China's Ethical Dilemmas Under Globalization and Uncertainty

Advances in Developing HumanResources

2014, Vol. 16(1) 74 –91© The Author(s) 2014

Reprints and permissions:sagepub.com/journalsPermissions.nav

DOI: 10.1177/1523422313509568adhr.sagepub.com

Article

China’s Ethical Dilemmas Under Globalization and Uncertainty: Implications for HRD

Jie Ke1 and Greg G. Wang2

AbstractThe Problem.Globalization has created increased economic and social uncertainty to China partially represented by daunting ethical dilemmas. It is critical for Chinese human resource development (HRD) researchers and practitioners to advice China to address the problems through balancing the need for short-term growth and long-term sustainability following the Global Financial Crisis era. However, little is known about how HRD can and should respond to these circumstances in a Chinese context.The Solution.Linking China’s ethical dilemmas to traditional cultural beliefs and values is necessary to understand the ethical issues in dealing with increased uncertainty in future development. Three major cultural beliefs/ideologies that influence ethical behaviors in China are analyzed: Confucianism, Taoism, and Capitalism. Ethical imperatives derived from cultural analysis and HRD implications are presented at the national, organizational, and individual level.The Stakeholders.The article offers HRD researchers and practitioners a framework to address how to create a benign ethical culture for China, which promotes and sustains ethical behaviors.

Keywordsethical dilemma, ethical culture, corporate social responsibility, uncertainty, globalization

1Jackson State University, MS, USA2University of Texas at Tyler, USA

Corresponding Author:Jie Ke, College of Education and Human Development, Jackson State University, 3825 Ridgewood Road, Box 23, Jackson, MS 39211, USA. Email: [email protected]

509568 ADHXXX10.1177/1523422313509568Advances in Developing Human ResourcesKe and Wangresearch-article2014

at PENNSYLVANIA STATE UNIV on February 20, 2016adh.sagepub.comDownloaded from

mailto:[email protected]

http://adh.sagepub.com/

Ke and Wang 75

Introduction

During the past three decades, China has experienced unprecedented economic devel-opment. This process is coupled with intensified globalization and uncertainty signi-fied by ethical challenges more severe than those anticipated in the literature (e.g., Chermack, Lynham, & Ruona, 2003). In recent years, the international community has expressed increasing concerns about China’s ethics issues: defective and unsafe prod-ucts, energy shortages, the widening disparities between the rich and the poor, envi-ronmental degradation, labor rights debates, and defiance of business ethics, to name a few (Gu & Ryan, 2011; X. H. Lu, 2009; Shafer, Fukukawa, & Lee, 2007; L. Wang & Juslin, 2009). Particularly, increasing research has been focused on Chinese business ethics and corporate social responsibility (CSR) since the late 1990s, but little has been done to revisit Chinese values and beliefs, and link them to the ethical dilemmas China is facing (Ardichvili, Jondle, & Kowske, 2010; Chan, Ip, & Lam, 2009; Hoivik, 2007). Yet, a related reality in China is that human resource development (HRD), as an emerging function of Human Resource Management (HRM), is a newly added organi-zational function brought in by multinational companies (MNCs), which is not tradi-tionally linked to ethical issues other than its role in employee ethics training and development. There is an apparent lack of HRD engagement in either research or practice.

Purpose and Significance

The purpose of this article is, therefore, to present the ethical dilemmas in China in the era of globalization and uncertainty by analyzing Chinese cultural beliefs and values, and to derive implications for HRD in relation to fostering ethical behaviors for a har-monious, balanced sustainable economy and society. By situating ethical issues in the uncertainty and cultural context as well as focusing on scrutinizing unethical behav-iors against the background of the value system, the authors intend to identify some of the root causes of such behaviors, from which imperatives and remedies can be derived. To this end, we intend to address the following questions:

a. How is ethics defined in China?b. What are the main ideologies/cultural beliefs and values that have exerted in-

fluence over ethical behaviors and shaped ethical culture in China? And, what ethical dilemmas and challenges have been brought to the Chinese business community by them?

c. What are ethical imperatives in the age of globalization and uncertainty?

HRD is an emerging field brought in through China’s operations with multinational corporations after economic reform. From a practice perspective, HRD has experi-enced rapid growth and development throughout different types of organizations. However, limited research can be found in the literature regarding HRD in China. Most published research in this area has consisted of introducing Western



76 Advances in Developing Human Resources 16(1)

HRD practices or theories, or overviews of China’s HRD status. The deficiency was confirmed by our search of the literature on how HRD addresses ethical concerns. This article, therefore, represents a step forward in building the body of knowledge of HRD in China through analyzing a prevalent phenomenon of business ethical violations in the age of globalization and uncertainty from a cultural perspective. With a conceptual framework offering practical implications for HRD professionals, this article contrib-utes to the international HRD literature in an important and under-researched con-text—that of China.

Method

We adopted an approach to review and synthesize the literature followed by a holistic and preliminary conceptualization starting with a keyword guided literature search. As CSR is closely related to ethical research, and ethics is considered a “spring board” and driver for CSR (L. Wang & Juslin, 2009), CSR was used as a primary keyword. Search terms included combinations of the following keywords: ethical dilemma, eth-ics, China, corporate social responsibility, ethical climate, uncertainty and globaliza-tion, ethical value, and/or culture. In addition to using major research databases including ProQuest, ABI Inform, PsycInfo, and EBSCO, the authors used Google, Google Scholar, Baidu (a major Chinese search engine) for the search. The search was focused on the major journals in various fields related to China on ethics, manage-ment, business, marketing, and human resources, including Journal of Business Ethics, Business Ethics Quarterly, Business and Society, Business Ethics: European Review, and Business and Society Review published from 1996 to 2012. This is a period in which business ethics issues in China have received growing attention due to China’s entry into the World Trade Organization (WTO) and its increasing importance in the global business world (X. H. Lu, 1997, 2009; Lu & Enderle, 2006). Next, traditional and comprehensive “pearl growing” was used (Schlosser, Wendt, Bhavnani, & Nail-Chiwetalu, 2006) as well as cross-referencing methods to obtain additional sources. Our search yielded 225 relevant articles either in English or Chinese. On screening the abstract and conclusion of each, we identified 85 of the most relevant sources to include in this study. The selected sources are those that directly discuss and address ethical issues and concerns in the China context.

