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Purpose – This chapter aims to construct a scientific microworld to explain the management strategy of yang-ru yin-fa (Confucianism in public and Legalism in private) in Chinese organizations by an emic approach of indigenous psychology.

Design/Methodology/Approach – In consideration of the difficulties faced by either an imposed etic approach or a derived etic approach, this chapter advocates for an emic approach that argues that, in order to understand the specific features of organizational dynamics in China, it is necessary for us to construct an objective system of knowledge (epistemology) on the basis of Chinese cultural values (ontology), which can be examined by methods of social sciences (methodology).

Findings – Based on the theoretical model of Face and Favor, a conceptual scheme was proposed to highlight the contrast between Confucianism and Legalism in traditional as well as contemporary Chinese society. Findings of pervious empirical researches on two types of guanxi, along with two types of official and ethical leadership in Chinese organizations were reviewed to demonstrate the usage of yin/yang balance in strategic management.

Originality/Value – Taking the discourse of this chapter as an example, it is expected that the author's approach may initiate a scientific revolution against the Western paradigms of psychology that had been constructed on the presumption of individualism (Evenden & Sandstrom, 2011; Hwang, 2012).