Discounted prices,discounted respect? The influence of cultural norms on freelance contract relations in England and Taiwan

Abstract

Freelance contract relations are culturally embedded social relations. The article compares England and Taiwan due to their distinct social norms and concepts of trust for those in contractual relationships, and explores the cultural differences manifested in freelance contract relations. Based on 32 interviews with freelancers in Taiwan and 36 interviews in England, the findings suggest that freelancers’ contract negotiation and tolerance of violation are culturally dependent. In Taiwan, contract relations in general tend to be conflated with interpersonal relations associated with affect and reciprocity, but in freelance contracts, the responsibility for maintaining relations and demonstrating trustworthiness seems to fall on freelancers, who feel obliged to extend favours by compromising their own interests. In England, contract relations are associated with moral equality and the need to remain credible by fulfilling agreements; as such, contracting parties have lower expectations of the other to compromise, and deviations from fulfilling mutual obligations are limited compared to Taiwan.

Introduction

Contract relations reflect culturally appropriate considerations (Granovetter, 2017), and freelance contract relations are one such example. Freelance contracts fall outside the regulating radii of labour law and industrial relations (Norbäck and Styhre, 2019; Randle and Culkin, 2009), and have been studied as social relations within the scope of labour relations (Dex et al., 2000; Rosenkranz, 2019; Stanworth and Stanworth, 1997; Ursell, 2000) and entrepreneurship (Mathisen, 2017; Storey et al., 2005). As actors of freelance contracts are situated within different cultural spheres, and cultural norms have substantial influence on tactics adopted by contractual parties (Moran et al., 2007; Rauch et al., 2000), the article argues for a cultural comparison perspective to better understand the dynamics of freelance contracting.

The article chooses Taiwan and England as two comparative cases. The population of freelance workers in the UK generally increased from 1.04 million in 1992 to an estimated 2.2 million in 2020 (IPSE, 2020; Kitching, 2015), ¹ accounting for nearly half of the self-employed. In 2022, the UK had 4.1 million sole self-employed, 2.8 million of whom were sole traders (IPSE, 2022). Reasons for this increase include the need for flexibility and autonomy (IPSE, 2019). Thompson’s disconnected capitalism thesis (2003, 2013) suggests this is also the result of financialised capitalism and pursuit of short-term shareholder value. To minimise labour costs, the most controllable cost in many sectors, and to access mobile and knowledgeable workers without organisational investment, employers restructure and externalise the labour market, resulting in fragmented, informal, and insecure forms of employment. The rise of the freelance workforce in the UK corresponds to the growing prevalence of neoliberal narratives about flexibility and entrepreneurship, which potentially are divestment and precarity in disguise.

Freelance statistics in Taiwan are not as traceable, but observations can be made with reference to atypical workers (part-time workers, temporary workers, and dispatched workers) and the self-employment population. According to Taiwan’s Directorate General of Budget, Accounting and Statistics, the number of atypical workers increased 23% from 0.65 million in 2008 to 0.798 million in 2022. This increase resulted from firms’ cost saving strategies in response to the global financial crisis (Lee et al., 2011), a similar trend observed in England. However, rather than reflecting neoliberalism and globalisation, these changes in the self-employed population reflect Taiwan’s macro-environment inducive to self-employment. The number of own account workers/self-employed increased 14% from 1.374 million in 1978 (22% of the total workforce) to 1.572 million in 1991 (19% of the total workforce). In 2022, the number decreased from 18% to 1.295 million (11% of the total workforce), which was affected by COVID-19 (TPEC, 2022). In 2022, 23% were in the primary sector, 9% in the secondary sector, and 68% in the service sector (Statistical Bureau, 2022). Self-employment was encouraged by Taiwan’s export-led economy, powered by own account workers and family enterprises subcontracting simple tasks, and ‘a weakly regulated private sector that does not provide proper labour compensation and sufficient job stability’ (Yu and Su, 2004: 394). Therefore, the emergence of freelancing may be attributed to a mixture of neoliberalism, economic history, and low labour protection for full-time employment.

Current economic similarities and cultural differences lend the two to comparison. Both have vibrant, advanced economies with large service sectors (Brien, 2023; Chen and Lee, 2004; Kuo, 2019), and freelancers in both societies have access to free public healthcare, irrespective of their formal employment status (Wu et al., 2010); both conditions facilitate freelancing. However, they differ in the norms regulating social relations (Hofstede, 1983; Lowe, 1996). Clearly, cultural influences within England (e.g. Islam, Hinduism, Atheism) and Taiwan (e.g. Christianity) are diverse, with no tradition fully encapsulating secular culture. Nevertheless, a useful starting point to consider cultural differences in social norms relating to contract relations is examining prevalent influences in one culture that are not in the other. This still permits examination of the specific cultures that influence relational social norms and hence different contracting behaviours between Taiwan and England (Voronov and Singer, 2002).

