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Comparison of Ethics between China and the USA

Comparison of Ethics between China and the USA

Matthew Brooks
IMS 3310.006
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Comparison of Ethics between China and the USA

Abstract:

Purpose: The purpose of this research was to examine the ethical and values differences between

China and the United States of America. China and the United States are the two biggest

economies at the moment and as a result, it is worthwhile to examine how they achieved this.

One facet of their success is their ethics and value systems. This area has a strong influence on

fiscal and monetary policy, trade relations, worker performance and other areas related to

business. By examining the differences, a connection can be made between ethical positions and

how they affect the business side.

Design/methodology/approach: The two methods for measuring this are the Hofstedes cultural

dimensions and the ethics position questionnaire. These two methods study the values and ethics

most commonly found in both China and the USA, then break down the information into useable

data. By taking these results several statements could be made about how these ethics and values

influence the business environments.

Findings: The studies showed stark differences in cultural indicators between the two countries

as well as some similarities. The findings show a pattern related to the ethics and values between

the countries as well as how they affect business.

Originality/value/contribution: By using a combination of two different cultural studies a valid

conclusion can be found that the differences in ethics and values can influence the business
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Comparison of Ethics between China and the USA
environment and potentially performance. With the rise of China as a major influencer in global

economics, it is worth examining what is behind their environment and performance.

Start of Chinese Economic Growth

The importance of studying Chinas ethics and values and how they contribute to

business is driven by Chinas rapid rise to an economic powerhouse. While this economic growth

is slowing down and will eventually come to a stop, China has already solidified its spot as being

a powerful influencer in terms of global economics. China is currently the second biggest

economy with a GDP of over 16 billion US dollars, more than twice than the third biggest

economy. China experienced an average annual economic growth of over 10% since 1978. In

1978, China experienced market reforms that shifted away from a more centralized economy and

to one where Chinas economic growth is largely labour-intensive with high levels of fixed

capital investment (Linda Yueh, National Institute of Economic Review). The market reforms

initially focused on increasing production which would lead to increased exports. China also

improved the shift from an agriculture business that focused on self-sustainment to one that

increased the amount sold by farmers. During the 80s and 90s, the government allowed more

free market policies, more free trade policies were introduced and the service and export industry

increased. Both industries became a larger part of the national GDP. The change in market

policies and direction had repercussions across other areas as well. There has been an increased

focused in education, practically standardized test scores, and infrastructure. There have also
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Comparison of Ethics between China and the USA
been negative repercussions from the economic growth. China has experienced economic

inequality, with China having the most people living in poverty, a growing pollution problem and

hampered future growth concerns as a result of a slowing economy and low birth rates. As a

result of these problems, Chinas twelfth five year plan is set to address these problems.

Using the Hofstede Cultural Dimensions and Ethics Position Questionnaire

Geert Hofstede uses six measures in his cultural dimensions theory. He uses power

distance, individualism, masculinity, uncertainty avoidance, pragmatism, and indulgence. The

original version of the study had only four measures and used over 70 countries. Eventually a

fifth and sixth measure was added and more countries were included. The dimensions theory is

based on how humans all have attitudes relative to each other (Geert Hofstede). Each of the

dimensions are used in relation to other countries, for example, when comparing the USA and

China, China has a power distance score of 80 while the United States has a score of 40. These

are based in relation to other countries. Each of the dimensions measure values that make each

countrys culture unique. The power distance index measures the acceptance of social

inequalities with a high score indicating a high level of acceptance of the inequality.

Individualism measures whether a society values a social circle that is more casual and people

take care of only themselves versus more collective society that values tightly knit family units

and friends that take care of each other. In the masculinity versus femininity index,

masculinity classified as being more assertive and competitive while femininity is known as

caring for the weak and being more cooperative. Uncertainty avoidance is measuring the

societys comfortableness of the futures ambiguity with a high score indicating a relatively high

level of acceptance. Pragmatism in this case measures how willing they are to take steps to
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Comparison of Ethics between China and the USA
change the future instead of being hesitant to change cultural norms. Indulgence is measured as

how much restraint a person has. People with low scores are described as taking less leisure time

and slightly more pessimistic while a high score indicates little restraint and indulging in leisure

activities.

The Ethics Position Questionnaire was developed by Donelson R. Forsyth using

Milgrams study of obedience to authority. The data was obtained by fielding a series of

questionings pertaining to ethics. When applied to cultural studies, he used 139 samples from 29

countries. The results are then categorized on a scale of idealism and relativism with four sectors,

absolutism, situationism, exceptionalism, and subjectivism. Patterns were found where the

countries placement on the grid related to the geographic location. This indicates a correlation

between geographic location and the ethics measured in the survey. Forsyth used the data to see

if it could accurately identify moral behavior but results have been inconclusive.