To identify the ethics literature related to HRD, we specifically searched all issues in the past decade of the four HRD journals to ensure we captured all HRD and ethics-oriented articles (Human Resource Development Quarterly, Human Resource Development International, Human Resource Development Review, and Advances in Developing Human Resources) with the following keywords: HRD, ethics, CSR, and China. We were able to identify 15 additional articles from these sources. As a result, this literature review included 100 publications in the form of books, articles, confer-ence proceedings, and online sources (reports and policy documents). All selected publications were categorized into six content areas that are closely related to our topic: Chinese culture, CSR and ethics, ethics and HRD, Chinese HRD, CSR/ethics in China, and transitioning society and economy. Under each content area, publications



Ke and Wang 77

are sorted in chronological order to show the evolvement of the sub-topics. Critical content analysis in Torraco (2005) was used to generate concepts that provide new ways of thinking about our topic.

Literature Review and Findings

Comparative studies have been conducted on the differences in ethical values between China and America (Ahmed, Chung, & Eichenseher, 2003; Ardichvili et al., 2010; Ardichvili et al., 2012; Becker, 1996; Chapple & Moon, 2005; Hoivik, 2007; Pitta & Hung, 1999; Shafer et al., 2007; J. Tsui & Windsor, 2001; Whitcomb, Erdener, & Li, 1998). For example, Whitcomb et al. (1998) used five business vignettes from Fritzsche and Becker (1984) to examine the differences in ethical decisions and rationale between American and Chinese students. They found that although there were resem-blances between the Chinese and American decision choices in three out of five vignettes, the reasoning to reach the decisions were very different. The analysis of the rationales disclosed the differences in ethical culture and values underlying ethical decision making between these two countries. More recent studies have reported that ethical behaviors are determined by ethical culture/climate, not by ethical codes of conduct, training, or other formal rules and regulations (Ardichvili et al., 2010; Ardichvili et al., 2012). It is, therefore, important to understand ethics issues in China and the role that HRD can play in promoting such behavior through understanding Chinese ethical culture which underpins ethical behaviors.

Ethics and Its Development in China

Ethics research has evolved into an established discipline in the West over the past four decades (Hatcher, 2002). Dealing with “internal values that are a part of corporate culture and shapes decisions concerning social responsibility with respect to the exter-nal environment” (Samson & Daft, 2003, p. 147), ethics has two layers of connotation in the management and HRD literature—business ethics and CSR. Specifically, “busi-ness ethics is the study of conflict, conflict between economics and values, between competition, commerce, and capitalism, and between morality, integrity, and responsi-bility” (Hatcher, 2002, p. 59). CSR was considered “a public posture towards society’s economic and human resources and a willingness to see that those resources are used for broad social ends and not simply for the narrowly circumscribed interests of pri-vate persons and firms” (Frederick, 1960, p. 60). In China, business ethics and CSR are relatively new, although some similar concepts can be found in ancient times.

Business Ethics

As X. H. Lu (1997) argues, the emergence of business ethics in China is something like the emergence of Chinese culture. It emerged from a mixture of different ethical ideologies: “traditional ethics, Marxist ethics, and the ethical issues implicit in the reform” (X. H. Lu, 2009, p. 454), all of which emphasized the moral aspect of




economic activity. X. H. Lu (2009) has categorized the development of business ethics in China into two stages. The first stage was from 1978 to the end of 2001, during which the rise of business ethics was a response to economic reform. Prior to reform, when traditional ethics was criticized and abandoned, no specific business ethics was expressed or discussed in the literature. A form of Marxism, interpreted by the Chinese leaders of the day, that stressed class morality was the dominant, although not exclu-sive concept of ethics that was referenced in this period (X. H. Lu, 1997). In addition, business ethics was generally only of interest to academics until China joined the WTO in 2001.

The second stage was from 2002 to the present. In this period, business ethics became more important at a practical level in organizations. Four factors have contrib-uted to this change: (1) the need to comply with WTO rules; (2) a crisis-induced effort in seeking the support of traditional ethics; (3) increased awareness of employee rights and interests due to economic and social transformation, particularly the influence from practices introduced by multinationals in China (Kolk, Hong, & Dolen, 2010; A. S. Tsui, Schoonhoven, Meyer, Lau, & Milkovich, 2004); and (4) the change in govern-ment ideology. Some government announcements, such as Three Principles for People and the slogan, “Don’t cook by the book,” by a former Premier Zhu Rongji, drew the public’s attention to “credibility” and “integrity” in the business world (Zhu, 2002). As such, both government and organizations became more involved in promoting ethics. It is also during this stage that the government showed its policy preference in main-taining a harmonious society.

CSR

CSR originated from the West and has been defined in various ways since the 1920s. Generally, CSR defines corporate social, economic, and environmental responsibility in addition to its financial accountability (L. Wang & Juslin, 2009). CSR started to gain greater prominence in China in the mid-1990s when the Western CSR concept was introduced by multinationals locating in China (Ying, Yu, & Cui, 2006; Young, 2002). The evolution of CSR in China can be characterized into various stages from ancient to current times and the following sections summarize these eras.