The article adopts a cultural comparative perspective to address gaps in research on freelance contracting. It contributes to the understanding of freelance contracting as reflecting culturally embedded social norms, manifested in distinct contract negotiations and responses to client contract violations.

Understanding culturally embedded freelance contract relations

Freelance contracts are agreements established between two parties, one selling labour and the other purchasing its product or service. The absence of formal ‘employee’ designation reduces freelancers’ rights to the terms specified in the contract only. Freelancer–client relations are situated in informal systems of social norms that govern expectations of the right, just, or moral ways of managing working relations. Another reason to focus on social and cultural analysis is that contract law systems in both places are rooted in local customs and norms. English contract law has evolved to accommodate the rise of a market economy (Horwitz, 1974). However, contract law in Taiwan reflects its political history (Japanese Minji government introduced Continental law to Taiwan) more than its contracting customs, which have been influenced by customs from mainland China due to large-scale immigration since the 16th century (Keller, 1994).

Relational social norms and the notion of trust in Taiwan and England

In Taiwan, the principles of interpersonal relations are rooted in Confucian philosophy (Lin and Ho, 2009). Chinese societies like Taiwan have developed a specific and prevalent concept of interpersonal relations called guanxi, literally translated as ‘pass the gate and get connected’ (Lee and Dawes, 2005: 29). For people not related through family, a common way to establish guanxi is by offering help to another without requesting immediate return, thereby indebting the beneficiary and enabling the benefactor to call on resources from the beneficiary afterwards. The reciprocal offerings can induce gratitude and belonging that motivate future supporting behaviours (Chen and Chen, 2004); therefore, the reciprocity developed in guanxi is intertwined with affect (Lee and Dawes, 2005; Lin, 2011). This principle of reciprocal relations is important to understanding contractual relations in Taiwan (Hwang et al., 2009).

To understand the basic principle of interpersonal relations in England, one can refer to influence of the Enlightenment and Weber’s theory of capitalism. In England, the aspiration for equality is widely recognised (Robinson and Bell, 1978), albeit not always realised (Duffy et al., 2021). The Enlightenment ideology of equality, ‘grounded on the principle of moral equivalence’ (Israel, 2006: 554), privileges contractual relations: ‘agreements alone therefore remain as the basis of all legitimate authority among men’ (Rousseau, 2019: 7). Weber makes similar claims but from the perspective of modern capitalism (Ertman, 2017). Weber (1961) suggested that Church law and a self-disciplined army led to the development of bureaucratic state and citizenship, leading to rational capitalism, under which relationships including economic transactions and rights were governed by calculable law, and people were equal citizens with the same political rights. In the same text, Weber noted that in China’s patrimonial bureaucracy, clans and moral considerations constituted more important factors for personal relationships.

Among social norms, trust is particularly important in transactions (Chiles and McMackin, 1996; Dyer and Chu, 2003). When contracting parties lack full information about the trustworthiness of others and gathering that information is costly, the norm of trust provides a convenient reference for interaction strategies. Socially constructed expectations allow parties to predict each other’s behaviours. Expectations of trustworthiness also help determine how much effort contracting parties should put into detailing obligations and penalties in case of contract violations. If contracting parties wish to repeat contracts or have future relationships, they are incentivised to act in a trustworthy manner (Hardin, 2001).

The nature and level of trust towards the other party in a contractual relationship differ across societies, which are broadly categorised by Fukuyama (1995) into high-trust and low-trust societies. Some ‘individualist’ societies (e.g. northern European societies) are associated with having high trust, because they have developed ‘institutions like property rights, contract, and a stable system of commercial law’ to ‘substitute for the trust that existed naturally within families and kinship groups and constituted a framework under which strangers could interact in joint business ventures or in the market place’ (Fukuyama, 1995: 223). In comparison, in collectivist societies like Taiwan, trust tends to be embedded in established social networks.

In Taiwan, trust is often a by-product of guanxi (Farh et al., 1998; Leung et al., 2011). It is common to capitalise on guanxi for business purposes (Luo, 1997) when extending reciprocal relations aligns with mutual interest. Yeung and Tung (1996) acknowledge that guanxi is similar to nepotism, in that contracts can be awarded based on connections rather than ‘objective evaluation of ability’ (1996: 57). Therefore, when contractual relations occur within guanxi networks, contracting parties are presumed to be trustworthy, because their realisation of future interests is encapsulated in the affect-laden relation (Hardin, 2001). However, when contracting occurs outside established guanxi, trustworthiness must be established by expressing sincerity in entering a relation and demonstrating the ability to fulfil obligations in the relation (Chen and Chen, 2004). In short, trust is co-constitutive of guanxi networks. As such, not only does trust presuppose guanxi but demonstrating trust within established relationships is considered good moral behaviour (Steinhardt, 2012).

