The effect of complying with censorship requirements in China on
the home country stakeholder perceptions of American MNEs
A qualitative case study of established, well-known, American MNEs
Master’s thesis IB&M
Donny van der Zande S3853179
Supervisor: Mrs. J.R. de Wit Co-assessor: Dr. O. Lindahl
2 ABSTRACT
The significant size of the Chinese consumer market causes foreign multinational enterprises (MNEs) to comply with requirements set by the Chinese government, such as engaging in censorship. Understanding how complying with censorship requirements in China can affect home country legitimacy is of increasing importance for MNEs with business operations in China. This thesis analyzes how complying with censorship requirements in China affects home country stakeholder perceptions for American MNEs. To answer this question, a qualitative content analysis is conducted by means of an interview, governmental documents, news articles and organization statements in order to obtain an overview of the current censorship situation in China, the MNE stakeholder perception in the United States and the US-China relations related to censorship. This thesis conducts a multiple case study analysis of established, well-known,
American MNEs that complied with Chinese censorship requirements. By drawing on legitimacy theory and corporate political activity theory, the results show that complying with censorship requirements in China has a negative effect on home country stakeholder perceptions for
American MNEs. The extent of this negative stakeholder perception is determined by the degree of personal involvement of the stakeholders. A higher degree of personal involvement is expected to lead to a more negative stakeholder response than a lower degree of personal involvement.
Key terms: Legitimacy, China, Censorship, Corporate political activity, Content analysis,
3 ACKNOWLEDGEMENT
4 TABLE OF CONTENTS
1. INTRODUCTION ... 7
2. LITERATURE REVIEW ... 11
2.1 Types of legitimacy ... 11
2.2 Political risk and corporate political activism in China ... 13
2.3 Reclaiming legitimacy ... 15
2.4 Stakeholder perception ... 17
3. METHODOLOGY ... 19
3.1 Research design ... 19
3.2 Sample selection ... 20
3.3 Definitive sample and coding ... 21
4. RESULTS ... 23
4.1 Reasoning behind censorship in China ... 23
4.2 Measures for censorship in China ... 24
4.3 Controlled speech of organizations by China ... 26
4.4 Increasing stakeholder perception ... 27
4.5 Business case studies ... 28
4.5.1 National Basketball Association (NBA) ... 29
4.5.2 Activision Blizzard ... 32
4.5.3 Google ... 34
4.5.4 Apple ... 37
4.6 US – China relations on censorship ... 39
5. DISCUSSION AND CONCLUSION ... 42
5.1 Discussion of findings ... 42
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5.3 Limitations and suggestions for future research ... 44
5.4 Conclusion ... 45
6. REFERENCES ... 47
6.1 Content analysis ... 50
7. APPENDIX ... 60
Appendix 1: Coding Scheme ... 60
Appendix 2: Interview guide ... 62
Appendix 3: Interview with Prof. Robert Ross of Boston College ... 63
6 LIST OF TABLES
Table 1: The NBA………..69
Table 2: Activision Blizzard………...70
Table 3: Google……….….71
Table 4: Apple:………...73
LIST OF ABBREVIATIONS
CCP Chinese Communist Party
CPA Corporate political activity/activism MNE Multinational Enterprise
7 1. INTRODUCTION
“Thanks to the NBA, Twitter and a Chinese government that feeds a national “outrage culture”,
questionable relationships between American companies and Beijing are getting more attention than ever.” – Jake Novak, CNBC (Novak, 2019)
A recent incident featuring the influence of China in the operations of western organizations has caused various news outlets to consider to what end the Chinese censorship has spread across borders. The Financial Times reported that a tweet supporting the ongoing protests in Hong Kong, created by the general manager of the Houston Rockets, a team in the National Basketball Association, hereafter referred to as NBA, resulted in a removal from Chinese state television (Rachman, 2019). This was, however, not the first time. China attempts to police the speech of foreign Multinational Enterprises (MNEs) on a variety of subjects, including Tibet, Taiwan, Xinjiang, human rights, territorial claims and now the demonstrations in Hong Kong in order to maintain the narrative and control desired by the Chinese communist party (Deyer, 2016).
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China also directly affects other countries as was seen in the early stages of the Covid-19 pandemic. Legitimate information concerning the Covid-19 virus was suppressed in order to prevent negative media coverage (Amnesty, 2020). Therefore, there is a need to understand the censorship situation in China and the potential effects on other countries worldwide.
The relationship between the Chinese government and MNEs has been increasingly researched (Stevens, Xie, & Peng, 2016; Tan & Tan, 2012). Research into the relationship between Google, Yahoo and the Chinese government was examined during their spell on the Chinese market (Stevens et al., 2016; Tan & Tan, 2012). The case of Google and Yahoo provides an initial outlook on the influence of the Chinese government on foreign MNEs entering the country or market. With the increasing growth of the Chinese market, it can be assumed that this influence has only increased, causing a situation in which foreign MNEs active in the Chinese market are likely to comply with the censorship requirements of the Chinese government in order to maintain legitimacy (Stevens et al., 2016). The establishment and maintenance of legitimacy in host environments is an ever-critical issue for MNEs, since obtaining legitimacy concerns an organization’s survival (Suchman, 1995; Zaheer & Kostova, 1999). Obtaining host country legitimacy, however, can affect a company’s legitimacy in their home market by means of positive or negative legitimacy spillovers (Zaheer & Kostova, 1999). In the case of Google and Yahoo, complying with censorship requirements in China was negatively perceived in the United States (Stevens et al., 2016). For MNEs, their customer loyalty and company image depend on how a company is perceived by their stakeholders (Costa & Menichini, 2013). It can therefore be assumed that whenever a company is involved in a business activity abroad that their stakeholders consider to be against the norms and values of the home country, such as censorship, the activity will result in a decrease in legitimacy and negative stakeholder perceptions in the home country. This effect has to be further researched in order for MNEs to be able to understand the potential risk of complying with Chinese censorship demands. This is the central topic of this thesis and results in the following research question:
“How does complying with censorship requirements in China affect home country stakeholder perceptions for American MNEs?”
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research gap is examined through a detailed content analysis with the use of three propositions in order to obtain an overview of the current censorship situation in China, the effect of censorship in business and the US-China relations related to censorship. The effect of censorship in business is examined by analyzing four well-known and established companies: the NBA, Blizzard, Google and Apple. The MNEs selected for the business cases are well-known and established since such companies are monitored closely by their respective stakeholder groups in order to make sure they are conducting business which can be considered ethical and to the standards expected in the United States. Three propositions are formed in the literature review as a point of departure for this analysis. The propositions will not be empirically tested but rather explored by means of qualitative research.
