universalism

AIG & Universalism –cultural views on contractual obligations

Posted on March 18, 2009. Filed under: American culture, business, cross cultural, cross cultural conflict, cross cultural miscommunication, universalism | Tags: , , , , , , , , |

Although I personally think AIG is beyond reprehensible, greedy, corrupt and incompetent, I am intrigued by the cultural influences of the situation we now find ourselves in.  I considered, specifically, the differences in cultural views on contractual obligations between Universalist and Particularist cultures, and use the US and China as examples.

The idea that  AIG has a contractual obligation to pay out bonuses to the very executives who brought the company to the brink of bankruptcy  is firmly grounded in American culture. America is a Universalist culture–they have rules and laws and contracts that are applicable to everyone equally (supposedly). They believe contracts are legal and binding, regardless of obvious changes in situation.  AIG executives moan that these bonuses were promised to them by contract and contracts, in a Universalist culture, are untouchable. A deal is a deal. Even a raw one.

Chinese culture, on the other hand, is Particularist. Particularists look at each situation, and understand that things may change unexpectedly. For the Particularist, contracts may be amended or adjusted if the situation or context changes. Particularists also spend more time building relationships,  and value personal obligation and “face” more than Universalists.  For Particularists,  a trustworthy person is known to honor the changing circumstances.  The idea is to build a long term relationship and have a win-win situation over time for both parties.

For the Universalist, it is the complete opposite. A trustworthy person keeps his word, abides by the contract, and pays up. Even when it’s ethically, morally, and  poltically wrong.

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