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J Bus Ethics (2013) 114:633642

DOI 10.1007/s10551-013-1709-z

Cross-Cultural Perceptions of Business Ethics: Evidence


from the United States and China
Michael J. Gift Paul Gift QinQin Zheng

Received: 1 March 2011 / Accepted: 1 October 2012 / Published online: 19 April 2013
Springer Science+Business Media Dordrecht 2013

Abstract A number of empirical studies have examined discrepancies in the ethical perceptions formed toward the
business ethics across cultures, focusing primarily on dif- counterpart culture. Results support a role for ethical per-
ferences in ethical profiles between cultures and groups. ceptions in future research, and further examination and
When managers consider whether or not to develop a inquiry into the development and adaptation of ethical
business relationship with those from a different culture, perceptions in cross-cultural business dealings.
their decision may be affected by actual differences in
ethical profiles, but potentially even more so by their Keywords Business ethics  Cross-cultural perceptions 
perceptions of ethicality in the counterpart culture. The Ethical perceptions  Ethical vignettes  International
latter issue has been largely ignored in extant empirical business  Survey instruments
research regarding cross-cultural ethical profiles. In this
study, we employ a design that allows for a more complete
analysis of cross-cultural perspectives, examining both the Introduction
manner in which selected cultures view themselves and the
manner in which those same cultures perceive the ethical In recent years, the issue of business ethics has been of
profiles of others. To this end, we surveyed masters stu- growing interest to academics, practitioners, and govern-
dents in business fields at several universities in the United mental agencies. This interest has been accentuated by
States and Chinatwo countries/cultures that engage in a notable events that highlight the importance of ethical
significant amount of business transactionsand examined conduct. In the past decade, there have been several busi-
differences in personal ethical profiles across cultures, ness scandals involving conduct which could be described
differences in one groups ethical profile and the way it is at best as unethical and at worst as outright illegal. Some of
perceived by the other group, and differences in perceived the most famous scandals during this time were Enron,
ethical profiles across cultures; that is, differences in how WorldCom, and Tyco. However, others such as Global
groups view each other. Findings suggest meaningful Crossing, Adelphia Communications, ImClone (i.e., Mar-
tha Stewart), and Waste Management also suffered from
poor corporate governance processes and behavior that
lacked sound ethical standards. Further financial debacles,
M. J. Gift such as the Bernie Madoff and Allen Stanford Ponzi
Faculty of Business Administration, University of Macau, schemes and the Financial Crisis of 2008, have continued
Macau, China
to keep the ethicality of business managers in the spotlight.
P. Gift (&) Ethical profiles may affect behavior in more than one
Graziadio School of Business and Management, Pepperdine way. The ethical profile that an individual brings to an
University, 6100 Center Drive, Los Angeles, CA 90045, USA exchange directly affects that individuals behavior. In
e-mail: paul.gift@pepperdine.edu
addition, the individuals perception of the ethical profile
Q. Zheng of the other party to an exchange can impact behavior.
School of Management, Fudan University, Shanghai, China Thus, ones actions can vary with their perception of the

