If you had to choose just one of the philosophical approaches discussed in Lecture 2 (Business Ethics - Normative Theories) to guide your decision making, which would you choose? Why? If you had to rank them from most to least helpful, how would you rank

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Home >English homework help >If you had to choose just one of the philosophical approaches discussed in Lecture 2 (Business Ethics - Normative Theories) to guide your decision making, which would you choose? Why? If you had to rank them from most to least helpful, how would you rank

The Relevance and Value of Confucianism

in Contemporary Business Ethics Gary Kok Yew Chan

ABSTRACT. This article examines the relevance and

value of Confucian Ethics to contemporary Business

Ethics by comparing their respective perspectives and

approaches towards business activities within the modern

capitalist framework, the principle of reciprocity and the

concept of human virtues. Confucian Ethics provides

interesting parallels with contemporary Western-oriented

Business Ethics. At the same, it diverges from contem-

porary Business Ethics in some significant ways. Upon an

examination of philosophical texts as well as empirical

studies, it is argued that Confucian Ethics is able to pro-

vide some unique philosophical and intellectual perspec-

tives in order to forge a richer understanding and analysis

of the field of contemporary Business Ethics.

KEY WORDS: business ethics, Confucian ethics, reci-

procity, hierarchy, The Doctrine of the Mean, human

virtue

Introduction

Confucianism as a body of philosophical ethical

thought and the discipline of Business Ethics appear,

at first blush, to be strange bedfellows. In terms of

origins and sources, Confucianism emerged in the

4–5th century BC prior to the industrial age and the

modern knowledge economy. Business Ethics today,

on the other hand, is largely Western-oriented. It is

also influenced by and is discussed primarily with

reference to the capitalist framework. As we will see

below, though some of the ethical theories regularly

taught and examined in contemporary Business

Ethics such as Aristotelian ethics may originate from

the Axial Age 1

(as did Confucianism), a large

majority of the major moral philosophers featured in

the texts hail from the West. Indeed, it is not sur-

prising that Confucianism as a philosophy did not

recognise the discipline of Business Ethics as such

(Wang, 2004, p. 55).

Ironically, notwithstanding the different origins

and sources, one commonality between Confucian

Ethics and Business Ethics is that both have under-

gone and are currently undergoing crises of sorts.

Yet, the problems faced by each of the disciplines or

areas and the respective socio-historical backgrounds

against which these disciplines are situated are indeed

quite disparate.

Confucianism has had to weather the onslaught of

criticisms 2

in the wake of the Asian economic crisis of

the 1990s arising from or in connection with the

allegations of cronyism and nepotism in some Asian

countries. Confucianism had undergone a tumultu-

ous history in China and its significance in its birth-

place had fluctuated. During the May Fourth

Movement of 1919 and the Maoist Cultural Revo-

lution from 1966–1976, for instance, Confucianism

was maligned and severely suppressed in China. Yet,

during the meteoric rise of the East Asian economies

in the 1980s and early 1990s, some have argued that

Confucianism was the bedrock, if not one of the

pivotal factors, upon which the economic successes

rested. As a practical value system in the Chinese

Gary Kok Yew Chan is Assistant Professor of Law at Singapore

Management University. Apart from Business Law, he

teaches Ethics and Social Responsibility. He has obtained an

LL.B (National University of Singapore) and LL.M (School

of Oriental and African Studies, University of London)

respectively and has published in several reputable law jour-

nals including Journal of Business Law, Cambridge Law

Journal, Australian Journal of Asian Law, Hong Kong

Law Journal and Singapore Journal of Legal Studies. In

addition, he holds an M.A. in Southeast Asian Studies

(National University of Singapore) and a B.A. in Philosophy

(University of London).

Journal of Business Ethics (2008) 77:347–360 � Springer 2007 DOI 10.1007/s10551-007-9354-z

community, however, particularly at the familial and

community level, Confucianism has remained very

much alive until the present-day.

In a similar vein, Business Ethics itself has often

been regarded as a misnomer of sorts or an oxy-

moron 3

perhaps only two decades ago (though it is

now a subject taught in most major business

schools). 4

The objective of business profit-making

sat uneasily with the concept of ethical behaviour,

some argued. Businessmen and ethicists debated

about the proper ethical behaviour of businesses and

for-profit corporations. There have been various

attempts to support the very intellectual foundations

of Business Ethics, or at least, to prevent it from

totally succumbing or being reduced to the ‘‘cor-

porate jungle’’ phenomenon.

Albert Carr (2002), in his well-known article ‘‘Is

Business Bluffing Ethical?’’, appears to walk the

middle path between immorality (deception) and

morality (honesty) in business. By analogising

business to a game of poker, he argues that some

forms of deception may be acceptable in the

business arena (Carr, 2002, pp. 101–102). Yet, he

admits that a reputation for integrity and honesty

will benefit the businessman in the long run (Carr,

2002, p. 107). Similar debates such as the Fried-

man-Freeman debate (Freeman, 2002; Friedman,

1970) 5

surface with respect to the issue of the need

for corporations to demonstrate social responsibil-

ity. These are just two examples of the ongoing

debates in contemporary business ethics, which

suggest that the jury is still out on the precise

parameters of ethical business.

In view of the seeming gulf in the origins, sources,

socio-historical developments and their respective

internal intellectual and political struggles, what then

is the relevance and value of Confucian Ethics to the

discipline of contemporary Business Ethics?

We can begin by briefly examining the socio-

historical impact of Confucian Ethics on businesses

in the Confucianist Asian countries. There is a

massive Chinese population both within and outside

of the People�s Republic of China, the birthplace and mainstay of Confucianism. The economic status

of China in international business transactions is

growing rapidly. It is evident that the potential im-

pact of China and Chinese people in the contem-

porary business arena is likely to increase in

significance. Moreover, the non-Chinese people in

the other East Asian economies such as Japan and

South Korea also subscribe to and are influenced by

Confucianism in their business practices.

