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This paper attempts to provide an understanding of gift-giving for a more systematic assessment of relationship building to succeed in an Asian realm. This study examines the underlying linkage between the intensity of gift-giving and constructing relationships. The goal is to provide both researchers and businesses an insight into how to successfully manage profitable relationships in a culture-rich environment that is growing ever more demanding and complicated. Gift-giving is seen as an act of reciprocity, and often misconstrued as bribery by Westerners, yet it appears to be an important constituent of the Asian culture and can be seen as a form of relationship investment, that if cultivated well, can uplift interactions between businesses.
Abstract
This paper attempts to provide an understanding of gift-giving for a more systematic assessment of relationship building to succeed in an Asian realm. This study proposes to examine the underlying linkage between the intensity of gift-giving and constructing relationships. The goal is to provide both researchers and businesses an insight into how to successfully manage profitable relationships in a culture-rich environment that is growing ever more demanding and complicated. Gift-giving is seen as an act of reciprocity, and often misconstrued as bribery by Westerners, yet it appears to be an important constituent of the Asian culture and can be seen as a form of relationship investment, that if cultivated well, can uplift interactions between businesses.
Key words: gift-giving, culture, Asian, guanxi
Introduction
Gifts can be tangible or intangible; they may be in the form of cash or kind. It is popular to give gifts redolent with some meaning. Recognition, affection and importance are all conferred along with gifts (Stafford, 1997). Gifts also encourage reciprocal relations by perhaps discharging a social obligation, or expressing gratitude in some form (Fadiman, 1986).
Anthropologists and historians who were influenced by the work of Mauss (1967) have shed some light on gift-giving in the articulation of Asian society. Although gift-giving derives its significance from the economic and symbolic value each culture places on the gift (Carrier 1991; Mauss 1967), the tradition of gift-giving has evolved in numerous dimensions. In a modern day situation, gift-giving is seen as a gesture of goodwill or as a token of appreciation or affection. However, from a business perspective it could be categorized into two broad classifications, for instance, it is intended to create an obligation (Shaw & Barry, 1998), or intended for appreciation. The former can be viewed as a long-term bond, the latter as short-term gratification. 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 social exchange towards individuals, rather than from a business perspective, for maintaining strong relationships. It is a subject that may be of equal significance to an understanding of what the implications and ethical considerations are, for one of the less tangible factors (gift-giving) behind successful business operations in Asia. This study proposes to examine the underlying linkage between the intensity of gift-giving and constructing relationships. The goal is to provide both, researchers and businesses to successfully manage profitable relationships in a culture-rich environment that is growing ever more demanding and complicated. In order to understand the influence of gift-giving towards conducting business between different cultures, there are 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 relationship marketing?
Culture and Gift-Giving
Why accentuate on gift-giving whilst doing business in Asia? It is an acknowledged fact that business executives do not base their investment solely on economic considerations; other factors such as networking and business relationships are also vital. Although, gift-giving issues in India and China are discussed here as supportive examples, one should be aware that each country in Asia is governed by its distinctive culture that leads to specific behaviour appropriate to a particular setting. Expectations within a culture will directly or indirectly effect many business transactions. Business success in Asia requires an in-depth understanding of their unique business environments and cultures; hence an understanding of culture is regarded as critical to success in managing. It is also significant for businesses and foreign investors who can, in addition, gain a competitive edge by understanding and incorporating this cultural distinction within a given business.
In an Asian context, gift-giving is a distinct cultural and interpersonal act that carries with it specific moral characteristics. However, for Western organisations there is a degree of ambivalence regarding the rectitude of gift-giving. To understand the cultural issues of gift-giving, it is best to draw on, in the first instance, some of the underlying differences in business practices. The difference between the management practices of the West and the East lies in the emphasis placed on written contracts and procedures in the former, as compared with building personal relationships in the latter (Davis, Leung, Luk & Wong, 1995). The differences are worthy of attention mainly if Westerners intend doing business in Asia. In the West, business relationships develop after the business is done, unlike Asia where relationships are developed before the business is established (Smith, 1995).When Western businesses started doing business in Japan for example, they misinterpreted it as inappropriate. For them, accepting a gift felt like accepting a bribe and yet, what may seem to constitute bribery for a Westerner, may well be in keeping with Japan's long standing tradition of it as part of the recognition, elaboration and cementing of business and personal relationships. In countries such as Germany and Switzerland, local businessmen are not comfortable with accepting gifts because they do not like being obligated (Fadiman, 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 culture and varying value systems, for each gift functions as a method of communication (Senior, 1996). Etiquettes and local customs drive gift-giving in a culture 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 to do) (Arunthanes, Tansuhaj and Lemak, 1994). In cultures where gift-giving is considered as an appropriate behaviour, it is beneficial to accept the practice.
