2013 Cambridge Business & Economics Conference
ISBN : 9780974211428
Leadership and Ethics within the Chinese and American Corporate Culture
Adam Sharrard, Shawn Carraher
(260) 519-3432
July 2-3, 2013
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Abstract
Purpose – The purpose of this research paper is to examine Chinese and the United States of
America’s leadership styles and ethics with a focus on Confucianism. It will explore leadership
styles and ethical standards of Chinese and Western entrepreneurs and business leaders. There is
much to be said about the differences that play in this type of field.
Design/Methodology/Approach – Forsyth’s Ethics Position Questionnaire was used for the
measurement of ethics, and Fiedler’s Least Preferred Coworker Scale was used to measure
leadership. The information has been collected and compiled from scholarly sources. The
sources include data collection through surveys, history, and scholarly articles. Each
method/approach is unique to the study being done on leadership and ethics, specifically to some
relation to Confucianism.
Findings – The findings show that Confucianism does play a role in cultural differences between
business leaders from China and the United States. Chinese business leaders stress relationship
development, and encourages and helps foster the growth of his/her subordinates. Guanxi is a
term that is prevalent in many of Chinese business leaders’ ethical decisions. There are many
actions that the Chinese see as necessary, while some Westerners believe it to be unethical.
These practices stem from Confucian teachings.
Originality/Value/Contribution – The paper is original in a sense that it is combining various
studies on cultural differences on leadership and ethics into one. It helps to centralize all the
different things that have been researched and discussed in regards to this topic. It is valuable to
learn about the cultural differences and use what has been found to better understand how
Chinese business leaders see react to certain situations and ethical decisions.
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Research
Leadership
Still to this day, Confucius ideals are seen in leadership positions all throughout the
Chinese corporate culture. There are many characteristics that have been taught for thousands of
years within the historical country of China, and it is evident that it still holds true to modern day
business leaders.
Relational
One of these characteristics is someone who values relationships and puts others first.
They practice ren, which is translated into love without discrimination (Sheh 2010). A leader
who practices ren does not take advantage of the weak, and does not exploit others with profit in
mind. Mencius, who was the most recognizable Confucian other than Confucius himself,
believed that a “Confucian leader is one who emphasizes benevolence and righteousness instead
of thinking of ways of profiting” (Lau, 1970).
Stemming off of ren, Confucian leaders also look to emphasize ren quin in their
leadership style. Ren quin is translated into “human feelings or relationships” (Sheh 2010). Even
when a subordinate makes a mistake, a leader with Confucian influence will more than likely
give that individual a chance to redeem him/herself. In the book “Riding the Waves of Culture”,
authors Trompenaars and Hampden-Turner write of a scenario of an assembly line worker in
East Asia who inserted a component upside down, rendering the entire batch defective. When
the floor director was asked who the culprit was, they refused to answer, and said that the matter
was handled (Trompenaars & Hampden-Turner, 2012). This is somewhat uncommon in Western
corporations. Many times, that person is singled out and punished. But the floor director knew
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that it was a mistake, and was willing to give that individual another chance. Leaders with
Confucian aspects often see firing as a last resort, and believe in fostering the relationships with
his/her subordinates (Trompenaars & Hampden-Turner, 2012).
Ren quin is often sought after more than intelligence when looking for individuals to
appoint as business leaders. Sheh states, “A person who is high in intelligence (IQ) but grossly
lacks human skill (EQ) will not be a preferred choice” (Sheh 2010). But if an individual has
average intelligence, but has great human skills, then that person stands a good chance of being
selected. Being able to interact with and having a high regard for others is paramount for
Confucian leaders.
When it comes to relationships, traditional Confusions teachings have put emphasis on
different social roles, which helps ensure order (Chau-kiu 2008). Traditionally, Confucians put
social roles in pairs. In descending order, they are: ruler and subject (also viewed as leader and
subordinate), father and son, husband and wife, elder and youngest brother, and friend and friend
(Woods, 2012). Definitionism also plays an important role in leadership. Definitionism
maintains that “every person must have a proper name, title, or role that prescribes behavior”
(Liu, 1997).
