J Bus Ethics (2013) 114:633642
DOI 10.1007/s10551-013-1709-z
Cross-Cultural Perceptions of Business Ethics: Evidence
from the United States and China
Michael J. Gift Paul Gift QinQin Zheng
Received: 1 March 2011 / Accepted: 1 October 2012 / Published online: 19 April 2013
Springer Science+Business Media Dordrecht 2013
Abstract A number of empirical studies have examined
business ethics across cultures, focusing primarily on dif-
ferences in ethical profiles between cultures and groups.
When managers consider whether or not to develop a
business relationship with those from a different culture,
their decision may be affected by actual differences in
ethical profiles, but potentially even more so by their
perceptions of ethicality in the counterpart culture. The
latter issue has been largely ignored in extant empirical
research regarding cross-cultural ethical profiles. In this
study, we employ a design that allows for a more complete
analysis of cross-cultural perspectives, examining both the
manner in which selected cultures view themselves and the
manner in which those same cultures perceive the ethical
profiles of others. To this end, we surveyed masters stu-
dents in business fields at several universities in the United
States and Chinatwo countries/cultures that engage in a
significant amount of business transactionsand examined
differences in personal ethical profiles across cultures,
differences in one groups ethical profile and the way it is
perceived by the other group, and differences in perceived
ethical profiles across cultures; that is, differences in how
groups view each other. Findings suggest meaningful
M. J. Gift
Faculty of Business Administration, University of Macau,
Macau, China
P. Gift (&)
Graziadio School of Business and Management, Pepperdine
University, 6100 Center Drive, Los Angeles, CA 90045, USA
e-mail: paul.gift@pepperdine.edu
Q. Zheng
School of Management, Fudan University, Shanghai, China
discrepancies in the ethical perceptions formed toward the
counterpart culture. Results support a role for ethical per-
ceptions in future research, and further examination and
inquiry into the development and adaptation of ethical
perceptions in cross-cultural business dealings.
Keywords Business ethics  Cross-cultural perceptions 
Ethical perceptions  Ethical vignettes  International
business  Survey instruments
Introduction
In recent years, the issue of business ethics has been of
growing interest to academics, practitioners, and govern-
mental agencies. This interest has been accentuated by
notable events that highlight the importance of ethical
conduct. In the past decade, there have been several busi-
ness scandals involving conduct which could be described
at best as unethical and at worst as outright illegal. Some of
the most famous scandals during this time were Enron,
WorldCom, and Tyco. However, others such as Global
Crossing, Adelphia Communications, ImClone (i.e., Mar-
tha Stewart), and Waste Management also suffered from
poor corporate governance processes and behavior that
lacked sound ethical standards. Further financial debacles,
such as the Bernie Madoff and Allen Stanford Ponzi
schemes and the Financial Crisis of 2008, have continued
to keep the ethicality of business managers in the spotlight.
Ethical profiles may affect behavior in more than one
way. The ethical profile that an individual brings to an
exchange directly affects that individuals behavior. In
addition, the individuals perception of the ethical profile
of the other party to an exchange can impact behavior.
Thus, ones actions can vary with their perception of the
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ethical profile of the other party even though true ethical
profiles are unchanged. For example, individuals may seek
out or avoid certain potential employers or suppliers due to
the perceived ethicality of management or business con-
tacts. Positive or negative media reports regarding man-
agement may cause significant swings in sales and job
applications even though the underlying ethicality of
management is unaffected.
Ethical differences are important to understand, but it is
not necessary for parties to have identical ethical profiles in
order to conduct business; it is not even sufficient (e.g., I
may not do business with you if I perceive your ethical
profile to be different from mine, even though the reality is
that our two profiles are very similar). One partys per-
ception of another may affect both the likelihood of
engaging in a business deal and the resources used to
facilitate, monitor, and police the arrangement.
A particular scenario with great potential for inaccurate
perceptions involves international business dealings
between two companies from different countries and cul-
tures. In this setting, actual and perceived differences
among parties can be exacerbated by, among other things,
cultural differences that inhibit effective understanding,
language constraints that inhibit effective communication,
and media reports that may sensationalize certain stories.
These types of decisions are becoming a regular occurrence
for todays business managers, having grown rapidly over
the past 2030 years as the costs of doing distant business
decline and trade agreements and organizations expand
(Soubbotina 2004).
This leads to the question, Do businesspeople tend to
have sound perceptions of the ethical profiles of their
counterparts in another country/culture? If their percep-
tions are unsound, business transactions that are otherwise
profitable and beneficial to society may not be undertaken
and resources are likely to be over or underutilized when
facilitating and monitoring transactions.
The main research questions we address in this paper are
as follows:
RQ 1 Do business ethical profiles differ across U.S. and
Chinese cultures?
RQ 2 Are perceptions of the ethical profiles of
counterparts in the other culture consistent with their
actual profiles?
RQ 1 has been examined by other researchers in the past.
Our results add to the literature in this regard. RQ 2 is the
primary research question of this paper.
To analyze our research questions, we surveyed masters
students in business fields in the United States and China.
The survey design is suggested as a new and more com-
plete approach for the study of multicultural ethical issues,
incorporating the role of ethical perceptions as well as
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M. J. Gift et al.
ethical profiles. We examine the relationship between own
