Electronic copy of this paper is available at: http://ssrn.com/abstract=728441

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Chinese and American Arbitrators:

Examining the Effects of Attributions and Culture on Award Decisions

Ray Friedman Owen Graduate School of Management

Vanderbilt University 401 21st Ave. South Nashville, TN 37203

Phone: (615) 322-3992 Fax: (615) 343-7177

E-mail: Ray.Friedman@Vanderbilt.Edu

Wu Liu Owen Graduate School of Management

Vanderbilt University 401 21st Ave. South Nashville, TN 37203

Phone: (615) 322-8655 E-mail: Wu.Liu@Owen.Vanderbilt.Edu

Chao Chen

303 MEC, Organization Management Department Rutgers Business School

111 Washington Street Newark, NJ 07102-3027 Tel: (973) 353-5425 Fax: (973) 353-1664

E-mail: chaochen@andromeda.rutgers.edu

Shu-Cheng Chi Department of Business Administration

National Taiwan University 50, Lane 144, Sec. 4, Keelung Rd.,

Taipei, Taiwan Phone: (886) 2-33661049 Fax: (886) 22362-5379

Email: n136@mba.ntu.edu.tw

Electronic copy of this paper is available at: http://ssrn.com/abstract=728441

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Abstract

Most arbitration research has been conducted in United States, despite the growth

of arbitration internationally. In this study, we examine differences between Chinese and

Americans arbitrators. First, we examine general levels of leniency versus punishment

when arbitrators make awards. We predict, and find, that Chinese arbitrators punish bad

performance more heavily than do American arbitrators. Second, we examine the effects

of attributions on awards. Prior theory suggests that Chinese tend to have more external

attributions for events, which should make Chinese arbitrators more lenient than

American arbitrators. We find the opposite – that Chinese arbitrators have more internal

attributions for poor performance than do Americans. Moreover, where evidence is

mixed (evidence is provided for both internal and external attributions), American

arbitrators pay more attention to external causes, while Chinese arbitrators pay more

attention to internal causes.

EMPIRICAL PAPER

KEY WORDS:

Arbitration, Attribution, Chinese, Culture, Cross-cultural, punishment

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Arbitration, as an important form of third-party dispute resolution, has received

much attention. Compared with other dispute resolution alternatives, arbitration has

advantages in that it is convenient, cost-saving and efficient in concluding cases. It is

also preferred due to its flexibility, confidentiality, finality and enforceability. More

parties have come to choose and adopt arbitration for dispute resolution. One of the

research questions that has dominated the arbitration literature is: which factors influence

arbitrator decision-making? Studies have indicated that the gender of the grievant (e.g.

Bingham & Mesch, 2000), the gender of the arbitrator (e.g. Caudill & Oswald, 1993), the

age and experience of the arbitrator (Bemmels, 1993), underlying principles held by

arbitrators (Bazeman, 1985) and attribution process (Bemmels, 1993) may affect

arbitration decisions.

All of those studies, however, were conducted in western cultural contexts.

Therefore, these studies leave open the possibility that arbitrators from different cultures

might not resolve cases in the same way. Possible cultural differences in arbitration have

not been addressed in the arbitration literature. With globalization, national economies

are now closely interwoven, and business practices that had been more common in the

West – such as arbitration -- are now spreading to other countries. Within China, in

particular, the total number of international arbitration cases has grown from 203 to 738

in the 1990s (CIETAC report, 2000). Arbitrators from different countries are invited to

form arbitration panels. It is important to know whether arbitrators from different

cultural backgrounds solve cases in the same way.

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The purpose of this study is to investigate the effects of cultural difference on

arbitrator decision making and the mechanisms leading to these differences. Specifically,

we will focus on comparing Chinese and American arbitrators. We ask: Do Chinese and

American arbitrators evaluate cases in the same way? We expect some differences due to

evidence that Chinese and Americans differ in terms of the focus on punishment versus

rewards, and in terms of a focus on internal versus external attributions. We examine

these issues by collecting data from arbitrators in the U.S. and in China, using a scenario

research method (as used, e.g., in Bemmels, 1993).

Theory

Arbitrators have a great deal of leeway in determining the awards they make.

One element is to determine the level of responsibility of each party. The other element

is to determine how much to award the complaining party. The final decision is affected

by both judgments of responsibility and personal preferences regarding how severe the

punishment should be. Both elements need to be considered when examining Chinese

and American arbitrators.

Determining Responsibility: Attribution in Arbitration

Attribution theory has been developed to explain how people interpret and

response to what happens to them or others. Based on information at hand, and personal

beliefs and motivations, people usually first interpret what causes outcomes and then they

react to the outcome based on those causal judgments (Kelley & Michela, 1980). Many

studies have confirmed that people engage in attribution process when making decisions,

such as when leaders evaluate subordinates’ performance (Knowlton & Mitchell, 1980;

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Dobbins, 1985), when employees’ respond to a coworker’s performance (e.g. Struthers et

al, 2001), and when labor arbitration make decisions (Bemmels, 1991).