Historically, according to Weber, Confucianism

did not encourage capitalistic innovations amongst

businessmen in China due, in part at least, to the

practice of magic rituals of the Emperor, the

emphasis on traditions, the reliance on the moral

cultivation of the scholar-bureaucrat (as opposed to

the profit-making activities of the merchants) and

the maintenance of hierarchical relationships (Tam-

ney and Chiang, 2002: 63–64). Several studies have

recognised the practical and important role of

Confucian Ethics in businesses within the Asian re-

gions, though the issue is by no means conclusive.

The economic successes of the East Asian economies

(such as Japan, South Korea, Taiwan and Hong

Kong) have been attributed to Confucianism by

various scholars 6

and politicians. 7

A brief mention of relevant studies which explore

the influence of the Confucian ethical approach to

economic and business development would suffice

here. Hofstede and Bond (1988) found that certain

values of what they term ‘‘Confucian dynamism’’ 8

correlate well with the economic growth of East

Asian countries. Kit-Chun�s (2003) study on the impact of Confucian ethics on the development of

the economy examines the influence of Classical

Confucianist ethics to the agrarian economy, the

Neo-Confucianist commercialised economy, the

reformist Confucians� political economy and the Modern Confucians of the global economy. Orna-

towski (1999) traced the historical development of

Confucian influence on the economic development

of Japan. Shibusawa Eiichi, a prominent industrialist,

advocated Confucian ethics in Japanese business

practices combined with modern business skills. In

contemporary Japan, the Confucian notion of hier-

archy and familial relations is evident in the pyra-

midal organisation of family companies, such as the

oya gaisha (parent company), kogaisha (child com-

pany) and magogaisha (grandchild company). This is

characterised by relations of dependence and control

as well as the demonstration of benevolence which is

reciprocated by the act of loyalty amongst the dif-

ferent tiers of the keiretsu structure (Ornatowski,

1999, 395).

On a more micro and personal level, Tak and King

(2004) have conducted interviews with individual

348 Gary Kok Yew Chan

contemporary Confucian merchants in mainland

China, Taiwan, Hong Kong, Singapore and Kuala

Lumpur, Malaysia on their business practices. The

study centred on the perceived conflicts experienced

by those Confucian merchants interviewed with re-

spect to business practices that adhere to Confucian

ethics and the maximisation of material gains. The

authors concluded from the interviews that abiding by

one�s moral principles (in this case, largely Confucian- based ethics) can be costly.

To return to the main thesis, it is argued in this

article that Confucian Ethics has much to contribute

to Business Ethics, a discipline which explores the

proper conduct of businesses and businesspeople. I

wish to emphasise the utility of Confucian Ethics

towards attaining a richer understanding and analysis

of the field of contemporary Business Ethics. One

does not have to endorse all things Confucian or

even a majority of the Confucian tenets in order to

appreciate its relevance and value to the study of

Business Ethics. Indeed, some of the Confucian te-

nets will be subject to critique in this article.

At present, the study of Business Ethics in the

English-speaking world is largely Western-centric. If

one peruses the main general texts on Business

Ethics, one would realise that the materials relate

predominantly to ethical theories of Western origin.

The major moral philosophers featured in the main

Business Ethics texts 9

include Aristotle, John Stuart

Mill, Immanuel Kant, Adam Smith, John Rawls and

Robert Nozick. 10

Whilst it is noted that reference

has been made to Confucian ethics in some texts,

these are usually fairly brief mentions 11

. There is, on

balance, a greater focus on the contribution of

Confucian Ethics in academic business ethics jour-

nals. Hopefully, some of the useful discussions in

these journals could eventually find its way into the

mainstream business ethics texts in the future.

In this article, I will focus on some thematic and

inter-related areas of comparison between Confucian

Ethics and Western-oriented contemporary Business

Ethics. In each of the following areas, I shall argue that

Confucian ethics offers valuable philosophical and

intellectual perspectives to the study of contemporary

Business Ethics. The approach adopted here is partly

philosopher-based and partly issue-based. I shall pay

attention to the ideas of the major philosophers

studied in contemporary Business Ethics such as Kant

and Aristotle as well as some empirical studies on

guanxi and whistle-blowing insofar as they relate to the

following philosophical issues:

I the relevance of Confucian Ethics to the

field of Business within the broad frame-

work of Capitalism;

II the Principle of Reciprocity; and

III the significance of Human Virtues and the

Mean.

The above areas are by no means exhaustive 12

. The

main sources of Confucianism discussed in this

article will be taken from the four books of Classics

(the Analects, Mencius, The Great Learning and the

Doctrine of the Mean) as put together by the neo-

Confucianist, Chu Hsi (Chan, 1963, p. 19) 13

The relevance of confucian ethics to the

field of business within the broad framework

of capitalism

To adequately assess the contribution of Confucian

Ethics to the study of Business Ethics, one needs to

first contend with more preliminary and broader

questions as follows:

• Is Confucian Ethics relevant to the business arena?

• Is Confucianism compatible with Capitalism?

Confucianism and profit-making

One major task pertaining to Confucian Ethics in

the business arena is to understand and explain the

apparent negative attitude of Confucius against

profit-making in business activities. In the Confu-

cian classics, there are, admittedly, statements which

indicate the association between ‘‘profit’’ and the

‘‘inferior man’’ (Analects, Book 4, Number 16) as

well as the primacy of benevolence and righteous-

ness over profit (Mencius, Book 1, Part 1, number 1;

Chan, 1963, p. 60). In The Great Learning, it is stated

that ‘‘[a] man of humanity develops his personality

by means of his wealth, while the inhumane person

develops wealth at the sacrifice of his personality’’

(Chan, 1963, p. 94).