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ethical profile of the other party even though true ethical ethical profiles. We examine the relationship between own
profiles are unchanged. For example, individuals may seek ethical profiles and perceptions of ethical profiles of those
out or avoid certain potential employers or suppliers due to from different cultures/countries (China/United States). We
the perceived ethicality of management or business con- also study reported profiles across countries (similar to
tacts. Positive or negative media reports regarding man- other studies) and perceived profiles across countries. We
agement may cause significant swings in sales and job find weak differences in actual reported ethical profiles and
applications even though the underlying ethicality of much stronger differences when perceptions are involved,
management is unaffected. suggesting value in future examination of the role and
Ethical differences are important to understand, but it is development of ethical perceptions in doing business and
not necessary for parties to have identical ethical profiles in across cultures.
order to conduct business; it is not even sufficient (e.g., I In what follows, our use of the term ethical percep-
may not do business with you if I perceive your ethical tions differs from some of the ways it has been used in the
profile to be different from mine, even though the reality is past research. Jones (1991) states that ethical perception is
that our two profiles are very similar). One partys per- concerned with an individuals recognition of a moral issue
ception of another may affect both the likelihood of and the reality that he or she is a moral agent. We employ
engaging in a business deal and the resources used to the term in a different manner. We use ethical percep-
facilitate, monitor, and police the arrangement. tion to indicate the ethical regime inferred by one person/
A particular scenario with great potential for inaccurate group concerning a separate person/group whose actions
perceptions involves international business dealings and background are only incompletely observed and
between two companies from different countries and cul- experienced. Thus, our usage is focused on ones ethical
tures. In this setting, actual and perceived differences perception of others.
among parties can be exacerbated by, among other things,
cultural differences that inhibit effective understanding,
language constraints that inhibit effective communication,
and media reports that may sensationalize certain stories. Prior Research
These types of decisions are becoming a regular occurrence
for todays business managers, having grown rapidly over A number of studies have empirically examined ethical
the past 2030 years as the costs of doing distant business profiles across different countries as well as across different
decline and trade agreements and organizations expand cultural groups within a country. Attia et al. (1999) com-
(Soubbotina 2004). pare the ethical profiles of marketers in the United States
This leads to the question, Do businesspeople tend to and those in three Middle Eastern countries: Egypt, Jordan,
have sound perceptions of the ethical profiles of their and Saudi Arabia. They examine subjects on several
counterparts in another country/culture? If their percep- dimensions: relativism, idealism, and corporate ethical
tions are unsound, business transactions that are otherwise values. In general, they find support for a statistical dif-
profitable and beneficial to society may not be undertaken ference between Middle Eastern and American marketers
and resources are likely to be over or underutilized when on the dimension of idealism, but no difference on rela-
facilitating and monitoring transactions. tivism. As one would expect, the differences noted are
The main research questions we address in this paper are ascribed primarily to the different cultural backgrounds of
as follows: the study participants. The results were not strong in either
direction in the area of corporate ethical values.
RQ 1 Do business ethical profiles differ across U.S. and
Karande et al. (2000) examine the perceived moral
Chinese cultures?
intensity, ethical perception, and ethical intention of
RQ 2 Are perceptions of the ethical profiles of
Malaysian and American marketing managers using four
counterparts in the other culture consistent with their
scenarios. They find some differences and attribute them
actual profiles?
to disparities between the United States and Malaysia in
RQ 1 has been examined by other researchers in the past. terms of the moral climate established in the general
Our results add to the literature in this regard. RQ 2 is the society, the organizational culture, and other cultural
primary research question of this paper. factors. Their results are similar in spirit to Ahmed et al.
To analyze our research questions, we surveyed masters (2003) who examine the ethical profiles of business stu-
students in business fields in the United States and China. dents in China, Egypt, Finland, Korea, Russia, and the
The survey design is suggested as a new and more com- United States. Using a modified version of prior research
plete approach for the study of multicultural ethical issues, instruments, they solicit responses to several questions
incorporating the role of ethical perceptions as well as and scenarios from participants in each country. They

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Cross-Cultural Perceptions of Business Ethics 635