Two attribution models have received much attention and been well examined in

the past thirty years. One is Kelley’s (1967, 1973) cube, which describes how different

information can influence social attribution processes. Kelley argues that attributions are

a function of consensus, consistency, and distinctiveness. People can take the

combination of the three types of information to attribute other’s behavior to one of the

three general causations: person, stimulus, or situation (see the detailed review by

Martiko & Thomson, 1998). The other is Weiner’s (1971, 1985) achievement

motivation model, which explains how attributions individuals make for their own

success or failure influence their subsequent behavior, affect, and expectations. Weiner

argues that attributions can be categorized into three dimensions: locus of causality,

stability, and controllability (see the detailed review by Martiko & Thomson, 1998).

Although Kelley’s model was originally to explain other’s behavior and Weiner’s model

was originally to explain people’s own outcome, some scholars have recently integrated

both of them to explain social- and self-attributions (Martiko & Thomson, 1998)

While arbitrators would like us to believe that all their decisions are “objective”

and based purely on law, we can expect that arbitrators are influenced by attribution

processes. That is, they determine awards in part based on who they think is responsible

for the problem that created the dispute. Bemmels (1993) used Kelley’s cube to examine

the attribution process of arbitrators by conducting a field experiment. He generated a

labor arbitration case, and manipulated three factors that influence attribution, i.e.

consensus, distinctiveness, and consistency. The results of this study generally supported

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the idea that attribution theory can explain how arbitrators decide labor cases.

Specifically, when given information that makes the target of the grievance appear

responsible (i.e. low consensus, low distinctiveness, and high consistency), arbitrators

tended to make decisions more favorable to the grievant; when given information that

makes the target of the grievance appear not to be responsible (i.e. high consensus, high

distinctiveness, and low consistency), arbitrators tended to make decisions less favorable

to the grievant. In sum, attribution theory provides us with an explanation of arbitrator

decision-making. In the following hypothesis we define negative behavior as the

specific incident that leads to the dispute.

H1: If arbitrators judge negative behaviors to be more internally caused than

externally caused, they will give larger awards to the party complaining about

those behaviors.

Cross-Cultural Attribution

People approach attribution problems with beliefs about the causes and effects

involved: “given a certain effect, there are suppositions about its causes; given a certain

cause, there are expectations about its effects.” (Kelly & Michela, 1980, pp468). Culture,

which influences people’s beliefs, is another important factor in attribution processes.

Cross-cultural attribution literature indicates that given the same information, people

from different cultures may give different explanations (Miller, 1984, 1987; Morris &

Peng, 1994; Stevenson & Stigler, 1992; Choi, Dalal, Kim-Prieto, & Park, 2003).

Americans tend to make more dispositional attribution, while Asians tend to make

more situational or contextual attributions. Shweder and Bourne (1982) found that

compared to Americans, Hindu Indians tended to use more contextual-centered

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descriptions when they described their acquaintances. Miller (1984) pushed a step

further. She asked Hindu Indian and American participants (aged 8, 11, 15, and adult) to

report two prosocial and two deviant behaviors of one of their acquaintances, and to

provide explanations for those behaviors. She found that Indians used situational

attributions significantly more than Americans, and Americans gave dispositional

attributions more than Indians. In addition, socialization partly accounted for such

differences because the differences were more salient with the increase of age. However,

since Shweder & Bourne (1982) and Miller (1984) asked respondents to report about

different objects (e.g, the deviant behavior with which they are familiar), the attribution

differences may be caused by real differences created by these objects. Morris and Peng

(1994) provided more strong evidence demonstrating differences in attribution. They

showed the same cartoons (Study 1) and social events (Study 2) to Chinese and American

participants, and asked them to provide attributions. They found that Chinese students

attributed more to situational causes than American counterparts, and American students

emphasized dispositional causes more. Thus, culture affects attributions (e.g, Morris &

Peng, 1994).

The Chinese approach to interpreting behaviors is consistent with Chinese culture.

Chinese people, who define themselves as the members of group, have a holistic

worldview (Markus & Kitayama, 1991). They believe that human behavior is

constrained by role, the relationship with others, and situations. Therefore, when

unexpected things happen, they attribute more to situations than dispositions. On the

contrary, American people, who define themselves as independent individuals, have an

analytic worldview. They presume that social behavior is shaped by personal

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preferences and dispositions. So they tend to attribute unexpected events to dispositions.

In sum, given the same information, Chinese are more likely to make external attributions

than Americans, whereas Americans are more likely to make internal attribution than

Chinese.

H2: Chinese arbitrators are more likely than American arbitrators to see

external factors causing the negative behaviors they are asked to evaluate.

As a result of this difference in attributions, we expect that:

H3: A tendency towards external attributions of the causes of negative behaviors

will cause Chinese arbitrators to make lower awards than American arbitrators.