In the context of governance and the state, The

Great Learning also stated that ‘‘financial profit is not

considered real profit whereas righteousness is con-

The Relevance and Value of Confucianism 349

sidered the real profit’’ (Chan, 1963, p. 94). Simi-

larly, Mencius warned that excessive emphasis on

‘‘profits’’ will lead the country to ruin:

If your Majesty [King Hui at Liang] ask what is prof-

itable to your country, if the great officers ask what is

profitable to their families, and if the inferior officers

and the common people ask what is profitable to

themselves, then both the superiors and the subordi-

nates will try to snatch the profit from one another and

the country will crumble (Chan, 1963, pp. 60–61).

It is important to note, however, that the above

statements from the Confucian classics did not, taken

as a whole, denigrate business activities per se. The

main emphasis or lessons to be drawn from the

statements are that one should strive to attain human

virtues such as benevolence, righteousness, humanity

and the development of one�s personality. The Confucian statements collectively sought to remind

the disciples of the significance of following the

‘‘Way’’ (Analects, Book1, number 15).

In the course of advocating the virtues, the con-

cept of profit-making was employed as a foil. Hence,

in contrast to the aim of developing human virtues,

the profit-making activity represents man�s efforts to attain material wealth at the expense of virtuous

living. It would be making a quantum leap, how-

ever, to argue from the above statements that

Confucianism was necessarily against business and

profit-making. In this regard, we note that Shibus-

awa Eiichi, the Japanese industrialist, had contended,

consistent with the above statements in the Confu-

cian classics, that Confucius did not condemn profit-

making activities unless it was for selfish purposes and

not for the good of the community (Ornatowski,

1999, 390). In addition, Jing Yuan-Shan (1841–

1903), described as a ‘‘a Confucian merchant par

excellence’’ from Shanghai, regarded moral attainment

as more important than seeking material well-being

(Tak and King, 2004, p. 248).

The question we need to address, therefore, is

whether Business is necessarily an activity or practice

which seeks material wealth at the expense of

human virtues in a manner incompatible with

Confucian ethics. We will examine the Western-

centric ethical approaches to Business and Capital-

ism followed by a discussion of the Confucian

contributions.

Western-centric ethical approaches to business and

capitalism

In the Introduction above, we examined briefly the

paradoxical concept of Business Ethics and the

internal debates inherent within the discipline. In-

deed, this issue pertaining to the compatibility of

Ethics with the business capitalist framework has

been one of the pivotal points in the development of

contemporary Business Ethics in the English-speak-

ing world. In this regard, the Confucian debate

concerning the relationship between ethics and

profit-making finds a parallel in contemporary

Business Ethics.

Within Business Ethics, the main (and oft-cited)

proponents of the capitalistic ethos are, amongst

others, the Scottish philosopher Adam Smith and

American philosophers Ayn Rand and Robert

Nozick. Smith (1937), in his book The Wealth of

Nations argued that each man should work for his

self-interest so that the economy as a whole, via the

Invisible Hand, would grow and bestow (unin-

tended) public benefits. Nozick (1974), in his theory

of entitlement, contended that we should be free to

pursue our interests and individual rights within the

capitalist framework with minimal governmental

intervention. This principle holds as long as we do

not breach the principles of original acquisition and

voluntary exchanges. In similar vein, Rand (1976)

believed that capitalism is the only system which is

capable of protecting individual rights. The exten-

sion of the government beyond the minimal level

would threaten the exercise of such individual rights,

she argued. She premised her arguments on

‘‘objectivism’’, a theory of ethical egoism based on

self-interest (and selfishness). In the context of the

corporate social responsibility debate, Milton

Friedman (1970) argued that the responsibility of the

corporation is to make profits subject to compliance

with the laws and the rules of the business game (that

is, open and free competition without deception or

fraud). The managerial executive discharges his or

her fiduciary duties to the shareholders of the cor-

porations by doing just that (that is, make profits) 14

The dangers of extreme capitalism riding rough-

shod over ethics are real. Marx and Engels (1998) have

painted a gloomy picture in The Communist Manifesto:

‘‘[t]he bourgeosie ... has left remaining no other nexus

350 Gary Kok Yew Chan

between man and man than naked self-interest, than

callous ‘‘cash payment.’’‘‘ (p. 38). But the endorse-

ment of the capitalistic ethos based on brute desires

and self-interests is by no means unqualified, as may be

gleaned from the illustrations below.

It has been argued that moral considerations and

other interests (apart from the profit-making motive)

feature in business activities within the capitalist

framework. Aristotle, in similar vein to Confucius,

had frowned upon profit-making activities in trade

exchanges as being devoid of virtue (Solomon, 1992,

p. 321; Nicomachean Ethics: 148). Adam Smith himself

described man�s propensity for altruistic ethical behaviour in his other work entitled A Theory of

Moral Sentiments (published in 1759) based on the

concept of the ‘‘impartial’’ spectator. This approach

is also consistent with Mill�s notion of the ‘‘disin- terested and benevolent spectator’’ in Utilitarianism

(1987, p. 28). In the arena of corporate social

responsibility, Edward Freeman, in contrast to

Friedman, proposed a stakeholder approach to cor-

porate responsibility which takes into consideration

the other interests of consumers, suppliers, the

community (and not merely the shareholder�s inter- ests in financial profits). Unsurprisingly, Freeman

rests the stakeholder theory on the more universal

character of Kantian and Rawlsian precepts. As can

be seen, there are ongoing debates in contemporary

Business Ethics on the (sometimes uneasy) relation-

ship between Ethics and Business and/or Capitalism.

