Ethical ideologies among senior managers in China

Transcription

1 Asian J Bus Ethics (2013) 2: DOI /s Ethical ideologies among senior managers in China Bala Ramasamy & Matthew C. H. Yeung Received: 16 March 2012 / Accepted: 25 June 2012 / Published online: 17 August 2012 # Springer Science+Business Media B.V Abstract The ethical judgment of Chinese business leaders has become increasingly important particularly due to the important role that China plays in the global economy. Previous studies tend to categorize Chinese managers as more relativist and thus more lenient in their ethical judgments. In this study we survey 256 senior managers from mainland China and find that they are in fact less relativist and more idealist than the global average. A significant portion of them are absolutists which imply that these managers believe that positive consequences should result from ethical decisions based on universal moral rules. Our findings question the implications made by previous researchers that among Chinese managers there is a less than clear demarcation between right and wrong. We conclude that business leaders in China would be more supportive of codes of conduct and other ethical behaviour because of the ethical position they hold. Keywords China. Ethics. Idealism. Relativism Introduction China ranks 78 among 178 countries in the Corruption Perception Index of Transparency International (2010) in The World Economic Forum s (2010) Global Competitiveness Index ranks China 55 out of 138 countries in the ethical behaviour of firm indicator. Corruption is ranked as the third most problematic factor in doing business in China by the same Forum. High profile cases involving tainted B. Ramasamy China Europe International Business School, 699 Hongfeng Road, Pudong, Shanghai , People s Republic of China bramasamy@ceibs.edu M. C. H. Yeung (*) The Open University of Hong Kong, Room A0829, 8/F, Block A, 30 Good Shepherd Street, Homantin, Kowloon, Hong Kong myeung@ouhk.edu.hk

2 130 B. Ramasamy, M.C.H. Yeung milk, lead abuse in toys and corruption involving mayors and ministers are reported quite regularly in China. These are attention grabbing stories and most people would claim that these actions are wrong. What are less reported by popular media are those dubious actions carried out by individuals that borders between right and wrong. Withholding information on tax returns, favours for obtaining jobs and contracts and other similar actions are seen to be acceptable because they apparently do not cause harm to anyone. Yet, these are the ethical dilemmas faced by many in their daily role as executives and managers. Research into those factors that influence the business decision-making process when faced with an ethical dilemma has been extensive. In particular, most research tends to utilize tools developed by various authors to measure antecedents of ethical behaviour. One popular tool is the Ethical Position Questionnaire (EPQ) developed by Forsyth (1980). The EPQ is based on the idea that one s ethical ideology (or philosophy) influences judgment regarding morality. Two dimensions of ethical ideology that seem consistent among most people are (1) concern for consequences and (2) concern for principles (Forsyth et al. 2008). The former, which is based on teleology, is referred to as Idealism; while the latter, which is based on deontology, is labeled relativism. So extensive has been the use of the EPQ that in 2008, Forsyth et al. were able to conduct a meta-analytic study of the ethical position theory in a cross cultural setting utilizing 81 studies. Studies that use Chinese subjects exclusively include Redfern and Crawford (2004), Redfern (2005), Tian (2008), Zhao (2008) and Al-Khatib et al. (2007). China has also been included in cross country surveys, for example in Singh et al. (2007), Forsyth et al. (2008) and Vitell and Patwardhan (2008). Given the important role of China in the global economy in recent years, a deeper understanding of ethical behaviour among Chinese managers and its antecedents is warranted. In this paper, we fill several gaps that exist in the current literature vis-à-vis the ethical position theory in general and ethical behaviour of Chinese managers in particular. First, we examine the ethical position among senior Chinese managers. Previous papers (Redfern 2005; Redfern and Crawford 2004; Al- Khatib et al. 2007) have used as their samples junior or at most middle level managers. The role played by senior leadership is critical because s/he serves as a role model for his or her own subordinates about the type of behaviours that are seen as ethically acceptable and how ethical problems and questions should be addressed (Dickson et al. 2001: 208). The ethical philosophy that dominates the thinking of senior managers in China should set the ethical climate within their respective organizations. Second, previous studies have thus far focused on the two dimensions of the ethical position theory (idealism and relativism) and their influence on ethical perception of a moral dilemma (Al-Khatib et al. 2007; Vitell and Patwardhan 2008). We extend this line of research by considering the four distinct ethics positions (exceptionism, absolutism, subjectivism and situationism) of Chinese managers and their respective degree of influence on ethical perception of moral dilemmas. Third, we argue that categorizing managers/subjects in a country as belonging to a distinct position (for example, the Chinese are subjectivist (Forsyth et al. 2008)) is incorrect as there might be a significant number of individuals who fall into each of the four positions. Finally, we extend the understanding of the two dimensions of ethics position theory by comparing the degree of (in)consistency of relativism in gauging the ethicality of various dilemmas. We show, true to their nature, that relativists are

