Research shows that Asian businesses have strong informal networks which are

Research shows that asian businesses have strong

This preview shows page 54 - 56 out of 241 pages.

Research shows that Asian businesses have strong informal networks which are developed from kinship and close associates (Tsui-Auch, 2005). These networks are relationship based, long term and provide rich reservoirs of cheap or free finance, cheap co-ethnic labour, information, and vital business connections (Basu & Altinay, 2002; Licht & Siegel, 2006; Tsang, 2002). The networks are enforced by the practice of “reciprocity and retribution” (Fulop & Richards, 2002, p. 282) and coordinated through “trust and relationship building” (Gupta & Moore, 2008, p. 1). Like guanxi, the networks are utilitarian focussed with exchanges of favours expected from in-group members (Bjerke, 2000; Fan, 2002; Weidenbaum, 1996). For some, business networks constitute “commercial investment or a form of insurance” (Wang, Zhang, & Goodfellow, 1998, p. 36). Due to the close business ties, guanxi has been equated as unethical (Dunfee & Warren, 2001). Given the strong Asian networks and benefits and costs of guanxi , how might Asian operators in New Zealand utilise their networks for tax compliance and if so, how? Answers to these questions can help inform the IRD on the influences of networks on Asian operators.
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41 “Saving face” to the Asians is important as it is more than esteem or self respect (Tung, 1996) and they take measures to prevent failures including business failures (Yang, 1991). This is because business failure bring a “loss of face” (S. Redding & Ng, 1982) and it “shames the founder due to its public nature, loss of social status and the sense of letting the family down” (Begley & Tan, 2001, p. 539). The seriousness of business failure for some equals castigation and ruin (Ray, 1994). Business success is therefore critical to “save face” since their business and family reputation is very much intertwined (Begley & Tan, 2001; Earley, 1997; Tsang, 2002). Literature has shown that overseas ethnic Chinese, Japanese and Koreans are heavily influenced by Confucian teachings which emphasise diligence, perseverance, flexibility, filial piety, self sacrifice, delayed gratification, frugality, responsibility and recognition of the hierarchical orderings of relationships (Gupta & Hanges, 2004; Hofstede & Bond, 1988; Tung, 1996). These practices have led to high saving rates, business tenacity, increased wealth accumulation, superior business skills and knowledge, and low business costs (Hampden-Turner & Trompenaars, 1996; Hofstede & Bond, 1988; McGrath, MacMillan, Yang, & Tsai, 1992). They are obsessed with wealth accumulation to protect against precarious environments (McGrath, MacMillan, Yang, et al., 1992) and to “provide security for future generations” (Gupta & Moore, 2008, p. 13). Asians are also highly secretive, adaptable, undertake pragmatic business decisions, and can expect family contributions (Bjerke, 2000; P. Chu, 2000; Zheng, 2002). Given the foregoing Confucian influences on overseas Asians, how would that affect their tax compliance practices and perceptions in New Zealand? Information gained from their tax compliance behaviours can benefit the IRD in terms of regulatory and assistance measures towards the Asian group.
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  • tax compliance, SME Operators

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