Confucianism is considered as one of the religious and philosophical mainstreams in China, among Buddhism, Daoism, popular religion, Chinese Legalism and military strategy.[1] In contrast to Buddhism, Confucianism has its origins in China. Therefore it is seen as a typical Chinese tradition. In how far Confucianism is still alive today is in question, after the political turmoil of the last century.

Business Ethics has meanwhile become a serious issue both for government and business in China. Chinese government has already undertaken various steps to foster ethical behaviour in the area of business activities. On the other side business itself has to undergo a transformation, which means that companies in China need to establish corporate ethics strategies to meet the requirements set by Chinese government.

A corporate ethics strategy is of great importance for both indigenous and foreign companies. Especially in the case of a foreign company with a majority of Chinese employees business ethics originated from the Western hemisphere yields difficulties. In order to develop adequate corporate ethics in such a case it is essential to take the cultural differences into account. A Confucianism-oriented approach presents a possible solution in respect of integrating Chinese culture when developing corporate ethics.

While a Confucian approach in corporate ethics has also external effects, speaking of stakeholders outside the organisation, this article only focuses on perspectives regarding internal consequences. Accordingly two different perspectives are outlined concerning the feasibility of a Confucian approach: Edward J. Romar and James Weber generally endorse a Confucian corporate ethics strategy. In contrast Gary Kok Yew Chan and Po Keung Ip hold a critical view in this regard.

Confucianism as an appropriate foundation for corporate ethics

In this part of the article various considerations to support a Confucian approach are presented, which originate from Edward J. Romar’s article “Virtue Is Good Business: Confucianism as a Practical Business Ethics”.

Romar (2002) states that Confucianism could indeed provide an applicable guideline for organisational behaviour, because it is context-oriented regarding the assignment of responsibilities. Responsibilities come together with roles, and roles in turn are defined by the constituted hierarchy.

In organisations hierarchy appears to be indispensable, because it provides structure and thus effectiveness. It has the function to restrict the individual employee’s scope of behaviour, tasks and responsibilities. Therefore in a working environment, behaviour of individuals is bound to their position and “structured around business processes, knowledge and areas of responsibilities” (Romar 2002, p.120).

Confucius realised that “any society needs conventions to regulate social action” (ibid.) and

he saw this regulation footed on hierarchical structures. In a working environment there is a need for regulation, as outlined above. Since an organisation represents a part of society, Confucianism can therefore serve as basis for regulations. In relation to this Confucianism incorporates hierarchy in two ways.

First, there is the idea of a superior person in a moral context, which is linked to leadership. The moral superior person shall lead the way to a moral and just society. Morality is considered as “a critical part of every decision and the foundation of individual behaviour” (ibid.), therefore a moral role model is essential. In the case of an organisation this means management should lead by example: leaders should not act selfishly, but in the interest of their subordinates.

Second, with hierarchy comes dependance and a limited scope of action, which Confucius took into consideration by assigning roles and duties to certain positions. In this context of restricted individuality, independence and adaption to roles, collective success is emphasised, instead of individual success. Employees have consequently limited influence regarding duties, tasks and outcomes. However all these rather limited individual actions can produce a collective success.

Yet collective success requires that everyone involved knows his or her position, role and tasks within a process and applies “proper attitudes and knowledge to its completion” (Romar 2002, p.122). Confucianism recognises that collective success consists of individual contributions by dependent agents and accordingly calls for moral autonomy and individual responsibility. The willingness of each individual to carry out the assigned tasks and responsibilities is vital to collective success. These human interdependencies in turn constitute the idea of community.

Collective success is further strongly linked to benevolence, which is one of the most important values Confucianism has to offer. Only if people assume responsibility for acting benevolently, individual as well as collective success is likely to be achieved. Here comes Confucius’ Golden Rule into play, which leads to benevolence, as Mencius[2] put it (Romar 2002, p.123). The Golden Rule presents the underlying guiding principle of actions, because it implies a prudential application of moral standards. This includes the ability to take up an opposite position, in order to decide what is appropriate to do.[3]

Furthermore benevolence is associated with other Confucian values, such as kindness, tolerance and trustworthiness. Confucius emphasises trustworthiness in contrast to trust, because trust needs to be earned. Today trustworthiness as well as trust are two important values for business. Also in contemporary management literature the importance of trust is underscored as in Peter Drucker’s publications for instance (Romar 2002, p.124).