Information Processing

In prior research on attribution in arbitration (Bemmels, 1993), conditions were

manipulated such that it was very clear whether an internal or external attribution was

triggered. However, in many cases arbitrators may be exposed to contending arguments

and thus receive information suggesting both internal and external attributions In such

cases the question is whether the arbitrator is more likely to pay attention to the

information suggesting internal attribution or to information suggesting external

attributions.

We argue that causal beliefs can influence information processing in attribution.

When people hold suppositions or expectations when assessing causal effects, they tend

to see information that fits with their prior beliefs while ignoring the information that

does not fit with their prior beliefs (Chapman & Chapman, 1969; Ajzen, 1977; Golding &

Rorer, 1972). Therefore, while we expect that for all arbitrators to make attributions

about the causes of negative behavior to be consistent with the information provided (e.g.,

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where there is high consensus, low consistency, and low distinctiveness, external

attributions are expected), we also expect that Chinese and Americans will attend to

information that is consistent with their cultural biases.

H4: If information is provided to arbitrators is ambiguous (that is, it includes

both information that suggests external and internal attributions for the negative

behavior), cultural biases will be amplified. Groups that tend to see more

external attributions will be more influenced by information suggesting external

attributions. Groups that tend to see more internal attributions will be more

influenced by information suggesting internal attributions.

Given H2 above, which predicted that Chinese arbitrators would tend to see external

causes for behaviors while American arbitrators would see internal causes for behaviors,

we expect that:

H5: If information is provided to arbitrators is ambiguous (that is, it includes

both information that suggests external and internal attributions for the negative

behavior), Chinese arbitrators will be more influenced by information suggesting

external attributions while American arbitrators will be more influenced by

information suggesting internal attributions.

Determining Award Level: Punishment in Chinese and American Cultures

Now we turn to the second element that influences arbitration awards: severity of

punishment. Do Chinese and Americans think differently about punishment? Research

suggests that Chinese and Americans differ in the strength of social controls, with

Chinese exerting more control than Americans. Chen and colleagues (Chen, Hastings,

Rubin, Chen, Cen, & Stewart, 1998) found that Chinese parents emphasize more

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behavioral control and obedience from toddlers than do Canadian parents. Studies of

culture show that Chinese are more oriented to how others view them than is the case for

Americans (e.g., Markus & Kitayama, 1991). Control is not just meant for the individual

target of control attempts, but also for observers. Model behavior is a crucial component

of traditional Chinese social control system. In “the Analects of Confucius”, Confucius

said, “If a ruler is himself upright, his people will do their duty without orders; but if he

himself be not upright, although he may order, they will not obey.” (Confucius [1960]:

book 13, chap.6: 266).

While social controls are generally stronger in Chinese than American culture, the

particular form that control takes is also different, with Chinese emphasizing punishment

and Americans emphasizing reward. The stronger use of punishment in Chinese culture

can be seen in studies of early childhood development. For example, Americans regard

corporal punishment to child as illegitimate and unfair parental practice, whereas Chinese

view such parental practices as expressions of love and concern (Chao, 1995; Simons,

Wu, Lin, Gordon, & Conger, 2000). More interestingly, authoritarian parenting is

associated with low school achievement for U.S. children, whereas such parenting is

associated with high school achievement for Chinese children (Dornbusch, Ritter,

Leiderman, Roberts, & Fraliegh, 1987; Steinberg, Dornbusch, & Brown, 1993).

Redding (1990) argues that in traditional Chinese culture order is maintained “largely by

fear of punishment (p. 45).” He goes on to explain that “the Draconian rigor with which

authorities could treat breaches of role performance is frighteningly illustrated by Hsu, in

the grim story of the Cheng family (p.45):”

“In October 1865, Cheng Han-cheng’s wife had the insolence to beat her mother-in-law. This was regarded as such a heinous crime that the following punishment

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was meted out. Cheng and his wife were both skinned alive, in front of the mother, their skin was displayed at city gates in various towns and their bones burned to ashes. Cheng’s granduncle, the eldest of his close relatives, was beheaded; his uncle and two brothers, and the head of the Cheng clan, were hanged. The wife’s mother, her face tattooed with the words ‘neglecting the daughter’s education’ was paraded through seven provinces. Her father was beaten 80 strokes and banished to a distance of 3000 li. The heads of the family in the houses to the right and the left of the Cheng’s were beaten 80 strokes and banished to Heilung-kiang. The educational officer in town was beaten 60 strokes and banished to a distance of 1000 li. Cheng’s nine-month-old boy was given a new name and put in the country magistrate’s care. Cheng’s land was to be left in waste ‘forever.’ All this was recorded on a stone stele and rubbings of the inscriptions were distributed throughout the empire” (p.45-46).

