Understanding Cross-National Differences in Risk Through a Localized Cultural Perspective

Abstract

We examine cross-national differences in attitudes and decisions toward risk by comparing Chinese (collectivists), South Korean (collectivists, but with distinctive localized cultural norms), and Australian (individualists) undergraduate student samples from a balanced cross-cultural perspective. Individual evaluation revealed that risk was least favored by the Chinese students in their attitudes and choices, followed by the South Korean and Australian students. Unlike previous results from South Korean and Australian student samples that exhibited unique shifts toward risky choices indicative of group polarization, the Chinese students did not tend to take greater risks when making group versus individual decisions (i.e., risky shift). This was regardless of the group’s gender composition, although the pattern did vary according to financially oriented risk domains. The implications of these results are discussed in terms of each country’s indigenous sociocultural norms.

Keywords

risk group decision making risky shift group polarization cross-cultural differences Zhong Yong

As globalization compels organizations to respond more flexibly to a rapidly changing business environment, groups rather than individuals now make important organizational decisions (Bazerman, Giuliano, & Appelman, 1984). In the past few decades, many theories and empirical studies have been proposed to understand how the group decision-making process occurs in risky situations. Indeed, groups and individuals behave differently when making decisions in situations of uncertainty (Sniezek, 1992). Extensive research has been focused on the group polarization phenomenon, which refers to the tendency of groups to reach a decision that leans toward a more extreme (i.e., risky or cautious) position than those made by individuals prior to group discussion (Moscovici & Zavalloni, 1969). In particular, affective, cognitive, interactive, and statistical academic perspectives have been adopted to derive alternative hypotheses to account for the group shift phenomenon (Vinokur, 1971). The proposals were ultimately narrowed down to the following two promising accounts: (a) social comparison (Sanders & Baron, 1977) and (b) persuasive argumentation (Burnstein & Vinokur, 1977). Both accounts were supported by the results of a meta-analysis of 21 studies on choice shifts in group decision making (Isenberg, 1986).

In addition, eclectic, individual-level explanatory mechanisms underlying group polarization have been elaborated through the lens of collective-level (extra-individual) variables in group decision processes, with a particular emphasis on culture (Carlson & Davis, 1971; Hong, 1978; Kim & Park, 2010). These authors documented substantial cross-national differences in group polarization between Eastern and Western samples of students. This theoretical approach assumes that national difference is driven by superordinate cultural typologies (i.e., individualism vs. collectivism; see Hofstede, 1981).

However, this approach overlooks indigenous cultural norms that have evolved as part of the idiosyncratic history of individualist and collectivist cultures and their effects on the way people think, feel, and behave. For example, each collectivist country has a unique and dominant cultural norm such as Zhong Yong in China, can-do spirit and nunchi in Korea, and wa in Japan, which is a significant core value and belief that affects the people’s behavior and thoughts (M. H. Bond, 2002; Caudill, 1973; Kitayama, 2002; Kitayama & Uskul, 2011; Rohrmann, 2013; Triandis, 2001). Failure to recognize the importance of the historical transmission of localized norms from one generation to the next within collectivist nations impedes a full understanding of within-collectivist (e.g., China vs. South Korea) cultural differences in cognition, attitudes, and behavior (Kitayama, 2002; Triandis, 2001; Yamawaki, 2012). As a practical example, boundless business practices across the globe pose numerous management challenges in human resources and organizational behavior (e.g., supervisor abroad—subordinate at home relationships facing many foreign ventures in China; see Korea Institute for International Economic Policy, 2004).

In this article, we propose a new perspective in the mechanism of group polarization phenomenon that accounts for the indigenous cultural characteristics of collectivist countries. Our premise is that although collectivist societies do share one particular superordinate cultural orientation (i.e., collectivism), group polarization also emerges in a locally informed manner that reflects each country’s cultural peculiarity and that exerts a unique influence on individual and group judgments and decision making.

Ultimately, this research captures national differences by comparing risk attitudes and choices both within-collectivist samples (i.e., China vs. South Korea) and between individualist and collectivist samples (i.e., Australia vs. China) of undergraduate students. We compared data from Australian (considered individualists) and South Korean student samples reported in two previous studies (Kim & Park, 2010; Ronay & Kim, 2006) to newly collected data obtained from a Chinese student sample at the individual and group levels. Although both South Koreans and Chinese are considered collectivist, they have distinctive localized cultural norms. Patterns of group-induced shift toward risk in group-decision-making situations were compared across the three different national samples.

Cross-National Differences in Risk in Group Situations: Australia Versus South Korea

To determine the pattern of individualist–collectivist differences in how group contexts influence an individual’s tolerance for risk when making decisions under uncertainty, a recent study (Kim & Park, 2010) compared South Korean and Australian student samples. According to Kim and Park (2010), the determinants of the risky shift (considered a form of group polarization) differed between the two national groups. Specifically, one of the driving forces underlying a group-induced shift toward risk in South Korean individuals was dependent on a dominant collective social norm that is profoundly embedded in South Korean society and culture. In contrast, the main impetus for Australian individuals relates to personal attributes (i.e., gender characteristics such as masculinity vs. femininity) that are amplified in group situations. In other words, South Korean male, female, and mixed-gender groups consistently shifted their choices toward a riskier position when they made decisions in groups versus when doing so individually; there were no gender differences in risky group decisions. In contrast, only male groups exhibited a risky shift in the Australian sample (Ronay & Kim, 2006).