present the results as indicating a level of awareness in all they have an accurate understanding of them?1 Each party
countries about the importance of ethics but that there are to an international business transaction is fully informed
some statistically significant differences in these levels. only on their own ethical dimensions. They have imperfect
Christie et al. (2003) examine the ethical attitudes of information regarding the ethical profile of their trading
business managers participating in executive MBA pro- partner and therefore must form a perception. Thus, the
grams in India, Korea, and the United States., looking for only information the parties know for certain is their own
differences in ethical attitudes. They find that culture has ethical profile and their perception of profile the counter-
a strong influence on ethical attitudes, in general, and on party brings to the transaction.
certain specific ethical situations. Axinn et al. (2004) To our knowledge, no study to date has directly exam-
examine the perceived importance of ethics and social ined how members of one country/culture perceive the
responsibility among American managers and American, ethical profile of members of another country/culture. Ca-
Malaysian, and Ukrainian MBA students. They separate gle et al. (2008) survey undergraduate finance students to
questions into shareholder/stakeholder dimensions. In examine their beliefs about ethical behavior and their
addition, they examine perceptions of relativism and perceived ethical profiles of businesspeople. Comparisons
idealism. They note several statistically significant dif- are made between male and female responses and
ferences in the levels of responses, but there do not seem responses before and after ethical discussions in class.
to be any underlying systematic drivers for these differ- Joseph et al. (2009) examine perceptions of the ethical
ences except that American managers tend to score lower standards of others in the context of U.S. student percep-
than any of the MBA student groups. However, only tions of other U.S. students. These studies provide insights
American managers are examined. Managers from other into the differences between ethical assessments and the
countries are not included in the study. perception of others, but the subjects were similar to each
Each of the previous studies examines responses from other in terms of country and culture.
subgroups in different countries. They compare ethical
profiles of study participants across subgroups. They
provide interesting insights regarding the ethical profiles
of managers or students in each of the countries involved, Data and Methodology
but they provide no insights regarding the manner in
which participants in one country perceive the ethical We examine the ethical profiles of study participants from
profile of participants in another country. China and the United States as well as the perceived pro-
Rashid and Ho (2003) examine ethical profiles across files of each of these groups toward their cross-cultural
ethnic groups within a single country. Specifically, they counterparts. Thus, our study is focused on the differences
investigate Malay, Chinese, and Indian managers and in profiles and perceptions when parties vary greatly with
executives in Kuala Lumpur, Malaysia. They show that regard to country and culture.
ethnic identification is associated with differences in scores
on 24 ethics-related questions. Data
The previous studies examine the effects of differences
in cultural/country backgrounds. Other characteristic dif- During the spring and summer of 2010, we surveyed 265
ferences have also been examined. For example, Taylor MBA and other business masters students from two uni-
(2004) investigates the ethical profiles of students across versities in China and two universities in the United States.
majors regarding downloading copyrighted music. We selected China and the United States as the cross-cul-
Although country and culture are not systematically tural counterparts due to (1) the significant volume of trade
manipulated, the students belong to different groups in between these two countries and (2) the amount of infor-
terms of their major and their experience with down- mation available through public channels concerning each
loading music. These factors prove to be statistically country. The first condition highlights the importance of
significant in explaining different profiles toward ethical cultural and ethical awareness of the other party. The
issues in the music business. In addition, Persons (2009) second condition helps to ensure that participants in one
investigates the ethical profiles of business students across country have at least some idea, whether sound or unsound,
characteristics such as gender, major, culture, and work about the ethical and cultural profiles of individuals in the
experience. other country.
Examination of ethical profiles across cultures and
characteristics is certainly a worthwhile objective. But, are
the participants in these studies and the general business- 1
In prior research, masters or undergraduate business students are
people they represent aware of these differences and do frequently used a proxy for business professionals.

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Table 1 Total number of completed surveys Singhapakdi et al. (1996). Questions 7 and 9 are from
Full sample Filtered sample
Cagle et al. (2008). In question 7, we substituted the phrase
ethically-questionable for the original word shady,
China 116 112 believing this to be less ambiguous with respect to its
United States 149 99 ethical implications for nonnative English speakers.
Total 265 211 Questions 14 and 69 are general ethics/corporate social
The filtered sample excludes students who did not grow up in the responsibility (CSR) questions. Questions 5 and 10 are
country in which the survey was administered from Ludlum and Mascaloinov (2004), who base their
questions off of a 2002 National Association of Scholars
(NAS) and Zogby market research poll of 401 college
Sample sizes for each country are shown in Table 1. The seniors to examine the issue of relativism. For questions 11
full sample was filtered to exclude students who did not and 12, we developed two business scenarios, also known
grow up in the country in which the survey was adminis- as ethical vignettes. Question 11 is based off of Persons
tered. In other words, the filtered sample only includes (2009) and question 12 is our own.
students who grew up in the United States and took the The twelve questions have both positive and negative
survey in the United States, and students who grew up in valences.2 The vignettes standout on the survey due to their
China and took the survey in China. This filtering of the relative length compared to the other ten questions. For this
data decreased our sample size to 211 students, 112 in reason, we put these questions last. We mixed up the
China and 99 in the United States. remaining NAS/Zogby questions and ethics/CSR questions
In addition to the survey questions, we collected by origin and by valence. This was done in order to max-
demographic and background data on each participant imize the need for participants to read and understand each
(hereinafter referred to as characteristics). The charac- question prior to answering it.3
teristics are indicator variables (0,1) measuring whether the Each participant answered the 12-question survey twice.
participant is an MBA student, has an undergraduate First, they were asked to answer the twelve questions in a
business degree, has taken an ethics course, has at least manner that reflected their own personal opinions. Next,
6 years of business experience, has had business interac- they were asked to answer the same twelve questions based
tions with domestic companies, has had business interac- on what they believed the opinions would be of a typical
tions with a company from the counterpart country, is at businessperson from the counterpart culture. Using this
least 25 years old, and is a male. A final characteristic design, China subjects completed the survey twice, once
measures participants level of interest in business ethics reflecting their own ethical profile (denoted CC) and once
on a 5-point Likert scale, where 1 is no interest, 3 is reflecting their perception of the U.S. ethical profile
moderate interest, and 5 is very interested. Table 2 presents (denoted CU). U.S. subjects also completed the survey
summary statistics of these characteristics. Students in the twice, once reflecting their own ethical profile (denoted
U.S. and China samples are very similar with respect to UU) and once reflecting their perception of the China
their mean in six of the nine characteristics. There are ethical profile (denoted UC). In addition to each partici-
significant differences in the proportion enrolled in an pants answers to 24 questions, we also know their survey
MBA program, the proportion that have had business country as well as characteristics such as their age, gender,
interactions with a domestic company, and the proportion degree program, work experience, domestic and counter-
that have had business interactions with a company from part business experience, and interest in business ethics.
the counterpart country. Given the design of the survey, we are able to make the
comparisons represented in Fig. 1.

