Understanding Global Business Ethics: A Practical Approach

Posted on Aug 21, 2024 in Philosophy and ethics

Chapter III: Ethics in Global Business

Understanding Ethical Standards

Ethics are moral standards, not governed by law, that focus on the human consequences of actions. They often require behavior that meets higher standards than those established by law, including selfless behavior rather than calculated action intended to produce a tangible benefit. Ethics can sometimes conflict with individual and corporate self-interest.

Ethics are a product of a society’s culture, encompassing its traditions, customs, values, and norms. Members of a culture often take ethics for granted, implicitly understanding the requirements of relationships, duties, and obligations between people and groups and distinguishing between their self-interests and the interests of others.

Four Perspectives on Ethics

The practical interests of the individual or group exploring ethical questions influence the appropriateness of each perspective:

  1. Descriptive Approach: The study of ethics using the methods and theories of social science.
  2. Conceptual Approach: Focuses on the meaning of key ideas in ethics, such as obligation, justice, virtue, and responsibility.
  3. Normative Approach: Involves constructing arguments in defense of basic moral positions and prescribing correct ethical behavior.
  4. Practical Approach: A variant of the normative perspective, involving developing a set of normative guidelines for resolving conflicts of interest to improve societal well-being.

Ethical Relativism and Universalism

Individual Ethical Relativism is the view that there is no absolute principle of right and wrong, good or bad, in any social situation.

Cultural Ethical Relativism is the doctrine that what is right or wrong, good or bad, depends on one’s culture.

Ethical Universalism maintains that there are universal and objective ethical rules located deep within a culture that also apply across societies.

Corporate Social Responsibility

The Efficiency Perspective of corporate social responsibility argues that the obligation of business is to maximize profits for shareholders.

Corporate Social Responsibility Theory differs from the efficiency perspective. Along with recognizing multiple stakeholders, this theory regards stakeholder groups not as uninvolved actors, as efficiency theory does, but as active participants in the future direction of the firm in which they have a stake. Although stakeholder theory appears straightforward, there are practical problems with implementing it. First, it is difficult to identify an organization’s stakeholders. For example, are unborn future generations stakeholders?

Kohlberg’s Theory of Moral Development

Lawrence Kohlberg, an American psychologist, takes a universal perspective in his theory of moral development, which outlines six stages:

  1. Stage 1: Obedience and Punishment. Obedience to those in authority who have the power to punish.
  2. Stage 2: Individualism and Reciprocity. The greatest good for the individual person making the decision.
  3. Stage 3: Interpersonal Conformity. Expectations of others, including friends, family, etc., determine what is right for an individual.
  4. Stage 4: The Social System or Law and Order. Doing one’s duty and obeying rules.
  5. Stage 5: The Social Contract. Thinking on morality. The principle of the greatest good for the greatest number is the criterion for right and wrong used by rational people.
  6. Stage 6: The Stage of Universal Ethical Principles. Selected freely by a person and that the individual is willing for everyone to live by.

Face and Ethical Considerations

Face is an ethical concept because it displays an individual’s understanding of culturally defined moral codes as they apply to and maintain a particular social situation. An approximate meaning of face in Asian cultures refers to behavior that meets criteria of harmony, tolerance, and solidarity. Finally, the Asian understanding of face reflects concern with social virtue instead of Western concerns with truth. This translates into collectivist, high-power distance cultural behavior in which saving one’s face and that of other group members, in particular, the superior, is of central importance in highly integrated and authoritarian cultures.

Discrimination and Child Labor

Discrimination is the preference given to members of certain groups. Race, ethnicity, age, gender, geographic region, and religion are variables used to discriminate.

Child Labor is used extensively in many less-developed countries.

Bribery and Corruption

Two common forms of bribes are:

  1. Whitemail: A payment made to a person in power for favorable treatment that is illegal or not warranted on an efficiency, economic benefit scale.
  2. Lubrication Bribes: Payments to facilitate, speed up, or expedite otherwise routine government approvals for things such as licenses or inspections.

Intentional Misrepresentation in Negotiation

This includes bluffing, fraud, intimidation, and various other forms of deception.

Ethics in the U.S. & UK

The U.S. and UK share a common Anglo-Saxon heritage, system of law, economic system, and language. However, there are some differences in their approach to ethics:

  1. U.K.: Companies are more likely to communicate ethics policies through legal departments.
  2. U.S.: Firms consider most ethical issues more important than do their U.K. counterparts.
  3. U.K.: Managers consider external corporate stakeholders more important than do U.S. managers.
  4. U.K.: Firms are more protective of employee rights and more likely to specify policies forbidding employee conduct counter to the firm’s interests.

The Global Approach

The Organisation for Economic Co-operation and Development (OECD) is an international organization that helps governments tackle the economic, social, and government challenges of a globalized economy.

Code of Ethics

Although these are not laws, they codify behavior that is unacceptable under certain conditions.

Resolving Ethical Issues

Several methods can be used to resolve ethical issues:

  1. Avoiding: One party simply chooses to ignore or not deal with the conflict.
  2. Forcing: One party forces its will upon the other.
  3. Education-Persuasion: One party attempts to convert others to its position through providing information, reasoning, or appeals to emotion.
  4. Infiltration: One party introduces its cultural values to another society, hoping that an appealing idea will spread.
  5. Negotiation-Compromise: Both parties give up something to negotiate a settlement.
  6. Accommodation: One party adapts to the ethics of the other.
  7. Collaboration-Problem Solving: Both parties work together to achieve a mutually satisfying solution, a win-win outcome meeting the needs of both.

Conclusion

Four perspectives help us understand ethics: the descriptive, conceptual, normative, and practical. By understanding these perspectives and the various ethical challenges faced in global business, we can work towards creating a more ethical and responsible business environment.