Using the two Surveys on China

The results of Geert Hofstedes analysis of China are shown here.

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Comparison of Ethics between China and the USA

The results show that China ranks highly in power distance and pragmatism while

Having a low score in individualism, uncertainty avoidance and indulgence while also

having and average masculinity score. The results fit in with the current economic environment

and commonly held beliefs about the culture. One reasoning for Chinas leaning towards a more

collectivist society is explained by economist Jon Elster.

Among economists, those who do not subscribe to the individual rationality of norms
will mostly argue for their collective rationality, claiming that social norms have
collectively good consequences for those who live by them and that, moreover, these
consequences explain why the norms exist (Elster).

With social norms and traditions heavily ingrained, it is reasonable to believe that the commonly

held values and traditions are considered to be for the benefit of society rather than the

individual. The high power distance score, indicating a relatively high acceptance for social

inequality, reflects the massive income disparity currently happening. Recent studies have shown

that rapid economic growth often results in significant changes in individual economic well-
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Comparison of Ethics between China and the USA
being, such as social mobility, for many citizens in a society. Social mobility, in turn, has been a

salient factor in explaining an individuals political attitudes (Xiaobo Lu). With Chinas

economic large economic growth over the last 30 years, there has been an increase in individuals

achieving a high level of wealth but there has also been an increased income disparity. Much of

the impoverished Chinese citizens are rural people who do not have as many opportunities to

climb the social ladder. They do not have access to government services such as education and

healthcare both of which are still a part of the central government.

Chinese culture influences this with high power distance might lay greater emphasis on

status and power (Bih-Shiaw, J). This works well with Chinas above average masculinity score

which emphasizes assertiveness and competition. With a society that values hard work and

working your way up it is not surprising to see such a wide income disparity. The high

pragmatism score can be surprising for a country widely believed to be engrossed in traditional

values but the reason behind the score can be supported by the nationwide reform that started in

the 1970s with the Great Leap Forward and the incremental market reform. Though there has

been resistance, particularly in the rural areas, the people with the most power have been

supportive of the new wave of changes.

The lower scores in the individualism, uncertainty avoidance, and indulgence reflect a

balance of the traditional values and current culture. The collectivism attitude represents a

culture that emphasizes a strong family unit that supports each other. Houses typically have

multiple generations living together, with adult children taking care of elders. Restraint is
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Comparison of Ethics between China and the USA
expected of many people and leisure time is not as often as in other countries. The long term

uncertainty reflects the current culture as there is a growing concern over pollution and income

disparity with the next 5 year plan being used to remedy these problems.

United States Cultural Dimensions

The results of Hofstedes United States Analysis (Hofstede 2001)

The United States scored highly in individualism, above average in masculinity and

indulgence, slightly below average in power distance and uncertainty avoidance and low in

pragmatism. Americas highest score, individualism, is evident in our culture where people are

expected to move out at somewhere between 18 and your early 20s rather than living at home.

Family units are more spread out rather than living in a more centralized location. When parents

reach old age they are commonly put in retirement or advanced care facilities. The free market

economy also promotes the trait associated with masculinity such as competitiveness,

assertiveness and what some would say a lack of caring for others. The last item is a polarizing
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Comparison of Ethics between China and the USA
issue in American politics with some saying that if you are poor or destitute it is solely your

fault. The other side will advocate for programs that will aid people and encourage programs

designed for the welfare of society. The high indulgence score reflect our society valuing of

entertainment outlets but also exposed some of the problems Americans have had with restraint.

High credit card debt can reflect spending more than you make as well as a preference for non-

essentials. The polarization of American politics is also present in areas such as power distance

and uncertainty avoidance where a relatively average score was given. There has been a growing

economic disparity in the United States with only a small portion of the population getting the

majority of the increase of wealth. Researcher Thomas Piketty found that The US distribution of

income has become more unequal than in Europe over the course of the 20th century; it is now as

unequal as pre-WW1 Europe (Piketty). The divide come from how the issue is to be resolved

with some calling for a massive shift in wealth redistribution and the other calling for

maintaining the current order of things. This has led to a gridlock on solving this issue between

those calling for social change and those reluctant to do so and wanting to hold onto tradition.

Comparison of Cultural Dimensions between China and USA

The US and China results compared (Hofstede 2001).

