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A Cross-Cultural Comparison of Ethical Orientations and Willingness to Sacrifice EthicalStandards: China versus Peru

Author(s): Christopher J. Robertson, Bradley J. Olson, K. Matthew Gilley and Yongjian

Bao

Source: Journal of Business Ethics, Vol. 81, No. 2 (Aug., 2008), pp. 413-425

Published by: Springer

Stable URL: http://www.jstor.org/stable/25482223

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Journal ofBusiness Ethics (2008) 81:413-425 ? Springer 2007

DOI 10.1007A10551-007-9504-3

A Cross-Cultural Comparison of Ethical

Orientations and Willingness to Sacrifice

Ethical Standards: China Versus Peru

Christopher J. Robertson

Bradley J. Olson

K. Matthew Gilley

Yongjian Bao

ABSTP^ACT. Despite an increase in international busi

ness ethics research in recent years, the number of studies

focused on Latin America and China has been deficient.

As trade among Pacific Rim nations increases, an

understanding of the ethical beliefs of the people in this

region of the world will become increasingly important.

In the current study 208 respondents from Peru and

China are queried about their ethical ideologies, firm

practices, and commitment to organizational perfor

mance. The empirical results reveal that Chinese workers

are more relativistic and less idealistic than their Peruvian

counterparts. One explanation for the disparity between

these two groups is likely the variation in collectivism that

can be traced to different levels of importance across in

groups and outgroups. In addition to a summary of the

results, future research directions and managerial impli

cations are discussed.

KEY WORDS: culture, ethics, Peru, China

The power, prowess, and potential of the Chinese

economy have been an undeniably hot topic in the

cross-cultural management literature. And for good

reason: China is the most populous nation in the

world with over 1.3 billion people, and the Chinese

economy, now one of the world's largest, has grown

at a rate of over 8% for 3 years in a row. The

Chinese presence is truly global and one of the

more recent focal areas of Chinese trade and

investment has been Latin America. Between 1999

and 2004 overall trade between China and Latin

America has increased by over 900% (Lloso, 2005).

In 2004 alone approximately $20 billion, or nearly

half of all overseas Chinese investment, was destined

for Latin America. Chinese officials have also

discussed the possibility of investing an impressive

$100 billion in building up the infrastructure in

Latin America (Lloso, 2005). The already impressive

relations between China and Latin America are

indeed poised for phenomenal growth in the coming

decades.

Peru in particular has cultivated a strong rela

tionship with China. Formal trade relations between

Peru and China go back 30 years: trade spiked in

2004 when Peru formally recognized China as a

market economy. The November 2003 signing of an

agreement between Peru and China to boost tour

ism and trade, resulting in China's designation of

Peru as an official destination for Chinese tourism,

has also fostered economic growth. In 2004 the

value of trade between these two nations was

$1.75 billion. This level is expected to increase more

than 12% in 2005 to over $2 billion (Latin American

News Digest, 2004). Trade between China and Peru

is also a two-way street, as signified by the fact that

China is the second most important destination for

Peruvian exports, behind the United States, and

China could potentially pass the U.S. in the near

future as the top Peruvian export market.

Scholarly research of Chinese and Peruvian cul

tural values has been varied with China receiving the

lion's share of research attention since joining the

World Trade Organization in 2001. Researchers

have focused on a number of Chinese management

topics such as guanxi, foreign direct investment

strategy, work values, and ethical beliefs (Luo, 2002;

Redfern, 2005; Ralston et al., 1997). The number

of empirical studies in which Chinese managers and

employees are compared to Western counterparts

has also been growing at an impressive rate. Yet

despite China's trade presence and influence in Latin

America, cross-cultural studies focused on China and



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414 Christopher J. Robertson et al.

trade partners such as Peru have been virtually

nonexistent (Arruda, 1997). This has been the case

with business ethics research, an area that is still

deficient in empiricism and in cross-national studies

(Arruda, 1997; Robertson and Crittenden, 2003).

Thus we have elected to assess differences in

employee ethical orientations between China and

Peru. Peru was selected due to its membership with

China in the Asia-Pacific Economic Cooperation

(APEC) and its significant level of trade with China

(http://www.apec.org). Also, based on prior studies

of Peruvian culture, it appears that Peruvian values

tend to be somewhat representative of the cultural

values of the Andean region of South America

(Lenartowicz and Johnson, 2002). The overall

objective of this study is therefore to examine and

compare the beliefs of Chinese and Peruvian

employees related to ethical orientations and will

ingness to sacrifice ethical standards.

