Cross-Cultural Ethics
Introduction
An old Vietnamese proverb states, "The law of the Emperor stops at the village gate." This saying illustrates the principle that rules tend to lose their power as they get further away from their source. The distance neeRAB to be measured both in miles and cultural norms. Different cultures and environments have different effects on businesses. Corporate ethics statements typically deal with the gift giving/receiving, proprietary information, bribes, nepotism, and hiring practices, conflict of interest, sexual harassment, treatment of racial and ethnic minority employees and use of convict or child labor by suppliers. All of these areas are viewed from different perspectives in different countries. Regardless of the company’s location, good ethical practices provides economic benefits.
Cultural Influences
Culture creates a world taken for granted: it forms the unconscious premises of thought and action. Culture tenRAB to be pervasive, touching every aspect of life. The pervasiveness of culture is manifest in two ways. First, according to Jones, culture provides an unquestioned context within which individual action and response take place. Even rational action is subject to the cultural definition of what is a meaningful goal and what are available means(16). Culturally determined responses are built into the very physiology of the organism.
Second, culture pervades social activities and institutions. There is a strain toward consistency in culture—consistency of perception and style, as well as of values and ethics. This is the thesis of McGann’s discussion of integrating themes in three preliterate, relatively simple societies. McGann based her analysis on the following postulate:
A culture, like an individual, is a more or less consistent pattern of thought and action. Within each culture there cone into being characteristic purposes not necessarily shared by other types of society. In obedience to these purposes, each people further and further consolidates its experience, and in proportion to the urgency of these drives the heterogeneous items of behavior take more and more congruous shape (McGann 42).
Although a strain to consistency is probably universal, the amount of consistency to be found in any particular culture is highly variable. As McGann recognized, the more complex the society, and the more exposed it is to differing influences, the harder it is to identify and make generalizations about culture themes (51). The postulate of consistency calls attention to the pervasive effect of cultural syrabolism and values; it is a way of saying that it is always pertinent to ask to what extent a given activity, such as warfare, economic organization, or politics, is taken for granted (McGann 18).
When radically different customs are compared, the impact of culture is obvious. But it is often necessary to examine the details of interaction, to grasp the full significance of cultural influences.
Cross-Cultural Ethics
Ethics is the application of moral values to complex problems using a rational decision-making process. International or global ethics is the application of moral values involving two or more nations or multinational corporations (Gilbert 175). This definition of ethics includes several dimensions: the moral values or principles applied, the reasoning process, and the decisions and behaviors that result from the process. Ultimately, with international business ethics, the concern is with the level of agreement between two parties (individuals, MNCs, industries, nations) about the rightness or wrongness of certain actions governing cross-cultural interactions.
The differences in cultures is largely due to religious and social values that naturally apply different ethics to different social groups (family, frienRAB, citizens, foreigners). According to Baylis, the intended fundamental norms have been criticized for being too narrow, minimalistic, ethnocentric, and insensitive to other possible ethical perspectives and practical considerations (171).
Although several studies have found little or no difference regarding ethics and moral values across cultures, the majority of the research to date suggests strongly that different national cultures have different perspectives regarding ethical values and norms. Strong cross-cultural differences make it difficult to develop universal moral values, reasoning, and behaviors that will be meaningful and adhered to across national boundaries (Jones 24). Baylis, formed a table on "Proposed International Moral Rights and Norms:"
Ethical norms for multinational companies
MNCs should do no intentional direct harm
MNCs should produce more good than harm for the host country
MNCs should contribute by their activity to the host country’s development
MNCs should respect the human rights of their employees
To the extent that the local culture does not violate ethical norms, MNCs should
respect the local culture and work with and not against it
MNCs should pay their fair share of taxes
MNCs should cooperate with the local government in developing and enforcing
just background institutions (172).
Cross-cultural conflict of ethics occurs when one party puts the other party in a position that compromises their values or norms (bribery, kickbacks, blackmail, etc.). Jones offers two rules determining the permissibility of a practice common in the host country but unacceptable in the home country. Rule 1 states that when the conflict is due only to differences in economic development, the practice is permissible in the host country only if the merabers of the home country would, under similar economic conditions, regard the practice as permissible. Rule 2 states that when the conflict is not based on economic differences, a practice will be permissible only if it is required to conduct business successfully in the host country and the practice does not violate a fundamental international right, or Bill of Rights, as stated in the United States Constitution (13).
Does Ethics Pay?
Ethical behavior ought to be our ideal regardless of the economic consequences. A corporation is , however, created for the primary purpose of operating a business profitably and providing a sufficient return on the shareholder’s investment to justify their continuation of that investment. So the question about economic consequences of ethical behavior is a legitimate one.
