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A Cross-Cultural Comparison of Ethical Orientations and Willingness to Sacrifice EthicalStandards: China versus Peru
Author(s): Christopher J. Robertson, Bradley J. Olson, K. Matthew Gilley and Yongjian
Bao
Source: Journal of Business Ethics, Vol. 81, No. 2 (Aug., 2008), pp. 413-425
Published by: Springer
Stable URL: http://www.jstor.org/stable/25482223
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Journal ofBusiness Ethics (2008) 81:413-425 ? Springer 2007
DOI 10.1007A10551-007-9504-3
A Cross-Cultural Comparison of Ethical
Orientations and Willingness to Sacrifice
Ethical Standards: China Versus Peru
Christopher J. Robertson
Bradley J. Olson
K. Matthew Gilley
Yongjian Bao
ABSTP^ACT. Despite an increase in international busi
ness ethics research in recent years, the number of studies
focused on Latin America and China has been deficient.
As trade among Pacific Rim nations increases, an
understanding of the ethical beliefs of the people in this
region of the world will become increasingly important.
In the current study 208 respondents from Peru and
China are queried about their ethical ideologies, firm
practices, and commitment to organizational perfor
mance. The empirical results reveal that Chinese workers
are more relativistic and less idealistic than their Peruvian
counterparts. One explanation for the disparity between
these two groups is likely the variation in collectivism that
can be traced to different levels of importance across in
groups and outgroups. In addition to a summary of the
results, future research directions and managerial impli
cations are discussed.
KEY WORDS: culture, ethics, Peru, China
The power, prowess, and potential of the Chinese
economy have been an undeniably hot topic in the
cross-cultural management literature. And for good
reason: China is the most populous nation in the
world with over 1.3 billion people, and the Chinese
economy, now one of the world's largest, has grown
at a rate of over 8% for 3 years in a row. The
Chinese presence is truly global and one of the
more recent focal areas of Chinese trade and
investment has been Latin America. Between 1999
and 2004 overall trade between China and Latin
America has increased by over 900% (Lloso, 2005).
In 2004 alone approximately $20 billion, or nearly
half of all overseas Chinese investment, was destined
for Latin America. Chinese officials have also
discussed the possibility of investing an impressive
$100 billion in building up the infrastructure in
Latin America (Lloso, 2005). The already impressive
relations between China and Latin America are
indeed poised for phenomenal growth in the coming
decades.
Peru in particular has cultivated a strong rela
tionship with China. Formal trade relations between
Peru and China go back 30 years: trade spiked in
2004 when Peru formally recognized China as a
market economy. The November 2003 signing of an
agreement between Peru and China to boost tour
ism and trade, resulting in China's designation of
Peru as an official destination for Chinese tourism,
has also fostered economic growth. In 2004 the
value of trade between these two nations was
$1.75 billion. This level is expected to increase more
than 12% in 2005 to over $2 billion (Latin American
News Digest, 2004). Trade between China and Peru
is also a two-way street, as signified by the fact that
China is the second most important destination for
Peruvian exports, behind the United States, and
China could potentially pass the U.S. in the near
future as the top Peruvian export market.
Scholarly research of Chinese and Peruvian cul
tural values has been varied with China receiving the
lion's share of research attention since joining the
World Trade Organization in 2001. Researchers
have focused on a number of Chinese management
topics such as guanxi, foreign direct investment
strategy, work values, and ethical beliefs (Luo, 2002;
Redfern, 2005; Ralston et al., 1997). The number
of empirical studies in which Chinese managers and
employees are compared to Western counterparts
has also been growing at an impressive rate. Yet
despite China's trade presence and influence in Latin
America, cross-cultural studies focused on China and
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414 Christopher J. Robertson et al.
trade partners such as Peru have been virtually
nonexistent (Arruda, 1997). This has been the case
with business ethics research, an area that is still
deficient in empiricism and in cross-national studies
(Arruda, 1997; Robertson and Crittenden, 2003).
Thus we have elected to assess differences in
employee ethical orientations between China and
Peru. Peru was selected due to its membership with
China in the Asia-Pacific Economic Cooperation
(APEC) and its significant level of trade with China
(http://www.apec.org). Also, based on prior studies
of Peruvian culture, it appears that Peruvian values
tend to be somewhat representative of the cultural
values of the Andean region of South America
(Lenartowicz and Johnson, 2002). The overall
objective of this study is therefore to examine and
compare the beliefs of Chinese and Peruvian
employees related to ethical orientations and will
ingness to sacrifice ethical standards.