ethical profiles and perceptions of ethical profiles of those
from different cultures/countries (China/United States). We
also study reported profiles across countries (similar to
other studies) and perceived profiles across countries. We
find weak differences in actual reported ethical profiles and
much stronger differences when perceptions are involved,
suggesting value in future examination of the role and
development of ethical perceptions in doing business and
across cultures.
In what follows, our use of the term ethical percep-
tions differs from some of the ways it has been used in the
past research. Jones (1991) states that ethical perception is
concerned with an individuals recognition of a moral issue
and the reality that he or she is a moral agent. We employ
the term in a different manner. We use ethical percep-
tion to indicate the ethical regime inferred by one person/
group concerning a separate person/group whose actions
and background are only incompletely observed and
experienced. Thus, our usage is focused on ones ethical
perception of others.
Prior Research
A number of studies have empirically examined ethical
profiles across different countries as well as across different
cultural groups within a country. Attia et al. (1999) com-
pare the ethical profiles of marketers in the United States
and those in three Middle Eastern countries: Egypt, Jordan,
and Saudi Arabia. They examine subjects on several
dimensions: relativism, idealism, and corporate ethical
values. In general, they find support for a statistical dif-
ference between Middle Eastern and American marketers
on the dimension of idealism, but no difference on rela-
tivism. As one would expect, the differences noted are
ascribed primarily to the different cultural backgrounds of
the study participants. The results were not strong in either
direction in the area of corporate ethical values.
Karande et al. (2000) examine the perceived moral
intensity, ethical perception, and ethical intention of
Malaysian and American marketing managers using four
scenarios. They find some differences and attribute them
to disparities between the United States and Malaysia in
terms of the moral climate established in the general
society, the organizational culture, and other cultural
factors. Their results are similar in spirit to Ahmed et al.
(2003) who examine the ethical profiles of business stu-
dents in China, Egypt, Finland, Korea, Russia, and the
United States. Using a modified version of prior research
instruments, they solicit responses to several questions
and scenarios from participants in each country. They
Cross-Cultural Perceptions of Business Ethics
present the results as indicating a level of awareness in all
countries about the importance of ethics but that there are
some statistically significant differences in these levels.
Christie et al. (2003) examine the ethical attitudes of
business managers participating in executive MBA pro-
grams in India, Korea, and the United States., looking for
differences in ethical attitudes. They find that culture has
a strong influence on ethical attitudes, in general, and on
certain specific ethical situations. Axinn et al. (2004)
examine the perceived importance of ethics and social
responsibility among American managers and American,
Malaysian, and Ukrainian MBA students. They separate
questions into shareholder/stakeholder dimensions. In
addition, they examine perceptions of relativism and
idealism. They note several statistically significant dif-
ferences in the levels of responses, but there do not seem
to be any underlying systematic drivers for these differ-
ences except that American managers tend to score lower
than any of the MBA student groups. However, only
American managers are examined. Managers from other
countries are not included in the study.
Each of the previous studies examines responses from
subgroups in different countries. They compare ethical
profiles of study participants across subgroups. They
provide interesting insights regarding the ethical profiles
of managers or students in each of the countries involved,
but they provide no insights regarding the manner in
which participants in one country perceive the ethical
profile of participants in another country.
Rashid and Ho (2003) examine ethical profiles across
ethnic groups within a single country. Specifically, they
investigate Malay, Chinese, and Indian managers and
executives in Kuala Lumpur, Malaysia. They show that
ethnic identification is associated with differences in scores
on 24 ethics-related questions.
The previous studies examine the effects of differences
in cultural/country backgrounds. Other characteristic dif-
ferences have also been examined. For example, Taylor
(2004) investigates the ethical profiles of students across
majors regarding downloading copyrighted music.
Although country and culture are not systematically
manipulated, the students belong to different groups in
terms of their major and their experience with down-
loading music. These factors prove to be statistically
significant in explaining different profiles toward ethical
issues in the music business. In addition, Persons (2009)
investigates the ethical profiles of business students across
characteristics such as gender, major, culture, and work
experience.
Examination of ethical profiles across cultures and
characteristics is certainly a worthwhile objective. But, are
the participants in these studies and the general business-
people they represent aware of these differences and do
635
they have an accurate understanding of them?1 Each party
to an international business transaction is fully informed
only on their own ethical dimensions. They have imperfect
information regarding the ethical profile of their trading
partner and therefore must form a perception. Thus, the
only information the parties know for certain is their own
ethical profile and their perception of profile the counter-
party brings to the transaction.
To our knowledge, no study to date has directly exam-
ined how members of one country/culture perceive the
ethical profile of members of another country/culture. Ca-
gle et al. (2008) survey undergraduate finance students to
examine their beliefs about ethical behavior and their
perceived ethical profiles of businesspeople. Comparisons
are made between male and female responses and
responses before and after ethical discussions in class.
Joseph et al. (2009) examine perceptions of the ethical
standards of others in the context of U.S. student percep-
tions of other U.S. students. These studies provide insights