3 Ethical ideologies in China 131 more inconsistent when evaluating ethical dilemmas as each situation is judged based on its own (de)merits. We attempt to address the issues above by reviewing the literature and developing hypotheses in the next section. In the Data and methodology section, we explain the data and methodology used in the paper. The Results of analysis section shows the results of analysis while the final section offers a discussion on our findings and conclusion. Literature review and hypotheses development Forsyth (1980) developed the ethics position questionnaire (EPQ) to distinguish between two moral orientations: an ethics of idealism and an ethics of relativism. These were based on two moral philosophies teleology and deontology. Hunt and Vitell (1986) defined deontological theories as those that focus on specific actions or behaviour of an individual while teleological theories concentrates more on the consequences of such actions and behaviour. Consistent with teleological theories, highly idealistic individuals assume that harming others is not at all justifiable; in contrast, individuals who score low on the idealism scale assume that harm is sometimes unavoidable when producing desirable outcomes. On the other hand, highly relativistic individuals evaluate what is right and wrong on the basis of the particular situation and action they are evaluating; in contrast, individuals who scored low on the relativism scale use consistent principles derived from moral principles, norms and laws to define what is right and wrong, no matter what the dilemma circumstances may be (Forsyth 1980; Forsyth and Berger 1982; Forsyth et al. 1988). Thus, the relativism scale is linked to deontology theories. Idealism and relativism are two distinct concepts. Given that these are orthogonal dimensions (Hastings and Finegan 2011), an individual may be high or low on either dimension (Angelidis and Ibrahim 2011) or anywhere along the continuum within each dimension. Ethical position among Chinese managers As mentioned earlier, there have been several studies that have evaluated the ethics position of Chinese managers. However, all of them have used junior or middle level managers as their subjects. Redfern and Crawford (2004) used subjects aged 22 and above, with merely 8 out of 115 managers surveyed aged above 45 years old. Al- Khatib et al. (2007) had a sample size of 140 with an average work experience of 9 years. Singh et al. (2007) studied middle level marketing managers (n0140) while Redfern s (2005) average age of subjects was 35 (n0206). Finally, Vitell and Patwardhan s (2008) subjects were even younger with only 5 years of average work experience, prompting the authors to suggest future work to focus on more senior managers. Studies that have used Chinese subjects exclusively (Redfern and Crawford 2004; Tian 2008; Al-Khatib et al. 2007) tend to conclude that their subjects scored higher in idealism scores are higher than relativism. Studies that are crossculture in nature (Singh et al. 2007; Vitell and Patwardhan 2008; Robertson et al. 2007) on the other hand conclude that Chinese subjects are more relativist and less

4 132 B. Ramasamy, M.C.H. Yeung idealist than their counterparts in the USA, EU and Peru, respectively. Forsyth et al. s (2008) meta-analytical study also concluded that Chinese subjects are more relativistic (0.687) and less idealistic (0.716) than the international means (0.586, 0.728). Thus, Chinese managers were classified as subjectivists from an international perspective (Forsyth et al. 2008). Subjectivists reject ethical rules and base their judgment on personal feelings about the action and the settings (Forsyth 1992). They seek to promote their own interests rather than focusing on producing positive outcomes for others. In the subjectivist approach, consequences are the central motivating factor in ethical decisions. Weeks et al. (1999) suggested that attitudes towards ethical issues could vary depending on a manager s career stage. In Cron s (1984) career development framework, a worker moves through four career stages: exploration, establishment, maintenance and disengagement. In the exploration stage, workers may compromise on ethical standards when pushed by the superior for better performance. In the establishment stage, the high need for achievement is internal to the individual and so compromising on ethical standards is also likely. In the maintenance stage however, the need to prove oneself is not dominant, and so the temptation to compromise on ethical values is also lower. Finally, in the disengagement stage, the individual becomes more detached from the organization and personal ethics would begin to dominate. In operationalizing their study, Weeks et al. (1999) argued that age can accurately define these career stages. Kohlberg (1968, 1976) had earlier suggested three levels of cognitive moral development (CMD). In the pre-conventional level, right or wrong is based on personal consequences. In the conventional level, what is right is based on conformity to society s expectations; while at the post-conventional level, ethical decision-making is based on universal values. Ashkanasy et al. (2006) stated that a higher CMD is associated with more ethical decisions. It can also be implied that the higher stages of CMD are linked to more advanced career stages. Previous studies found that Chinese decision makers are more relativist (e.g. Al- Khatib et al. 2005; Redfern and Crawford 2004). They also rely less on idealistic positions and more on economic and self driven concerns (McDonald and Park 1996; Lin 1999). This may imply that the subjects themselves are at a lower stage of career development. Since we are focusing on the ethical philosophies of more senior managers, we could then hypothesize that: H1: Senior Chinese managers are more idealist and less relativist in their ethical positions compared to their counterparts who are younger and less senior. A large number of studies have examined the relative influence of personal moral philosophies on the ethical intentions of various subjects. Marta et al. (2008) considered such a relationship among small business managers while Singh et al. (2007), Singhapakdi et al. (2001, 2007) and Vitell et al. (2003) focused on marketing managers. Most of these studies used vignettes or ethically questionable scenarios to link moral philosophies to ethical judgments. In most cases too, the general results tend to suggest that idealism is positively correlated to ethical judgments. Vitell et al. (2003) for instance found that American marketing managers who were more idealistic were more likely to believe that ethics was more important to the success of the firm while relativist tend to reject the notion. In a study of Thai managers, Singhapakdi et al. (2008) concluded that idealism positively influences perceived