In the next section of this article an analysis of
Chinese and Peruvian cultural values, with an eye
toward ethical orientations, will be presented. This is
followed by the development of formal hypotheses,
a description of the methods, and a discussion of the
statistical results. The article concludes with an
assessment of future research directions and mana
gerial implications.
Literature review and hypotheses
The burgeoning body of cross-cultural research has
yielded strong evidence that documents the exis
tence of cultural differences of managers from dif
ferent nations (Hofstede, 1997; Husted, 1999;
Lenartowicz and Johnson 2002; Robertson et al.,
2003; Trompenaars 1994). While notable differences
have been found in such aspects of culture as per
ceptions of power, concern for time, ability to cope
with uncertainty, regard for material goods, display
of emotions, change, and group orientation (i.e.,
Hofstede and Bond, 1988; Rawwas et al., 1994),
very little empirical work has focused on cross
national ethical beliefs or ideologies (Robertson et
al., 2003). This dearth of empirical business ethics
research has been more punctuated in the develop
ing world, especially areas that have been tradition
ally underrepresented in management research such
as Latin America (Arruda, 1997; Lenartowicz and
Johnson, 2002; Marshall 2003). In fact, in a recent
review by O'Fallon and Butterfield (2005), of the 19
studies from 1996-2003 that examine cross-cultural
differences in ethical decision-making, only three
incorporate Latin American samples.
Despite the geographical gaps in empirical studies
of business ethics, in the past two decades significant
progress has been made toward a deeper under
standing of the ethical decision-making process
(Hosmer, 2000; Trevino, 1986). Business ethics
scholars have examined a multitude of influential
factors including, but not limited to, individual
values, moral intensity, situational factors, moral
philosophies, cultural values, political inclination,
and economic variables (Husted, 1999; Jones, 1991;
Ralston et al., 1997; Rest, 1986).
The concept of ethical ideology has been one area
of business ethics research that has received minimal
attention in cross-cultural research. Empirical studies
in the management and marketing fields, mostly
performed with purely American samples, have found
ethical judgments are mediated by the individual's
ethical ideology. In one study, Vitell et al. (1993)
found that more idealistic members showed higher
levels of honesty and integrity than their less idealistic
and more relativistic counterparts. A more recent
study of Russian and American managers found that
Russian managers were both more idealistic and more
relativistic than their American colleagues, and that
both idealism and relativism affect the individual's
willingness to sacrifice ethics (Robertson et al., 2003).
The ethical ideologies of idealism and relativism
have received considerable attention in the realm of
business ethics (Ferrell et al., 2000; Robertson et al.,
2003). Forsyth (1980) developed a measurement tool
for idealism and relativism that set the foundation for
future empirical studies. According to Rawwas et al.
(1994, p. 228), a high score on Forsyth's idealism
scale signifies that an individual or group believes
more in the moral absolute of specific actions or
behaviors in determining what course of action one
should follow. Thus, idealism refers to the degree
to which an individual believes that the right
decision can be made in an ethically tenuous situa
tion. This is essentially the deontological perspective
that embodies concern for others' welfare when
evaluating alternatives.
The notion of relativism, conversely, refers to
the rejection of universal rules in making ethical
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A Cross-Cultural Comparison 415
judgments. People who espouse relativism make
decisions on a situationalfy specific basis. That is,
high-relativists evaluate the current situation and use
this as the basis for making a judgment (Robertson
et al., 2003). High relativists place little emphasis on
laws and regulations, and low relativists, on the other
hand, believe that standard rules can be applied
regardless of the issue at hand (Rawwas et al., 1994).
Relativism, however, does not create a sort of cha
otic or anarchic front: with relativism, there is still
order and rules, just not universality, and thus, many
ways to solve situations (Warren et al., 2004).
Although very little research has focused on
Chinese ethical judgments, one recent study found
that the Chinese appear to score high in relativism
(Redfern, 2005). Based on the vertical collectivist
culture in China (Bhagat et al., 2002), these pre
hminary results are not surprising. A collectivist
culture refers to a society that values unity and
cohesion, encourages loyalty within groups, and
discourages disharmony (Hofstede, 1993), and ver
tically collective societies stress top?down authority.
This does not imply, however, that those immersed
in collectivism will not engage in actions of dishar
mony or deceit in particular situations. In fact,
Triandis (2004) has found that cultures steeped in
vertical collectivism are more apt to be deceptive if
this dishonesty benefits the ingroup. A vertical col
lectivistic society emphasizes the ingroup while still
recognizing the importance of submitting to
authority (Tjosvold et al., 2001). Those in the lower
ranks may be asked to comply with unethical actions
based on this respected structure, while those in
outgroups may receive unwarranted actions from
those in the ingroup based on status of hierarchy. In
addition, guanxi, which is culturally specific to the
Chinese society, can create disharmony or deceit
within certain groups. Studies have shown that
although guanxi can help those within the ingroup
to succeed professionally, those within the outgroups
normally receive the greatest harm from this cul
turally derived relationship (Warren et al., 2004).
