OC - Unit 1 Case Analysis

by Joergen Dahlen The case In May 1994, Gao Feng, a devout Christian, was arrested in Beijing for planning a private worship service and candlelight vigil to commemorate the fifth anniversary of the Tiananmen Square massacre. Gao was a 26-year employee of Beijing Jeep, Chryslers joint venture with the Chinese government. Gao was accused of violating Chinese laws against the practice of religion outside of a state-authorized venue. Article 36 of the Chinese Constitution nominally provides for freedom of religious belief; however, the government restricts religious practice to government-sanctioned organizations. State Council Regulation 145 requires all worship-places to register with government religious affairs bureaus and thereby to come under the supervision of official patriotic religious organizations. There are almost 85,000 approved venues for religious activities in China. Many religious groups have been reluctant to comply, either out of opposition to state control of religion or due to fear of adverse consequences if they reveal, as the regulations require, the names and addresses of church leaders. The Universal Declaration of Human Rights, endorsed by UN resolution in 1948, states: Article 18. Everyone has the right to freedom of thought, conscience and religion; this right includes freedom to change his religion or belief, and freedom, either alone or in community with others and in public or private, to manifest his religion or belief in teaching, practice, worship and observance. Article 19. Everyone has the right to freedom of opinion and expression; this right

includes freedom to hold opinions without interference and to seek, receive and impart information and ideas through any media and regardless of frontiers. Article 20. (1) Everyone has the right to freedom of peaceful assembly and association. (2) No one may be compelled to belong to any association.
OC 6445 Unit 1 Joergen Dahlen

According to press reports, Gao was detained by the government for 5 weeks, without formal charge. In early July, he returned to work at Beijing Jeep and told his supervisor that the Chinese Public Safety Bureau had imprisoned him for over a month. Chrysler asked Gao to produced proof of his detention. The Chinese police gave Gao a note that said he had been detained for 3 days and then released without trial. Beijing Jeeps general manager was faced with a tough decision. The Chinese joint venture partner was pressuring Chrysler to fire Gao. If the manager did not fire him, millions of dollars of Chryslers invested capital in China would be put at risk. If, however, Chrysler fired Gao Feng, the company would become complicit in the violation of his rights to religious freedom and political expression. One of the keys to success in the Chinese market is good relations with the Communist Party, which keeps rigid control over the economy. Multinational corporations spend years cultivating good guanxi or connections in China. They are thus extremely vulnerable to retaliation. At the time of the Gao Feng incident, for example, Chrysler was aware that failure to accede to the governments request could result in losing a valuable minivan contract to its German competitor Daimler Benz. (Spangler, 2011).

OC 6445

Unit 1

Joergen Dahlen

Case Analysis

This case combines issues related to ethical decision making, cultural decision making and a possible need for organizational change. It touches on some complex issues related to Chinese and international laws. The text presents two possible outcomes, which are: 1. If Chrysler decides not to fire Gao, the company will jeopardize its joint venture partnership with the Chinese. 2. If Chrysler decides to fire Gao, the company would become complicit in the violation of his rights to religious freedom and political expression, as stated in The Universal Declaration of Human Rights. Neither of the options is beneficial for Chrysler and their partnership with the Chinese. I would also like to argue that neither are any of the options beneficial for the Chinese (Even though they may not see it this way). By using Adlers (2008) Cross-Cultural Decision Making Model and other theories, I will try to address the issues stated above.

Traditional decision-making processes are made up by five basic steps (Adler, 2008): 1. Problem recognition 2. Information search 3. Construction of alternatives 4. Choice 5. Implementation

OC 6445

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Joergen Dahlen

In the case of Chrysler operations in China, Chrysler may recognize this problem differently compared to the Chinese. They would probably also gather information related to the issue differently from the Chinese. In the eyes of the Chinese, there is only one alternative and choice Gao must be fired. Managers from different cultures perceive problems in different ways (Adler, 2008). Therefore, there will be cultural variations in the approach to each of the five steps.

The first step, Problem recognition, addresses what different cultures identify as a problem and when they recognize that a problem exists. Some cultures emphasize solving problems, while others accept situations as they are (Adler, 2008). When looking at the case of Chrysler and the Chinese, we must look at both sides of the story and try to identify cultural differences that may affect the problem recognition step. According to research done by Maris G. Martinsons (2006), North Americans tend to value individual freedom while the Chinese tend to maintain social order through a harmony-within-hierarchy arrangement. Because North Americans value freedom (and thereby freedom of speech), Chryslers manager would probably identify this problem as something that can be fixed. On the other side, the Chinese see this problem as more rigid and expects others to accept the rules set by the government. Even if some of the Chinese representatives would want to resolve the situation in sake of the joint venture, they would be restricted to oppose because of the social order and hierarchy.

