Cros Cultural Management Ethics

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Managing Cross Cultural Business EthicsAuthor(s): Chris J. Moon and Peter WoolliamsReviewed work(s):Source: Journal of Business Ethics, Vol. 27, No. 1/2, Business Challenging Business Ethics:New Instruments for Coping with Diversity in International Business: The 12th Annual EBENConference (Sep., 2000), pp. 105-115Published by: SpringerStable URL: http://www.jstor.org/stable/25074367 .

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Managing Cross CulturalBusiness Ethics Chris J.Moon

Peter Woolliams

ABSTRACT. The Trompenaars database (1993)updated with Hampden-Turner (1998) has beenassembled to help managers structure their crosscultural experiences in order to develop their competence for doing business and managing across theworld. The database comprises more than 50,000cases from over 100 countries and is one of the

world's richest sources of social constructs. Woolliamsand Trompenaars (1998) review the analysis undertaken by the authors in the last five years to developthe methodological approach underpinning the

work. Recently Trompenaars with Hampden-Turner(Trompenaars and Woolliams, 1999) have extendedthe concepts into a new model on dilemma reconciliation of cultural differences. This paper reviewsthese latest updates in relation to dilemmas of crosscultural business ethics. The paper asserts that knowledge in relation to business ethics is culturally specific;

and that ethnocentrism is not easy to avoid. Too greatan emphasis on rational-analytic conceptions of reality

may mean that syntheses, emotion, and intuition, arenot adequately developed. This presents implicationsfor doing business and managing across cultures andfor resolving ethical dilemmas.KEY WORDS: business ethics, cross-cultural management, dilemma reconciliation, ethical codes, transcultural competence

1. IntroductionIt is becoming clear that the quest for a universal(i.e. global) theory of international ethics is basedon a false premise that such a single unifyingtheory is possible - let alone desirable. Theintention of this paper is not to dismiss thevaluable insights of such eminent writers oninternational business ethics as Donaldson (1985,1989) and De George (1985, 1992). However,the authors of this paper wish to draw on theirown research (Woolliams and Moon, 1999) andthat of key gurus in the arena of cross-culture,such as Trompenaars (1993) and Trompenaars,

Hampden-Turner (1998), to increase the depthof current understanding and to add value to thework of writers in the business ethics field. Bybeing provocative it is hoped that fresh insightscan be gleaned. Thus this paper

asserts that allethical codes are subjective because they areinterpreted differently by each reader. Any questfor the application of a universal code that failsto take this into account should be abandoned.

Of course itmay be true that most societies valueloyalty, honesty, promise-keeping, privacy, etc.but these values vary considerably in their practical interpretation. Thus the value to managers

Chris Moon isManager, Ethics & Responsible BusinessPractice Consulting, Arthur Andersen. He is SecretaryofEBEN-UK and taught all theMBA Business Ethicsclasses at The Management School, Imperial College,University ofLondon, for 3 years.He has published over20 articles and several book chapters concerning BusinessEthics; and is a member of The Institute of Social andEthical AccountAbility and a Fellow of the RoyalSociety for the encouragement ofArts, Manufactures &Commerce.

Peter Woolliams is Clifford Thames Professor ofInternational Business at theAnglia Business Schoolhaving beenformerly Professor ofManagement at the

East London Business School. He has worked extensively as an academic and practitioner consultantthroughout the world with many leading organisations

and management gurus. His main interests are comparative management and international business dynamics.He has been visiting researchfellow for the Centre forInternational Business Studies (Amsterdam) 10 yearsand has worked closely with Dr. Fons Trompenaars and

Dr. Charles Hampden-Turner.

jfegl Journal of Business Ethics 27: 105-115, 2000.r" ? 2000 Kluwer Academic Publishers. Printed in theNetherlands.