Methodology Comparison A Analyzes ethical profiles across coun-


tries, UU and CC. This analysis has been performed in
Table 3 lists the twelve questions used for our survey previous studies across cultures and groups. The results
instrument. Each question was answered on a 7-point directly relate to RQ 1.
Likert scale, where 1 is strongly disagree, 2 is disagree, 3 is Comparison B Analyzes each countrys perception of
slightly disagree, 4 is no opinion, 5 is slightly agree, 6 is the other, UC and CU.
agree, and 7 is strongly agree. We chose a 7-point Likert
scale to be consistent with the survey best practices of 2
i.e., A more ethical response is a higher number for some and a
Dillman et al. (2009). lower number for others.
Questions 14, 6, and 8 are from the perceived role of 3
This should reduce the likelihood that a participant falls into an
ethics and social responsibility (PRESOR) scale of answer pattern.

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Cross-Cultural Perceptions of Business Ethics 637

Table 2 Summary statistics for survey participants in the United States and China
Characteristic United States China
Mean S.D. Mean S.D. Min. Max.

MBA .95 .22 .58 .50 0 1


Business degree .45 .50 .50 .50 0 1
Ethics class .62 .49 .64 .48 0 1
Business experience C6 years .24 .43 .28 .45 0 1
Domestic business interactions .94 .24 .73 .44 0 1
Business interactions with counterpart .23 .42 .48 .50 0 1
Age C25 years .76 .43 .82 .38 0 1
Male .64 .48 .56 .50 0 1
Ethics interest (5-point scale) 3.80 .84 3.72 .89 1 5
Sample size is 99 in the United States and 112 in China. The characteristics are indicator variables measuring whether the participant is an MBA
student, has an undergraduate business degree, has taken an ethics course, has at least 6 years of business experience, has had business
interactions with domestic companies, has had business interactions with a company from the counterpart country, is at least 25 years old, and is
a male. A final characteristic measures participants level of interest in business ethics on a 5-point Likert scale, where 1 is no interest, 3 is
moderate interest, and 5 is very interested. Means of MBA and domestic and counterpart business interactions are significantly different across
countries at the 1 % level

Table 3 Survey questions


Q.1 Good ethics is often good business.
Q.2 If survival of the business enterprise is at stake, then ethics and social responsibility must be ignored.
Q.3 If the stockholders are unhappy, nothing else matters.
Q.4 The most important concern for a firm is making a profit, even if it means bending or breaking the rules.
Q.5 There are clear and uniform standards of right and wrong by which everyone should be judged.
Q.6 Efficiency is much more important to a firm than whether or not it is seen as ethically or socially responsible.
Q.7 It is sometimes necessary for a company to engage in ethically-questionable practices because its competition is doing so.
Q.8 Corporate planning and goal setting sessions should include discussions of ethics and social responsibility.
Q.9 An employee may need to lie to a customer/client to protect the company.
Q.10 What is right and wrong depends on individual values and cultural diversity.
Q.11 The CEO of a publicly-traded company is concerned about sales being much lower than expected this year. The CEO decides to offer
abnormally large discounts to a few important customers on the condition that the products be shipped before the end of the year so the
sales will be included in this years income statement.
Do you agree or disagree that this is acceptable?
Q.12 The CEO of a publicly-traded company instructs the Marketing department to promote the companys products as The Best in the
market even though the CEO knows that some competitors products are better.
Do you agree or disagree that this is acceptable?