into the differences between ethical assessments and the
perception of others, but the subjects were similar to each
other in terms of country and culture.
Data and Methodology
We examine the ethical profiles of study participants from
China and the United States as well as the perceived pro-
files of each of these groups toward their cross-cultural
counterparts. Thus, our study is focused on the differences
in profiles and perceptions when parties vary greatly with
regard to country and culture.
Data
During the spring and summer of 2010, we surveyed 265
MBA and other business masters students from two uni-
versities in China and two universities in the United States.
We selected China and the United States as the cross-cul-
tural counterparts due to (1) the significant volume of trade
between these two countries and (2) the amount of infor-
mation available through public channels concerning each
country. The first condition highlights the importance of
cultural and ethical awareness of the other party. The
second condition helps to ensure that participants in one
country have at least some idea, whether sound or unsound,
about the ethical and cultural profiles of individuals in the
other country.
1
In prior research, masters or undergraduate business students are
frequently used a proxy for business professionals.
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Table 1 Total number of completed surveys
Full sample Filtered sample
China 116 112
United States 149 99
Total 265 211
The filtered sample excludes students who did not grow up in the
country in which the survey was administered
Sample sizes for each country are shown in Table 1. The
full sample was filtered to exclude students who did not
grow up in the country in which the survey was adminis-
tered. In other words, the filtered sample only includes
students who grew up in the United States and took the
survey in the United States, and students who grew up in
China and took the survey in China. This filtering of the
data decreased our sample size to 211 students, 112 in
China and 99 in the United States.
In addition to the survey questions, we collected
demographic and background data on each participant
(hereinafter referred to as characteristics). The charac- question prior to answering it.3
teristics are indicator variables (0,1) measuring whether the
participant is an MBA student, has an undergraduate
business degree, has taken an ethics course, has at least
6 years of business experience, has had business interac-
tions with domestic companies, has had business interac-
tions with a company from the counterpart country, is at
least 25 years old, and is a male. A final characteristic
measures participants level of interest in business ethics
on a 5-point Likert scale, where 1 is no interest, 3 is
moderate interest, and 5 is very interested. Table 2 presents
summary statistics of these characteristics. Students in the
U.S. and China samples are very similar with respect to
their mean in six of the nine characteristics. There are
significant differences in the proportion enrolled in an
MBA program, the proportion that have had business
interactions with a domestic company, and the proportion
that have had business interactions with a company from
the counterpart country.
Methodology
Table 3 lists the twelve questions used for our survey
instrument. Each question was answered on a 7-point
Likert scale, where 1 is strongly disagree, 2 is disagree, 3 is
slightly disagree, 4 is no opinion, 5 is slightly agree, 6 is
agree, and 7 is strongly agree. We chose a 7-point Likert
scale to be consistent with the survey best practices of
Dillman et al. (2009).
Questions 14, 6, and 8 are from the perceived role of
ethics and social responsibility (PRESOR) scale of
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M. J. Gift et al.
Singhapakdi et al. (1996). Questions 7 and 9 are from
Cagle et al. (2008). In question 7, we substituted the phrase
ethically-questionable for the original word shady,
believing this to be less ambiguous with respect to its
ethical implications for nonnative English speakers.
Questions 14 and 69 are general ethics/corporate social
responsibility (CSR) questions. Questions 5 and 10 are
from Ludlum and Mascaloinov (2004), who base their
questions off of a 2002 National Association of Scholars
(NAS) and Zogby market research poll of 401 college
seniors to examine the issue of relativism. For questions 11
and 12, we developed two business scenarios, also known
as ethical vignettes. Question 11 is based off of Persons
(2009) and question 12 is our own.
The twelve questions have both positive and negative
valences.2 The vignettes standout on the survey due to their
relative length compared to the other ten questions. For this
reason, we put these questions last. We mixed up the
remaining NAS/Zogby questions and ethics/CSR questions
by origin and by valence. This was done in order to max-
imize the need for participants to read and understand each
Each participant answered the 12-question survey twice.
First, they were asked to answer the twelve questions in a
manner that reflected their own personal opinions. Next,
they were asked to answer the same twelve questions based
on what they believed the opinions would be of a typical
businessperson from the counterpart culture. Using this
design, China subjects completed the survey twice, once
reflecting their own ethical profile (denoted CC) and once
reflecting their perception of the U.S. ethical profile
(denoted CU). U.S. subjects also completed the survey
twice, once reflecting their own ethical profile (denoted
UU) and once reflecting their perception of the China
ethical profile (denoted UC). In addition to each partici-
pants answers to 24 questions, we also know their survey
country as well as characteristics such as their age, gender,
degree program, work experience, domestic and counter-
part business experience, and interest in business ethics.
Given the design of the survey, we are able to make the
comparisons represented in Fig. 1.
Comparison A Analyzes ethical profiles across coun-
tries, UU and CC. This analysis has been performed in
previous studies across cultures and groups. The results
directly relate to RQ 1.
Comparison B Analyzes each countrys perception of
the other, UC and CU.
2
i.e., A more ethical response is a higher number for some and a
lower number for others.
3
This should reduce the likelihood that a participant falls into an
answer pattern.
Cross-Cultural Perceptions of Business Ethics 637