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106 Chris J. Moon and Peter Woolliams

and business professionals comes from understanding and evaluating the meaning they give toany published or evolving codes to thereby determine appropriate personal effective behaviours.The authors have attempted to achieve thisthrough the development of computer modelsavailable on CD-ROM that enable users toundertake self-sufficiency evaluations to exploretheir "subjectivities". The rationale for thisapproach is grounded in the research of

Trompenaars et al. (1993 and 1998) who,building on the work of earlier researchers oncross culture, have extensively delineated theimportance of recognising the different meaningsgiven by people in different cultures to apparently the

samethings. Trompenaars' well-knownmodel based on seven dimensions of cross culture

helps to structure, generalise and explain thesedifferences. They owe their origin from thedifferent meanings given to relationships betweenpeople, meanings of their relationships withtime and nature (the environment). Researchprocesses, methods and techniques are themselvesrelated to the cultures in which they are used andhave been developed. How can we overcomedefensive responsiveness to a questionnaire validated in Anglo-Saxon countries for use in theUnited Arab Emirates? A recent researcher hadto jointly swear on the Quaran with the respondent before he would even consider looking ata questionnaire that contained ethical dilemmas(Al-Refaei, 1998).

2. The research

From an initial data set of 50,000, Woolliamsand Trompenaars (1998) selected some 40,000comparative valid cases from 60 countries inorder to validate a model for managers from

multi-national and international corporationsfaced with international operations and culturalbarriers of communication. Functionally equivalent managers were selected in order to "assail"the integrity of existing research into nationaland organizational culture. Scenarios were presented that portrayed a dilemma between twoprinciples such as respect for law and loyaltyamong friends. The 58-item questionnaire was

validated through discussion; structured interviews, oral histories, cognitive mapping, andstrategy based consulting, such that idiomaticambiguities and temporary oddities were ironedout. The rationale behind the forced-choiceformat was that the respondent reconstructs the

meaning of culture through how they perceivethey and others around them ought to behave:

. . .most, although not all respondents, wouldprobably behave in ways of which their cultureapproved. Where cultural beliefs prove ill suitedto the conduct of successful business we mightfind behaviour deemed "corrupt", "unethical","illegal". Rules against insider dealing, forexample, are particularly difficult to enforce, wherecompetitive advantage lies in better information.

There is always a gap between cultural prescriptions and actual conduct. Ours is a description ofthe former, which leads to approved conduct, notconduct per se."

(Woolliams and Trompenaars, 1998, p. 11)Although the dilemmas are hypothetical, andabstraction can never replicate reality, all thescenarios were conducted around situations that

sought to be common to the experiences ofmanagers in all cultures. "You are gettingpromoted . . ."; "An employee's dismissal is beingdiscussed . . ."; "You have come from a secretboard meeting . . .". Translation problems acrosscultures were considered by asking translators toconsider the wider context of the scenario andto "balance the alternatives". These investigationswere undertaken on the full database and for eachcountry. Thus various revisions were made to thequestionnaire as a result of experience in Asia,

Africa, the Middle East and Eastern Europe.The validity of the questionnaire was norma

tively tested in terms of coherence, pragmatism,and correspondence. The reliability of thedimension scales inherent in the questionnairewas constantly revised based on tests usingCronbach's Alpha measure of internal consistencyfor each combinatorial scale. Administration ofthe questionnaire was carefully managed tominimise defensive responsiveness by ensuringanonymity, etc; and emphasising the independentbasis of the research.

The dilemmas were selected on the basis that


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Managing Cross Cultural Business Ethics 107

they were shared by all cultures to a varyingdegree. What is significant is that the attitude andresponse to the challenge of each dilemma wasfound to vary significantly between cultures. Ofparticular relevance to the subject of businessethics, is the group of dilemmas that arisesbetween the seemingly opposing values of universalism and particularism. People everywhereare confronted with choices when consideringtheir obligations to their personal friends and/orsociety at large. The universalism-particularismdilemma defines how we judge other people'sbehaviour. Trompenaars asserts in this respect thatthere are two "pure" yet alternative types ofjudgement.

At one extreme we encounter an obligationto adhere to amoral or ethical code whichis universally agreed to by the culture inwhich these codes are accepted. This isadherence to the golden rule and its derivatives ("do unto others as you would have themdo unto you9). In business as well as society,this translates into rules defining conductssuch as equal opportunities, political correctness, etc.

At the other, we encounter an equally validtype of particular judgement based onobligations to people we know. Here therelationship is dominating and behaviour isdetermined by this relationship. Any ethicalcode is deemed secondary to this relationship. Obligations to friends are perceived asmore important than obligations to adhereto a code that appears abstract. Behaviouris determined by a thinking process basedon: "J must protect my partner orfriend, irrespective of what any abstract ethical rules maysay. Otherwise, what arefriends for?"