Confucian approaches to business and capitalism

As described above, the Confucian argument lies in

moral self-cultivation and the development of hu-

man virtues, epitomised in the Confucian gentleman

(junzi), instead of focusing on profits. I do not

interpret Confucius in the classics as arguing for a

cessation or impairment of business activities, but

rather to emphasise the significance of human virtues

as opposed to the mere fulfilment of selfish material

desires. The Confucian approach suggests that one

should adopt a proper focus towards the striving for

human virtue and profits, respectively.

Indeed, to reinforce this point, we can argue that

the realm of economic or business activity is but

one facet of man�s life. Whilst man has been regarded as an economic being or having economic

value within the capitalist framework, he is not

solely defined by economic value. The realm of or

the activity of business is merely a sub-set of the

entire human striving (which I would refer to as

comprising a gamut of life-activities and human

beliefs). This human striving may include a belief in

God or supernatural being, intellectual or knowl-

edge pursuits as well as the enjoyment of life and

happiness.

There is no necessary incompatibility between

Confucian ethics and Capitalism. Nuyen (1999) has

argued that Chinese philosophy including Confu-

cianism is compatible with classical capitalism of

perfect competition. In this regard, he refers to the

writings of Francois Quesnay, the classical thinker.

Quesnay stated that the economy is a self-regulating

mechanism in accordance with the laws of nature

and hence, a policy of laissez-faire should be adopted.

This was adopted, as Nuyen described it, with a

view to achieving ‘‘the goal of social harmony, and

ultimately the harmony of the whole nature’’ (p. 75)

which is consistent with the Confucian concept of

chung yung (the Mean) and the way of the Tao (pp.

76–79).

However, whilst we attempt to integrate ethics

and business holistically, the fact remains that we

cannot completely eschew the reality that business

objectives and life-objectives may conflict in at least

some circumstances. The potential conflict between

the personal morality of a company employee or

agent and its ‘‘fiduciary duties’’ to the company is a

case in point. This does not mean that business and

the rest of one�s life are or should be categorically treated as separate components. Indeed, we ought

to, as Solomon has argued, seek to integrate ethics

and business in a more holistic fashion. 15

But at the

practical level, where there is a particular conflict

between the attainment of business profits and the

fundamental objectives of the whole life, it is logical

and sensible that the latter should prevail. The

objective of advancing human virtues should tri-

umph over the narrower economic interests.

In summary, Business is not necessarily an

activity or practice which seeks material wealth at

the expense of human virtues. Further, as business

activities (based on profits) are only a part of the

whole life (based on human virtues), one ought not

to seek material wealth at the expense of human

virtues.

The Relevance and Value of Confucianism 351

The principle of reciprocity

There are various formulations of the broad concept

of reciprocity in Western-oriented Business Ethics. I

shall briefly examine the manner in which the rec-

iprocity concept is manifested in the ethical theories

of Kant, Mill and Rawls. Thereafter, I will proceed

to discuss the Confucian concept of reciprocity as

well as its contribution to the Western concept of

reciprocity by examining the phenomenon and

practice of guanxi amongst Chinese people.

The Kantian categorical imperatives of univer-

sality and respect for humans, both of which are

consistent with the principle of reciprocity (Sullivan,

1994, p. 46, 66), feature prominently in the Business

Ethics texts. The first formulation of the universality

mandates the moral agent to ‘‘act only in accordance

with that maxim through which you can at the same

time will that it become a universal law’’. The moral

agent has to act on maxims which are consistently

universalised to avoid self-contradiction (Bowie,

1999, p. 15). For example, a lying promise is a

contradiction in itself. Double standards, with re-

spect to the application of the moral actor�s actions to persons similarly circumstanced, are not to be

condoned. The second formulation of humanity

requires the moral actor to ‘‘use humanity, whether

in your own person or in the person of any other,

always at the same time as an end, never merely as a

means’’ (Kant, 1996, p. 80). This is based on the

concept of human dignity and autonomy. The

treatment accorded to the other person�s ends must be reciprocated by the other person�s treatment of the moral agent�s ends (Korsgaard, 1996, p. 193). Thus, both formulations are in line with the broad

principle of reciprocity.

Kant�s categorical imperatives are premised upon the Good Will, a sense of moral duty and human

rationality. If the moral actor acts out of the pure

desire for personal profits or even to do something

beneficial for another person with the expectation of

some benefits in return (reciprocal altruism), the act

does not, according to Kant, possess the requisite

moral worth. Indeed, in such a case, the moral actor

is also not acting rationally. It is morally wrong

according to Kant to violate a ‘‘negative’’ or ‘‘per-

fect’’ duty such as the moral duty not to show dis-

respect for persons 16

. Though both Confucianism

and Kantianism embody principles of reciprocity, the

difference lies in the respective premises. The Con-

fucian approach based on one�s virtue and the development of character may be contrasted with the

Kantian emphasis on Will, reason and moral duty.

Mill is often cited as the proponent of Utilitari-

anism in Business Ethics texts. Within his utilitarian

calculus, he has argued that the moral actor, in the

process of making decisions based on utilitarianism,

should act impartially as a ‘‘disinterested and

benevolent spectator’’ (Mill, 1987, p. 28), consistent

with the broad notion of reciprocity. Utilitarianism

is not concerned with the moral agent�s own hap- piness, but the happiness of everyone concerned. It

assumes that the moral actor is indifferent whether

his or her own welfare may be adversely affected as

long as overall welfare is maximised (Crisp, 1997, p.