In the next section of this article an analysis of

Chinese and Peruvian cultural values, with an eye

toward ethical orientations, will be presented. This is

followed by the development of formal hypotheses,

a description of the methods, and a discussion of the

statistical results. The article concludes with an

assessment of future research directions and mana

gerial implications.

Literature review and hypotheses

The burgeoning body of cross-cultural research has

yielded strong evidence that documents the exis

tence of cultural differences of managers from dif

ferent nations (Hofstede, 1997; Husted, 1999;

Lenartowicz and Johnson 2002; Robertson et al.,

2003; Trompenaars 1994). While notable differences

have been found in such aspects of culture as per

ceptions of power, concern for time, ability to cope

with uncertainty, regard for material goods, display

of emotions, change, and group orientation (i.e.,

Hofstede and Bond, 1988; Rawwas et al., 1994),

very little empirical work has focused on cross

national ethical beliefs or ideologies (Robertson et

al., 2003). This dearth of empirical business ethics

research has been more punctuated in the develop

ing world, especially areas that have been tradition

ally underrepresented in management research such

as Latin America (Arruda, 1997; Lenartowicz and

Johnson, 2002; Marshall 2003). In fact, in a recent

review by O'Fallon and Butterfield (2005), of the 19

studies from 1996-2003 that examine cross-cultural

differences in ethical decision-making, only three

incorporate Latin American samples.

Despite the geographical gaps in empirical studies

of business ethics, in the past two decades significant

progress has been made toward a deeper under

standing of the ethical decision-making process

(Hosmer, 2000; Trevino, 1986). Business ethics

scholars have examined a multitude of influential

factors including, but not limited to, individual

values, moral intensity, situational factors, moral

philosophies, cultural values, political inclination,

and economic variables (Husted, 1999; Jones, 1991;

Ralston et al., 1997; Rest, 1986).

The concept of ethical ideology has been one area

of business ethics research that has received minimal

attention in cross-cultural research. Empirical studies

in the management and marketing fields, mostly

performed with purely American samples, have found

ethical judgments are mediated by the individual's

ethical ideology. In one study, Vitell et al. (1993)

found that more idealistic members showed higher

levels of honesty and integrity than their less idealistic

and more relativistic counterparts. A more recent

study of Russian and American managers found that

Russian managers were both more idealistic and more

relativistic than their American colleagues, and that

both idealism and relativism affect the individual's

willingness to sacrifice ethics (Robertson et al., 2003).

The ethical ideologies of idealism and relativism

have received considerable attention in the realm of

business ethics (Ferrell et al., 2000; Robertson et al.,

2003). Forsyth (1980) developed a measurement tool

for idealism and relativism that set the foundation for

future empirical studies. According to Rawwas et al.

(1994, p. 228), a high score on Forsyth's idealism

scale signifies that an individual or group believes

more in the moral absolute of specific actions or

behaviors in determining what course of action one

should follow. Thus, idealism refers to the degree

to which an individual believes that the right

decision can be made in an ethically tenuous situa

tion. This is essentially the deontological perspective

that embodies concern for others' welfare when

evaluating alternatives.

The notion of relativism, conversely, refers to

the rejection of universal rules in making ethical



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A Cross-Cultural Comparison 415

judgments. People who espouse relativism make

decisions on a situationalfy specific basis. That is,

high-relativists evaluate the current situation and use

this as the basis for making a judgment (Robertson

et al., 2003). High relativists place little emphasis on

laws and regulations, and low relativists, on the other

hand, believe that standard rules can be applied

regardless of the issue at hand (Rawwas et al., 1994).

Relativism, however, does not create a sort of cha

otic or anarchic front: with relativism, there is still

order and rules, just not universality, and thus, many

ways to solve situations (Warren et al., 2004).

Although very little research has focused on

Chinese ethical judgments, one recent study found

that the Chinese appear to score high in relativism

(Redfern, 2005). Based on the vertical collectivist

culture in China (Bhagat et al., 2002), these pre

hminary results are not surprising. A collectivist

culture refers to a society that values unity and

cohesion, encourages loyalty within groups, and

discourages disharmony (Hofstede, 1993), and ver

tically collective societies stress top?down authority.

