Business Ethics in East Asia

Examples in Historical Context

Chris Rowley, Ingyu Oh

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9781315455716
• Topic: Business
• Subtopic: Business General
• Index: Business

For organisations and management the role of business ethics is of key importance, but to what extent business ethics are actually new or fashionable or universally applicable are interesting questions. Asia has been the site of contests between competing economic and ethical views of how economic norms and institutions are organized. This book examines the evolutionary similarities and differences of institutionalizing business ethics in Asia in a historical context and in comparison to better-explored business ethics literature, both empirically and theoretically.

This collection uses both historical and contemporary cases in Japan, Korea and China to show that these countries have tried to balance their traditional business ethics norms and values with those that have been introduced from the West. Underpinning the case studies is the fact that these countries have historically pursued ethical mandates in running private corporations, although corruptive practices were also rampant during different historical periods.

Business ethics and the role of context: institutionalism, history and comparisons in the Asia Pacific region

Chris Rowley^a,b,c,d and Ingyu Oh^e

^aCass Business School, City University, London, UK; ^bIHCR, Korea University, Seoul, Korea; ^cInstitute of Asia and Pacific Studies, Nottingham University, Nottingham, UK; ^dGriffith Business School, Griffith University, Nathan, Australia; ^eResearch Institute of Korean Studies, Korea University, Seoul, Korea

ABSTRACT

The role of business ethics is important and key to organizations and management. To what extent business ethics are actually new or fashionable or universally applicable is an interesting question. Business ethics can usefully use the explanatory power of New Institutionalism and Modes of Exchange as Asia has been a rich ground of contests between competing economic and ethical views of how economic norms and institutions are organized. Explaining the evolutionary similarities and differences of institutionalizing business ethics in this region was the context of history and comparisons to better ground business ethics literature, both empirically and theoretically.

Introduction

The role of business ethics is important and key to organizations and management, including in human resource planning, such as with job applications (see Ramasamy, Rowley, and Yeung 2016). To what extent are business ethics actually new or fashionable or universally applicable is an interesting question. This collection on business ethics in East Asia over history, from early to global capitalism, derives from an international workshop organized in Seoul, South Korea in March 2015. The theme was to investigate the explanatory power of new institutionalism (NI), especially, ideational and/or cognitive institutionalism as advanced by North (2005) and the ‘manorial’, ‘market’, ‘entrepreneurial’ and ‘mercantile’ modes of exchange (MOE) of Lie (1992) in expounding the historical evolution of business ethics. We found this theme a timely and interesting one because in the Asian economies, business ethics are considered to be still under-developed compared to in Western economies. As Japan, Korea and China took a leadership role in Asia in developing their economies, it was also expected by many that they should also take a leading role in converting businesses to more ethical and responsible ones for their stakeholders. However, during the last three decades of economic turmoil with bubble bursts and recurring financial crises, reforms of business ethics have not yielded such expected results, despite continuous governmental and social efforts by many concerned groups and parties. For one thing, none of the Japanese, Korean or Chinese organizations and other economic institutions in our collection have not really fully adopted Western norms of business ethics and beyond symbolic gestures and PR stunts.

While Western norms of business ethics, corporate social responsibility (CSR) and corporate governance are not fully adopted in Asia at the moment, the historical development of capitalism and other MOE reveal that Asia has been a rich ground of contests between competing economic and ethical views of how economic norms and institutions are organized. Japan, Korea and China had all experimented with various degrees of MOE types in their own domestic markets and/or in their trade relations with neighbouring and long distance partners. How do we explain this rich fertile ground of ideological contests, either in favour of or opposition to one particular norm of business ethics over another? To answer the question in the light of applying its solution to the current debates of business ethics, either in favour of or in opposition to the full adoption of Western norms, we wanted to examine the value of NI and MOE theories in explaining the evolutionary similarities and differences of institutionalizing business ethics in this region. In this, what has been taken as important to resolving this problem was the context of history and comparisons to better ground business ethics literature, both empirically and theoretically.