Table 2 Summary statistics for survey participants in the United States and China
Characteristic United States China
Mean S.D. Mean S.D. Min. Max.

MBA .95 .22 .58 .50 0 1

Business degree .45 .50 .50 .50 0 1
Ethics class .62 .49 .64 .48 0 1
Business experience C6 years .24 .43 .28 .45 0 1
Domestic business interactions .94 .24 .73 .44 0 1
Business interactions with counterpart .23 .42 .48 .50 0 1
Age C25 years .76 .43 .82 .38 0 1
Male .64 .48 .56 .50 0 1
Ethics interest (5-point scale) 3.80 .84 3.72 .89 1 5
Sample size is 99 in the United States and 112 in China. The characteristics are indicator variables measuring whether the participant is an MBA
student, has an undergraduate business degree, has taken an ethics course, has at least 6 years of business experience, has had business
interactions with domestic companies, has had business interactions with a company from the counterpart country, is at least 25 years old, and is
a male. A final characteristic measures participants level of interest in business ethics on a 5-point Likert scale, where 1 is no interest, 3 is
moderate interest, and 5 is very interested. Means of MBA and domestic and counterpart business interactions are significantly different across
countries at the 1 % level

Table 3 Survey questions

Q.1 Good ethics is often good business.
Q.2 If survival of the business enterprise is at stake, then ethics and social responsibility must be ignored.
Q.3 If the stockholders are unhappy, nothing else matters.
Q.4 The most important concern for a firm is making a profit, even if it means bending or breaking the rules.
Q.5 There are clear and uniform standards of right and wrong by which everyone should be judged.
Q.6 Efficiency is much more important to a firm than whether or not it is seen as ethically or socially responsible.
Q.7 It is sometimes necessary for a company to engage in ethically-questionable practices because its competition is doing so.
Q.8 Corporate planning and goal setting sessions should include discussions of ethics and social responsibility.
Q.9 An employee may need to lie to a customer/client to protect the company.
Q.10 What is right and wrong depends on individual values and cultural diversity.
Q.11 The CEO of a publicly-traded company is concerned about sales being much lower than expected this year. The CEO decides to offer
abnormally large discounts to a few important customers on the condition that the products be shipped before the end of the year so the
sales will be included in this years income statement.
Do you agree or disagree that this is acceptable?
Q.12 The CEO of a publicly-traded company instructs the Marketing department to promote the companys products as The Best in the
market even though the CEO knows that some competitors products are better.
Do you agree or disagree that this is acceptable?

