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Cross-cultural Issues in Business Ethics
John Hooker Carnegie Mellon University June 2007

Outline of the argument
A new economic order.
Based on cultural comparative advantage.

Implications for business ethics.
Acknowledge and understand differences in cultural norms. Rather than universalize ethics along Western lines.

Example: corruption.
Activity that undermines a cultural system.

A new economic order
Movement toward a multi-polar equilibrium.

A new economic order
Based on comparative cultural advantage.
Much more than “outsourcing.” Many countries have cheap labor. Only a few have become economic powerhouses.

Such as…
Japanese quality. Korean manufacturing. Indian information technology. Chinese entrepreneurship. Western technological innovation.

A new economic order
Japanese quality
Continuous improvement.
• Group-oriented, rather than requiring individual reward. • Long time horizon. • No need for cause-and-effect manipulation. • Maintain group harmony by honoring everyone’s ideas. • Nemawashi.

Hanko stamp
Traditionally a part of

nemawashi

A new economic order
Superior operations management
• Just-in-time inventory management • Kanban systems minimize rework, maximize flexibility. • Lean manufacturing, reduced setup times.

Outgrowth of keiretsu (formerly zaibatsu).
• Old-boy networks, trust relationships. • Keidanren. Toyota factory in Japan

A new economic order
Indian IT
Pantheism vs. secularism
• No need to maintain & manipulate nature. • Other coping mechanisms

Inner discipline
• Get control of one’s mind rather than the environment. • Modern form: intellectual discipline, academic competition.

IIT Mumbai

A new economic order
Networking.
• Efficient way to absorb technical knowledge.

A verbal culture.
• Well suited to academic discourse, information age.

Case study: software development
• No need for the technology, but well suited to create it. • Create an orderly world of the mind, rather than an orderly world externally.

Indians see themselves as Westernizing
• There is a common reliance on rationality. • But Indians are leveraging their own cultural traits.

A new economic order
Korean Manufacturing
Initially an imitation of Japanese

zaibatsu.
• High power distance culture allowed Park Chung Hee to create the

chaebol.

Cozy relationship between leading industrial families and the government • Allowed Korea to build major private corporations in a relationship-based culture. Park Chung Hee Korean dictator 1961-79

A new economic order
Loyalty to the boss.
• Paternal relationship.

Highly disciplined, hierarchical groups.
• Organized by age.

Highly competitive, masculine culture.
• Strong national solidarity.

Focus on loyalty to boss.
• Bottom line and short-term profitability are secondary. Korean chaebol

A new economic order
Chinese entrepreneurship
A cultural trait of coastal Chinese.
• Particularly, speakers of Yuè (Cantonese), Mĭn (Fujianese), and Wú (Shanghaiese) dialects.

Uncertainty tolerant culture. Self esteem tied to wealth and status. • “To be rich is glorious” (Deng Xiaoping). Guangzhou

Masculine culture, competitive.

A new economic order
Relationship-based business. • Guānxì is a time-tested
mechanism. • World’s largest economy for 8 of last 10 centuries, soon to be again.

Making inroads into South America, Africa, Middle East.
• These countries are more comfortable with Chinese relationship-based business style than Western rule-based transparency. President Hosni Mubarak of Egypt with Chinese Trade Minister Bo Xilai, who headed a delegation of 150 Chinese businessmen.

A new economic order
Western technological innovation
Disenchantment of nature.
• Opened the way to manipulation of a secular world. • Greek rationality.

Technology as coping mechanism
• Controlling the environment rather than oneself. • Support from family, friends less important. Max...
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