In England, the concept of trust has discursive roots in Protestantism and the development of the market economy. Protestantism emphasised the importance of a ‘superior community of faith and a common ethical way of life in opposition to the community of blood’ (Macfarlane, 1978: 49). The Protestant work ethic promoted ‘the spirit of capitalism’ (Weber, 1976), and the development of complex market relations required tradespeople to be credible and fulfil their obligations as promised. Being credible was so important for business transactions that trustworthiness was judged by one’s transaction records or association with creditworthy groups (Cornwell, 2007). Assessing the reputation of credibility was essential for sellers and buyers with no knowledge of each other (evidence available from the late sixteenth and seventeenth centuries, Muldrew, 1993).

In summary, trust is valued in transactional relationships in both England and Taiwan, but different cultural conceptions have influenced distinct interpretations and functions of trust and obligation. In Taiwan, contracting parties tend to perceive ‘trust’ in terms of establishing guanxi and maintaining future business relationships for the benefit of long-term reciprocity (Hwang and Blair Staley, 2005). Conversely, in England, ‘the contract’ is situated in the enlightenment discourses of equality, Protestantism, and market economy, where trust is perceived as the credibility of fulfilling agreements. Given the cultural differences in relational norms and their manifestation of trust, the article explores the differences in freelance contract relations in England and Taiwan.

Research methodology

This study adopted a qualitative approach to explore how contracting dynamics differ in England and Taiwan. The study design used maximum variety sampling, a purposeful sampling strategy, because it ‘allows for the collection of two kinds of data, first detailed descriptions of the uniqueness of the cases, and secondly the shared patterns that cut across cases. These common patterns found in variation provide insight into shared experiences’ (Emmel, 2013: 38). I conducted 32 semi-structured interviews in Taiwan in 2017 and 36 in England in 2019 (see Appendix).

Interviewees from both places had different occupations with experience of contracting with local clients. Occupations covered industries including TV and films, photo and video production, graphic design, music, journalism, translation, IT, business consultancy, and therapy. Because the purpose of this study was to compare contracting dynamics unique to the local culture, I ensured that freelancer participants relied mostly, if not exclusively, on locally-based clients who found them via word of mouth, their own websites or social media accounts, or other professional connections, not through digital platforms. Work from digital freelancing platforms such as Upwork or equivalent constituted only a small portion of income, if any (only three interviewees used platforms before). After obtaining informed consent, the interviews were recorded and transcribed in the language spoken. The content of interview included: contract negotiation patterns and justification, issues in negotiation, types and execution of contract agreement, problems in contract enforcement, and reaction to problems. Interviews lasted one hour on average. In this article, interviewees are anonymised.

Interviews were transcribed and coded manually in Word documents. Based on the grounded theory approach (Charmaz, 2006), an abductive process was used to analyse interview scripts and generate theoretical insights. It ‘involves a recursive process of double-fitting data and theories. An abductive inference involves making a preliminary guess based on the interplay between existing theories and data when anomalies or unexpected findings occur’ (Timmermans and Tavory, 2012: 179). In line-by-line coding of interviews conducted in Taiwan, the phenomenon of discounts and ongoing discussions during the contracting period soon emerged. While my exposure and sensitivity to Chinese culture quickly brought attention to the less clear-cut contractual relationships, it was important not to explain these relationships with a positivist approach (i.e. a dichotomy between Eastern collectivism and Western individualism). Instead, I focused on nuances in participants’ differing understanding and, thus, enactment of a contractual relationship. The interview transcripts were subjected to thematic analysis. The interview content was subdivided into broad categories of ‘setting quotes’, ‘fee negotiation process and strategies’, ‘changes during contracts’, and ‘reactions to contract changes’. These themes were further explored to understand freelancers’ and clients’ interpretations and justifications of their contracting behaviour. Because interviewees in England were asked questions to compare the findings on contracting dynamics found in Taiwan, the findings section follows the chronological order of case selection to present the themes and analysis of contracting dynamics.

Findings

The general contracting processes were largely similar and started by determining the service and agreeing a mutually satisfactory fee, but the complexity of negotiation depended on the trust between the parties. Due to different normative considerations of social relations, another major difference between England and Taiwan was freelancers’ reactions to contracting problems. Differences in contract negotiation, problems and solutions are discussed below with possible explanations.