Kim and Park (2010) attributed this national difference in risky shift to interpersonal relationships characterized by collectivistic and individualistic cultures. In a collectivist culture (e.g., South Korea), the social boundary that distinguishes the self from others tends to be more flexible and less constrained due to an interdependence-oriented interpersonal relationship style. This relationship style emphasizes the desirability of aligning oneself with prevailing social or group norms, maintaining cohesiveness with group members, and prioritizing group over individual decisions (Hofstede, 1981; Markus & Kitayama, 1991; Triandis, Bontempo, Villareal, Asai, & Lucca, 1988). This cultural drive toward community solidarity facilitates links between the self and others in collectivists (R. Bond & Smith, 1996), resulting in close social networks where in-group members are willing to support each other and take joint responsibility for potential negative consequences of their decisions (Wallach, Kogan, & Bem, 1964). This diffusion of responsibility attenuates group members’ risk perception. Consequently, the reliable group-induced shifts toward risk noted among South Korean individuals arise from the salience of being part of a group that augments group cohesion due to implicit social norms in collectivists.

In contrast, people in an individualistic culture (e.g., Australia) pursue individualism by positioning themselves separately from others, expressing their ideas and feelings, and attaching a higher priority to individual rather than group decisions (Hofstede, 1981; Markus & Kitayama, 1991; Triandis et al., 1988). This emphasis on individualism leads people in such cultures to be less vulnerable to group pressure to conform (Suh, 2002), and more personally responsible for the possible negative consequences of their decisions (Weber & Hsee, 1998). Therefore, individualists are more likely to base risk decisions on personal attributes (e.g., gender characteristics such as masculinity and femininity) rather than on relational attributes (e.g., group homogeneity) during group decision making (Ronay & Kim, 2006). Hence, decisions made by men within a group of men reflect masculinity. Similarly, Schwartz and Rubel (2005) also reported that men and women differed in fundamental social values among Australians and U.S. Americans. For example, stimulations such as a preference for excitement, risk taking, and challenge in life are more valued among men than among women. As a result, risk taking is used to derive a sense of belonging and esteem from group membership. Conversely, women in all-female groups tend to base their decisions on femininity, which stereotypically devalues risk taking; women avoid risky decisions to derive a sense of belonging and esteem from group membership. This phenomenon ultimately produces a gender difference in which female groups take fewer risks than male groups do in group decision making. Consequently, group situations in an individualistic culture (e.g., Australia) create a context where personal attributes (i.e., gender characteristics) can be salient and guide in-group norms, resulting in gender differences in risky shift patterns.

Cross-National Differences in Risk in Group Situations: China Versus South Korea

The comparison of risk taking between Australian and South Korean individuals is of theoretical importance because it provides empirical evidence for differences between individualistic and collectivistic cultures, where the dynamic relationships between the self and others affect evaluations of risk. In addition to an individualist versus collectivist perspective, the present study further investigated national differences in risk from a within-collectivist cultural perspective by examining another collectivist sample—in this case, a Chinese sample—and by comparing South Korean with Chinese cultures.

Chinese and South Korean cultures are generally acknowledged to share many collectivistic cultural characteristics (e.g., an interdependent-oriented relationship style). However, the Chinese possess a unique cultural trait that distinguishes them from South Koreans. Thus, the risky shift observed in the South Korean student sample might not be observed in the Chinese student sample. This prediction is derived from the highly influential Confucian doctrine called “The Doctrine of the Mean” (“Zhong Yong” in Chinese). Zhong Yong has a strong foundation in the Chinese education system and influences many aspects of Chinese life, such as literature, architecture, ethical beliefs, modes of thinking, and decision making (Ou, 1998; Sun, 2008). Zhong Yong emphasizes avoiding extremes when two opposing views are encountered, to resolve conflicts and achieve the ultimate goal of Zhong Yong: harmonious relationships among individuals, people and society, and people and nature (G. M. Chen & Chung, 1994; Cheung et al., 2006; He, 1998; H. Yu, 2001; Y. X. Zhu, 1999).

The philosophical connotation embedded in Zhong Yong has been applied to decision making in the Chinese government. For instance, one great ruler of ancient China, Shun, established (or modified) policies according to Zhong Yong, and arrived at the “middle” as a point of compromise between two extreme stances after listening to all the opinions on a relevant bill, and then implemented this as a formal policy for his people (X. Zhu, 1989). In daily life, examples of Zhong Yong include Chinese people tending to settle disputes through compromise (Cheung et al., 2003), avoiding taking a radical point of view (Lee, 2000), and even determining their average order quantities to be closer to the mean demand than American people do in newsvendor inventory decisions (Feng, Keller, & Zheng, 2011). This influence of Zhong Yong on governance is also evident in modern Chinese society. For example, the most influential leader in determining China’s modern direction, Deng Xiaoping, led the Chinese economic reform according to Zhong Yong, such that its conventional socialist characteristics (e.g., planned economic system) were merged with a newly introduced market economic system to create a socialist market economy (Deng, 1994; Ma & Yang, 2006). In addition, Deng Xiaoping eased potential concerns (e.g., changes in economic systems) aroused by the return of Hong Kong and Macau to China through a balanced and harmonized way of thinking. He respected the territories’ distinctive economic systems and civil liberties and proposed a one country, two systems model for a peaceful reconsolidation, which allows for the coexistence of different economic systems (i.e., a socialist system in China and a capitalist system in Hong Kong and Macau) under one Chinese identity (Chenglie, 1997; China Facts and Figures, 2006).