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related to censorship requirements can affect an MNE’s stakeholder perception in their home market of the United States. This thesis also looks into which CPA approach American MNEs intrinsically opt for in China regardless of potential repercussions among home country stakeholders.
11 2. LITERATURE REVIEW
The establishment and maintenance of legitimacy in host environments is an ever critical issue for MNEs (Zaheer & Kostova, 1999). Previous instances of legitimacy issues for MNEs include criticism in global media and negative stakeholder responses such as destruction of property. Legitimacy refers to the social justification and the public endorsement of an actor or an activity (Suchman, 1995). Zaheer and Kostova (1999)also mention the concept of ‘legitimacy spillovers’. It describes a situation in which the legitimacy of a foreign subsidiary may be determined by the legitimacy of other subsidiaries in the MNE either in other countries or in the same market. These spillovers can either be positive or negative which either contribute or diminish legitimacy for a MNE. Across-country legitimacy spillovers examine the effect of how building legitimacy and mitigating political risk in one country can affect an organizations’ operations in another country. The main focus of this section will be on China as a host country due to its increasing market size and influence over foreign MNEs but the theory should be applicable to institutionally similar countries as long as they elicit similar reactions from the stakeholders of an MNE and possess the same market potential. Other countries that have imposed censorship include: India, Russia, Saudi Arabia and South Korea (Verkamp & Gupta, 2012). However, further research is required into the stakeholder responses from American MNEs related to complying with censorship requirements in these countries in order to test the generalizability of this thesis.
2.1 Types of legitimacy
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company’s direct dealings with the Chinese government while moral legitimacy will be used to describe the response of home market stakeholders. Cognitive legitimacy focuses on the subconscious acceptance of a company’s existence rather than a conscious evaluation of an organization’s merits and actions (Stevens et al., 2016). The actions of MNEs and the stakeholder response to these actions are a central aspect of this research. Cognitive legitimacy will therefore not be used to describe the effect of complying with censorship demands on home country stakeholder perception.
The effect of obtaining legitimacy in China
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appears to be clear conflict for MNEs between obtaining pragmatic legitimacy in China and obtaining or maintaining moral legitimacy in the United States. This phenomenon is further examined in this thesis.
Proposition 1: American MNEs cannot obtain or maintain pragmatic legitimacy in China and
moral legitimacy in the United States at the same time when it comes to censorship requirements in China.
2.2 Political risk and corporate political activism in China
When it comes to achieving or maintaining both pragmatic and moral legitimacy, doing business in China comes with a significant amount of political risk since rules and regulations are not so transparent or absolute as in the United States (Jayaraman, 2009). Political risk is hereby defined as “the phenomenon whereby firms invest in a foreign country and experience unexpected, adverse impacts on their performance due to the host country political environment” (Stevens & Newenham-Kahindi, 2017: 11). Political risk in a foreign environment may arise due to various policies or actions by the host country government or the host country society that affect MNEs in their business operations (Stevens & Newenham-Kahindi, 2017). These host country policies or actions may result in billions of dollars in lost revenue for MNEs if they are not dealt with correctly (Stevens & Newenham-Kahindi, 2017). However, the pursuit of firm legitimacy actually appears to counteract the effect of political risk over time since a company would invest in relationships with the government and influential social groups, increasing their chances of surviving the political risk situation as time goes by (Darendeli & Hill, 2016). This calls for a bridging strategy in order to overcome the initial barrier of political risk by steadily increasing a firm’s legitimacy in a host country. Literature describing these types of strategies for dealing with this political risk is referred to as Corporate Political Activity theory (De Villa et al., 2019; Hillman, Keim, & Schuler, 2004).
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(De Villa et al., 2019). A non-engaging CPA approach can also be defined as compliance, indicating that an organization consciously and strategically chooses to comply with institutional pressures in hopes of increasing their legitimacy (Oliver, 1991). Corporate political activity approaches can take many forms, from establishing political action committees (PACs) which entails financially backing a candidate with favorable policies, to lobbying or charitable donations (Hansen & Mitchell, 2000). These methods are primarily used in the United States by significantly large domestic companies and MNEs. These methods come with a widespread perception that they negatively affect the character of legislation, and that anyone who lobbies is a part of a so called special interest group (Keffer & Hill, 1997). The act of altering socially institutionalized practices such as engaging in political lobbying has the potential to further reduce public acceptance of an organization, leading to a decrease in moral legitimacy (Ashforth & Gibbs, 1990; Palazzo & Scherer, 2006). With the public perception in the US (home country) being fairly negative towards these types of CPA, it begs the question how these CPA methods are received in the US when a company employs these methods in China (host country). Before establishing that response, it is important to understand what types of CPA would contribute to an MNE’s legitimacy in China.
Corporate political activism in China
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decrease significantly. This was the case when Google actively went against the censorship requirements that are in place in China. Their legitimacy in China significantly decreased and their market share in China dropped rapidly (Peng et al., 2019; Stevens et al., 2016). However, there are ways for foreign MNEs to reclaim this lost legitimacy by taking an active compliant, non-engaging or apologetic approach and regaining the trust of the Chinese government and Chinese stakeholders which may lead to an increase in legitimacy. Google did not opt for this approach, instead deciding to leave the Chinese market.
2.3 Reclaiming legitimacy
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When it comes to legitimacy repair in China, previous instances of violations are needed in order to assess which type of CPA approach would function in China. The American MNE Walmart had two incidents in recent years related to their business activities in China (Liu et al., 2019). The first incident was a violation of consumer laws in Chinese stores where mislabeled pork items were sold as more expensive organic pork, obtaining 730.000 yuan in illegal benefits. It was defined as criminal misconduct and 10 Walmart stores had to be shut down. The second incident included the sale of packed donkey meat mixed with fox meat and was framed as a negligent act on the part of Walmart in the Chinese market. In the first incident, Walmart responded with a non-engaging approach, they were apologetic and open to reform following the shutdown of the stores. This response was perceived as reasonable and pragmatic in China and helped the company gain endorsement of the local host government. In the second incident, Walmart responded with an engaging approach in which they blamed the local government and tried to justify that the incident was not their fault since the meat was delivered by a local supplier. This response was perceived as irresponsible and insincere by the company’s stakeholders in China (Liu et al., 2019). Walmart’s operations in China were not widely publicized in the United States. This was possibly due to the situations being highly specific for the Chinese market and since the United States was not affected by this dispute. Another example of an American MNE attempting to repair their legitimacy in China is Apple (Peng et al., 2019). Apple was denounced after it had violated laws and regulations related to its warranty policy for Chinese consumers. Apple responded with an apologetic statement targeting their Chinese consumers. Apple’s apology was positively received and led to an increase in pragmatic legitimacy in China (Peng et al., 2019)
A non-engaging approach in China appears to be the effective option when it comes to repairing legitimacy since it will be perceived as reasonable and pragmatic (Liu et al., 2019; Peng et al., 2019). Therefore, in order to be successful in China, complying with or accommodating to the Chinese stakeholders, of which the key stakeholder is the government, is crucial for achieving pragmatic legitimacy (Liu et al., 2019; Oliver, 1991; Peng et al., 2019). It is expected that complying with censorship requirements in China is considered a competence violation in the United States.