The above research by Woolliams andTrompenaars includes extensive quantitativeanalysis of this paradigm as contained in the

Trompenaars' database. Scales were constructedto place some 50,000 individuals and groups ofindividuals along an Universalism-Particularismscale. Extensive database mining sought linkageof this scale to other cross-cultural scales andother variables - such as education, socioeconomic grouping, gender, religion, job

function, etc. The most significant variable wasconfirmed to be nationality. This supportsTrompenaars' propositions concerning ecologicalaspects of cross-culture.

3. The dilemmas

Earlier research (based mainly in the U.S. suchas Lewin, 1936), identifies the underlyingconcept of universalism as a feature of modernisation - where the role of the family becomesmore fragmented. People live on their own, oras a one-parent family. Work and career places

higher demands on individuals and personal lifemay become secondary. Technology replacestraditional roles. Whereas, particularism tends tobe a feature of smaller, largely rural communi

ties, or where the terrain so dictates. Hereeveryone continues to know everyone personally.The frequently cited incident from Stoufferand Toby (1951), that poses the dilemma of apassenger in a car illustrates this paradigm. Thedriver has an accident by driving too fast. Doesthe passenger have an obligation to tell the truthin court or to protect his/her friend? If thefriend was a mother, an illicit lover during anassignation, or just an occasional work colleague,the judgement may remain the same i.e. theuniversalistic requirement is to tell the truth.Or the need to protect his/her friend, or his orher lover to conceal the affair, may mean thataspects of the particular situation are taken intoaccount.

Trompenaars' extensive data on this casereveals statistically highly significant differencesbetween nationalities. Whilst there is always theindividual response to consider, there are significant trends that some cultures tend to be more

universalistic (Americans and Germans), whereasothers are more particularistic (Venezuela andGulf Countries) (Al-Refaei, 1998). The dilemmais often revealed when multi-national companiestry to define a single (best way?) for a systemfrom head office in the home country and tryto impose it as the universal system throughoutthe world. Rules about "Pay for performance"based on individual sales may work well in countries that are individualistic, but in countries


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which are more communitarian, the idea of differentiating or highlighting the performance ofone employee compared to another may be alien- and counter-productive.Whilst previous research has considered theimportance of "culture" in defining an orthogonal set of ethical principles, most has focussedon corporate rather than national culture(Linthicum 1994). Thus, for example, whenthere is a value congruence between the

dominant organisational values and the values ofthe work force, it is not surprising that a codeof ethics for which the organisation can achieveacceptance is based on the underlying valuesystems of the employees. Customers and otherstakeholders may be in second place. However,such codes may overlook the vital role that

national culture plays. As Tayeb (1996, p. 85)maintains:... in Unitarian cultures organisations . . . tend tofollow a narrow set of goals, have few stakeholders

to whom they are accountable, and are less responsive to the needs and interests of their employeesand their communities alike. In pluralistic nationsorganisations cater for the interests of a largenumber of stakeholders, and are expected to bepart of the society at large and take responsibilityfor itswell-being.

Similarly, in more individualistic societies, suchas the U.S. and U.K., it ismaintained that workand private life are emotionally distinct whereasin some communitarian societies such as Japanthe organisation is a source of emotional andmaterial support (i.e. it has a different meaning).National culture even appears to correlate withthe size of the organisation. The Chinese appearto have a strong preference for small familyowned businesses (as in Taiwan and Hong Kong)

whereas SMEs in the U.S. are on average muchlarger. Such culture-specific factors seem tooutweigh intra-cultural ones. Tayeb (1996) recallsa matched-pair study of Indian and Englishorganisations which found that on a number ofmeasures the differences between the two sampleswere consistent with cultural differences betweenIndian and English peoples as a whole.