Ancient values related to the CSR concept (Confucius’s time-1949). During this period, most business organizations were family-based and largely engaged in agricultural production. As such, CSR-related concepts and behavior were focused on business reputation through fairness and word-of-mouth. This was exemplified by the popular Confucian virtues, such as “benevolence (ren),” “righteousness (yi),” “sincerity (xin).” A good business person corresponding to today’s CSR concept at the time was often referred to as the “Confucian merchant (ru shang)” (Cheung, 2004; Min, 2013).

Dislocated CSR. The period between 1949 and 1983 witnessed a stage we term as “dis-located CSR.” During this period, the traditional “Confucian merchant” was replaced by the merchant with a Communist ideology (Brook, 1999). This was a stage



Ke and Wang 79

predominantly under the Communist obligatory ideology with all responsibilities—at least on the surface and “officially”—assigned by the government. Enterprises were state- or collectively owned, taking various social responsibilities in their communities or regions on behalf of the state, such as schooling, housing, and health care. As such, each organization was indeed a mini-society which attempted to include all social functions.

An absence of CSR (1984-1994). This stage started from China’s economic reform transitioning from a planned economy to a socialist market economy with private enterprises and joint ventures emerging and bringing the cult of money-worship. Given the priority of GDP-driven economic development, CSR at this stage was either absent or replaced by the interpreted capitalist ideology of maximizing economic returns. Nevertheless, the first academic literature on CSR was published during this era.

The introduction of Western CSR (1995-1999). With the emergence of and engagement in the globalization process, Chinese enterprises started to (or were forced/required to, depending on one’s perspective) accept some CSR requirements from their interna-tional business partners. During this stage, some enterprises experienced CSR assess-ment and auditing through their supply chains and through their foreign business partners (J. Wang & Chaudhri, 2009). However, Chinese enterprises were reluctant to accept the concept and practice because it was generally considered too costly to man-age (Kolk et al., 2010).

CSR learning stage (2000-2003). CSR was further enforced in Chinese society under the pressure of MNCs operating in China. A key instrumental change was brought in by the government. Government departments such as the Ministries of Labor, Com-merce, as well as Chinese Enterprise Confederation (CEC) all established CSR inves-tigation committees. Two documents from the central government, “The Concept of Scientific Development” in 2003 and “The Construction of a Harmonious Society” laid the foundation for localizing CSR in China.

Engagement (2004-present). During this era, the concept of CSR began to be embraced by many Chinese organizations and society. CSR practices were present in domestic and state-owned enterprises (SOEs) as well as export-oriented enterprises. In 2005, the first CSR report from a Chinese SOE was published by the State Grid Corporation of China. China’s own national social standards and regulations were established during this period as well (Ramasamy & Garriga, 2009).

The above developmental stages show that both business ethics and CSR are con-cepts adapted from the West (Chan et al., 2009; Lindgreen, Swaen, & Campbell, 2010; Qu, 2007; Tsalikis & Fu, 2010; Yin & Zhang, 2012), and China appears to be moving toward integrating the ethics practice into its economic and social development. However, given its current early development stage, it would be inappropriate to benchmark Chinese business activities against ethics theories and practices in the West without considering the Chinese cultural background which underpins ethical




behaviors and practices in China. The next section turns attention to Chinese culture in an effort to better understand ethics and CSR in a Chinese context.

Ideologies Influencing Chinese Ethical Culture and Behaviors

Ethics is culture laden. It “represents rules or principles that inform behavior within a particular culture” (Ardichvili & Jondle, 2009, p. 226). Culture is manifested through belief and value known as ideology (Shein, 1992). Therefore, it is important to under-stand major ideologies that have shaped Chinese culture and ethics, particularly Confucianism (Ardichvili et al., 2010; Ardichvili et al., 2012; Gu & Ryan, 2011; Ip, 2009; Irwin, 2012; L. C. Lu, Rose, & Blodgett, 1999; O’Leary, Robin, & Fraser, 2012; Su & Littlefield, 2001; A. S. Tsui, Wang, & Xin, 2006; J. Tsui & Windsor, 2001). The review of literature showed that Chinese society has been under the influence of a mix of ideologies as a result of political change, adoption of associated ideologies and reform, globalization, and uncertainty. These political changes and ideologies have brought different values to the Chinese society. Table 1 summarizes major ideologies shaping Chinese ethical culture as well as ethical dilemmas generated by the beliefs, values, and attributes held under those ideologies.

Confucianism

Confucianism is more of a moral system than a set of ethical standards that “has been firmly established as an undeniable, unofficial, but powerful system of moral, political

Table 1. Ideologies and Ethical Dilemmas in China.

Ideologies

Confucianism Taoism Capitalism

Beliefs, values, and attributes

Harmony Hierarchy Collectivism Guanxi Balance and harmony

Money worship

Positive influence

Promotes ethics and CSR in general

Helps maintain order when ethical culture is in place

Ensures high conformity if ethical culture can be created

Maintains social interactions for comparative advantage

In line with C SR originating in the West and promotes sustainable development

Calls for resurrection of traditional ideologies

Negative influence

Might compromise some people’s interest when monitoring system is absent

Makes subordinates unable to challenge status quo and voice different opinions

Lack of individual accountability in unethical behaviors

May lead easily to bribery and corruption

Maximizes business profits at the cost of ethics and CSR

Note. CSR = corporate social responsibility.



Ke and Wang 81

and social principles governing nearly every aspect of Chinese life since the Han era (206 BC-AD 220)” (Wang et al., 2005, p. 314). This system emphasizes wu lun—five cardinal relationships between emperor–subject, father–son, husband–wife, elder–younger brothers, and friend–friend. Wu lun set forth hierarchy (Paternalism) and group orientation (collectivism) for the society (Ardichvili et al., 2010). It also embraces five virtues constituting a base for Confucian ethics in ancient China: Ren (benevolence), Yi (Righteousness), Li (profits or gains), Zhi (wisdom), and Xin (trust-worthiness), among which Ren rules all other virtues. In other words, li without ren is considered unethical. Confucianism is one of the major influences on current Chinese business ethics practices (Ardichvili et al., 2010; Ip, 2009). Values held in Confucianism may either promote or compromise ethical behaviors in contemporary China under different situations. In general, ethical dilemmas may be embedded in pursuing and maintaining the following values.

