Part 2: Detailed Research Proposal
[Ethical Practices of Taiwanese Enterprises in Vietnam in the case of Bribery]
Background
Business ethics is not a new topic where numerous of academic articles have written in discussing the relevant field, the term ‘corporate governance’ recently caught everyone attention again after the ‘creative accounting’ scandals and the Sarbanes Oxley Act 2002 was passed in the US. (Donleavy et al., 2008) The wind is affecting the whole world, and it is bringing up the awareness of the general public after recent reports like the suppliers of Primark used child labour in India and NHS tools being produced in poor working conditions. More and more business schools are integrating this subject area into their business courses. However, the business education in Asia is still not as popular as in Western developed countries and CSR is a relatively concept in Asia (Donleavy et al., 2008, Ip, 2008). The business ethics education in Taiwan is about 20 years behind US (Wu, 2003). In this fast-paced global business arena, everyone is competing in a more competitive market. More and more MNCs are expanding their territory to developing countries such as China, Indonesia, Vietnam and India where lower production costs usually associate with poorer working condition, less protection in relation to health and safety, and environment protection (Crane & Matten, 2007). Should these foreign enterprises follow the standard as it was in their home countries or exploit them with the loopholes in local countries?
Knowing how cultural differences could shape one’s perspective, several studies have done previously in comparing cultural values and differences in ethical attitudes, pointed out the perceptions towards bribery in Asian countries and the negative effects of bribery. (Wu, 2003; Ang & Leong, 2002; Shafer, Fukukawa &Lee, 2006) For example, gift-giving is seen as a common practice in China, Japan and Taiwan as courtesy or reciprocity where this may be seen as bribes in UK.
How do managers from different culture background deal with local culture, tradition or socially acceptable norms such as gift-giving, grease money, kickbacks and bribery? Indeed, in some MNCs, they have their own codes of ethics, and how do the managers cope with the conflicts arose from these situations? Mckinney & Moore (2008) questioned the effect on the perceptions on such behaviours if having a written code of ethics.
In my study, I’d like to focus on the business ethic practices of Taiwanese enterprises in Vietnam in relation to bribery where there has not much work been done. Ancient China and Confucianism played a big role in the history of these two countries (Ralston D.A. et al., 2006); however they are still politically, economically and culturally very different. Due to its strategic location, Taiwanese culture is largely influenced by America, Europe and especially Japan where Taiwan used to be Japan’s colony for around 50 years (Maguire 1997), and it is called Confucian familism.(Ip, 2008) Vietnam, on the other hand, is strongly influence by Western values after its French Colonization in the 1880s for about 70 years and then US intervention up to 1975. (Thang L.C. et al., 2007)Furthermore, Taiwan is a capitalist country where Vietnam is a communist one. According to the data release from CIA, Taiwan’s GDP is estimated to be $757.2 billion and growth rate of 1.7%; where Vietnam’s GDP is estimated to be $246.6 billion and growth rate of 6.3%. (www.cia.gov )Taiwan has a free market; legislations do get a lot stricter with bribery and politician often get charged for the wrongdoings. Vietnam released new policies to encourage private enterprises and foreign investments within the recent years. (Ralston D.A. et al., 2006; Quelch J. A. & Dinh-Tan C.M., 1998) And bribery is still a common practice for local bureaucrat.
Aims and Objectives
The aims of this project is to explain how cultural difference impact business ethics attitudes and/or behaviours for managers in one country working in another country using bribery as the focus of the interest.
The objective of this project is to identify how or if it is possible to strike a balance between the local traditions and also legislations and company’s own code of ethics when it comes to bribery and hence the tendency in adjustments of ethical behaviours and decision-making especially in the matter of bribery.
Review of the Literature
Globalisation is an inevitable trend (Freidman T., 2005), companies now often cross the border and start doing business and interacting with suppliers, customers, employees and other stakeholders from other countries (Mckinney J. A. & Moore C. W., 2008; Franke G.R. & Nadler S.S. ,2008), hence it is necessary for companies to learn the different ways of doing business in different countries.(Crane & Matton, 2007 pp 380)
Several previous studies (Batten J. et al., 1999; Donaldson T., 1996; Tavakoli A. A. et al., 2003) have shown that the difference in ethical management practices such as sexual harassment (Mitsubishi), poor working condition (NHS), child labour (Primark), gift-giving (in Japan and China where particularly linked to Guan-xi) and bribery (Lockhead) in different countries where they have recently gained public’s attention. (Christic P. M. J. et al., 2003; Hartman L.P., 2005 pp.223; Pawpaka, 2002)
Donaldson (1996) tried to provide some possible answers to companies on their business practices in foreign setting i.e. in the host countries. He mentioned a culture relativist will respect the local culture and do as the locals do even though the behaviours are not morally right (Donaldson T. Werhane P.T., 1988, pp.28); absolutism, on the other hand, is based on the presumptions that there is only one right and universal set of concepts and can only be expressed with that set of concepts (Donaldson T. & Werhane P. T. 1988, pp. 28); and practices in real business world usually lie somewhere in between the two extremes. Hofestede (2001) defined culture as ‘the collective programming of the mind that distinguishes the members of one group or category of people from another’ (Hofstede, 2001 cited in Franke & Nadler, 2008) And Donaldson (1996) argued that sometimes things are neither good nor bad but exist in there is a grey area which calls ‘moral free space’ And as western firms more familiar with the local culture and traditions, they become more tolerable with local practices such as gift-giving
The centre of attention of this project will be drawn upon bribery, which is defined as ‘the offering, promising, or giving something in order to influence a public official in the execution of his/her official duties’ (OECD Observer, 2000, cited in Sanyal, 2005)or simply defined as ‘payments to encourage people to do things that they should not'(Fisher & Lovell, 2006 pp.424) Sanyal (2005) stated that bribery exists in all countries to some extent and there are four factors to bribe, which include economic factors, cultural factors, legal factors and other reasons; she also argued that there are three reasons why international firms think bribery may need to take place in order to get the project started or completed, seem as an acceptable behaviour since everyone does it and to get the opportunity to get business.