Based on the salience of Zhong Yong features in Chinese Confucian culture, we conjectured that a sample of Chinese undergraduate students, who are historically and socially influenced by Zhong Yong, while making group decisions involving risk, would be more likely to amass individual members’ ideas and then try to reach a compromise between two extreme opinions (among them) as a final decision. Particularly in discussions between group members who are unfamiliar with each other, finding the optimal point of compromise between extremes is considered socially desirable to reduce intra-group conflict caused by members’ different views (Yao, Yang, Dong, & Wang, 2010). Such a holistic act is ultimately compatible with social expectations and norms (i.e., the retention of harmonious relations among members; Yao et al., 2010). Thus, Chinese students may be less susceptible to group-induced shift toward risk, thereby resulting in group decisions that are unlikely to be riskier than individual decisions (i.e., less likely to result in risky shift). This study proposes the following hypothesis:

Hypothesis 1 (H1): Chinese students do not shift their choices toward a riskier position when making group decisions than when they are alone.

This differs from what might be expected of South Korean undergraduate students, who are identified as “dynamic collectivists” (Bae, Rowley, & Sohn, 2002). Their action-oriented values (i.e., can-do spirit and optimistic progressivism) reflect the influences of rapid post-war capitalistic economic development and a 30-year military regime, which are emphasized by underlying collectivist traits (e.g., group cohesiveness and conformity) in group situations. Hence, South Korean students are expected to endorse riskier options in a group rather than individually (Kim & Park, 2010), which in turn results in higher levels of risky shift relative to Chinese students.

Hypothesis 2 (H2): South Korean students shift their choices toward greater risk than do Chinese students when making group decisions.

Method

Participants

Two hundred ninety-two Chinese undergraduates¹ (M_age = 21.04, SD = 2.25) were recruited from a co-educational national university in Qingdao, China. A total of 67 men and 73 women were randomly assigned to 2 independent same-gender groups (i.e., 3-4 men [or women] per group), resulting in 19 all-male and 20 all-female groups. Group members were required to reach a consensus on hypothetical risk scenarios. In addition, 38 men and 38 women were randomly assigned to mixed-gender groups (2 men and 2 women per group; 19 groups in total). In addition, 32 men and 44 women were randomly assigned to the individual control condition and did not participate in group discussions. Although the Australian study (Ronay & Kim, 2006) only included same-gender student groups, the present study adopted the same group composition (i.e., same-gender and mixed-gender groups) as used in the South Korean study (Kim & Park, 2010) for the Chinese sample. As a result, a robust comparison of three different samples of undergraduates for cross-national differences in group-induced risky shift could be made based on the fact that the two previous studies (Kim & Park, 2010; Ronay & Kim, 2006) and the current study completely shared the same research design and materials as explained below.

Procedure

Pre-test

Each participant filled out a questionnaire on their demographic details and then completed Chinese versions of self-reported risk measures in the following order: the semantic differential risk scales (the Risk Global–Semantic Differential Scale [RG-SDS], Risk Unique–Semantic Differential Scale [RU-SDS]), and the Choice Dilemma Questionnaire (CDQ). We used different measures to examine whether cross-national differences in risk can be reliably observed and replicated at an individual level across different measures that assess the same construct of risk in different formats.

Manipulation

After participants in the experimental conditions (i.e., all-male, all-female, and mixed-gender groups) completed the six hypothetical risk scenarios individually in the CDQ at pre-test, they were asked to engage in face-to-face group discussions (i.e., manipulation) to exchange opinions and reach a group consensus on all six CDQs within 10 min. The participants in the individual control condition took a break for 10 min, and then responded to the same CDQ items again (post-test).

Measures

As noted above, the same scales (i.e., RG-SDS, RU-SDS, and CDQ) were used in this study as used in the two previous studies (Kim & Park, 2010; Ronay & Kim, 2006). They were originally developed in English, and were then translated into Chinese. To optimize the translated questionnaires’ accuracy, a forward–backward translation process was used following the translation technique recommended by Behling and Law (2000).

RG-SDS

The RG-SDS (Cronbach’s α = .92 in this study) is a self-reported attitudinal measure that assesses participants’ overall evaluations of a global construct of “risk.” Participants were asked to indicate their attitudes toward risk using 7-point scales that were anchored at either end by two polar opposite adjectives (e.g., loss vs. gain, mistake vs. success, penalty vs. benefit, waste vs. achieve, loss vs. reward, cost vs. profit, and failure vs. win). Higher scores on the RG-SDS indicate a more positive attitude toward risk (see Appendix A).

RU-SDS

The RU-SDS (Cronbach’s α = .91 in this study) is a variant of the RG-SDS, in which the target (in this case, risk) is replaced with self-selected risk items. The RU-SDS was used because people occasionally engage in risky behaviors (e.g., drinking and smoking) despite having a negative perception of global risk. Participants were instructed to select 10 risky activities that were relevant to their lives from 34 risky behaviors, after which the 10 items were narrowed down to the 6 activities most relevant to each participant. The six items were then used as evaluation categories using the same semantic differential scale as in the RG-SDS. Higher scores on the RU-SDS indicate a more positive attitude toward self-relevant risk activities (see Appendix B).

CDQ

An adaptation of Kogan and Wallach’s (1964) CDQ (Cronbach’s α = .40 for the six items in this study)² was used to assess the extent to which participants were willing to take risks in uncertain conditions, first alone and then in a group situation. The CDQ items represented hypothetical risk situations, and participants were instructed to indicate the lowest probability of success they considered acceptable when recommending an action to the central person in each scenario. The choices were odds of 1, 3, 5, 7, and 9 chances of success out of 10 (scored as 1, 3, 5, 7, and 9, respectively), with one additional category (scored as 10) where participants could decline to recommend an alternative regardless of the probability of success. CDQ scores are calculated by summing the CDQ item scores. Lower CDQ scores indicate greater risk acceptance. The same six CDQ items (Appendix C) used in the Australian (Ronay & Kim, 2006) and South Korean (Kim & Park, 2010) studies were adopted from the original 12-item set.