Harmony is a central value in the Confucian society. People in this society are expected to live harmoniously through internal self-cultivation and external moral engagement. In general, this value corresponds with business ethics and CSR. However, in the absence of monitoring systems for checking abuse and maintaining fairness, over-emphasizing harmony may compromise the interest of people who are not in authority, as is currently the case in China (Ip, 2009).

Hierarchy is dictated by wu lun, which maintains that social order is predetermined and should not be questioned. When an ethical culture is in place, hierarchy is a virtue because it requires strict conformity (Weller, 1996). Yet hierarchy implies inequity. In a hierarchical environment, subordinates can not challenge the authority, even when they observe unethical behaviors, leading, potentially, to an even worse ethical culture in an organization.

Group-orientation (collectivism) emphasizes that one should always place group interests above individual interests. In a highly collective society, such as that of China, it implicitly requires individuals’ strict conformity and commitment to the social or work groups in which they are affiliated (Chen, Chen, & Meindl, 1998). The downside is that individual accountability to ethical behaviors may be very difficult to enforce.

A frequently studied cultural attribute of Confucianism is guanxi because it is a contemporary derivative of Confucianism, and an integral part of doing business in China (Chen & Chen, 2004; Hoivik, 2007; Snell & Tseng, 2001). Guanxi refers to connections or relationships, and is essentially relationship-based, utilitarian, and transferrable; and it cannot be bought. Guanxi covers multiple aspects: network rela-tionship, ongoing and long-term commitment, trustworthiness, Mianzi (image as per-ceived by others), Quanzi (circle of friends; sphere of influence), and Renqing (human empathy; human relationship). Reciprocity is essential in guanxi. When guanxi is used, a return of favor at a later date is expected. As long as a favor is returned, the behavior is ethical. Some have argued that guanxi is benign and necessary in the busi-ness world because it emphasizes good faith and lacks ongoing and long-term commit-ment, an essential aspect in creating a harmonious society (Su & Littlefield, 2001). What makes guanxi unique is its dual impact on ethical behaviors. “Guanxi has its




own moral code and serves as a necessary social function” (Hoivik, 2007, p. 460). It can be helpful or harmful to social groups and organizations, depending on the situa-tion (Lovett, Simmons, & Kali, 1999). In other words, guanxi is a double-edged sword, which can help business to gain competitive advantage, but may also lead to bribery or corruption.

As a moral system, Confucian ideology is different from ethical standards per se. “Morality is the set of beliefs a person has about what is right and wrong in the world” (Klugman & Stump, 2006, p. 186). When ethics totally relies on the strength of per-sonal beliefs, it opens doors for unethical behaviors. This may explain why China, under the influence of Confucianism, is a country of Ren Zhi (ruling by man) rather than that of Fa Zhi (ruling by law). In addition, associated with Confucianism culture is a high tolerance of ambiguity (Hofstede, 2001), inducing vague rules, regulations, and imprecise contracts (Huang, 2008; Irwin, 2012).

In short, Confucianism holds some values that are beneficial for creating a benign ethical culture, such as trustworthiness, diligence persistence, greater respect for sta-tus, higher value on thrift, and a greater sense of shame (Harvey, 1999; Li & Madsen, 2009). Those values may lead individuals to be conscious of what constitutes unethical behaviors and to follow ethical standards. Individuals who possess these virtues are likely to respect rules, fulfill societal expectations, and act ethically (L. C. Lu et al., 1999).

Ethical Dilemmas Under Confucianism

Potential ethical dilemmas are imbedded in Confucianism. For example, four negative aspects of Confucian values, personal steadiness and stability, saving face, respect for tradition, and reciprocation of favors and gifts, are oriented toward “short-termism,” are in conflict with long-term sustainability, and often result in unethical behaviors (Hofstede & Bond, 1988). While harmony is a goal of the Confucian society, the inter-ests of some people might be compromised if monitoring of fairness is not in place or not effective (Ip, 2009). Similarly, although respect for hierarchy and loyalty elicits conformity and makes the alignment of behaviors to formal ethical rules and regula-tions easier, it is more likely to cover up or feed problems in unethical behaviors due to the inclination to challenge authority (Harvey, 1999; Whitcomb et al., 1998). For group-orientation, individual accountability and motivation may be compromised par-ticularly in performance-based systems. Although Guanxi may provide an easy entry to business opportunities for trust and long-term relationship, it also has the potential to dance around bribery, corruption, and other unethical behaviors.

Taoism

Like Confucianism, Taoism emphasizes balance and harmony. But unlike Confucianism, Taoism promotes natural harmony and harmony with nature. Taoism does not preach morality per se, instead it simply explains what certain behaviors will produce. Therefore, harmony in Taoism is more in line with CSR originated from the



Ke and Wang 83

West. It provides a concept of sustainability and can be adopted as a principle to pro-tect the environment and achieve sustainable development (L. Wang & Juslin, 2009).

Capitalism

Since 1978, Capitalism was introduced gradually through, at first, a highly mixed market economy by the new era of political leaders. However, the transition (still ongoing) to Capitalism in China prioritized a focus on pursuing monetary return and created a credibility crisis as economic reform progressed, which pushed China back, at least to some extent, to its traditional ideology—Confucianism. Obviously, the so called “cult” of money-worship does not have great concern about business ethics and social responsibilities, posing a major ethical dilemma in the age of globalization.

