Is Confucianism Good for Business Ethics

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Journal of Business Ethics (2009) 88:463–476 DOI 10.1007/s10551-009-0120-2

Ó Springer 2009

Is Confucianism Good for Business Ethics in China?

Po Keung Ip

ABSTRACT. This article examines whether and to what extent Confucianism as a resilient Chinese cultural tradition can be used as a sound basis of business practice and management model for Chinese corporations in the twenty-first century. Using the core elements of Confucianism, the article constructs a notion of a Confucian Firm with its concepts of the moral person (Junzi), core human morality (ren, yi, li) and relationships (guanxi), as well as benign social structure (harmony), articulated in corporate and organizational terms. The basic character of the Confucian Firm is described, and its philosophical and cultural foundation is critically assessed with respect to its moral legitimacy and relevant to today’s China. China’s recent Corporate Social Responsibility (CSR) development is a high profile response to global business ethics concerns. Efforts have been made to emulate and develop good business practice fashioned in CSR norms and visions. The so-called ‘‘human-based’’ and ‘‘virtuebased’’ business practices rooted in local cultural heritage have been touted as a Chinese response to this problem. This investigation is particularly relevant in the context of the increasingly prominence of the Chinese corporations (China Inc.) in the wake of the rise of China as a global power. How relevant is Confucianism to the building of a modern Chinese corporation that is willing and able to practice reasonable norms of business ethics? The findings of this discussion, which include the organizational implications of the Confucian familial collectivism, have implications for other Chinese communities (Taiwan, Hong Kong, and Singapore) where Confucian tradition is endorsed and practiced.

KEY WORDS: Confucianism, familial collectivism, Confucian Firm, Greater China, principled ethics, virtue ethics

Po Keung Ip, PhD., is Professor and Director of Applied Ethics Center, Graduate Institute of Philosophy, National Central University, Taiwan. He teaches and conducts research in business ethics and well-being studies, and is currently working on the ethical aspects of the Chinese business system, including guanxi.

This article examines whether and to what extent Confucianism as a resilient Chinese cultural tradition can be used as a sound basis of business practice and management model for Chinese corporations in the twenty-first century. Using the core elements of Confucianism, the article constructs a notion of a Confucian Firm with its concepts of the moral person (Junzi), core human morality (ren, yi, li), and relationships (guanxi), as well as benign social structure (harmony), articulated in corporate and organizational terms. The Confucian Firm as an ideal type construction is largely a virtue-based corporation as it is informed and constituted by Confucianism which, deep down, is a virtue-based ethics. The basic characters of the Confucian Firm – authority structure, social interaction pattern, decision-making process, leadership, stakeholder relationships – are described. The firm is critically assessed with respect to its moral legitimacy and relevance to today’s China. As China has become the factory of the world, Chinese factories and companies have been under increasing pressure from the global community and NGOs to comply with universally accepted rules of business ethics in labour issues, environmental responsibilities, and anti-corruption practices, among other things. China’s recent Corporate Social Responsibility (CSR) development is one conspicuous form of its response to this demand. Efforts have been made to emulate and develop good business practice fashioned in CSR norms and visions. However, CSR as a globally promoted concept owes its origin to Western corporate experience. Directly transporting CSR as

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