This does not imply, however, that those immersed

in collectivism will not engage in actions of dishar

mony or deceit in particular situations. In fact,

Triandis (2004) has found that cultures steeped in

vertical collectivism are more apt to be deceptive if

this dishonesty benefits the ingroup. A vertical col

lectivistic society emphasizes the ingroup while still

recognizing the importance of submitting to

authority (Tjosvold et al., 2001). Those in the lower

ranks may be asked to comply with unethical actions

based on this respected structure, while those in

outgroups may receive unwarranted actions from

those in the ingroup based on status of hierarchy. In

addition, guanxi, which is culturally specific to the

Chinese society, can create disharmony or deceit

within certain groups. Studies have shown that

although guanxi can help those within the ingroup

to succeed professionally, those within the outgroups

normally receive the greatest harm from this cul

turally derived relationship (Warren et al., 2004).

Although Latin America traditionally has been

classified as a collectivistic culture (Hofstede, 1997;

Trompenaars, 1994), the degree to which Peruvian

collectivism compares to Chinese collectivism is not

clear. Although cross-cultural research has gained

invaluable insight from Hofstede (1980) and others,

such as Triandis (1995), we must be cautious in

assuming that the behaviors of those in a specified

collectivist country will mirror the actions of those

in different collectivistic nations. For example, the

added dimension of guanxi appears to accelerate and

strengthen the relativistic qualities of the Chinese

culture, whereas, Latin societies may not have such

influential networks. Lenartowicz and Johnson

(2002) provide strong support that examining

regional/country differences is essential even when

cultural similarities have been noted by past research.

These researchers found that among managers from

12 Latin American nations, the Peruvian group

ranked highest, relative to its peers, along an indi

vidualistic-oriented dimension titled self-direction.

Moreover, in a recent qualitative study of Chinese

managers it was concluded that some respondents

justified their actions, such as bribery to government

officials to receive some sort of preferential treat

ment, which is against formal laws, based on their

desire to maintain a guanxi relationship (Warren

et al., 2004). Thus, the guanxi relationship, which is

prominent in China and unknown in Peru, requires

those within this network to adjust their ethical

judgments based on the situation at hand, which is a

classic form of relativism. Based on this analysis:

Hypothesis 1 Chinese employees will be more

Relativistic than their Peruvian counterparts

when faced with ethical dilemmas.

Idealism, which refers to the degree of concern

for morals ideals and a concern for others' welfare, is

less consistent with collectivistic values such as those

linked with relativism (Robertson et al., 2003). The

Chinese culture incorporates Confucian teachings,

which certainly aligns with idealistic beliefs (Red

fern, 2005). Yet, our previous discussions of vertical

collectivism and guanxi and its double-edge nature

creates both cooperative peace (ingroups) and con

tentious needs (outgroups) depending on the spec

trum of the relationship. Thus, with such

relationship networks, would there be as much

concern for another's welfare as there would be in

collectivistic societies?

For those immersed in this complex network,

there may be a paradox within the Chinese culture

based their collectivistic culture and guanxi

relationships. There is a recent study that found

that Chinese managers who were less influenced by



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the outside world were less idealistic than those

with greater external influences (Redfern, 2005). In

addition, one study found that Asian decision-makers

have lower concern in ethical decision-making for

external stakeholders (Jackson et al., 2000). There is

also support that when Chinese managers were

confronted with conflict from outside groups, their

strategy was to embarrass the external group in order

to influence the Chinese manager's position. Thus,

there may be a dilemma within the Chinese society

between the collectivist and Confucist teachings of

total harmony and peace and the pull of guanxi

relationships; they may accept the paradox as a Yin

and Yang. Having the latter perspective would

bring assurance that their ethical decision-making

was appropriately justified.

Consistent with idealism is the notion of integrity,

which emphasizes overall honesty in decision-mak

ing, and has been closely associated with Chinese and

Peruvian societies (Holt et al., 1994; Lenartowicz and

Johnson 2002). Individualistic values may also play a

role in the worldview of idealists. Individualism tends

to be more prevalent in a free-market economy, and

Peru may be experiencing a cultural shift due to a

number of capitalist policies implemented in recent

years. Moreover, idealistic individuals believe that

there is a morally correct alternative that will not harm

others. Thus less idealistic individuals may make

decisions without reference to its impact on others. In

Lenartowicz and Johnson's (2002) study of Latin

American values, Peru scored highest along the

integrity dimension, compared to civility, self-direc

tion and drive. Further, Peru's ranking on Transpar

ency International's Corruption Perceptions Index

(CPI) for 2005 was 65th, while China ranked 78th,

which suggests a more idealistic culture relative to

daily business corruption as measured by the CPI

(Transparency International, 2005). Thus, based on

the above linkages, the following hypothesis has been

developed:

Hypothesis 2 Peruvian employees will be more

Idealistic than their Chinese counterparts when

faced with ethical dilemmas.

