ equally to all circle members. That is, for the guanxi closer to the focal person, the more resources are included for equally sharing. The weaker is the guanxi in one's circle, the less resource is included. Outside one's guanxi circle, the equity rule applies for those pure instrumental exchanges. But when giving benefits to one of his devoted followers, the leading member of a guanxi circle, again for example, must not neglect the other followers and may even need to consider the feelings of people outside the circle of his devoted followers.

In other words, there are no three types of guanxi in Zhai's model; rather guanxi is a spectrum from strangers to family ties. From inside to outside, the force of pure instrumental exchanges increases and the principle of equal sharing decreases.

For example, I once investigated a case when I was in a disaster-stricken area in Sichuan Province. A public charitable organization intended to invest 8,000,000 yuan in a county to construct buildings for the local victims, but the governor of the county said that he was unwilling to launch such projects. That was because this fund was only enough for reconstructing a couple of villages and it was impossible for the governor to identify the ones eligible for sharing it. Villages without access to the fund would begin to complain no matter which villages had been identified. For the purpose of equal sharing and justice, therefore, the governor would rather spend the fund building public infrastructures than distributing it to particular villages or villagers.

Another principle that guides Chinese behavior is that of favor, or the above-mentioned favor exchanges in familiar ties. Unfortunately, the principles of equal sharing and favor often conflict with each other, as the former requires that all the members of a circle be equally treated, including the sharing of resources, while the latter is particularistic, that is, it requires that a particular person in the circle be specially treated. In other words, there are conflicts between particularism and fairness in a larger network.

The leader of an organization, for example, should, throughout the organization, maintain his image as one who upholds equal sharing and justice. In the meantime, however, he must, within the circle of his familiar ties, obey the favor rule, that is, he should favor his followers depending upon the closeness of his relationships with them. If the leader does carry out perfectly equal sharing, there will be discontentment and complaints from his inner circle members: ―Given my contribution to you, why do I have to share equally with others?‖ At this moment, the leader generally will manage to give somewhat larger shares to the members of the circle to show differentiated treatment. But if he/she excessively favors his/her circle members, the leader will cause discontentment throughout the organization.

Conflicts between equal sharing and the favor rule constitute the very reason why Chinese usually work with underhand tactics. Underhand tactics is their only recourse when it is impossible to make trade-offs between the two principles. A better solution is that the leader can give good reasons for favoring his followers and a set of sharing norms acceptable to all. Examples of reasons for larger shares include superior performance at work, personal efforts, good relationships with others, etc. Unfortunately, however, he can do nothing but secretly favor his followers if he can find no good reason. That is when a hotbed for underhand tactics comes into being.

Chinese often need to make trade-offs between the principles of equal sharing and favor. They follow different principles inside and outside their circles, according to Hsu's situation determinism theory. Since they always deal with other persons by determining whether the latter ones are within their circles or not, Chinese cannot follow only the principle of equal sharing or of favor. A successful leader typically lets the members of his circle feel the use of the favor rule, on the one hand, and those outside it, the use of the principle of equal sharing, on the other. Briefly, he realizes perfectly dynamic balance between the two principles.

Dynamic Balancing between Trust and Power

It is actually impossible, for the focal person of a guanxi circle, to always follow only the favor rule. A person who does so is a ―good guy‖, but he will likely become a non-authoritative hypocrite and be faced with disobedient people. Favor exchanges are of course a cornerstone for relationships between friends and trust is critical for guanxi management, but a person who does not know how to exercise power can be anything but a good leader. A real good leader knows when to use power, when to rely on guanxi and how to balance them.

Balancing between power and trust is something commonly seen in enterprises. There is such an example from an outsourcing service provider for a world-class maker of optical disc drives (I had a long-term field study in the factory of this provider). The provider received a big order from the maker. The president was very happy and came back drunk, saying how good relationships he had with the managers of this maker. Nonetheless, he sobered up all of a sudden and, as if he had woken up from a dream, made calls to have employees solicit orders. I felt very strange and asked him why he did this even though he had received this big order. He explained that it indeed was good to receive the big order but that power would become unbalanced since it, alone, represented more than half of the total sales volume at the company. The current sense of friendship would no longer exist once power becomes unbalanced. That is because power and trust interact with each other and the sense of trust will more likely occur if the two parties are equal. And that was why the president must secure other orders as soon as possible in order to reduce the share of this international giant back to 40%. When it comes to personal ties, he had pretty good relations with the maker's president for the Greater China region. When it comes to the production process, the two companies had worked together for years, including joint R&D efforts. But power weighing was always on his mind even if their relations, corporate or private, were already so good. Once severe power imbalance occurred, the party which got the upper hand would no longer pay much attention to the other. This was very clear to both parties.

We can see from this case that Chinese of course value favor exchanges in order to establish long-term, solid exchange relations and also will, in such relations, maintain high trust through the mixture of affective and instrumental exchanges, but that such exchanges are overshadowed by power. In other words, favor exchanges are more likely to occur in the event of equivalent powers; and the party who gets the upper hand, in case of power imbalance, will gradually be inclined to get resources by power instead of favor exchanges.

Of course, Chinese know, even in the event of power imbalance, that they should leave room for favor exchanges. That is because familiar ties will break up soon if either party always oppresses the other by power. Accordingly, another issue for which Chinese always need to realize balance is when to use power and when to leave room for favor exchanges.

 
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