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Obtaining legitimacy in China often comes with conflicting demands from home and host country stakeholders(Stevens et al., 2016; Zaheer & Kostova, 1999). This occurred to Google and Yahoo upon entry into China. They were required to uphold local regulations of information censorship in order to obtain legitimacy in China. This restriction of information was in conflict with the system in the US where free flow of information and freedom of speech are considered crucial. Yahoo chose a non-engaging CPA approach with the Chinese regulations and quickly gained a high legitimacy in the Chinese markets. The choice for this CPA approach was not well received in the home market resulting in a low perceived legitimacy among stakeholders and Yahoo’s exit out of China. Google did not agree with this censorship and chose an engaging CPA approach, actively trying to alter the rules implemented by China. This resulted in a low perceived pragmatic legitimacy among stakeholders in China but also a relatively low perceived moral legitimacy among stakeholders in their home market (Peng et al., 2019; Stevens et al., 2016). Complying with censorship requirements therefore seems to consist of a lose-lose situation in which people either succeed in China but receive a negative response in their home market causing them to eventually leave the Chinese market or a negative response in both China and the home market. This leads to the possibility that doing business in China is generally negatively received by the home market related to both engaging and non-engaging CPA strategies. This calls for a further analysis of the intricate dealings of companies with China and the exact effect on legitimacy in the home market. Complying with the Chinese government, in particular in situations that consist of censorship, is therefore expected to have a negative effect on the home country legitimacy of an American MNE.
Proposition 2: Complying with Chinese censorship requirements in order to obtain pragmatic
legitimacy has a negative effect on home country moral legitimacy for American MNEs
2.4 Stakeholder perception
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company reputation and legitimacy. It is also important for an MNE to realize that when a stakeholder group’s interests are not being met, they are likely to leave the firm for another network that will satisfy their interests or they will try to find other ways to pursue their interests (Freeman, 2010). This indicates that unless a business model is unique and non-substitutable, stakeholders are willing to find other outlets to satisfy their interest if they perceive that their trust in the company is broken. The best way for a company to achieve success is keeping all stakeholder groups satisfied, since their interests appear to be inherently tied together (Freeman, 2010). In order to “manage for stakeholders”, the relationships between these interest groups have to be shaped and managed. This is a key aspect of today’s business organizations (Freeman, 2010). This seems to be a difficult concept as companies such as the NBA, Blizzard, Apple, Google and Yahoo all opted for China’s financial incentives rather than social responsibility by choosing to comply with Chinese censorship demands. This angered stakeholder groups without financial interests in the company (Roberts & Pan, 2019; Stevens et al., 2016). This leads to the expectation that MNEs intrinsically choose pragmatic legitimacy in China over moral legitimacy in the United States even if it goes against the wishes of certain stakeholder groups. Stakeholder perception is therefore framed as the general response of the majority of stakeholder groups, since a company’s decisions are targeted primarily at increasing their financial performance which is in the interests of the shareholders. When it comes to situations in China affecting the stakeholder perception in a company’s home market, it is to be expected that the stakeholder awareness of a company’s actions is larger when a company is well-known and significantly large, because it will be frequently mentioned in the media. Social responsibility also seems to be a larger issue for these types of companies, also increasing the awareness of a company’s actions in China.
Proposition 3: American MNEs intrinsically choose pragmatic legitimacy in China over moral
19 3. METHODOLOGY
This thesis features exploratory research by trying to determine how the phenomenon of complying with the censorship requirements in China affects the home country stakeholder perceptions for American MNEs. This will be examined with the use of the three aforementioned propositions as well as a detailed analysis related to the current censorship situation in China, four business cases of American MNEs and the US-China relations related to censorship.
3.1 Research design
This thesis consists of exploratory research with the goal of obtaining new insights related to a previously unexplored situation (Jaeger & Halliday, 1998). A qualitative analysis is used that takes the propositions formed in the literature as a point of departure. Through multiple types of data, including an interview, governmental documents, news articles and organization statements, a triangular analysis is created on the subject by means of a multiple case study. This is done in order to obtain a multifaceted result that includes inputs from a variety of stakeholders in order to determine how an MNEs actions in China are perceived in the United States. A multiple case study is used since it is well suited to new research areas for which existing theory seems inadequate and allows for incremental theory building (Rowley, 2002). An interview is conducted with prominent American professor Robert Ross on the relationship between China and the United States and the extent to which China is able to influence MNEs in the US into complying with their demands and into the reaction this generates from the stakeholders. This is a semi-structured interview in order to obtain retrospective and real-time accounts of Prof. Ross’ experience related to the phenomenon of theoretical interest (Gioia, Corley, & Hamilton, 2012).
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relations related to censorship and the stakeholder perceptions of MNEs from the United States. These inputs come from news sources in the US as well as from news sources in China and other countries in order to create a non-biased sample to a certain extent.
3.2 Sample selection
The content analysis includes interviews with experts related to China featured in various news articles and journals. The interviewees in these news articles and journals include several prominent researchers and professors. Examples of interviews that are examined are with: Prof. Margaret Roberts from the University of California (2017), Daniel Blumenthal, director of Asian Studies at the American Enterprise Institute (2020), Elizabeth Economy, director for Asia studies at the Council on Foreign Relations (2018) and Prof. Christopher Balding from Fulbright University in Vietnam (2019). Additionally, the content analysis features journalistic opinions and descriptions, public opinions and NGO statements. The perception of various important stakeholder groups in the United States, including the government, NGO’s, consumers and employees are considered. The time frame which these newspaper articles and documentation stem from is 2010 until 2020 in order to get a broad overview of how this situation has developed over time since the initial practices of Google and Yahoo in China in 2010.
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information on the situation between the US and China when it comes to the Chinese censorship policy. These criteria can be seen independently, indicating that if a media channel, NGO or private news organization fulfills one of the criteria, they are eligible for inclusion in this thesis.