4. Questions of meaningWhat concerns the main focus of this paper are

questions of meaning. The meaning attributed toethical issues in business and professional life is,therefore, an important point of enquiry ? notleast of all because Business and Professional

Ethics may be misconceived as a type of universalistic code. Acceptable behaviours may bedefined on the assumption that there is a universal truth or best way or code of behaviours.Previous debates on ethical issues have tendedto ignore these issues i.e. issues deriving from

meaning. Thus power and dependency issuesbetween individual and business, often ask suchquestions as to what extent business shouldsupport their employees as an alternative tofamily and church ? and the very act of askingthis question is itself culturally specific.As Trompenaars and his co-researchers continually comment, such debates have ignored thefundamental question about the meaning of anyfactor to people or peoples. For example, whentranslating text to and from English and Germanthe translations seeks to achieve linguistic trans

parency and equivalence. In many cases confusion results even with "perfect translations" ?viz.: at the end of meal, do you "pay the checkwith a bill (U.S.)" or pay the bill with a cheque(U.K.)? But even linguistics fail to overcome thefundamental problem of what does it mean? In

marketing its famous Sony Walkman, it isassumed that the product (which is technicallyidentical wherever it is manufactured andsold throughout the globe) has the same meaningto customers. However, studies show that

Americans perceive it as a product they can useto listen to music without being disturbed by others,whereas in China it is perceived as a productthey can use to listen to music without disturbingothers. Same product, different meaning. Similarly,"banking" has different meanings to differentpeoples; Islamic Banking is far different to otherEuropean and American Banking.Writers on ethics rarely point to the "law" asthe final arbiter of ethical matters. However,business practitioners may prefer to define andresolve ethics through changes in (company) law;and this is particularly relevant to international


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business law which has shown some convergence(Carroll and Gannon, 1997). But again, the lawhas a different purpose because of its differentrole deriving from its different meaning in differentparts of the world. Does a red traffic light causedrivers to stop, or pedestrians to not jay walk?(Perhaps yes in Germany, but not so in Taiwan!).Speed cameras are accepted in some countries(for the greater good), but are considered a threatto individual liberties in others. The law, may

be regarded as the moral minimum and in termsof providing guidance to managers the law alonemay not be enough.The issue of universal truth is not theonly source of differences between cultures.Trompenaars reminds us that these also include:

A. Meanings of rights given to individualscompared to groups (Individualism or

Communitarianism)B. Meanings given to the degree of involvement in relationships (Specific or Diffuse)C. Meanings given to body language andother non-verbal leakageD. Meaning given to status (Achieved or

Ascribed)E. Meaning given to timeF. Meaning given to nature

A. Meaning of rightsIn an INDIVIDUALISTIC culture, the freedomof the individual comes first and serves society.Society is thought to improve because individuals have their freedom to improve and develop.In a COMMUNITARIAN culture, we take careof society even at the cost to individual freedom.Thus what is the ethical position of Pay forPerformance? Individualism versus Communitarianism can impact on business policies suchas "pay for performance". Consider a pay schemedevised at the Head Office of a multinationalcompany based in an Individualistic Culture. Thescheme would emphasise the individual, differentiate one individual from another, and showsome personnel as having achieved high andothers low. If this pay scheme is implemented ina Communitarian Culture, the effect of breaking

up the group identity may result in disastrousconsequences. In such a culture, perhaps thepay/bonus scheme should depend on the overallperformance of the whole group or even go tothe group member with the greatest need.

B. Meaning of involvement

Regardless of how important privacy is, everyculture has a private domain they will not evendiscuss with many other people. Kurt Lewin, aGerman Psychologist, appraising the Americans,said, "It's wonderful to be in the States because

people tend to be so hospitable. They have openpersonalities, and visitors can easily get intocontact". Lewin concluded, "It's because the

Americans have a relatively small domain ofprivacy which is very sealed off- and because it'ssealed off, they can have a big public life".In some cultures (such as American), thisdomain is very limited - related to just a fewareas - and this leads to lots of relationshipswhere privacy is not actually involved. These aretherefore SPECIFIC relationships. Specific in thisinstance means that what is shared is determinedone specific situation at a time, without anynecessary implications for the overall relationship.Each interaction stands alone in the specificsituation of the present moment.A specific relationship iswithout any symbolic

meaning about the relationships between theindividuals' more secret domains of personalprivacy. What is private is clearly very differentand is separated from what is public. In specificcultures, nothing that applies to relationships inone situation necessarily carries over into thenext one. Each event of relationship is its ownlittle drama with its specific roles and costumes.In a DIFFUSE culture - everything is private.The car is private, the refrigerator is private. Inthe beginning of any relationship, you protectthis privacy. Initially this leads to a no-no relationship. Everything is very polite and deliberately distant and has a "cool" feeling. Don't tryto do business at this stage of the relationship!