Although Latin America traditionally has been
classified as a collectivistic culture (Hofstede, 1997;
Trompenaars, 1994), the degree to which Peruvian
collectivism compares to Chinese collectivism is not
clear. Although cross-cultural research has gained
invaluable insight from Hofstede (1980) and others,
such as Triandis (1995), we must be cautious in
assuming that the behaviors of those in a specified
collectivist country will mirror the actions of those
in different collectivistic nations. For example, the
added dimension of guanxi appears to accelerate and
strengthen the relativistic qualities of the Chinese
culture, whereas, Latin societies may not have such
influential networks. Lenartowicz and Johnson
(2002) provide strong support that examining
regional/country differences is essential even when
cultural similarities have been noted by past research.
These researchers found that among managers from
12 Latin American nations, the Peruvian group
ranked highest, relative to its peers, along an indi
vidualistic-oriented dimension titled self-direction.
Moreover, in a recent qualitative study of Chinese
managers it was concluded that some respondents
justified their actions, such as bribery to government
officials to receive some sort of preferential treat
ment, which is against formal laws, based on their
desire to maintain a guanxi relationship (Warren
et al., 2004). Thus, the guanxi relationship, which is
prominent in China and unknown in Peru, requires
those within this network to adjust their ethical
judgments based on the situation at hand, which is a
classic form of relativism. Based on this analysis:
Hypothesis 1 Chinese employees will be more
Relativistic than their Peruvian counterparts
when faced with ethical dilemmas.
Idealism, which refers to the degree of concern
for morals ideals and a concern for others' welfare, is
less consistent with collectivistic values such as those
linked with relativism (Robertson et al., 2003). The
Chinese culture incorporates Confucian teachings,
which certainly aligns with idealistic beliefs (Red
fern, 2005). Yet, our previous discussions of vertical
collectivism and guanxi and its double-edge nature
creates both cooperative peace (ingroups) and con
tentious needs (outgroups) depending on the spec
trum of the relationship. Thus, with such
relationship networks, would there be as much
concern for another's welfare as there would be in
collectivistic societies?
For those immersed in this complex network,
there may be a paradox within the Chinese culture
based their collectivistic culture and guanxi
relationships. There is a recent study that found
that Chinese managers who were less influenced by
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416 Christopher J. Robertson et al.
the outside world were less idealistic than those
with greater external influences (Redfern, 2005). In
addition, one study found that Asian decision-makers
have lower concern in ethical decision-making for
external stakeholders (Jackson et al., 2000). There is
also support that when Chinese managers were
confronted with conflict from outside groups, their
strategy was to embarrass the external group in order
to influence the Chinese manager's position. Thus,
there may be a dilemma within the Chinese society
between the collectivist and Confucist teachings of
total harmony and peace and the pull of guanxi
relationships; they may accept the paradox as a Yin
and Yang. Having the latter perspective would
bring assurance that their ethical decision-making
was appropriately justified.
Consistent with idealism is the notion of integrity,
which emphasizes overall honesty in decision-mak
ing, and has been closely associated with Chinese and
Peruvian societies (Holt et al., 1994; Lenartowicz and
Johnson 2002). Individualistic values may also play a
role in the worldview of idealists. Individualism tends
to be more prevalent in a free-market economy, and
Peru may be experiencing a cultural shift due to a
number of capitalist policies implemented in recent
years. Moreover, idealistic individuals believe that
there is a morally correct alternative that will not harm
others. Thus less idealistic individuals may make
decisions without reference to its impact on others. In
Lenartowicz and Johnson's (2002) study of Latin
American values, Peru scored highest along the
integrity dimension, compared to civility, self-direc
tion and drive. Further, Peru's ranking on Transpar
ency International's Corruption Perceptions Index
(CPI) for 2005 was 65th, while China ranked 78th,
which suggests a more idealistic culture relative to
daily business corruption as measured by the CPI
(Transparency International, 2005). Thus, based on
the above linkages, the following hypothesis has been
developed:
Hypothesis 2 Peruvian employees will be more
Idealistic than their Chinese counterparts when
faced with ethical dilemmas.