Evidence from Taiwan

Asking for discounts and evading discussion of compensation

In Taiwan, price negotiation took the form of clients pressuring freelancers to compromise, while freelancers sought to establish and contribute to a reciprocal relationship (i.e. guanxi). Some clients would explicitly negotiate around discounts; others were more implicit, evading and postponing price discussions to gain bargaining power over freelancers, who would have already invested work. In terms of price negotiation, the first quote given was not expected to be fixed, and clients would enquire about the possibility of discounts, potentially indicating clients’ mistrust of freelancers to provide fair quotes (Yamagishi et al., 1998). By requesting discounts, clients intended to minimise the risk of the other party taking advantage of the one-off market exchange. If clients and freelancers had no previous relations, clients would suspect freelancers of quoting way above the market value of the service, or simply push to see how low freelancers would go; however, some freelancers reported learning this bargaining norm from clients, and consequently increasing prices in order to offer a bigger discount (interviews with T9, T14, T15, T21, T22, T27, and T32). T21 commented: ‘At the beginning of negotiation, I will raise my rate much higher than my baseline and see how much the client will bargain down’.

Clients’ requests for discounts could have another function in a contractual relation: to see whether freelancers are willing to offer a favour by lowering their prices, making the act of discounting a signal of the start of a guanxi relationship. T9, an interpreter with work experience in the US, was initially perplexed by this bargaining norm, but later realised the implications of bargaining and the futility of resisting it. She also made an interesting observation that bargaining was more prevalent among the older generation, who would expect 10% or 20% discounts. Senior freelancers advised her to raise her quote to give clients room to negotiate and gain ‘petty advantages’.

Apart from negotiation, freelancers observed another bargaining strategy used by some clients: evading price discussion (interviews with T15, T16, T17, T29, and T32). For this strategy to be successful, clients appealed to the virtues of good interpersonal relations. That is, clients expected freelancers to trust that entering the relationship would not result in mistreatment. The moral imperative to trust and maintain relationships was used by clients even before establishing a reciprocal relationship. A freelancer’s immediate enquiry about the client’s budget might signal to the client a lack of sincerity and trust on the part of the freelancer, both of which are moral prerequisites for entering and sustaining a social relation. However, without explicit promises, freelancers would have no guarantee that the client will honour the fee-for-service transaction. This could become a serious problem if freelancers invest time and labour without first agreeing remuneration, giving them less negotiating power to ask for higher pay. Therefore, clients’ imposition of social relation virtues could cajole freelancers into an unfair exchange. For example, T15, a video director, met a new client who explained in detail his ambition to showcase his products without clarifying the budget. When T15 and her freelance friend pressed the client on budget, the client was upset: ‘If you mention budget, then you don’t understand what I am talking about’. After two meetings with the client, T15 realised that this was a tactic to extract free labour from the freelancers. An artist (T32) summarised his experience of trying to ascertain budget when clients resist such discussion:

‘In Taiwan, they usually exaggerate how fantastic their project will be, skirting around the budget. Pie in the sky… Everything was described with fancy words at the start, but eventually they alluded to the small budget. There is a saying here, money talk hurts feelings.’

When freelancers had pre-existing relations with clients, either a former contractual relation or a friendship, both parties had some basis of trust and viewed the contractual relation as more than a transaction (interviews with T7, T10, T11, T12, T13, and T29). In a pre-existing interpersonal relationship, it was considered moral to enhance personal bonds by showing willingness to continue with another transactional relation. Interviewees frequently mentioned ren qing, translated as personal affection or personal indebtedness. Ren qing could manifest in freelancers giving special treatment to clients by accepting a lower-than-normal price, or even by providing free work to pay back and sustain the reciprocal relation. When overwhelmed by work, T3 still accepted low-paying magazine editing jobs from editors she previously worked for. If freelancers owed ren qing to friends or wanted to support friends who had been supportive, it was assumed that ren qing merited lower prices or even free work. For example, because T29 stayed over at a friend’s home several times for free during work trips, when his friend later borrowed money to create a start-up company, he volunteered to film a promotional video for his friend.

Freelancers were less inclined to complain about repaying ren qing, as it seemed just, except when clients used the ren qing expectation, especially its implicit bargaining power to offer potentially good pay and more transactions, to deliberately lower prices and extract more work. However, future reciprocity seemed to require freelancers’ acceptance of lower prices in exchange for clients’ inclination to continue the relationship. T14 recalled having to take a low budget project from a former client who had paid reasonable fees previously, because declining the project would upset the client. Assuming that declining would mean ‘the business relationship will end,’ she accepted that she ‘probably won’t get reasonably compensated every time.’

Tolerance of contract violations

Contracting parties, especially freelancers, believed that if they invested in the contractual relationship by doing more favours, the other party would treat them well as the reciprocal relations continued. However, the contractual relations that became embedded in reciprocal relations created many more obligations for some freelancers than those explicitly stated and agreed in initial contracts. During the contract period, many freelancers reported being given a heavier workload, and needing greater effort to deliver than they were remunerated for (interviews with T4, T6, T16, T29, and T30). For example, T4 was paid for a day’s work, which turned out to include only the day of shooting videos, not the extra 3 days for meetings, scouting scenes, and post-production editing.

