Communication Currents

The rapid rise of capitalism in China has piqued the interest of communication scholars about the potential differences between Chinese and U.S. individuals and organizations, which function in similar economic systems but entirely different cultures. One of the topics is the self-enhancing attributional bias. It is a tendency to take personal credit for positive outcomes, while blaming failures on outside factors. In general, researchers have found that the self-enhancing attributional tendency is more common among people in North American cultures than in East Asian cultures. Researchers have provided a variety of explanations for the difference. One of them is due to difference in self-construal, or the extent to which the self is viewed as separate from or connected to the other, between East Asian and North American cultures. In North American cultures, an independent self-construal is most common and associated with a greater need to maintain positive self-regard through emphasizing one’s own achievements and denying responsibility for failures. In East Asian cultures, an interdependent self-construal is most common and individuals do not stress self-promotion but rather interdependence, the environment, and harmony.

Most such comparative studies are conducted at the individual level. Cross-cultural studies of attribution at the organizational level are scarce. To learn more about this, we analyzed the content of 200 corporate annual reports from Chinese and U.S. companies. Annual reports are a regulative mechanism for publicly-listed companies, and they serve to enhance transparency and help investors make decisions regarding investments.  In addition to satisfying mandatory corporate reporting requirements, corporate annual reports have become a form of strategic communication. They are highly sophisticated products that serve to construct particular images of the organization. Corporate annual reports not only present accounts of corporate activities over the past year, but also include attributions for its performance. Attributional explanations in annual reports are expected to explain and justify performance. They also serve to build confidence and support among investors, clients, customers, government, and employees. Such attributions have been generally regarded as an explicit form of strategic communication and impression management.

The findings of this study suggest that both Chinese and U.S. companies attribute favorable performance more to internal causes than to external causes, and attribute unfavorable performance more to external causes than to internal causes. These findings support the universalistic view of self-enhancing attributional bias and show that the typical pattern for attributions found in studies of causal reasoning for individual performance also characterizes attributions to causes of corporate performance. There are three possible explanations for these findings.

The first reason could be that corporate annual reports and attributions reflect cultural values and social norms. Thus Chinese culture, like U.S. culture, may tend to accept the self-enhancing attributional bias. Given the great changes in Chinese society’s value systems since the early 1980s, after China’s transition from socialism to capitalism and the new emphasis on material success and personal freedom, it is possible that the finding is related to societal transformation and the growing popularity and influence of individualism in the last three decades. 

The second reason could be that East Asian cultures may self-enhance toward their organizations and in domains that are especially important to them, such as corporate annual reports.  For both Chinese and U.S. companies, annual reports are strategic documents that communicate and enhance corporate legitimacy and manage image in the global market where companies are pressured to compete for scarce capital and resources. Attributions in annual reports serve to communicate and construct a positive image of the company when the performance is favorable and shift responsibility and blame to outside factors when the performance is unfavorable.

A third reason may be that Chinese companies learned the style of annual report writing and attributions from their U.S. counterparts because the Chinese stock exchange market started only in 1991. Thus, their regulation mechanisms, such as the annual reports, imitated those of the U.S. companies in order to communicate and defend corporate legitimacy regarding performance to attract international investors, as did their U.S. counterparts. Most likely Chinese corporate annual reports and attributional styles have been influenced by all three factors.

In addition, the findings of this study show that Chinese companies gave more credit to external factors than did their U.S. counterparts in explaining positive outcomes although both Chinese and U.S. companies showed the attributional bias. This finding is consistent with the literature that regards East Asians, including Chinese, as more situational and holistic than their U.S. counterparts when explaining social events. For instance, while East Asian cultures more often utilize situational factors in explaining crimes, North American cultures tend to rely on personal dispositions for explanations.

There may be two reasons for this difference. First, despite the influence of capitalism, East Asian traditional cultures still have deep-rooted influence in China, so corporate annual reports reflect cultural values. Second, the Chinese socialist system’s emphasis, from 1949 to 1978, on collectivist and governmental forces in social, economic and political life has been so pervasive that situational factors continue to play an important role in explaining social events among Chinese. For example, many of the Chinese companies attributed their successful performance to the “correct guidance of the government” and the “subsequent good economic and market environment” in their annual reports. Although China has adopted a capitalistic economic system since 1992, the influence experienced in the four decades before is obviously still apparent. The continued influence of a socialist culture may explain why the current study finds a greater tendency for Chinese companies to attribute success to outside situational factors more than their U.S. counterparts.