Grounding the debate and analysis

We can locate and ground our collection and NI and MOE within earlier theories and debates. These include universalism’s convergence versus contingency’s divergence. The central proposition of universal-type theories is of a world-wide tendency for political, social, economic, technological and market forces to push national systems towards uniformity and convergence of practices assumed to be universally applicable and transferable. Such ideas have a long antecedence (e.g. Kerr et al. 1962) and regularly re-emerge. Earlier ideas of the ‘one best way’ at country level include France with indicative planning in the 1960s and Scandinavia with corporatism in the 1980s as well as in some strands of the Excellence (Peters and Waterman 1982), Fordism, Flexible Specialization (Rowley 1994), Lean Production and Toyotism (Womack, Jones, and Roos 1990) and Japanization (Oliver and Wilkinson 1992) and post-cold war (Ohmae 1990; Fukuyama 1992) literatures.

Linked to this area is globalization, with its singular world view of market unification and institutional convergence leading to the ‘one best way’ in a range of areas. Theories from different subject areas explain globalization and Robinson (2007) reviews these as: Global Capitalism, Network Society, Space and Place, Transnationality and Transnationalism, Modernity and Postmodernity to Global Culture and World-Systems. World-Systems Theory (Wallerstein 1974, 2004) is historical and multi-disciplinary, emphasizing: world-systems rather than nation states; historical processes as they unfold over long time periods; and combining distinct bodies of knowledge. Thus, the world-system is a social reality comprised of inter-connected firms, households, classes and identity groups of all kinds with key moments significant in the development of the modern world-system, such as the sixteenth-century development of a capitalist world economy. However, critics suggest world-systems collapse cultural forces into political systems and the independent influence of cultural forces cannot be reduced to different characteristics of political systems.

Many remain sceptical of such universalistic theories. This literature similarly has a long lineage (see Woodward 1965; Lawrence and Lorsh 1967; Hofstede 1980, 1984). Comparisons of the UK, including not only Japan (Dore 1974), but also Germany and France, often found national differences in areas such as business organization and structure, management and use of technology. Similarly, System, Society and Dominance Theory (Smith and Meiksins 1995) organized influences on work organization in a triad of: modes of production; institutional patterns; best practice or universal modernization strategies generated (diffused by the dominant society). This argued convergence was not likely as structural pressures were conveyed through and conditioned by the histories and cultural contingencies of nations, which complicated convergence pressures. Indeed, local actions were mediated through traditions at national level, so successive rounds of institutional reinvention are layered up each other, resulting in place-specific recombinant formations each with their own distinctive properties (Sorge 2005).

Other critiques of globalization include the literatures around capitalist variety (Hall and Soskice 2001; Hancke, Rhodes, and Thatcher 2007) and comparative capitalism (Berger and Dore 1996; Hollingworth and Boyer 1997; Kitschelt et al. 1998, Coates 2000; Boyer 2005; Crouch 2005). These detail the various ‘types’ of capitalisms they see existing. For example, capitalisms were distinguished by: Dore (2000) as ‘Stock Market’ or ‘Welfare’; Chandler (1990) as ‘Competitive Managerial’, ‘Personal’ or ‘Cooperative Managerial’; Gerlach (1992) as ‘Liberal’ or ‘Alliance’; Albert (1993) as ‘Neo-American’ or ‘Rhinish’; Lazonick (1990, 1991, 1998) as ‘Managerial’, ‘Propriety’ or ‘Collective’; and Amable (2003) as: ‘Market-based’, ‘Social-democratic’, ‘Continental European’, ‘South European’ and ‘Asian’. Harada and Tohyama (2012) produced a fivefold typology of Asian capitalism diversity: ‘City’ (Singapore and Hong Kong), ‘Insular Semi-Agrarian’ (Indonesia and Philippines), ‘Innovation-Led’ (Japan, Korea and Taiwan), ‘Trade-Led Industrializing’ (Malaysia and Thailand) and ‘Continental Mixed’ (China). Similarly, institutional diversity produced five groups of Asian economies in terms of impacts on firm innovation activities (Tohyama and Harada 2013) and four clusters of Asian welfare capitalisms (Tohyama 2015).

However, the comparative capitalisms literature has been criticized for static analysis and bias towards predicting institutional stability, rather than change, points made in earlier critiques of institutional pluralist industrial relations analysis and theory. So, Deeg and Jackson (2007) introduced change into comparative capitalism at three levels. First, micro, with less deterministic views incorporating greater understanding of how actors reshape institutions as both constraints and resources for new courses of action incrementally changing institutions. Second, meso, to specify the linkages among institutions and institutional domains and how change in one affects the other. Third, macro, to incorporate views of national and international politics and the impact of rule-breaking processes that govern institutional reform. Another alternative includes ‘Variegated Capitalism’ with its concern with ‘…the combined and uneven development of “always embedded” capitalism, and the polymorphic interdependence of its constituent regimes’ (Peck and Theodore’s 2007, 733).