5 Ethical ideologies in China 133 importance of ethics. Other studies with similar results include Vitell and Patwardhan (2008) and Rallapalli et al. (1998). Studies that included Chinese subjects tend to show the importance of relativism. Singh et al. (2007) for instance found that among Chinese marketing managers, relativism was a significant determinant of moral intensity which indirectly affects ethical judgments. Vitell and Patwardhan (2008) concluded that Chinese managers were more relativistic than their European counterparts. However, more relativistic decision-makers also were more likely to conform to a questionable action. In a solely Chinese study however, Tian (2008) acknowledged that relativistic managers tend to view bribery and kickbacks more favourably; but then the idealism scores of these managers were higher than their relativism scores. Forsyth et al. s (2008) cross country study tend to suggest that the Chinese are markedly more relativistic than the international average (0.687 vs ) and marginally less idealist (0.716 vs ). If we follow Forsyth and O Boyle s (2011) conclusion that relativism suggests ethical leniency, whereas idealism predicts more firm, and more judgmental, moral pronouncement (p.354), we have to accept that Chinese managers are relatively less ethical. However, as implied in his seminal work, Forsyth (1980) stated that both idealism and relativism determines one s ethical ideology as these are orthogonal dimensions. A similar view is shared by Hunt and Vitell (1986) and Brady (1990). So, rather than classifying individuals as either idealistic or relativistic, each dimension can be dichotomized into high and low to produce a four classifications based on an individual s preferred ethical ideology (Angelidis and Ibrahim 2011): exceptionism, absolutism, subjectivism and situationism. This is shown in Fig. 1. Situationists (High relativism, High idealism) consider the context of the situation but attempt to secure the best possible outcome although at times it will violate traditional rules of ethics. Subjectivists (High relativism, Low idealism), as described previously, reject moral rules but do acknowledge that negative consequences can sometimes be unavoidable. Absolutists (High idealism, Low relativism) believe that positive consequences should result from the ethical decision by following moral rules. Exceptionists (Low idealism, Low relativism) think highly of moral principles but try to balance the positive and negative consequences of an action. As described earlier, high idealism and low relativism seem to match an ethically firm manager, while low Fig. 1 Four classifications of ethical ideologies. Source: Forsyth (1980) R e l a t i v i s m Idealism High Low High Situationists Subjectivists Low Absolutists Exceptionists Source: Forsyth (1980)

6 134 B. Ramasamy, M.C.H. Yeung idealism and high relativism is consistent with an ethically lenient manager. This leads us to hypothesize that: H2a: Absolutist managers are ethically much stricter than other types in the ethical taxonomy. H2b: Subjectivist managers are the most ethically lenient compared to other ethical positions. Much has been written about the differences in ethical positions of managers in various countries, and the general conclusion is that culture plays an important role in influencing one s ethical perception, decision making and attitude (Burnaz et al. 2009: 372). The high power distance, uncertainty avoidance and collective nature of the Chinese has been attributed to susceptibilities towards unethical behaviour (Volkema 2004). In an effort to protect relationships (guanxi), a Chinese manager would even exhibit less than ideal ethical behaviour (Al-Khatib et al. 2007). Comparative studies like Forsyth et al. (2008) have lumped all (or an average) Chinese managers as subjectivists (i.e. most ethically lenient) and offered implications based on this premise. We hypothesize that among senior Chinese managers, given H1, a larger proportion would belong to the absolutist category. More formally, H3: A larger proportion of senior Chinese managers are absolutists while subjectivists would form a minority group. Relativism and the ethical dilemma There seems to be a general consensus that idealism has a direct positive effect on ethical intentions. More specifically, individuals who score high on the idealism scale tend to be firm in their ethical decision-making (Vitell et al. 2003; Singh et al. 2007; Singhapakdi et al. 2008; Vitell and Patwardhan 2008; Rallapalli et al. 1998). However, results on the influence of relativism (or deontology) on ethical intentions seems less obvious. Rallapalli et al. (1998) for instance found that deontological evaluations were less significant in influencing ethical judgments than teleological evaluations. In Vitell and Patwardhan s (2008) comparison of USA and Chinese managers, relativism was only a significant determinant of perception of bribery and offensive advertising among Chinese subjects only. Relativism was also not a significant predictor of ethical intention among Thai managers (Singhapakdi et al. 2008). We argue that the reason for the inconclusive results is in the nature of the relativism scale itself. Forsyth (1980) describes individuals who are highly relativists as those who are skeptical of universal moral principles. They are also pragmatic in that moral standards should be based on one s own personal perspective of the issue at hand. Quoting Fletcher (1966), relativists tend to focus on a contextual appropriateness not the good or the right, but the fitting (p. 186). This would imply that although highly relativist individuals tend to provide a greater degree of justification of questionable actions, the consistency with which they evaluate various actions would be limited. In other words, the ethicality of one s action would be quite distinct from another. The degree of inconsistency of decisions across various