136). Mill has been criticised for ignoring the

‘‘separateness of persons’’ and the agent�s contexts and circumstances which inform his decision-mak-

ing. These personal circumstances and background

may include the moral agent�s unique personal and familial relations to affected persons that have been

taken into consideration in Aristotle�s Ethics and Confucian ethics.

With respect to Rawls� A Theory of Justice, the focus is the concept of the veil of ignorance. The

Rawlsian hypothetical construct of man in the ori-

ginal position under the veil of ignorance finds reso-

nance in business ethics debates. Rawls� A Theory of Justice is based on the doctrine of social contract. In

this hypothetical social contract, the free, rational

and self-interested man in the original position,

according to Rawls, would be making decisions

without any knowledge of each party�s personal characteristics such as race, abilities and social

backgrounds (Rawls, 1972). The rational man

however desires to maximize the primary goods

consisting of rights, liberties, opportunities, income

and wealth. Rawls� principles of justice,17 binding on members of the society, are derived from this

hypothetical exercise (Rawls, 1972).

Putting aside the precise content of the principles

of justice and the subsequent modifications in Rawls� Political Liberalism

18 for the moment, we focus on the

hypothetical method by which the principles are

derived. This method is akin to (though not exactly

identical to) the moral actor placing himself or

herself in a similar position to the other affected

persons. It is a rule of procedural fairness that parties

352 Gary Kok Yew Chan

determining the principles of justice should not be

biased in favour of their own particular interests. The

hypothetical parties, under the veil of ignorance,

would not be able to unfairly advance their own

special interests at the expense of the interests of

others. Thus, in this conception of ‘‘justice as fair-

ness’’, the parties are morally constrained to consider

the interests of everyone insofar as one�s own interests may be affected by the community princi-

ples of justice drawn up – and this is compatible with

the reciprocity principle.

That said, it must be pointed out that the man in

the original position under a veil of ignorance is an

imaginary construct and a hermeneutical tool to

illustrate the concept of justice as fairness. It cannot

serve as an independent ground for subscribing to

the two principles of justice (Dworkin, 1989, p. 18).

Further, the technique of utilising the veil of igno-

rance may not be equally fair to everyone. 19

How does Confucian Ethics contribute to the

above discussion on the reciprocity principle in the

business arena? When asked whether there is one

word which would serve as a guiding principle for

one�s entire life, Confucius responded with the word ‘‘altruism’’ and the golden rule ‘‘Do not do to others

what you do not want them to do to you’’ (Analects,

Book XV, Number 23). The Chinese character for

altruism (shu) encapsulates the concept of interper-

sonal care involving real and concrete individuals

(Wang, 1999, 418). This may be distinguished from

the more detached, impartial and disinterested agents

in Mill�s Utilitarianism and the Kantian categorical imperatives as well as the hypothetical construct in

Rawls� ‘‘justice as fairness’’ approach. In The Great Learning, the Confucian reciprocity

principle is further reinforced, amongst others, in the

context of the master–servant relationship:

What a man dislikes in his superiors, let him not dis-

play in the treatment of his inferiors: what he dislikes

in inferiors, let him not display in the service of his

superiors. (The Great Learning, X, ii)

The Confucian approach also offers a different per-

spective by making a connection between the reci-

procity principle to important human virtues, unlike

the primary underlying bases in Mill (disinterested

and benevolent spectator), Kant (will, reason and

duty) and Rawls (fairness). According to the Analects

(Book VI, Number 28), the person who abides by

the principle of reciprocity is a man of humanity.

A man of humanity, wishing to establish his own

character, also establishes the character of others, and

wishing to be prominent himself, also helps others to

be prominent. To be able to judge others by what is

near to ourselves may be called the method of realizing

humanity.

A man of humanity is one who practises the five vir-

tues of ‘‘earnestness, liberality, truthfulness, diligence,

and generosity’’ (Analects, Book 17, number 6). In the

book of Mencius, VII.A 4, the formula was specifically

associated with the virtue of benevolence:

Try your best to treat others as you would wish to be

treated yourself, and you will find that this is the

shortest way to benevolence.

One other aspect in which Confucian ethics differs

from Kant, Mill and Rawls is the former�s particu- laristic application of the reciprocity principle. The

Confucian reciprocity principle appears to be qual-

ified (and, indeed, complicated) by the apparent

emphasis on familial relations. In the Analects,

Confucius seemed to suggest that favoritism should

be shown towards family members:

The Duke of She told Confucius, ‘‘In my country

there is an upright man named Kung. When his

father stole a sheep, he bore witness against him.’’

Confucius said, ‘‘The upright men in my community

are different from this. The father conceals the

misconduct of the son and the son conceals the

misconduct of the father. Uprightness is to be found

in this (Book 13, number 18). 20

In this regard, Mencius also favoured the Confucian

emphasis on the five familial relations which are

hierarchical in nature (Mencius, Book 3, Number 4).

It should also be pointed out that Mencius had, in

support of hierarchy at the familial level, opposed the

principle of universal love without distinction

advocated by the Moists (Mencius, Book 3, Number

5). The rationale appeared to be based on parents

being the foundation of men. Mencius argued:

Mo advocated universal love which means a denial of

the special relationship with the father. To deny the

special relationship with the father ... is to become an

The Relevance and Value of Confucianism 353

animal ... If the principles of ... Mo are not stopped,

and if the principles of Confucius are not brought to

light, perverse doctrines will delude the people and

obstruct the path of humanity and righteousness.

When humanity and righteousness are obstructed,

beasts will be led on to devour men, and men will

devour one another (Chan, 1963, p. 72).

As Koehn and Leung (2004) have noted, the

Confucian li (or rules of propriety) means that the

concept of human dignity is not equal for every-

one but is based on one�s societal roles as well as family background and occupations (p. 269).