Comparison C C1 analyzes the U.S. perception of China Results


and the U.S. ethical profile, UC and UU. C2 analyzes
Chinas perception of the United States and Chinas Validity and Reliability
ethical profile, CU and CC. These comparisons answer
the question, Do I perceive a considerable difference Questions 14 and 69 are constructs designed to capture
between your ethical profile and mine? beliefs regarding business ethics/CSR. As previously
Comparison D D1 analyzes the U.S. perception of discussed, these questions were adapted from and,
China and Chinas ethical profile, UC and CC. D2 therefore, validated by prior researchers. To remain
analyzes Chinas perception of the United States and the consistent with other studies, Cronbachs alpha is used to
U.S. ethical profile, CU and UU. These comparisons assess reliability. U.S. profiles (UU) have an alpha of .74,
answer the question, Is my perception of your ethical China profiles (CC) have an alpha of .72, U.S. percep-
profile considerably different from your ethical profile? tions of China (UC) have an alpha of .90, and China
The results directly relate to RQ 2. perceptions of the United States (CU) have an alpha of

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stricter ethical standards compared to Chinese participants.


However, the difference in perceptions in comparison B
(CU - UC) is much more striking, with differences for
five of the eight questions significant at the 1 % level.
Thus, participants across cultures appear to be slightly, if at
all, different with respect to ethical profiles and markedly
different with respect to perceptions of the counterparty.
The NAS/Zogby questions relate to relativism. The two
questions are similar but are being asked from two different
perspectives (positive and negative). Interestingly, in this
case, we observe a significant difference in Q.5 and no
significant difference in Q.10. Thus, there is some support
for the position that Chinese participants are more open to
accepting moral relativism, but this conclusion must be
tempered with the awareness that it is not supported by
Fig. 1 Survey design structure results from both NAS/Zogby questions, only one of them.
This theme holds throughout all of the analyses of the
NAS/Zogby questionswe sometimes see significant dif-
.82. These alpha levels indicate a reasonable level of ferences in the positive version (Q.5) and never see a sig-
reliability. nificant difference in the more negative version (Q.10).
The ethical vignettes of Q.11 and 12 were designed to
portray specific situations where actions that are neither
Comparisons A and B illegal nor unusual might have a suggestive ethical
dimension. They are somewhat incomplete and do not
Comparisons A and B are constructed from an OLS provide a clear picture of their ethicality. Answers to these
regression of questions provide information regarding baseline differ-
Qscore a b1 Country b02 X e ences between the two groups. In comparison A, there is
not a significant difference between participants in China
where Qscore is the relevant questions rating, country is and the United States for either of the ethical vignettes.
an indicator variable distinguishing between U.S. and This provides some assurance of a common baseline
China participants, and X is a vector of participant char- between the two groups and of the qualification of the
acteristics including indicator variables for male, age C25, vignettes for use in sensitivity analyses.
business interactions with counterpart, and ethics interest
C4. Age is a commonly included characteristic variable Sensitivity Analyses
and the other three consistently measured as significant in
various regression specifications during pretesting. Inclu- The regression results derive from performing statistical
sion of these characteristics in the regression analyses analyses on ordinal survey data from a Likert scale of 1
controls for confounding factors associated with different through 7. Treating ordinal data as cardinal data can
proportions of these variables across samples. For example, sometimes lead to faulty inference. For this reason, we
one would want to control for the effect of gender if it had perform three types of sensitivity analysis to support the
a significant effect on ratings, and 75 % of the Chinese assertion that our analysis is not misleading. These analy-
sample were male, while 80 % of the U.S. sample were ses are more sophisticated and represent the current state-
female. The parameter of interest is b1. of-the-art in the analysis of ordinal survey data.
Results for comparisons A and B are presented in The first sensitivity analysis uses an ordered probit
Table 4. Comparison A is similar to most of the previous model to estimate comparisons A and B, respectively.
cross-cultural studies, where one cultures ethical profile is Ordered probit models are used by researchers and mar-
compared to that of another culture. It estimates b1 for each keting professionals to analyze ordinal survey data of the
question using UU and CC data. The eight ethics/CRS type we have in this study (Greene and Hensher 2010). The
questions (of positive and negative valence) show some results in Table 4 are qualitatively similar to the original
statistical support for a difference between the two cultures, results when using an ordered probit model. In other words,
but the support is rather weak with b1 significant for only the exact same signs of b1 are obtained as the original
three of the eight questions at the 5 % level. In general, regression model for all twelve questions and with no loss
U.S. participants tend to rate more in the direction of of significance.