An additional area of business ethics research that
has gradually received attention is the analysis of
common business practices (Robertson and Fadil,
1999). In the United States, many firms now have
formal codes of ethics. While different countries tend
to have their own distinct moral paradigms, the
characteristics of individual managers and workers
help shape a nation's overall worldview. Idealism and
relativism both possess intuitive links to the willing
ness to sacrifice ethical standards for individual and
firm financial rewards. Collectivistic individuals, like
those who are highly idealistic, typically believe that
any means are justified by end results (Rawwas et al.,
1994). Relativists, with their situational ethics, ap
pear to be more focused on the current situation
rather than end results. Relativists also tend to be
more inclined to sacrifice personal moral standards
for the perceived norms of the group. Specific to the
U.S. versus Peru situation is the idea of a tradeoff
between profitability and ethicality. Robertson et al.
(2003), in their study of ethical beliefs between U.S.
and Russian managers, found that in both samples,
relativism and idealism each had a positive effect on
the willingness to sacrifice ethical standards for
individual and firm financial rewards. Unfortunately,
research on ethical ideologies has been neglected in
developing countries, although such settings could
provide rich data concerning the problems of sub
stantial growth and ethical matters. Ethical dilemmas
would be inherent for those immersed in collectiv
istic societies when collectivist-promoted harmony
clashed with attractive profits gleaned from a flowing
economic society. Although prior empirical research
of ethical ideologies and ethical business practices is
extremely limited, we have found no evidence that
contradicts the findings of Robertson et al. (2003)
and we therefore find it consistent to theorize that the
relationship between ideology and sacrificing of
moral standards will hold up in the Peruvian and
Chinese samples. Thus,
Hypothesis 3 In Peru and China, relativism will
have a positive effect on the willingness to sacri
fice ethical standards for individual and firm
financial rewards.
Hypothesis 4 In Peru and China, idealism will
have a positive effect on the willingness to sacri
fice ethical standards for individual and firm
financial rewards.
Moreover, due to the proximity in corruption
scores on the CPI scale and a lack of evidence that
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A Cross-Cultural Comparison 417
suggests a significant gap in the relationship between
the sacrificing of standards, we anticipate no differ
ence between the Chinese and Peruvian groups:
Hypothesis 5 There will be no significant differ
ence between Chinese and Peruvian employees
when faced with sacrificing ethical standards for
individual and firm financial rewards.
Research method
Sample and sampling procedure
In order to empirically test each hypothesis, primary
data was collected from Peruvian and Chinese
employees using a survey-based methodology. The
Chinese employees were from a major urban area in
Mainland China, while the Peruvian employees
were from the largest city in the country. The aim
was to gather data from Mainland China, since
Mainland Chinese employees would likely have
been reared with more traditional cultural values
than those residing in places with long-standing
exposure to Western influences, such as Hong Kong
or Taiwan (Olson et al., 2007). Surveys were ini
tially written in English and then translated into
Spanish and Chinese by native speakers. To ensure
appropriate translation, the surveys were then back
translated from Spanish and Chinese to English by a
separate translator, and appropriate changes were
then made before final distribution to the partici
pants (Alreck and Settle, 1995).
Respondents came from a number of firms in
various industries. Surveys were distributed to
respondents attending executive education or
continuing education classes in Peru and China. In
each case, one of the researchers met the employees
in a group setting and distributed the surveys.
Respondents were told that their participation was
voluntary and that their responses were completely
anonymous. Any potential foreign (not Chinese or
Peruvian) respondents were dismissed from partici
pation. Respondents were allowed unlimited time to
complete the surveys. When all respondents had
finished filling out the surveys the on-site researcher
then collected the complete set for the participating
group. During the data collection phase, we targeted
a sample size of 60 respondents from each country,
which is consistent with the sampling protocol set
forth by Malhotra et al. (1996). After data collection
was complete, the sample included responses from
64 Peruvian and 144 Chinese employees. While
conducting our statistical analyses, the usable
responses ranged from 49 to 64 for the Peruvian
group and 127-144 for the Chinese contingent.
About 63% of the Peruvian and 73% of the Chinese
respondents were married, just over one-half occu
pied management positions, and the modal age
(measured with a categorical variable) was in the 30
39 year-old range.