This story suggests that punishment is emphasized in Chinese culture because it is helps

remind others of social rules. The emphasis in western culture, by contrast, is

punishment that is “fair” to the individual. This difference in emphasis can be seen in the

workplace, as well. Zhou and Martocchio (2001) found that Chinese managers tend to

give more punishments for bad performance than American managers, while American

managers tend to give more rewards for good behavior than Chinese managers.

Given the greater focus on punishment in Chinese culture, we might expect that

Chinese arbitrators will impose more heavy punishments on those who do something

wrong, so that when there is a complaint made to them as arbitrators, they are more likely

to give higher awards to the wronged party.

H6: Chinese arbitrators will give higher awards to a wronged party (greater

punishment to the party that engaged in the negative behavior) than will

American arbitrators.

Note that we have opposing hypotheses about the overall level of award made by Chinese

versus American arbitrators. H3 says that Chinese will make lower awards than

Americans since they are more likely to attribute negative behaviors to external causes,

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while H7 says that Chinese will make higher awards than Americans since they are likely

to be more punishing of negative behavior.

Method

We conducted a field experiments to test our hypotheses, using scenarios. We

asked arbitrators to read those scenarios, and then complete a questionnaire indicating

their attributions and arbitration decisions.

The Case

We created three versions of the scenario. One scenario that provides external

attribution information, one provides internal attribution information, and a third provides

both external and internal (ambiguous) attribution information. These scenarios were

written and revised after consultation with several active arbitrators. The scenario

describes a dispute between a wool supply company and a clothes company. The wool

supply company was supposed to ship a certain amount of wool to a clothes company

every day but for two weeks it failed to do so. It was also pointed out that during the

same period the electricity system in the city broke down repeatedly. The dispute focused

on whether the wool company was responsible for the failure of the shipment. One

version included external attribution information, i.e. high consensus (most other

companies also failed to supply during that period), low consistency (the wool company

was reputed to be highly reliable). One version included internal attribution information,

i.e. low consensus (most other companies managed to fulfill the contract), high

consistency (the wool company was reputed to be highly unreliable). Another version

provides ambiguous information, i.e. one witness gives external attribution information

while the other witness gives internal attribution information.

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The Design of the Study, Manipulations, and Variables

Each participant read one of the three versions of the attribution case. Participants

were all experienced arbitrators, with one set from the U.S. and another set from China.

Subjects were reached with the assistance of one (in China) or two (in the U.S.)

arbitration associations that emphasize commercial arbitration (as opposed to

employment or labor arbitration). For Chinese, the scenario and survey instrument was

provided in Chinese. This was done by translating the English version into Chinese,

back-translating, and then correcting any problems that the back-translations revealed

(Brislin, 1970). With subjects in China and the U.S., we thus have a 2 (country of

arbitrator) x 2 (type of information in case) experimental design for the hypotheses that

examine the effects of attribution on awards, and a 2 (country of arbitrator) x 3 (type of

information in case) experimental design for the hypothesis about the effects of

ambiguous information.

After reading each scenario, arbitrators were asked several questions to make sure

that they understood the manipulations. These manipulation checks helped us to be sure

that respondents received the information that was relevant to make attribution judgments.

In addition, they were asked questions about their attributions (i.e to what extent the

failure was caused by external factors or internal factors). Next, they were asked to

make the final award decision, i.e. how much should the plaintiff be compensated. Lastly,

they were asked to fill out a short version of the locus of control scale (Ghorpade, Hattup,

& Lackritz, 1999) by James (1957). We chose this scale because conceptually, locus of

control seems to measure at a trait level a predisposition to see the world as externally or

internally controlled.

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Results

Preliminary Analyses

As a first step in the analysis, we did an exploratory factor analysis of items

intended for our scales “internal attribution” and “locus of control,” using varimax

rotation. The locus of control measure did not hold together as expected, and results

varied when the Chinese and American samples were analyzed separately. We were able

to identify five items that held together in both cultures separately (as well as when both

samples were combined) so we reduced the size of the scale to include only these items.

A confirmatory factor analysis of this locus of control scale and the internal attribution

scale showed that the two-factor solution (CFI=.967, NNFI=.954, RMSEA=.055) fits

better than the one-factor solution (CFI=.611, NNFI=.481, RMSEA=.185; ∆ χ 2=119.38,

∆df=1, p<.001). Scale alphas are shown in Table 1.

---------------------------------------------- Insert TABLE 1 about here

----------------------------------------------

In order to be sure that our manipulations worked for both Chinese and American

subjects, we examined our three manipulation check items (“Many companies failed to

deliver their products to customers during those weeks,” “It was difficult for State Wool

to buy portable electricity generators to solve the problem,” and “State Wool is known as

a reliable supplier”), to see if there were significant differences between ratings for the

internal and external attribution scenarios. For both Chinese and American arbitrators,

the differences were significant for all three items (in all cases, p<.001).