Bribery is a common ethical issue that an international manager has to face and most of the bribery occurs because of the concept of economic rent which is defined as the extra revenue earned from a situation when the resources are scarce (Bradburn, 2001 pp. 150-153; Tavakoli A.A. et al., 2003) ‘A few experts believe that in some inefficient economies or traditional societies, bribery may yield benefits such as fairer allocation of resources and improved quality of the civil service.’ (Sung, 2006)The costs and effects of bribery are immense where it could remove obstacles lay out by laws and regulations for the benefits of the few could de-motivate foreign investments as extra costs incur, interrupt market competition. (Sung, 2006) People have long known the harmful effects of bribery; however it is still widespread and in certain cases rooted in cultures and values.
Gordon & Miyake (2001) proposed three possible difficulties that the practice of bribery could not stop, which include the difficulty in bench-marking acceptable courtesy and building relationships and bribery; difficulty in distinguish the payment that is ought to pay for the civil service or bribery; and the fact that different cultures have different degree of tolerance of different practices. In developing countries, most local bureaucrats have comparatively low pay and they see bribery as part of the remuneration which motivate and excel the speed of their work. Sometimes, people actually see accepting these behaviours as respecting local culture; this problematic school of thought is called culture relativism. Relativists think that the ethical answer depends on the circumstances of the situation. (Hartman, 2005 pp.3; Donaldson T. & Werhane P.H., 1988, pp. 27)
According to the Bribe Payers Index (BPI) produced by the Transparency International, a global agency based in Berlin where its ultimate mission is to fight against corruption, Taiwan has a BPI of 7.5 which is the 14th place over the 22 countries, the higher the score the cleaner the nation is over the full score of 10. The BPI includes the 22 leading international and regional exporting countries based on the assumption that they have higher tendency to conduct bribery abroad. (Transparency International)This shows that Taiwanese enterprises do prone to higher possibility of engaging in bribery abroad. Furthermore, from the Global Corruption Barometer 2007, Asia Pacific has demands for Bribery of more than 20% which means more than 20% of respondents had been asked to pay for bribes over the past 12 months in order to obtain a service, the figure has grown significantly comparing to 2006 (15%). From the statistics given by the Taipei Economic and Cultural Office in Vietnam, we can see that there is a very close business relationship between Taiwan and Vietnam where the accumulated sum of capital invested in Vietnam up to the first 11 months of 2008 is $19650.57 million between 1988 to Nov 2008 which ranks as the country of biggest source of capital. (TECO) Therefore, it is worth conducting this project.
Methodological Approach
Due to the limitations of time and cost of this project, a cross-sectional design and research strategy will be applied although a longitudinal would be able to tell more about the change of business and management of ethical intuition and decision-making. I will apply the similar research design developed by Wu (2001).The replication of previously done work ensures that a set of valid and established scales is used and also make the results more comparable between previous and current studies. (Robertson, 2008) However, there are yet many studies in this area, therefore it is difficult to apply an identical research design but similar. A cross-sectional study is also called social survey design where ‘it entails the collection of data on more than one case (usually quite a lot more than one) at a single point in time in order to collect a body of quantitative or quantifiable data in connection with two or more variables (usually more than two), which are then examined to detect patterns of association.’ (Bryman &Bell, 2007 p.55)
The cross-sectional survey contains the following elements:
– A self- completed questionnaire that contains 30 close- ended questions with a written set of definition of terms appeared in the questionnaire. The close ended questions would contain questions to test the managers’ perceptions of bribery and the behaviours which they could accept even though differ from the company’s code of ethics.
– A face-to-face or phone interview with the sampling group. The Sampling group for this study will be the managers of small and medium sized Taiwanese enterprises in Vietnam which will be defined as having more than 500 employees within the company. The main age group will be around 30- 55 years old and each of them should have at least 3 years for his/ her current position. The questions would include what they think bribery can be avoided and if they see bribery as an aid, an obstacle or inevitable.
The respondents will be chosen from the latest year book of Yearbook of the Taiwanese Trade and Commerce Association in Vietnam to obtain a representative nature of the sampling. The questionnaires will be posted online, sent via emails and all respondents will be phone interviewed. The sampling group size will ideally be around 50 to 100, so that the results will be more presentable and credible. The Likert-type scale will be applied for close-ended questions, ranging from never acceptable to always acceptable, so that results can be quantified easily and replicable where respondents will be asked to indicate the degree to which they would agree with the behaviours.
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