An inference of gift‐giving within Asian business culture

An Inference of Gift-GivingWithin Asian Business Cultureby Clare D’Souza, Dept. of Accountancy and Management, La Trobe Uni-versity, Plenty Road, Bundoora 3083, Australia

Abstract

This paper attempts to provide an understanding of gift-giving for a moresystematic assessment of relationship building to succeed in an Asian realm.This study proposes to examine the underlying linkage between the intensityof gift-giving and constructing relationships. The goal is to provide both re-searchers and businesses an insight into how to successfully manage profit-able relationships in a culture-rich environment that is growing ever moredemanding and complicated. Gift-giving is seen as an act of reciprocity, andoften misconstrued as bribery by Westerners, yet it appears to be an impor-tant constituent of the Asian culture and can be seen as a form of relationshipinvestment, that if cultivated well, can uplift interactions between busi-nesses.

Key words: gift-giving, culture, Asian, guanxi

Introduction

Gifts can be tangible or intangible; they may be in the form of cash or kind. Itis popular to give gifts redolent with some meaning. Recognition, affectionand importance are all conferred along with gifts (Stafford, 1997). Gifts alsoencourage reciprocal relations by perhaps discharging a social obligation, orexpressing gratitude in some form (Fadiman, 1986).

Anthropologists and historians who were influenced by the work ofMauss (1967) have shed some light on gift-giving in the articulation of Asiansociety. Although gift-giving derives its significance from the economic andsymbolic value each culture places on the gift (Carrier 1991; Mauss 1967),the tradition of gift-giving has evolved in numerous dimensions. In a modernday situation, gift-giving is seen as a gesture of goodwill or as a token of ap-preciation or affection. However, from a business perspective it could becategorized into two broad classifications, for instance, it is intended to cre-ate an obligation (Shaw & Barry, 1998), or intended for appreciation. Theformer can be viewed as a long-term bond, the latter as short-term gratifica-tion. The process may take place over time and goes through three phases,giving, receiving and reciprocating (Joy, 2001).

The attention towards gift-giving has been viewed more so as a socialexchange towards individuals, rather than from a business perspective, formaintaining strong relationships. It is a subject that may be of equal signifi-

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cance to an understanding of what the implications and ethical considera-tions are, for one of the less tangible factors (gift-giving) behind successfulbusiness operations in Asia. This study proposes to examine the underlyinglinkage between the intensity of gift-giving and constructing relationships.The goal is to provide both, researchers and businesses to successfully man-age profitable relationships in a culture-rich environment that is growingever more demanding and complicated. In order to understand the influenceof gift-giving towards conducting business between different cultures, thereare several key issues this paper attempts to address:

- Why accentuate on gift-giving practices in Asia?

- What constitutes ethical principles in gift-giving?

- Why is reciprocity an obligation to be fulfilled?

- How may the benefits of gift-giving cultivate relationshipmarketing?

Culture and Gift-Giving

Why accentuate on gift-giving whilst doing business in Asia? It is an ac-knowledged fact that business executives do not base their investment solelyon economic considerations; other factors such as networking and businessrelationships are also vital. Although, gift-giving issues in India and Chinaare discussed here as supportive examples, one should be aware that eachcountry in Asia is governed by its distinctive culture that leads to specific be-haviour appropriate to a particular setting. Expectations within a culture willdirectly or indirectly effect many business transactions. Business success inAsia requires an in-depth understanding of their unique business environ-ments and cultures; hence an understanding of culture is regarded as criticalto success in managing. It is also significant for businesses and foreign in-vestors who can, in addition, gain a competitive edge by understanding andincorporating this cultural distinction within a given business.