On the other hand benevolence alone is not sufficient. Confucian ethics also underlines education and moral knowledge. Therefore lifelong knowledge seeking in respect of knowledge of the task given as well as moral knowledge are emphasised. Confucius believed in the human capability to improve, which required an attitude of perpetual learning.

Another Confucian contribution to an overall improved organisational behaviour is the etiquette-based behaviour associated with the Chinese term li. This term implies fundamental knowledge regarding appropriate use of language in social settings or adequate forms of addressing someone for instance had been described in Confucius’ books. Profound knowledge in respects mentioned is vital for organisations. For management this issue should be of high priority, because it is essential in order to succeed (Romar 2002, p.121).

Examples of applied Confucianism

In the second part of this article three examples for Confucian led companies are presented. Subsequently follows a short summary, which briefly points out the advantages of a Confucian approach regarding a corporate ethics strategy.

In his publication “Using Exemplary Business Practices to Identify Buddhist and Confucian Ethical Values Systems” James Weber describes various companies, which are already led by Confucian values. The core of these values is the practice of Confucius’ Golden Rule as Weber puts it “What you do not wish done to yourself, do not do to others”[4], a long-term-orientation, leading by example, true merit and at last the attitude that righteousness is to be preferred against profit (Weber 2009, p.522).

One of Weber’s examples is the Weizhi Group of Xian[5], whose corporate culture is described by four core values: kindness, sincerity, diligence and wisdom. Their corporate conduct emphasises the importance of customer satisfaction and concern for employees’ needs.

Another example is a Taiwanese company called Sinyi Real Estate. Founded in 1981 by Chun-chi Chou, on principles of trustworthiness and fair dealing, which means sinyi in Chinese. Chou is a strong supporter of Confucius’ teachings and his Confucian belief is reflected in his personal code of ethics. A collective approach is visible through his focus on teamwork and organisational goals, which is complemented by a “team-centered reward system” (Weber 2009, p.529). Also profit is not seen as the main goal, following the Confucian tradition, but trustworthiness.

The third and last example is Ping An Insurance, which was established in 1988. Today it is the second largest insurance company in China. In 1992 Ping An Insurance started to develop a Confucian approach, based on Confucius social and moral codes. Their corporate ethics consists of the “Four Pillars for profitable growth”, which include “a customer-centric business model, rule-based operations, market-based performance management, and integrated information management and platforms across the company” (Weber 2009, p.530). The core values regarding conduct are respect, integrity and loyalty towards customers, co-workers and supervisors. In comparison to Sunyi, Ping An Insurance does not condemn profit, which might surprise in the context of Confucius’ righteousness versus profit principle. Instead Ping An Insurance developed a profit motive, as described above, which appears to be generally reconcilable with Confucius’ teachings.

To sum up briefly: A Confucian approach regarding a corporate ethics strategy could lead to a more humane organisation, including a long-term orientation, because stakeholders are not simply considered “as means to an end but ends in themselves” (Romar 2002, p.129). Furthermore the Confucian approach recognises a certain form of community in a company, which means that there is not only one single goal, but multiple goals to fulfil in order to meet all needs. Therefore not only profit and organisational success is important, but also the need of employees and customers.

Why Confucianism does not provide an appropriate base for corporate ethics

In the final part of this article critical perspectives by Po Keung Ip (2009) and Gary Kok Yew Chan (2008) with regard to a Confucian approach in corporate ethics are presented. The arguments below originate from their articles “Is Confucianism Good for Business Ethics in China?” and “The Relevance and Value of Confucianism in Contemporary Business Ethics” both published in the Journal for Business Ethics. Major issues discussed thereof in this part are the negative aspects of collectivism and hierarchical structures, which generally leads to an inequality of persons.

Confucianism strongly fosters two tendencies: collectivism and hierarchy. These two aspects together constitute a vertical collectivism (Robertson 2008, p.415).

When implementing a Confucian approach, consequently collectivism and collectivist goals play a major role. Referring to collectivism Po Keung Ip outlines one weakness of a Confucian basis.