M easures
We elected to follow the research design employed
by Robertson et al. (2003) in their cross-cultural
study of ethical orientations between the United
States and Russia. Replication of a previously
employed research method provided us with two
distinct advantages: (1) we utilized a valid and
established scale and (2) we fostered comparability of
results between the prior and current studies. Idealism
and relativism were measured using the scale origi
nally published by Forsyth (1980). Idealism was
measured using 10 items, and relativism was mea
sured using nine items. Idealism questions included
items such as One should never psychologically or
physically harm another and The dignity and
welfare of people should be the most important
concern in any society. Examples of relativism
questions are What is ethical varies from one situ
ation and society to another and What is ethical
for everyone can never be resolved since what is
moral or immoral is up to the individual. The
reliability for idealism was .74 for both Peru and
China, while the reliability for relativism was .69 for
Peru and .56 for China (Cronbach, 1951), and sta
tistical results suggest no concerns with abnormal
distributions.
Employees' Willingness to Sacrifice Ethical Standards
for Individual and Firm Financial Rewards was measured
using four items developed specifically for this study.
Respondents were asked to indicate the extent to
which: (1) making money is more important than
running an honest business; (2) investors should be
more interested in their ROI than in creating social
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418 Christopher J. Robertson et al.
good; (3) firms are successful based on financial gains
instead of moral accomphshments; and (4) top
management should be concerned with increasing
shareholder wealth instead of business ethics. Re
sponses were coded on a five-point scale, where
1 = strongly disagree and 5 = strongly agree. The
reliability of this measure was .76 for Peru and .68 for
China, and statistical results suggest no concerns with
abnormal distributions.
We controlled for the extent to which the
respondents' organizations had a formal system of ethics
in place. Respondents were asked to indicate their
level of agreement (1 = strongly disagree to
5 = strongly agree) with each of the following: (1)
My firm has standards and procedures in place, such
as codes of ethics; (2) my firm has high-level per
sonnel responsible for ethics compliance programs;
(3) my firm has ethics training programs in place; (4)
my firm has in place systems that monitor, audit, and
report misconduct; (5) my firm is consistent with the
enforcement of ethics standards; and (6) my firm
focuses on ethics training programs. The reliability
of this measure was .79 for Peru and .81 for China,
and statistical results suggest no concerns with
abnormal distributions.
We also incorporated a variety of other control
variables into our regression models to enhance
confidence in our findings. To control for firm
level effects when predicting employees' feelings
regarding the profit/ethics tradeoff, we included a
categorical measure of firm size based on number of
employees. In larger firms, employees may be less
likely to be intimately involved with and aware of
key ethical issues. Conversely, in smaller firms,
employees may be more likely to see the effects of
the firm on key stakeholders, thus enhancing their
awareness of potential profit-ethics tradeoffs.
Therefore, we feel that controlling for firm size is
important. A similar argument may be made with
regard to another of our controls, hierarchical level
within the organization. Higher-level managers are
more likely to have information that crosses internal
departmental boundaries, as well as the boundary
between the company and its external stakeholders.
Thus, an individual's hierarchical level may affect
his or her awareness of the profit-ethics tradeoff,
necessitating its inclusion as a control variable. Level
within the organizational hierarchy was measured
by asking respondents to indicate whether their
position was in senior executive, middle manage
ment, junior management, non-management, or
staff. Several additional individual-level factors were
included as controls in our regression models,
including education level, marital status, gender, and
age. With regard to education level, those with
greater educational attainment may be more likely
to have been exposed to ethics curricula and
training that may have addressed and enhanced their
ethical awareness. Respondents were asked to
indicate their highest level of education based on
the following possible values: high school, some
college, college graduate, some graduate school, and
graduate degree. Prior studies have also included
marital status and age in cross-national ethical
decision-making analyses (i.e., Robertson et al.,
2003). Marital status was measured simply with an
indication of married versus non-married status.
Age was a categorical variable where ages were
grouped into 10-year ranges from 1 = 20-29 years
of age through 5 = 60 and older.
Results
Means, standard deviations, and zero-order correla
tions are found in Table I.
To test hypotheses 1, 2, and 5, f-tests were per
formed in an attempt to determine whether Peru
vian and Chinese employees differed significantly
with regard to relativism, idealism, and a willingness
to sacrifice ethical standards for financial gain (the
profit/ethics tradeoff'). As noted in Figure 1, sig
nificant differences were present between Peruvian
and Chinese employees on all three variables. This
provides support for Hypotheses 1 and 2, but refutes
Hypothesis 5. Chinese employees appear to be sig
nificantly more relativistic than their Peruvian
counterparts. Thus, it appears that the Chinese
group places more emphasis on the specific situation
and the relationships among the individuals in
volved, when confronted with an ethical dilemma.