Results

Individual-Level Analyses: National Differences in Risk Attitudes and Choices

The means and standard deviations for the RG-SDS, RU-SDS, and CDQ at pre-test for the Australian, South Korean, and Chinese participants are given in Table 1. A previous study (Kim & Park, 2010) reported that Australian participants exhibited stronger pro-risk attitudes and choices than did the South Korean participants across the three risk measures. The independent-samples t test was conducted to examine how Chinese participants differ from South Korean (i.e., within collectivists) and Australian samples (i.e., between collectivist and individualist) on risk attitudes (i.e., RG-SDS and RU-SDS) and risk choices (i.e., CDQ). All p values reported in this article were two-tailed unless specified.

Table 1.

Cross-National Differences in Risk Attitudes and Choices Between the Australian, South Korean, and Chinese Participants at Pre-Test.

Measures	Australians(n = 126)	South Koreans(n = 283)	Chinese(n = 291)	F (df1, df2)
RG-SDS	4.65_a (1.12)	3.64_b (1.31)	2.89_c (1.38)	79.15*** (2, 685)
RU-SDS	3.53_a (1.09)	3.14_b (1.02)	2.75_c (1.07)	25.64*** (2, 695)
CDQ	32.82_a (7.24)	37.04_b (7.15)	38.45_c (7.76)	24.98*** (2, 681)

Note. Standard deviations are denoted in parentheses below means. Means with differing subscripts within rows are significantly different across the three groups at p < .05. RG-SDS = Risk Global–Semantic Differential Scale; RU-SDS = Risk Unique–Semantic Differential Scale; CDQ = Choice Dilemma Questionnaire.

***

p < .001.

On the within-collectivists comparison, the test showed the same pattern across the three risk measures, such that the Chinese participants reported lower preference for risk than did the South Korean participants: t(566) = −6.62, p < .001, d = .56 for RG-SDS; t(571) = −4.41, p < .001, d = .37 for RU-SDS; t(558) = 2.24, p = .03, d = .19 for CDQ. Similarly, this pattern was replicated in the between collectivist and individualist comparison, indicating that the Chinese participants exhibited lower preference for risk than did the Australian participants: t(409) = −12.37, p < .001, d = 1.40 for RG-SDS; t(414) = −6.77, p < .001, d = .72 for RU-SDS; t(410) = 6.89, p < .001, d = .75 for CDQ. This replicates the previous finding (Rohrmann & Chen, 1999) that shows Chinese to be less tolerant than Australians in individual risk acceptance. Overall, our present findings suggest that the Chinese participants favored risk the last, the Australian participants the most, and South Korean participants in-between, and this pattern was also reliable in their choices (i.e., CDQ).

Group-Level Analyses: National Differences in Group-Induced Risky Shift

Due to the interdependence among group members, “group” was selected as the unit of analysis to examine the effect of group discussion on risky decision making. Table 2 shows the means and standard deviations of pre- and post-test CDQ group mean scores for the three national groups.

Table 2.

CDQ Scores in Individual and Group Situations for the Three National Groups.

	Australians		South Koreans		Chinese
Situation	Pre-test	Post-test	Pre-test	Post-test	Pre-test	Post-test
Individual
Male	33.04 (4.25)	33.50 (3.35)	35.93 (4.77)	36.53 (5.65)	38.91 (4.71)	38.11 (5.32)
Female	33.30 (2.67)	33.12 (1.60)	34.45 (4.54)	35.88 (4.31)	40.22 (3.66)	40.22 (4.53)
Group
All-male	31.66 (2.45)	29.50 (3.03)	38.22 (4.16)	35.47 (5.58)	37.68 (4.46)	36.89 (7.71)
All-female	33.49 (4.68)	32.90 (4.38)	36.45 (3.42)	34.40 (4.66)	38.99 (3.81)	39.55 (4.95)
Mixed			37.99 (2.87)	37.03 (6.37)	37.66 (4.45)	38.05 (6.98)

Note. The table provides descriptive statistics with “group” (e.g., a group of three to four members) as the unit of analysis for both individual and group situation conditions for all three national groups. Values are denoted as M (SD). Lower scores reflect greater tolerance for risk taking. CDQ = Choice Dilemma Questionnaire.

Dependent variable

Following Kim and Park (2010), we calculated differences in group CDQ scores by subtracting post-test scores from pre-test CDQ group mean scores; this difference was the main dependent variable in the subsequent statistical analyses that were used to examine the effect of group discussion on CDQ risk decisions. Thus, higher CDQ difference scores indicate a greater shift toward risk in group-based decisions. We used the same index as the CDQ sum score,³ which is the sum of pre-test and post-test CDQ group mean scores. The sum score is used to identify the effect of group discussion itself on risky shift while controlling for the effect of a group’s overall risk attitude.

National differences in risky shift

To determine if the Chinese participants exhibited a different pattern of risky shift from that observed in the Australian and South Korean participants, a 2 (situation: group vs. individual⁴) × 3 (nation: Australia vs. South Korea vs. China) univariate analysis of variance was conducted with CDQ sum score as the control variable and the CDQ group difference score as the dependent variable.

There was a significant effect of CDQ sum score, F(1, 151) = 20.56, p < .001, η² = .12, indicating that overall risk attitude of groups affected risky shift. No main nation effect was observed, F(2, 151) = 1.50, p = .23, η² = .02, but there was a significant main situation effect, F(1, 151) = 5.92, p = .02, η² = .04, suggesting that participants generally had greater risk tolerance in a group in contrast to individually. In addition, the analysis of variance revealed a significant situation × nation interaction, F(2, 151) = 5.36, p = .01, η² = .07, indicating that the magnitude of the group-induced shift toward risk differed across the nations.