Freelancers mostly tolerated clients’ demands, because they hoped to add ren qing owed by clients and because they feared damaging their relations. Contract violations may partially be attributed to lack of written formal contracts, and to clients being more motivated to sign contracts to protect their own interest, such as ensuring project delivery time and publication rights (this was also found in interviews in England). However, contract violations could also occur whether agreements were made orally or in writing. T30 said: ‘Some clients didn’t really read the contract carefully. Signing the contract was a formality for them’. Although unhappy, he would tolerate demands incurring extra costs, such as finishing photo edits earlier or additional editing requirements, hoping that the clients would recommend his photography service to others.

Another commonly tolerated problem related to payment. Because of ren qing, freelancers in Taiwan were lenient with delayed payments and clients’ unilateral reductions in final payments (interviews with T16, T27, and T29). The virtues of maintaining a harmonious relationship (Yum, 1988) were so instilled in freelancers that they preferred not to use legal routes to resolve payment issues. Interviewee T3, a journalist, was used to waiting two or three months to receive payment. In one extreme case, she had not received payment for a book she had ghost-written for a doctor two to three years after completing it. Instead of sending the doctor a legal notice, the journalist told him, ‘I could settle for less money than we originally agreed’.

Freelancers regarded legal recourse to deal with contract violations as the least optimal solution, because it would mean a definite end to the contractual relationship and future benefits they might still reap from reciprocal relations. To avoid breaking interpersonal ties when dealing with contract violations, some freelancers would send a legal notice in the name of a studio or company (T3), set up mainly to reduce tax bills (interviews with T6, T11, T15, T24, and T28). Corresponding through the legal entity seemed to help separate the business relationship from the interpersonal relationship. Essentially, the relative obligations in reciprocal relations are influenced by power differentials (Hwang, 2011), so using legal entities helped some freelancers avoid imposed obligations inherent in personal relations with limitations (as clients may still resort to personal relations narrative to lower fees, indicated by T9, T14, and T30).

Evidence from England

Predetermined negotiation rules

Compared to the pre-contractual bargaining norms in Taiwan, negotiation in England was more straightforward. The client would specify the work required and ask the freelancer for a quote, and the client would decide whether to proceed based on the quote given; alternatively, the client would inform the freelancer of their expected rate first, and the freelancer would decide whether to proceed. If both parties’ requests (i.e. quoted fees and job specification) could be satisfied, they would proceed into a contractual relation, which would not be contingent on future collaborations and would not be likely to evolve into personal indebted relations as it might in Taiwan. Most interviewees in England were not familiar with the discount norm evident in Taiwan. When presented with the imaginary scenario of being asked for a discount, freelancers responded that they would prefer not to enter a contractual relationship than to lower rates (interviews with E2, E6, E12, E24, E27, and E34). Contractual relations were regarded as transactional. The idea of being asked to give discounts was incomprehensible, because everyone should be treated equally, and ‘because it [was] a fixed price that everyone pays’ (E25). When asked about the possibility of giving discounts, E34 was firm on his non-discount position: ‘I don’t change that (fee). I don’t discount it. I don’t reduce that fee in any way. If anyone wants to try and do that, the answer is no. If they’re not happy, that’s okay. We don’t work together’. Unlike freelancers in Taiwan, freelancers in England were not afraid of defending their fees, even when higher than market average, because they believed that the fees reasonably reflected their working hours, effort, and experience. Freelancers regarded clients who haggled at first would ‘end up being the most difficult clients’ (E6), and they were not ‘legally obliged to take on jobs’ (E27) anyway.

On the rare occasions when ‘discounts’ were given, the rationale differed from that in Taiwan. Lowering prices slightly would be considered in two exceptional circumstances. The first was when clients belonged to commonly-acknowledged low-income groups (e.g. charities, students). Society generally considers it moral to help individuals from low income and disadvantaged groups. Interviewees’ discretion was based on this public moral standard, and having pre-existing interpersonal relations was not sufficient to justify a discount as it would be in Taiwan. Therefore, the amount of discount given to financially disadvantaged groups was predetermined. A therapist explained that she might consider offering 10% off for a few, such as students or people in financial difficulty, only if ‘you can put your case forward,’ otherwise she would not ‘feel bad charging a good price’ for her time (E8).