When gathering information, North Americans tend to base their perception of the situation on fact-oriented, empirical evidence (Adler, 2008). Americans tend to have a more pragmatic approach to gathering information (The Hofstede Center, Undated), meaning that they check to see if the information is true. Chrysler would want to get the facts straight before they start

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Joergen Dahlen

constructing alternatives. China has a score of 100 on pragmatism, which means that they have a very pragmatic culture and therefore tend to believe that that the truth depends very much on the situation (The Hofstede Center, Undated). In this case, the truth is controlled by politics and gathering information would be bound by the same hierarchy arrangement as mentioned in step 1. They would not go against the word of the police, and the information related to the issue would probably be strictly regulated by politics and the social order related to this. Because of the social order and hierarchy, Chrysler would probably have a hard time getting all the correct evidence and information from the Chinese police/government officials.

According to Adler (2008), people from California tend to generate more new alternatives, because Californians come from a more future-oriented culture. I will assume that this accounts for most other North Americans as well, since the US as a whole is considered to be a future-oriented culture (Shi & Wang, 2011). China scores lower than the US on future orientation (Shi & Wang, 2011), which makes sense since business relationships is based on good Guanxi, which can be explained as a relationship built on trustworthiness over time (Los Angeles Chinese Learning Center, undated). Because of possible limitations in the Information Search-step, there may be limitations as to constructing alternatives for Chrysler. Chryslers management might have to look at other options. They may try to locate similar cases to figure out if there has been any equivalent construction of alternatives. They could also consider creating alternatives based on their company values (ethical values) and social responsibility policies. If an alternative were found to be in conflict with company values and social responsibility policies, choosing this alternative may cause problems in the future for Chrysler on a global scale by damaging their company reputation.

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Joergen Dahlen

When it comes to making a decision, North Americans tend to do this individually and in a quick-paced manner (Adler, 2008). In more hierarchical cultures cultures that scores high on the power distance dimension only senior executives make important decisions. In this case, there is a lot of risk involved for Chrysler when making a decision. Willingness to accept risk can be examined through The Hofstede Centers (Undated) Uncertainty Avoidance: North American culture scores very low on Uncertainty Avoidance, which means that Chrysler would probably tend to approach this case with a risky behavior. At the same time, the Chinese also tend to have a risky behavior according to the Hofstede Center (Undated). According to Adler (2008), people from the US have a more sequence-oriented culture, meaning that they usually discuss alternatives in a preplanned sequence and make incremental decisions as each alternative is discussed.

Some of the most difficult global business decisions involve ethical considerations (Adler, 2008, p. 214). In this case, there are many possible ethical considerations to be taken when implementing the choice. Whether Chrysler chose to address these ethical considerations or not, can be affected by the business culture in Chrysler, which again is influenced by the culture of the US. According to a survey by Harvard Business Review (as cited in Adler, 2008), almost half of the responders agreed that American business executives tend not to apply ethical laws immediately, but rather work towards gains. I would like to question the relevance of this research because it may be outdated the development of the global business climate and failures done by companies like Enron, can possibly have changed the way American business executives conduct their business (Question for further research).

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Joergen Dahlen

To summarize, Chrysler should consider how firing Gao would be in line with company values and policies. If firing Gao is in conflict with company values and policies, they should consider how this might affect the company in the future due to how other employees might react and how this may cause bad publicity, as well as how the company would become complicit in the violation of Gaos rights to religious freedom and political expression. The case only states that the relationship with the Chinese will be put at risk. It does not state that the relationship will be terminated. As I wrote in the paragraph about Uncertainty Avoidance, Americans tend to be willing to take and accept risk. If Chrysler weighs up the possible loss and gains, they may come to the conclusion that it is worth taking on that risk, and instead try to heal their relationship with the Chinese in the aftermath.

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Reference list Adler, Nancy J. 2008. International Dimensions of Organizational Behaviour. Fifth Edition. Thomson Higher Education.

Los Angeles Chinese Learning Center. Undated. Chinese Business Culture: Guanxi, An Important Chinese Business Element. http://chinese-school.netfirms.com/guanxi.html (Read 02/5/2014)

Martinsons, Maris G. 2006. Comparing the Decisions Styles of American, Japanese, and Chinese Business Leaders. City University of Hong Kong.

Shi, Xiumei. Wang, Jinying. 2011. Cultural Distance between China and US across GLOBE Model and Hofstede Model. Vol. 2. PP 11-17. International Business and Management.

The Hofstede Center. Undated. Country Comparison: United States. http://geerthofstede.com/united-states.html (Read 2/6/2014)

OC 6445

Unit 1

Joergen Dahlen