HRD’s Role in Managing Ethical Culture

The ethical dilemmas and challenges originated from Chinese culture during its transi-tion to a “market” (market, hereafter, but debates remain over how “free-market” the Chinese economy is) economy have posed significant threats to China’s sustainability in economic and societal development during uncertain times. It is critical for HRD professionals to take cultural factors into consideration when addressing these ethical concerns. In the literature, HRD is considered to be playing a pivotal role in develop-ing an ethical culture, including culture change efforts, developing dynamic ethical training programs and up-to-date codes of ethics (Ardichvili & Jondle, 2009). However, in the existing business practice in China, there has been no literature or media reports indicating HRD’s role in ethics-related practice at either the national or the organizational level. In fact, the function of HRD is still largely focused on training and performance in organizations without an explicit focus on ethics. The lack of eth-ics in HRD theory and practice in China may be influenced by the following two factors.

First, HRD as a field of practice did not feature in China until multinational compa-nies’ human resource management practices brought greater prominence to HRD in the mid-1990s. The field is currently unregulated with a limited sense of social respon-sibility regarding the HRD profession. This is evidenced by the fact that there are only two HRD doctoral programs in the country, one in Beijing and the other in Shanghai. Both programs were created during the last three years and there is not a single ethical course listed in either of the two PhD curricula. The reality in the practitioner field is even more disturbing.

Second, as an emerging field, HRD functions in the West have been struggling to gain a seat in the boardroom to be a real business partner (Hatcher, 2002). HRD pro-fessionals in most multinational companies still play a limited role in influencing orga-nizational ethical culture and CSR policies. Such reality is inevitably affecting their counterparts in China through operational practices in all MNCs, thus influencing the Chinese organizations and corresponding HRD functions.




Discussion

The combined effect of the above two factors has resulted in Chinese HRD profession-als’ limited ability in addressing ethics and CSR concerns. In other words, HRD in China is facing a daunting task to play a role in building an ethical organizational and societal environment. Therefore, ethical culture change is an imminent call for HRD professionals. This is critical not only for organizations, but also for the interest of all stakeholders. To move this agenda forward, Chinese HRD professionals need to be aware of the ethical imperatives facing the nation and integrate plans to address these imperatives while developing itself into a mature profession.

Ethics Imperatives at Three Levels: Implications for HRD Practice

Ethics issues in China are multi-dimensional and multi-level (X. H. Lu, 1997, 2009). To address the cultural ethical dilemmas, we propose the following priorities for cul-tural change at National (Macro), Organizational (Meso), and Individual (Micro) lev-els. These imperatives are conceptualized to create a harmonious and ethical culture and society.

At the National Level, a fundamental transition from a “moral” society to an “ethi-cal” one is needed to cope with increased globalization and uncertainty. First, to rule out ambiguity in the culture, China needs to update its legal system. Not only does the government need to make effective and comprehensive laws and regulations on criti-cal ethical issues, such as product safety and quality, fair competition and environmen-tal protection, but also a system of accountability and quality monitoring has to be put in place. Law enforcement and punishment need to be made stricter and more effective (Harvey, 1999; X. H. Lu, 2009; Whitcomb et al., 1998). Given that China is a society that respects hierarchy, ethics-based compliance programs which require conformity by all Chinese organizations are more likely to be successful (Collier & Esteban, 2007; Paine, 1994). Second, to raise the awareness of business ethics and CSR, the use of contextualized codes of ethics and CSR standards should be made mandatory nation-wide. Research shows that small- and medium-sized enterprises are reluctant to invest in training and development, because it does not yield short-term gains (Qian, 2006; Xu, 2005). The government may need to provide financial assistance or incentives to them. Third, in China currently, there is no equivalent law to the U.S. Foreign Corrupt Practices Act (X. H. Lu, 2009; Whitcomb et al., 1998). Laws to this effect are needed urgently to alleviate the negative effect of guanxi culture.

At the Organizational Level, the vague nature of the Confucian moral system is closely related to uncertainty and ambiguity in laws and regulations; this might not only have repercussions on business decision-making in the globalized markets, but also result in failing to govern individual behaviors. Therefore, it is critical to create a healthy ethical organizational culture through formulating localized codes of ethics and CSR policies to clearly define acceptable ethical conduct and behaviors (Ip, 2000). The ethical standards and policies have to fit the organizational culture and be aligned with organizational structure, followed by interactive ethics training and education



Ke and Wang 85

programs. Multinational companies operating in China may team up with their Chinese business partners to build a more robust ethical business environment.

Among all the organizations with various ownership systems, SOEs appear to be more willing to engage with social responsibility, as private enterprises are the least informed of CSR and are generally less willing to accept the concept, and multination-als appear to be ranked in between the two, in many cases (Harvey, 1999). For instance, The Capital Iron and Steel Company, one of the earliest and largest pilot SOEs in China’s reform, realized the importance of business ethics and CSR as early as the late 1990s and committed to three business ethics principles: (1) seeking profits with proper means; (2) protecting the environment when pursuing economic development; and (3) balancing the interests of the State, the organization and individuals when distributing benefits (Harvey, 1999). Second, the code of ethics and CSR that are less focused on individualism will work better. Third, organizations need to benchmark the codes of ethics against historically existing values in Chinese culture and test their feasibility in implementation.

At the Individual Level, there is substantial potential to promote ethical behaviors. The focus should be on “cultivating” individuals to become critical thinkers. As a result of a long history and under the influence of mixed ideology, it may take some time for individuals to fully embrace the concept of business ethics and CSR. When mentoring such individuals, one needs to be aware of the functions of guanxi, mianzi, and quanzi (one’s social/work circle) embedded in the Confucianism and often widely used in practice. In a Confucianism culture, respect for seniority and hierarchy makes leadership ethics training extremely important; and “walking the talk” has been shown to be an effective approach to get compliance. Therefore, organizations can incorpo-rate ethical training components in leadership development programs and provide role models for all individuals.