In Asia, gift-giving is no recent phenomenon and is used as a means of gaining access to, and favourable consideration from, important business associates and government officials. Anthropologists have extensively analyzed the cultural role of gift-giving (e.g., Bell, 1991; Ekeh, 1974; Malinowski, 1922). They, and ethno-ethicists, have long pointed out the importance in almost every culture of gifts as a media for establishing mutual ties.
One classic example that prevails widely is the Guanxi- style relationship. Given that gift-giving conduct varies greatly across cultures, it may be worthwhile to address Guanxi style relationships in Asia. The rationale behind discussing guanxi is done not only because it symbolizes gift-giving to strengthen relationships, but also in the process of cultivating guanxi, gifts are normally used (Brunner, Chen, Sun and Zhou, 1989). The core of the Chinese 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 or networks in order to secure favours in personal or business relations. People who share a guanxi relationship are committed to one another by an unspoken code of reciprocity and equity, and disregarding this commitment can damage one's social reputation (Luo, 1997).
Guanxi is defined as a network of relationships a person builds through the exchange of gifts and favours to attain mutual benefits. It is based on friendship and affection, and on a reciprocal obligation to respond to requests for assistance (Pearce II and Robinson, 2000). Wong and Chan (1999) have defined guanxi as social interactions within the network place, and its members in the equivalent of an infinitely repeated game with a set of people they know. Their findings revealed that adaptation, trust, dependence and favouritism are found to have a correlation with some of the relationship performance indicators. While Peng (1997, p. 449) gives a more meaningful definition of guanxi... "as being a relationship between two people or organisations containing implicit mutual obligation, assurances and understanding governing Chinese attitudes towards long term social and business relationships". Pearce II and Robinson (2000) highlight the emphasis on attaining mutual benefits through the exchange of gifts, based on friendship. Wong and Chan (1999), refers to guanxi as social interaction with a set ofpeople they know, while Peng (1997) suggests a broader view, stating that it not only attaining a mutual obligation between individuals, but on the basis of an organisation as a whole. Ifguanxi were to refer only to interpersonal relationships, then there is a possibility that Western firms may wish to avoid guanxi, due to the several risks involved (Li and Wright, 2000)
The process of cultivating guanxi through gift-giving, no doubt, can be seen as an integral part of relationship marketing. For example, the Chinese strive to keep relationships among guanxi members stable and harmonious because guanxi is the basis on which they exchange a lifetime of favours, resources and business leverage. Guanxi has been synonymous with having a customer orientation, and the aim is to retain customers in the long run. Guanxi style relations have also been defined as a web of personal connections, relationships and obligations that business people can use to obtain resources or advantages (Davies 1995, Davies, Leung, Luk and Wong, 1995) through a continual exchange of favours (Pye, 1992). Luo's (1997) study found that guanxi based business variables are significantly and positively related to a firm's accounting and market performance. Guanxi based sales force marketing in which the decisions are virtually dependent upon guanxi, are found to have a systematic and favourable effect on a firm's profitability, asset turnover, and domestic sales growth. Guanxi style buyer-seller relationships were found to be strongly related to reduced levels of perceived uncertainty about the business environment and a variety of improved performance outcomes (Abramson and Ali, 1997). Accordingly, it seems appropriate to attribute guanxi to be treated as an integral asset that creates value to ascertain a relationship, as customer retention and loyalty are of paramount importance especially in relationship marketing. One may argue that since guanxi fundamentally accentuates obligations, favours or gifts to strengthen relationships, it could well become an ethical issue as it bases itself on a reciprocal obligation to respond to requests for assistance.
Ethical Issues
In common parlance, `gift-giving' is sometimes used as a euphemism for bribery, which may not always be appropriate. Since gift-giving is often misconstrued as bribery by Western society, the thrust of this examination of gift-giving is to establish an argument for identifying and isolating the cultural implications of gift-giving. This assists in being able to identify the incidence of bribery and corrupt practices within a cultural context.
