The cultural gap between Equity and Equality

Posted: October 28, 2011 in Ethical decision-making
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The second paragraph of the Declaration of Independence of the United States of America begins:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,

More than two centuries later, Americans and other Westerners still stride the planet convinced of the obvious universality of their values. They can hardly be blamed, as there is a lot of apparent evidence to support this view: Western brands have been on the march. Visit any city around the world and, upon disembarking, you’ll be greeted by the familiar sights of KFC, Coco Chanel, even Marlboro. Similarly parliamentary, electoral democracy has spread in past decades. It seems to be a one-way story of the adoption of enlightened Western ways and rising prosperity to follow.

Tiananmen Square Protest (tian_med)

This guy is a hero in the West but 1989 fizzled in China. Why?

Research shows that countries retain sharp divisions in the emphasis they place on individual versus collective values. Generally countries in the Western tradition have a higher emphasis on the individual and those in the Confucian tradition have a high emphasis on the collective. These traditional values have persisted into modern times despite the removal of Confucianism as the official Chinese religion.

These findings are known and accepted but do not seem to be translating into managerial education.

The result is that American or British businesspeople turn up in ‘non-Anglo’ countries poorly equipped to motivate and build rapport with local workers. Notably they carry with them the baggage of America’s highly antagonistic labour relations but for now I want to highlight something else: compensation.

The central motivational factor under a manager’s control is the allocation of extrinsic rewards. (Ralston et al., p. 70)

How is compensation to be divided?

The dominant view in the West is that reward should be, to some extent, related to the person’s output. This is equity-based reward.  The dominant Confucian assumption, however, is that an equal distribution -regardless of output- is ‘fairer’ because it is more conducive to the group cohesion. This is equality-based reward.

(Incidentially there is a third approach: Rewards are distributed according to need. Under this approach a breadwinner for a large family would be paid more than a single person without dependents doing the same job)

What flows from this? For one, it explains how executive pay has been able to run so far ahead of average workers’ pay in the United States especially.

More relevantly, it explains why many national and plant managers make their own lives difficult by implementing reward-for-output. Not only is it not appreciated, it probably causes friction.

This is not to say that rewards can never be shaped towards encouraging performance in Eastern cultures, just that they need to be directed towards the group.

My point in all this is that well-meaning labour activists in the West who want to assist their brethren in the developing world ought to consider that it might not be appropriate to promote a wage-setting apparatus similar to the one in their home country, complete with tiered salary grades and assumptions about the relative worth of different kinds of work. It might be like forcing a square peg into a round hole.


  • Ralston D, et al, The relevance of equity values in Eastern cultures, in ‘Whose Business Values? Some Asian and Cross Cultural Perspectives’ (1995) edited by Sally Stewart and Gabriel Donleavy

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