In short, the imperatives at all levels are to address a critical ethics question of how to balance the needs of globalization and economic development, their associated uncertainty, and the need for social development against the backdrop of Chinese culture.

Based on the review of the literature, a conceptual framework illustrating HRD’s role in creating ethical culture is proposed to address the aforementioned imperatives at three levels, National (Macro), Organizational (Meso), and Individual (Micro) and presented in Figure 1.

At each level, the focus of HRD interventions is suggested. Triangles indicate the first-level priorities and reversed triangles indicate the second-level priorities of HRD interventions. Ethics issues in China are multi-faceted and multi-level; and HRD may assume different roles in assisting organizations to become an active global citizen in the process of globalization under uncertainty. The following analysis of HRD’s roles in developing a healthy ethical culture at different levels is in line with the multi-level proposals for developing human capital in China (Deng, 2003; J. Wang & Wang, 2006).

At the National (Macro) level, HRD may act as a strategic advisor and consultant to the government. To address the imperatives at this level, the focus of HRD interven-tions may be on assisting the formulation of national policy and codes of ethics. For




instance, HRD professionals may propose ethical standards contributing to the strate-gic plan of developing human capital and advise the government to invest in specific ethics education and training nationwide. The issues that demand attention may include ethics-induced food safety, corruption, unethical labor practices, corporate misconduct, product safety, and environmental protection (Tian, 2006).

At the Organizational (Meso) level, HRD professionals may act as a strategic busi-ness partner, advisor, trainer, and facilitator. To address the imperatives at this level, HRD interventions may focus on: (1) planning and formulating localized codes of ethics and CSR policies and getting full support from organizational leadership. The history of CSR development in China has demonstrated that localized concepts that incorporate local cultures, values, and reality can help overcome resistance, negative attitudes, and misunderstandings (L. Wang & Juslin, 2009); (2) educating all stake-holders and raising awareness of ethical policies and behaviors through training and development programs; (3) determining critical issues that ethics and social responsi-bility programs should be focused on in correspondence with the organizational cul-ture and business reality; (4) working with core business units to ensure compliance with ethics policies through monitoring and enforcing the ethics rules and regulations; (5) cultivating and institutionalizing ethical thinking (Ardichvili & Jondle, 2009); and (6) developing and updating codes of ethics.

At the Individual (Micro) level, HRD professionals may play a role in mentoring. To address the imperatives at this level, HRD interventions may be focused on (1) designing and implementing ethics leadership programs, and through leaders’ behav-iors to influence employees’ ethical perceptions and decision-making reasoning when facing ethical dilemmas and (2) understanding different personal values and beliefs for individual development by incorporating their perspectives. It may also be used to provide feedback on important localized and contextual knowledge to the organiza-tional and national ethics and CSR programs. According to Ardichvili and Jondle

Figure 1. Framework of HRD’s role in creating ethical culture in China.Note. HRD = human resource development.



Ke and Wang 87

(2009), the emergence of ethical business culture and development of individuals’ moral identities go hand-in-hand. “There is a strong connection between the personal development of leaders and organizational members and the development of the whole business into an entity that is based on strong moral principles” (Ardichvili & Jondle, 2009, p. 233).

Mentoring and leadership development programs assist in building a strong ethical culture for the organization because:

Managers are a model of the behaviors they demand of others; managers communicate the importance of integrity when making difficult decisions; leadership understands the pressure points that drive unethical behavior; leadership develops processes to identify and remedy those areas where pressure points occur. (Jensen, 2006, p. 339)

In summary, to be effective, the implementation of HRD interventions is likely to start from the national level, considering the hierarchical nature of Chinese culture; but the individual level provides feedback for improvement during the process of imple-mentation. Throughout the process, national policies and corporate values in ethics should be clearly identified and aligned not only with each other, but also with the day-to-day operations of the organization (Ardichvili & Jondle, 2009). As stated in Ardichvili et al. (2010), the success in creating an ethical culture in an organization is determined by: (1) “the alignment between formal structures, process, policies, formal training and development programs, and consistent value-based ethical behaviors of top leadership” (p. 300); and (2) personal moral development and authentic leadership behaviors.

Implications for HRD Research

Although much effort has been made to understand Chinese cultural characteristics and their impact on ethics issues in China, more indigenous studies in the field of HRD are needed to understand local ethics phenomena and uncover cultural factors that contribute to benign ethical culture/climate in organizations (Wang, 2012). As pointed out by A. S. Tsui et al. (2004) and Whetten (2002), scholarship should continuously assess the knowledge claims of our field by both contextualizing general knowledge and generalizing contextual knowledge.

Theories on Chinese ethical culture and dilemmas are anything but established, and yet are in great need, particularly the theories to explain how culture and cultural val-ues interact with and impact ethical behaviors and ethical decision-making under the pressures of globalization and economic uncertainty. In the age of globalization and uncertainty, explicit theory on corporate culture with Chinese specificity is likely to generate new political, moral, and legal thinking and build a more ethically oriented culture and environment for both organizations and society.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.




Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

References

Ahmed, M. M., Chung, K. Y., & Eichenseher, J. W. (2003). Business students’ perception of ethics and moral judgment: A cross-cultural study. Journal of Business Ethics, 43, 89-102.

Ardichvili, A., & Jondle, D. (2009). Integrative literature review: Ethical business cultures: A literature review and implications for HRD. Human Resource Development Review, 8, 223-244.

Ardichvili, A., Jondle, D., & Kowske, B. (2010). Dimensions of ethical business cultures: Comparing data from 13 countries of Europe, Asia, and the Americas. Human Resource Development International, 13, 299-315.

Ardichvili, A., Jondle, D., Kowske, B., Cornachione, E., Li, J., & Thakadipuram, T. (2012). Ethical cultures in large business organizations in Brazil, Russia, India, and China. Journal of Business Ethics, 105, 415-428. doi:10.1007/s10551-011-0976-9

Becker, G. K. (1996). Ethics in business and society: Chinese and western perspectives. Berlin, NY: Springer.

