Although not a full-scale trade war, it might be a phoney trade war period that the US and China have entered into. This is where Prof. Qinqin Zheng’s research on cross-cultural business ethics might come in useful for both sides – before things escalate.  

The US and China: Perceptions of business ethics re-visited by Tom Gamble. Related research: Cross-cultural Perceptions of Business ethics: Evidence from the United States and China

Back in February of this year, when the menace of a US-China trade war was in the offing, Prof. Qinqin Zheng of School of Management Fudan University shared her research into comparing business ethics between American and Chinese business people. A fully-fledged trade war between the two economic powers has thankfully not yet transpired, but certain initiatives at tightening import quotas and rules seem to have begun to affect the grassroots Chinese producers of goods and foodstuffs.

This could be seen as a standard outcome of the economic chess moves now underway – and fair game in any competition that might even force an eventual win-win to happen. But there is also the risk that the pressure being felt by the Chinese manufacturer, with all its knock-on effects on employees and ordinary folks, might just cause Sino-US relations to sour even further and finish in standoff.

With this scenario a possibility, it might be a good moment to look back on Prof. Zheng’s article and draw wisdom from the resemblances – and differences – in how both sides see each other.

US and Chinese perceptions of business ethics

Professors Zheng, P. Gift and M. J. Gift in their paper Cross-cultural Perceptions of Business Ethics: Evidence from the United States and China set their research to task on two questions. Do business ethics differ across US and Chinese cultures? And are perceptions of each other’s ethical profiles true to their actual profiles? These questions are important and useful in understanding today’s stained – and strained – relations between the two countries. Because ethical profiles affect perceptions and behaviour not only within a given individual, but also between individuals and, at a wider level, business dealings between trading nations.

Students entering the job market with an MBA, for example, may choose to target or avoid a potential employer on the grounds of their own ethics, but also their perception of the employer’s ethics and behaviours. It is likely that a student would have thought twice about sending off a CV to Enron, Bernie Madoff or, more recently Volkswagen, the car-maker tarnished by dubious software and animal rights issues. Likewise, businesses might avoid suppliers involved in unethical practices or investors shy away from companies whose practices cause harm to the environment or employees.

Perception that counts

Ethical differences are important to understand but, this said, it is not necessary for parties to have identical ethical profiles in order to do business together, say Zheng et al. Rather, it is the perception that counts: one party’s perception of another may affect the possibility of engaging in a business deal, and this is magnified when inaccurate perceptions are involved in international business dealings. The picture can become exacerbated by three factors influencing the relationship: cultural differences, language constraints, and media reports that may sensationalise certain stories. This begs the question: do business people have sound perceptions of the ethical profiles of their counterparts in other countries? If they are unsound, then transactions that are otherwise profitable and beneficial to society may lose out.

To test their questions, Prof. Zheng and her colleagues used a population of 265 MBA and business master’s students from two universities in the United States and two in China, collecting data from survey questions and personal demographic and background data for each participant. The information was then crossed and crunched along two dimensions: comparing ethical profiles between the two countries, and comparing each country’s perception of the other’s ethical profiles.

It’s not what you are, but the way that you see others

What came out might seem surprising given the standard picture of difference the popular media may provide. The first finding is that there does not appear to be a consistent difference between the ethical profiles of the United States and Chinese business students. Respondents’ answers on ethical issues posed by the survey questions tended to reflect a great amount of similarity despite their cultural differences: both business student populations largely believe that companies should be responsible, and that business strategy and practices must include ethics.

But when each country looked at the other, the differences in their perceptions of each other’s ethical profile were consistent and considerable. As such, both the US and Chinese see the ethics of the other both differently than they view their own, and differently than the true profile of the other. In a nutshell, it’s like both sets of business people were saying: “We have ethics and values – and they are better and more altruistic than yours. And what’s more, yours are shadier than and less altruistic than ours”.

Why is this? Are the inaccuracies due to human nature, lack of information, bad information, bias or stereotypes? Or is it simply the uncertainty factor when dealing with differences in culture and nationality (“can we trust them?”). Or even the negative stories in the media and lack of attention paid to positive stories – after all, would the fact that mixed marriages between the two cultures produce pretty babies meet the headlines more than military face-offs in the Pacific?

Perhaps not. But Professors Zheng, Gift and Gift are sure of one thing: that the fact that we see others in a worse light than reality means it is essential to truly learn about your trading partners, the environments in which they operate, and the cultural and social factors that shape their ethical profiles. It could make trade wars a little less likely – and negotiations to avoid them a little friendlier.

Useful links:

• Browse the original research paper Cross-cultural Perceptions of Business ethics: Evidence from the United States and China
• Read Prof. Qinqin Zheng’s article Ethical Leadership, Words of Wisdom
• Visit the School of Management Fudan University website.

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The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.  

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