In order to see if our samples were culturally typical (Brett, 1997) we regressed

locus of control on country (American=0, Chinese=1), controlling for age, education, and

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sex, shows that Chinese are higher on external locus of control (B=.26, p<.05). Our logic

is that if prior theories about Chinese making external attributions are correct, they should

be higher in external locus of control. Thus, this analysis shows that the Chinese and

American samples in our study are culturally typical. However, in our case this is not

actually necessary, since we are studying Chinese and American arbitrators, not Chinese

and Americans in general. While it is interesting to know if expected patterns appear for

a cross-cultural sample of arbitrators, the validity of the study does not depend on it.

Main Effect of Attribution

To test H1, that attributions affect arbitrator awards, we regressed award on

attribution, controlling for age, education, arbitrator experience (the number of cases that

arbitrator had handled), and order. Order was included because during this data

collection we conducted a second study (not reported here) using the same subjects since

samples of arbitrators are very hard to get. Scenarios from the two studies were counter-

balanced, but to make sure this did not bias our results we added a control for order (0, if

this survey was received first, and 1 is this survey was received second). The sample

used for this analysis was those who received either the external or internal conditions.

Results, shown in Model 1 of Table 2, indicate a strong effect of attribution on award.

The Beta for attribution is .43, p<.001. Thus, H1 was supported. To further examine the

effects of attribution for all arbitrators, we ran a model (model 2) showing that our

experimental condition significantly affected attributions (Beta=.48, p<.0001) and

another model (model 3) showing that our experimental condition significantly affected

final awards (Beta=.36, p=.001). Adding attribution to model 3 (see model 4), we found

that the effect of the experimental condition (Beta=.19, n.s) on award level was fully

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mediated (Barron and Kenny, 1986) by attributions. The Beta for experimental condition

was reduced from .36 (p<.001) to .19 (n.s.), while the Beta for attribution was .32 (p<.05).

---------------------------------------------- Insert TABLE 2 about here

----------------------------------------------

Main Effect of Country on Attributions and Awards

To test H2, that Chinese will report higher level of external attributions than

Americans, we regressed attribution on country, controlling for age, education, sex,

experience, and order. The sample used for this analysis was those who received either

the external or internal conditions. As shown in Model 1 of Table 3, the coefficient for

country was highly significant, but in the opposite direction of what we expected (B=.50,

p<.001). Chinese were far more likely to attribute the negative behavior reported in our

scenario to internal causes than external causes. This held true, despite Chinese being

higher on external locus of control than Americans. Given these results, we should

expect attributions to push the award levels higher for Chinese than Americans, rather

than lower (thus, we need to modify H3 to now say that Chinese arbitrators will make

higher awards than will American arbitrators).

---------------------------------------------- Insert TABLE 3 about here

----------------------------------------------

To examine the main effect of country on arbitrator awards, we regressed award

on country, controlling for age, education, sex, experience, and order. As shown in

model 2 of Table 3, country was significant (B=.31, p<.05), showing that Chinese

arbitrators gave higher awards than did American arbitrators. In order to see whether this

was driven by cross cultural differences in attribution (our modified H3), or a general

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tendency of Chinese to punish negative behavior more than Americans (H6), we added

attribution to Model 2. As shown in Model 3 of Table 3, adding attribution reduced the

coefficient for country from .31 to .10, a level that was not significant, and attribution

remained highly significant (B=.41, p<.01). It appeared (following the method suggested

by Barron and Kenny, 1987) that the higher awards made by Chinese arbitrators could be

fully explained by higher levels of internal attribution among Chinese arbitrators. Since

Chinese-American differences in awards were fully mediated by differences in

attributions, we must conclude that that other factors – such as our hypothesized tendency

for Chinese to punish more severely – did not significantly affect Chinese-American

differences in arbitrators awards. Thus, we must reject H6.

Cross-Cultural Differences in Attribution Processes

We found earlier that arbitrators in our sample, as a whole, responded as expected

to attribution processes. For exploratory purposes, we checked to see whether attribution

processes differed between Americans and Chinese. Models 1 and 2 of Table 4 show

that our experimental condition significantly affected attributions for both American

(Beta=.57, p<.01) and Chinese arbitrators (Beta=.57, p<.01). As shown in Model 3, the

interaction effect of country by condition was not significant (Beta=.20, n.s), indicating

that our experimental manipulation produced equivalent attribution responses in Chinese

and American arbitrators. Looking at the effects of attributions on awards, Models 4 and

5 show that, for both American and Chinese arbitrators, attributions significantly affected

final awards (For American, Beta=.54, p<.01; for Chinese, Beta=.32, p<01). As shown in

Model 6, the interaction effect for country by attribution was not significant (Beta=-.58,

n.s), indicating that attributions produced equivalent award responses in Chinese and

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American arbitrators. Lastly, looking at overall effect of experimental condition on

awards, Model 7 and 8 show that, for all both Chinese and American arbitrators, our

experimental condition significantly affected final awards (For Americans, Beta=.57,

p<.01; for Chinese, Beta=.27, p<.05). As shown in Model 9, the interaction effect for

country by experimental condition was not significant (Beta=-.52, n.s.), indicating that

our experimental conditions produced equivalent award responses among Chinese and

American arbitrators.