Brook, T. (1999). Profit and righteousness in Chinese economic culture. In T. Brook & H. V. Luong (Eds.), Culture and economy: The shaping of capitalism in eastern Asia (pp. 27-44). Ann Arbor: University of Michigan Press.

Chan, A., Ip, P. K., & Lam, K. J. (2009). Business ethics in greater China: An introduction. Journal of Business Ethics, 88, 1-9.

Chapple, W., & Moon, J. (2005). Corporate social responsibility (CSR) in Asia: A seven-country study of CSR web site reporting. Business & Society, 44, 415-441. doi:10.1177/0007650305281658

Chen, C.C., Chen, X.P., & Meindl, J.R. (1998). How can cooperation be fostered? The cultural effects of individualism-collectivism. Academy of Management Review. 23(2), 285-304.

Chen, X. P., & Chen, C. C. (2004). On the intricacies of the Chinese Guanxi: A process model of Guanxi development. Asia Pacific Journal of Management, 21, 305-324.

Chermack, T. J., Lynham, S. A., & Ruona, W. E. A. (2003). Critical uncertainties confront-ing human resource development. Advances in Developing Human Resources, 5, 257-271. doi:10.1177/1523422303254628

Cheung, T. S. (2004). Righteousness and profitableness: The moral choices of contemporary Confucian entrepreneurs. Journal of Business Ethics, 54, 245-260.

Collier, J., & Esteban, R. (2007). Corporate social responsibility and employee commitment. Business Ethics: A European Review, 16, 19-33.

Deng, J. (2003). An analysis of the current situation about human capital investment in China [in Chinese]. Journal of Zhaozhuang Teachers College, 20(1), 102-104.

Frederick, W. C. (1960). The growing concern over business responsibility. California Management Review, 2, 54-61.

Fritzsche, D. J., & Becker, H. (1984). Linking management behavior to ethical philosophy: An empirical investigation. The Academy of Management Journal, 27, 166-175.

Gu, H. M., & Ryan, C. (2011). Ethics and coporate social responsibility: An analysis of the views of Chinese hotel managers. International Journal of Hospitality Management, 30, 875-885.



Ke and Wang 89

Harvey, B. (1999). “Graceful merchants”: A contemporary view of Chinese business ethics. Journal of Business Ethics, 20, 85-92.

Hatcher, T. (2002). Ethics and HRD: A new approach to leading responsible organizations. Cambridge, MA: Basic Books.

Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Thousand Oaks, CA: SAGE.

Hofstede, G., & Bond, M. H. (1988). The Confucius connection: From cultural roots to eco-nomic growth. Organizational Dynamics, 16, 5-21.

Hoivik, H. (2007). East meets West. Tacit messages about business ethics in stories told by Chinese managers. Journal of Business Ethics, 74, 457-469.

Huang, H. (2008). Notes: Maximizing Chinese imports’ compliance with United States safety and quality standards: Carrot and stick from whom? Southern California Interdisciplinary Law Journal, 18(131), 131-160.

Ip, P. K. (2000). Developing virtuous corporations with Chinese characteristics for the Twenty-first Century. In F. J. Richter (Ed.), The dragon millenium (pp. 184-206). Westpoint, CT: Quorum.

Ip, P. K. (2009). Is Confucianism good for business ethics in China? Journal of Business Ethics, 88, 463-476. doi:10.1007/s1055100901202

Irwin, J. (2012). Doing business in China: An overview of ethical aspects. London, UK: Institute of Business Ethics.

Jensen, M. H. (2006). Serve the people! Corporate social responsibility (CSR) in China. Copenhagen, DM: Asia Research Centre, Copenhagen Business School.

Klugman, C., & Stump, B. (2006). The effect of ethics training upon individual choice. Journal of Further and Higher Education, 30, 181-192.

Kolk, A., Hong, P., & Dolen, W. (2010). Corporate social responsibility in China: An analy-sis of domestic and foreign retailers’ sustainability dimensions. Business Strategy and the Environment, 19, 289-300.

Li, J., & Madsen, J. (2009). Chinese workers’ work ethic in reformed state-owned enterprises: Implications for HRD. Human Resource Development International, 12, 171-188.

Lindgreen, A., Swaen, V., & Campbell, T. T. (2010). Corporate social responsibility practices in developing and transitional countries: Botswana and Malawi. Journal of Business Ethics, 90, 429-440. doi:10.1007/s10551-010-0415-3

Lovett, S., Simmons, L. C., & Kali, R. (1999). Guanxi versus the market: Ethics and efficiency. Journal of International Business Studies, 30, 231-247.

Lu, L. C., Rose, G. M., & Blodgett, J. G. (1999). The effects of cultural dimensions on the ethi-cal decision-making in marketing: An exploratory study. Journal of Business Ethics, 18, 91-105.

Lu, X. H. (1997). Business ethics in China. Journal of Business Ethics, 16, 1509-1518.Lu, X. H. (2009). A Chinese perspective: Business ethics in China now and in the future.

Journal of Business Ethics, 86, 451-461.Lu, X., & Enderle, G. (Eds.). (2006). Developing business ethics in China. New York: Palgrave

Macmillan.Min, M. (2013). The Confucian merchant tradition in the late Qing and the early Republic and

its contemporary significance. Social Sciences in China, 34, 165-183.O’Leary, T., Robin, D., & Fraser, C. (2012). Ethics in early China: An anthology. Baltimore,

MD: Project Muse.Paine, L. S. (1994). Managing organizational integrity. Harvard Business Review, 72, 106-117.




Pitta, D. A., & Hung, H. G. (1999). Ethical issues across cultures: Managing the differing per-spectives of China and the USA. The Journal of Consumer Marketing, 16, 240-255.

