The Mechanism of Entrepreneurs' Decision-making in the Spillover Effects of Industry Unethical Behavior: A Theoretical Reflection under the Chinese Cultural Context

摘要

Ethical issues in businesses in China are at large. Chinese entrepreneurs depend mainly on their personal relations as the guidance of business ethics. The concept of "guanxi" is inherent in Chinese work ethics and can be conceived as a cultural way of doing businesses in China. This study attempts to find out how the decision-making of a firm is affected by the unethical behaviour of other firms in the industry. The key facets of relational embeddedness include interpersonal trust and trustworthiness, overlapping identities, and feelings of closeness or interpersonal solidarity. Based on the nature of business in China, the prevailing unethical behaviour of a firm in an industry has a spillover effects on other firms and compel them to make an unethical decision. Hence, the main proposition of the study is that; an unethical behaviour in the industry spillover its effects into unethical decision-making of a firm in that industry. The highly embededness in relations and external locus of control also lead to moral disengagement of an entrepreneur thereby commit an unethical decision. Therefore, when an unethical behaviour has occurred in the industry, the monitoring mechanism should convey the attention to the other entrepreneurs to avoid the spillover of that unethical behaviour.