Specifically, compared with the Chinese participants, the South Korean participants shifted their choices toward greater risk when they made decisions after a group discussion (i.e., group situation condition), t(151) = −1.99, p = .049, d = .55, thus supporting H2. However, there was no difference between the Chinese and Australian⁵ participants in the magnitude of risky shift, t(151) = .49, p = .62, d = .34. The effect of group discussion on risk decisions appears to explain the within-collectivist cultural differences (China vs. South Korea) in risky shift. Indeed, there was no effect of group discussion on risk decisions among the Chinese participants, t(151) = .71, p = .48, d = .07, whereas the South Korean participants took greater risks when making group as opposed to individual decisions, t(151) = 3.81, p < .001, d = 1.07.

Within-collectivist cultural differences in Zhong Yong CDQ scores

To determine if the absence of risky shift observed in the Chinese sample was due to Zhong Yong, we created Zhong Yong CDQ (CDQ_ZY) scores to account for the theoretical emphasis of Zhong Yong philosophy on the reduction in in-group conflicts, as well as on the retention of harmonious respective relationships (Yao et al., 2010). We presumed that such harmonization can be achieved when the extent to which the pre-test CDQ scores of each member in the same group are distant from the optimally compromised score (i.e., CDQ_ZY score) is minimized. We accept the presence of different ways (e.g., 1/N rule and majority rule) of pursuing an optimal compromise (i.e., CDQ_ZY score) between the two extreme positions. Nevertheless, our method of averaging the lowest and highest pre-test CDQ scores for members in the same group seemed to be the most appropriate in that it was less dispersed than other ways of either averaging all group members’ pre-test CDQ scores (i.e., 1/N rule) or selecting an option that embraces a majority (i.e., majority rule⁶). For this reason, the CDQ_ZY scores were calculated by averaging the lowest (i.e., the most risky) and highest pre-test CDQ scores (i.e., the most cautious) among group members. The pre-test CDQ scores used to derive the CDQ_ZY scores were selected from the participants that were subjected to the experimental conditions.

If Zhong Yong–oriented principles do underlie Chinese group decision making, as we expected, there will be no significant difference between the CDQ_ZY scores and the original group CDQ scores (i.e., post-test CDQ group mean scores) for the Chinese sample. Conversely, this prediction will not hold for the South Korean sample that exhibited risky shift, such that the original group CDQ scores will be significantly riskier than the CDQ_ZY scores. This expectation needs to be substantiated by looking at whether the two national groups are reliably different with respect to the CDQ_ZY scores and the original group CDQ scores.

To determine if there are within-collectivist cultural differences in the extent to which the influence of Zhong Yong is reflected in the original group CDQ scores of the two national groups (i.e., Chinese and South Korean), the independent-samples t test was conducted using the CDQ_ZY difference scores (CDQ_ZY scores minus post-test CDQ group mean scores) as the dependent variable. Higher CDQ_ZY difference scores indicate that the original group CDQ scores were made in a more extreme (i.e., risky) manner relative to the CDQ_ZY scores. As expected, a reliable difference was detected between the two national groups, t(112) = 1.99, p = .049, d = .37, indicating that the CDQ_ZY difference scores were greater for the South Korean (M = 1.71, SD = 4.60) than for the Chinese (M = −.03, SD = 4.72) participants.

More elaborately, the CDQ_ZY difference was compared within each national group. A one-sample t test showed that the South Korean participants were significantly riskier, t(55) = 2.77, p = .01, d = .37, whereas the Chinese participants did not show a reliable difference, t(57) = −.06, p = .96, d = .01.

National differences in domain-specific risky shift

Based on some reliable findings reported in previous studies (i.e., Chinese’s greater tolerance for risk than Americans in monetary decision making; see Hsee & Weber, 1999; Weber & Hsee, 1998), further analyses were performed to explore whether the salience to the Chinese of domain-specific (i.e., investment) risks also applies to their group-level decisions on the specific CDQ items concerning gambling and investment. The test result showed that the Chinese participants shifted their group choices toward greater risk on playing chess (Item 5) than did either the South Korean participants, t(151) = −2.97, p < .01, d = .15, or the Australian participants, t(151) = −3.25, p < .001, d = .21. This pattern was also marginally reliable for investments in business expansion (Item 1) for the Chinese versus South Korean participants, t(151) = −1.82, p = .07, d = .63, whereas no significant difference was seen between the Chinese and Australian participants, although on average the Chinese show greater risky shift relative to the Australians, t(151) = −1.33, p = .19, d = .14.

Risky shift among the Chinese participants

To determine the effect of group discussion on risky shift in Chinese all-male and all-female groups, a 2 (situation: group vs. individual) × 2 (gender: male vs. female) univariate analysis of variance was conducted with CDQ sum score as the control variable and CDQ group difference score as the dependent variable.

There was a significant effect for CDQ sum score, F(1, 60) = 21.18, p < .001, η² = .26, indicating that the overall risk attitude of the groups affected risky shift. The main effects of gender, F(1, 60) = .20, p = .66, η² = .003, and situation, F(1, 60) = .80, p = .38, η² = .01, and the Gender × Situation interaction, F(1, 60) = .08, p = .78, η² = .001, were not significant. Unlike the South Korean groups, which exhibited a reliable risky shift regardless of group gender composition (Kim & Park, 2010), the Chinese groups did not show a significant shift in their choices toward greater risk when making group versus individual decisions, t(60) = −.42, p = .68, d = .01 for all-male groups, and t(60) = −.87, p = .39, d = .21 for all-female groups. Thus, H1 was supported.