An additional area of business ethics research that

has gradually received attention is the analysis of

common business practices (Robertson and Fadil,

1999). In the United States, many firms now have

formal codes of ethics. While different countries tend

to have their own distinct moral paradigms, the

characteristics of individual managers and workers

help shape a nation's overall worldview. Idealism and

relativism both possess intuitive links to the willing

ness to sacrifice ethical standards for individual and

firm financial rewards. Collectivistic individuals, like

those who are highly idealistic, typically believe that

any means are justified by end results (Rawwas et al.,

1994). Relativists, with their situational ethics, ap

pear to be more focused on the current situation

rather than end results. Relativists also tend to be

more inclined to sacrifice personal moral standards

for the perceived norms of the group. Specific to the

U.S. versus Peru situation is the idea of a tradeoff

between profitability and ethicality. Robertson et al.

(2003), in their study of ethical beliefs between U.S.

and Russian managers, found that in both samples,

relativism and idealism each had a positive effect on

the willingness to sacrifice ethical standards for

individual and firm financial rewards. Unfortunately,

research on ethical ideologies has been neglected in

developing countries, although such settings could

provide rich data concerning the problems of sub

stantial growth and ethical matters. Ethical dilemmas

would be inherent for those immersed in collectiv

istic societies when collectivist-promoted harmony

clashed with attractive profits gleaned from a flowing

economic society. Although prior empirical research

of ethical ideologies and ethical business practices is

extremely limited, we have found no evidence that

contradicts the findings of Robertson et al. (2003)

and we therefore find it consistent to theorize that the

relationship between ideology and sacrificing of

moral standards will hold up in the Peruvian and

Chinese samples. Thus,

Hypothesis 3 In Peru and China, relativism will

have a positive effect on the willingness to sacri

fice ethical standards for individual and firm

financial rewards.

Hypothesis 4 In Peru and China, idealism will

have a positive effect on the willingness to sacri

fice ethical standards for individual and firm

financial rewards.

Moreover, due to the proximity in corruption

scores on the CPI scale and a lack of evidence that



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suggests a significant gap in the relationship between

the sacrificing of standards, we anticipate no differ

ence between the Chinese and Peruvian groups:

Hypothesis 5 There will be no significant differ

ence between Chinese and Peruvian employees

when faced with sacrificing ethical standards for

individual and firm financial rewards.

Research method

Sample and sampling procedure

In order to empirically test each hypothesis, primary

data was collected from Peruvian and Chinese

employees using a survey-based methodology. The

Chinese employees were from a major urban area in

Mainland China, while the Peruvian employees

were from the largest city in the country. The aim

was to gather data from Mainland China, since

Mainland Chinese employees would likely have

been reared with more traditional cultural values

than those residing in places with long-standing

exposure to Western influences, such as Hong Kong

or Taiwan (Olson et al., 2007). Surveys were ini

tially written in English and then translated into

Spanish and Chinese by native speakers. To ensure

appropriate translation, the surveys were then back

translated from Spanish and Chinese to English by a

separate translator, and appropriate changes were

then made before final distribution to the partici

pants (Alreck and Settle, 1995).

Respondents came from a number of firms in

various industries. Surveys were distributed to

respondents attending executive education or

continuing education classes in Peru and China. In

each case, one of the researchers met the employees

in a group setting and distributed the surveys.

Respondents were told that their participation was

voluntary and that their responses were completely

anonymous. Any potential foreign (not Chinese or

Peruvian) respondents were dismissed from partici

pation. Respondents were allowed unlimited time to

complete the surveys. When all respondents had

finished filling out the surveys the on-site researcher

then collected the complete set for the participating

group. During the data collection phase, we targeted

a sample size of 60 respondents from each country,

which is consistent with the sampling protocol set

forth by Malhotra et al. (1996). After data collection

was complete, the sample included responses from

64 Peruvian and 144 Chinese employees. While

conducting our statistical analyses, the usable

responses ranged from 49 to 64 for the Peruvian

group and 127-144 for the Chinese contingent.

About 63% of the Peruvian and 73% of the Chinese

respondents were married, just over one-half occu

pied management positions, and the modal age

(measured with a categorical variable) was in the 30

39 year-old range.