---------------------------------------------- Insert TABLE 4 about here

----------------------------------------------

Cross-Cultural Differences in Information Processing

H4 states that, given ambiguous stimuli (the existence of both internal and

external attribution information), arbitrators will be more influenced by the information

that is consistent with their prior views. H5 states that, because Chinese focus more on

external attributions, Chinese will be more influenced by external information while

Americans will be more influenced by internal information. Since we now know that

Chinese arbitrators tended to make more internal attributions (not external) for negative

behaviors, we should expect the opposite of our original H5. To test for these

hypotheses we conducted an analysis of covariance (ANCOVA) of condition (internal

causes, external causes, and both) by country while controlling age, education, gender,

experience and order, with arbitrator award as the dependent variable. As seen in table 5,

the country by condition interaction effect was significant (F=5.75, p<.01). Figure 1

shows the adjusted marginal means of award for Chinese and Americans for the three

conditions (internal, external, and both). Looking at figure 1, it appears that Chinese

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arbitrators responded to the mixed condition the same as they responded to the internal

condition and that American arbitrators responded to the mixed condition the same as

they responded to the external condition. Table 6 reports comparisons of the adjusted

means, confirming that for American arbitrators award levels for the external and

ambiguous conditions were the same, while they were both different from the award

levels for the internal condition. It also shows that for Chinese arbitrators award levels

for the internal and ambiguous conditions were the same, while they were both different

from the award levels for the external condition.

---------------------------------------------- Insert TABLE 5 about here

---------------------------------------------- ----------------------------------------------

Insert FIGURE 1 about here ---------------------------------------------

To see if this was due to differences in attribution, we did the same ANCOVA

with attribution as the dependent variable. In this analysis, the interaction effect of

country by condition was not significant (see Table 5). Looking at Figure 2, it appears

that attribution levels for both Chinese and American arbitrators was between that of the

internal and external conditions, and that there was no difference in the pattern for

Chinese and Americans.

---------------------------------------------- Insert FIGURE 2 about here

---------------------------------------------- Looking at Table 6, comparing the marginal means of the cells, we can see that

attributions for the mixed condition were not significantly different than those for the

internal and external conditions, for American arbitrators. For Chinese arbitrators,

however, the marginal means for the mixed condition were significantly different than

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the external condition, but not significantly different than the internal condition. Despite

this last finding, the lack of a significant interaction effect between country and condition,

and the contrast results for Americans raises the question of whether Chinese-American

differences in awards for the ambiguous condition can be explained by differences in

attribution. To answer that question, we did regression just for respondents to the

ambiguous condition. For this sample (received ambiguous scenario), however, our

initial regressions indicated that we had problems with multicollinearity--- the

correlation between education and country happened to reach as high as .94 in this

sample. The collinearity statistics showed that the tolerance for both “country” and

“education” were.095. Therefore, we dropped education as a control from this

regression. The resulting model shows that country had a significant effect on award in

the mixed condition (Beta=.76, p<.001). However, adding attribution to the model did

not reduce the effect of country very much (the Beta shifted from .76 without attribution

to .61, p<.001 with attribution included). This suggests that while cross-country

differences in attribution may account for some of the difference between Chinese and

Americans in terms of awards, much of the difference must be explained by other causes.

The one cause we have presented above is that Chinese were higher on punishing than

were Americans. It seems that this dynamic may not come into play when attributions

are very clear (that is, when there is a clear external or internal cause), but it did come

into play when the situation was more ambiguous.

---------------------------------------------- Insert TABLE 6 about here

----------------------------------------------

Discussion

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This study extends prior research on attribution in arbitration to a non-Western

setting, where attribution processes are though to operate differently (Morris and Peng,

1994). Our study reproduces Bemmels’ (1993) finding that arbitrators in general do not

respond just to what the parties in a dispute do, but also to their assessment of whether

the actions were internally or externally caused. When exposed to evidence that the

action was internally caused (in our case, high consistency and low consensus (we

manipulated two of the three of Kelly’s (1967, 1973) cube) arbitrators provided higher

awards to the party making the complaint than when exposed to evidence that the action

was externally caused. This basic process occurred for both Chinese and American

arbitrators.

However, Chinese arbitrators did differ from American arbitrators in that they

were more likely than American arbitrators to make internal attributions for the behaviors

that they judge, and these attributions explained higher levels of awards. This finding

was surprising, given past research showing that Chinese tend to make more external

attributions than Americans. At this point we can only speculate about the cause of this

surprise finding, especially given the fact that Chinese in our study were higher on

external locus of control than Americans in our study (that finding would seem to

confirm a general tendency of our Chinese subjects to see external factors as more

influential than internal factors). We see four possible explanations.

