Business values and ethics in Asia: a problem for international companies?
Name of the author: Dan Wu
Student number: 7079393
After the 1997–99 Asian financial crisis revealed the rot in many Asian companies, ‘allegations of nepotism, corruption, crony capitalism, and collusion have been frequently referred to contribute to the downfall of Asian governments in Japan, Thailand, and Indonesia’ (Ang and Leong, 2000). Before many U.S. and European companies start doing business in Asia, many western businesspeople will find out that they have to build up relationship with their business partners first by giving them gifts or going out dinner with them. However, these activities usually will make westerners feel like doing something with corruption or bribe. The dilemma they faced is obviously not only to accept these Asian ways of doing business or not. So what is the real cause of these phenomena? Do these practices represent the business values and ethics in Asia? How should international companies do when facing these dilemmas? In order to answer these questions, this paper has two objectives: first, to investigate the business values and ethics in Asia, and second, to find the proper way how international companies should deal with business values and ethics in Asia which are unethical at home. Discussion
Ethics is closely connected to culture. ‘Culture is ethical because it includes values which distinguish what is right and wrong, and what is acceptable and not acceptable, for a particular society’ (Tabalujan, 2008). For over 2000 years, the Asian culture has inculcated the values of collectivism and order in its conduct of social and business events. For instance, Confucius in the sixth century BC provided a code on the ties between an individual to his/her family and the society based on their respective roles and positions in the environment. A consequence of such a collectivistic culture is interpersonal connections (Hwang, 1987), considered as one of the critical interpersonal relationship values in a Asian society (Kao, 1993; Osland, 1989) and, until recently, a vital ingredient for the success of East Asian economies (Montagu-Pollock, 1991). Interpersonal relationship in this context refers to the cultivation of special relationships or connections. The Asian believe that one’s existence is influenced by relationships with others and that one cannot change the environment but must harmonize with it. Therefore, to succeed in a competitive environment, it is necessary to develop a network to support and protect each other from adversity. With interpersonal relationship, one becomes an “insider,” and negotiations can proceed smoothly. Adversity may come in the form of out-group members who are considered to be less dependable and trustworthy than members of the in-group (Lee and Lo, 1988; Leung, 1988; Li, 1992). Thus, this mindset has led the Asian to develop interpersonal connections among members of the in-group to overcome problems and get things done in many fields including business. Indeed, Leung et al. (1995) found interpersonal relationship to be an underlying feature in Chinese business. Therefore, those business practices in Asia that western businesspeople think “unethical”, such as gift giving, stem from the interpersonal relationship, which is deeply rooted in Asian culture. In the Asian economic crisis which began in July 1997, ‘many commercial negotiations in Asia are believed to be tinted with and tainted by political and other vested interests’ (Asian Development Outlook, 1998; The Straits Times, 1998). However, in most western countries, interpersonal relationship between business partners would be branded unacceptable nepotism or bribery. In the United States, for example, the ethical principle of equal opportunity holds that arms-length transactions should be done between independent parties. Given this differences in ethical attitudes, how should managers of international...
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