Newspapers that are examined in this research are: NYTimes, Business Insider, Financial Times,
Reuters, The Daily Telegraph, EFE newswire, South China Morning Post, Washington Post, the Guardian, Canadian Press, Telegraph Herald. NGOs with documentation and standpoints on the
subject of censorship in China that are included are: Global Voices, Witness organization, Amnesty
International, Human Rights in China. Governmental transcripts that are examined are the US Congressional Testimony and Transcripts, the US-China economic and security review commission, the House Oversight and Government Reform Subcommittee on Information Technology and the Senate Judiciary Committee. Private news companies and blogs featuring
information on the topic by means of documentation that are examined are: Foreign Policy Blogs
Network, Plus Media Solutions, Fast Company, Council on Foreign Relations, Pew Research Center, Morning Consult, eweek.com, VentureBeat, Silicon, Activist Post, thenextweb.com, the American prospect blogs, Axios, Digital Journal, Conservative Daily News, Western Free Press, Sputnik News service, Florida Politics, Atlantic Online, indieWIRE, National Legal and Policy Center. Combining the inputs from these various sources will help provide a clear overview of the
censorship situation in China and how complying with Chinese demands affect stakeholder perceptions in the home market for well-known and established MNEs in the United States.
3.3 Definitive sample and coding
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and therefore requires substantial immersion into the data in order for new insights to emerge (Hsieh & Shannon, 2005).
The definitive coding sample consists of three major categories, with subsequent first and second order codes (Gioia et al., 2012). The first category is the effect of censorship in business. The effect of censorship in business category consists of codes related to the four business cases and the general implications of censorship on business operations. The four business cases of the NBA, Blizzard, Google and Apple are further divided into second order codes, including the actions of the company, the compliance with censorship requirements, the influence of the company in China and the stakeholder perception in the home country. The most important stakeholder groups related to censorship in China are the US government, an MNE’s employees, an MNE’s consumers and NGOs since they will provide insights into the stakeholder perception from various different angles. These codes allow for a detailed analysis related to the business cases of the American MNEs concerning the censorship requirements in China. The second category is censorship in China. This category includes codes that describe the current censorship situation in China. Understanding the current censorship situation in China is important when determining to what extent censorship is able to affect other countries and organizations. The category includes several first order codes. The first order codes include measurements for censorship, reasoning behind censorship and controlled speech of organizations by China. The third category, US-China relations on censorship, is created in order to obtain a detailed analysis of US-China relations related to the censorship policy in China. The first order codes include potential strategies to combat Chinese censorship and US-China relations. An overview of all codes in the analysis can be found in Appendix 1. Appendix 4 contains an overview of business case comparisons.
23 4. RESULTS
In order to get an in-depth overview of how complying with the censorship requirements in China affects US multinationals, it is first crucial to determine what the censorship process entails in China. This will be described with the reasoning behind censorship in China, the measurements for censorship in China and the controlled speech of organizations. Additionally, the selected business cases are examined in order to compare and analyze the situations of the NBA, Blizzard, Google and Apple related to complying with censorship requirements and the effect of compliance on stakeholder perception in the United States. The final aspect of the results section will cover the US-China relations related to the censorship policy to determine the current state of affairs between the two countries and potential changes in the future.
4.1 Reasoning behind censorship in China
There is a distinction between how the reasoning behind censorship is perceived by the leaders in China and how it is perceived in the United States (Economy, 2018; Blumenthal, 2020). The perception in China is described as: “For Xi Jinping, however, there is no distinction between the
virtual world and the real world: both should reflect the same political values, ideals, and standards. To this end, the government has invested in technological upgrades to monitor and censor content. It has passed new laws on acceptable content, and aggressively punished those who defy the new restrictions” (Economy, 2018). China sees the internet as a part of their
sovereignty and feels like they should regulate the internet in a similar or more strict way compared to other aspects of society such as the media.
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have to deal with tensions in their approach to internet governance. This tension leads to countries like the United States losing support for a truly global and open internet under the perception of protecting countries from cybercrime (Sherman & Raymond, 2019). This highlights that countries such as China and the United States have opposing viewpoints of how to handle the internet as a country.
The perception of the reasoning behind the censorship in the United States differs greatly from how China views its policy. In a senate foreign relations subcommittee in the United States, the reasoning behind the censorship policy was discussed. It was described as: “the Chinese
Communist Party has constructed this massive propaganda and censorship apparatus because it considers the truth to be dangerous. It does not want its citizens to know the extent of its corruption, its repression, its mismanagement of the economy, and of crises such as the current virus, bird flu in 1997 and SARS in 2003.” (Blumenthal, 2020)
This indicates that China and the United States are on opposing sides of this policy, since China believes it is their right to police the internet while the United States believes that policing the internet is a repression of the people. Countries with conflicting norms and values often feel a certain way about a foreign country’s policy but are reluctant to actively try and influence these policies (Interview with Ross, 2020). However, the censorship in China is now affecting countries worldwide as countries are enduring the global Covid-19 pandemic. The disinformation spread by China in addition to the silencing of the Chinese citizens who wanted to speak out about the severity of the virus, is said to have created a situation in which the virus is expected to have been more widespread than it would have been if the country had been forthcoming with information (Blumenthal, 2020; Rogin, 2020; Zhang, 2020). If China would have been forthcoming with information concerning the virus, other countries could have been more prepared. This leads to the situation that the censorship policy in China has directly affected multiple countries worldwide. This results in an increasing awareness related to the censorship policy in China and how it affects other countries (Roberts, 2017; Blumenthal, 2020; Economy, 2018).
4.2 Measures for censorship in China
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and other foreign websites. Chinese citizens can use a virtual private network (VPN) in order to get around the firewall, but this is something only few people in China do (Roberts & Pan, 2019). The censorship situation in China provides an interesting dynamic. The inhabitants know that their internet is censored, but over time, they go through a normalization process (Wang & Mark, 2015; Roberts, 2017). This implies that citizens in China consider the censorship policy more normal over time, leading to a situation in which the Chinese citizens do not actively try to counteract censorship (Roberts, 2017). Another example of the normalization process is that Chinese citizens feel that the censorship policy does not affect them in a major way (Roberts, 2017; Roberts & Pan, 2019). This can be further explained by the possibility of substitutes for the Chinese people in that:
“Chinese users generally don't try to evade censorship because they don't need to - they have homegrown social media options like Weibo, WeChat and Douyin. These Chinese tech companies censor content for the Chinese government. Sometimes, they make their own censorship decisions to preempt government sanctions; other times they take directions from the government.”(Roberts & Pan, 2019)
26 “The most powerful weapon China has to bend the West to its ideological agenda is the lure of the Chinese market” (Blumenthal, 2020). The market size and potential incentivizes cause American
companies and organizations to comply with demands set by China in order to get or maintain access to the Chinese market (Blank, 2019; Blumenthal, 2020). This causes a situation in which MNEs are careful of potentially offending China, leading to an increasing influence of China over the business operations of MNEs. This increasing influence frequently causes foreign MNEs to opt for a non-engaging CPA approach in order to appease the Chinese stakeholders and to obtain pragmatic legitimacy in China.
