CONFUCIANISM VS.

BUSINESS BY: LORI BORDE AND SONJA

TEIXEIRA 02/11/10

Course Number: ADM 3155

Course Name: Introduction to International Business

Student Names and ID Numbers: Lori Borde 3400242

Sonja Teixeira 3400187

Title: Confucianism vs. Business

Confucianism is a set of ethical beliefs, sometimes called a religion, taught by Chinese

philosopher Confucius in 6th – 5th century B.C.1 To understand the teachings of Confucius, we
must look at the time in which he was born.
Confucius was born in a period during which China was characterized by social anarchy (Smith,
1965).2 He believed the situation was not hopeless and that China could be saved if its people
would seek the good for others, something their ancestors practiced. This led him to become a
teacher to sons of nobility and hoped with the right advice he could bring about an ideal world.3
Confucius’ teachings emphasized love for humanity, gave high value to learning, devotion to
family, peace and justice.
There are many elements that form the foundation of this belief system. These elements include
rén (humanity), yi (righteousness), li (ritual), and xiao (filial piety), and can be considered the
key principles of Confucianism.4
The first principle, rén, is about humaneness and the care and concern for other human beings. It
is meant to be the foundation for all human relationships. In the Analects, Confucius said “...the
humane man, desiring to be established himself, seeks to establish others; desiring himself to
succeed, he helps others to succeed. To judge others by what one knows of oneself is the method
of achieving humanity..." (Confucius & Lau, 1979).5
The second principle is li. Li is the respect for rituals or ritual consciousness. It is a guide to
human relationships such as loyalty to superiors and respect for elders and is also gives
instructions on the behaviour expected of individuals based on their roles in society.6 This is
probably best expressed by Confucius’s reciprocity saying in the Analects, "...do not do unto
others what you would not have them do unto you..." (Confucius & Lau, 1979).7
The third principle, yi, is the moral disposition to do good. 8 Followers of Confucianism have the
ability to recognize what is right and good and under certain circumstances what the right thing
to do is.
The fourth principle, xiao, can be considered the root of the other principles. Humaneness is the
larger vision of Confucianism, but it starts with filial piety. Filial piety is basically a respect for
one’s parents and ancestors because they are the source of your life; therefore you should do well
to bring respect and honour to your family name.9 Confucius extended this belief into five basic
human relationships, (1) ruler to ruled; (2) father to son; (3) husband to wife; (4) elder brother to
younger brother; and (5) friend to friend, and spoke of the specific duties each person in these
relationships has.10
Confucianism has strongly influenced the cultures of China, Taiwan, Korea, Japan and Vietnam.
It is estimated that worldwide six million people follow Confucianism to the exclusion of all

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other religions, but if we were to consider those who follow the Chinese traditional religion, this
number would increase to 350 million people.11

Confucian societies value harmonious relationships. In Chinese, this is referred to as ‘guanxi’.

Connections in virtually all social functions, including business, are of the utmost importance. In
these societies ‘who you know is more important than what you know’12.
Guanxi refers to the establishment of a connection between independent individuals to enable a
bilateral flow of person or social transactions. Both parties must derive benefits from the
transaction to ensure the continuation of such a relationship. This differs from ‘networking’ in
the Western world in the following ways:
• Motives: role obligation versus self-interest.
People have responsibility to the role in their relationship and not merely to their own self
interest.
• Reciprocation: Self-loss vs self-gain.
Everyone is encouraged to become a yi-ren. In becoming a yi-ren, one must repay
favours and increase the value of the favour given.
‘if someone pays you an honour of a linear foot, you should reciprocate by honouring the
giver with ten linear feet’
• Time orientation: long-term vs short-term perspective.
Guanxi is maintained through continuous, long- term interactions.
• Power differentiation: xia vs power
In Confucianism, everyone striving to become a yi-ren becomes a xia or a knight-
righting the wrongs in the worlds. Those is positions of the power to assist the
disadvantaged gain face( reputation).
• Nature of power: personal power vs institutional authority.
Governance by ethics is given preference over governance by law.
• Sanction: shame vs guilt
Great emphasis is placed on face and face-saving. A loss of face bring shame to a person
and to his or her family members. Extra care must be taken to gain and maintain face,
often referred to as ‘face works’
Generally, it was immoral to focus all ones energy into profit making as it was come as a
sacrifice of building ones virtues. Confucianism brought ethics into business dealings. Instead of
following laws, business men would follow ethical guidelines. Excess profits are eliminated
through avoiding activities such as manipulating supply and demand to bring about higher prices.
If one is found engaging in such unethical activities in the pursuit of greater profits, he will lose
‘face’ and bring shame to him and his family members13.
The key religious norms suggest utmost respect for customers. Confucianism speaks of building
long- term sustainable relationships. Building Guanxi with ones customers is a great business
tactic as it will lead to customer loyalty. Politeness to customers also stems from the Confucian
virtue, Li (rituals). This was a tradition passed from Ancient China and was to be obeyed.
Confucian philosophy with respect to gender was very traditional. The male – junzi was the
leader and more dominant sex. 14 The woman’s main duty was the serve the man in her life. One
of the many principles of Confucian thought was ritual (li). The rituals of ancient China speak of
the ‘three obediences’ which were subjecting a woman to her father, then to her husband, and
then to her sons during widowhood. Women had no dignity nor human rights. This is a conflict
with one of the principles of Confucianism with is ren- humanity.

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TEIXEIRA 02/11/10

Followers of the Confucian philosophy believe in Guanxi. This can be translated to mean
relationship, and in a business context, ‘connections’. The building of long- lasting relationships
is a value that has become quite profitable. Guanxi is maintained through continuous, long- term
interactions. In business relations, loyalty to ones employer is based above all else. Ones
fiduciary duty governs his activities. However, employees are not blindly loyal. The benefit of
the relationship is extended both ways. The employee engages in gift-giving which gives him
good ‘face’ or good reputation.
Furthermore, a lot of emphasis is placed on ethics. Both employee and employer focus their
work around ethical behaviour rather a rule-based system. Through this, trust is built and
cultivated to form better relationships with the people one works with, and employees tend to be
more motivated.
An advantage shared by followers of Confucian thought is that overall costs are lowered because
the economy is not one that follows the law 13. Instead, ethics are the guidelines for business. This
eliminates the high costs such as implementation of contracts. This also decreases the amount of
time to engage in such business dealings.

References

1. http://en.wikipedia.org/wiki/Confucius
2. Huston Smith, The Religions of Man, New York: Harper and Row, 1965, p. 166
3. http://www.patheos.com/Library/Confucianism.html
4. http://en.wikipedia.org/wiki/Confucianism
5. Confucius & Lau, D.C., The Analects, New York: Penguin Classics, 1979, p. 243
6. http://en.wikipedia.org/wiki/Confucianism
7. Confucius & Lau, D.C., The Analects, New York: Penguin Classics, 1979, p. 206
8. http://en.wikipedia.org/wiki/Yi_(Confucianism)
9. http://en.wikipedia.org/wiki/Filial_piety
10. http://www.openhistory.org/jhdp/intro/node35.html
11. http://www.religioustolerance.org/confuciu1.htm
12. International Business, third edition. (Stuart Wall, 2010) p.183- 185

13. http://www.chinaculture.org/gb/en_madeinchina/2006-02/20/content_79482.htm

14. http://www.calvin.edu/academic/philosophy/virtual_library/articles/clark_kelly_j/a_confu
cian_defense_of_gender_equity.pdf