7 Ethical ideologies in China 135 ethical vignettes or scenarios has not been considered by previous studies. We hypothesize that: H4: The inconsistencies in ethical decisions across different scenarios/issues will be greater among highly relativistic individuals. Data and methodology Our investigations to test the aforementioned hypotheses were based on data generated by means of a self-administered questionnaire, with mainly closed ended questions. Copies of the questionnaire were distributed online to 400 working adults enrolled for the largest EMBA programme in mainland China. There was no compulsion in completing the questionnaire but s and short messaging services were sent to the participants urging them to fill in the questionnaire. A total of 382 completed questionnaires were returned. Given that the focus of the present study is on senior Chinese managers, 126 of the returned questionnaires were removed either because the subjects classified themselves as junior and middle managers or because of their non-chinese nationality (which include those from Taiwan, China and Hong Kong SAR). The remaining 256 completed questionnaires were included in our analysis. The sample characteristics are summarized in Table 1. In order to obtain reliable information from the participants, established and validated scales were used in the data selection. The questionnaire instrument consisted of three sections. The first section contained basic demographic characteristics including date of birth, educational level, occupation, gender, nationality and type of companies. No name or student number was requested to ensure anonymity. In the second section, the participant s ethical ideology was measured using the Ethics Position Questionnaire (EPQ) developed by Forsyth (1980). The EPQ consists of two scales, each designed to measure idealism and relativism respectively. All 20 questions of the EPQ were included in our questionnaire, 10 questions each to measure the 2 moral philosophies. For each item, respondents were asked to indicate the degree of agreement or disagreement on a Likert scale ranging from 1 to 5 where 1 indicates completely disagree and 5 indicates completely agree. We applied confirmatory factor analysis to the collected data. The Cronbach alpha coefficients for both scales exceeded 0.7, but the result indicated that the internal consistency of the scales can be further improved by removing three and one question(s) from the idealism and relativism Table 1 Sample demographics Gender Male 79.3 % Type of companies Listed SOEs 5.1 % Female 20.7 % Non-listed SOEs 11.3 % Nationality Mainland Chinese 100 % Listed private companies 13.3 % Occupation Senior Managers 100 % Non-listed private companies 44.1 % Age Min 30 Foreign subsidiaries 13.7 % Mean 40 Joint ventures 7.4 % Max 65 Governmental agencies 5.1 %

8 136 B. Ramasamy, M.C.H. Yeung scales, respectively. Thus, seven and nine items were used to compute the average scales of idealism and relativism, respectively. The Cronbach alpha coefficients were 0.89 and 0.79 for the idealism and relativism scales, respectively, roughly in line with the Cronbach alpha coefficients (0.8 and 0.73) reported by Forsyth (1980). In the third section of the questionnaire, the ethical judgments of the senior managers were measured by the justifiability of morally questionable actions extracted from the World Value Survey. The nine questionable actions (1) (9)are displayed in Table 2. For each action, respondents were asked to indicate to what extent they think the act/ action can always be justified or never be justified on a Likert scale ranging from 1 to 10 where 1 indicates never justifiable and 10 indicates always justifiable. The first four involved instrumental personal rewards but no direct harm to other humans. These questions have been used by a number of researchers to measure ethical behaviour at the individual level (for example, Parboteeah et al. (2005) and Guiso et al. (2009)). Items in this category are those that compromise the governance system and labeled Systems Dilemma. The remaining five involved potentially detrimental harm to people s moral welfare. Two of these items (abortion and mercy killing) were also used in Forsyth (1980). We label this Human Dilemma. We used the 4-item and 5- item average scales to measure ethical judgments of the two different dilemmas. The Cronbach alpha coefficients for the two aspects were 0.82 and 0.80, respectively. The descriptive statistics of the average scales mentioned so far are reported in Table 2. Results of analysis The descriptive statistics shown in Table 2 indicates that our subjects in general are relatively more idealistic and less relativistic. In other words, they find morally Table 2 Descriptive statistics Scale/item; n0256 Mean SD Min Max Idealism Relativism Systems dilemma (1) Claiming government benefits to which you are not entitled (2) Avoiding a fare on public transport (3) Cheating on taxes if you have a chance (4) Someone accepting a bribe in the course of their duties Average scale of (1) (4) Human dilemma (5) Prostitution (6) Abortion (7) Divorce (8) Euthanasia (9) Suicide Average scale of (5) (9)

