Determinants of biased subjective performance evaluations: evidence from a Taiwanese public sector organization

Drawing on the notion of guanxi, which is obligation-bound, in Confucian cultures, this study investigates whether rating leniency and rating compression in performance evaluation are based on supervisor-subordinate acquaintanceship, alma mater ties, and subordinates' physical proximity to their supervisor. After controlling for supervisor-subordinate gender similarity and age difference, this study first finds that public sector supervisors are willing to provide relatively lenient ratings and compressed ratings for their subordinates when their personal acquaintanceship with them is strong, and when there is close physical proximity between them. Second, an alma mater connection with a subordinate leads to rating leniency by the supervisor. Finally, it is worth noting where this study differs from Bol's research (from Western cultures). In particular, while Bol, J.C. [2011. The determinants and performance effects of managers' performance evaluation biases. The Accounting Review, 86 (5), 1549-1575] demonstrates that age differences between supervisors and subordinates decrease rating leniency, this study documents insignificant results for similar demographic characteristics in age and gender. Bol, J.C. [2011. The determinants and performance effects of managers' performance evaluation biases. The Accounting Review, 86 (5), 1549-1575] also demonstrates that if a private sector supervisor sharing a work location with subordinates faces relatively lower information-gathering costs, he or she will give less lenient and less compressed ratings. However, this study shows opposite findings for the guanxi norm in Confucian societies.