Global Institution of Business? Comparing Role-of-Business Expectations in USA, South Korea, Hong Kong and Singapore

We examined the structure and content of people’s beliefs about the role of business in society. Institutional Theory and global economic integration would lead one to expect cross-cultural alignment and isomorphism regarding the institution of business. In an effort to find a “global” model, we combined data from USA, South Korea, Hong Kong and Singapore and conducted exploratory and confirmatory factor analyses (EFA and CFA). The results identified a 4-factor model that captured the implicit structure of people’s expectations regarding business. The four domains of concern covered environmental, human dignity, community and economic expectations. However, when we conducted multi-group structural equation modeling (MSEM), only two of the four countries conformed to this “global” model. Subsequent EFAs for the non-conforming countries uncovered significant structural differences in the number and composition of factors in their institutional models of business. In addition, we found significant differences between countries with respect to the content of their institutional expectations. For example, the two countries with statistically-similar institutional structures had significantly different mean ratings on two of the four factors. They were concerned about the same domains—but with different levels of expectations. Our results paint a complicated picture—on the one hand we found a global model that fit the combined data and was a good fit for half of the countries surveyed, but we also found that there were significant cross-cultural differences in structure and content of the respondents’ role-of-business expectations. Not only was there inconsistency between the countries about which CSR domains were relevant to business, but respondents in different countries differed about how they defined the domains. Therefore, managers face a complicated challenge when enacting corporate social responsibility (CSR) practices in a global context. Lacking a single, unifying set of global expectations, we advocate clarity with respect to the local variations regarding the role of business in society.