In an Asian context, gift-giving is a distinct cultural and interpersonalact that carries with it specific moral characteristics. However, for Westernorganisations there is a degree of ambivalence regarding the rectitude ofgift-giving. To understand the cultural issues of gift-giving, it is best to drawon, in the first instance, some of the underlying differences in business prac-tices. The difference between the management practices of the West and theEast lies in the emphasis placed on written contracts and procedures in theformer, as compared with building personal relationships in the latter(Davis, Leung, Luk & Wong, 1995). The differences are worthy of attentionmainly if Westerners intend doing business in Asia. In the West, businessrelationships develop after the business is done, unlike Asia where relation-ships are developed before the business is established (Smith, 1995).WhenWestern businesses started doing business in Japan for example, they misin-terpreted it as inappropriate. For them, accepting a gift felt like accepting abribe and yet, what may seem to constitute bribery for a Westerner, may well

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be in keeping with Japan’s long standing tradition of it as part of the recogni-tion, elaboration and cementing of business and personal relationships. Incountries such as Germany and Switzerland, local businessmen are not com-fortable with accepting gifts because they do not like being obligated (Fadi-man, 1986).

Notably, some of these differences are vested in their culture, likewise,gift-giving is also a cultural practice that helps to define the ethos of a cultureand varying value systems, for each gift functions as a method of communi-cation (Senior, 1996). Etiquettes and local customs drive gift-giving in a cul-ture rich environment. Business gift-giving is viewed as either an imperative(i.e., a must) or as an adiaphora (i.e., something one may or may not have todo) (Arunthanes, Tansuhaj and Lemak, 1994). In cultures where gift-givingis considered as an appropriate behaviour, it is beneficial to accept the prac-tice.

In Asia, gift-giving is no recent phenomenon and is used as a means ofgaining access to, and favourable consideration from, important business as-sociates and government officials. Anthropologists have extensively ana-lyzed the cultural role of gift-giving (e.g., Bell, 1991; Ekeh, 1974;Malinowski, 1922). They, and ethno-ethicists, have long pointed out the im-portance in almost every culture of gifts as a media for establishing mutualties.

One classic example that prevails widely is the Guanxi- style relation-ship. Given that gift-giving conduct varies greatly across cultures, it may beworthwhile to address Guanxi style relationships in Asia. The rationale be-hind discussing guanxi is done not only because it symbolizes gift-giving tostrengthen relationships, but also in the process of cultivating guanxi, giftsare normally used (Brunner, Chen, Sun and Zhou, 1989). The core of the Chi-nese economy and business conduct is guanxi connections (Kao, 1993).Guanxi is a complex term, having various connotations. For example,Guanxi-type relationships refer to the concept of drawing on connections ornetworks in order to secure favours in personal or business relations. Peoplewho share a guanxi relationship are committed to one another by an unspo-ken code of reciprocity and equity, and disregarding this commitment candamage one’s social reputation (Luo, 1997).

Guanxi is defined as a network of relationships a person builds throughthe exchange of gifts and favours to attain mutual benefits. It is based onfriendship and affection, and on a reciprocal obligation to respond to requestsfor assistance (Pearce II and Robinson, 2000). Wong and Chan (1999) havedefined guanxi as social interactions within the network place, and its mem-bers in the equivalent of an infinitely repeated game with a set of people theyknow. Their findings revealed that adaptation, trust, dependence and favour-itism are found to have a correlation with some of the relationship perform-ance indicators. While Peng (1997, p. 449) gives a more meaningful


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definition of guanxi… “as being a relationship between two people or or-ganisations containing implicit mutual obligation, assurances and under-standing governing Chinese attitudes towards long term social and businessrelationships”. Pearce II and Robinson (2000) highlight the emphasis on at-taining mutual benefits through the exchange of gifts, based on friend-ship. Wong and Chan (1999), refers to guanxi as social interaction with a setof people they know, while Peng (1997) suggests a broader view, stating thatit not only attaining a mutual obligation between individuals, but on the ba-sis of an organisation as a whole. If guanxi were to refer only to interpersonalrelationships, then there is a possibility that Western firms may wish toavoid guanxi, due to the several risks involved (Li and Wright, 2000)

