Kam-hon Lee, Gong-ming Qian, Julie H. Yu, and Ying Ho
Executive Summary
To gain marketing advantage and to avoid bureaucratic red tape in international markets, sometimes business executives engage in ethically questionable practices, such as trading favors (e.g., gift, commission, gratuity) with local officials and authorities. Such questionable activities induce moral and legal risks to business executives. In this article, Lee, Qian, Yu, and Ho examine the influence of the nature of the favor-trading proposal and the permissiveness of the operating business environment on executives’ risk-taking behavior. This study adopts MacCrimmon and Wehrung’s (1986) risk-taking paradigm to capture the full range of reactions (i.e., risk recognition, risk adjustment, and risky choice) of an executive to an ethically questionable business proposal. It explores the causes of Hong Kong executives’ questionable business practices in international marketing activities and further substantiates the findings in two replication samples (i.e., Mainland Chinese and U.S. executives).
The study’s primary participants are Hong Kong executives who are involved in international marketing activities; they are appropriate for the current study because Hong Kong has been an international trade center for many years. The results of the Hong Kong sample show that the nature of the proposal indeed affects executives’ risk recognition, risk adjustment, and risky choice. Although the operating business environment also affects executives’ risk recognition and risk-adjustment behavior, it has no significant effect on executives’ risky choice. However, the behaviors of Mainland Chinese and U.S. executives reveal a different situation. The proposal type and the operating business environment do not produce the same effect on Mainland Chinese and U.S. executives. Differences in the risk-taking behavior of Hong Kong and Mainland Chinese executives may be due to economic and legal development. Differences in the risk-taking behavior of Hong Kong and U.S. executives may be due to cultural differences.
Lee, Qian, Yu, and Ho’s findings confirm that both the nature of the proposal and the operating business environment affect Hong Kong executives’ favor-trading behavior in international markets. Moreover, this study presents a broad scope of possible actions (i.e., try to influence, gain additional information, develop new options, and consult with supervisors) for executives to handle ethical dilemmas in international marketing. In addition, the findings suggest that the development level (economic and legal) and the ethical convictions of an executive’s home country affect his or her risk-taking behavior.
Biography
Kam-hon Lee is Professor of Marketing, The Chinese University of Hong Kong.
Gong-ming Qian is Associate Professor of Management, The Chinese University of Hong Kong.
Julie H. Yu is Associate Professor of Marketing, The Chinese University of Hong Kong.
Ying Ho is a doctoral student of marketing, The Chinese University of Hong Kong.
Journal of International Marketing, Vol. 13, No. 1, March 2005
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