Nobody is available for anything yet other thanbeing polite. For people in diffuse cultures, theintermixture of private and public is a source of


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comfort, confidence, strength and pride. But aperson from a specific culture usually experiencesit as a suffocating burden.

Specific cultures separate their tiny privatefrom their large public, and enjoy the accomplishments of highly focused relationships, andfurther the freedom that comes from being ableto break and remake such relationships. Thesedifferences create all kinds of confusion and alarmbetween the two cultures. When a representative of a diffuse culture meets an individualfrom a specific culture, their domains of privacycollide. A German, Italian or Frenchman may seean Englishman as rude and careless ? as someonewho is pushy and premature in trying to dobusiness for instance ? and as someone whodoesn't understand the importance of businessagreements and is not very responsible inhonouring them! The Englishman may see theGerman, Italian or Frenchman as snobbish andarrogant - as typically bureaucratic - that isunreasonable, timid and careful as a businesspartner - and as someone who seems to want "allor nothing" even when the "all" is completelyimpractical.

C. Meaning of body languageTrompenaars also reminds us that some societieseasily display emotions, and others withhold theexpression of them. All people find ways torelease pent-up emotions, but each culture hasits own sanctioned way of doing so ? some privately and some publicly. Some cultures expresstheir emotions continuously. AFFECTINGcultures such as Americans and Europeans,display emotions relatively easily. The Japanesecall these "transparent cultures" because theyshow their emotion about everything - theirmaterial possessions, themselves, other people,their ideas, beliefs ? everything.In many other societies, including theJapanese, you may never reveal what youare feeling, thinking or believing. In theseNEUTRAL cultures, such public displays may beconsidered childish, harmful and even rude.These differences in displaying emotions maylead to distrust and hostility between neutral and

affecting cultures. For example, if you wereworking with a team of Italians and you accidentally insulted them; they may show their displeasure by talking together excitedly in Italianand then walking out of the room. The Italiansare an especially affecting culture. In contrast, ifyou accidentally insulted a group of Indonesiansthey would probably not walk out. They may feelinsulted but probably would not show it. You

might not even be aware that you had insultedthem but their trust in you would be damaged.You might find your project failing and neverunderstand why ? and the more you express yourfrustration and disappointment, the more rapidlythe project fails!

D. Meaning of status

In an ACHIEVEMENT orientated culture, youare what you do and have done. The emphasisis on the results you attain and the performance,results and materialistic gains you can exhibitas proof of your achievement. Competitionand individual effort enhances status. In an

ASCRIBING culture, you are who you are byvirtue of your birth and position. Your ascribedstatus has no reference to ability or innate differences between individuals. Thus, when weintroduce ourselves, we are positioning ourselvesin terms of status. Some may introduce themselves by firstly describing their job (achievementorientated) others may do so by reference to theirfamily and social position (ascribing).

E. Meaning of time

St. Augustine said in effect, "All this about past,present, and future is nonsense because the onlything that exists is the present." But he went onto say "we have three presents, the present ofthe past, the present of the present and thepresent of the future." A theme taken up to goodeffect by Charles Dickens with his ghosts of

Christmas ? past, present, and future. Thus, themeaning we assign to the present depends onwhich time sense we relate to predominantly. Wehave moments where the present ismuch more


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affected by the past and others by the future.Some of the participants in the workshop willsay, "I now understand what my life has beenabout", but others will say "I like this because Ican use it tomorrow" and still others will say, "Ijust like being here and participating".You can imagine the problems that arise whenyou try to implement a system of goal-setting or

management by objectives into cultures that havea small future orientation. Cultures like Franceand Venezuela may care less about planning forthe future because the future has little or nobearing on the present. In other cultures, thefuture is very handy. The Spanish invented"manyana" and are very good at it! For theJapanese, experience evolves through time,starting in the distant past and ending in thedistant future. Often, they arrange their diagramas concentric circles. Westerners have the ideathat experience occurs in a much more discreet

manner, in chunks. Another way to representthese extreme perceptions is to note that you canstructure time as either SEQUENTIAL or SYNCHRONY.