The process of cultivating guanxi through gift-giving, no doubt, canbe seen as an integral part of relationship marketing. For example, the Chi-nese strive to keep relationships among guanxi members stable and harmo-nious because guanxi is the basis on which they exchange a lifetime offavours, resources and business leverage. Guanxi has been synonymouswith having a customer orientation, and the aim is to retain customers in thelong run. Guanxi style relations have also been defined as a web of personalconnections, relationships and obligations that business people can use toobtain resources or advantages (Davies 1995, Davies, Leung, Luk andWong, 1995) through a continual exchange of favours (Pye, 1992). Luo’s(1997) study found that guanxi based business variables are significantlyand positively related to a firm’s accounting and market performance.Guanxi based sales force marketing in which the decisions are virtually de-pendent upon guanxi, are found to have a systematic and favourable effecton a firm’s profitability, asset turnover, and domestic sales growth. Guanxistyle buyer-seller relationships were found to be strongly related to reducedlevels of perceived uncertainty about the business environment and a varietyof improved performance outcomes (Abramson and Ali, 1997). Accord-ingly, it seems appropriate to attribute guanxi to be treated as an integral as-set that creates value to ascertain a relationship, as customer retention andloyalty are of paramount importance especially in relationship marketing.One may argue that since guanxi fundamentally accentuates obligations, fa-vours or gifts to strengthen relationships, it could well become an ethical is-sue as it bases itself on a reciprocal obligation to respond to requests forassistance.

Ethical Issues

In common parlance, ‘gift-giving’ is sometimes used as a euphemism forbribery, which may not always be appropriate. Since gift-giving is oftenmisconstrued as bribery by Western society, the thrust of this examinationof gift-giving is to establish an argument for identifying and isolating thecultural implications of gift-giving. This assists in being able to identify theincidence of bribery and corrupt practices within a cultural context.


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Bribery is regarded as a violation of duty, thus the act of bribery shouldbe made clear to avoid ambiguity. Dunfee, Smith and Ross Jr. (1999, p. 25)have defined bribery as “...an occurrence when one person (briber) providesan inducement to another person (bribee) that is intended to be in exchangefor doing, or not doing, something that would favour the briber and be con-trary to the bribee’s positional duty”. This definition clearly indicates a fa-vour is reciprocated by exercising positional power, and ignores theemotional concept of relationship building or cultivating ties.

Even definitions or meanings given to the term ‘bribery’ in BusinessEthics literature do not always serve to distinguish sufficiently between itand relationship building. For example, Velasquez (1998, p. 432) defines acommercial bribe as; “….a consideration given or offered to an employee bya person outside the firm with the understanding that when the employeetransacts business for his or her own firm, the employee will deal favourablywith that person or with that person’s firm”, whilst Shaw and Barry (1998, p.354) define a bribe as “… a remuneration for the performance of an act that’sinconsistent with the work contract or the nature of the work one has beenhired to perform”.

In both the above definitions the emotional context of relationshipbuilding is ignored. A bribe seems to be more implied as a condition to do ornot to do. Having reviewed the Asian cultural context, it can be pointed outthat Velasquez’ (1998) definition appears to be somewhat appropriate. Forinstance, given the importance of guanxi in Chinese society, Velasquez’(1998) definition of bribery seems to define instead the social forms in whichrelationships are formed and cemented. That is, by establishing (in partthrough gift-giving) respect and appreciation between the parties, their rela-tionship will be harmonious and supportive, in short ‘favourable’ (may per-haps not be in keeping with what Velasquez had in mind). However, thisdefinition clearly fails to account for the intent of gift-giving in Asian socie-ties. What is nearer to the Asian understanding of bribery is perhaps the con-cept of appropriateness or proper intent and conduct. Thus, we find thedefinition given by Shaw and Barry (1998) to be more appropriate for crosscultural studies, in that it incorporates the idea that what is wrong is thatwhich is ‘inconsistent’ with the social fabric within which the job and its ac-tions are performed. Thus, ethical viewpoints may well be based upon theoriginating country’s cultural perspective (Wederspahn, 1997).

Ethical considerations are involved in many marketing decisions and,hence, academics have attempted to develop models of ethical decision mak-ing in marketing (Ferrell and Gresham, 1985; Ferrell, Gresham and Frae-drich, 1989). The question of whether gift-giving is ethical, or whether giftscan be termed as bribery, or whether gift- giving builds or destroys businessrelationships are of course problematic. How would the value of a particulargift entice the recipient? Would the value of extravagant gifts induce em-


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ployees to betray the trust of their company or customers or be seen as a to-ken of the value in which the business relationship is held?