Bribery is regarded as a violation of duty, thus the act of bribery should be made clear to avoid ambiguity. Dunfee, Smith and Ross Jr. (1999, p. 25) have defined bribery as "...an occurrence when one person (briber) provides an inducement to another person (bribee) that is intended to be in exchange for doing, or not doing, something that would favour the briber and be contrary to the bribee's positional duty". This definition clearly indicates a favour is reciprocated by exercising positional power, and ignores the emotional concept of relationship building or cultivating ties.
Even definitions or meanings given to the term 'bribery' in Business Ethics literature do not always serve to distinguish sufficiently between it and relationship building. For example, Velasquez (1998, p. 432) defines a commercial bribe as; "....a consideration given or offered to an employee by a person outside the firm with the understanding that when the employee transacts business for his or her own firm, the employee will deal favourably with 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's inconsistent with the work contract or the nature of the work one has been hired to perform".
In both the above definitions the emotional context of relationship building is ignored. A bribe seems to be more implied as a condition to do or not to do. Having reviewed the Asian cultural context, it can be pointed out that Velasquez' (1998) definition appears to be somewhat appropriate. For instance, given the importance of guanxi in Chinese society, Velasquez' (1998) definition ofbribery seems to define instead the social forms in which relationships are formed and cemented. That is, by establishing (in part through gift-giving) respect and appreciation between the parties, their relationship will be harmonious and supportive, in short 'favourable' (may perhaps not be in keeping with what Velasquez had in mind). However, this definition clearly fails to account for the intent of gift-giving in Asian societies. What is nearer to the Asian understanding of bribery is perhaps the concept of appropriateness or proper intent and conduct. Thus, we find the definition given by Shaw and Barry (1998) to be more appropriate for cross cultural studies, in that it incorporates the idea that what is wrong is that which is 'inconsistent' with the social fabric within which the job and its actions are performed. Thus, ethical viewpoints may well be based upon the originating 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 making in marketing (Ferrell and Gresham, 1985; Ferrell, Gresham and Fraedrich, 1989). The question of whether gift-giving is ethical, or whether gifts can be termed as bribery, or whether gift- giving builds or destroys business relationships are of course problematic. How would the value of a particular gift entice the recipient? Would the value of extravagant gifts induce employees to betray the trust of their company or customers or be seen as a token of the value in which the business relationship is held?
Nonetheless, there are a number of considerations that can help one determine the morality of giving and receiving gifts in any business situation as proposed by Shaw and Barry (1998). One may be based on the value of the gift. Two elements determine value; one is nominal or substantial value, which is enough to influence a business decision. Unquestionably, both these terms are open to interpretation. For example a nominal gift given frequently could at some stage be construed as substantial. Secondly, what is the intention of the gift? Is it customary for a business to conduct this practice of gift-giving and lastly what is the position and sensitivity to influence the recipient of the gift? In what way may the recipient's opinion, influence or decision result in preferential treatment for the donor? Killen (1987) has stated that there are a number of common situations that occur in purchasing departments that raise the question of ethics as in the acceptance of nominal gifts from suppliers. Presumably, in the event of a `nominal gift' policy within the organisation, which sanctions the acceptance of nominal gifts; employees should refrain from actions that might relate their actions to the proffering of such gifts, i.e., the value attribute of the gift is the point at ethical issue. This lends itself universality to the policy that is not an exercise in moral relativism, however, for Asian communities too, they uphold the notion that bribery and corruption are socially and morally destructive. Instead, this is an attempt to show that the intent of gift-giving can be an exercise in upholding central, cultural values so that the action is evaluated in terms of its moral intent rather than as an economic exchange or attempt to subvert appropriate behaviour. Bribery, on the other hand, is an act that is performed without an emotional bondage or sensitivity.
Reciprocity
The act of gift-giving evolves in three phases, receiving, giving and reciprocating (Joy, 2000). Reciprocity plays a fundamental role in distinguishing between guanxi and bribery. In both processes, reciprocity is evaluated as an economic exchange. It is recognised however, that gift-giving has two possible characteristics - reciprocal and altruistic (Malinowski, 1922). Therefore, it is reasonable to assume that reciprocity may differ with each action, and also, that reciprocity may take on a 'power' function that raises ethical issues.
In India, after a business deal is closed, it is acceptable to exchange something (Bullis, 1998, p.209). Reciprocity, for instance, is a universal moral standard (Steidlmeier, 1999) in most, if not all cultures, and is of particular importance in an Asian context where social customs and traditions have traditionally worked as support mechanisms for the building of relationships of trust, respect, bonding, face-saving and appreciation (Stafford, 1997).