F. Meaning of natureNature can sound very remote but it is very close

in the sense of culture and how it affects businessand management at large. Look back at the different ways people have dealt with nature overtime. Prior to the Renaissance in 15th century

Europe, nature was seen as an organism. Naturewas out there; and Talos, the goal of nature, wasput there by the supreme designer, God. Thesepre-Renaissance cultures believed that there wasan environment and the environment determined

what human beings needed to be doing. Naturewas in psychological terms, the locus of externalcontrol - it controls us rather than the opposite.The Renaissance turned this organistic viewof nature into a mechanistic one. If you picturenature as amachine (like Leonardo da Vinci), you

begin to realise that if you push here you cancause a reaction there. Hence developed the ideathat you could control nature. This is the mechanistic view of nature; that the environment issomething out there that we can control with

science and technology. The pre-Renaissanceview of EXTERNAL control converted to oneof INTERNAL control.

Very often Westerners try to put controlmechanisms on everything. They have budgetarycontrol to control finances, they have pay-forperformance to control compensation. They havestaff appraisals that control, etc.; etc. They nowhave in the context of this paper ^ethical control"\This approach does not work in societies thatdon't believe in control and don't allow control.In eastern societies, the organistic model is stillvery much there. For example, in Americanfootball or boxing, the basic principle is that youhave an opposing force, so you hit as hard as youcan, and if you hit harder, you will win. InJapanese martial arts like Karate and Aikido, theprinciple is to take the natural force from theenvironment and use it to your advantage.This can help to explain how the Japaneseview business. For they are the environment andthe environment is theirs. They strive to remainin harmony with their environment. Theirbusiness environment includes many customers,and since customers are a natural part of the environment, many Japanese companies take customers onto their boards of directors. Relativelyunheard of in the West! Likewise, quality is notsuch a big issue in Japan. They never talk aboutit because, you don't talk about things that areso obvious and have become habitual. In their

minds, a society may be seriously sick if it constantly talks about quality.

5. Dilemma reconciliation

The future for business ethics should be tocontinue to examine the relationships betweennorms and values and what these mean to theactors. Norms are what is usual and acceptedpractice whereas values are what you would prefer.When values and norms are convergent, we havelittle difficulty. When values and norms conflict,we have a source of disharmony. Ethical debateis rightly placed at the centre of inviting societyto reflect on its norms and values and the degreeto which these are appropriate. Constructivedebate can change peoples' values and hence the


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112 Chris J. Moon and Peter Woolliamsnorms of their groups ? although it is known thatpeople often reluctantly change their behaviourfirst (norms) because they rarely address the issuesand start to change the way they think (values)i.e. the meaning they give to things.

The first mistake is to ignore these differencesand maintain one's own norms in different societies and cultures. This is a "win-lose" relationship and your own ethical principles may alienate

your adversary. A second easy mistake to makeis to adopt the uwhen inRome, do as Romans do"paradigm. Here, for the sake of harmony (?), ormore likely to close a sale(!), we may think thatby abandoning our (norms) behaviours andadopting the norms of the destination culture,we can "fit in" and be accepted. In practice, thetension caused by trying to act out an unfamiliarrole and abandon one's own ethical code or principles, is likely to fail as your adversary quicklybegins to mistrust you. This will be a lose-winstrategy. Compromise at best is only a lose-losestrategy and still requires you to abandon someof your position.