Nonetheless, there are a number of considerations that can help onedetermine the morality of giving and receiving gifts in any business situationas proposed by Shaw and Barry (1998). One may be based on the value of thegift. Two elements determine value; one is nominal or substantial value,which is enough to influence a business decision. Unquestionably, boththese terms are open to interpretation. For example a nominal gift given fre-quently could at some stage be construed as substantial. Secondly, what isthe intention of the gift? Is it customary for a business to conduct this prac-tice of gift-giving and lastly what is the position and sensitivity to influencethe recipient of the gift? In what way may the recipient’s opinion, influenceor decision result in preferential treatment for the donor? Killen (1987) hasstated that there are a number of common situations that occur in purchasingdepartments that raise the question of ethics as in the acceptance of nominalgifts from suppliers. Presumably, in the event of a ‘nominal gift’ policywithin the organisation, which sanctions the acceptance of nominal gifts;employees should refrain from actions that might relate their actions to theproffering of such gifts, i.e., the value attribute of the gift is the point at ethi-cal issue. This lends itself universality to the policy that is not an exercise inmoral relativism, however, for Asian communities too, they uphold the no-tion that bribery and corruption are socially and morally destructive. In-stead, this is an attempt to show that the intent of gift-giving can be anexercise in upholding central, cultural values so that the action is evaluatedin terms of its moral intent rather than as an economic exchange or attempt tosubvert appropriate behaviour. Bribery, on the other hand, is an act that isperformed without an emotional bondage or sensitivity.

Reciprocity

The act of gift-giving evolves in three phases, receiving, giving and recipro-cating (Joy, 2000). Reciprocity plays a fundamental role in distinguishingbetween guanxi and bribery. In both processes, reciprocity is evaluated as aneconomic exchange. It is recognised however, that gift-giving has two pos-sible characteristics – reciprocal and altruistic (Malinowski, 1922). There-fore, it is reasonable to assume that reciprocity may differ with each action,and also, that reciprocity may take on a ‘power’ function that raises ethicalissues.

In India, after a business deal is closed, it is acceptable to exchangesomething (Bullis, 1998, p.209). Reciprocity, for instance, is a universalmoral standard (Steidlmeier, 1999) in most, if not all cultures, and is of par-ticular importance in an Asian context where social customs and traditionshave traditionally worked as support mechanisms for the building of rela-tionships of trust, respect, bonding, face-saving and appreciation (Stafford,1997).


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Steidlmeier (1999), reflecting on John Noonan’s views (1984, p.3) onreciprocity, states that it is in any society a rule of life, and a universal norm,which in most cultures has been accepted as a basic moral rule of social cohe-sion (Hwang, 1987). The rules concerning reciprocity and the ways in whichreciprocity is conceived in Asia are distinct from Western cultures. Withinthe Chinese business context, pao (doing favours), is used to foster guanxi tobuild a network. This also involves a reciprocal obligation, which is an essen-tial feature of guanxi (Schutte and Ciarlante, 1998). As such, China is a cul-ture in which what counts is not only whom one knows, but also who oweswhom a favour (Brunner, Chen, Sun and Zhou, 1989).

On the other hand, in Japan, on represents the concept of reciprocity.Similar to the Chinese pao, the recipient is obligated to repay on in order torestore balance to the relationship, but it is focused less on actual repaymentthan on sentiment of the recipient. If reciprocity occurs in the form of gifts,the value is carefully noted so that a gift of equal value may be returned(Schutte and Ciarlante, 1998). Since Guanxi is based on reciprocity, execu-tives would implicitly accept an obligation to ‘return a favour’ (Pearce II andRobinson, 2000) in the unspecified future. Failure to reciprocate involves aloss of face and signals an inability to repay the giver. This intense obligationcreates a desire to be freed and restore autonomy free of guanxi or on. There-fore, an exchange or a willingness to act manifests itself at some point wait-ing to be discharged.