Lifelong Learning
Confucianism also stresses constantly pushing one’s mind further, and to never become
complacent. This is seen in Chinese business leaders as well. Sheh writes, “Not only do
(leaders) have a strong commitment to learning from self and others, they are also not selfish in
sharing knowledge and experience with their followers” (Sheh 2010). This stems from their
constant search for creating and fostering relationships. Confucian leaders also fully expect their
subordinates to do the same, and to stretch their minds. In fact, formal training for new hires is
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not as common as it is in Western cultures. Many times, all training is done on the job, and they
are expected to learn and ask questions as they go along (Sheh, 2010).
Confucianism also teaches that making mistakes is a natural part of life, but those who
refuse to learn from their mistakes are fools. Confucius states that “even a sage makes mistakes.
The difference between a wise and unwise person is that a wise person will make amends while
the unwise person persists in his mistakes and even covers them up” (Khu 1991).
Moderation
A central theme in Confucianism is zhongyong, which is translated into ”the doctrine of
mean”. The doctrine of mean states that “one must adhere unswervingly to the mean, or centre
course, at all times and in every situation” (Zhongyong. 2012). A Confucius leader practices
this theme by balancing the “hard” leadership styles, such as discipline, charisma, and courage,
with the “soft” leadership style, such as wisdom, patience, endurance, and perseverance. Sheh
writes that a Confucius business leader “is firm in his principles but flexible in his approach”
(Sheh, 2010). Traditional Western leadership tends to focus on one of these styles, and does not
try to implement different techniques depending on the situation. The Transformational
leadership style tends to offer charisma and motivational inspiration, while Servant leadership
tends to be patient, and offers wisdom as to offer growth for the subordinate (Chau-kiu, 2008).
Confucian leaders look to incorporate both of these leadership styles as they see fit.
Business Ethics
Confucian teachings also helps shape ethical decisions and lifestyles among business
leaders. Confucian business leaders strive to be virtuous and moral. “In all, virtuous practice is
the foremost component in Confucian leadership” (Chau-kiu, 2008). A leader knows that if he
does not set this standard for himself, then his organization will not be virtuous either. This
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ethical standard must be evident throughout the whole organization, and it starts with the leaders.
If the leader isn’t virtuous, then trust will not be built (Sheh, 2010). The best way to teach
ethical standards is to provide an example.
Confucian views virtue as a reflection of nature (Chau-kiu 2008). Confucianists see
nature as organized hierarchically and harmonious (Chau-kiu, 2008). Therefore, they strive to be
virtuous, and to “be honest to people’s nature and to keep human and physical natures
functioning” (Chau-kiu, 2008). Much like nature, Confucian leaders views the business culture
as different levels of leaders. They put individuals in “particularistic relationships” (Brown,
2006). When negotiating, often the leaders of the group are the only individuals that speak, and
they are sat down in order according to rank. They are being treated differently, but this is
custom within Eastern cultures. It is not considered disrespectful (Penzer, 2006).
Guanxi
Guanxi is a term that is used frequently in the Chinese corporate culture. Guanxi can be
described as an “informal, unofficial relationships utilized to get things done, from simply tasks
to major life choices” (Ruan, 1993). Although it may seem like a selfish intent, it is designed to
be a mutually beneficial relationship. Some believe that guanxi was developed during political
unrest during the Cultural Revolution in China. It was during this time that resources were
scarce, and many times it came down to who you knew when trying to obtain anything. But
many others feel that the concept of guanxi has developed from Confucian teachings of the
importance of relationships (Redfern 2009).
Chinese business leaders have many traditions to help ensure a mutually beneficial
relationship and to not insult the other business group. One example is the handling of business
cards. It is considered to be rude to write on a card you are given, or put it in your pocket or
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wallet (Penzer, 2006). These little miscues will insult your business counterpart and hurt the
delicate relationship that is being formed. Eastern businesses are also known for taking a long
time in negotiating a deal. While this may seem insulting to Western corporate culture, it is
expected in Chinese business cultures. They are building guanxi before business is negotiated,
but the extended period of time can be viewed as insulting and unethical to Western cultures.