4.3 Controlled speech of organizations by China
China’s influence is starting to reach beyond their own borders (Blumenthal, 2020; Rogin, 2020). Rather than only affecting companies and citizens in China, the country is increasingly interested in influencing what companies and people abroad do and say about China. One aspect in the United States that China has started to influence is pop culture. China is aware that their citizens have great admiration for American sports and pop culture stars. China believes that they have to control what these figures say (Blumenthal, 2020). An example of this is basketball star James Harden, who publicly apologized to China after his team’s general manager voiced his support for the protests in Hong Kong (Blumenthal, 2020; Rodrigo, 2019).
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whenever China perceives that a company has made a mistake. This apologetic response is in line with a non-engaging CPA approach which appears to be the best method for gaining pragmatic legitimacy in China. Judging by the potential punishment of being excluded from the Chinese market, it is unlikely that foreign MNEs will choose an engaging CPA approach when it comes to censored topics in China.
4.4 Increasing stakeholder perception
It is important to understand whether and how the American people perceive a company’s actions in China. In order to achieve that, it is initially important to determine to what extent the Chinese censorship affects American citizens in their day to day lives. There appears to be a growing awareness in the US of China’s censorship practices that occur worldwide in that: “Millions of
Americans appear to be realizing the power and breadth of China's ability to censor and control on a worldwide scale. China has a history of leveraging access to its massive market of 1.5 billion consumers to get foreign companies to bend to its will, squeezing apologies out of multinational retailers and airlines alike.” (Pandey, 2019)
With an increase in publicized instances in which Chinese censorship affects American companies, there appears to be a growing understanding and realization of this censorship in the US (Palmer, 2019; Pandey, 2019; Shepherd, Ahmed & Nicolaou, 2019; Rogin, 2020). This increase in publicized instances was partially caused by large companies such as the NBA bringing awareness to the effect of Chinese censorship in the United States. However, American multinationals are not the only group that is affected by the censorship. In fact, the American society and culture also seem to be affected, which causes a response by the stakeholders in the US. This is described as:
“Pushback in the US is in part driven by growing concerns that Chinese censorship is rippling through American culture and society. Hollywood, in particular, has tiptoed around Beijing to ensure commercial success in China.”(Shepherd, Ahmed & Nicolaou, 2019). This relates back to
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examples of movies that were banned in China as a result of a negative perception are Kundun and Seven years in Tibet (O’Connor & Armstrong, 2015).
A good way to describe the complicated situation that American companies find themselves in with regards to China and their home country of the United States is that: “American and international
firms are caught between a rock and a hard place. As they compete for profits and market share, they must navigate between the legal regimes and political demands emanating from Beijing on the one hand and democratic societies on the other” (Cook, 2018). This relates back to the
proposition that pragmatic legitimacy in China and moral legitimacy in the United States are in conflict. Either the MNE opts for pragmatic legitimacy in China and has the risk of losing moral legitimacy in the United States or the MNE puts greater importance on the norms and values of the United States, and loses pragmatic legitimacy in China. For many MNEs, China is one of their largest markets, often tilting the decision in favor of pragmatic legitimacy in China.
The US government is also starting to deem Chinese censorship as a global problem. Both Congress and the Senate have had multiple informatory meetings with experts related to the effect of Chinese censorship on Americans (Blumenthal, 2020; Cook, 2018). The US government is in favor of American MNEs upholding American norms and values as they go abroad and will likely act if they feel this is not the case. Additionally, in the wake of the Covid-19 pandemic, the Trump administration has spread awareness related to the dangers of Chinese censorship and disinformation for the American citizens (Rogin, 2020). This relates back to the earlier notion that a more forthcoming China, related to providing information on the Covid-19 virus, could have helped other countries be more prepared (Blumenthal, 2020; Rogin, 2020).
It therefore appears that there is a growing awareness of the Chinese censorship policies and how they affect companies and people in China. However, there is a need for a more detailed analysis on the response of the American people when American companies are actively complying with these censorship demands. In order to determine this, 4 business cases in which some form of compliance with these demands occurs are examined.
4.5 Business case studies
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the companies related to the censorship requirements by China, the influence of the company in the Chinese market, the compliance with the censorship requirements and the stakeholder perception in the United States.
4.5.1 National Basketball Association (NBA)
The NBA is a cornerstone of American sports and entertainment and was created in 1949. It is among the most highly regarded sports organizations with nearly 500 million fans in China (Zilgitt & Medina 2019). Recently it endured a controversy surrounding Chinese censorship that elicited a large amount of responses from their stakeholders in their home market. The general manager of the Houston Rockets tweeted his support for the protests in Hong Kong. Chinese technology conglomerate Tencent cancelled digital streaming of Rockets’ games in response. This led to the NBA and Morey putting out a statement apologizing for the tweet (Roberts & Pan, 2019).
This public apology resulted in responses from a variety of different stakeholder groups who voiced their opinion on what had transpired. The government responded in a fairly unanimous way, in that a bipartisan set of US lawmakers from Congress and the Senate wrote a letter to the NBA indicating their disapproval of how the company handled the situation. It was bipartisan in the way that highly politically diverse US lawmakers from Ted Cruz of Texas to Alexandria Ocasio-Cortez from New York were a part of the letter (Congress of the United States, 2019; Lane, 2019). A key part of the letter included: "The NBA should have anticipated the challenges of doing business in a country
run by a repressive single party government, including by being prepared to stand in strong defense of the freedom of expression of its employees, players, and affiliates across the globe." ( Congress of the United States, 2019; Lane, 2019). The request from the US lawmakers included that they
expect the NBA to be united against potential future boycotts or selective treatment by China, especially with their higher influence in comparison with other American companies (Congress of the United States, 2019; Lane, 2019).
Another stakeholder group of the NBA, the media, responded in an equally disapproving way. One journalist wrote: “An American business, one that prides itself on supporting freedom of speech in
America, became an arm of Chinese censorship. The NBA isn't just following Chinese law in China; it's imposing the Chinese Communist Party's rules internationally”(Palmer, 2019). This notion of
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type of political policy while any mention of a political incident in China is off limits (Irfan, 2019). This is not just when the NBA is in China but also when they speak about China in the United States. This creates a situation in which China is able to impose its censorship regulations on foreign MNEs in their home countries, leading to concern from stakeholder groups such as the US government and the media who fear that the NBA values revenue from China over the norms and values in the United States. The NBA ended up giving another statement responding to the negative response by its stakeholders, indicating that it supported the freedom of speech of their employees to the dismay of China (Booker, 2019; Irfan, 2019).
