Research published in Economic Inquiry used a novel experimental methodology to dissect the motivations behind cronyism, such as when a manager hires a friend without considering their abilities.

According to the findings, cronyism survives mostly because it is advantageous for those who participate.

But how?

Researchers used Rice University’s Residential College system to conduct a game-based laboratory experiment with real social groupings.

The experiment indicated that cronyism is a widespread behavior, with beliefs in reciprocity and favoritism among the motivations.

Individuals engage in cronyism in the first scenario because they expect their fellow “ingroup” members (in this case, college residents) would reciprocate.

According to the findings, cronyism has a beneficial impact on reciprocity among such members.

“Cronyism is seen as unambiguously bad,” according to corresponding author Catherine Eckel, “and many policies are designed to prevent it, in both the private and public sectors. But we show that, despite its reputation, cronyism might be good.”

In their experiment, the findings showed that “people who select their ingroup members trust them more, and lower-productivity workers are so grateful for being chosen that they reciprocate that trust at high levels.”

According to them, “this leads to a better outcome for both. So for jobs that require trust, cronyism can pay. Shared identity motivates even low-quality workers to respond to trust with greater effort.”

Source: 10.1111/ECIN.13080

Image Credit: Getty

You were reading: This is why cronyism persists – says study