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Jones and Stout (2015) have made one claim that I would like to correct: There is substantial quantitative (and observational) research on the workplace and organizational performance effects of nepotism and cronyism. That these authors have missed this research is understandable; the research is not in traditional industrial and organizational (I-O) psychology publications (although some of it does appear in journals from the related field of organizational behavior). Nevertheless, this work is systematic and rigorous, and the work provides strong evidence to support the experience-based perceptions of practitioners that nepotism and cronyism damage employees and their supervisors and produces poorer organizational performance. I welcome the opportunity that Jones and Stout (2015) have provided to briefly introduce my colleagues in I-O psychology to this literature.
I begin with Max Weber (1947), who proposed on the basis of his observational research of organizations in Germany over 100 years ago that the performance of what he called bureaucracies (where nepotism and cronyism are constrained by tests and other human-resources systems that foster decisions based on impersonal assessments of merit) was superior to the performance of what he called traditional forms of organizing (based on nepotism and cronyism, among other things). That nepotism and cronyism damage organizational performance has been documented in numerous studies since then. I cite just a few: In his large study of overseas Chinese firms, Redding (1990) found that these family-based organizations were characterized by extensive political infighting among siblings and cousins, and the firms usually split into separate, small organizations to provide each family member with his or her own organization, to keep the peace. Supervisors were autocratic, and employees were unhappy. Hellman, Jones, and Kaufmann (2003) and Kaufmann and Kraay (2002) have provided rich data on how executives' dependence on personal relationships is used as a proactive competitive advantage that they call "state capture," in which powerful business elites use their personal relationships with government officials for personally favorable laws and enforcement. This "competitive advantage" produces poorer economies as those without connections are shut out and as the inefficient are protected (see also Fligstein, 2001). Al-Aiban and Pearce (1993) found that in Saudi Arabia--where cultural obligations to protect and advance family members...