M easures

We elected to follow the research design employed

by Robertson et al. (2003) in their cross-cultural

study of ethical orientations between the United

States and Russia. Replication of a previously

employed research method provided us with two

distinct advantages: (1) we utilized a valid and

established scale and (2) we fostered comparability of

results between the prior and current studies. Idealism

and relativism were measured using the scale origi

nally published by Forsyth (1980). Idealism was

measured using 10 items, and relativism was mea

sured using nine items. Idealism questions included

items such as One should never psychologically or

physically harm another and The dignity and

welfare of people should be the most important

concern in any society. Examples of relativism

questions are What is ethical varies from one situ

ation and society to another and What is ethical

for everyone can never be resolved since what is

moral or immoral is up to the individual. The

reliability for idealism was .74 for both Peru and

China, while the reliability for relativism was .69 for

Peru and .56 for China (Cronbach, 1951), and sta

tistical results suggest no concerns with abnormal

distributions.

Employees' Willingness to Sacrifice Ethical Standards

for Individual and Firm Financial Rewards was measured

using four items developed specifically for this study.

Respondents were asked to indicate the extent to

which: (1) making money is more important than

running an honest business; (2) investors should be

more interested in their ROI than in creating social



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good; (3) firms are successful based on financial gains

instead of moral accomphshments; and (4) top

management should be concerned with increasing

shareholder wealth instead of business ethics. Re

sponses were coded on a five-point scale, where

1 = strongly disagree and 5 = strongly agree. The

reliability of this measure was .76 for Peru and .68 for

China, and statistical results suggest no concerns with

abnormal distributions.

We controlled for the extent to which the

respondents' organizations had a formal system of ethics

in place. Respondents were asked to indicate their

level of agreement (1 = strongly disagree to

5 = strongly agree) with each of the following: (1)

My firm has standards and procedures in place, such

as codes of ethics; (2) my firm has high-level per

sonnel responsible for ethics compliance programs;

(3) my firm has ethics training programs in place; (4)

my firm has in place systems that monitor, audit, and

report misconduct; (5) my firm is consistent with the

enforcement of ethics standards; and (6) my firm

focuses on ethics training programs. The reliability

of this measure was .79 for Peru and .81 for China,

and statistical results suggest no concerns with

abnormal distributions.

We also incorporated a variety of other control

variables into our regression models to enhance

confidence in our findings. To control for firm

level effects when predicting employees' feelings

regarding the profit/ethics tradeoff, we included a

categorical measure of firm size based on number of

employees. In larger firms, employees may be less

likely to be intimately involved with and aware of

key ethical issues. Conversely, in smaller firms,

employees may be more likely to see the effects of

the firm on key stakeholders, thus enhancing their

awareness of potential profit-ethics tradeoffs.

Therefore, we feel that controlling for firm size is

important. A similar argument may be made with

regard to another of our controls, hierarchical level

within the organization. Higher-level managers are

more likely to have information that crosses internal

departmental boundaries, as well as the boundary

between the company and its external stakeholders.

Thus, an individual's hierarchical level may affect

his or her awareness of the profit-ethics tradeoff,

necessitating its inclusion as a control variable. Level

within the organizational hierarchy was measured

by asking respondents to indicate whether their

position was in senior executive, middle manage

ment, junior management, non-management, or

staff. Several additional individual-level factors were

included as controls in our regression models,

including education level, marital status, gender, and

age. With regard to education level, those with

greater educational attainment may be more likely

to have been exposed to ethics curricula and

training that may have addressed and enhanced their

ethical awareness. Respondents were asked to

indicate their highest level of education based on

the following possible values: high school, some

college, college graduate, some graduate school, and

graduate degree. Prior studies have also included

marital status and age in cross-national ethical

decision-making analyses (i.e., Robertson et al.,

2003). Marital status was measured simply with an

indication of married versus non-married status.

Age was a categorical variable where ages were

grouped into 10-year ranges from 1 = 20-29 years

of age through 5 = 60 and older.

Results

Means, standard deviations, and zero-order correla

tions are found in Table I.

To test hypotheses 1, 2, and 5, f-tests were per

formed in an attempt to determine whether Peru

vian and Chinese employees differed significantly

with regard to relativism, idealism, and a willingness

to sacrifice ethical standards for financial gain (the

profit/ethics tradeoff'). As noted in Figure 1, sig

nificant differences were present between Peruvian

and Chinese employees on all three variables. This

provides support for Hypotheses 1 and 2, but refutes

Hypothesis 5. Chinese employees appear to be sig

nificantly more relativistic than their Peruvian

counterparts. Thus, it appears that the Chinese

group places more emphasis on the specific situation

and the relationships among the individuals in

volved, when confronted with an ethical dilemma.