Comparison C C1 analyzes the U.S. perception of China Results

and the U.S. ethical profile, UC and UU. C2 analyzes
Chinas perception of the United States and Chinas
ethical profile, CU and CC. These comparisons answer
the question, Do I perceive a considerable difference
between your ethical profile and mine?
Comparison D D1 analyzes the U.S. perception of
China and Chinas ethical profile, UC and CC. D2
analyzes Chinas perception of the United States and the
U.S. ethical profile, CU and UU. These comparisons
answer the question, Is my perception of your ethical
profile considerably different from your ethical profile?
The results directly relate to RQ 2.
Validity and Reliability
Questions 14 and 69 are constructs designed to capture
beliefs regarding business ethics/CSR. As previously
discussed, these questions were adapted from and,
therefore, validated by prior researchers. To remain
consistent with other studies, Cronbachs alpha is used to
assess reliability. U.S. profiles (UU) have an alpha of .74,
China profiles (CC) have an alpha of .72, U.S. percep-
tions of China (UC) have an alpha of .90, and China
perceptions of the United States (CU) have an alpha of

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Fig. 1 Survey design structure
.82. These alpha levels indicate a reasonable level of
reliability.
Comparisons A and B
Comparisons A and B are constructed from an OLS
regression of
Qscore a b1 Country b02 X e ences between the two groups. In comparison A, there is
where Qscore is the relevant questions rating, country is
an indicator variable distinguishing between U.S. and
China participants, and X is a vector of participant char-
acteristics including indicator variables for male, age C25,
business interactions with counterpart, and ethics interest
C4. Age is a commonly included characteristic variable
and the other three consistently measured as significant in
various regression specifications during pretesting. Inclu-
sion of these characteristics in the regression analyses
controls for confounding factors associated with different
proportions of these variables across samples. For example,
one would want to control for the effect of gender if it had
a significant effect on ratings, and 75 % of the Chinese
sample were male, while 80 % of the U.S. sample were
female. The parameter of interest is b1.
Results for comparisons A and B are presented in
Table 4. Comparison A is similar to most of the previous
cross-cultural studies, where one cultures ethical profile is
compared to that of another culture. It estimates b1 for each
question using UU and CC data. The eight ethics/CRS
questions (of positive and negative valence) show some
statistical support for a difference between the two cultures,
but the support is rather weak with b1 significant for only
three of the eight questions at the 5 % level. In general,
U.S. participants tend to rate more in the direction of
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M. J. Gift et al.
stricter ethical standards compared to Chinese participants.
However, the difference in perceptions in comparison B
(CU - UC) is much more striking, with differences for
five of the eight questions significant at the 1 % level.
Thus, participants across cultures appear to be slightly, if at
all, different with respect to ethical profiles and markedly
different with respect to perceptions of the counterparty.
The NAS/Zogby questions relate to relativism. The two
questions are similar but are being asked from two different
perspectives (positive and negative). Interestingly, in this
case, we observe a significant difference in Q.5 and no
significant difference in Q.10. Thus, there is some support
for the position that Chinese participants are more open to
accepting moral relativism, but this conclusion must be
tempered with the awareness that it is not supported by
results from both NAS/Zogby questions, only one of them.
This theme holds throughout all of the analyses of the
NAS/Zogby questionswe sometimes see significant dif-
ferences in the positive version (Q.5) and never see a sig-
nificant difference in the more negative version (Q.10).
The ethical vignettes of Q.11 and 12 were designed to
portray specific situations where actions that are neither
illegal nor unusual might have a suggestive ethical
dimension. They are somewhat incomplete and do not
provide a clear picture of their ethicality. Answers to these
questions provide information regarding baseline differ-
not a significant difference between participants in China
and the United States for either of the ethical vignettes.
This provides some assurance of a common baseline
between the two groups and of the qualification of the
vignettes for use in sensitivity analyses.
Sensitivity Analyses
The regression results derive from performing statistical
analyses on ordinal survey data from a Likert scale of 1
through 7. Treating ordinal data as cardinal data can
sometimes lead to faulty inference. For this reason, we
perform three types of sensitivity analysis to support the
assertion that our analysis is not misleading. These analy-
ses are more sophisticated and represent the current state-
of-the-art in the analysis of ordinal survey data.
The first sensitivity analysis uses an ordered probit
model to estimate comparisons A and B, respectively.
Ordered probit models are used by researchers and mar-
keting professionals to analyze ordinal survey data of the
type we have in this study (Greene and Hensher 2010). The
results in Table 4 are qualitatively similar to the original
results when using an ordered probit model. In other words,
the exact same signs of b1 are obtained as the original
regression model for all twelve questions and with no loss
of significance.
Cross-Cultural Perceptions of Business Ethics 639