Furthermore, Table 2 shows the CDQ group scores for the South Korean and Chinese mixed-gender groups. As the variance in the dependent variable (i.e., CDQ group difference scores) was unequal across the four groups (i.e., the Chinese/Korean mixed-gender experimental groups and the Chinese/Korean mixed-gender control groups⁷), regression was used for the analyses. Therefore, the CDQ group difference scores were regressed from the CDQ sum scores. Situation (dummy-coded 0 = group, 1 = individual) and nation (dummy-coded 0 = Chinese, 1 = South Korean) were used as predictors. As with the same-gender experimental groups, the results showed that the effect of overall risk attitude on risky shift was also reliable in the mixed-gender groups (i.e., a significant effect of CDQ sum score), β = −.40, p < .001.

Contrary to the finding from the South Korean sample (Kim & Park, 2010), which exhibited a reliable risky shift in the mixed-gender group condition, the Chinese mixed-gender groups did not shift their group choices toward a riskier position after group discussion. Risky shift was not significantly different between the experimental and corresponding mixed-gender control (individual) groups, β = −.07, p = .49. In addition, no reliable difference was detected in the magnitude of the risky shift between the Chinese and Korean mixed-gender experimental groups (i.e., the effect of nation), β = −.11, p = .29.

Discussion

Cross-National Differences in Risk Attitudes and Choices at the Individual Level

The fact that Australian students exhibited greater risk tolerance than do South Korean students, who in turn were more pro-risk than Chinese students were, can be interpreted by drawing on two theoretical perspectives: the culture theory that has been applied to cross-national comparisons of risk taking (Douglas, 1992; Thompson, Ellis, & Wildavsky, 1990; Wildavsky, 1987), and Schwartz (1992)’s value theory that asserts the existence of fundamental social values in each country such as conformity value (e.g., restraint of actions).

Individualistic cultures (e.g., the American and Australian cultures, reviewed in Chai, Liu, & Kim, 2009; Schwartz & Bilsky, 1987) are characterized by few externally mandated social restrictions (e.g., rules, laws, and group norms) on individual acts. This allows people from these cultures to be self-assured and self-determined when presenting their ideas, feelings, and decisions, and encourages them to challenge uncertainty, as this is viewed as an opportunity for potential gains. Hence, individualistic cultural forces have a self-enhancing effect on individualists’ responses toward socially desired traits—in this case, risk. Conversely, strongly hierarchical and bureaucratic cultures (e.g., South Korean and Chinese cultures, reviewed in Chai et al., 2009; Schwartz & Bilsky, 1987) have many externally mandated social constraints, encompass individualistic acts that are considered deviant, and exhibit a preference for procedures that conform to social customs. These facts suggest that collectivists may encounter difficulties in generating unique and creative ideas necessary for innovation. In fact, a recent study of Chinese employees across several industries (e.g., information technology, real estate, and finance) reported that an excessive endorsement of Zhong Yong disrupts the process of turning creative ideas into innovative behaviors (Yao et al., 2010). The disparity between individualistic and collectivistic cultures might result in differences in uncertainty avoidance (Hofstede, 1983), such as differences in risk tolerance between collectivists (low tolerance) and individualists (high tolerance).

Besides individualist versus collectivist comparison in risk, it is also important to understand within-collectivist cultural differences between the South Korean and Chinese samples. Despite sharing collectivistic characteristics and hierarchical cultural norms, lower risk tolerance in the Chinese students compared with the South Korean students may be explained by the relatively belated market-oriented economic reform in China (named Reform and Opening-up policy), that started in 1978 (Deng, 1994). It has been less than 40 years since the Chinese government allowed its people to operate private businesses and opened the country to foreign investments. This suggests that the government restrictions in the previously closed economic (centrally planned) system prevented Chinese individuals from acquiring experience with individual challenges involving risk. This alternative account is in line with our results.

Cross-National Differences in Risky Shift

Comparing the three national groups allowed us to better understand cross-national differences in risky shift patterns from a balanced cross-cultural perspective. Most notably, regardless of group gender composition, the Chinese student groups did not take greater risk in group choices. This pattern differs from previous studies with South Korean and Australian student samples; the South Korean groups showed a group-induced shift toward risk, regardless of group gender composition (Kim & Park, 2010), and only the Australian all-male groups exhibited risky shift (Ronay & Kim, 2006).

We propose two potential explanations for the absence of risky shift in the Chinese sample. First, the perception of social networks (e.g., family and group members) may differ between cultures. While social networks tend to be regarded as a virtue (i.e., a cushion against possible losses) in individualistic cultures (Weber & Hsee, 1998), they can be viewed as a double-edged sword (i.e., a burden as well as cushion) in collectivistic cultures. On one hand, collectivistic individuals can accept greater risk in group choices based on the expectation that in-group members within their social networks will be willing to share responsibility for possible losses from the risky option, even if this expectancy leads to taking unwanted risk (e.g., pressure for group conformity). On the other hand, collectivistic individuals may be reluctant to accept greater risk in group choices based on the expectation that they will be financially obligated to help group members if choosing the risky alternative has negative consequences (Li, 2004). For this reason, the tendency to take greater risk in a group situation might be socially reinforced or attenuated depending on the perceived quality of the social network (i.e., cushion vs. burden). This influence of perceived social-network quality on risk may be more salient in the Chinese than in the South Korean cultural context, even though both are collectivistic cultures. Indeed, in a Chinese sample of undergraduates, there was no group-induced risky shift on either willingness to pay for lottery options or preferential investment options when risk decisions were made in groups consisting of family members rather than of individuals (Li, Bi, & Zhang, 2009). The authors found, using the same variables, that the pattern was the same when risk decisions were made in groups consisting of strangers as they were in groups of individuals. The absence of risky shift seems to have been replicated in this study, although there were sample differences between the two studies (i.e., Chinese Singaporean students in Li et al., 2009, vs. mainland Chinese students in this study).