As a result of the popularity and brand awareness of the NBA in the United States, the NBA is held to a high standard when it comes to protecting American norms and values in their business operations (Lee, 2019; Palmer, 2019). This perception is a key difference compared to how other American companies who are active in China are perceived. Rather than primarily complying with the censorship requirements when in China, the NBA has apparently also imposed censorship on their employees when in the US. Due to the public awareness of the NBA, this imposed censorship was widely publicized and elicited a response from the stakeholders. The NBA’s apology broadcasted the situation to a wider audience who, as a consequence, became more aware of China’s influence abroad (Lee, 2019; Palmer, 2019). To many people, it may hit close to home to see that China can actively alter business operations in the United States. This perception is widely shared and described as:
“Incidents that might once have gone unremarked by Americans are now drawing public attention. Partially that's due to the nature of the NBA itself; Americans care a lot more about basketball than they do about airline bookings—and perhaps a lot more about freedom of speech in the United States than about Hong Kong itself.” (Palmer, 2019)
“But unlike in previous cases, where U.S. companies' attempts to soothe Chinese audiences went largely unnoticed by the American public, the NBA's apology led to push back from American lawmakers and fans to stand up to Beijing.” (Lee, 2019)
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signs and banners from the Capital One Arena stadium in Washington, stating that signs, banners, posters and flags were not allowed regardless of the political nature (Conklin, 2019). It is unclear whether the fans were protesting the situations in China in particular or the apologetic response from the NBA impeding the freedom of speech regarding these topics.
The NBA is, however, in a fairly unique position since there is no domestic equivalent for the NBA in China, and with the current popularity of basketball and the NBA in China, they appear to have significantly more influence in China than other American companies with a domestic substitute (Roberts & Pan, 2019). The NBA has 200 million followers on social media in China and nearly 500 million in China watched the NBA games in the 2018-2019 season. There are also around 300 million people in China who play basketball, making it the most popular sport in China (Blank, 2019; Zillgitt & Medina, 2019). This creates a significant influence for the NBA in China since there is a large demand for the NBA in China. This influence and the domestic response to the controversy caused the NBA to reevaluate the situation and quickly came to Morey’s defense, with the NBA commissioner Adam Silver indicating that the NBA firmly supports the freedom of expression of its players, employees and team owners (Booker, 2019; Irfan, 2019). This is an engaging CPA approach by the NBA and is different from how US companies have previously responded to the Chinese pressures, potentially explained by their greater influence. This influence can be described as: “While the NBA faces an economic hit for resisting censorship, it may have
more leverage vis-a-vis the Chinese government than U.S. social media companies do. If Beijing bans NBA coverage, die-hard fans might seek alternative ways of viewing games that involve circumventing censorship. This potential gateway risk could give more incentives to the Chinese government to strike a deal with the NBA rather than blacklist it.” (Roberts & Pan, 2019)
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Medina, 2019). NBA Commissioner Adam Silver stated that the NBA expected to lose hundreds of millions of dollars following the rift with China, but no actual number related to the losses has been released (Deb, 2020).
Robert Ross, professor at Boston College, deems the controversy as a short term situation and feels that the controversy will not harm NBA sales or popularity when it returns after the coronavirus pandemic (Interview with Ross, 2020). It can therefore be expected that in the specific case of the NBA, while complying with the Chinese censorship requirements elicits a negative response from its stakeholders, the NBA’s business going forward will not be significantly harmed. The initial non-engaging CPA approach caused a negative stakeholder response in the United States and the subsequent engaging CPA approach caused a negative stakeholder response in China. This contributes to the proposition that it is difficult to balance pragmatic legitimacy in China with moral legitimacy in the United States.
4.5.2 Activision Blizzard
The American video game company Blizzard produces well-known titles such as Heartstone, World of Warcraft and Overwatch, each gathering a significant player and fan base with professional, competitive tournaments. For context, Overwatch has sold 50 million copies worldwide since its release in 2016, resulting in over $1 billion in revenue (Carpenter, 2017; Ballard, 2020). This makes Blizzard a significantly large player in the gaming industry, which is valued at $150 billion (Ballard, 2020). Recently, the company has been going through a controversy after suspending a professional E-sports player going by the name Blitzchung, after he voiced support for the protestors in Hong Kong (Chan, 2019; Pandey, 2019; Roberts & Pan, 2019). The event generated significant concern, from various stakeholder groups, such as from members of Congress to people on Reddit, that American companies were going to cave to China in order to access their market (Roberts & Pan, 2019; Webb, 2019). For Blizzard, China is one of the world’s largest video gaming markets in the world, indicating that it is in Blizzard’s interest to maintain good relationships with China (Roberts & Pan, 2019). Blizzard also has Chinese investors. Tencent, one of China’s largest companies owns a 5% stake in its holding company, Activision Blizzard (Webb, 2019).
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Blizzard faced a user boycott in response to the suspension of Blitzchung (Roberts & Pan, 2019; Webb, 2019). Customers deliberately refrained from using games made by Blizzard and enticed others to do the same through social media campaigns. Blizzard is facing significant backlash from some of their most valuable stakeholder groups, their employees and their customers (Fried, 2019). The employees of Blizzard staged a walkout and covered up a stone reading ‘every voice matters’ on the Blizzard campus (Takahashi, 2019). Blizzard’s took the non-engaging CPA approach further than the NBA, suspending a player and taking away his prize money. This resulted in a clear response in the United States which is described as: “Blizzard's decision has sparked outrage from
Americans, who say Blitzchung's comments should be protected as free speech — especially given that Blizzard is an American company. Supporters of the protests in Hong Kong accused Blizzard of compromising its principles to protect its business interests in China.” (Webb, 2019)
Fans and customers also responded to the controversy, vowing to boycott Blizzard until it changed its stance on the Hong Kong protests. Message boards for Blizzard’s most popular games were filled with calls for a boycott of Blizzard. The topic “#Blizzardboycott” became trending on twitter, indicating the dismay and feeling of betrayal the fans and customers had in response to the actions of the company (Webb, 2019). Fans showed pictures of them deleting their Blizzard accounts and cancelling their World of Warcraft subscriptions (Webb, 2019).
The media showed their dismay over the idea that Blizzard was prioritizing its relationship with China over protecting the free speech of its players. Blizzard subsequently denied this, but the thought process was already in place (Webb, 2019). Competitors of Blizzard also criticized the decision in a similar manner. Epic Games, the company that created the game “Fortnite” stated that none of their players would be punished for sharing their opinions on politics or human rights (Webb, 2019). An interesting aspect of this is that Tencent, the Chinese company with a 5% stake in Activision Blizzard, owns 40% of Epic Games, indicating that the company should have a greater interest in maintaining relationships with China, but instead appears to put a higher value on freedom of speech (Webb, 2019). Epic Games states that it would in this case have chosen moral legitimacy in the United States over pragmatic legitimacy in China.