Table 4 Regression results of comparisons A and B

Model: Qscore a b1 Country b02 X e A B

(UU - CC)1 (CU - UC)2

Positive valence questions

Q.1 Good ethics is often good business 1.13** .36
Q.8 Corporate planning and goal setting should include ethics .29 1.46**
Negative valence questions
Q.2 If the companys survival is at stake, ethics must be ignored -.38* -1.07**
Q.3 If stockholders are unhappy, nothing else matters -.43 -.27
Q.4 The most important concern is making a profit -.36 -.93**
Q.6 Efficiency is more important than a companys ethics reputation -.31 -.95**
Q.7 Questionable practices okay, if the competition is doing so -1.70** -.11
Q.9 Employees may need to lie to protect the company -.31 -.88**
NAS/Zogby questions
Q.5 There are clear, uniform standards of right and wrong .87** .08
Q.10 Right and wrong depends on individual values and culture -.19 -.11
Vignettes
Q.11 Abnormally large price discount at year-end .33 -.97**
Q.12 Marketing product as The Best -.23 -1.25**
For each question of comparison A, the statistic is the OLS regression estimate of b1 using U.S. ethical profile (UU) and China ethical profile
(CC) data. For each question of comparison B, the statistic is the OLS regression estimate of b1 using China perceptions of the United States
(CU) and U.S. perceptions of China (UC) data. Participant characteristics (X) are male, age C25, business interactions with counterpart, and
ethics interest. ** and * indicate significance at the 1 and 5 % levels, respectively

A potential concern when conducting surveys across
populations with strong cultural differences is differential
item functioning (DIF). DIF arises when persons from
different cultures are not comparable with respect to their
survey responses on a given question.4 A method of con-
trolling for DIF involves use of anchoring vignettes, which
can transform the answers of different individuals to the
same or comparable scale. For the second sensitivity
analysis, we perform the simple non-parametric method of
King et al. (2004) on each of the eight ethics/CSR ques-
tions of comparison A (UU and CC). The results are his-
tograms, and when the DIF-transformed histograms are
compared to standard histograms, DIF is not supported.
The third sensitivity analysis performed is the para-
metric method of King et al. (2004). This method is best
described as a generalized ordered probit model that allows
for threshold heterogeneity and DIF. We use this method
on each of the eight ethics/CSR questions of comparison A.
Once again, we obtain the exact same signs of b1 as our
original regression model, with no loss of significance.
Thus, all three sensitivity analyses have results that are
qualitatively similar to those of the original, simple
regression model. They also support the notion that DIF is
4
For example, you and I have the same underlying level of
agreement with a question, but you rate it as a seven and I rate it as a
five.
not a meaningful concern in our survey. We chose to dis-
play results from the original model since they are easier to
implement and interpret and still lead to sound inference,
according to the sensitivity analyses.
Comparison C
Comparisons C1 and C2 are constructed as the mean value
of the difference between participants perception of the
other culture and their own ethical profile. C1 is for U.S.
students (UC - UU) and C2 is for Chinese students
(CU - CC). These comparisons examine the perceptions
one country has toward another relative to their own pro-
file. They answer the question, Do I perceive a consid-
erable difference between your ethical profile and mine?
The results are shown in Table 5. They strongly suggest
that individuals in each country perceive those from the
counterpart country as having a substantially different
ethical profile from their own. Participants in both coun-
tries perceive those from the other country as being less
ethical than themselves on all measures (ethics/CSR
questions and vignettes), although the difference appears to
be a bit more muted in China. These differences will not
prevent international business transactions or even misal-
locate business resources so long as the perceptions are
sound, which is the next comparison.

