Business ethics is a concept with varying definitions. It is not easily agreed upon worldwide. Although, it is an old concept and is implemented in every culture and business, but still, its definition varies from person to person. Scholars consider business ethics as an applied ethics, which can be defined as the specialized study of moral values or right and wrong principles in business. However, these definitions of right and wrong differs from person to person based on the thoughts developed by their culture or community. These thoughts or right and wrong help people in making decisions, business dealings, and taking specific actions.
The United States of America has a saturated market; therefore, most organizations is planning to expand or move their main manufacturing units to other countries. China is one among the ideal countries that have the flourishing economy and positive factors like low cost labor and advanced technology that can help businesses earn more profits. Many organizations in the USA are expanding their businesses and moving towards China. However, before moving to China and making decisions, organizations must study the norms and values of the Chinese community. This paper will discuss the practicing business ethics in USA and China and up to what level the organizations would have to adjust themselves in business ethics as according to the new culture and community.
Chinese society strictly follows traditional values, norms, and propriety. These norms and values define how the people of the specific country or culture should act within that community. Irwin (2012) discussed the climate of business ethics in China. It explores the current businesses operating environment of China and impact of its culture on the business decisions and practices. Irwin discussed the corporate social responsibility and business ethics trends in China and explored the challenges that other foreign businesses may encounter in the Chinese market.
Irwin (2012) studied Hofstede’s cultural dimensions and scored the Chinese culture. Five cultural dimensions were identified that are power distance, individualism, masculinity, uncertainty avoidance, and long term orientation. The study recorded high score in power distance, low in individualism, high in masculinity, low in uncertainty avoidance, and high in long term orientation. These factors greatly affect the business practices in China. For example, high power distance reflects the acceptance of inequalities among people. This culture influences the ethical behavior practiced in Chinese organizations like subordinates are less likely to challenge the decisions of their supervisors at workplace and therefore, their relationship tends to be more polarized. Low individualism reflects the collectivist behavior of Chinese. Due to collectivism approach of people, nepotism and cronyism are also common at organizations. Managers are commonly involved in favortism when considering hiring and promotions at organizations.
The high score in masculinity of the Chinese culture adds a positive point to the business ethics. It values competition, success, and achievement. Another characteristic of the Chinese culture which sometime added as the positive point to business ethics is the low score in uncertainty avoidance. It indicates that the people of China are comfortable with ambiguity. It can be reflected as the lack of adhereance to contracts, and rules and regulations; thus giving more importance to the relationships. High score in long term oriented culture of China indicates their long term relationships with employees and long term contracts. Most Chinese spend their whole life servicing for only one organization which reflects their loyalty. Similarly, Chinese organizations make investments on long term projects.
Pitta, Fung, & Isberg (1999) explored the ethical issues across different cultures. They mainly focused on managing the perspectives of the USA and China. Researchers argued that US marketers follow their standards of ethics; however, when Americans would encounter the Chinese culture of business ethics, that may lead to ethical conflict. The risk of ethical conflict increases as is the smaller number of US companies enter China. They suggest that for reducing the potential of this risk, it is important for the US marketers to learn and have knowledge of the Chinese business ethics. In addition, they must know about each culture’s ethical history and foundation. It is important, because the expectations and ethics in each culture affect their business transactions. With an understanding of the cultural bases of ethical behavior in both China and USA can arm the marketer with the required knowledge to be successful in the cross-cultural businesses.
The common cultural conflicts discussed in the article are illegal campaign contributions, hiding information, knowingly selling defective goods, bribery, and troubling acts. Such activities represent the misconduct at individual and organizational level. In United States, all companies, whether operating on a national or international level are forbidden to engage in any kind of illegal activities in the USA. For example, bribery to get the business is illegal for any US company, no matter where it is located in the world. However, in comparison to Germany, the bribery rules are not as strict as in US. They are explicitly deducted as tax from the amounts. These differences in the standards of bribery between US and Germany can lead to conflicts. Similarly, culture cannot be defined in universal terms. Every society or country has different culture. Some possess modern and developed civilization; however, others have more traditional norms and values. Therefore, it is important for the organziations to study the culture of other societies before moving their business. It should study about the goodness of people, interpersonal relations, personal space and space in society, and the society’s orietntation towards past, present, and future.
Pitta, Fung, & Isberg (1999) compares the cultural differences between that of USA and China. In China, gift giving is highly valued and persumed that the giver appreciates the business relationship. However, in the US culture, the gifts are usually considered as the bribe, which is strictly prohibited. The Western or US business focusses more on the professionalism like for US managers contracts are the primary things in the business dealings. They refer to the business contracts, whenever there is a change or contradition in the project results or process. They rely most of their time on designing and signing the contract. However, in case of Chinese or other societies focus more on the negotiation. For Chinese managers, content of the contract is not as important as the context of contract. If any problem arises, then they resolve by communication and relationship. Therefore, there are less limitations directed in the contract as compared to that in western business cultures.
Pitta, Fung, & Isberg (1999) also highlighted the difference in the interpersonal relations between the two cultures. In the USA, individual uniqueness and diversity, and rights of individuals are highly valued. However, in China, individual rights are given less importance, but managers pay more attention to their network connections. Foreign countries’ businesses often face difficulty in penetrating into the Chinese market, because outsiders are usually not accepted. It reflects an unethical behavior or favortism of the managers towards their local businesses. However, the Chinese culture leans more towards the traditional style. They value prayers for elders, admire past, and help deceased relatives. However, Americans have little concern for the deceased or old parents and relatives. They live in the present and focus more on their work. For organizations moving from western societies to China are recommended to hire an expert who can guide people of the best practices and decisions.
Chinese Government has opened up markets and signed contracts with foreign countries organizations. There are wide differences in business ethics followed in China and foreign countries and since, Chinese culture follow strict norms and values; therefore, it is important to make appropriate adaptations in ethical practices like emphasizing more on communication, and relationships.
Irwin, J. (2012). Doing Business in China: An Overview of Ethical Aspects. Institute of Business Ethics.
Pitta, D. A., Fung, H.-G., & Isberg, S. (1999). Ethical Issues Across Cultures: Managing the Differing Perspectives of China and the USA. Journal of Consumer Marketing , 240-256.