Profit and Principles: Business Ethics in Hotel Management Companies in Asia

By Reynolds, Paul | Australian Journal of Hospitality Management, Autumn 2000 | Go to article overview

Profit and Principles: Business Ethics in Hotel Management Companies in Asia


Reynolds, Paul, Australian Journal of Hospitality Management


Abstract

When conducting business in Asia, many hotel managers employed by companies based in the West find that some of their codes of ethical conduct inhibit fluid business dealings.

Evidence from the recent collapses of business in the Philippines, Malaysia and Indonesia shows that corruption, nepotism and bribery are common occurrences and are accepted as part of general business life. It is also clear that these are not the only countries where such practices are common. There is much anecdotal and published evidence of projects (including hotel projects), which have foundered or have been rendered unprofitable or unmanageable by illicit and unlawful practices in China, Vietnam and Thailand.

This paper reviews how the dealings of hotel companies are influenced by different ethical standards in the country of operation. Also examined are the tensions created by conflicting codes of ethical conduct when operating in a different cultural environment and the implications for management practices and training. A report is made on an empirical study of a group of fourteen managers who work in eight international multinational hotel companies (MHCs) in South-East Asia. The results endorse some of the anecdotal material, which suggest that practices considered corrupt by Western ethical standards are routinely practised by MHCs operating in SouthEast Asia.

Keywords: Corruption, Ethics, Management, South-East Asia, Hotels, Human Resources

The Master said: `Riches and rank are what every man craves; yet if the only way to obtain them goes against his principles, he should desist from such a pursuit.'

(Lau, D.C. 1979, p.4.5)

Introduction

The following paper will review ethical tensions experienced by some expatriate hotel managers. These managers often work in countries with codes of ethical practice different from those of their employer and their contemporaries. The paper will review a range of literature dealing with the topic and also report on an empirical study where opinions were solicited from a group of fourteen hotel managers, trained in Western countries, who had working experience in hotels in the Asia-Pacific region.

In the past thirty years, the tourism industry has seen a proliferation of multinational corporations operating throughout the world. These companies are, for the most part, based in Europe and the USA. They all have a permanent force of professional managers who are dispersed throughout the world to set up and manage their properties.

The rapid globalisation of the industry has brought forward the question of whether hospitality and tourism operations can be managed in a uniform manner regardless of the country in which they operate. Can a multinational company apply uniform personnel policies and procedures, and establish homogeneous managerial practices in all their operations, or are these allowed to vary country by country? Several authors have investigated expatriate managerial effectiveness (Richards 1991; Yu and Pine 1994; Li and Tse 1998).

Globalisation of the business environment has created an increasingly complex set of relationships for the modern business manager. According to Hofstede (1993) the consequences for managerial practices resulting from cultural differences are numerous and significant. If there is divergence between managerial or corporate values and work practice values, then there are likely to be significant problems in managing the workforce. Values affect attitudes that, in turn, affect behaviour. There can therefore be a lack of congruence between a manager's personal values and her/his behaviour at work. Such incongruence also occurs for the expatriate manager when corporate values do not conform with work values in the country of operation. One such lack of equilibrium is created by the presence in the operating country of what the organisation would consider corrupt business practice. …

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