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congress for New York), Marco Rubio (Republican senator for Florida) and Ron Wyden (Democratic senator for Oregon), stated that Blizzard has to decide whether to look further than the bottom line and promote American values or to give in to the demands set by China (Congress of the United States, 2019; Hamilton, 2019; Shanley, 2019).
This situation puts Blizzard in a difficult position, it is dependent on the Chinese market and unlike the NBA, they do not have the same influence in China since a smaller group of Chinese citizens would be affected by a possible ban from China. The company appears vulnerable to the expanding efforts by China to control the public discussion of situations in China (Rogin, 2020). Blizzard therefore has to find a balance between pragmatic legitimacy in China and moral legitimacy in the United States. This contributes to the propositions that pragmatic legitimacy in China and moral legitimacy in the United States are difficult to balance and that complying with Chinese censorship requirements negatively affects moral legitimacy in the United States.
Robert Ross, professor at Boston College, while comparing the cases, indicated that the retaliation against Blizzard was far more severe due to it being more personal. The difference between the two is that you are dealing with personal interactions on the web rather than going into a store buying basketball shoes (Interview with Ross, 2020). It can therefore be expected that in situations similar to Blizzard, in which people perceive the controversy as being a personal issue in which they feel someone is wronged, the response by the stakeholders will be far more negative and will result in actual damage to both the brand as well as the profits of a company as consumers are expected to refrain from or think twice about using the company’s products in the future.
4.5.3 Google
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the censorship demands was not received well by their stakeholders. This was in part because the company was planning to do exactly what they were against 8 years earlier (Roberts & Pan, 2019). Compared to the NBA, Google has relatively low influence in China due to the presence of Baidu, a Chinese equivalent to the American search engine. If they want to be active in China, they have to conform to the censorship requirements set by the Chinese government. The ability to block online services from reaching potential markets in addition to the large domestic market potential, allows the Chinese government to force concessions from foreign firms (Blank, 2019; Blumenthal, 2020; Cook, 2018; Rogin, 2020; Shepherd, Ahmed & Nicolaou, 2019). It appears that this ability and the market potential allow the Chinese government to even lure in significantly large companies such as Google. Taking that into account, this leaves little room for negotiation for companies wanting to do business in China, even for companies the size of Google. If Google wants to be active in China, they have to abide by the censorship regulations.
One of the first stakeholder groups that indicated that they disapproved of the potential search engine project in China were the employees (Johnson, 2018; Nakashima, 2018). Around 1000 Google employees have sent a letter to the leaders of the company urging them to be more forthcoming when it comes to the potential project. The employees stated that there were urgent moral and ethical concerns with the project (Johnson, 2018; Nakashima, 2018). The letter urged Google executives to make it clear what their intentions were behind the project and whether the company would go along with the Chinese censorship demands (Johnson, 2018; Nakashima, 2018). One of Google’s former employees, a research scientist named Jack Poulson, stated that he resigned because he felt that the company was not upholding their standards when it comes to human right norms. Google apparently did not answer whether or not it would agree to the Chinese censorship demands (Jowitt, 2018).
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Pence stated that Google would strengthen Communist Party censorship and compromise the privacy of the Chinese customers should it proceed with the Dragonfly search engine (Reuters, 2018).
Another stakeholder group that responded to the controversy were 19 NGO’s and organizations such as Amnesty International, WITNESS and the Human Rights Watch (WITNESS, 2018). They stated that by accommodating the Chinese government’s repression of dissent, Google would actively participate in violating the rights to freedom of expression and privacy for millions of internet users in China (WITNESS, 2018). Google mentions in their Code of Conduct that it is their goal to advance the rights to privacy and freedom of expression globally for their users (WITNESS, 2018). This project would be in contrast with their own Code of Conduct. This and the potential human rights concerns are the reason why the organizations strongly urged Google to cancel the project.
Robert Ross, professor at Boston College, perceives the situation as an issue for the corporate culture of Google. Eight years ago, Google left China, not wanting to let go of their own corporate values. These values are instilled in the corporate culture of Google so a potential move back to China can come across as going against your own values to the employees (Interview with Ross, 2020). Google’s choice for an engaging CPA approach when they were active in China eight years earlier resulted in praise that Google valued American norms and values over the financial incentives in China. Google seems to opt for a non-engaging CPA approach with the Dragonfly search engine. This is in conflict with the decision the company made eight years earlier and led to a loss of trust from the employees, the government and NGO’s. This led to a decrease in moral legitimacy for Google among stakeholder groups in the United States. However, considering the degree of political risk in China, a non-engaging approach seems to be the best method for Google to obtain pragmatic legitimacy in China (De Villa et al., 2019; Liao & Yu, 2012). Google ended up cancelling the Dragonfly project. It is speculated that this was as a result of the negative responses by the stakeholders. However, this was not confirmed by Google (Su, 2019; England, 2019).
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going against their own values and their own corporate culture when wanting to do business in China. The government wants American companies to uphold American norms and values abroad. The NGO’s and organizations see this situation as a problem because Google might be contributing to the oppression of the Chinese people. One stakeholder group that did not have a significant response to the story were Google’s customers in America. This could be explained by the highly unpersonal nature of the situation for the American consumers. In addition, these actions will not change the product in the United States, so it is not likely that they associate the potential search engine in China with the usage of the search engine in America.
4.5.4 Apple
Apple is an American multinational technology company, with many products that can be purchased in China (Abrougui, 2018). Apple currently has a market share in China of 8.5% in the first quarter of 2020, increasing from 7.3% in 2019. (Reuters, 2020). In recent years, Apple has selected a non-engaging approach when it comes to Chinese censorship demands in order to maintain pragmatic legitimacy in China. Apple has complied with Chinese censorship demands on multiple occasions. These instances often concern only one or two stakeholder groups, thereby having lower public awareness than companies such as the NBA or Blizzard who were widely publicized. The stakeholder groups that have displayed continuous concern related to Apple’s compliance with Chinese censorship requirements are the US government and various NGOs (Chesser, 2018; Tufekci, 2019).
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organization Amnesty International, which stated that it would initiate a social media campaign against Apple (Chesser, 2018).
Taking down the VPN’s naturally caused a negative response from VPN operators located in various countries worldwide. ExpressVPN stated that they were troubled to see Apple aiding China’s censorship efforts (Cadell, 2017; Mozur, 2017). Sunday Yokubaitis, president of privacy and security software company Golden Frog, stated that he was disappointed that Apple caved to pressure by China even though there is no law or regulation that would make VPN’s illegal (Cadell, 2017; Mozur, 2017). He also stated that he sees internet access as a human right in China, and that he expected Apple to value human rights over profit (Cadell, 2017; Mozur, 2017).
