A Chinese-United States Joint Venture Business Ethics Model and Its Implications for Multi-National Firms

Article excerpt

The study of business ethics has continuously attracted researchers' attention (Hunt and Vitell 1986, De George 1987, Ferrell et al 1989, Gundlach and Murphy 1993, Lovett et al 1999). These studies, however, concentrate on comparing European and North American ethical beliefs and research on Chinese business ethics has largely been neglected (Nyaw and Ng 1994). Ip and Chan (1999) concurred and attribute the reason to the difficulty of in-depth analysis on vast amount of Chinese business ethic literature that is embedded within the doctrine of Confucianism. The lack of in-depth study leads to inconclusive comments made by different authorities. For example. Lee (1981) suggests that the Chinese managers and the British managers based in Hong Kong have comparable moral standards whilst Nyaw and Ng (1994) claims that Hong Kong Chinese managers are more likely to tolerate unethical behavior than their Canadian counterparts. These inconclusive findings are difficult to generate a comprehensive model on Chinese business ethics so as to help multi-national organizations to establish their Sino-foreign joint venture ethical policies. Intensive review on western (mainly from the U.S) and Chinese literature shows that U.S. ethical judgement is heavily influenced by four constructs, i.e. trust, equity, responsibility and commitment whilst Chinese ethical judgement is substantially determined by the Chinese relational constructs, i.e. 'jen', 'guanxi', xinyong, and 'face'. In turn, the Sino-U.S. joint venture manager's determination of corporate ethical culture has to balance the two ethical judgements so as to maintain harmony between the two joint venture parents. The study attempts to combine the U.S. and traditional Confucius ethical concepts to generate a theoretical Sinu-U.S. joint venture business ethic model to help multi-national firms effectively operate in a Chinese environment. It aims at capturing the current business ethical practices in the west and China and proposes an ethical model to help foreign enterprises to develop their long-term corporate cultural strategies with their Chinese partners in this important global market.


American ethical researches mainly concentrate in providing theories and models in inlra-organization to see how an individual develops his/her ethical behaviors within an organization (Hunt and Vilell 1986, Hunt et al 1989, Fen-ell et al 1989) and interorganization context to study how business ethics evolve (Gundlach and Murphy 1993, Nyaw and Ng 1994) but empirical testing is limited (Jones 1991, Thong and Yap 1998). They also lack in-depth analyses on a major source of Chinese ethical codes, i.e. Confucianism. As such, their applications in the Chinese market (PRC) are specifically problematic (Ip & Chan 1999).

Ip and Chan (1999p.52) adapt a relativist approach and posit that 'Jen ' (moral excellence) regulates the moral standards in a Chinese society. If this word is composed of two characters "two" and "man" (Lin 1939), Confucianism surely advocates an ethical normality, i.e. a man must practice moral excellence rightly in a confined ethical code. This code is well defined in an interpersonal relationship environment or 'Guanxi' that is driven by its interaction dynamics 'face' (Leung and Chan, in print). They help position one's xinyong (personal trust) in Chinese interactions (Tong and Yong 1998).

Ip and Chan's (1999) approach implies that American organizations need to understand the Chinese ethical behavior before they apply their ethical concepts in a Sino-American joint venture context. Thus, this study starts with a literature review to discuss the U.S. and Chinese business ethical concepts; it then integrates them to generate a Sino-foreign joint venture ethical model. Recommendations and future research directions are given.


This study is an initial attempt to integrate the current western and Chinese ethical theories and to develop a Sino-foreign joint venture ethical model so as to help foreign organizations establish their Sino-foreign joint venturing ethical policies in the Chinese market. …


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