Hypothesis 2 suggested that Peruvian employees will

be more idealistic than Chinese employees when

faced with ethical dilemmas. Our results indicate that

this is, indeed, the case, and it can be deduced that

Peruvian employees believe more in moral absolutes

and have stricter, more cogent, definitions of

morality. Finally, Hypothesis 5 theorized that there



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TABLE I

Descriptive statistics and correlations

ManSD12345 6 7 89

Peruvian respondents

1. Profit/ethics tradeoff 7.98 4.16

2. Relativism 25.86 6.72 .31

3. Idealism 41.70 5.52 -.04 .22

4. Co. has ethics procedures 22.65 4.16 -.06 .10 .11

5. Marital status 0.63 0.49 -.07 .10 -.03 -.11

6. Gender 0.36 0.48 .04 -.04 .03 -.02 -.20

7. Hierarchical level 2.40 1.26 .00 .06 .06 -.00 -.18 .07

8. Age 2.98 0.96 -.13 .06 -.03 .19 .41*** -.31* .01

9. Education 3.38 0.71 .18 -.13 .08 .06 -.03 .23 -.17 .17

10. Company Size 4.23 1.38 .09 .04 .20 -.04 -.12 .05 .44 .22 .17

Chinese respondents

1. Profit/ethics tradeoff 9.96 3.75

2. Relativism 27.99 5.33 .04

3. Idealism 36.57 6.37 -.19 .07

4. Co. has ethics procedures 21.24 5.17 -.07 .06 .17*

5. Marital status 0.73 0.45 -.09 -.05 -.15 -.01

6. Gender 0.67 0.47 .17 .06 -.17 -.12 .02

7. Hierarchical level 2.08 0.94 -.08 .07 .04 .00 .37 -.18

8. Age 2.06 0.93 .06 -.00 .15 .04 -.50*** .08 -.30***

9. Education 2.34 0.91 .02 .06 -.00 -.14 .18 .07 -.03 -.07

10. Company Size 2.26 1.28 .21* -.05 -.03 .10 -.22* .14 -.57*** .22** .09

*j?


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41.70

36.57

Relativism Idealism Willingness to

Sacrifice Ethical

Standards for

Financial Gain

llll Mean for Chinese Sub-Sam ple, n =144

Mean for Peruvian Sub-Sample, n = 64

Figure 1. Means of relativism, idealism, and willingness

to sacrifice ethical standards for financial gain for Peru

vian and Chinese sub-samples, Note: The means of all

three variables for the Peruvian and Chinese sub-sam

ples are significantly different at the p < .05 level.

backgrounds has perplexed many managers (Hu

sted, 1999; Robertson et al., 2003). This moral

dimension of managerial decision-making, as op

posed to the economic dimension, is likely to be

come more of a concern for corporate leaders,

organizational researchers and society as a whole in

the future (Luo, 2002). Globalization has indeed

forced more managers to confront ethical percep

tions and beliefs that are inconsistent with their

own moral codes (Velasquez 2000). Great care

must be employed to fully understand the processes

and procedures of firms with different cultural

backgrounds. Thus, managers must be somewhat

flexible with members of different cultures in eth

ical situations, yet they must remain true to the

underlying ethical principles of their organization.

The present study's emphasis on Chinese versus

Peruvian ethical orientations sheds light on two

nations that have recently entered the global mar

ketplace and have forged strong economic and

political relationships.

Our results have revealed some interesting find

ings about employees in China and Peru. First, as

predicted, it appears that relativism is more prevalent

in China than in Peru. It is perhaps the Confucian

collectivism combined with a deeply seeded tradi

tion of guanxi that has stimulated this moral para

digm. When compared to the earlier study by

Robertson et al. (2003) China's mean relativism

score, 27.99, is actually a tick below that of Russia

(28.75). Perhaps it is the moral acceptance of

behaviors such as price fixing and data manipulation

in Russia that bolsters the Russian relativism (Puffer

and McCarthy, 1995). The rationale and significance

of these scores could be a fruitful area for future

research. Second, the Peruvian sample scored sig

nificantly higher along the idealism dimension when

compared to their Chinese counterparts. This

underlying value of idealism appears to be particu

larly strong when compared to the Russian and

American mean scores from Robertson et al.'s

(2003) previous analysis with a Peruvian mean score

of 41.70, close to three points above the Russian and

American mean scores. The lack of full support for

Hypotheses 3 and 4 supports this distinction. Indeed

it appears that there may be multiple shades of ide

alism and relativism. Moreover, the relationship

between in-group versus out-group collectivism and

relativism may have played a role in the perception

of ethicality in our study. Future researchers may

want to probe deeper into these constructs in the

quest for sub-cultural differences within Peru and

Ch ina.