9 Ethical ideologies in China 137 questionable actions involving instrumental rewards but no direct harm to humans (systems dilemma) to be more justifiable when compared to morally questionable actions that are potentially detrimental to moral welfare of humans (human dilemma). To test H1, we compared the idealism and relativism means of our sample (Chinese senior managers) against those studies which examined Chinese managers with less experience and hence more junior. We excluded studies that had focused more specifically on Hong Kong respondents as a manifestation of Chinese moral orientations (for examples, Ralston et al. (1994); Siu and Tam (1995). In addition, we also excluded studies with incomplete statistical information (for example, Douglas and Wier (2005); Redfern and Crawford (2004); Singh et al. (2007)). Table 3 shows the remaining studies that examined the ethical ideologies of Chinese subjects with means of idealism and relativism reported. The last two columns in Table 3 provide information suggesting that our respondents were relatively more senior when compared to samples from previous studies. Not all the studies used the same measurement scale to score idealism and relativism, so we converted the means by linear interpolation. The standard deviations (SD) were converted by multiplying the converted means with the coefficients of the variations of the original measurements used by each selected study. Comparing our scores with previous studies, our senior managers are indeed less relativist. However, a comparison of the idealism scores is not very conclusive. To validate H1, we conducted the odd ratio analysis. The odd ratio is computed as the ratio between idealism and relativism of the present study divided by the ratio between idealism and relativism of the competing study weighted by the sample size of the corresponding study. An odd ratio of 1 implies that the condition (relatively high in idealism and relatively low in relativism) is equally probable in both samples; similarly, an odd ratio above 1 implies that the condition is more likely to occur in the present study. The odd ratios were further tested to check if each was significantly greater than one (H 0 : odd ratio 1) using the one-tailed Fisher Exact test. Except for the test against Robertson et al. (2007), clearly, the H 0 s were rejected. It is evident that our senior managers were relatively more idealist and less relativist compared to the junior and middle managers reported in previous studies. Thus, H1 is supported. These findings provide further support to the notion that age and seniority influence ethical ideologies (Lin and Zhang 2011) which in turn affects moral judgments. Our results are also quite consistent with Gu and Ryan (2011) whose evaluation of hotel managers in China showed that senior managers and owner-operators showed greater respect for the well-being of individuals, compared to their more junior counterparts. Loviscky et al. (2007) stated that at the post conventional level in moral cognitive development, moral principles that emphasize justice and rights become more important than society s laws and values. Popularity gives way to principles. The significantly low scores in relativism among managers in our sample indeed show that principles are becoming important in moral judgments. The second hypothesis concerns the ethicality of absolutists and subjectivists. To test H2a and H2b, we first split the sample, using the sample means of the idealism and relativism scales as the cut-off values, into four groups according to Forsyth s classification of ethical positions. By design, these four groups should have their very own approach to formulating moral judgments. The size of each ethical position is: 25.0 % situationists, 19.9 % exceptionists, 30.5 % absolutists and 24.6 % subjectivists.

10 138 B. Ramasamy, M.C.H. Yeung Table 3 A comparison of idealism and relativism among Chinese managers Idealism Relativism n Odd ratios Fisher Exact p value H0: Mean SD Mean SD odd ratio 1 Age Experience/Education Redfern (2005) Mean: % degree/master Siu et al. (2001) 3.35 NR 3.64 NR Mean: 33 6 % senior manager Chiu and Erdener (2003) % aged % inexperienced staff Robertson et al. (2007) (skewed to the younger side) About 50 % held management positions. Vitell and Patwardhan (2008) Not indicate Years of current position: 2.8 years Addison et al. (2008) Mean:33 10 % were partners or senior managers Tian (2008) Mean: % senior manager Present study Average age: % senior manager

11 Ethical ideologies in China 139 An analysis of covariance (ANCOVA) was used to test the equality of means of ethicality among the four groups of respondents with gender and age entered as covariates. In other words, the test of hypothesis was strengthened by adjusting for the relationships between ethicality and these variables. The adjusted means scores are shown in Table 4. Gender and age were both insignificant while the ideology factor was strongly significant (F05.50, p<0.01; F05.43, p<0.01 for the first and second type of questionable actions, respectively), implying that the degree of ethicality is not the same among the four groups. A follow-up post hoc LSD tests (not reported here) revealed the following relationships: 1. For questionable actions that involved no direct harm to humans, absolutists are significantly much stricter than all other moral ideologies at the 5 % significance level. Subjectivists are significantly more lenient than all other moral ideologies at 10 % significance level. 2. For questionable action involving harm to humans, absolutists are again significantly stricter in their judgment than the exceptionists and subjectivists at the 5 % significance level. Subjectivists are more ethically lenient than absolutists and situationists at the 5 % significance level. These evidences provide support for H2a and H2b. To test H3, we compared the proportion of absolutists and subjectivists against the proportions of other ethical positions. The proportion of each position is displayed in Table 5. WetestH 0 : p 1 p i and H 0 : p 4 p i by the one-tail tests of equality of proportions. The tests were also replicated using the international means (converted from Forsyth et al. (2008)). The results are summarized in Table 6. Based on both sets of statistical tests, H 0 : p 1 p i is rejected at the 10 % significance level, if based on sample means and at the 1 % significance levels, if based on international means. This means that the proportion of absolutists is indeed larger among senior Chinese managers. However, H 0 : p 4 p i cannot be totally rejected. Thus, we cannot conclude that subjectivists form a minority group in our sample, although they are smaller in size compared to the absolutists (at least at the 10 % significance level). In cross country studies, the cut-off means to identify the proportions of each ethical position is obviously relative. Using both within sample Table 4 Mean scores of various ethical positions for systems and human dilemmas Ethical dilemmas Systems dilemma Human dilemma Estimated marginal means, adjusted for the covariates F test Pairwise comparisons (1) Absolutists n (2) Exceptionists n (3) Situationists n (4) Subjectivists n (p<0.01) (1)<(2),(3),(4) a (2)<(4) b (3)<(4) b (p<0.01) (1)<(2),(4) a (3)<(4) a a 5 % significance level b 10 % significance level