Hypothesis 2 suggested that Peruvian employees will
be more idealistic than Chinese employees when
faced with ethical dilemmas. Our results indicate that
this is, indeed, the case, and it can be deduced that
Peruvian employees believe more in moral absolutes
and have stricter, more cogent, definitions of
morality. Finally, Hypothesis 5 theorized that there
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A Cross-Cultural Comparison 419
TABLE I
Descriptive statistics and correlations
ManSD12345 6 7 89
Peruvian respondents
1. Profit/ethics tradeoff 7.98 4.16
2. Relativism 25.86 6.72 .31
3. Idealism 41.70 5.52 -.04 .22
4. Co. has ethics procedures 22.65 4.16 -.06 .10 .11
5. Marital status 0.63 0.49 -.07 .10 -.03 -.11
6. Gender 0.36 0.48 .04 -.04 .03 -.02 -.20
7. Hierarchical level 2.40 1.26 .00 .06 .06 -.00 -.18 .07
8. Age 2.98 0.96 -.13 .06 -.03 .19 .41*** -.31* .01
9. Education 3.38 0.71 .18 -.13 .08 .06 -.03 .23 -.17 .17
10. Company Size 4.23 1.38 .09 .04 .20 -.04 -.12 .05 .44 .22 .17
Chinese respondents
1. Profit/ethics tradeoff 9.96 3.75
2. Relativism 27.99 5.33 .04
3. Idealism 36.57 6.37 -.19 .07
4. Co. has ethics procedures 21.24 5.17 -.07 .06 .17*
5. Marital status 0.73 0.45 -.09 -.05 -.15 -.01
6. Gender 0.67 0.47 .17 .06 -.17 -.12 .02
7. Hierarchical level 2.08 0.94 -.08 .07 .04 .00 .37 -.18
8. Age 2.06 0.93 .06 -.00 .15 .04 -.50*** .08 -.30***
9. Education 2.34 0.91 .02 .06 -.00 -.14 .18 .07 -.03 -.07
10. Company Size 2.26 1.28 .21* -.05 -.03 .10 -.22* .14 -.57*** .22** .09
*j?
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420 Christopher J. Robertson et al.
41.70
36.57
Relativism Idealism Willingness to
Sacrifice Ethical
Standards for
Financial Gain
llll Mean for Chinese Sub-Sam ple, n =144
Mean for Peruvian Sub-Sample, n = 64
Figure 1. Means of relativism, idealism, and willingness
to sacrifice ethical standards for financial gain for Peru
vian and Chinese sub-samples, Note: The means of all
three variables for the Peruvian and Chinese sub-sam
ples are significantly different at the p < .05 level.
backgrounds has perplexed many managers (Hu
sted, 1999; Robertson et al., 2003). This moral
dimension of managerial decision-making, as op
posed to the economic dimension, is likely to be
come more of a concern for corporate leaders,
organizational researchers and society as a whole in
the future (Luo, 2002). Globalization has indeed
forced more managers to confront ethical percep
tions and beliefs that are inconsistent with their
own moral codes (Velasquez 2000). Great care
must be employed to fully understand the processes
and procedures of firms with different cultural
backgrounds. Thus, managers must be somewhat
flexible with members of different cultures in eth
ical situations, yet they must remain true to the
underlying ethical principles of their organization.
The present study's emphasis on Chinese versus
Peruvian ethical orientations sheds light on two
nations that have recently entered the global mar
ketplace and have forged strong economic and
political relationships.
Our results have revealed some interesting find
ings about employees in China and Peru. First, as
predicted, it appears that relativism is more prevalent
in China than in Peru. It is perhaps the Confucian
collectivism combined with a deeply seeded tradi
tion of guanxi that has stimulated this moral para
digm. When compared to the earlier study by
Robertson et al. (2003) China's mean relativism
score, 27.99, is actually a tick below that of Russia
(28.75). Perhaps it is the moral acceptance of
behaviors such as price fixing and data manipulation
in Russia that bolsters the Russian relativism (Puffer
and McCarthy, 1995). The rationale and significance
of these scores could be a fruitful area for future
research. Second, the Peruvian sample scored sig
nificantly higher along the idealism dimension when
compared to their Chinese counterparts. This
underlying value of idealism appears to be particu
larly strong when compared to the Russian and
American mean scores from Robertson et al.'s
(2003) previous analysis with a Peruvian mean score
of 41.70, close to three points above the Russian and
American mean scores. The lack of full support for
Hypotheses 3 and 4 supports this distinction. Indeed
it appears that there may be multiple shades of ide
alism and relativism. Moreover, the relationship
between in-group versus out-group collectivism and
relativism may have played a role in the perception
of ethicality in our study. Future researchers may
want to probe deeper into these constructs in the
quest for sub-cultural differences within Peru and
Ch ina.