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Cross-Cultural Perceptions of Business Ethics 639

Table 4 Regression results of comparisons A and B

Model: Qscore a b1 Country b02 X e A B

(UU - CC)1 (CU - UC)2

Positive valence questions


Q.1 Good ethics is often good business 1.13** .36
Q.8 Corporate planning and goal setting should include ethics .29 1.46**
Negative valence questions
Q.2 If the companys survival is at stake, ethics must be ignored -.38* -1.07**
Q.3 If stockholders are unhappy, nothing else matters -.43 -.27
Q.4 The most important concern is making a profit -.36 -.93**
Q.6 Efficiency is more important than a companys ethics reputation -.31 -.95**
Q.7 Questionable practices okay, if the competition is doing so -1.70** -.11
Q.9 Employees may need to lie to protect the company -.31 -.88**
NAS/Zogby questions
Q.5 There are clear, uniform standards of right and wrong .87** .08
Q.10 Right and wrong depends on individual values and culture -.19 -.11
Vignettes
Q.11 Abnormally large price discount at year-end .33 -.97**
Q.12 Marketing product as The Best -.23 -1.25**
For each question of comparison A, the statistic is the OLS regression estimate of b1 using U.S. ethical profile (UU) and China ethical profile
(CC) data. For each question of comparison B, the statistic is the OLS regression estimate of b1 using China perceptions of the United States
(CU) and U.S. perceptions of China (UC) data. Participant characteristics (X) are male, age C25, business interactions with counterpart, and
ethics interest. ** and * indicate significance at the 1 and 5 % levels, respectively

A potential concern when conducting surveys across not a meaningful concern in our survey. We chose to dis-
populations with strong cultural differences is differential play results from the original model since they are easier to
item functioning (DIF). DIF arises when persons from implement and interpret and still lead to sound inference,
different cultures are not comparable with respect to their according to the sensitivity analyses.
survey responses on a given question.4 A method of con-
trolling for DIF involves use of anchoring vignettes, which
can transform the answers of different individuals to the Comparison C
same or comparable scale. For the second sensitivity
analysis, we perform the simple non-parametric method of Comparisons C1 and C2 are constructed as the mean value
King et al. (2004) on each of the eight ethics/CSR ques- of the difference between participants perception of the
tions of comparison A (UU and CC). The results are his- other culture and their own ethical profile. C1 is for U.S.
tograms, and when the DIF-transformed histograms are students (UC - UU) and C2 is for Chinese students
compared to standard histograms, DIF is not supported. (CU - CC). These comparisons examine the perceptions
The third sensitivity analysis performed is the para- one country has toward another relative to their own pro-
metric method of King et al. (2004). This method is best file. They answer the question, Do I perceive a consid-
described as a generalized ordered probit model that allows erable difference between your ethical profile and mine?
for threshold heterogeneity and DIF. We use this method The results are shown in Table 5. They strongly suggest
on each of the eight ethics/CSR questions of comparison A. that individuals in each country perceive those from the
Once again, we obtain the exact same signs of b1 as our counterpart country as having a substantially different
original regression model, with no loss of significance. ethical profile from their own. Participants in both coun-
Thus, all three sensitivity analyses have results that are tries perceive those from the other country as being less
qualitatively similar to those of the original, simple ethical than themselves on all measures (ethics/CSR
regression model. They also support the notion that DIF is questions and vignettes), although the difference appears to
be a bit more muted in China. These differences will not
4
prevent international business transactions or even misal-
For example, you and I have the same underlying level of
agreement with a question, but you rate it as a seven and I rate it as a
locate business resources so long as the perceptions are
five. sound, which is the next comparison.