First, none of the prior studies of attribution put the subjects in a position to make

judgments about the other party. They were asked to explain what was happening, but

not to make judgments or decisions about awards or punishments. It may be that the

Chinese tendency to see behaviors as externally caused is greatly diminished when a

22

person feels responsible for controlling bad behaviors. A second explanation is that,

while Chinese tend to be high on external attributions, they also tend to hold a

incremental implicit theory (Dweck, Chiu, & Hong, 1995). That is, they tend to see

people as more changeable than Americans. If you believe that someone is more

changeable, then you are more likely to feel that they are responsible and more likely to

feel that it is useful to punish bad behavior. Third, it may be that our hypothesized

tendency to punish more in Chinese culture influences attribution processes, such that

Chinese look for evidence that is consistent with a desire to punish, enhancing internal

attributions. Fourth, there may be institutional reasons why Chinese and American

arbitrators act differently. American arbitrators tend to be lawyers, while Chinese

arbitrators are not lawyers, which may make Americans more aware of contextual issues.

The legal principal in the U.S. of force majeur, where parties are not held responsible for

“acts of god,” may not be present in the Chinese legal system. It may also be that, since

arbitration is fairly new in China, Chinese arbitrators may be trying especially hard to

assert their role as enforcers of contracts, erring on the side of being more punishing.

Note that if the first three explanations are valid, then we should get similar results for

Chinese and American subjects who are not arbitrators. That is, being put in a position to

judge would trigger a similar non-typical set of attribution processes. However, if our

fourth explanation holds, then we would not expect non-arbitrators to produce results

similar to what we have found here.

Our study also examined the effects of arbitrator responses to ambiguous

information. This has never been done before, in part because scholars like to have

“clean” experiments, yet in the real world this ambiguous condition is most common.

23

Our findings were quite dramatic – arbitrators from China appeared to focus only on the

internal cause information (amplifying their tendency to see behaviors as more internally

caused) while Americans appeared to focus only on the external cause information

(amplifying their tendency to see behaviors as more externally caused). Thinking about

this pattern, the American response seems consistent with the American legal tradition of

“innocent until proven guilty.” In the U.S. context, doubt favors the accused. In the

Chinese context, there are not such a strong set of protections against being wrongly

accused. The philosophy there may be more “guilty until proven innocent.” This may

be driven by the emphasis on shame (versus guilt) (Benedict, 1967) in Chinese culture.

With a shame culture, what appears to others you have done is much more important than

what you know you have done. It may also be the case that the tendency to punish, that

we predicted, only occurs in more ambiguous situations. A clear internal or external

manipulation creates such a strong condition that Chinese-American differences in

punishment are washed out. Only when there is more uncertainty about attributions do

punishment differences come into play.

In sum, our study extends the prior literature in several ways. It is the first to

directly assess arbitrator decision making in China, which is greatly needed given the

sudden rise of arbitration in China. It is the first to look at how arbitrators respond to

ambiguous information, which is needed since this type of situation is what arbitrators

often face in real world decision. It extends the study of cross-cultural differences in

attribution to a new context, one where attributions have very strong consequences for

law and business. And it confirms the basic findings of prior research on attributions in

arbitration.

24

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Table 1 Descriptive statistics, Pearson Correlations, and Reliabilities (N=148)

Means SD 1 2 3 4 5 6 7 8 9

1. Country (China=1) 0.56 0.50 -- 2. Award 6.05 3.72 0.51** -- 3. Internal Attribution 3.74 1.43 0.48** 0.57** .85 4. Order 0.47 0.50 0.02 0.19* 0.09 -- 5. Age 5.90 2.20 -0.67** -0.32** -0.37** 0.04 -- 6. Education 3.01 1.14 -0.79** -0.36** -0.33** 0.04 0.59** -- 7. Male 0.83 0.38 -0.06 0.12 0.06 0.04 0.26** 0.03 -- 8. Experience (solved cases) 2.32 1.11 -0.44** -0.22** -0.30** -0.03 0.45** 0.32** 0.01 -- 9. External LOC 2.83 1.04 0.27** 0.13 0.11 -0.04 -0.16 -0.24** -0.13 -0.13 .72

Two-tailed ** p<.01 * p<.05 The numbers on the diagonal are Cronbach’s alphas of the scales.

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Table 2: Attribution Effects for All Arbitrators (N=85)

Model 1 Model 2 Model 3 Model 4

Dependent Variable Award Internal Attribution Award Award Variable Beta t Beta t Beta t Beta t

Age -0.24 -1.69 -0.11 -0.82 -0.24 -1.64 -0.21 -1.48Education 0.01 0.06 -0.14 -1.25 -0.06 -0.50 -0.02 -0.18Male 0.17 1.63 0.01 0.11 0.17 1.54 0.16 1.51Experience (Cases) 0.07 0.57 -0.09 -0.85 0.03 0.27 0.06 0.56Order 0.16 1.58 0.10 1.06 0.22** 2.19 0.18 1.78Internal Attribution 0.43** 4.03 -- -- -- -- 0.32* 2.54Condition (Internal=1) 0.48** 5.00 0.36** 3.42 0.19 1.57F 5.80** 7.07** 4.87** 5.42**Total R2 .335 .352 .298 .358Adjusted R2 .277 .302 .237 .292

One-tailed t-tests are shown for hypothesized relationships. The betas are standardized coefficients.

