American and Chinese Business Ethic Culture - Essay Example

American and Chinese Business Ethic Culture Two ethical issues for ethics in business from a different continent or culture, the context, rationale and whom it benefits The Chinese and the American culture are two different cultures, both in social and the business contexts. In this respect, there are certain ethical business issues that arise from these two cultures, which are of a particular concern. First, while the American culture of legal universality seeks to establish a business environment where all the players are treated equally, it tends to entrench law into the ethical system, such that the ethical perspective is lost (Ardichvili, Jondle & Kowske, 2009). This aspect is of a major concern, owing to the fact that the relevance of ethics in the business environment is to enhance the development of ideologies and business practices that are moral, just and considerate, devoid of the force of the law (Spencer, 1992). Thus, the major concern relating to the American business ethics culture is that it has stifled and completely negated the essence of ethics as a voluntary initiative for individual organizations, by replacing the relevance of ethics in business with the force of the law. In this respect, the USA corporate receives numerous and strong incentives to promote adherence to the business ethics and corporate code of conduct from the government. Thus, the USA corporate has the high tendency of establishing ethic programs based on the existing government legal framework, thus making the American ethical culture excessively legalistic (Ardichvili, Jondle & Kowske, 2009). The overall effect of the excessively legalistic American ethical culture is that the American business environment is less flexible, thus creating little room for interpreting rules more loosely based on the situations and the relationships involved. In this respect, ethics does not play an important role in the American business environment, since it is simply geared towards legal compliance (Ardichvili, Jondle & Kowske, 2009). Nevertheless, the American business ethical culture benefits the wider population, due to the creation of a universally and equitable ground for establishing and running business, by limiting the extent to which the unethical business conduct such as corruption can persist in this business environment. On the other hand, the Chinese business culture is defined by a stronger and dominant ethical dimension, as opposed to strict compliance with the law. The Chinese business culture is largely defined by the need to ‘preserve face’, which then means that many illegal business tendencies are overlooked for the sake of presenting the Chinese business environment as friendly and accommodative (Irwin, 2012). The great extent of liberality characteristic of the Chinese business ethics environment results in the formation of companies and organizations that seek to export the same culture of minimal ethical code. The consequence of a minimalistic ethical code of the Chinese business environment is that; there is less direct approach to the real problem that hinders the creation of a free and equitable business platform, such as corruption. According to the Transparency International Report of 2010, when ranked in a scale of 1-5, with 1 represent no corruption and 5 representing the most corrupt, the business sector in China scored a 3.6 mark, ranking as the most corrupt sector in the country (Irwin, 2012). The culture of bribery is deeply entrenched in the Chinese contract, procurement and tendering system, such that the winners of large government or private sector contracts are a few firms that are able to influence the tendering process through bribery. The ethical code also lacks in the Chinese non-governmental organization sector, such that NGO officials have largely been involved in scandals that entail using donations to afford luxury lifestyles (Irwin, 2012). The overall effect of this nature of business environment is that corruption in the Chinese business environment is rampant, thus hindering the ability of most of the Chinese firms to cope and compete effectively with their European and USA companies on the global business front. Thus, the Chinese business ethic culture benefits only few individuals who are able to bribe their way into obtaining tenders, contracts and other business deals through bribery. What specific ethical principles are being ignored or violated? The ethical principle of undue influence is violated under the American ethical business culture. This is because; the American ethical business culture is excessively legalistic. Thus, the American ethical business environment is geared towards legal compliance as opposed to the creation of a flexible business environment where rules can be interpreted differently, based on the situations and the business relationships (Spencer, 1992). On the other hand, the ethical principles of integrity and objectivity are violated under the Chinese ethical business culture, owing to the fact that there lacks strong ethical controls to vices such as corruption. Under the Chinese business culture, bias and conflict of interests makes the business environment hostile for the players who are incapable of engaging in the corrupt tendencies of bribery. Which stakeholders are negatively affected? What is the local impact? The global impact? The stakeholders affected in the context of the American business culture are the business owners, since they have to adhere strictly to the established formal code of conduct, thus have less room for flexible interpretation and application of rules based on the prevailing situations. On the other hand, the small business owners are negatively affected in the Chinese business culture, since corruption creates an imbalanced and unfavorable business environment for the small businesses that cannot be able to bribe their way to contracts, procurements and tenders. The local impact is that the American business environment is characterized by low levels of corruption and fewer corruption scandals at the corporate governance levels, thus boosting healthy economic growth. However, the local impact of the Chinese business culture is that corruption and bribery are rampant. This hinders effective exploitation of resources for appropriate Chinese economy growth and expansion, forcing many firms to seek to invest externally. The global impact is that the American foreign organizations are more ethical and highly completive compared to the Chinese firms, which have not expanded their investment widely, especially outside Asia. What change in practices (or laws) might you recommend, to improve the ethics for each situation that you have identified? The recommendation for the improvement of the American business ethics environment is the separation of the legal from the ethical codes in corporate guidelines. This will create a more open and flexible space for business to apply ethical codes more loosely, based on the prevailing circumstances, thus boost business interactions. On the other hand, the recommendation for improving the Chinese business ethics environment is the creation of strong corporate and business ethical guidelines, which will avert unethical business practices such as corruption. References Ardichvili, A. Jondle,D. & Kowske, D. (2009). Dimensions of Ethical Business Cultures: Comparing Data from 13 countries of Europe, Asia, and the Americas. Center for Ethical Business Cultures. Irwin, J. (2012). Doing Business in China: An Overview. London: Institute of Business Ethics. Spencer, H. (1992). The principles of ethics. New York: D. Appleton and Company. Read More