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Table 5 Statistical results of comparisons C1 and C2


C1 C2
(UC - UU)1 (CU - CC)2

Positive valence questions


Q.1 Good ethics is often good business -1.79** -.29
Q.8 Corporate planning and goal setting should include ethics -2.17** -.38*
Negative valence questions
Q.2 If the companys survival is at stake, ethics must be ignored 2.31** .84**
Q.3 If stockholders are unhappy, nothing else matters 1.72** 1.00**
Q.4 The most important concern is making a profit 2.71** 1.45**
Q.6 Efficiency is more important than a companys ethics reputation 2.27** 1.02**
Q.7 Questionable practices okay, if the competition is doing so 2.28** .50**
Q.9 Employees may need to lie to protect the company 1.74** .54**
NAS/Zogby questions
Q.5 There are clear, uniform standards of right and wrong -.29 .62**
Q.10 Right and wrong depends on individual values and culture .23 -.14
Vignettes
Q.11 Abnormally large price discount at year-end 1.19** .66**
Q.12 Marketing product as The Best 1.63** .08
For each question of comparison C1, the statistic is the mean difference between U.S. perceptions of China (UC) and the U.S. profile (UU). For
each question of comparison C2, the statistic is the mean difference between China perceptions of the United States (CU) and the China profile
(CC). ** and * indicate significance at the 1 and 5 % levels, respectively

Comparison D Summary and Conclusions

Comparison D is constructed from an OLS model with the This paper proposes a new dimension to the traditional
same structure as was used for comparisons A and B. D1 approach of empirical studies of cross-cultural ethical
uses U.S. perception and Chinese profile data (UC - CC), issues. Ones perception regarding the ethicality of another
while D2 uses Chinese perceptions and U.S. profile data party may have an impact on ones willingness to engage in
(CU - UU). They examine the perceptions one country international business relationships, the decision to do
has toward another as compared to the other countrys business in one country versus another, and the business
actual profile. These comparisons answer the question, Is resources allocated to facilitating, monitoring, and policing
my perception of your ethical profile considerably different such arrangements. When aggregated, these business
from your ethical profile? The results are noteworthy and decisions can have significant economic impacts on the
appear in Table 6. respective countries and, thus, are worthy areas for future
Estimates suggest that individuals in each country have study in the field of business ethics.
considerable error in their perception of the ethical profile Our study employs a new design in the examination of
of those from the counterpart country. Every ethics/CSR multicultural ethical subject matter. It yields some inter-
question has an estimate that is significant at the 1 % esting findings and insights, each of which has potential
level, except for one which is significant at the 5 % level. repercussions in the continuing expansion of China/U.S.
As might be expected, each culture errs on the side of trade, in particular, and international business, in general.
perceiving the other as being less ethical than their actual Our first finding is that there does not appear to be a
profile reveals. These results are meaningful in that if consistent difference in the ethical profiles of each culture.
ethical perceptions are unsound between cultures engag- Comparison A shows some support for differences, but it is
ing in a swiftly growing number of business transactions weak at best. However, when ethical perceptions are
and relationships, there is likely value in exploring the examined (comparison B), the differences become consis-
foundation, formulation, and adaptation of such percep- tent and considerable. This suggests a high potential value
tions over time, and it also suggests that perceptions be of understanding the formulation of these perceptions and
considered in future cross-cultural studies of ethical developing mechanisms to better align perceptions with
profiles. reality.

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Cross-Cultural Perceptions of Business Ethics 641