Guanxi clearly plays a role in the overall Chinese

value system. Guanxi relationships are predicated

upon loyalty to those within the ingroup; thus,

when individuals are faced with ethically tenuous

situations, decisions may be based more on those

who are affected (such as ingroup or outgroup) than

the laws at hand. It is guanxi that creates the envi

ronment for ingroups and outgroups. There are

privileges to those within the ingroups, such as

favoritism, personal benefits, access to resources and

cooperation, and discrimination toward outgroups

(Ashforth and Mael, 1989). Those within the

ingroup strive for harmony, and respect the feelings

of others within this group when engaging in deci

sion-making. Thus, there is a double-edge sword

component to this social network (Warren et al.,

2004). In addition, those in guanxi relationships are

guided by the norms and rules within that system

that may supersede formal laws. While guanxi is

generally thought of as a strictly Chinese construct,

the extent to which it exists, in form, in other cul



10/14

TABLE II

e l a t i v i s m a n d i d e a l i s m o n t h e w i l l i n g n e s s t o s a c r i f i c e e t h i c a l s t a n d a r d s f o r f i n a n c i a l g a i n a

P e r u v i a n m a n a g e r s C h i n e s e m a n a g e r s

P r e d ic t o r s a n d c o n t r o l s C o lu m n C o n t r o ls o n l y C o l u m n 2 F u ll m o d e l C o l u m n 3 C o n t r o l s o n l y C o l u m n 4 F u l l m o d e l

C o m p a n y h a s e t h i c s p o l i c i e s / p r o c e d u r e s . 1 0 . 0 4 ? . 1 0 . 0 4

M r u 1 1 02 0 0 0 4

Gender .10 .09 -.10 -.07

Hierarchical level .01 - .01 .04 .07 Q

Age 24 24 09 12

E d u c a t i o n . 2 3 . 2 8 . 0 4 . 0 6 q

C o m p a n y s i z e .1 0 . 0 6 . 2 5 . 2 3 I r

Rela

I d e a l i s m - . 0 8 - . 2 6 * q

F full model ) .68 1.33 1.70 2.11* |

35 330

R2 .10 .23 .11 .16 1

9407100

a T h e d e p e n d e n t v a r i a b l e i s T h e W i l l i n g n e s s t o S a c r i f i c e t h i c a l S t a n d a r d s f o r F i n a n c i a l G a i n

S t a n d a r d i z e d r e g r e s s i o n c o e f f i c i e n t s a r e r e p o r t e d

* p < . 0 5 , * * p < . 0 1 P e r u v i a n n = 4 9 , C h i n e s e n = 1 0 7

to



11/14


tures is relatively unknown yet worthy of future

investigation.

In addition, further research should examine the

Western influence on China versus the traditional

effects of guanxi relative to ethical decisions. As

mentioned previously, there are many positive

aspects of guanxi, which are in harmony with the

underlying principles of collectivism, yet such rela

tionships can also promote unethical actions. The

controls that Western firms have incorporated in

their regular business practices to curb unethical

decisions such as bribery may help to curtail unethical

guanxi practices. Moreover, national or local Chi

nese governments may feel pressured by international

forces to minimize the negative effects so common

with these exclusive networks (Lee et al., 2001).

Finally, Triandis (2004) argues that Chinese managers

who are more educated and exposed to international

cultures and social settings will be less affected by the

stringent protocols of guanxi.

The negative relationship between idealism and

willingness to sacrifice ethical standards for financial

gains of Chinese employees provides support that

those with high idealism will not allow the negative

aspects of guanxi to counter the positive aspects of

Confucius collectivism. Idealism within the Chinese

culture, then, may be an important mitigating factor

in the double-edged dilemma of guanxi. In addition,

research shows that in certain instances, Chinese

employees who engaged in unethical decisions did

so not for personal financial gain, but out of respect

for those who were entitled to favors based on the

guanxi relationship (Warren et al., 2004). In other

words, there may be many other underlying reasons

where guanxi will require individuals to act uneth

ically.

There are limitations in any study, and one lim

itation of this study is that the generalizability of our

results may be somewhat hmited with regard to the

Peruvian sample because the number of Peruvian

respondents was less than half the number of Chi

nese respondents. Thus, generalizing our findings to

individuals with different functional backgrounds

may not be appropriate, because of the lack in dis

parity of our Peruvian group. In addition, given that

our study is cross-sectional and correlational in nat

ure, one must view our causal hypotheses with

caution. Even though there is compelling theoretical

justification for our assertion that idealism will affect

the profit/ethics tradeoff, there is still the possibility

that causation is not occurring. Nevertheless, given

the theoretical justifications provided in the

hypothesis development section, we are reasonably

confident in the causal relationships hypothesized.

