SMEs’ changing perspective on international trade credit risk management in China: a cultural values evolution approach

ABSTRACT

Due to the globalization of business, historically developed business practices based on cultural values can suddenly become dysfunctional. Chinese exporters, particularly in small- to medium-sized enterprises (SMEs), for instance, are adopting new trade credit risk practices in response to unreliable international customers. Through 45 in-depth interviews, we investigated how Chinese SMEs are changing their perspectives on International Trade Credit Risk Management by employing a cultural values evolution approach. We explained why some Chinese exporters, but not others, shift from affect-based to fact-based risk management practices concerning trade credit. As a major outcome of our research, we identified and articulated four alternative stances towards credit risk: conventionalism, polycentrism, pragmatism, and rationalism.

KEYWORDS:

• China
• international trade credit risk
• Chinese exporters
• values evolution
• risk and risk exposure
• cultural norms

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Jiang Zhou

Jiang Zhou is an Associate Professor at Hangzhou Dianzi University, and her research interest is in International Business and Chinese cultural values.

Ling Deng

Ling Deng is Program Manager of Master of International Business Program at RMIT University in Australia. Her research interest focuses cross-cultural management, cultural intelligence and International business.

Paul Gibson

Paul Gibson is a senior lecturer at RMIT University. Dr Gibson’s research interests include cultural values, leadership, and organisational studies. Dr Gibson has twenty years of experience as an executive coach for senior managers in a wide range of corporations and government departments in Australia.