Guanxi clearly plays a role in the overall Chinese
value system. Guanxi relationships are predicated
upon loyalty to those within the ingroup; thus,
when individuals are faced with ethically tenuous
situations, decisions may be based more on those
who are affected (such as ingroup or outgroup) than
the laws at hand. It is guanxi that creates the envi
ronment for ingroups and outgroups. There are
privileges to those within the ingroups, such as
favoritism, personal benefits, access to resources and
cooperation, and discrimination toward outgroups
(Ashforth and Mael, 1989). Those within the
ingroup strive for harmony, and respect the feelings
of others within this group when engaging in deci
sion-making. Thus, there is a double-edge sword
component to this social network (Warren et al.,
2004). In addition, those in guanxi relationships are
guided by the norms and rules within that system
that may supersede formal laws. While guanxi is
generally thought of as a strictly Chinese construct,
the extent to which it exists, in form, in other cul
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TABLE II
e l a t i v i s m a n d i d e a l i s m o n t h e w i l l i n g n e s s t o s a c r i f i c e e t h i c a l s t a n d a r d s f o r f i n a n c i a l g a i n a
P e r u v i a n m a n a g e r s C h i n e s e m a n a g e r s
P r e d ic t o r s a n d c o n t r o l s C o lu m n C o n t r o ls o n l y C o l u m n 2 F u ll m o d e l C o l u m n 3 C o n t r o l s o n l y C o l u m n 4 F u l l m o d e l
C o m p a n y h a s e t h i c s p o l i c i e s / p r o c e d u r e s . 1 0 . 0 4 ? . 1 0 . 0 4
M r u 1 1 02 0 0 0 4
Gender .10 .09 -.10 -.07
Hierarchical level .01 - .01 .04 .07 Q
Age 24 24 09 12
E d u c a t i o n . 2 3 . 2 8 . 0 4 . 0 6 q
C o m p a n y s i z e .1 0 . 0 6 . 2 5 . 2 3 I r
Rela
I d e a l i s m - . 0 8 - . 2 6 * q
F full model ) .68 1.33 1.70 2.11* |
35 330
R2 .10 .23 .11 .16 1
9407100
a T h e d e p e n d e n t v a r i a b l e i s T h e W i l l i n g n e s s t o S a c r i f i c e t h i c a l S t a n d a r d s f o r F i n a n c i a l G a i n
S t a n d a r d i z e d r e g r e s s i o n c o e f f i c i e n t s a r e r e p o r t e d
* p < . 0 5 , * * p < . 0 1 P e r u v i a n n = 4 9 , C h i n e s e n = 1 0 7
to
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422 Christopher J. Robertson et al.
tures is relatively unknown yet worthy of future
investigation.
In addition, further research should examine the
Western influence on China versus the traditional
effects of guanxi relative to ethical decisions. As
mentioned previously, there are many positive
aspects of guanxi, which are in harmony with the
underlying principles of collectivism, yet such rela
tionships can also promote unethical actions. The
controls that Western firms have incorporated in
their regular business practices to curb unethical
decisions such as bribery may help to curtail unethical
guanxi practices. Moreover, national or local Chi
nese governments may feel pressured by international
forces to minimize the negative effects so common
with these exclusive networks (Lee et al., 2001).
Finally, Triandis (2004) argues that Chinese managers
who are more educated and exposed to international
cultures and social settings will be less affected by the
stringent protocols of guanxi.
The negative relationship between idealism and
willingness to sacrifice ethical standards for financial
gains of Chinese employees provides support that
those with high idealism will not allow the negative
aspects of guanxi to counter the positive aspects of
Confucius collectivism. Idealism within the Chinese
culture, then, may be an important mitigating factor
in the double-edged dilemma of guanxi. In addition,
research shows that in certain instances, Chinese
employees who engaged in unethical decisions did
so not for personal financial gain, but out of respect
for those who were entitled to favors based on the
guanxi relationship (Warren et al., 2004). In other
words, there may be many other underlying reasons
where guanxi will require individuals to act uneth
ically.
There are limitations in any study, and one lim
itation of this study is that the generalizability of our
results may be somewhat hmited with regard to the
Peruvian sample because the number of Peruvian
respondents was less than half the number of Chi
nese respondents. Thus, generalizing our findings to
individuals with different functional backgrounds
may not be appropriate, because of the lack in dis
parity of our Peruvian group. In addition, given that
our study is cross-sectional and correlational in nat
ure, one must view our causal hypotheses with
caution. Even though there is compelling theoretical
justification for our assertion that idealism will affect
the profit/ethics tradeoff, there is still the possibility
that causation is not occurring. Nevertheless, given
the theoretical justifications provided in the
hypothesis development section, we are reasonably
confident in the causal relationships hypothesized.