Moreover, this notion of ‘‘role-based dignity’’ is,

according to empirical studies, prevalent in the

East Asian countries (Koehn and Leung, 2004, p.

273). In the employment context, a strictly hier-

archical and authoritarian structure within the

work organisation according to Confucian ethics

would be contrary to the notion of participatory

democracy in the workplace based on freedom

and consent as endorsed by Kantianism (Bowie,

1999, p. 97).

Admittedly, the specific illustration about the father

concealing the misconduct of the son and vice versa is

problematic as it appears to not merely condone, but

to praise the act of concealment of a wrongdoing.

The general thrust of the Confucian emphasis on

particular familial and close relationships is, however,

in my view, underlined with an appropriate sense of

realism. This realism about human nature was lacking

in Mill�s notion of the ‘‘disinterested and benevolent spectator’’, the Kantian moral agent imbued with

‘‘moral duty’’ and the Rawlsian man in the original

position. If we put aside the specific problematic

illustration, and focus on the general theme of giving

priority to familial and close relationships, it may be

argued that the problem of subjectivity (and favour-

itism) in Confucian ethics may have been somewhat

exaggerated. It is also observed that this emphasis on

hierarchical relationships in the practical business

arena is also shared by Western theorists such as

Drucker (Romar, 2004; Drucker, 1981).

Still on the principle of reciprocity and hierarchy,

one fruitful area of research pertains to the concept

and practice of guanxi (or interpersonal relationships

or connections), bribery and corruption in Confu-

cianist Asian countries. The concept of guanxi is

based on and reflects the principle of reciprocity and

interdependence as well as hierarchy in society (Su,

Sirgy and Littlefield, 2003, p. 305). Guanxi involves

social exchanges for mutual benefits which favours

parties superior in the hierarchy. The notion of

reciprocity (bao) is significant amongst Chinese

people. If favours given by one party are not

reciprocated by the other party, the latter may suffer

a ‘‘loss of face’’ (mianzi) or may be regarded as

ungrateful, thus resulting in estrangement by others

(Su and Littlefield, 2001, p. 201). Guanxi and mianzi

are part of the Confucian social rituals (li).

I would briefly outline some relevant studies. Su,

Sirgy and Littlefield (2003) found that favour-seek-

ing guanxi orientation is not related to ethical rea-

soning (more specifically, cognitive moral

development) of Chinese business people, but is

instead guided by cultural norms. In a separate study,

it was found that favour-seeking guanxi merely re-

flects the culturally rooted social interchange in the

Chinese collectivist society as opposed to rent-

seeking guanxi (that is, the ‘‘returns over and above

the costs of employing a monopolistic resource (e.g.

bureaucratic power) by manipulating government

policy’’). The latter tends to be associated with

corruption (Su and Littlefield, 2001, p. 202). Apart

from cultural values, institutional factors may also be

significant. 21

To arrive at a definition of bribery which is

unethical, Steidlmeier (1999) analyses reciprocity

in resource transfers by examining the type of

action in question and the associated ends sought,

the means taken and the ensuing consequences

arising from the action. Whether the reciprocal

behaviour of the parties in question constitutes

bribery or otherwise would also depend on the

intentions of the parties and the degree of coer-

cion involved (p. 126). Dunfee and Warren (2001)

focuses on the normative question of whether the

reciprocal practice of guanxi, in its various forms

and guises, is unethical. In adopting a ‘‘particu-

laristic’’ analysis, they discuss the various criteria

(including the reduction of social wealth, the

violation of important fiduciary duties, the non-

substantiation by authentic norms of the particular

community and the violation of hypernorms) for

determining whether guanxi is unethical. The

authors concluded that ‘‘there are many different

forms of guanxi that may have distinct impacts on

354 Gary Kok Yew Chan

economic efficiency and the well-being of ordin-

ary Chinese citizens’’ (p. 202). Fan (2001), on the

other hand, appears more direct in condemning

the majority of business guanxi in China as an

‘‘inevitable evil under the current political and

socio-economic environment’’ on the grounds that

personal gains are obtained by such guanxi prac-

tices at the expense of other members of the

society (p. 376). Significantly, Fan (2001) reminds

us that although Confucianism was responsible for

the principles governing interpersonal relations

amongst the Chinese people, Confucius had also

emphasised the exemplary virtues of uprightness

(yi), benevolence (ren) and propriety (li) and that

moral concerns should always be prior to business

interests (p. 376).

Human virtues and the mean

There are several commonalities between Confu-

cian and Aristotelian ethics. We have previously

indicated above the similar (negative) attitudes

shown by both Aristotle and Confucius towards

profit-making. We can also add that both the

Confucian and Aristotelian frameworks emphasise

human virtues. In particular, both philosophers

believe in the significance of exemplary individuals

for guidance and training in proper ethical

behaviour (Sim, 2001). For Confucius, the person

of exemplary virtue is junzi: for Aristotle, it is

phronimos. Both junzi and phronimos exhibit desir-

able attributes of uprightness and other-regarding

conduct. Second, Confucian and Aristotelian ethics

are based on the need for the practice of such hu-

man virtues and the cultivation and development of

one�s character. For Aristotle, ethics is a ‘‘practical science’’, that is, it is concerned with action, rather

than a set of theoretical knowledge about the right

action. Aristotle said that ‘‘we become just by

performing just acts, temperate by performing

temperate ones, brave by performing brave ones’’

(The Nicomachean Ethics, p. 92). In the Analects,

Confucius said that ‘‘[b]y nature men are alike.

