Of Washing Machines, Trade Wars and Ethical Perceptions

Prof. Qinqin Zheng

Could a China-US trade war be avoided by being aware of your ethical perceptions? Prof. Qinqin Zheng of School of Management Fudan University, together with fellow researchers Paul Gift, Graziadio School of Business, Pepperdine University, and Michael J. Gift, Faculty of Business Administration, Macau University, carried out research into cross-cultural perceptions of business ethics that may answer the question.

The washing machine as a weapon

Yet another headline recently hit the international news in early February, stoking up tension and fears of a China-US trade war – this time backing it up with acts. In late January, President Trump announced he would levy tariffs on imports of Chinese solar panels and washing machines which he accused had ‘stolen’ American jobs. The response, less imaginative in its wording, from the Chinese Ministry of Commerce (MOFCOM) nevertheless implied possible anti-dumping and anti-subsidy investigations into sorghum imported from the US. China buys huge quantities of it – 79% of the harvest in 2017 – and is indeed a big buyer of US agricultural produce that accounts for some $21bn of trade. And, in what appears to be an up-the-ante, the US President let it be known that China might be in line for a potentially very large intellectual properties fine from the US.

As the world looks on and ordinary folk wonder just where events will lead to, it is interesting to draw on research undertaken by Professor Qinqin Zheng and her peers Michael J. Gift and Paul Gift.

US and Chinese perceptions of business ethics – taken to the cleaners

Professors Zheng, Gift and Gift 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? The questions may be important and useful in understanding today’s stained – and strained – relations between the two countries. This is 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 the use of monkeys to study the effects of diesel exhaust fumes. Likewise, businesses might avoid suppliers involved in unethical practices or investors shy away from companies whose practices cause harm to the environment or employees.

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. For 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 unsound, then transactions that are otherwise profitable and beneficial to society may lose out.

In order 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, crunched and rinsed 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 of the wash was clear. 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. Moreover, 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 “we have ethics and values – and they are better and more altruistic than yours” or “and 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. Professors Zheng, Gift and Gift propose new research in order to answer these questions, but they 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. Perhaps that could be wise advice for our global leaders too.

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