For example, when a buyer and seller establish a relationship, often adeal is made. Although, not compulsory, the seller may reciprocate by giv-ing the buyer a gift. This act is the reciprocity that all anthropologists insistupon: “the freedom and obligation inherent in the gift, and the generosity andself interest that are linked in giving” (Mauss, 1990:p.68). It should be madevery clear that in any gift-giving transaction the recipient should view the giftas appropriate to the relationship between the giver and the receiver (DePaulo, Brittingham and Kaiser, 1983). Gift-giving should reflect this consid-eration to maximise its potential in stimulating customers, not only to feel re-warded for past business, but also tactfully induced (i.e. not manipulated) tocontinue doing business with the giver (Beltramini, 2000). Like guanxi, itshould help strengthen a relationship bond.

Benefits of Gift-Giving: Implications for Relationship Marketing

In Indian business relationships, like Chinese, to accept a gift and not recip-rocate is perceived as immoral. While the underlying traditional Asian cul-tural logic provides the fundamental ethos of business practices, socialknowledge provides the rules of the game. Therefore, within a business con-text in Asia, being obliged and to reciprocate accordingly is expected behav-iour that shows respect for another person and strengthens relationships. It isone of the ways of nurturing such relationships and strengthening the trust,


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caring and commitment between the parties. This thus prompts the founda-tion for creating a relationship.

D’Souza and Sansbury’s (2000) research on gift-giving in India sug-gests some favourable insights. What is interesting to note, that when askedabout their views on gift-giving, 86 percent of respondents said that theyviewed it as ‘a norm that businesses should practise’. This indicates that cul-turally, it is deemed necessary as normal practice to give gifts. Eighty per-cent of the respondents were obliged to buy from their supplier whoprovided gifts. The problem here is that gift-giving in response to obligationcurtails further selection from other suppliers and seventy seven percent ofrespondents indicated that the value of the gifts were large, and thereforethey were compelled to buy from their suppliers. This again would addressthe question of reciprocity as the value in question provided a stronger bond-age.

Interestingly, eighty three percent of respondents preferred to be loyalto the supplier who gave them gifts and would also get the supplier to modifyproducts accordingly if required. Notably, even the response of 92% whoacknowledged that they might make better decisions in the absence of gifts,may be in recognition of the difference between supporting relationships,which are beneficial as a whole to the firm, and specific purchasing deci-sions, which are not necessarily the most cost effective. This clearly indi-cates that gift-giving does create supplier loyalty. Loyalties and obligationsto individuals make the system work. In short, it is a mistaken belief to as-sume that a system not based on universalistic principles is necessarily un-ethical (Lovett, Simmons & Kali, 1999).

Thus, as can be seen from above, the benefits of gift-giving in a busi-ness relationship can help build ties, cultivate relationships, enthuse loyaltyand goodwill and an integral part of relationship marketing. gift-giving ei-ther in the form of guanxi or plainly as addressed is regarded as a highly so-cial behaviour that individuals perform.

Conclusions

In light of the above discussion, the cultural context of a country can signifi-cantly influence business relationships. It is the business climate that proac-tively sets the conditions that will influence gift-giving and as it can be seen,in Asia gift-giving is an accepted gesture. This study indicates quite stronglythat gift-giving is powerful in shaping the strategy of a continuing relation-ship. It should be understood that gifts often prompt the need for reciprocity.This study has thrown some light on gift-giving as a concept to explain thedynamism inherent in building relationships both within and across culturesand it is hoped that future research will explore the interplay of gift-giving interms of gift value and the intensity of reciprocity. Regardless of the culturalsetting, this topic deserves further research attention on influence of gifts on


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employees, and this could be a strategy well worth implementing for rela-tionship marketing in Asia.

More research needs to be done in constructing an understanding ofthe social fabric of the respondent’s culture when attempting to assess gift-giving in the Asian context. It may be suggested that gift giving within theAsian realm is expected behaviour that shows respect to another person andstrengthens relationships, it is one of the ways of nurturing such relationshipsand strengthening the trust, caring, reciprocity and commitment between theparties. Gift giving and relationships interact to produce a distinctive way ofbusiness that evolves over time, if invested wisely.


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An inference of gift‐giving within Asian business culture