Another plausible alternative for the absence of group-induced shift toward risk in the Chinese groups is the influence of localized sociocultural norms—in this case, Zhong Yong, which permeates almost all aspects of Chinese society (Ou, 1998; Sun, 2008). Specifically, the sociocultural force dominant within China (i.e., Zhong Yong) drives Chinese individuals to seek the midpoint between two extreme views to achieve harmony from a holistic perspective (Yao et al., 2010); this cultural value may be amplified during group decision making due to the greater salience of collectivism (Hong, 1978).

However, this interaction between a localized norm (i.e., Zhong Yong) and a superordinate cultural orientation (i.e., collectivism) seems to feature an exception to the specific CDQ items concerning gambling and investment (Items 1 and 5), which almost consistently showed higher risky shifts by Chinese relative to South Korean and Australian participants. Further research may be required to identify which China-localized cultural norms are more strongly activated with collectivism in monetary risk-related domains. For instance, another unique characteristic of Chinese culture, Guanxi, is an intangible network of personal or organizational connections based on mutual trust and commitment that is relied on to cope with threats from uncertain/ambiguous situations (Park & Luo, 2001) and to maintain long-term relationships (Chen & Chen, 2004). As Chinese individuals tend to regard their in-group members as a fundamental source of financial support when they are in need (Hu & Xie, 2012), accepting pronounced risks in the context of monetary decisions (e.g., exchanging substantial financial support between members) may be identified as collective cooperation to preserve their social networks. In this case, the influence of Guanxi emphasizing the long-term retention of social connections may be more profound in financial risk taking in a Chinese sample. This presents the intriguing research avenue of attempting to quantify Guanxi by comparing risk decisions made by groups built on Guanxi versus groups not built on Guanxi (e.g., no relationship among members) in financial-related risk domains. In fact, a recent study examining the effect of Guanxi on Chinese group decision making under risk reported that Chinese individuals exhibited group-induced risky shift in their group choices when personal relations among group members are intertwined with Guanxi (Cheng, Park, & Kim, 2014).

Conversely, the shift toward risk observed in the South Korean groups may be the result of action-oriented cultural norms (e.g., can-do spirit and optimistic progressivism; see Steers, Ungson, & Shin, 1989) based on their experiences of both a military regime (Kim, 1990) and rapid economic development and industrialization (e.g., the Miracle on the Han River; see Norton, 1998). These cultural forces infuse South Korean society with a fierce competitive drive that builds a fear in South Korean individuals of tendering to fear being left behind. This sociocultural value may be inflated by an interaction with the underlying collectivistic cultural attributes (e.g., group pressures for conformity; nunchi in South Korea; see Choi, 2000) in group situations, resulting in a group-induced shift toward challenge involving risk as a localized cultural norm.

Implications

Despite the limitation of this cross-national experiment to Australian, South Korean, and Chinese contexts, some intriguing implications are evident. Theoretically, this study furthers our understanding of the risky shift phenomenon by demonstrating that the influence of group situations on collectivist individuals’ risk taking can be contextualized based on localized sociocultural norms within the shared superordinate cultural dimension (i.e., collectivism), at least in the Chinese and South Korean contexts. In addition, this study provides empirical evidence for the influence of Zhong Yong on Chinese group decision making under risk by quantifying the extent of this influence, whereas previous focus on Zhong Yong in the literature has mainly been restricted to theoretical discussions with little empirical evidence.

From a practical perspective, examining national differences between South Korea and China in risk taking is valuable for decision makers in international business (e.g., South Korea vs. China) as the results suggest that it should not be assumed that negotiating partners from other countries are willing to take risks (e.g., one should not assume that all South Korean and Chinese individuals are alike simply because they are collectivists). Indeed, many Japanese distributors that have recently entered the Chinese market have suffered a considerable reduction in both overall sales and number of stores because they naively applied Japanese organizational culture and structure to local branches in China (Korea Trade-Investment Promotion Agency, 2011). Organizational and managerial theories of leadership, organization, and motivation developed in one country will not always work in other countries (Hofstede, 1983). The present research supports these arguments.

This suggests that glocalization, the pursuit of globalization via understanding the cultural heritage of local areas (Chen & Tjosvold, 2007; Prahalad & Doz, 1987; Sharma, 2009), is critical for such decision making and for avoiding conflicts between supervisors abroad and their subordinates at home, and vice versa. Moreover, glocalization is imperative in reaching consensus when making group decisions that involve risk because the two parties possess different viewpoints toward “risk” (Hsee & Weber, 1999).

Remaining Issues for Future Research

Our finding that Chinese students reported lower risk tolerance than did Australian students in the individual condition, and that Chinese groups did not show greater risky shift than did Australian groups (on Item 1, business expansion) seems inconsistent with previous studies (Hsee & Weber, 1999; Weber & Hsee, 1998) that showed that the Chinese samples exhibited a higher risk preference than did the American samples. This latter finding was supported by the cushion hypothesis: Tight-knit social networks in Chinese culture serve as a cushion to rely on when support is needed, which may lower perceptions of the negative consequences of a risky option. However, this inconsistency should be viewed as ongoing and controversial because the studies differ in both measures and domains.