12 140 B. Ramasamy, M.C.H. Yeung Table 5 Ethical positions within the sample Ethical positions Absolutists Exceptionists Situationists Subjectivists Classified by the sample means Classified by the international means 78 ðbp 1 ¼ 0:305Þ 51 ðbp 2 ¼ 0:199Þ 64 ðbp 3 ¼ 0:25Þ 63 ðbp 4 ¼ 0:246Þ 105 ðbp 1 ¼ 0:410Þ 49 ðbp 2 ¼ 0:191Þ 60 ðbp 3 ¼ 0:234Þ 42 ðbp 4 ¼ 0:164Þ means and international means, we can confirm that the proportion of absolutists among Chinese senior managers is significant. A new breed of business leaders are emerging in China who are better educated in business management and more comfortable with open markets. Their ethical standards are more in line with those of developed countries, although traditional practices like guanxi continue to dominate the business environment (Lin and Zhang 2011). Finally, in H4, we hypothesized that ethical decisions inconsistencies across different scenarios/issues will be greater among highly relativist individuals. We first split our samples into two groups by the mean of relativism. For each respondent, we computed the standard deviation of their ethical judgment for both types of questionable actions. The standard deviation denotes the average distance between each ethical judgment from the overall standard of ethical judgment and thus measures the degree of consistency/inconsistency of our subjects judgments. A highly consistent individual is expected to apply similar ethical judgments to different ethical issues. In contrast, individuals with low level of consistency are expected to adjust their ethical judgments according to the nature of the issue. ANCOVA was used to test the equality of means of consistency in ethical judgment between the two groups of respondents with gender and age entered as covariates. The results are reported in Table 7. In situations involving a systems dilemma, highly relativist respondents are about twice as inconsistent as their low relativist counterparts. The relevant F test is significant, suggesting the consistency of ethical judgments was not equal. For the type of morally questionable actions involving potential detriment to human welfare, the consistency of ethical judgments is roughly the same between high relativist individuals and their low relativist counterparts. The relevant F test is insignificant, suggesting the consistency of ethical judgments was not different between the two groups. Given these evidences, H4 is partially supported. This result suggests two Table 6 Ethical positions based on sample means and international means Sample means International means Absolutists bp 1 subjectivists bp 4 absolutists bp 1 subjectivists bp 4 H 0 : p 1 p i H 0 : p 4 p i H 0 : p 1 p i H 0 : p 4 p i Absolutists bp 1 NA (p00.069) NA (p<0.01) Exceptionists bp (p<0.01) (p00.899) (p<0.01) (p00.209) Situationists bp (p00.084) (p00.459) (p<0.01) (0.023) Subjectivists bp (p00.069) NA (p<0.01) NA

13 Ethical ideologies in China 141 Table 7 (In)consistencies of moral judgments Consistency/inconsistency Systems dilemma Human dilemma Figures in square parentheses are standard deviations Low relativist group n [0.065] [0.092] High relativist group n [0.066] [0.093] ANCOVA F test (p value) (<0.01) (0.382) All samples n [0.754] [1.052] implications. First, it provides empirical support to the view (for example, see Jepson School of Leadership Studies, dforsyth/ethics/ ethics.htm) that while certain reprehensible actions (the human dilemma, in our case) are clearly judged to be immoral, in less clear cut cases (systems dilemma), disagreement among people is common. In particular, the consistency of judging human dilemma issues like prostitution and euthanasia as unethical seems high irrespective of ethical ideologies. However, when faced with systems dilemma, high relativists, true to their nature, tend to evaluate each issue based on its own merit. Second, our results suggest that using mean values of ethical scenarios/issues to measure the degree of ethicality has to be done with caution as the mean may mask the degree of inconsistency of each scenario evaluation. In other words, the comparison of ethicality should consider both the mean as well as the variance of the ethical items. As mentioned earlier, researchers have had better success when linking idealism to ethical judgments and rather less success when linking relativism to ethical judgments. Our result shows higher relativism is related to higher variations in ethical judgments. The correlation between two variables could be low when either or both have large variance. Furthermore, this also leads us to conclude that highly relativistic individuals ethical judgments are highly variable from one situation to another, whereas most previous studies suggested that highly relativistic individuals are less ethical. Our conclusion mostly reflects the predefined characteristics of relativistic individuals as conceived by Forsyth (1980). Discussion and conclusion Previous studies have theoretically and empirically shown that ethical judgments regarding alternative courses of actions are influenced by both deontological and teleological considerations (Hunt and Vitell 1986; Hunt and Vasquez-Parraga 1993; Mayo and Marks 1990 among others). With the introduction of the EPQ by Forsyth (1980), these two ethical ideologies have been tested in a wide range of countries, industries and occupations. Ethical judgments are indeed influenced by the degree of relativism and idealism. In the last two decades, comparing ethical ideologies of managers of different nationalities to show the ethical distance has become popular. China has been one of the favourite countries among the developing world for cross comparison due to its popularity as a trading and investment partner on the one hand, and its reputation for dubious business practices (Egels-Zanden 2007) on the other. Not surprisingly, Chinese managers were found to be more relativistic than their

