Reconciling ethical issues in international business

Author: Iloka Benneth Chiemelie

Published: 22-September-2014

1.      Introduction

The subject of ethics is no longer new in business literatures and practical management and it has gained increased acclamation as a result of increased adoption and acceptance of globalization, and international business (Rest and Narváez, 1994; Maclagan, 1998). When it comes to discussing the relationship between business dealings and ethics, people have a general perception that there is no ethics in business, and business is independent of ethics; oxymoron is the word that has been used when it comes to describing the relationship existing between business and ethics (Werhane and Freeman, 1999; Duska, 2000). Carr (1968) wrote an article asking “Is Business Bluffing Ethical”, in which the author made known that business people normally see business as some sort of porker game with themselves as the players. Additionally, reactions made towards business and ethics clearly indicates that morality is not traditionally expected from people doing business. Potentially, such tradition might have been formed from individual experience or coming from exposures that we have to corporate ethical behaviors in the media. Irrespective of the controversy that surrounds business and ethics, little efforts have me made in literature to understand how managers actually make decisions when they are confronted with moral dilemmas that feature sensitive moral issues in their place of work and how they actually strive to arrive and finally arrive at a balance between business and ethics. The made reason for such is reflected on the general statement made by business ethicists such as Maclagan (1998), Fisher and Lovell (2003), Treviño and Brown (2004) and Goodpaster (2007), in which they made known that it is extremely difficult to judge whether an action is right or wrong in business reality, and such difficult normally results in hard to resolve dilemmas for business managers. In the view of such understanding, this paper will seek to analyze how ethics can be reconciled in international business.

1.1. Reconciling ethical issues in international business

In accordance with Milton Friedman (1970), it is very important that managers ensure business decisions are made for the purpose of maximizing the profit of their company with a subsequent increase in productivity, market share, and returns on investment and other performance induced business outcomes. The academics literatures have presented discussions of the consequences that businesses must face when they decide to occupy the type of managerial model position discussed by Friedman (Carroll, 1987; Goodpaster, 2007). The outcome of such as illustrated in literatures is that managers do face a number of business dilemmas which involves the fight to attain balance between their individual moral values and organizational demands and goals. The most affected managers are those with high level of moral standards that can be pressurized into compromising their own individual moral standards by focusing primarily on their managerial responsibilities.

In recent years, there have been a standardization of corporate social responsibilities (CSR) by large-multinational corporation, and this have reshaped the form and approaches adopted by MCNs when it comes to ethical codes of conduct and these companies have been involve sin publicizing their moral values by remaining focused on corporate governance and social responsibilities (Bondy, Matten and Moon, 2004; Levis, 2006); but such movements seem to be different and contradictory with the main objective of business which is for profit making as described by Friedman.

Culture has been single handedly blamed for majority of ethical issues that are occurring in modern business and such blames are directly reflected in the definition of culture, in which it is defined as people’s way of life. Across the globe, there are different people and their ways of life are also different. Thus, their ethical views in terms of how businesses are supposed to be conducted are varied. A number of literatures, (see, for example, Verstraeten, 1998;  O‟Higgins, 2003; Windsor, 2004; Ciulla, Martin and Solomon, 2007) have identified culture as influencing the business ethics of corporations, which means that any change that must be made in business ethics will need to first be addressed on the cultural ground. However, culture is something that cannot easily be changed. It is predefined and inherent approach of life that have been molded by people since they came into this world, thus changing such views are significantly difficult. However, research has made know that the only way to progress in international business is by understanding these cultural differences and striving to ensure growth through reconciling any cultural dilemmas existing in the business process (see, for example, De George; 1999; Werhane and Freeman, 1999; Boatright, 2000; Cordeiro, 2003). There are numerous approaches that can be adopted in order to reconcile cultural dilemma, but those that will be discussed in this section are as referenced in past literatures and the process of reconciling cultural issues in international business include:

1.1.1.      Understand the two cultures involved – before any reconciliation can begin, the reconciler needs to first understand the different cultures that are involved in the reconciliation process. This is because such understanding will highlight existing differences and then determine what is to be reconciled and how it can be reconciled.

1.1.2.      Elicit the dilemma – once the two cultures have been clear understood, the next stage is to determine the cause of the dilemma from the two culture identified. It is always the case that one action will cause a reaction, thus this stage involves understanding what the action is all about and where it came from.

1.1.3.      Chart the dilemma – the next stage is to chart the dilemma in their order of importance and significance and the purpose is to define which dilemma will be addressed first and the level of cognizance that should be attached to such dilemma.

1.1.4.      Stretch the dilemma – this involves further expanding the dilemma to understand positive effects associated with it. The decision to reconcile any dilemma in international business will be based on the fact that it has more negative effects.

1.1.5.      Finding epithets – this involves identifying the right solutions for the negative effects highlighted from stretching the dilemma. The focus is on replacing negatives with positives in order to create balance. For instance, if increased production is polluting the environment, one needs to reduce production in order to ensure that the environment is not damaged (CSR).

1.1.6.      Reconcile all dilemmas – once the above steps have been completed, the next and final step is to combine all the processes into one in order to create a common and mutually beneficial ground for both businesses and companies. This involves combining both the cultures of the local market and that of the business in order to ensure that business activities doesn’t endanger values of local cultures, while local cultures doesn’t endanger the potential of businesses to meet their own need.

1.2. Framework for reconciling ethical cultures in international business

Figure 2.1: framework for CSR in international business

Besides the need to ensure ethical responsibility, the above figure clearly demonstrate that there are also other responsibilities that companies must adhere to in order to maintain full corporate social responsibilities, international corporations must be economically responsible (returning significant value to investors), legally responsible (aiding by all laws guiding international business), ethically responsible (ensuring that their businesses doesn’t impact negatively on the society), and philanthropically responsible (helping the society grow in as many ways as they can.

1.3. Conclusion

From the above case analysis, it is now clear that the issue of international ethics in business is not easy to resolve because the objective of any business is to make profit. However, businesses still need to ensure their activities doesn’t have any negative impact on the society because this is the only way that sustainable and mutually beneficial partnership can be established between the stakeholders and the business.

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