Through practice they have become far apart’’

(Book 17, Number 2). This emphasis on practice

is also evident in Aristotle�s statement in the Nicomachean Ethics that ‘‘[t]he moral virtues, then,

are engendered in us neither by nor contrary to

nature; we are constituted by nature to receive

them, but their full development in us is due to

habit.’’ (p. 91).

These concepts of moral cultivation and moral

leadership are arguably vital pillars in Business Ethics

education (Paine, 1999). For example, Koehn (2001)

has studied the concept of ‘‘trustworthiness’’ of the

Confucian junzi as applied to contemporary business

leadership. Solomon (1992) has also applied Aristo-

telian virtues to business leadership.

In Confucian ethics, there is less emphasis on the

individual as a metaphysical self compared to

Aristotelian philosophy. The Confucian individual is

interpreted in connection with the community in

which he or she is a part. The cultivation of the

inner self is basically assessed by reference to one�s external behaviour (Yao, 1996). The Confucian

moral actor cleaves towards ethical standards to be

found in a set of societal rituals and propriety (li)

though the self is not completely surrendered or

submerged, as it were, in the sea of ritualised stan-

dards (Sim, 2003, 459).

Aristotelian ethics, on the other hand, pays more

attention to the metaphysical self based on the

doctrine of the soul. For Aristotle, human beings

have a rational soul which exercises and controls the

functions and appetites of nutrition and perception

in humankind. The human goal is happiness

throughout one�s life spent in virtuous conduct and contemplation (The Nicomachean Ethics, p. 83) and

happiness is ‘‘an activity of the soul’’ (The Nico-

machean Ethics, p. 88). Confucian ethics does not

conceive of the self as the ‘‘cognitive mind’’ but

essentially as the ‘‘moral mind/heart’’ (xin) exem-

plified in proper external behaviour (Yao, 1996).

Sim (2003) contended that Aristotle�s metaphys- ics, in the main, overly focuses on the individual at

the expense of relations (pp. 451–452). For example,

Aristotle suggested that a friendship with another is

premised on the view that the good actions of the

other person mirror that of the individual moral

actor (The Nicomachean Ethics, p. 293). He proceeded

to add that ‘‘in its extreme form friendship approx-

imates to self-love’’ (The Nicomachean Ethics, p. 294).

In Confucian ethics, however, familial relations are

prior to the individual. The good arising from the

emphasis on familial relations also extends to the

state. This sacrificial attitude or approach is, as we

have seen, consistent with the other-regarding

The Relevance and Value of Confucianism 355

conduct of the moral exemplar in Confucian ethics.

Hence, in this regard, Sim (2003) argued that

Confucian ethics can supplement Aristotle�s lack of an adequate account of human relations in his ethical

framework. Confucian ethics provides a more con-

sistent rendering of exemplary conduct through its

greater emphasis on relations, as opposed to Aris-

totle�s individualism. However, two caveats must be noted. The social

aspects of the Aristotelian human nature cannot be

overlooked. Aristotle conceived of man as a ‘‘polit-

ical animal’’ (Politics, Book 1) and ‘‘social animal’’ by

nature (Nicomachean Ethics, p. 74). Further, contem-

porary renderings of Aristotle stress the communi-

tarian aspect of Aristotle�s ethics. Solomon (1992), for example, emphasised that community is one of the six

important dimensions of Aristotle�s virtue ethics. He argued that, in the contemporary business context,

the corporation is a community and that the indi-

vidual person finds his or her identity and meaning

only within the community (p. 326). Thus, though

there is a material difference in the Confucian and

Aristotelian approaches to the metaphysical aspects of

the individual, both ethical philosophies seek to lo-

cate and concretise the role and significance of the

community in individual ethical practices.

The other point of comparison between Confu-

cian and Aristotelian ethics is the concept of the

Mean in ethical conduct. For Aristotle, finding the

ethical mean is intimately connected with the notion

of human virtues. For each virtue, there is an

appropriate mean. 22

For example, we are exhorted to

avoid the extremes of Rashness and Cowardice but

to strive towards the mean, which is Courage. Aris-

totle in the Nicomachean Ethics defines ‘‘virtue’’ as a

‘‘purposive disposition, lying in a mean that is relative

to us and determined by a rational principle’’ (p. 101).

Thus, the words ‘‘relative to us’’ suggest that the

mean is subjectively assessed by the moral actor. The

interpretation of the appropriate mean would be

based on the moral actor�s culture, circumstances and backgrounds. Aristotle admitted, as Confucius did,

that it is difficult to find the ethical mean (p. 108). In

this regard, he provided some general principles to

guide one�s endeavour to aim at the mean. The principles are as follows: (1) Keep away from the

extreme that is more contrary to the mean; (2) No-

tice the errors which we are liable to fall into due to

our natural tendencies and avoid them; and (3) Guard

against objects of pleasure (p. 109). However, these

appear to be fairly general guidelines.

The Confucian Doctrine of the Mean, on the

other hand, is based on the twin notions of centrality

and balance (Chan, 1963, p. 16). This Confucian

classic is concerned with human nature and being in

harmony with the universe (Chan, 1963, pp. 95–

96). The Mean is inextricably tied to human virtues:

it is practised by the ‘‘superior man’’ whilst the

‘‘inferior man’’ acts contrary to the Mean (The

Doctrine of the Mean, Stanza 2). Three virtues were

highlighted in this Confucian classic: wisdom,

humanity and courage (Stanza 20). Moreover, the

value of sincerity to the superior man and humanity

features prominently (Doctrine of the Mean, stanzas

24–26). However, similar to Aristotle�s ethics, the achievement of the Confucian Mean is a difficult

process and few people have attained the Mean (The

Doctrine of the Mean, Stanzas 3 and 6).