Attempts have been made to produce a universal international code of ethics (cf. Donaldsonand Dunfee, 1994; Hosmer, 1995; Caux RoundTable, 1996). The writers of the Caux codesuggest that this code be based on trying toinclude two extreme ethical ideals - kyosei andhuman dignity. Kyosei is said to mean living and

working together for the common good, whereashuman dignity is said to mean the sacredness orvalue of each person. However, this version ofthe universalism-particularism dilemma ignoresthe fact that the nationality profile of stakeholders

may have changed from the original issue. Thusan American company with American shareholders may now have 50% of its shareholdersfrom the Far East. Its business strategy formulatedon the basis of an acceptable ethical code mayhave been focussed on maximising shareholdervalue whereas itmay be more appropriate that the

CEO and team now review their strategy formulation on the basis of the changed shareholdervalues (Dickerson, PhD thesis in preparation).The Caux Round Table (1998) web-site doesindicate a belief in the reconciliation of valuesbut that their statement is only the start of aprocess:

As a statement of aspirations, this document aimsto express aworld standard against which businessbehaviour can be measured. We seek to begin aprocess that identifies shared values, reconciles differing values, and thereby develops a shared perspective on business behaviour acceptable to andhonoured by all.

Thus, any statement of general principles canonly be a starting point. Whereas, studies haveshown that cross-cultural training can contributeto: greater feelings of well-being and self-confidence for the manager, improved relationshipswith host nationals, the development of correctperceptions of host culture members, betteradjustment to the new culture, and higher performance (Black and Mendenhall, 1990). In fact,the lack of such training may be the cause ofindividual and organisational failure; the costs ofwhich are estimated by Black and Mendenhall tobe $50?150K for individual failure, and over $2billion per year to U.S. business as awhole. Theethics of international business relationships arethus considered to be an essential component oftraining for cultural understanding and sensitivity.As Triandis et al. (1988) pointed out, giving agift can be an important step to becoming a

member of a group, and giving a gift incorrectlycould lead to ostracism. This is significant inJapan where gift giving has been considered asan important part of relationship building. It isthe interpretation (i.e. meaning) of the gift thatis the critical factor (Albert, 1986).

Managers must be able to interpret culturalsignals often overlooked through selective perception (Albert, 1986), but more than this theyneed to be aware of inconsistencies in culturalbehaviour (Adler and Graham, 1989). Thuslearning about another culture is only a first step;one must recognise cultural heterogeneity.Trevino and Nelson (1995) argue that managersshould be trained with respect to business ethicsbeliefs and practices. They can not rely onintuition (Donaldson, 1992) to guide themthrough the murky waters of dirty tricks, payoffs,and bribes (cf. Adler, 1992). However, theseauthors all miss the basis point that the only realsolution is to recognise then respect and thenreconcile these differences (Trompenaars andHampden-Turner 1998).


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Some organisations have developed codes ofbusiness conduct with guidelines for dealing withproblems (e.g. Caterpillar, Xerox, and GeneralDynamics) perhaps modified to deal with particular cultural contexts. There may be rewardsand sanctions for complying with or breakingcompany policy. Nevertheless, these approachesare highly ethnocentric in origin, developedwithout a full and proper understanding of thecomplexity of meaning given to ethical issues indifferent cultures: nepotism, incompatible values,public expectations, the legitimacy of businessand wealth creation. Noble attempts have been

made to devise a Transcultural Corporate Ethic(Frederick, 1991) based on respecting nationalsovereignity, social equity, market integrity,human rights, but such attempts fall short of

probing managers beliefs. The danger is thatmoral guidelines, such as drawn up by DeGeorge(1992) may end up being used as the basis forcompromise; or Donaldson's (1989) fundamentalinternational rightsmay end up as being overly prescriptive and hence impractical.

To support the work of Trompenaars andHampden-Turner, Woolliams and Trompenaars

(1998) have been concerned to produce selfadministered computer based diagnostic tools tohelp individuals and groups investigate their ownorientations and to clarify the meaning they giveto meanings. In this way, both at the level of theindividual and through shared exchanges, thewhole problem of subjectivity and ethnocentrismcan be exposed. Current research is accumulatingevidence that it is possible to reconcile differentvalue systems and moreover that this is effectivein doing business and managing across cultures.This is the "new approach" that has "addedvalue" over and above "compromise solutions"and produces ethically acceptable outcomes to allparties and is based on a new fundamental modelconceived by Trompenaars and Hampden-Turner(1998).

The following is how Hampden-Turner,Trompenaars and Woolliams have now expresseda typical dilemma.