But the Chinese prefer to build a mutually beneficial relationship before deciding on business
decisions (Ping, 2006).
One tradition that is generally viewed as unethical in Western culture is gift giving. Gift
giving is another way of ensuring a strong guanxi. Many times, the gifts have a cultural
significance, and are directed towards the business as a whole and not a specific business leader
(Ping, 2006). The act of gift giving can be seen as bribery in the United States, but it is merely
viewed as a necessary business practice in China. Any relationship takes time and consideration,
and the Chinese have taken that concept from Confucian teachings and have implemented it into
their business practices. Westerners may see it as dealing under the table, which is frowned upon
(Ping, 2006).
Western networking is seen as more task oriented compared to Chinese practices. The
United States is seen as more individualistic, while the Chinese put more emphasis on
developing a relationship. “Business cooperation in the Western culture is driven by the desire
to exchange benefits rather than exchange favour” (Redfern, 2009).
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Method
Sample
For this paper, we used two samples of entrepreneurs from the USA and China. They
included a sample size of 339 from the United States of America and 218 from China. In China,
the average age was 42 and consisted of 64.7% female and 35.3% male. In the United States, the
average age was 42 and consisted of 66.4% female and 32.8% male with 1.2% not disclosing
gender.
Instruments
Ethics – Forsyth’s Ethics Position Questionnaire was used to measure ethics. The
resource has been deemed credible. According to Harzing’s Publish or Perish, Forsyth (1980)
has been cited 742 times. Davis et al. (2001) researched the reliability of the Ethics Position
Questionnaire in his study called “Measuring Ethical Ideology in Business Ethics: A Critical
Analysis of the Ethics Position Questionnaire.”
Leadership – In order to measure leadership, Fiedler’s Least Preferred Coworker Scale
was used. The resource has been deemed credible. According to Harzing’s Publish or Perish,
Fiedler (1967) has been cited 4528 times. (Citation needed on reliability)
Results
Looking at Table 1, it should be clear that we received statistically significant results
from all ethical standpoints except from “Ethics are Absolute” in China. Looking at Table 2, we
can see that the United States produced no statistically significant results.
As can be seen in the China-Table 1 and USA-Table 2, we are comparing correlations between
the measures of ethics and personality in both the United States and China. The numbers
highlighted in yellow in China-Table 1 show significant correlations. The numbers highlighted
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in red in USA-Table 2 are comparisons for which the China-Table 1 shows correlation but USATable 2 does not.
Correlations for which are strong in China are Relativism: Individual and Cultural,
Consideration of Others, and Situationalism. Relativism: Individual and Cultural significance
equals .003, and r = -.197. Consideration of Others significance equals .000 and r = .268.
Situationalism significance equals .004 and r = .193. In China, Ethics are Absolute was not
significant only being .905 and r = -.008.
In the USA, there is no significant correlations. Relativism: Individual and Cultural
significance equals .486 with r = -.038. Consideration of Others significance equals .097 with r
= .091. Situationalism significance equals .126 with r = .084. Ethics are Absolute significance
equals .393 with r = -.047.
Discussion and Conclusion
The results look to be interesting. The concept of guanxi comes to mind when looking at the
results. Because of the nature of guanxi, Fiedler’s model may not be the best way to measure
leadership with the Chinese. Fielder’s model two sides is a friendship orientated leader, and a
task oriented leader. The Chinese integrate both of these into one. When looking at getting tasks
done, it seems that Chinese business leaders look to develop relationships first with the intention
of forming a mutually beneficial relationship. Therefore, a task completion might be the end
result, but a friendship is sought after first.
When looking at Relativism: Individual and Cultural, the correlation is negative, meaning
they are more task oriented than relational. So when looking at the individual or culture, the
leader is more task oriented.
When looking at Consideration, the higher the considerate someone is, the more likely they
will be friendship oriented. This makes sense, and needs no further explanation.
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Situationalism means dealing with anything other than the individual or culture. This shows
the opposite of Relativism: Individual and Cultural. This shows a positive correlation, meaning
they are more relational over task orientation.