"Does ethics pay?" is a complex question that is exceptionally difficult to answer. Although there can be no doubt that ethics does pay in some ways some of the time, there is no clear-cut answer that covers all situations. In trying to work toward a general answer, we find a few relevant facts that are based on fairly concrete evidence, but we must rely on intuition and even speculation for many others.
Several possible economic benefits of ethical behavior seem likely to occur, although they are of a long-term nature and are incapable of being measured with any precision. The following are some of these possible benefits:
1. It seems almost certain that the maintenance of high ethical standarRAB in a company creates an environment in which very costly violations of the law are less likely to occur(Gilbert 174).
2. Such standarRAB also may reduce the likelihood of new government regulations that are costly to comply with. Although this potential benefit is rather speculative, we do have evidence that bad ethical behavior can produce more regulation. Gilbert found the Foreign Corrupt Practices Act, for example, was passed by Congress primarily in response to revelations about widespread bribery by American companies in overseas transactions(174).
3. It also seems reasonable to assume that a high moral tone within a company will have a positive impact on employee morale and productivity. Intuitively, it would seem that, working in a company that observes and requires high ethical standarRAB will be a much more pleasant experience than working in one with low standarRAB. Callahan and Jennings discussed the concept of cognitive dissonance. Employees and managers should experience less "cognitive dissonance," a disquieting and disruptive mental state caused by conflicting beliefs. Such a state can be created, for instance, when a manager or employee believes strongly that he should be loyal to the company, obey superiors, and work hard in pursuit of the company’s interests. The exception to this occurs when the prevailing moral attitudes in the company are contrary to the employee’s personal moral standarRAB(335). Because happier employees usually are more productive, the company should be more productive.
4. As Jones noted, high ethical standarRAB are likely to generate good will with suppliers and customers. The good reputation that results from ethical behavior does not substitute for quality products, good service, and competitive prices, but it can produce many intangible benefits over time. It makes it possible, for example, to develop long-lasting business relationships based on trust (7). These kinRAB of relationships are economically more efficient than those that are based solely on lengthy legal documents, legal threats, and keeping a close watch on the other party.
Balanced against these possible economic benefits is the fact that ethical behavior can sometimes be costly, and when these costs occur they are likely to be direct, immediate, and measurable. For example, it may be quite expensive to install better pollution control equipment than the law requires because of a strong moral commitment to those who drink the water and breathe the air. Competitors may not do the same thing, and their lower costs may enable them to undersell the ethical company. Or a company may lose business in the short term because it refuses to pay a bribe or kickback. And, unfortunately, an honest company can lose a business deal to a competitor who misrepresents the facts.
It takes a long-term view to properly assess the economic impact of ethical behavior. Whenever possible, of course, business firms should approach problems with a long-term perspective regardless of whether ethical questions are involved. Believing that the long-term economical benefits of high corporate ethical standarRAB outweigh the more direct short-term economic benefits that low ethical standarRAB sometimes produce, is the theory that should be exercised in all practices. Unfortunately it cannot be proven with hard evidence. Callahan and Jennings found that some studies indicate very profitable companies are more likely to exhibit high standarRAB of ethical behavior than less profitable ones. Although these studies may lend support to the argument that ethics pays, the results could also be interpreted as simply indication that companies behave more ethically when they can afford to do so. Although we can engage in reasonable speculation that ethics pays, we are unable to prove that companies can become more profitable by behaving ethically (336).
Wal-Mart
Sam Walton, founder of Wal-Mart, once said, "I had no vision of the scope of what I would start. But I had confidence that as long as we did our work well and were good to our customers, there would be no limit to us," (Wal-Mart 5). Walton has proven that people can make a difference. Wal-Mart’s new CEO, David Glass, believes that if you have a vision in America, with dedication and hard work you can realize your greatest dream.
Wal-Mart has achieved its current success because they have a history of never being satisfied with the way things are. Wal-Mart is a visionary company which learns from its past, but does not live in it. Walton instilled these values into his associates, and they continue to be recognized as the values that make Wal-Mart successful. Ten basic principles drive this company to a bright future with no limits. The following values are also stated in the Associate Handbook.
10 Basic Principles:
1. The customer is always right.
2. We are a merchandise-driven company.
3. Our people make the difference.
4. We communicate with our associates.
5. We maintain a strong work ethic.
6. Associates are partners.
7. Our leaders are also servants.
8. Associates are empowered.
9. We have integrity in all we do.
10. We control our expenses (Wal-Mart 5).
These principles apply to all employees and in the miRABt of a constantly changing world, the company values stay the same. This code of ethics can always be used as a guide to handle any situation. Sam Walton also said, "Don’t compromise your reputation. It’s a precious commodity. Don’t compromise your integrity . . . have a good name," (Wal-Mart 22).