14 142 B. Ramasamy, M.C.H. Yeung counterparts in other regions, for instance Europe (Vitell and Patwardhan 2008) and the USA (Singh et al. 2007). In this paper, we argue and prove that the real Chinese decision maker (i.e. senior managers) is less relativistic and more idealistic, and the reason for the inaccurate conclusions of previous studies is due to the composition of their samples which comprised mainly of junior and less experienced executives. When more senior managers are considered, a sizeable portion of them are absolutist which implies that a moral set of rules will be followed because it will more likely result in the best consequence for all involved (Forsyth et al. 2008). These findings provide two important implications to managers. First, it brings into question several implications offered by previous researchers when dealing with Chinese managers/businesses. Vitell and Patwardhan (2008) for example suggested that global managers operating in China should codify desirable vs. undesirable behaviours (p. 207) when dealing with Chinese partners because of their highly relativistic position. Singh et al. (2007) concluded that the relativistic attitude of the Chinese sample is a reflection of a prevalent attitude in modern China and that they have a less clear and inflexible demarcation between right and wrong (p. 105). They suggest the codification of acceptable behaviour. In both these studies, the Chinese sample was clearly younger and relatively junior. Kwan and Frost (2002) contended that codes of conduct in China are of less importance than rules made by managers. However, a decade later, we are able to confirm that such a contention is no longer accurate. Our findings show that a significant portion of senior Chinese managers are less relativistic, based on the within-sample mean as well as the international mean provided by Forsyth et al. (2008). This implies that senior Chinese managers would actually be more welcoming of such codification as their evaluations are more deontological. However, foreign managers should not view their Chinese counterparts as less ethical, but rather find an acceptable middle ground (Singh et al. 2007) that will satisfy both parties ethical standards. Second, the claim that Chinese managers have a particular ethical position (e.g. Subjectivist) assumes homogeneity amongst the leadership in China. Such a claim is subject to the same criticism against Hofstede s view that every national population shares a unique culture (McSweeney 2002). We agree with Ralston et al. (2009: 384) that it is overly simplistic to assume relative consistency in worker behavior within a culture. Our findings show that even among senior managers in China, ethical positions differ even when age and gender are controlled for. Thus, foreign partners should not stereotype a Chinese manager into any particular ethical position and anticipate a related response. Rather, allocating time to get to know and understand the Chinese counterpart without prejudice could help the relationship and future negotiations. Although China ranks in the middle among countries in business ethics and corruption (as stated earlier), starting the contact with Chinese managers based on such a premise is not advisable. In addition, our study offers two implications for future research that employ the EPQ. First, researchers should be more careful in classifying subjects within a country as belonging to one ethical position. Means can mask the diversity that could exist within a country. Second, we offer another method to measure relativism i.e. the degree of (in)consistency between the ethical items in the questionnaire. Highly relativistic individuals, true to their nature will evaluate each of the ethicality

15 Ethical ideologies in China 143 scenario/issue quite differently than low relativistic individuals. However, we invite other researchers to test the applicability of this method using other samples. As with other studies, ours is also subject to several limitations. First, our sample is derived from a group of managers who had enrolled in an EMBA programme in a leading Business School in China. The entry requirements and selection criterions of the school creates a selection bias which constraints the generalization of our findings. Nevertheless, as our sample managers come from leading companies in mainland China, they do represent a significant part of China s business environment. Second, the constructs used to measure ethicality is simple. Using ethical scenarios and vignettes or field experiments would be preferred although the complexity affects the data collection process. Given the simplicity of our constructs, we are unable to confirm if the perceived moral judgments would be consistent with actual moral behaviour. Despite these limitations, the findings of the study question the current perception of China s ethical environment. We hope that our study would motivate further study and debate in this area. References Addison, P., Fan, Y.H., Glennda, S. Woodbine, G. (2008). The impact of Chinese auditors values on their ethical decision-making. Accounting and Finance Association of Australia and New Zealand Conference, 6 8 July, Sydney, Australia. Al-Khatib, J. A., Stanton, A. D., & Rawwas, M. Y. A. (2005). Ethical segmentation of consumers in developing countries: a comparative analysis. International Marketing Review, 22, Al-Khatib, J. A., Vollmers, S., & Lui, Y. (2007). Business to business negotiation in China: the role of morality. Journal of Business and Industrial Marketing, 22(2), Angelidis, J., & Ibrahim, N. A. (2011). The impact of emotional intelligence on the ethical judgment of managers. Journal of Business Ethics, 99, Ashkanasy, N. M., Windsor, C. A., & Trevino, L. K. (2006). Bad apples in bad barrels revisited: cognitive moral development, just world beliefs, rewards, and ethical decision-making. Business Ethics Quarterly, 16(4), Brady, F. N. (1990). Ethical management: rules and results. London: Macmillan. Burnaz, S., Atakan, M. G. S., Topcu, Y. I., & Singhapakdi, A. (2009). An exploratory cross-cultural analysis of marketing ethics: the case of Turkish, Thai, and American businesspeople. Journal of Business Ethics, 90, Chiu, R. K., & Erdener, C. B. (2003). The ethics of peer reporting in Chinese Societies: evidence from Hong Kong and Shanghai. International Journal of Human Resource Management, 14(2), Cron, W. L. (1984). Industrial salesperson development: a career stages perspective. The Journal of Marketing, 48, Dickson, M. W., Smith, D. B., Grojean, M. W., & Ehrhart, M. (2001). An organizational climate regarding ethics: the outcome of leader values and the practices that reflect them. The Leadership Quarterly, 12 (2), Douglas, P. C., & Wier, B. (2005). Cultural and ethical effects in budgeting systems: a comparison of U.S. and Chinese managers. Journal of Business Ethics, 60, Egels-Zanden, N. (2007). Suppliers compliance with MNCs codes of conduct: behind the scenes at Chinese toy suppliers. Journal of Business Ethics, 75(1), Fletcher, J. (1966). Situation ethics. Philadelphia: Westminster Press. Forsyth, D. R. (1980). A taxonomy of ethical ideologies. Journal of Personality and Social Psychology, 39 (1), Forsyth, D. R. (1992). Judging the morality of business practices: the influence of personal moral philosophies. Journal of Business Ethics, 11(5), Forsyth, D. R., & O Boyle, E. H. (2011). Rules, standards, and ethics: relativism predicts cross-national differences in the codification of moral standards. International Business Review, 20,