One potential research area on the applicability of

Confucian virtues, the notion of the self vis-à-vis the

community and the Mean is the issue of whistle-

blowing. One sub-area of study focuses on the virtue

of loyalty of the potential whistle-blower. First, one

important issue, which also relates to Section II

above, is whether reciprocity is embedded in the

concept of loyalty (Larmer 1992, p. 126; Vend-

ekerckhove and Commers (2004), pp. 228–229). As

Solomon (1997) described it, loyalty is ‘‘a question

of mutual obligations. What a company can expect

from its employees [...] depends on what the

employees expect, and have got, from the company’’

(p. 175). Vendekerckhove and Commers (2004)

argue for a concept of rational loyalty which has as its

object the explicit set of mission statement, goals,

value statement and code of conduct of the organi-

sation. Thus, coupled with the concept of reciprocal

loyalty, if organisations demand ‘‘rational loyalty’’

from their employees, they have to reciprocate that by

institutionalising whistle-blowing (p. 232). From the

Confucian philosophical perspective, however, the

relationship between the employer-organisation and

the employee ought not to be treated on an equal

footing. The employee is expected to show ‘‘filial

love’’ to the employer, but may not necessarily de-

mand the same love to be shown by the employers

towards them. Further, the concept of ‘‘rational

loyalty’’ does not sit comfortably with the Confucian

emphasis on the ‘‘heart’’ (xin) of the individual

356 Gary Kok Yew Chan

moral actor (potential whistle-blower), rather than

the cognitive self in Aristotelianism.

Apart from the issue of loyalty, several studies have

been conducted on cultural differences with respect to

the decision-making of the whistle-blower (Tavakoli,

Keenan and Crnjak-Karanovic 2003; Sims and Keenan

1999; Brody, Coulter and Mihalek 1998). I shall discuss

briefly those studies which assessed the contribution of

Confucian ethics in the context of whistle-blowing. It

is hoped that further research will be conducted. Chiu

(2003) acknowledged, for instance, that although

Confucian values such as loyalty, respect for authority

and harmony may present obstacles to a potential

whistle-blower, Confucianism also promotes ‘‘proso-

cial’’ behaviour which allows protest and dissent against

authorities when they are incompetent or public wel-

fare is at stake (p. 71).

A very recent report by Zhuang, Thomas and

Miller (2005) has found that the Chinese are more

likely to report the unethical acts of a peer than

Canadians. The authors suggested that this may be

attributed to the greater collectivism (which

emphasise loyalty) and long-term orientation 23

of the

Chinese (p. 477). The Chinese are more unwilling to

report the unethical acts of supervisors compared to

peers due to the high power distance of the Chinese

(i.e. the Chinese are more accepting of hierarchy) (p.

478). However, whilst the criteria of individualism,

collectivism, long-term orientation and power dis-

tance are drawn from Hofstede�s (2001) theory of culture, it should be noted that Confucian ethics was

not explicitly mentioned in the report.

One potential area of study, which, to the au-

thor�s knowledge, has not been conducted, is the question of whether the decision-making of whistle-

blowers is based on or at least influenced by the

doctrine of the mean. This may involve a study of

whether a typical employee, faced with a potential

whistle-blowing issue, would attempt to avoid what

he or she may perceive as extreme outcomes

(whether losing a job, causing the downfall of the

company, or damaging a colleague�s career) and in- stead seek more moderate outcomes.

Concluding remarks

Confucian Ethics can and does play an important

philosophical and practical role in impacting or

influencing the direction of contemporary Business

Ethics in the English-speaking world. With the

growing stature of China�s economy and businesses and the internationalisation of trade and commerce,

it is likely that this influence will continue to be

significant in the future. Studies have shown that it

has had an important impact on businesses in the

Asian region. A deeper understanding of Chinese

ethical philosophies (including Confucian Ethics)

and its relevance to businesses will stand one in good

stead.

We have examined the three important issues of

(i) the general approach of Ethics towards businesses

within the capitalist framework, (ii) the concept of

reciprocity as well as (iii) human virtues and the

Mean. Confucian Ethics provides interesting paral-

lels with Western Business Ethics in respect of the

Ethics versus business profit-making debate and, in

comparison with Aristotelian ethics, the focus on

human virtues and the Mean. At the same time,

Confucian Ethics diverges from Western Business

Ethics in its greater emphasis on hierarchy, guanxi,

social traditions and harmony, and, again comparing

with Aristotle, the Confucian focus on the concrete

individual moral actor, rather than the metaphysical

self. Via this comparative approach, certain

assumptions about the foundations of Business Ethics

may be usefully explored and challenged. The out-

come is likely to be the cultivation of richer and

more comprehensive perspectives of contemporary

Business Ethics for businesspersons, business ethi-

cists, academics and practitioners. It is urged that

philosophical perspectives be further tested by the

empirical studies on bribery, whistle-blowing and

other contemporary business ethics issues.

Notes

1 This is the period c. 600 BC–c. 600 AD during

which many significant philosophies and religions

emerged. See Tamney and Chiang (2002, pp. 8–9). 2

See e.g. Fukuyama (1998) Mallaby (1998). 3

See e.g. Desjardins (2006, p.3) for a discussion of

the ‘‘waning’’ Myth of Amoral Business and the

�emerging� Myth of Moral Business, see De George (1999, pp. 5–7).

4 In 1992, Robert Solomon was able to remark that

‘‘[w]e are gratefully past that embarrassing period when

the very title of a lecture on ‘‘business ethics’’ invited –

The Relevance and Value of Confucianism 357

no, required – those malapert responses ‘‘sounds like an

oxymoron’’ or ‘‘must be a very short lecture’’’’: Solo-

mon (1992, p 317.) 5