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Comparison of Ethics between China and the USA

As shown above, China scores vastly higher in power distance and pragmatism. The United

States scores vastly higher in individualism and indulgence. Both countries score relatively

similar in masculinity and uncertainty avoidance. Though there is income disparity in both

countries it appears more acceptable in China, a country with a much larger portion of the

population living in poverty. This can be attributed to a relatively higher level of restraint being

valued. The United States higher individualism score reflects the difference in traditional family

values present in both countries. While both countries value economic competition amongst the

labor force, there are different expectations for the purpose. Chinese culture expects people to

take care of family and there is a great influence on working for you family outside of the

immediate family unit. In the United States, families are not typically as close knit and children

are expected to support themselves and eventually their own family instead of staying with and

supporting their parents, grandparents, and other family members. The way both countries feel

about the ambiguity of the future are similar, they both feel more comfortable with the future,

with China being slightly more. The ways they address whatever concerns they have is different.
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Comparison of Ethics between China and the USA
China is much more pragmatic as shown by the massive change they underwent over the second

half of the 20th century. The support of this change is partly due the massive growth in GDP and

the emergence of China as a global economic power. The United States is much less likely to

want to undergo the same amount of change China has experienced. The divide in politics has

led to a stranglehold on some policies from both parties. Americans are more likely to keep the

current system by voting in the same incumbents rather than straying from the traditional two

parties.

The biggest similarities between the two countries is are the shared favor of a market

economy. Ethically they share the same attitudes of being responsible to yourself in terms of

climbing the social ladder rather than relying on welfare. They also handle several issues in their

society differently. In terms of government abuse, China is much more stringent on these cases

and will occasionally use the death penalty. The death penalty is much more widely accepted and

used more freely in China. In the United States, the death penalty is used only for violent crimes

rather than corruption and white color crime. The process for capital punishment is also slower

due to multiple appeals allowed for the defendant. Using the data from the Cultural Dimensions

theory, it can be linked to power distance and pragmatism. Overall the findings from the cultural

dimensions theory analysis on both countries have accurate representations of the ethical values

held by each country.

Ethics Position Questionnaire

Results of the questionnaire for China and the USA.

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Comparison of Ethics between China and the USA

In terms of idealism, China and the USA have a similar placement on the scale. The biggest

difference between the two is relativism. China is scores higher on the relativism scale, placing it

in the subjectivism square. The United States hold a lower scale and are in the exceptionism

square. Using Forsyths classifications, China can be best described as being pragmatic

relativists who base their ethical choices on personal considerations, such as individualized

values, moral emotions (Forsyth 1980a). They use a calculated approach to solve problems,

better known as having ethical egosism, a skeptical ethical philosophy that takes a pragmatic

approach to evaluating action (Forsyth 1980b). This falls in line with Chinas high pragmatism

score in Hofstedess test. Ethics essentially come from personal moral beliefs rather than outside

sources such as religion, philosophy and civil law. This at first can be surprising because of the

implication that Chinas strong centralized government would influence ethics and values.

However when studying the sources of morals, it can be seen that religion and philosophy, two

major sources of morals, do not play as big a part of the Chinese moral system as compared to
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Comparison of Ethics between China and the USA
countries like the United States. In the United States, religion plays a large part in morals and

values. A separate study found that religiosity was negatively correlated with subjects

perspective on relativism suggesting that a strong commitment to religious belief is associated

with a belief in universal moral principles(Davis, 2001). So for America being classified as

exceptionist, which are principled pragmatists who advocate following guidelines but also

make exceptions to the rule. The attitude regarding religion can be described as religious

participation on the part of the individual and the family, becomes a means of affirming and

maintaining both a culturally prescribed and subcultural identity (Argyle). The identity is seen

to flexible as people will identify themselves by a certain religion, political party, or label but

their actions will sometimes contradict that.

How the Results Affect Other Areas

Because ethics and values shape a persons identity they also influence areas such as

government policy, corporate actions and employee actions. In Geert Hofstedes approach, he

found that the results showed an accurate representation in several aspects of their society. In his

analysis he found that they are a masculine society success oriented and driven. The need to

ensure success can be exemplified by the fact that many Chinese will sacrifice family and leisure

priorities to work. The collectivist nature and pragmatism of Chinese society is understandable

due to their communist social and fiscal policies they have had in place for a large part of the 20th

century (Hofstede 2010). For the United States, the cultural survey falls in line with American

society and their history to this point. The high individualist score accurately represents

Americans emphasis on freedom, personal liberties and entrepreneurship as opposed to China

who has had market policies designed to favor state owned businesses, as well as certain
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Comparison of Ethics between China and the USA
restriction on personal liberties. Like China, the United States has a power driven and

competitive economic system that presents a lower power distance and high masculine score.