The Letter or the Spirit of the Law?Six months after the ABC mining company had signed a long-term contract with a foreign buyer to buybauxite in ten annual instalments, the world price of bauxite collapsed. Instead of paying $4 a tonne below worldmarket price, the buyer now faced the prospect of paying $3 above. The buyer faxed ABC to say itwished torenegotiate the contract. The final words of the fax read: "You cannot expect us as your new partner to carryalone the now ruinous expense of these contract terms." ABC negotiators had a heated discussion about thissituation.

Which view do you support?a. A contract is a contract. Itmeans precisely what its terms say. If the world price had risen we would not be

crying, nor should they. What partnership are they talking about? We had a deal. We bargained. We won.End of story.b. A contract symbolises the underlying relationship. It is an honest statement of original intent. However,such rigid terms are too brittle to withstand turbulent environments. Only tacit forms of mutuality have theflexibility to survive.c. A contract is a function of both the underlying relationship and the legal system covered by it.We shouldsplit the difference.d. A contract symbolises the underlying relationship. It is an honest statement of original intent. Where circumstances transform the mutual spirit of that contract, then terms must be renegotiated to preserve therelationship.e. A contract is a contract. Itmeans precisely what the terms say. If the world price had risen we would notbe crying, nor should they. We would, however, consider a second contract whose terms would help offsettheir losses.


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Option a is clearly the universalistic option(win-lose). Option b is the particularistic view(lose-win). Option c is the compromise solution(lose-lose).

Both options d and e are seeking to reconcilethe opposing values. Option e starts from anethical universalistic viewpoint but takes in toaccount the opposing value and seeks to reconcile and find a unifying solution. Option ? is thereverse and commences with a particularisticview but still seeks a unified reconciled solution.Both of these are win-win strategies. Newevidence reveals that propensity to reconcile isan effective behaviour of high performingglobal managers. New studies confirm high correlation between such propensity and 360 degreefeedback on business and managerial effectiveness (Hampden-Turner, 1998).

6. Trans-cultural competenceThis paper demonstrates that a new methodological framework is needed in order that a

manager can acquire and develop trans-culturalcompetence and high performance in the job.

High-performing managers consistently exhibitmore of this trans-cultural competence than thosewho give polarised or compromise responses

(Trompenaars and Woolliams, 1999). WhileAmerican managers typically put universalismfirst, they say, and East Asian managers usuallyfavour particularism, some managers from eachregion are able to reconcile both approaches.This trans-cultural competence correlatesstrongly with the extent of their experience withinternational assignments or working with adiverse workforce, and with ratings by both peersand managers on "suitability for" and "successin" overseas postings and partnerships and/ordealing with diversity. In fact, women in middle

management ? other than those adopting amaleapproach in a perceived man's world - tend tohave a higher propensity to reconcile opposingvalues than their male counterparts. Although,when severely challenged and unable to reconcile then these women also show signs of compromise.Trans-cultural competence is being shown to

be important in wide ranging situations fromprospecting for new business through to

managing existing projects and day-to-daybusiness. And studies are showing that thepropensity to reconcile can be developed throughtraining. The authors are using computer-basedmodels (available on CD-ROM) that enable

managers and business professionals to exploretheir own value systems and to identify theirposition on various ethical dilemma scales. Theresulting self-sufficiency analysis aids the user inunderstanding and interpreting their relationshipand the meaning they ascribe to various published and/or proposed ethical codes. What mayemerge are new global business paradigms fordealing with dilemmas of cross-cultural businessethics.

Acknowledgements

Arguments for this paper have been developedthrough peer review in relation to papers presented at: The First International Conference on

Cross Cultural Business Ethics held in Tunis,lOth-llth December, 1998; The Fourth Annual

Conference of the U.K. Association of theEuropean Business Ethics Network "BusinessEthics for a New Millennium" held at ChristChurch, Oxford, 15th-16th April 1999; and The12th EBEN Annual Conference 1999 "BusinessChallenging Business Ethics. New instrumentsfor coping with diversity in internationalbusiness" held at Amsterdam, The Netherlands,lst-3rd September, 1999.

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Chris J. MoonArthur Andersen.I Surrey Street,LondonWC2R 2PS,United Kingdom

E-mail: [email protected]

Peter WoolliamsAnglia Business School,

Anglia Polytechnic University,Danbury Park,Essex CM3 4AT,United KingdomE-mail: [email protected]

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Cros Cultural Management Ethics