Qian, Y. (2006). An analysis of the problem of human resource development and management in private enterprise [in Chinese]. Sci-Tech Information Development & Economy, 16(5), 238-240.

Qu, R. (2007). Corporate social responsibility in China: Impact of regulations, market orienta-tion and ownership structure. Chinese Management Studies, 1, 198-207.

Ramasamy, B., & Garriga, E. (2009). The China code: An analysis of China’s national social standards for the textile and apparel industry. Journal of Management & Public Policy, 1(1), 1-21.

Samson, D., & Daft, R. L. (2003). Management (Pacific Rim ed.). Southbank, Australia: Thomson.

Schlosser, R. W., Wendt, O., Bhavnani, S., & Nail-Chiwetalu, B. (2006). Use of information-seeking strategies for developing systematic reviews and engaging in evidence-based practice: The application of traditional and comprehensive pearl growing: A review. International Journal of Language & Communication Disorders, 41, 567-582.

Shafer, W. E., Fukukawa, K., & Lee, G. M. (2007). Values and the perceived importance of ethics and social responsibility: The U.S. versus China. Journal of Business Ethics, 70, 265-284.

Shein, E. (1992). Organizational culture and leadership: A dynamic view. San Francisco, CA: Jossey-Bass.

Snell, R. S., & Tseng, C. (2001). Commentary: Ethical dilemmas of relationship building in China. Thunderbird International Business Review, 43, 171-201.

Su, C. T., & Littlefield, J. E. (2001). Entering Guanxi: A business ethical dilemma in mainland China? Journal of Business Ethics, 33, 199-210.

Tian, H. (2006). Corporate social responsibility and advancing mechanism [in Chinese]. Beijing, China: Economy & Management Publishing House.

Torraco, R. J. (2005). Writing integrative literature reviews: Guidelines and examples. Human Resource Development Review, 4, 356-367.

Tsalikis, J., & Fu, W. (2010). Business ethics index: China revisited. Journal of Global Business, 4, 79-84.

Tsui, A. S., Schoonhoven, C. B., Meyer, M. W., Lau, C., & Milkovich, G. T. (2004). Organization and management in the midst of societal transformation: The People’s Republic of China. Organization Science, 15, 133-144.

Tsui, A. S., Wang, H., & Xin, K. R. (2006). Organizational culture in China: An analysis of culture dimensions and culture types. Management and Organization Review, 2, 345-376.

Tsui, J., & Windsor, C. (2001). Some cross-cultural evidence on ethical reasoning. Journal of Business Ethics, 31, 143-150.

Wang, G. G. (2012). Indigenous Chinese HRM research: phenomena, methods, and challenges, Journal of Chinese Human Resource Management, 3(2), 88 – 99.

Wang, J., & Chaudhri, V. (2009). Corporate social responsibility engagement and communica-tion by Chinese companies. Public Relations Review, 35, 247-250.

Wang, J., & Wang, G. G. (2006). Exploring national human resource development: A case of China management development in a transitioning context. Human Resource Development Review, 5, 176-201.

Wang, J., Wang, G., Ruona, W., & Rojewski, J. (2005). Confucian values and the implications for international HRD. Human Resource Development International, 8(3), 311-326.



Ke and Wang 91

Wang, L., & Juslin, H. (2009). The impact of Chinese culture on corporate social responsibility: The harmony approach. Journal of Business Ethics, 88, 433-451.

Weller, R. P. (1996). Unruly gods: Divinity and society in China. Honolulu: University of Hawaii Press.

Whetten, D. A. (2002). Constructing cross-context scholarly conversations. In A. S. Tsui & C. M. Lau (Eds.), The management of enterprises in the people’s Republic of China (pp. 29-47). Boston, MA: Kluwer Academic Publishers.

Whitcomb, L. L., Erdener, C. B., & Li, C. (1998). Business ethical values in China and the U.S. Journal of Business Ethics, 17, 839-852.

Xu, M. (2005). Comments on tactics of human resource managment in small and medium private enterprises [in Chinese]. Modern Finance and Economics–Journal of Tianjin University of Finance and Economics, 25(5), 44-47.

Yin, J., & Zhang, Y. (2012). Institutional dynamics and corporate social responsibility (CSR) in an emerging country context: Evidence from China. Journal of Business Ethics, 111, 301-316.

Ying, G. F., Yu, Z. H., & Cui, S. X. (2006). Guide to CSR [in Chinese]. Beijing, China: Enterprise Management Publishing House.

Young, N. (2002). Three “C”s: Civil society, corporate social responsibility, and China. The China Business Review, 29(1), 34-38.

Zhu, R. J. (2002, November 19). “Don’t cook by the book”—Motto for three accountancy col-leges. China News. Retrieved from http://www.chinanews.com/2002-11-19/26/245097.html

Author Biographies

Jie Ke is an assistant professor of human resource development (HRD) within the School of Lifelong Learning/College of Education and Human Development at Jackson State University. She is the managing editor of the Journal of Chinese Human Resource Management (JCHRM) and a lead grant writer for the Center for the Healing of Racism (CFHR). She also sits on the board of directors for CFHR. Her research interests include curriculum development, evaluation and assessment, diversity training, international human resource development/management, and effectiveness of elearning, and statistics education.

Greg G. Wang is professor of HRD in the College of Business and Technology, The University of Texas at Tyler. He is the editor of Journal of Chinese Human Resource Management. His recent research interest is in international HRD with an emphasis on Chinese indigenous research.


http://www.chinanews.com/2002-11-19/26/245097.html

http://www.chinanews.com/2002-11-19/26/245097.html


China's Ethical Dilemmas Under Globalization and Uncertainty

Documents

Transcript of China's Ethical Dilemmas Under Globalization and Uncertainty