The second exceptional circumstance was lowering prices slightly in exchange for certainty of longer-term work. E7 was happy to reduce her rates ‘on the basis that he would kind of commit to do that for ten days [every month for several months]’. This was called a retainer agreement, which was also evident and acceptable in Taiwan (interviews with T20 and T28). It may seem that in the retainer agreement, freelancers compromised financially to sustain the relationship, similar to discount considerations in Taiwan. However, the grounds for consideration in these two instances differed. In England, freelancers were explicitly promised a definite period of work that increased their short-term financial stability, and freelancers would record the hours worked and paid. A retainer agreement is a transaction and an agreement to regulate contracting parties, and not coded as a personal favour. By comparison, freelancers in Taiwan gave discounts hoping that their short-term compromise would create ren qing on the part of clients, and that the reciprocal relationship would lead to long-term transactional relations. In these cases, the long-term business transactions were not set in stone, and ren qing did not amount to any legally enforceable means to ensure clients choose the same freelancer for future transactions.

Interviewees in England seemed to distinguish clearly between personal and business relationships. Even when ‘friends’ did not qualify as disadvantaged, freelancers considered offering them free services for moral reasons and to avoid the implications of monetarising personal relationships. Some interviewees reflected on how pre-existing relationships would influence their rates. Interestingly, friends usually would not take advantage of friendship to request lower fees, so the decision to factor in ‘mates’ rates’ and offer free help was mostly in the freelancers’ hands. Freelancers generally did not feel comfortable charging friends and instead did the work for free (e.g. playing guitar for a friend’s wedding for 15 min as a present (E31)), because ‘otherwise, the amount that you reduce it by… it makes a statement about how much of a friend they are’ (E21), and these conversations would be awkward and difficult. Only one interviewee worked for a friend but charged full rates. Unfortunately, the friend delayed payment for a long time, causing her to regret forming a business relationship on the basis of friendship (‘never work for a friend again’, E12). This extreme case demonstrated that freelancers in England would rather avoid or minimise the complexity of mixing transactional and personal relations. Unlike in Taiwan, building good relationships with clients did not involve obligations to lower fees, but, to the contrary, opened up opportunities to increase fees.

Confrontation over contract violations

In England, there was a general expectation that both contracting parties should fulfil contractual obligations as agreed (Fried, 2015). This corresponded with the importance of adhering to the contract, so when freelancers were given additional work, they would confront clients and clarify the fee-for-service nature of the exchange by asking for due compensation for add-on tasks (interviews with E10, E15, E35). If additional work was undertaken without prior discussion of compensation, freelancers would be upfront about their additional fees without worrying too much the possibility of ruining the relationships. When a translator (E11) was asked to deliver an additional half page of translation, she had to remind clients that the little add-on tasks could be time-consuming. In her words:

‘There are these little things where you go on and, and then “can you just…”, yeah, this “can you just” usually then ends up being an hour of my time? That needs to be paid for, somehow. But I have to sort of go “Hello?”’

Some freelancers sought to avoid direct conflict, if possible, because good business relations could increase income security (Storey et al., 2005), but interviewees were so aware of the transactional nature of contractual relations, and they would defend their interests by explaining their terms and conditions. Many freelancers sold pre-paid classes and had cancellation policies to prevent arguments over payment for no-shows. One fitness trainer (E16) was living and working in a Muslim community. Some clients tried to use religion and say ‘Sister, you should be more merciful’ to avoid paying for no-shows, but the trainer perceived this as ‘taking liberty of other people's kindness’ and highlighted the importance of agreements: ‘You signed a contract, and if you break it, you’re breaking God’s law too’. Freelancers also would find creative ways of seeking compensation. A web designer (E27) informed his client extra work would cost a few hours, but the client was confused by the invoice upon completion, as if the hours would be free. By indirect retaliation of billing the unpaid service somewhere else in the freelance project, the web designer maintained good relations, at least superficially, and was able to uphold the principle of fairness in contractual relations – ‘offering a trade in exchange for money type situation that people all over Planet Earth use on a day-to-day basis’ (E27).

Freelancers in England faced another common contract violation: late, or even no, payment. Generally, it is not a concern for the interviewees, as clients face a reputational cost for not paying on time. However, late payment could occur, and it was more common for organisational clients requiring a lengthy process of approval and making the payment (Osnowitz, 2010), and this may take from one to six months (interviews with E3, E4, E8, E9, E28, and E30). Freelancers would not patiently wait for clients beyond a reasonable waiting period (two to three weeks depending on the freelancer). When the payment issue arose, interviewees in England were sterner than those in Taiwan. Because it was widely acknowledged that the purpose of a contractual relation was monetary exchange for service, both parties understood that obligation to pay was clearly on the side of clients. A common approach was to chase emails or to implement late payment policies. When soft demands for payment proved ineffective, freelancers would resort to legal action without fear of damaging existing or further relationships with clients. If contracts could not be respected, there could be no grounds for further contracts. Freelancers’ ability and confidence to threaten court action illustrated the legitimacy of their payment demand, which proved to be efficient in reminding clients of their failure to fulfil their obligations. For example, an illustrator (E9) charged interest on late payment and sent the client the invoice with the interest in ‘red, highlighted and in bold’. Other freelancers (E6, E27, E30, and E36) sent court letters when clients failed to respond. These actions resulted in instant payment, except in the case of a graphic designer (E27) whose client ignored court judgement. The only other exception was when a translator (E11) was not paid by a platform for a £20 job; she did not pursue court action because it was not worth the effort.