A general criticism of survey research is common
method variance, because the independent and
dependent constructs are often measured entirely
with self-reported data (as was the case here). One
cannot dismiss Podsakoff and Organ's (1986)
admonition to avoid measuring the independent and
dependent variables using the same source, since
there is a potential for questionable results. Yet,
common method variance may not be as much of a
limitation as once thought, because, although com
mon method variance inflates zero-order correla
tions, it also increases the shared variance among the
independent variables (Shaffer et al., 1999). This
makes it more difficult to find unique, significant
regression coefficients (Florey and Harrison, 2000)
and reduces the chance that common method vari
ance had a major effect on the conclusions of this
study. Nevertheless, one cannot absolutely rule out
the possibility that respondents artificially answered
in a consistent fashion, yielding possibly invalid re
sults. Another limitation is our use of the number of
employees as a measure of firms size rather than
annual total firm revenues. We elected to use the
former measure due to the potential problem of
comparing revenue amounts with different levels of
purchasing power parity.
A number of regional implications may exist
based on the findings of this study. In the study
conducted by Lenartowicz and Johnson (2002), the
scores of the Peruvian managers along all four
dimensions studied clustered well with Ecuador and
Chile, signifying commonalities across the Andean
region. Therefore it may be plausible to make some
tentative generalizations about moral value systems
in Andean South America. While Chile has more of
a European history with respect to immigration
patterns, Peru and Ecuador do share a strong com
mon thread with historical ties to the Inca empire.
Regarding managerial implications, top manage
ment must understand that the ethical climate of a
multinational organization can be extremely fragile.
The current results impact the communications,
strategic objectives, and control systems that may be
appropriate across multinational settings, having
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A Cross-Cultural Comparison 423
substantial potential importance for the development
of a country's corporate governance system. Our
findings also have revealed patterns that could be
helpful to managers in multinational firms that are in
the process of developing corporate codes of ethics
in Peru or China (Robertson and Fadil, 1999).
Specific, culturally contingent guidelines could be
created while considering some of the diversity in
values and beliefs across borders. Any adaptations to
policies should be reviewed by managers from both
nations in an attempt to dispel any deep discrepan
cies in firm policies and practices. Further, actions
and corrective steps taken by managers will likely
become more important in establishing, maintain
ing, or destabilizing a multinational's ethical envi
ronment. Perhaps the establishment of a more formal
code will facilitate stronger governance over indi
vidual behavior in both nations (Garten, 2002).
Moreover, studies of ethical beliefs can offer a
window into the core values of a culture. Ethical and
cultural values tend to be intertwined, and managers
can incorporate beliefs about idealism and relativism
into decisions related to human-resource manage
ment policies such as performance, training, and
reward systems.
We believe that the results of this study have
added breadth and depth to the inadequate empirical
database of studies that have focused on cross
cultural ethics between Peru and China. Moreover,
this study has identified a number of salient future
research endeavors for ethics scholars. For example,
future research should examine whether codes of
ethical conduct and ethics training have the same
effects on Peruvian and Chinese employees. Scholars
may also elect to examine the cross-cultural nature of
behavioral traits such as guanxi in various national
settings. Depth will also be added to this research
stream through the replication of studies of ethical
antecedents such as collectivism and other value
dim ensions .
In addition, the current research design could
be employed in other countries in Latin America
that have significant levels of trade with China,
such as Argentina or Brazil. A deeper analysis into
specific ethical dilemmas may add to our under
standing of the shape, form, and rhythm of the
relativism in China and idealism in Peru. Other
influential factors that may play a causal role in the
formation of moral ideology, such as religion and
form of government, could also be examined in
the future.
Note
APEC, founded in 1989. is a trade association that has
21 member nations which account for one-third of the
world's population and over 60% of global GDP. Peru and
Chile are the only South American members of APEC.
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Christopher f. Robertson
International Business,
College of Business Administration,
Northeastern University,
313 Hayden Hall, Boston, MA, 02115, U.S.A.
E-mail: [email protected]
Bradley J. Olson and Yongjian Bao
University of Lethbridge,
Lethbridge, AB, Canada
K. Matthew Gilley
Department of Management, Bill Greehey School
ofBusiness, St. Mary's University,
One Camino Santa Maria, San Antonio,
TX, 78228, U.S.A., (210) 436-3705
E-mail: [email protected]