Steidlmeier (1999), reflecting on John Noonan's views (1984, p.3) on reciprocity, 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 cohesion (Hwang, 1987). The rules concerning reciprocity and the ways in which reciprocity is conceived in Asia are distinct from Western cultures. Within the Chinese business context,pao (doing favours), is used to foster guanxi to build a network. This also involves a reciprocal obligation, which is an essential feature ofguanxi (Schutte and Ciarlante, 1998). As such, China is a culture in which what counts is not only whom one knows, but also who owes whom 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 to restore balance to the relationship, but it is focused less on actual repayment than 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, executives would implicitly accept an obligation to `return a favour' (Pearce II and Robinson, 2000) in the unspecified future. Failure to reciprocate involves a loss of face and signals an inability to repay the giver. This intense obligation creates a desire to be freed and restore autonomy free ofguanxi or on. Therefore, an exchange or a willingness to act manifests itself at some point waiting to be discharged.
For example, when a buyer and seller establish a relationship, often a deal is made. Although, not compulsory, the seller may reciprocate by giving the buyer a gift. This act is the reciprocity that all anthropologists insist upon: "the freedom and obligation inherent in the gift, and the generosity and self interest that are linked in giving" (Mauss, 1990:p.68). It should be made very clear that in any gift-giving transaction the recipient should view the gift as appropriate to the relationship between the giver and the receiver (De Paulo, Brittingham and Kaiser, 1983). Gift-giving should reflect this consideration to maximise its potential in stimulating customers, not only to feel rewarded for past business, but also tactfully induced (i. e. not manipulated) to continue doing business with the giver (Beltramini, 2000). Like guanxi, it should 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 reciprocate is perceived as immoral. While the underlying traditional Asian cultural logic provides the fundamental ethos of business practices, social knowledge provides the rules of the game. Therefore, within a business context in Asia, being obliged and to reciprocate accordingly is expected behaviour that shows respect for another person and strengthens relationships. It is one of the ways of nurturing such relationships and strengthening the trust, caring and commitment between the parties. This thus prompts the foundation for creating a relationship.
D'Souza and Sansbury's (2000).research on gift-giving in India suggests some favourable insights. What is interesting to note, that when asked about their views on gift-giving, 86 percent of respondents said that they viewed it as 'a norm that businesses should practise'. This indicates that culturally, it is deemed necessary as normal practice to give gifts. Eighty percent of the respondents were obliged to buy from their supplier who provided gifts. The problem here is that gift-giving in response to obligation curtails further selection from other suppliers and seventy seven percent of respondents indicated that the value of the gifts were large, and therefore they were compelled to buy from their suppliers. This again would address the question of reciprocity as the value in question provided a stronger bondage.
Interestingly, eighty three percent of respondents preferred to be loyal to the supplier who gave them gifts and would also get the supplier to modify products accordingly if required. Notably, even the response of 92% who acknowledged 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 decisions, which are not necessarily the most cost effective. This clearly indicates that gift-giving does create supplier loyalty. Loyalties and obligations to individuals make the system work. In short, it is a mistaken belief to assume that a system not based on universalistic principles is necessarily unethical (Lovett, Simmons & Kali, 1999).
Thus, as can be seen from above, the benefits of gift-giving in a business relationship can help build ties, cultivate relationships, enthuse loyalty and goodwill and an integral part of relationship marketing. gift-giving either in the form ofguanxi or plainly as addressed is regarded as a highly social behaviour that individuals perform.
Conclusions
In light of the above discussion, the cultural context of a country can significantly influence business relationships. It is the business climate that proactively 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 strongly that gift-giving is powerful in shaping the strategy of a continuing relationship. 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 the dynamism inherent in building relationships both within and across cultures and it is hoped that future research will explore the interplay of gift-giving in terms of gift value and the intensity ofreciprocity. Regardless of the cultural setting, this topic deserves further research attention on influence of gifts on employees, and this could be a strategy well worth implementing for relationship marketing in Asia.
More research needs to be done in constructing an understanding of the 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 the Asian realm is expected behaviour that shows respect to another person and strengthens relationships, it is one of the ways of nurturing such relationships and strengthening the trust, caring, reciprocity and commitment between the parties. Gift giving and relationships interact to produce a distinctive way of business that evolves over time, if invested wisely.
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by Clare D'Souza, Dept. of Accountancy and Management, La Trobe University, Plenty Road, Bundoora 3083, Australia
Copyright Barmarick Press 2003