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Table 5 Statistical results of comparisons C1 and C2

C1 C2
(UC - UU)1 (CU - CC)2

Positive valence questions

Q.1 Good ethics is often good business -1.79** -.29
Q.8 Corporate planning and goal setting should include ethics -2.17** -.38*
Negative valence questions
Q.2 If the companys survival is at stake, ethics must be ignored 2.31** .84**
Q.3 If stockholders are unhappy, nothing else matters 1.72** 1.00**
Q.4 The most important concern is making a profit 2.71** 1.45**
Q.6 Efficiency is more important than a companys ethics reputation 2.27** 1.02**
Q.7 Questionable practices okay, if the competition is doing so 2.28** .50**
Q.9 Employees may need to lie to protect the company 1.74** .54**
NAS/Zogby questions
Q.5 There are clear, uniform standards of right and wrong -.29 .62**
Q.10 Right and wrong depends on individual values and culture .23 -.14
Vignettes
Q.11 Abnormally large price discount at year-end 1.19** .66**
Q.12 Marketing product as The Best 1.63** .08
For each question of comparison C1, the statistic is the mean difference between U.S. perceptions of China (UC) and the U.S. profile (UU). For
each question of comparison C2, the statistic is the mean difference between China perceptions of the United States (CU) and the China profile
(CC). ** and * indicate significance at the 1 and 5 % levels, respectively

Comparison D Summary and Conclusions

Comparison D is constructed from an OLS model with the
same structure as was used for comparisons A and B. D1
uses U.S. perception and Chinese profile data (UC - CC),
while D2 uses Chinese perceptions and U.S. profile data
(CU - UU). They examine the perceptions one country
has toward another as compared to the other countrys
actual profile. These comparisons answer the question, Is
my perception of your ethical profile considerably different
from your ethical profile? The results are noteworthy and
appear in Table 6.
Estimates suggest that individuals in each country have
considerable error in their perception of the ethical profile
of those from the counterpart country. Every ethics/CSR
question has an estimate that is significant at the 1 %
level, except for one which is significant at the 5 % level.
As might be expected, each culture errs on the side of
perceiving the other as being less ethical than their actual
profile reveals. These results are meaningful in that if
ethical perceptions are unsound between cultures engag-
ing in a swiftly growing number of business transactions
and relationships, there is likely value in exploring the
foundation, formulation, and adaptation of such percep-
tions over time, and it also suggests that perceptions be
considered in future cross-cultural studies of ethical
profiles.
This paper proposes a new dimension to the traditional
approach of empirical studies of cross-cultural ethical
issues. Ones perception regarding the ethicality of another
party may have an impact on ones willingness to engage in
international business relationships, the decision to do
business in one country versus another, and the business
resources allocated to facilitating, monitoring, and policing
such arrangements. When aggregated, these business
decisions can have significant economic impacts on the
respective countries and, thus, are worthy areas for future
study in the field of business ethics.
Our study employs a new design in the examination of
multicultural ethical subject matter. It yields some inter-
esting findings and insights, each of which has potential
repercussions in the continuing expansion of China/U.S.
trade, in particular, and international business, in general.
Our first finding is that there does not appear to be a
consistent difference in the ethical profiles of each culture.
Comparison A shows some support for differences, but it is
weak at best. However, when ethical perceptions are
examined (comparison B), the differences become consis-
tent and considerable. This suggests a high potential value
of understanding the formulation of these perceptions and
developing mechanisms to better align perceptions with
reality.

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Cross-Cultural Perceptions of Business Ethics 641