Discussion and conclusion

Freelance contract relations are economic activities embedded in local cultural norms (Granovetter, 2017). Regarding freelance contracts as more transactional than relational pushes the research agenda towards the field of market business transactions or even market determinism. On the other hand, classifying freelance transactions as ‘contracts’ tends to foreground labour issues, sidelining the management of contractual obligations, which may differ across cultures. Therefore, for a more comprehensive understanding of freelance-client contract relations, the article has examined how cultural norms affect the actual contract formation process and problems that occur during the contractual period in Taiwan and England.

On culture and freelance contract relations

There are many theories or frameworks categorising the East and the West, such as Hofstede’s cultural dimensions (1983) and Hall’s high- versus low-context culture (Hall, 1976), all sharing the view that some societies may be more collectivist than others. For example, Taiwan would be regarded as a ‘collectivist’ society whereas England an ‘individualistic’ society. However, a society’s position on the ‘individualism-collectivism spectrum’ does not indicate what aspects of local culture make the society individualistic or collectivist. Instead of taking a positivist stance and assuming Western societies are rational whereas Eastern societies are relational, the article focuses on the emerging differences in contracting behaviours and seeks to explain them using social and cultural norms of interpersonal relations. The findings show that in both societies contract parties are aware of, and use, socially accepted ways to maximise self-interest to manage freelance contract relations.

Taiwan is often characterised as a Confucian society (Lowe, 1996), wherein reciprocal relations constitute special network ties between people. In the findings, the importance of reciprocal relations in Taiwan is demonstrated through freelancers’ management of discount requests, evasion of price discussions, and contract violations. By accepting discounts and tolerating contract violations, freelancers give favours to clients to create a relational debt, which they expect clients to pay back in the future. For similar reasons, clients avoid discussing fees and appeal to the personal relationship. Tolerating clients’ discount requests, circumvented payment discussions, and contract violations may also indicate that freelancers are repaying ‘favours’ to clients with whom they already have an established personal relationship. Personal ties and ongoing reciprocal obligations associated therein can over-rule the contract terms initially agreed (Luo, 1997). Freelance contractual relations are both transactional relations and a guanxi, where contracting parties prioritise maintenance of harmonious interpersonal relations and affectional bonds (Zhang et al., 2005).

England is a society influenced by Protestant and Enlightenment values (Rousseau, 2019). Freelancers in England did not report being asked to reduce fees for the same reasons as freelancers in Taiwan. Negotiation norms are straightforward: quotes are given to be accepted or rejected. Exceptionally, negotiations may only occur on actual mutually beneficial terms (e.g. retainer agreement) or considerations to help the ‘disadvantaged’ (e.g. students and charities), which are also part of discount considerations for freelancers in Taiwan. In terms of contract violation, because of the belief in England that a contract is a legally and morally compelling promise (Fried, 2015), freelancers regard it as just and lawful to demand that clients honour contracts and fulfil obligations as agreed. Among the few participants of ethnic or cultural minorities, only one freelancer commented on the use of religion by clients. Their awareness and adamant enforcement of contract are evidence of the importance of upholding contracting parties’ rights and obligations. However, more data from ethnic or cultural minorities may yield more insights into differing contracting customs within England’s various ethnic communities.

In Taiwan, freelancers’ near-absent, or reluctant, recourse to contracts when dealing with contract violations suggest the dominance of cultural norms and limited permeation of the legal system into contractual relationships. Even though Continental law became the foundation of the legal reform led by Chiang Kai-shek’s Nationalist party (Keller, 1994), and its contract law overlaps with European contract law, Taiwan’s current contract custom originates in, and shares similarities with, that in mainland China (Brockman, 2017). This may explain why, throughout the contracting period, rather than referring to written or oral agreements, freelancers tolerate contract modifications at the whim of clients simply to maintain good relationships. The findings show that, on rare occasions, freelancers position themselves as a legal entity, such as a studio or a company, whose interest they need to defend, to escape personal reciprocal obligations.