The problem with collectivist goals is that they overshadow individual interests. Moreover individual interests might be sacrificed in the name of collectivist goals. Ip also mentions that individual interests independent or separate from collectivist interests do not exist (Ip 2009, p.468). In the case of a company this means there is only one goal for all – organisational success. While Edward J. Romar emphasises the value of collectivist success in this context, Po Keung Ip criticises that collectivist success is only achievable through sacrificing individual interests.

In a collectivist society harmony is important. However maintaining harmony within a company sometimes includes suppressing individual employee’s interests and rights. Also conflicts are repressed in order to maintain harmony[6]. This approach does not yield a solution, rather it procrastinates the conflict. Po Keung Ip states that conflicts cannot be resolved without effective mechanisms and a “culture of honesty and respect” (Ip 2009, p.470). Only with free and open debates conflicts can be resolved and “genuine harmony” can be maintained (ibid.). A Confucianism approach strongly fosters hierarchy and role-based behaviour and hence does not offer much room for open, free and honest discussions in conflict situations.

Difficulties and problems resulting from a Confucian based hierarchal structure are linked to a second major issue. With a Confucian hierarchical structure comes paternalism and authoritarianism. Ip describes paternalism as “father-knows-best” principle (Ip 2009, p.469). The combination of patriarchal authority and paternalism together constitute authoritarian paternalism, which deters children and persons in general from choosing freely and making decisions autonomously. Moreover it hinders persons to develop their own capacity in respect of making choices and thinking independently. Ip states that “authoritarianism is hostile to personal autonomy and its growth” (ibid.). Referring to a company led by a Confucian approach this means freedom and autonomy of the employees are jeopardised. Also this “top-down decision making style” as Ip puts it (Ip 2009, p.473), breeds an organisation culture dominated by an attitude of command and control.

Another argument against implementing a Confucian approach is that in a working environment this kind of structure “would be contrary to the notion of participatory democracy in the workplace based on freedom and consent as endorsed by Kantianism” (Chan 2008, p.354). Though this argument is western-biased, it also partially reflects Ip’s critics. Whether a Kantian approach makes sense in China is another question, but the main point is the freedom and autonomy of employees, which is quite restricted when implementing a Confucian approach.

Which consequences follow for people’s equality when Confucianism is practised in a working environment is outlined by a final argument.

Po Keung Ip examines in his article “Is Confucianism Good for Business Ethics in China?” whether the Confucian approach is compatible with the human rights guidelines. He arrives at the conclusion that Confucian values practised within an organisation is not in accordance with the human rights guidelines, because of the reasons following (Ip 2009, p.472).

Firstly collectivism is not compatible with equality due to its tendency to override individual interests and goals. Furthermore collectivism defines the values and interests an individual has to live up to. A habit of passivity emerges as result of restricted individual freedom and autonomy and as Ip puts it: “employees are habitually deprived of the opportunities to learn and take up responsibilities, as well as to make choices and decisions.” (Ip 2009, p.473).

Finally particularism, evolving from the familial collectivist tendencies in Confucianism, undermines the principle of equality. An employment or promotion should not be decided on personal grounds such as familial relations for instance, but on grounds of a person’s capability and potential. Otherwise the principle of meritocracy is called into question.

Conclusion

At first sight implementing a Confucian approach in a company located in countries of Confucian heritage appears to be quite reasonable. However the problem is that most of the literature on this approach generally refers to positive aspects of Confucianism only. Critical or negative consequences of this approach are scarcely admitted. Furthermore the concept and the real world of business are rarely brought together (Ip 2009, p.473). A Confucian approach as corporate ethics strategy obviously has its shady sides, which must be considered when planning to implement such a strategy.

Moreover negative effects of applied Confucianism also affect external stakeholders. One of these potential effects worth mentioning is certainly the appearance of in-groups and out-groups due to vertical collectivism. This appearance is often associated with discrimination in general (Herrmann-Pillath 2009, p.327) and described as negative or even harmful outcome (Warren 2004, p.356) affecting people categorised as outside the group. In a business context this phenomenon can result in a company which defines itself as in-group and consequently external stakeholders as out-group. The in-group is dominated by different rules of morality and behaviour which do not apply for out-groups. Hence external stakeholders can be treated with mistrust (Chen 2006, p.1731) and even immoral behaviour towards them which is then “justified” by the in- and out-group order.

