Confucian ethics, moral foundations, and shareholder value perspectives: An exploratory study

• DOI: http://doi.org/10.1111/beer.12186
• Date: 01 July 2018
• Author: Xingyuan Wang,Fuan Li,Qin Sun
• Published date: 01 July 2018

ORIGINAL ARTICLE

Confucian ethics, moral foundations, and shareholder value

perspectives: An exploratory study

Xingyuan Wang

1

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Fuan Li

2

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Qin Sun

3

1

School of Management, Shandong

University, Jinan, Shandong, P. R. China

2

Department of Marketing and Management

Sciences, William Paterson University of

New Jersey, Wayne, New Jersey

3

Department of Marketing, California State

University, Northridge, Northridge, California

Correspondence

Fuan Li, Department of Marketing and

Management Sciences, William Paterson

University, 1600 Valley Road, Wayne, NJ

07470.

Email: lif@wpunj.edu

Funding information

National Natural Science Foundation of China,

Grant/Award Number: NSFC 71272121

A survey study was conducted to look into the effect of Confucian ethics and the psychological

foundations of morality on business managers’perspectives on corporate social responsibility

(CSR). Using responses from 393 Chinese managers, we first conductedconfirmatory factor analy-

sis to assess the reliability and validity of the measurement model and then employed hierarchical

regression to explore the relationships among Confucian ethics, moral foundations, and managers’

shareholder value perspectives. The results indicate that both Confucian ethics and managers’

moral foundationshad significant influence on shareholder value perspectives. In fact, moral foun-

dations and Confucian ethics interacted and jointly affected managers’positions on the

shareholder value model of corporate responsibility. This study demonstrates the importance of

psychological foundations of morality to managers’CSR orientations and substantiates the persis-

tent impact of Confucianethics/cultural traditionson today’business practices.

1

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INTRODUCTION

Despite therapid adoption of the stakeholder modelof corporate social

responsibility (CSR) in today’s businesses, the shareholder value model

of corporate responsibility still has a powerful influence on business

decisions and practices (Bachmann, Habisch, & Dierksmeier, 2017; de

Bettignies, Ip, Bai, Habisch,& Lenssen,2011; Frynas & Yamahaki, 2016;

Story & Neves,2015). Some scholars contendthat CSR activities should

be the job of elected governments, not profit-maximizing business enti-

ties (cf. Kim& Kim, 2010). Others have even argued for rejection of the

stakeholder theory because managers ought to act exclusively to maxi-

mize the long-run market value of business enterprises (e.g., Jensen,

2002). Moreimportantly, this narrow view of CSR seems to exert a sig-

nificantinfluence on business firmsthat operate in emergingeconomies,

whether multinational companies (MNCs) or local firms in host countries

(Arenas & Ayuso, 2016; de Bettignies et al., 2011; Jamali & Karam,

2016; Jamali, Karam, Soundararajan, & Yin, 2017). It has been argued

that CSR issues in emerging markets have taken on increasing signifi-

cance as emerging economies undergo fundamental reforms and are

being integrated gradually into the global economy (Tan, 2009). Thus,it

is crucialfor a business to find a properbalance between its CSRaspira-

tion and economic performance (Li, Luo,Wang, & Wu, 2013).

The impact of the narrow viewof CSR is highlighted by somewhat

inconsistent CSR behavior of MNCs and the notorious “profit-at-any-

cost”mentality of many local firms in emerging markets (Ip, 2009).

Emerging markets present a significant challenge to MNCs because of

underdeveloped institutional environments, inadequate regulations,

weak public governance or legal enforcement,and lack of public trans-

parency. MNCs are found to employ discordant or negligent practices

in their oversea subsidiaries while simultaneously being recognized for

accountability and integrity in their home countries (Hashmi, Daman-

houri, & Rana, 2015; Tan, 2009). These inconsistent practices indicate

the priority MNCs give to generating profit for shareholders over the

interest of other stakeholders in conducting business across different

markets.

The influence of shareholder value model of CSR on today’sbusi-

nesses is also reflected in the profit-at-any-cost mentalityevidenced by

the widespread irresponsible and unethical business practices of many

local firms in emerging markets (Bachmann et al., 2017; Ip, 2009). For

instance, Chinais the largest emerging market in the world andis noto-

rious for its unethicalpractices in the areas of product safety,informa-

tion disclosure, employee relations, and slave labor, just to name a few

(Lau, Lu, & Liang, 2014). An article appearing in the New York Time

reported that, “In the wakeof China’s worst recent food safety-related

disaster, in which melamine-tainted milk sickened 300,000 babies and

killed six in 2008, the government has been actively trying to crack

down on all manners of ‘taintedfood,’but it is clear from recent events

that the state has its hands full”(Bittman, 2011). The “recent events”

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C2018 JohnWiley & Sons Ltd wileyonlinelibrary.com/journal/beer BusinessEthics: A Eur Rev. 2018;27:2 60–271.

Received:22 December 2016

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Revised: 4 February2018

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Accepted:26 March 2018

DOI: 10.1111/beer.12186