Business Ethics in China: A Human Resource Management Issue?

China is widely perceived as having a problem in business ethics. One view holds that elements of Chinese culture tend to encourage unethical business decisions. Another perspective says that China has business ethics issues because its economy is in transition. The unclear rules of the game create opportunity for business ethics problems. The large amount of new wealth creates incentive to cut corners to get rich. Thus China, perhaps more than more developed economies, is seen as having business ethics problems. However, good business ethics help a society as a whole, and some say that good ethics can be a source of competitive advantage for an organization. Steps can be taken to improve Chinese business ethics at the societal level, at the individual level, and, importantly for this paper, at the organizational level. In addition to ethical leadership, we believe that one key to improving ethics at the organizational level is human resource management. Improvement can be made in the areas of recruitment, selection, performance appraisal, performance management, compensation, and benefits. Personnel policies can help ensure ethical conduct within the organization.