If a Confucian approach shall present a serious option to other approaches, a more detailed concept is needed, which fully reflects the effect of the concept on reality. Additionally negative aspects need to be reduced or if possible to be skipped completely.

On the other hand, even if a Confucian approach can be worked out, there still remains the general problem with virtue-based ethics. In this case Aristotelian and Confucian virtues share the same difficulties when applied as corporate ethics: virtues alone are not sufficient. They can guide people, without even being written down, but in an organisation there is a strong need for such guidelines of conduct to be recorded. The problem with virtues is simply that they have strong ambiguous tendencies. They are too vague to guide employee’s behaviour in a structured way, as it is required by established corporate ethics. Also some virtues might not be easily transferable to the present. In the end it is rather a general question whether virtue-based ethics have a future in today’s business world.


References

Chan, Gary Kok Yew. “The Relevance and Value of Confucianism in Contemporary Business Ethics.” Journal of Business Ethics 77 (2008): 347-360. Springer.

Chen, Yi Feng and Dean Tjosvold. “Participative Leadership by American and Chinese Managers in China: The Role of Relationships.” Journal of Management Studies 43.8 (2006): 1727-1725. Blackwell Publishing.

Herrmann-Pillath, Carsten. “Social Capital, Chinese Style: Individualism, Relational Collectivism and the Cultural Embeddedness of the Institutions-performance Link.” China Economic Journal 2.3 (2009): 325-50. Routledge, 1 Mar. 2010.

Ip, Po Keung. “Is Confucianism Good for Business Ethics in China?” Journal of Business Ethics 88 (2009): 463-76. Springer.

Robertson, Christopher J., Bradley J. Olson, K. Matthew Gilley and Yongjian Bao. “A Cross-Cultural Comparison of Ethical Orientations and Willingness to Sacrifice Ethical Standards: China Versus Peru.” Journal of Business Ethics 81 (2008): 413-425. Springer.

Romar, Edward J. “Virtue Is Good Business: Confucianism as a Practical Business Ethics.” Journal of Business Ethics 38 (2002): 119-31. Kluwer Academic Publishers.

Schönecker, Dieter, and Allen W. Wood. Immanuel Kant “Grundlegung zur Metaphysik der Sitten” Ein einführender Kommentar. Paderborn: Schöningh, 2007.

Warren, Danielle E., Thomas W. Dunfee and Naihe Li. “Social Exchange in China: The Double-Edged Sword of Guanxi.” Journal of Business Ethics 55 (2004): 355-372. Kluwer Academic Publishers.

Weber, James. “Using Exemplary Business Practices to Identify Buddhist and Confucian Ethical Value Systems.” Business and Society Review 114.4 (2009): 511-40. Blackwell Publishing.

 

Endnotes

[1]   Sun Zi (or Sun Tsu) is a popular representative of Chinese military strategy for instance.

[2]   Mencius was the most popular follower of Confucius’ teachings. He defended his philosophy after his death against competing movements. See http://plato.stanford.edu/entries/mencius/

[3]    Confucius’ Golden Rule is sometimes considered as resembling Kant’s “Categorical Imperative”, but the latter actually goes beyond the Golden Rule, see Schönecker & Wood 2007, pp.153

[4]   The original translation is somewhat different: “Do not impose on others what you yourself do not desire.” in Confucius Lun Yu, XV. 24., http://afpc.asso.fr/wengu/wg/wengu.php?l=Lunyu&no=415&lang=fr&m=NOzh

[5]   This example originates from the article “The Weizhi Group of Xian: A Chinese Virtuous Corporation” by Po Keung Ip published in Journal of Business Ethics 35 (2002): 15-26 as James Weber adds.

[6]   “The Chinese are more unwilling to report the unethical acts of supervisors compared to peers due to the high power distance of the Chinese (i.e. the Chinese are more accepting of hierarchy).” in Chan 2008, p.357;  Ip (2009) also describes this phenomenon as “sheepish compliance” and “Chinese ‘one-opinion-hall’”, p.469