Other related models of relevance to the context in which business ethics exist and operate include business systems (Whitley 1992, 2007, 2014; Redding 2005). Whitley (1992) used a threefold framework of impacts from: ‘Firms’ (management styles and structures, decision-making processes, owner–employee relations, patterns of growth and development); ‘Markets’ (customer, supplier and inter-firm relations, financial sector and market and industry development)’; ‘Societies’ (social influences on business evolution such as education, systems of power and status and family structures) to examine Japan, Korea, Taiwan and Hong Kong. Whitley (1999) detailed three types of North East Asian capitalism: ‘Fragmented’, ‘State-organised’ and ‘Collaborative’.

Witt and Redding (2014) covered various Asian examples, importantly arguing theories needed to incorporate ‘…social capital, culture, informality and multiplexity’ and ‘…variations in the extent of informality in a business system and its interplay with formal institutions’ (p.686). By social capital, they meant ‘trust’, both interpersonal or relational, as well as institutionalized or system (with triple components: control; trust; and morality) trust. Their framework includes the role of the state, financial system, ownership and corporate governance, internal structure of the firm, employment relations, education and skills formation, inter-firm relations and social capital. This framework was used to organize country descriptions, including Vietnam (Quang and Rowley 2014).

Thus, we see universalism constrained and diversity remaining for several reasons. Countries are at different stages of industrial and economic development and have distinctive political–economic frameworks, institutions and cultural features and value systems. Intra-national heterogeneity exists via organizational decentralization and flexibility and gaps between stated institutional frameworks and practice realities. The spread, take-up, operation and configuration of technology, with alternative solutions to common problems, varied. Furthermore, we argue, comparative approaches should assume economic relationships and activities ‘… are socially constructed and institutionally variable …’ and ‘… vary significantly between societal contexts’ (Whitley 1999, 5). In short, we show that the social, cultural, institutional, economic and political landscapes over which business ethics is constructed, exists, is understood and operates, variy.

Overview

We provide a diverse group of overviews, both theoretical and issue based (covering Indonesia, Singapore as well as Japan, Korea and China) and historical (covering Edo period, early industrialization and Meiji Restoration Japan, Choseon dynasty Korea) and contemporary sectors (horse racing, music and educaton) and topics (shareholder activism, socially responsible investing) case study examples. We now provide a tabular overview of our collection to aid synthesis and readers. (Table 1). The common themes running though our collection can be quickly and easily seen. These include business ethics grounded in historical and comparative contexts and the use of NI and MOE to aid explanatory analysis. We now detail the individual contributions.

First, Lie, who originally introduced MOE theory, starts with a theoretical caveat in attempting to explain the evolutionary success of the MOE in East Asia during the last two centuries. This argues people must ground their political economic reasoning within the three critical elements of history, power and critique. However, these are general ideas that have been given short shrift in the master narratives that dominate discussions of global political economy, including NI. He continues to warn that it is imp...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Citation Information
• Acknowledgement
• 1. Business ethics and the role of context: institutionalism, history and comparisons in the Asia Pacific region
• 2. Political economy and business ethics
• 3. Work ethic formed by pedagogical approach: evolution of institutional approach to education and competitiveness
• 4. The state as a regulator of business ethics in Edo Japan: the Tokugawa authority structure and private interests
• 5. A sociocognitive approach to business ethics: lessons from early industrializing Japan
• 6. Confucian business ethics in Korea: pre-modern welfare state
• 7. Overcoming ethical issues through symbolic management, cultivating proponents and storytelling: the institutionalization of Korea’s horseracing industry
• 8. The institutionalization of Korean traditional music: problematic business ethics in the construction of genre and place
• 9. Understanding the rise and decline of shareholder activism in South Korea: the explanatory advantages of the theory of Modes of Exchange
• 10. Corporate governance and the institutionalization of socially responsible investing (SRI) in Korea
• 11. Educational inequality among Chinese urban schools: the business ethics of private schools
• 12. Relinquishing business ethics from a theoretical deadlock: the requirement for local grounding and historical comparisons in the Asia Pacific region
• Index