First, measures: The type of scale used differed across the studies; the outcome values for evaluating risk taking were presented as the probability of success for a course of action in the current study, whereas other studies (Hsee & Weber, 1999; Weber & Hsee, 1998) used monetary rewards and return rates. This suggests that the use of different formats and risk domains may make it difficult to generate reliable results in cross-national research on risk, even if the scales used were intended to assess the same construct (i.e., risk taking under uncertainty). This argument is in line with a marketing research study (Jaffe & Nebenzahl, 1984) that showed that the use of scales that differ in format and end points yields less reliable evaluations of country images within the same sample. Furthermore, these scale differences led to an inconsistent pattern of cross-national differences in attitudes toward success for business careers (Yu, Keown, & Jacobs, 1993). Overall, future studies that examine the idiosyncratic utility of risk scales with respect to etic (culture-general) versus emic (culture-specific) properties are necessary to refine the results from risk research.

Second, domains: Hsee and Weber (1999) found that the cushion hypothesis was only valid in monetary risk-related domains (i.e., lottery and investment). This pattern was marginally supported by this study: The Chinese participants shifted their group choices toward a riskier position than the Australian groups did on the gambling risk-related item (i.e., CDQ Item 5, playing chess) whereas the overall CDQ scores resulted in no significant differences in the risky shift between the Chinese and Australian groups. An important implication is that a pattern of cross-national risk differences shown in one general-domain risk-taking score (e.g., the overall CDQ) does not generalize to domain-specific risk-taking scores. Consequently, future research needs to determine the domains in which risk taking is more salient to people from different nations, thereby extending the understanding of the divergence in risk between nations. An attempt in this direction was recently made by Hu and Xie (2012), who examined the cross-national validity of the Domain-Specific Risk-Taking Scale (DOSPERT; Weber, Blais, & Betz, 2002). Their results indicated that of the six DOSPERT Scale domains, the ethical, recreational, health/safety, and gambling domains represented a culture-general factor between the American and Chinese samples, but the social and investment domains were culture-specific factors; unlike the American sample, the two domains converged on one factor in the Chinese sample. An important next step is to test whether the factor structure of the DOSPERT Scale observed from the Chinese sample is indeed generalizable to another collectivist sample (e.g., South Koreans), which would help test the ecological validity of the results among within-collectivist cultures by identifying domains that are both culturally shared and differentiated.

Conclusion

We sought to go beyond the individualist/collectivist paradigm by comparing three samples of Chinese, South Korean, and Australian students in terms of their attitudes and decisions toward risk. The present study results extend the body of knowledge on risk research by highlighting the importance of localized sociocultural norms that interact with higher-order cultural orientations to determine patterns of risky shift in group decision making. However, this interpretation is limited to collectivistic contexts, specifically China and South Korea, because the current study did not include national comparisons between individualist samples. Thus, future studies are required to make within-individualist culture comparisons (e.g., comparing European nations; Kolman, Noorderhaven, Hofstede, & Dienes, 2003) of risk at both the individual and group levels. Such comparisons complement the theoretical implications of within-collectivist comparisons in understanding the group polarization phenomenon via a localized cultural perspective (Khondker, 2004; Rohrmann, 2013).

Footnotes

Appendix A

Appendix B

The Risk Unique–Semantic Differential Scale (RU-SDS) Items.

Smoking tobacco

Speed driving

Mountain climbing

Tattoo

Heavy drinking

Skydiving

Fist fighting

Stock investment

Snowboarding

Illegal drug

Para gliding

Wind surfing

Extreme sports

Bungee jumping

Cheating on a test

Shoplifting

Motorbike riding

White water kayaking

Premarital pregnancy

Water skiing

Driving without a seatbelt

Unsafe sex

Snow skiing

Hang gliding

Horse riding

Mountain biking

Drink driving

Boxing

Marijuana use

Living together before getting married

Cramming for exam

Cheating on a partner

Gambling

Other (please specify)

Appendix C

Acknowledgements

The authors gratefully acknowledge the members of the Center for Interdisciplinary Research in Business and Psychology and Global Management for their invaluable assistance in the completion of this research.

Authors’ Note

These data were partially drawn from Chong Zhang’s master’s thesis and were partly presented at the 117th Annual Conference of the American Psychological Association, Toronto, Canada, in August 2009.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: This work was supported by a grant funded by the National Research Foundation of Korea (NRF-2012014598) awarded to Do-Yeong Kim.

Notes

Author Biographies

Junsu Park graduated with bachelor and master of business administration degrees from Ajou University. He is currently pursuing a dual doctoral degree from both Ajou University (Global Management) and University of Eastern Finland (Business Administration) as a recipient of the Finnish government scholarship hosted by Center for International Mobility. His research interests include individual and group decision making under risk, debt management, trust and leadership, and cross-cultural management.

Do-Yeong Kim is professor of organizational behavior and global management, School of Business, Ajou University, South Korea. He received BA in psychology with Summa Cum Laude from the Ohio State University and earned his MS and PhD in social and personality psychology at the University of Washington. He earned the Tanaka Memorial Dissertation Award in ethnic minority psychology from the American Psychological Association. He is on the editorial board serving as a consulting editor of Asian Journal of Social Psychology. He has broad interests in research from basic to applied sciences, which are implicit social cognition, culture/acculturation, cross-cultural management, trust, mentoring, subjective well-being, risk-taking, and decision making, conducting the studies in both laboratory and real-world settings such as business organizations.

Chong Zhang graduated with master of business administration degrees from Ajou University. She is currently working for LENOVO which is located in Beijing, China. Her research interests are group decision making under risk and cross-cultural management.

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