Ethical decision making in complex host country settings : A study of Swedish managers in China

Abstract: Abstract: In this study we have turned to the complex host-country environment of China to investigate Swedish companies doing business in a highly corrupt business context to see which dilemmas managers meet and their approaches to these dilemmas. The importance of adapting to the local culture and environment is something researchers stress in the business literature. In the beginning of our study we ask if the same statement is true when it comes to ethical decision making and from the findings one can see that this is true to a certain degree. Almost half of our respondents have in some way pushed their ethical limits for what is acceptable business practice despite of the uniform view that corruption is something the companies do not want to participate in. For the companies that have been able to create an organization which has been able to resist unethical host country pressures we have found several important factors. These have been the importance of senior management staying long periods of time, role models living the values, an understanding from HQ about the local subsidiary, realistic performance targets, reinforcement of ethics initiatives, and last but not least control. However we have also found that organizations need to be aware that different departments will meet different ethical dilemmas. Therefore the ethical initiatives need to be adapted to the foreign firms’ situation depending on where in the value chain the company is located. Keywords: corruption, ethical dilemmas, ethical approaches, local business culture, China, Sweden, managers