A general criticism of survey research is common

method variance, because the independent and

dependent constructs are often measured entirely

with self-reported data (as was the case here). One

cannot dismiss Podsakoff and Organ's (1986)

admonition to avoid measuring the independent and

dependent variables using the same source, since

there is a potential for questionable results. Yet,

common method variance may not be as much of a

limitation as once thought, because, although com

mon method variance inflates zero-order correla

tions, it also increases the shared variance among the

independent variables (Shaffer et al., 1999). This

makes it more difficult to find unique, significant

regression coefficients (Florey and Harrison, 2000)

and reduces the chance that common method vari

ance had a major effect on the conclusions of this

study. Nevertheless, one cannot absolutely rule out

the possibility that respondents artificially answered

in a consistent fashion, yielding possibly invalid re

sults. Another limitation is our use of the number of

employees as a measure of firms size rather than

annual total firm revenues. We elected to use the

former measure due to the potential problem of

comparing revenue amounts with different levels of

purchasing power parity.

A number of regional implications may exist

based on the findings of this study. In the study

conducted by Lenartowicz and Johnson (2002), the

scores of the Peruvian managers along all four

dimensions studied clustered well with Ecuador and

Chile, signifying commonalities across the Andean

region. Therefore it may be plausible to make some

tentative generalizations about moral value systems

in Andean South America. While Chile has more of

a European history with respect to immigration

patterns, Peru and Ecuador do share a strong com

mon thread with historical ties to the Inca empire.

Regarding managerial implications, top manage

ment must understand that the ethical climate of a

multinational organization can be extremely fragile.

The current results impact the communications,

strategic objectives, and control systems that may be

appropriate across multinational settings, having



12/14


substantial potential importance for the development

of a country's corporate governance system. Our

findings also have revealed patterns that could be

helpful to managers in multinational firms that are in

the process of developing corporate codes of ethics

in Peru or China (Robertson and Fadil, 1999).

Specific, culturally contingent guidelines could be

created while considering some of the diversity in

values and beliefs across borders. Any adaptations to

policies should be reviewed by managers from both

nations in an attempt to dispel any deep discrepan

cies in firm policies and practices. Further, actions

and corrective steps taken by managers will likely

become more important in establishing, maintain

ing, or destabilizing a multinational's ethical envi

ronment. Perhaps the establishment of a more formal

code will facilitate stronger governance over indi

vidual behavior in both nations (Garten, 2002).

Moreover, studies of ethical beliefs can offer a

window into the core values of a culture. Ethical and

cultural values tend to be intertwined, and managers

can incorporate beliefs about idealism and relativism

into decisions related to human-resource manage

ment policies such as performance, training, and

reward systems.

We believe that the results of this study have

added breadth and depth to the inadequate empirical

database of studies that have focused on cross

cultural ethics between Peru and China. Moreover,

this study has identified a number of salient future

research endeavors for ethics scholars. For example,

future research should examine whether codes of

ethical conduct and ethics training have the same

effects on Peruvian and Chinese employees. Scholars

may also elect to examine the cross-cultural nature of

behavioral traits such as guanxi in various national

settings. Depth will also be added to this research

stream through the replication of studies of ethical

antecedents such as collectivism and other value

dim ensions .

In addition, the current research design could

be employed in other countries in Latin America

that have significant levels of trade with China,

such as Argentina or Brazil. A deeper analysis into

specific ethical dilemmas may add to our under

standing of the shape, form, and rhythm of the

relativism in China and idealism in Peru. Other

influential factors that may play a causal role in the

formation of moral ideology, such as religion and

form of government, could also be examined in

the future.

Note

APEC, founded in 1989. is a trade association that has

21 member nations which account for one-third of the

world's population and over 60% of global GDP. Peru and

Chile are the only South American members of APEC.

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Christopher f. Robertson

International Business,

College of Business Administration,

Northeastern University,

313 Hayden Hall, Boston, MA, 02115, U.S.A.

E-mail: [email protected]

Bradley J. Olson and Yongjian Bao

University of Lethbridge,

Lethbridge, AB, Canada

K. Matthew Gilley

Department of Management, Bill Greehey School

ofBusiness, St. Mary's University,

One Camino Santa Maria, San Antonio,

TX, 78228, U.S.A., (210) 436-3705

E-mail: [email protected]

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