16 144 B. Ramasamy, M.C.H. Yeung Forsyth, D. R., & Berger, R. E. (1982). The effects of ethical ideology on moral behavior. The Journal of Social Psychology, 117, Forsyth, D. R., Nye, J. L., & Kelley, K. (1988). Idealism, relativism, and the ethic of caring. Journal of Psychology, 122, Forsyth, D. R., O Boyle, E. H., & McDaniel, M. A. (2008). East meets west: a meta-analytic investigation of cultural variations in idealism and relativism. Journal of Business Ethics, 83, Guiso, L., Sapienza, P., & Zingales, L. (2009). Cultural biases in economic exchange? The Quarterly Journal of Economics, 124(3), Gu, H., & Ryan, C. (2011). Ethics and corporate social responsibility an analysis of the views of Chinese hotel managers. International Journal of Hospitality Management., 30(2011), Hastings, S. E., & Finegan, J. E. (2011). The role of ethical ideology in reactions to justice. Journal of Business Ethics, 100, Hunt, S. D., & Vitell, S. (1986). A general theory of marketing ethics. Journal of Macromarketing, 6 (1), Hunt, S. D., & Vasquez-Parraga, A. Z. (1993). Organizational consequences, marketing ethics, and salesforce supervision. Journal of Marketing Research, 30(1), Kohlberg, L. (1968). The child as a moral philosopher. Psychology Today, 2(4), Kohlberg, L. (1976). Moral stages and moralization: The cognitive-developmental approach. In T. Likona (Ed.), Moral development and behavior: theory, research and social issues. Holt, New York: Rinehart & Winston. Kwan, A., & Frost, S. (2002). Made in China: Reules and regulations versus codes of conduct in the toy sector. In R. Jenkins, R. Pearson, & G. Seyfang (Eds.), Corporate responsibility and labour rights: codes of conduct in the global economy (pp ). London: Earthscan. Lin, J. Z., & Zhang, J. (2011). Ethical awareness of Chinese business managers and accountants and their views on the use of off-book accounts. Advances in Accounting, Incorporating Advances in International Accounting, 27, Lin, C. (1999). A comparison of perceptions about business ethics in four countries. Journal of Psychology, 133(6), Loviscky, G. E., Trevino, L. K., & Jacobs, R. R. (2007). Assessing managers ethical decision-making: an objective measure of managerial moral judgment. Journal of Business Ethics, 73, Marta, J., Singhapakadi, A., & Kraft, K. (2008). Personal characteristics underlying ethical decisions in marketing situations: a survey of small business managers. Journal of Small Business Management, 46 (4), Mayo, M. A., & Marks, L. J. (1990). An empirical investigation of a general theory of marketing ethics. Journal of The Academy of Marketing Science, 18(2), McDonald, G. M., & Park, P. C. (1996). It s all fair in love, war and business: cognitive philosophies in ethical decision making. Journal of Business Ethics, 15(1), McSweeney, B. (2002). Hofstede s model of national cultural differences and their consequences: a triumph of faith-a failure of analysis. Human Relations, 55, Parboteeah, K. P., Bronson, J. W., & Cullen, J. B. (2005). Does national culture affect willingness to justify ethically suspect behaviors? A focus on the GLOBE National Culture Scheme. International Journal of Cross Cultural Management, 5(2), Rallapalli, K. C., Vitell, S. J., & Barnes, J. H. (1998). The influence of norms on ethical judgments and intentions: an empirical study of marketing professionals. Journal of Business Research, 43, Ralston, D. A., Gustafson, D. J., Terpstra, R. H., & Holt, D. H. (1994). Pre-post tiananmen square: changing values of Chinese managers. Journal of International Business Studies, 12(1), Ralston, D. A., Egri, C. P., Casado, T., Fu, P., & Wangenheim, F. (2009). The impact of life stage and societal culture on subordinate influence ethics: a study of Brazil, China, Germany, and the U.S. Journal of International Management, 15, Redfern, K. (2005). The influence of industrialization on ethical ideology of managers in the People s Republic of China. Cross Cultural Management, 12(2), Redfern, K., & Crawford, J. (2004). An empirical investigation of the ethics position questionnaire in the People s Republic of China. Journal of Business Ethics, 50, Robertson, C. J., Olson, B. J., Gilley, K. M., & Bao, Y. (2007). A cross-cultural comparison of ethical orientations and willingness to sacrifice ethical standards: China versus Peru. Journal of Business Ethics, 81, Singh, J. J., Vitell, S. J., Al-Khatib, J., & Clark, I. (2007). The role of moral intensity and personal moral philosophies in the ethical decision making of marketers: a cross-cultural comparison of China and the United States. Journal of International Marketing, 15(2),