Business Ethics in not Relativism

What is guanxi?

As one of the major dynamics of Chinese society, guanxi (roughly

translated as relationship) has been a pervasive part of the Chinese
business world, binding millions of Chinese enterprises, social groups
and individuals into a complex socio-economic web. Guanxi is
considered the life-blood of the macro-economy and micro-business
conduct in the Chinese society, and researchers are one in saying that
the guanxi network is one of the key determinants of business success
in this part of the world (Maximiano, 2007; Su, Sirgy, & Littlefield,
2003; Fan, 2002).

In China, gift-giving forms part of a larger picture that belongs to

the guanxi network. The guanxi network is rooted in the Confucian
canons of righteousness (yi), face (myan dz), mutual rights and duties
(quanli yu yiwu), benevolence (ren), and correct decorum (li mao),
which tell us why certain actionssuch as gift-giving among Chinese
business peopleare culturally meaningful or logical.

Is guanxi a cultural value?

Yes, guanxi is a cultural value.

Foreign entrepreneurs and corporations are almost always challenged

with a choice. On the one hand, China is the hottest place on earth for
transnational companies (TNCs) looking for cheaper labor. On the
other hand, heaps of information regarding corruptions in many
aspects of doing business in China are unfolding, that corruption is
endemic and reaches the highest levels of the ruling elite, and that the
Chinese rules of the game in doing business lack transparency and
universalitybecause local officials are left with tremendous
discretionary power (Steidlmeier, 1999). That is the perception from
outside in.

It could be that foreigners unfamiliar with Chinese cultural logic easily

identify gifts with bribes and make a conclusion too quickly that the
Chinese are wantonly corrupt in their business practices. This is not
necessarily the correct perception though. Besides, business and
political corruptions are by no means inimitable and unique to China
(Maximiano, 2007; Tam, 2002; Steidlmeier, 1999).

Is gift-giving part of the larger guanxi network?

As part of the larger guanxi network, gift-giving is an expected

behavior, a behavior that shows respect to another person and
therefore strengthens interpersonal relationships. Gift-giving is one of
the most pleasant and admittedly one of the most difficult of Chinese
cultural logic to understand. The lines between gift-giving and bribery
are often thin and blurred, and Chinese sources themselves are aware
of this difficulty.

Management gurus find guanxi itself a culturally acceptable

(Steidlmeier, 1999). It is the abuse of guanxi that lead to bribery and
other corrupt practices, which are deemed immoral or unethical (Su,
Sirgy, & Littlefield, 2003).

Is the understanding of culture and cultural values vital for business?

It is more likely that ethico-moral values and expectations across
cultures affect all business transactions. Thus Pitta et al (1999)
suggests that, in order to reduce the potential for ethical conflict when
US enterprises enter the Chinese market and succeed in cross-cultural
business, American marketers and business practitioners should
better understand the cultural bases for ethical behavior and moral
values when in China. It is vital for Western entrepreneurs to
understand the expectations of their counterparts around the world.

Following this line of reasoning, it might be well that the CEO who
does business in a different market context should follow the
acceptable moral and cultural values of that society he/she finds
himself/herself in. To employ the old adage When in Rome, do as the
Romans do is implied in ethical relativism, which seems to be the
safest attitude in doing business in a different market. To comply with
the moral value of the market or what the majority thinks as correct is
essentially the logical consequence of relativism. But we have to
distinguish cultural values from moral values (Maximiano, 2007).

Is it hard to differentiate the cultural values from moral values?

Guanxi, as a cultural value, is good. It is the abuse of guanxi that lead

to corruption and unethical practices. Therefore, firms doing business
in China should practice what the Chinese do (guanxi as a cultural
value), but not what is unethical (which is the abuse of guanxi).

A key factor is the distinction between cultural values and moral

values. Hence, it is paramount to know that not all cultural values are
moral values. By definition, cultural values (like guanxi) are territorial
and people-oriented, and businesses with operations across the globe
are encouraged to respect those cultural values. But cultural values
are not always moral values.

Moral values are those things everyone holds valuable like justice,
honesty, truthfulness, equal opportunity, humane treatment and
responsible management (Maximiano, 2006). Moral values, unlike
cultural values, are meritorious acts esteemed or recognized by
all (not only by certain people or segment of society)
and everywhere (that is, outside any territorial boundaries).

What are the four notions that comprise relativism?

The broader philosophical concept of relativism includes four narrower

notions, such as:

(1) Ethical relativism says that morality depends on a social

construct

(2) Situation ethics teaches that right or wrong is based on the

particular situation

(3) Cognitive relativism says that truth itself has no objective

standard

(4) Cultural relativism explains that certain cultural practices are

acceptable depending on cultural contexts.

It appears that these four different notions of relativism pervade

todays globalizing society. Because of the unsophisticated character
and convenience of this doctrine, much like utilitarianism, ethical
relativism has become very popular among business practitioners and
politicians. Relativism professes that all beliefs are equally valid, and
that the truth is relativedepending on the situation, level of
modernization, environment, and individual preference (Redfern &
Crawford, 2004).

What is ethical relativism?

Ethical relativism advocates that an act, behaviour, or decision is

morally right for a group of people of a particular culture/situation if
those people believe that it is right, and wrong if they think it is wrong.
The moral reasoning based on relativism presumes that absolute
values do not exist. Because diverse groups of people have different
ethical standards, relativism suggests there is no such thing as
objective truth and that universal moral standard is just a coincidence.

William B. Lytton, former vice president of Lockheed Martin Corp.,

made this commentary: There is no universal consensus on morality.
In the United States alone there are some very divisive issues (cited
in Maximiano, 2007).

Pitta et al (1999) observes that the potential for ethical conflict

increases as more and more US companies enter China and transact
business. Implied in the same observation is the existence of two
standards: the US and the Chinese ethico-moral standards. It seems
that from the studies of Pitta et al, there exist not one but a plurality of
ethico-moral standards.

Is the theory of ethical relativism popular among practitioners today?

In substance, the following propositions are embedded in the doctrine

of ethical relativism and situation ethics, which make it popular among
practitioner, namely:

(1) the pluralism of ethico-moral standards

(2) the application of democratic processes to ethics

(3) the individual decisions dependence on varying historico-cultural

situations.

Ethical relativism today enjoys high publicity and extensive popularity

by reason of its convenience. It is presented as a position positively
defined by tolerance, dialogue and freedom of expression, a position
that is suddenly limited if the existence of one valid moral truth for all
were affirmed and upheld.

Are there executives who do not buy the idea that ethics is relative?

David L. Enfield, vice president of global business practices for

Colgate-Palmolive Co., said his company encourages local adaptation
of ethical codes, but he also recommended that companies should
focus on the company's culture, not the national culture. For instance,
Enfield advised: You may state as a company principle that all
employees will be given equal opportunity and will be treated fairly at
work, despite what that country's pre-existing traditions are (cited in
Maximiano, 2007). It means that the provision of equal opportunity, in
addition to fair treatment of all employees, is an objective, universal,
and permanent moral value. In other words, what he was advocating is
to go above the culture and to separate the local culture from the
moral values, which by nature are global and universal.
Ethical relativists are correct when they insist that diverse markets
have different beliefs, and that the standards, beliefs, and practices of
other cultures when they do not match our own may not simply be
disregarded. Ethical relativists, however, seem wrong to conclude that
all moral standards, beliefs and practices are equally acceptable.

They are equally wrong to infer that the only criteria of right and
wrong are the moral values practiced by the majority. International
business ethics is neither a popularity contest nor a democratic
election, where the majority wins (Georges, 1999).