The different results between Situationalism and Relativism: Individual and Cultural is the
most intriguing turnout of the research performed. I would suggest a closer look into the
questions asked, and look to differentiate them even more to look for different answers
pertaining to specific questions. I would also survey others from other countries to see if there is
a correlation between them since there was none with the United States. This would give a
greater perspective on how China or the USA are different among the rest of the world.
The study evaluated both ethics and leadership of entrepreneurs with the aid of The Ethics
Position Questionnaire and the Least Preferred Coworker Scale. 218 surveys were conducted in
China and 339 in the United States. China – Table 1 had three significant correlations, while
USA – Table 2 had no significant correlations.
References
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Brown, B. (2002). Entrepreneurship and ethics in the chinese context. Ruffin Series in Business
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Ethics: A Critical Analysis of the Ethics Position Questionnaire. Journal Of Business
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Liu, Y. (1997), History of Ancient Management Philosophies in China, Shaanxi People, Xian.
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Penzner, B. (2006). The art of chinese business etiquette: Ancient traditions form the basis of
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China – Table 1
SeniorEntChina2
Q110
Frequency
Percent
Valid Percent
Cumulative
Percent
Valid
1
77
35.3
35.3
35.3
2
141
64.7
64.7
100.0
Total
218
100.0
100.0
Descriptive Statistics
1Correlations
LPC1
Pearson Correlation
LPC1
RelativismIndivid
ConsiderationOf
ualandCultural
Others
RelativismIndividualandCultur
al
Pearson Correlation
.268**
.193**
-.008
.003
.000
.004
.905
218
218
218
218
218
-.197**
1
.000
.000
.000
1.000
1.000
1.000
.003
N
218
218
218
218
218
.268**
.000
1
.000
.000
Sig. (2-tailed)
.000
1.000
1.000
1.000
N
218
218
218
218
218
.193**
.000
.000
1
.000
Sig. (2-tailed)
.004
1.000
1.000
N
218
218
218
218
218
-.008
.000
.000
.000
1
Sig. (2-tailed)
.905
1.000
1.000
1.000
N
218
218
218
218
Pearson Correlation
Situationalism
Pearson Correlation
EthicsAreAbsolute
e
Sig. (2-tailed)
Pearson Correlation
ConsiderationOfOthers
EthicsAreAbsolut
-.197**
1
Sig. (2-tailed)
N
Situationalism
1.000
218
**. Correlation is significant at the 0.01 level (2-tailed).
N
Minimum
Maximum
Mean
Std. Deviation
Q111
218
20
71
44.89
12.308
Q112
218
12
75
39.85
12.193
Valid N (listwise)
218
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Q110
Frequency
Valid
Missing
Percent
Valid Percent
Cumulative Percent
1
110
32.4
32.8
32.8
2
225
66.4
67.2
100.0
Total
335
98.8
100.0
4
1.2
339
100.0
System
Total
USA – Table 2
SeniorEntUSA2
1Correlations
LPC1
Pearson Correlation
LPC1
1
Sig. (2-tailed)
ConsiderationOfOthers
RelativismIndividualandCultur
al
Situationalism
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RelativismIndivid
Others
ualandCultural
Situationalism
EthicsAreAbsolut
es
.091
-.038
.084
-.047
.097
.486
.126
.393
N
331
330
330
330
330
Pearson Correlation
.091
1
.000
.000
.000
Sig. (2-tailed)
.097
1.000
1.000
1.000
N
330
338
338
338
338
-.038
.000
1
.000
.000
Sig. (2-tailed)
.486
1.000
1.000
1.000
N
330
338
338
338
338
Pearson Correlation
.084
.000
.000
1
.000
Sig. (2-tailed)
.126
1.000
1.000
N
330
338
338
338
338
-.047
.000
.000
.000
1
Sig. (2-tailed)
.393
1.000
1.000
1.000
N
330
338
338
338
Pearson Correlation
Pearson Correlation
EthicsAreAbsolutes
ConsiderationOf
1.000
338
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Descriptive Statistics
N
Minimum
Maximum
Mean
Std. Deviation
Q111
339
20
73
44.22
12.217
Q112
339
12
75
41.28
11.291
Valid N (listwise)
339
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