** p<.01

* p<.05

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Table 3: Main Effects of Country on Attribution and Award Level (N=85)

Model 1 Model 2 Model 3

Dependent Variable Internal Attribution

Award Award

Variable Beta t Beta t Beta t

Age -0.08 -0.51 -0.25 -1.53 -0.21 -1.40Education 0.17 1.13 0.13 0.80 0.06 0.38Male 0.05 0.49 0.20 1.69 0.17 1.57Experience (Cases) -0.06 -0.50 0.05 0.40 0.08 0.66Order 0.03 0.32 0.17 1.53 0.15 1.43Country (China=1) 0.50** 2.94 0.31* 1.70 0.10 0.60Internal Attribution 0.41** 3.62F 3.88** 3.08** 4.97**

Total R2 .230 .211 .339Adjusted R2 .171 .143 .271One-tailed ** p<.01 * p<.05

The betas are standardized coefficients.

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Table 4: Analysis of Cultural Differences in Attribution Processes

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9 Dependent Variable IA IA IA Award Award Award Award Award Award Sample U.S (n=44) China(n=41) Both (n=85) U.S (n=44) China(n=41) Both (n=85) U.S (n=44) China(n=41) Both (n=85) Variable Beta Beta Beta Beta Beta Beta Beta Beta Beta

Age -0.02 0.056 0.077 0 -0.26 -0.2 0.075 -0.222 -0.137Education 0.101 0.061 0.125 -0.14 0.1 0.06 -0.097 0.112 0.096Male -0.188 0.112 -0.023 0.24 0.19 0.2 0.127 0.208 0.161Experience (Case) 0.097 -0.107 -0.016 0.01 0.12 0.08 0.085 0.075 0.103Order -0.158 0.263 0.05 0.14 0.21 0.17 0.06 0.303* 0.167Internal Attribution (IA) —— —— —— 0.54** 0.32** 0.63** —— —— ——Condition (Internal=1) 0.573** 0.567** 0.434** —— —— —— 0.574** 0.272* 0.535**Country (China=1) —— —— 0.357 —— —— 0.53 —— —— 0.779**IA X Country —— —— —— —— —— -0.58 —— —— ——Condition X Country —— —— 0.203 —— —— —— —— —— -0.521F 3.70** 4.03** 7.94** 2.13* 1.75* 4.73** 2.19* 1.55* 4.61**Total R2 0.375 0.416 0.455 0.313 0.236 0.361 0.319 0.215 0.355Adjusted R2 0.274 0.312 0.398 0.166 0.101 0.285 0.173 0.077 0.278

One-tailed ** p<.01 * p<.05 The betas are standardized coefficients.

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Table 5: ANCOVA Results for the Effects of Country and Condition on Award and Internal Attribution

(N=136)

Dependent Variable Award Internal Attribution Covariates F df F df Age 0.00 1,112 0.00 1,112Education 0.12 1,112 1.08 1,112Male 2.09 1,112 1.11 1,112Experience (Case) 0.14 1,112 0.79 1,112Order 4.45 1,112 1.00 1,112Main Effects Country 13.64** 1,112 15.26** 1,112Condition 8.42** 2,112 13.76** 2,112Interaction Effect Country X Condition 5.75** 2,112 0.41 2,112

One-tailed ** p<.01 * p<.05

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Table 6: Estimated Marginal Means of Internal Attribution and Award for U.S and China Samples 1

U.S China Award External 2.92 a 6.34 a Internal 6.77 b 8.14 b Ambiguous 2.27 a 8.24 b Internal Attribution External 2.41 a 3.66 a Internal 3.61 b 5.21 b Ambiguous 2.99 a,b 4.64 b

1. Controlling for Age, Education, Male, Experience (Cases), and Order 2. Values marked with the same letter (“a” or “b”) are not significantly different from each other, whereas values marked with different character are significantly different from each other. Comparisons were calculated within-country, for each dependent variable separately.

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Figure 1 Estimated Marginal Means of Condition on Award

Estimated Marginal Means of Award

0

2

4

6

8

10

External Internal Ambiguous

Condition

Awar

d U.SChina

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Figure 2 – Estimated Marginal Means of Condition on Internal Attribution

Estimated Marginal Means of Internal Attribution

0

1

2

3

4

5

6

External Internal Ambiguous

Condition

Inte

rnal

Attr

ibut

ion

U.SChina