Cambridge Judge on Cross-Cultural Business Ethics: B-School Research

Standards of business ethics can fluctuate when people pursue negotiations with those of different nationalities and cultures, according to a cross-continental study co-authored by a management professor at the University of Cambridge Judge Business School.

In the study, people from the US were found to be more likely to use ‘questionable’ business ethics in their negotiating tactics with someone in China than they would employ with someone close to home. Conversely, people from China were found to be less likely to use questionable tactics when thought to be negotiating with someone in the US and more likely to use them on their fellow countrymen.

The results stemmed from approximately 800 participants from the US and China, each of whom were given a situation in which they were under pressure to make a sale and avoid a company loss. The person with whom they would be negotiating the sale was based in the US or China and dubbed either ‘Justin Adams’ or ‘Jia Liu’ as appropriate. Participants were then tested for their likelihood of using any of 16 negotiating tactics described as being of a questionable standard of business ethics, each of which could fit into one of five broad categories:

• False promises
• Misrepresentation to strengthen negotiating position
• Inappropriate information gathering about the counterparty’s negotiating position
• Attacking the opponent’s network
• ‘Traditional’ competitive bargaining such as inflated opening demands

‘Nationality can affect the ethics of negotiating tactics’ says Cambridge Judge professor

The difference between negotiating with someone in the US and someone in China was found to be significant among participants from the US, who were more likely, in particular, to make false promises and perform inappropriate information gathering. For those in China the differences were more marginal, but participants were found to be more likely to use questionable tactics when negotiating with others in China than with those in the US, especially in terms of attacking a person’s network (equated to the motive of getting a person fired to allow a new person to take their place) and making false promises when negotiating. However, it’s worth adding that analyzing changes in behavior masks the fact that participants in China tended to be more likely to utilize these questionable strategies in either scenario than their counterparts in the US.

“This study shows that the other party’s nationality can affect the ethics of negotiating tactics, and this has important implications. Business is increasingly global, so ethical concerns are becoming more important in terms of cross-national business and negotiations,” said David De Cremer, the Cambridge Judge professor and coauthor.

The importance of cross-national understanding has already become a central tenet of teaching across a number of MBA programs worldwide, yet employers of the degree’s graduates still report being marginally less satisfied with their levels of international awareness than the importance they attach to this trait. So, it seems there is still much to learn.  

Earlier this year, for example, INSEAD professor Erin Meyer outlined the differing approaches to disagreeing with others in meetings and discussions, summing up that “…the Germans, along with the French, Dutch and Danish are on the confrontational side of the disagreeing scale. On the other side stand the Chinese, and even more so, the Japanese, Thai and Indonesian”, with those from the US being placed somewhere in the middle of this scale. Of course, this isn’t intended as a means of stereotyping people of different nationalities, more as a way of appreciating cultural norms and understanding where people you work with might be coming from.

Business ethics study calls for more ‘nuanced understanding’ 

The cross-continental study discussed above, however, has added another layer of complexity to the mix in suggesting that, when it comes to the ethics of negotiating tactics, it can depend on who you are dealing with as much as where you are from. It was carried out with Yu Yang of ShanghaiTech University and Chao Wang of the University of Illinois acting as fellow coauthors alongside De Cremer. The Cambridge Judge professor was previously attached to CEIBS and specializes in organizational behavior, business ethics and CSR in his teaching at MBA and EMBA level.

The study outlines its belief that the process at work here is that “people adopt different models of what is ethically acceptable for themselves in intra-cultural versus inter-cultural situations,” and concludes that “a more nuanced understanding of ethical practices in different countries needs to be developed.”