The comparison reveals distinct avenues through which a freelancer’s bargaining power is realised: in England, quantitatively through pricing, and in Taiwan, qualitatively throughout the course of the business and personal relationships. In the latter case, an acceptable relationship might involve freelancers offering a ‘favour’ by reducing fees or doing more work, provided that clients reciprocate by offering repeat business. Admittedly, in this arrangement clients benefit immediately while freelancers hold out for a future benefit. In transient spot market transactions, there is little to stop clients falsely implying a ‘reciprocal’ relationship in order to impose additional obligations on the freelancer. Alternatively, some clients might genuinely intend to offer repeat business, but lack the opportunity to do so. Ideally, in a guanxi relationship, clients could repay freelancers’ favour by offering resources other than repeat contracts, and a mutually beneficial guanxi may not incur complaints about contract violations. However, freelance transactions are sporadic market transactions, in which clients’ ability to help freelancers is unclear, but clients, especially those without former reciprocal relations, often use the guanxi narrative and expectation to extract more work. In England, by comparison, the findings demonstrate that freelance contract relations are informed less, if at all, by the imperative to maintain a reciprocal relationship. Indeed, some freelancers prefer not to mix personal relations (e.g. friendship) with contract relations.

Trust in contracting dynamics

The findings demonstrate a complicated relationship between reciprocity and trust. In Taiwan, even in the absence of a pre-existing relationship, clients tend to ask for discounts. The discount phenomenon is paradoxical: clients habitually ask freelancers to reduce their rates; in anticipation, freelancers inflate their initial quotes. This paradox indeed gives opportunities for contract relations to develop into personal relationships (Luo, 2005); however, the custom of ‘special discounts’ discourages freelancers from quoting honest fees. The root of the paradox is that freelancers must prove their trustworthiness by quoting dishonest ‘standard’ rates.

By comparison, the simpler contracting negotiation process in England implies that contracting parties trust the first quote given is a fair reflection of freelancers’ work value, whether it be tendered by freelancers or clients. The implicit trust between contracting parties may be explained by the importance of being a credible tradesperson, which has been influenced by the early development of capitalism and Protestant virtues (Cornwell, 2007). Even though credibility as a professional or businessperson and subscribing to the ideology of equality among all people can relate to prominent strains of religious and philosophical influence, it should not be presumed that one has to be a capitalist, Christian, or humanist to exhibit these behaviours or share these expectations of social interactions.

The dynamics of negotiation show that the basis of interpersonal trust differs in Taiwan and England, but this difference should not be extrapolated to suggest that Taiwan (and other ‘collectivist’ societies) generally have low levels of social trust (Fukuyama, 1995). Rather, it should be understood that in England, trust in freelance relations relies either on legal enforcement or the explicit promise of continuous contract relations, whereas trust in Taiwan hinges on the expectation to develop or invest further in reciprocal relations.

Possible changes in freelance contract relations

Norms are ‘malleable, renegotiated, and shifting in accord with considerations of power and strategic interaction among individuals’ (Popkin, 1979: 22), so it is possible that the English model of contracting supersedes contracting norms in Taiwan, for two reasons. First, in Taiwan, young and highly-educated people are more trusting (Zhang et al., 2005). Modernisation and globalisation have weakened the salience of traditional Chinese values such as ‘the rejection of familistic attitudes, perceived control over one’s destiny and education’ (Steinhardt, 2012: 448). Growing distaste for ‘discounting’ is observed in interviewees, especially those who have studied or worked abroad and are used to the contracting norm of one-off quotes prevalent in English-speaking societies. Discounting norms may also weaken due to the development of a platform economy, since online freelance platforms require freelancers to have standardised pricing, disenabling clients to request discounts, and at the same time, eliminating opportunities for contracting parties to develop reciprocal relationships.

The study has some limitations that could be addressed in future research. First, because the study explored the considerations and behaviours of freelancers in contractual relations, it collected accounts from freelancers only. For a more comprehensive picture of contractual dynamics, future studies could include descriptions and justifications from clients. Second, the importance of reciprocal relations to freelancers in Taiwan might be explained by two additional factors: the high cost of finding and establishing new clients, and a relatively small market with limited clients and frequent repeat business. Because this study was not designed to compare market sizes and costs of developing social relations, future research could address how freelancer contracting norms may be influenced by objective and subjective senses of business opportunities and client acquisition costs.

Conclusion

Freelance contract relations are embedded in social norms, such that cultural variants produce different expectations and behaviours. This article contributes to the literature on freelancing by showing the importance and influence of cultural norms on freelance contracting relations in Taiwan and England. The study finds that freelancers in England expect clients to conduct trustworthy transactions and adhere to agreements throughout the contracting period, whereas freelancers in Taiwan prioritise giving reciprocal favours to clients, expecting that reciprocal relations are also in the clients’ interest. The complexity of freelance contracting in Taiwan compared with that in England reveals that contract relations are not merely economic transactions, but also reflect relational norms that differ across cultures. This is the first study to analyse cultural impacts on the dynamics of freelance contracting, and it opens up more opportunities for scholars to provide a more comprehensive picture of the power dynamics by examining clients’ contracting experiences.