1. Chapter Nine: 9.1 INFORMAL SYSTEMS
INTRODUCTION
INFORMAL RELATIONSHIPS
PATRONAGE
PATRONAGE, SOCIETY, AND CULTURE
GOVERNMENT-BUSINESS PATRONAGE
GUANXI
MANAGING INFORMAL SYSTEMS
IMPLICATIONS FOR THE MANAGER
SUMMARY
EXERCISE.

2. Chapter Nine: 9.2 PATRONAGE
Patronage relationships
DISTRIBUTE RESOURCES. These include economic, social and political resources
are RECIPROCAL
involve patron and client exchanging a STREAM of DISSIMILAR resources
are of long DURATION
EXCLUDE outsiders.

3. Chapter Nine: 9.3 RELATIONSHIPS IN FORMAL STRUCTURES AND PATRONAGE NETWORKS
Qualifications to join: Bureaucratic Criteria Social relationships
Scope of influence: Restricted by task / role Unrestricted
specification
Source of influence: Rules Control of resources
Seniority / juniority Bureaucratic rules Perceptions of status;
determined by: Control of resources.

4. Relations to other members determined
FORMAL
STRUCTURES
To save the needs of the
organization & Its customers
Organizational structure
Formal
PATRONAGE
NETWORKS
To serve the needs of
Members of the patronage
network
Informal
Purpose
Relations to other members determined
- Decision to reward / sanction determined by:
Typical mode of communication
Membership or not of
the patronage network;
In-and out-groups
Performance of formal
Tasks; position in the
Structure
Needs to reciprocate,
And for future exchange.

5. Chapter Nine: 9.4 SOCIAL CONDITIONS FOR PATRONAGE
public officials do not protect individual rights and liberties
officials are corrupt
welfare services have few resources
individuals do not have easy access to welfare services
available services are delivered too inefficiently to be effective
individuals do not have opportunities for social and occupational mobility. They cannot escape from traditional relationships.

6. Chapter Nine: 9.5 The POLITICAL/BUREAUCRATIC PATRON rewards his/her business client by
steering government contracts to the client
securing him government funding
providing him inside information about government policy
supporting legislation favorable to him
opposing unfavorable legislation
giving protection against other arms of the bureaucracy
giving protection against business competitors
acting as a consultant and middleman

7. (9.5) The CLIENT BUSINESSMAN reciprocates by
making payments – perhaps disguised as “consultancy fees”
giving favorable stock options
paying election expenses
demonstrating loyalty and respect
providing leisure opportunities such as holidays and golf weekends.