Table 6 Regression results of comparisons D1 and D2

Model: Qscore a b1 Country b02 X e D1 D2

(UC - CC)1 (CU - UU)2

Positive valence questions


Q.1 Good ethics is often good business -.72** -1.49**
Q.8 Corporate planning and goal setting should include ethics -1.88** -.72**
Negative valence questions
Q.2 If the companys survival is at stake, ethics must be ignored 1.89** 1.21**
Q.3 If stockholders are unhappy, nothing else matters 1.25** 1.40**
Q.4 The most important concern is making a profit 2.35** 1.78**
Q.6 Efficiency is more important than a companys ethics reputation 1.95** 1.32**
Q.7 Questionable practices okay, if the competition is doing so .54* 2.14**
Q.9 Employees may need to lie to protect the company 1.40** .83**
NAS/Zogby questions
Q.5 There are clear, uniform standards of right and wrong .57* -.23
Q.10 Right and wrong depends on individual values and culture .04 .11
Vignettes
Q.11 Abnormally large price discount at year-end 1.56** .26
Q.12 Marketing product as The Best 1.32** .31
For each question of comparison D1, the statistic is the OLS regression estimate of b1 using U.S. perceptions of China (UC) and China ethical
profile (CC) data. For each question of comparison D2, the statistic is the OLS regression estimate of b1 using China perceptions of the United
Sates (CU) and U.S. ethical profile (UU) data. Participant characteristics (X) are male, age C25, business interactions with counterpart, and ethics
interest. ** and * indicate significance at the 1 and 5 % levels, respectively

Another finding is that those in one culture tend to Foxconn story in the United States) and the lack of atten-
perceive the ethical profiles of others differently than the tion paid when a positive story arises. Perhaps it is due to
way they view their own ethical profile (comparison C) and biases or stereotypes. We do not provide a theoretical
differently than the actual profile of others (comparison D). framework to address the underlying cause of the observed
The results of comparison D directly address our primary phenomenon in this paper. The three main contributions of
research question about the soundness of one group/cul- this paper are as follows: (1) To make a case for the
tures ethical perceptions of another. These differences inclusion of ethical perceptions in empirical studies of
could be the potential impetus for reservations, misunder- cross-cultural ethical profiles, (2) to introduce a design for
standings, and conflicts in international business dealings. examining multicultural ethical issues while incorporating
This highlights the importance of informed international ethical perceptions, and (3) to document some apparent
engagements. One should not simply look for the lowest differences between the United States and China. The study
price or the highest potential volume. Parties to interna- sheds light on the feelings and perceptions that participants
tional relationships and transactions must make the in each country tend to bring to the table when they do
investment of truly learning about their trading partners, international business. Improving our understanding of
the environments in which they operate, and the cultural these perceptions can help businesspeople make better
and social structures that help to define their ethical pro- decisions and society achieve more beneficial transactions.
files. Investments of this type will help to minimize mis-
perceptions on both sides and to maximize the economic
welfare therefore derived. Future Research
Based on the available information, it is difficult to
ascribe any causal rationale to the observed phenomena in This study leads to several other avenues of further inquiry.
comparison D. Are the inaccuracies of ethical perceptions It raises the question of how perceptions of the ethicality of
due to human nature, a lack of information, or bad infor- others are formed. How are they affected by new and dif-
mation? Perhaps it is as simple as the uncertainty factor in ferent types of information? Might development of inter-
their knowledge of their cross-cultural counterparts. Per- national best practices or a universal code of conduct help
haps it is due to the attention paid by the media when a to align perceptions with reality? One could also examine
negative story involving the other culture arises (e.g., the how ethical perceptions appear to function between

123
642 M. J. Gift et al.

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undergraduate business students. Journal of Education for
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The design used in this study may provide a reasonable John Wiley & Sons.
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Acknowledgments We would like to thank every student who Ludlum, M., & Mascaloinov, S. (2004). Right and wrong and cultural
participated in the survey, all the professors who allowed us access to diversity: Replication of the 2002 NAS/Zogby poll on business
their students, and William McPherson and Chung-Shing Lee for ethics. The Journal of Education for Business, 79, 294298.
valuable assistance with data collection. We are grateful for the Persons, O. (2009). Using corporate code of ethics to assess students
extremely helpful comments and suggestions from conference par- ethicality: Implications for business education. Journal of
ticipants at the 3rd World Business Ethics Forum, seminar partici- Education for Business, 84, 357366.
pants at the Graziadio School of Business and Management at Rashid, M., & Ho, J. (2003). Perceptions of business ethics in a
Pepperdine University, and two anonymous referees. Any remaining multicultural community: The case of Malaysia. Journal of
errors are our own. Business Ethics, 43, 7587.
Singhapakdi, A., Vitell, S., & Kraft, K. (1996). Moral intensity and
ethical decision-making of marketing professionals. Journal of
Business Ethics, 36, 245255.
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