Apple received a lot of negative feedback from the American government over the removal of the HKmap.live application, including feedback from U.S. senators and pro-democracy Hong Kong legislators (Lee, 2019; Tufekci, 2019). This caused them to reinstate the application, calling it a mistake to remove the app. However, People’s Daily, the official newspaper of the Communist Party of China stated that the decision would cause trouble for Apple (Tufekci, 2019). In response, Apple deleted the app again, once more inciting negative responses from the American government (Tufekci, 2019).
There is a growing interest among Apple’s shareholders to know where the company stands when it comes to the censorship requirements of the Chinese government. “Apple has faced a large
shareholder rebellion over how the company complies with government censorship, as it comes under growing pressure for its role in China” (Titcomb, 2020). A proposal for Apple to disclose
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business in China, an MNE has to take a non-engaging CPA approach (De Villa et al., 2019; Liao & Yu, 2012; Liu et al., 2019).
Greatfire.org, a group that tries to combat Chinese censorship, stated that Apple’s decision to comply with the Chinese censorship requirements could put pressure on other companies to do the same thing and even said it might result in Chinese citizens experiencing censorship all over the world instead of only in China (Denyer, 2017; Greatfire, 2014). The group feels that Apple CEO Tim Cook and General Secretary Xi Jinping have a common perception of the internet in that: "It
is undeniable that Tim Cook and Xi Jinping have a shared vision of the internet. Xi wants to be able to control all information and silence those who may threaten his leadership. Cook helps him with vast, unaccountable, implementation of censorship across Apple products." (Denyer, 2017)
Apple finds itself in a complicated situation. China is Apple’s largest market outside of the US, indicating that it is crucial for them to stay active in that market (Mozur, 2017). This has, however, made them more vulnerable than other companies and with a lower influence in China since they have to maintain the non-engaging CPA approach in order to maintain pragmatic legitimacy in China. In the United States, Apple’s brand is perceived to be about freedom, fairness and equality, which is in contrast with the suppressive regime in China (Hersko, 2019). Due to this contrast, it can be expected that if Apple keeps complying with the censorship requirements in China, they will keep going through controversies in their home market. This adds to the proposition that complying with Chinese censorship requirements leads to a loss in moral legitimacy in the United States. Apple, as of June 15th, 2020, has not faced a significantly negative response from their stakeholders resulting in financial losses such as the NBA and Blizzard. However, if the company maintains the non-engaging CPA approach when it comes to censorship in China, it can be expected that this will change in the future, as China’s censorship requirements increase. Another possibility for a negative stakeholder response could occur if the degree of personal involvement increases and Apple’s customers in the United States feel that the company is going against their perceived brand image in other countries they are active in.
4.6 US – China relations on censorship
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virus and has stopped American funding to the World Health Organization (WHO) over the feeling that the organization was too close to China (Bloomberg, 2020). With high tensions between the two countries, it can be expected that the relationship will not get better anytime soon. The trade friction between the two countries originally started towards the end of the Qing dynasty, China’s last feudal government and continues until today (Chen, 2018). Ever since the US government approved the entry of China into the World Trade Organization in 2001, there has been an ongoing debate on free speech and censorship between the two countries (Chen, 2018). The United States is an avid believer in a free internet and China considers the internet to be a part of their sovereignty. In all 4 business cases, the government responded in a negative way to American companies complying with Chinese censorship demands. Most of these responses were requests and advice on what the government thinks the companies should do, but it is intriguing to know to what extent the American government actively tries to influence or alter the censorship policy in China.
“Combating internet censorship in China and helping Chinese internet users evade government censorship and surveillance has been identified as an important goal for U.S. foreign policy” (Eades, 2013). The US Agency for Global Media in collaboration with the Open Technology Fund
have launched several projects intended to inform Chinese citizens on the threats of censorship, how to circumvent this censorship, how to communicate securely online and how to freely express themselves (Cunningham, 2019).
Robert Ross, professor at Boston College, states that interference in foreign policy can often be counterproductive towards that what the government is trying to achieve. When there were rumors circling around that Americans were supporting the protestors in Hong Kong, it created a more dangerous situation in Hong Kong (Interview with Ross, 2020). This is described as: “The very act
of trying to interfere in Chinese politics to promote American values can make the Chinese system more oppressed” (Interview with Ross, 2020). While the American government may have good
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companies seems to be a big aspect of the current regulatory development in the United States. The Preventing Foreign Censorship in America Act is a bill which was introduces on February 10th, 2020. If passed, the bill will prohibit companies that are operating in the United States from retaliating against employees should they mention “China-related” topics. These topics could include Hong Kong, the Uighurs or the Chinese government’s human rights violations (Rogin, 2020). Comments on the bill from members of Congress include:
"Foreign adversaries think they can bully American entities into silencing their workers. But the First Amendment doesn't contain an asterisk. If you censor our basketball courts, we'll see you in the courtroom." Rep. Yvette D. Clarke (Rogin, 2020)
"The Chinese Communist Party is not content to exercise totalitarian control within its borders, increasingly, it is seeking to control freedom of thought and expression throughout the free world by pressuring foreign companies to punish or censor their employees who speak out on topics deemed objectionable by Beijing. This has to stop." Rep. Mike Gallagher (Rogin, 2020)
"As long as you're an American or on American soil, you should have the right to free speech. Congress will not stand idly by as China seeks to export its censorship abroad, the United States will remain the land of the free." Rep. Jim Banks (Rogin, 2020)
42 5. DISCUSSION AND CONCLUSION
This chapter features the discussion related to the research in this thesis and the conclusions that were made as a result of this research. Additionally, theoretical contributions, practical implications, limitations and suggestions for future research are added.
5.1 Discussion of findings
China’s censorship policy is an integral part of Xi Jinping’s governing strategy. It is based around the idea that there is no distinction between virtual autonomy and non-virtual autonomy. The Chinese Communist Party believes the internet to be a part of their regulatory jurisdiction, causing them to implement regulations on the usage of the internet. China effectively blocks Chinese viewers from Facebook, Twitter, Google and many other foreign websites that do not adhere by the censorship regulations. While censorship is a Chinese policy, it also influences companies and people with ties to China from other countries to avoid censored topics in an effort not to offend China.
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The four business cases also show that American MNEs that are active or want to be active in China choose a non-engaging CPA approach regardless of the potential negative effects to the company’s moral legitimacy with their home country stakeholders. Apple endures multiple negative stakeholder responses because of a continued compliance with Chinese censorship requirements. Blizzard removed a player from an E-sports tournament because he showed support to the protests in Hong Kong. The NBA initially apologized to China for an employee stating his support for the Hong Kong protests. Google was willing to endure a negative stakeholder response in order to be active in the Chinese market again. This is a key notion among the business cases. The Chinese market provides an incentive for American MNEs to choose a non-engaging CPA approach in China, regardless of the negative stakeholder perception in their home market.
5.2 Theoretical contributions and practical implications
