How do Expatriate Managers Draw the Boundaries of Moral Free Space in the Case of Guanxi?

Abstract

This paper explores expatriates’ ethical evaluations of and responses to guanxi in China through the lens of integrative social contracts theory. We conducted in-depth interviews with 14 expatriate managers who had spent, on average, 6.5 years working and living in China. Based on the content analysis of these interviews, we identified two different uses of guanxi: defensive and competitive. In general, the respondents found defensive guanxi moral in the Chinese context, while they considered competitive guanxi immoral. Based on our findings, we identified fair competition as the substantive hypernorm that governed most respondents’ ethical evaluations of guanxi. The study has implications for all scholars who seek to utilize integrative social contracts theory to study the relationship between informal networks and corruption in developing countries.

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Notes

  1. 1.

    Ethical imperialism is sometimes called ethical universalism, because the universal standards imposed on host countries typically originate from home country standards (Horak 2018).

  2. 2.

    The insights gained from the wider field research that this study was a part of, as well as from the interviews that were conducted for this study, suggest that expatriates from Japan and Singapore face cross-cultural ethical dilemmas similar to those of Western expatriates. Although it can be argued that Japan and Singapore have more in common with China culturally and hence have practices similar to guanxi, the two countries are known to be closer to the West than China in terms of the strength of their formal governance practices. In the World Justice Project’s Rule of Law Index (2019), Singapore and Japan ranked 13th and 14th, respectively, while the US ranked 19th. Moreover, Singapore was ranked as the third cleanest country in the world in Transparency International’s Corruption Perception Index (2019), while Japan ranked 18th. Both countries were above the US in the index, which was in 22nd.

  3. 3.

    These include the rights to:

    1. 1.

      freedom of physical movement,

    2. 2.

      ownership of property,

    3. 3.

      freedom from torture,

    4. 4.

      a fair trial,

    5. 5.

      non-discriminatory treatment,

    6. 6.

      physical security,

    7. 7.

      freedom of speech and association,

    8. 8.

      minimal education,

    9. 9.

      political participation,

    10. 10.

      subsistence.

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Acknowledgements

Dr. Tolga Ulusemre thanks Dr. William Rhey and Dr. Harm-Jan Steenhuis, the former Dean and the current Associate Dean of the College of Business at Hawaii Pacific University, respectively, for their encouragement and support.

Funding

This study was funded by a SPARC Graduate Fellowship from the Office of the Vice President for Research at the University of South Carolina.

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Correspondence to Tolga Ulusemre.

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Ulusemre, T., Fang, X. How do Expatriate Managers Draw the Boundaries of Moral Free Space in the Case of Guanxi?. J Bus Ethics (2021). https://doi.org/10.1007/s10551-020-04720-0

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Keywords

  • China
  • Guanxi
  • Informal networks
  • International business ethics
  • Integrative social contracts theory