The economic culture also embraces an indulgent society for America, while China has opposite

results in terms of indulgence. Using the results of the Forsyths Ethics Position Questionnaire it

can be seen that the two countries are similar in terms of idealism. Both countries have a set

group of morals and values. The key difference is their relativism scores. Chinas high relativism

manifest itself in the countries lackluster human rights activism and high income inequality. The

values come from a long history of tradition and philosophy rather than a strong religious

influence. The United States on the other hand adopts a more flexible set of values. It

accompanies this by having a populace active in social issues even if they do differ. Overall the

results of the two studies show that the values exhibited by both countries manifest themselves in

other areas of society such as business performance and government policy.

Corporations and Ethics

One key area to study on the effects ethics and values have on business is the issue of

corporate law. A corporations actions and ethics are representative of a portion of societys

values. In the Hofstedes cultural comparisons survey, areas like high power distance and

masculinity could show a societys tolerance for corporations emphasizing profit over issues like

worker pay, benefits, environmental impact and social impact. Transversely, a society with a

lower masculinity score and lower power distance would most likely be against the high income

inequality and other social issues problems. How each corporation acts is due to societal norms

and values at the time. A quote from Melvin Eisenbergs study on Corporate Law and Social

Norms best describes it as this (Eisenberg).

Corporate law serves both to facilitate and to regulate the conduct of the corporate
enterprise. Insofar as corporate law is regulatory, it provides incentives and disincentives
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Comparison of Ethics between China and the USA
to the major actors in the corporate enterprisedirectors, officers and significant
shareholdersthrough the threat of liability. In significant part, however, these actors are
motivate not by the desire to avoid liability, but by the prospect of financial gain, on the
other hand, and by social norms, on the other.

Worker Culture

Because of the different value systems the worker culture differs in several areas. For the

United States, there is a more personal relationship in a worker environment which can be

beneficial in terms of morale and it could be bad in terms of reduced motivation. For China, the

worker unit can best be described by this using HR expert Reyer Swaak description

Workers often belong to a unit, or work group, and their pay and benefits are governed by

policies set for the unit. Communist Party representatives still influence the

implementation and maintenance of these so-called personnel policies and practices.

However, some observers have noted that the Party is getting less and less involved in

these issues and, in some areas, has even abandoned direct control over the work unit

(Swaak).

As you can see, the influence of values from a strong centralized government still have had an

effect on worker values. The overall collectivist attitude shown by Chinese plays a strong role in

the worker environment. Studies have shown that at the individual level employee collectivistic

values may help maintain strong and stable interrelationships with others at work and enhance

the employees sense of attachment with the in-group (the organization).(Astakhova). With how

the market in China is shifting to adopting more free market policies, it will be interesting if their

survey results shift to adopt a more western outlook.

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Comparison of Ethics between China and the USA
Limitations and Concerns

While both surveys provide a solid general understanding of values and ethics in both

countries it is important to realize that they are not representative of every individual. The works

only examine values at a macro level. Peoples values are constantly changing and if the surveys

are administered sometime in the future, the results could very well be different. The research

conducted is best used with other research material that goes in further depth in each countrys

history, economic reports, culture.

Future Readings

For future research and applications, it is recommended that articles and surveys relating

to other factors that influence values, ethics and business be used to supplement this paper. For

teaching international business it is important to focus on the performance of all business

functions across national borders needs to be interdisciplinary and cross-functional with each of

its business discipline subsets and integrated into a meaningful whole to carry out the goals of

IBE (Taylor and Brodowsky, n.d).

The importance of studying the relationship between China and the United States is due

to several reasons. The relationship has military implications with the pentagon doing regular

reports, as well as each country having a trade dependence on each other (Fordham, 2011). With

so much business being conducted between the two, a better cultural understanding can be used

to better the relationship as well as learn from each other. The research can also be combined

with other country studies to perform analysis on individual areas. For example, a pattern can be

found in tourists from particular studies using Hofstedes analysis and others, People from
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Comparison of Ethics between China and the USA
western cultural countries tend to stay longer on a trip to a foreign country than people from

eastern cultural countries, because eastern cultures are high in power distance and

hierarchy( Hsu, Woodside, Marshall, 2012). This study also examines results from Inglehart and

Baker, Schwartz, Steenkamp, and GDP and Distance surveys that can also be used for a US and

China comparison. For a more guided study on cultural impact and business, the GLOBE study

is a useful tool for examining the managerial differences between countries. The study found

that,

While different societies have different views about many aspects of leadership and its

effectiveness, they also are in agreement on other aspects of leadership. GLOBE found

that there are 22 attributes that are universally deemed to be desirable. Being

motivational, dynamic, honest and decisive are examples of desirable leadership

attributes in all GLOBE countries (Javidan, 2009).

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