Table 6 Regression results of comparisons D1 and D2

Model: Qscore a b1 Country b02 X e D1 D2

(UC - CC)1 (CU - UU)2

Positive valence questions

Q.1 Good ethics is often good business -.72** -1.49**
Q.8 Corporate planning and goal setting should include ethics -1.88** -.72**
Negative valence questions
Q.2 If the companys survival is at stake, ethics must be ignored 1.89** 1.21**
Q.3 If stockholders are unhappy, nothing else matters 1.25** 1.40**
Q.4 The most important concern is making a profit 2.35** 1.78**
Q.6 Efficiency is more important than a companys ethics reputation 1.95** 1.32**
Q.7 Questionable practices okay, if the competition is doing so .54* 2.14**
Q.9 Employees may need to lie to protect the company 1.40** .83**
NAS/Zogby questions
Q.5 There are clear, uniform standards of right and wrong .57* -.23
Q.10 Right and wrong depends on individual values and culture .04 .11
Vignettes
Q.11 Abnormally large price discount at year-end 1.56** .26
Q.12 Marketing product as The Best 1.32** .31
For each question of comparison D1, the statistic is the OLS regression estimate of b1 using U.S. perceptions of China (UC) and China ethical
profile (CC) data. For each question of comparison D2, the statistic is the OLS regression estimate of b1 using China perceptions of the United
Sates (CU) and U.S. ethical profile (UU) data. Participant characteristics (X) are male, age C25, business interactions with counterpart, and ethics
interest. ** and * indicate significance at the 1 and 5 % levels, respectively

Another finding is that those in one culture tend to
perceive the ethical profiles of others differently than the
way they view their own ethical profile (comparison C) and
differently than the actual profile of others (comparison D).
The results of comparison D directly address our primary
research question about the soundness of one group/cul-
tures ethical perceptions of another. These differences
could be the potential impetus for reservations, misunder-
standings, and conflicts in international business dealings.
This highlights the importance of informed international
engagements. One should not simply look for the lowest
price or the highest potential volume. Parties to interna-
tional relationships and transactions must make the
investment of truly learning about their trading partners,
the environments in which they operate, and the cultural
and social structures that help to define their ethical pro-
files. Investments of this type will help to minimize mis-
perceptions on both sides and to maximize the economic
welfare therefore derived.
Based on the available information, it is difficult to
ascribe any causal rationale to the observed phenomena in
comparison D. Are the inaccuracies of ethical perceptions
due to human nature, a lack of information, or bad infor-
mation? Perhaps it is as simple as the uncertainty factor in
their knowledge of their cross-cultural counterparts. Per-
haps it is due to the attention paid by the media when a
negative story involving the other culture arises (e.g., the
Foxconn story in the United States) and the lack of atten-
tion paid when a positive story arises. Perhaps it is due to
biases or stereotypes. We do not provide a theoretical
framework to address the underlying cause of the observed
phenomenon in this paper. The three main contributions of
this paper are as follows: (1) To make a case for the
inclusion of ethical perceptions in empirical studies of
cross-cultural ethical profiles, (2) to introduce a design for
examining multicultural ethical issues while incorporating
ethical perceptions, and (3) to document some apparent
differences between the United States and China. The study
sheds light on the feelings and perceptions that participants
in each country tend to bring to the table when they do
international business. Improving our understanding of
these perceptions can help businesspeople make better
decisions and society achieve more beneficial transactions.
Future Research
This study leads to several other avenues of further inquiry.
It raises the question of how perceptions of the ethicality of
others are formed. How are they affected by new and dif-
ferent types of information? Might development of inter-
national best practices or a universal code of conduct help
to align perceptions with reality? One could also examine
how ethical perceptions appear to function between

123
642
countries other than the United States and China. How do
perception differences change when a foreign culture is
less well-known or receives less media coverage? To what
degree do potential business partners allow their percep-
tions (correct or incorrect) to influence their actual business
decisions? These questions, relating to perceptions of the
ethicality of international business partners, have been
largely missing in the extant literature.
The design used in this study may provide a reasonable
approach to guide future research in this area. Our partic-
ular sample is drawn from a population of business mas-
ters students in each country, serving as a proxy for
businesspeople, who are harder to survey. We do not
suggest that they are a perfect proxy, but they can still
provide valuable insight as can be seen in the other pub-
lications which use this technique (see the literature review
in Sect. 2). Future researchers may wish to investigate
other sample populations to see whether the results are
replicated or contradicted. While all of the above questions
go beyond the scope of this paper, they certainly are
deserving of attention in the future.
Acknowledgments We would like to thank every student who
participated in the survey, all the professors who allowed us access to
their students, and William McPherson and Chung-Shing Lee for
valuable assistance with data collection. We are grateful for the
extremely helpful comments and suggestions from conference par-
ticipants at the 3rd World Business Ethics Forum, seminar partici-
pants at the Graziadio School of Business and Management at
Pepperdine University, and two anonymous referees. Any remaining
errors are our own.
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