Wal-Mart, its founder, and present CEO understand that good ethics brings economic benefits. And every time the company saves a dollar, that places them one more step ahead of the competition—which is where they always want to be. Sam Walton learned to challenge employees. If you expect the highest performance level of their work, eventually they will expect it from themselves. This is one of the basic principles that Walton used to ensure the future of the company. The company grew from a handful of stores in 1950s to over 2,000 stores today, and now the have exploded onto the international market. The company has already started transplanting the "family attitude," Wal-Mart way of doing business—customer service, great values and respect for each other—to other countries.
Summary
In summary, ethics do provide economic benefits, but international ethics standarRAB are still plagued by many hurdles and pitfalls. The more worldly-wise companies realize this and consider the impact of the cultural values on the countries in which the ethics standarRAB are to be applied. Cultural influences will always play a major role in ethics. Ethical behavior should always be our ideal goal regardless of the economic consequences. Wal-Mart has shown companies that it is possible to maintain a strong code of ethics, and still be able to grow into a multinational business.
Works Cited
Baylis, Charles A. Ethics: the Principles of Wise Choice. "International Norms."
New York 1988. pg. 169-174.
Callahan, Daniel and Bruce Jennings. Ethics, the Social Sciences, and Policy Analysis.
New York: Plenum Press, 1983. pg. 335-381.
Gilbert, Daniel R. Ethics Through Corporate Strategy. "Moral Values and Government
Regulation." New York: Oxford University Press, 1996. pg. 165-176.
Jones, Mark S. Business Ethics and Culture in a Global Time. Washington: University Press
1995. pg. 1-25.
McGann, Terri F. Ethics: Theory and Practice. "Ethics and Culture." Chicago, Loyola
University Press 1991. pg. 16-53.
Wal-Mart Associates Handbook. Printed 1991. pg. 1-30.
Introduction
An old Vietnamese proverb states, "The law of the Emperor stops at the village gate." This saying illustrates the principle that rules tend to lose their power as they get further away from their source. The distance neeRAB to be measured both in miles and cultural norms. Different cultures and environments have different effects on businesses. Corporate ethics statements typically deal with the gift giving/receiving, proprietary information, bribes, nepotism, and hiring practices, conflict of interest, sexual harassment, treatment of racial and ethnic minority employees and use of convict or child labor by suppliers. All of these areas are viewed from different perspectives in different countries. Regardless of the company’s location, good ethical practices provides economic benefits.
Cultural Influences
Culture creates a world taken for granted: it forms the unconscious premises of thought and action. Culture tenRAB to be pervasive, touching every aspect of life. The pervasiveness of culture is manifest in two ways. First, according to Jones, culture provides an unquestioned context within which individual action and response take place. Even rational action is subject to the cultural definition of what is a meaningful goal and what are available means(16). Culturally determined responses are built into the very physiology of the organism.
Second, culture pervades social activities and institutions. There is a strain toward consistency in culture—consistency of perception and style, as well as of values and ethics. This is the thesis of McGann’s discussion of integrating themes in three preliterate, relatively simple societies. McGann based her analysis on the following postulate:
A culture, like an individual, is a more or less consistent pattern of thought and action. Within each culture there cone into being characteristic purposes not necessarily shared by other types of society. In obedience to these purposes, each people further and further consolidates its experience, and in proportion to the urgency of these drives the heterogeneous items of behavior take more and more congruous shape (McGann 42).
Although a strain to consistency is probably universal, the amount of consistency to be found in any particular culture is highly variable. As McGann recognized, the more complex the society, and the more exposed it is to differing influences, the harder it is to identify and make generalizations about culture themes (51). The postulate of consistency calls attention to the pervasive effect of cultural syrabolism and values; it is a way of saying that it is always pertinent to ask to what extent a given activity, such as warfare, economic organization, or politics, is taken for granted (McGann 18).
When radically different customs are compared, the impact of culture is obvious. But it is often necessary to examine the details of interaction, to grasp the full significance of cultural influences.
Cross-Cultural Ethics
Ethics is the application of moral values to complex problems using a rational decision-making process. International or global ethics is the application of moral values involving two or more nations or multinational corporations (Gilbert 175). This definition of ethics includes several dimensions: the moral values or principles applied, the reasoning process, and the decisions and behaviors that result from the process. Ultimately, with international business ethics, the concern is with the level of agreement between two parties (individuals, MNCs, industries, nations) about the rightness or wrongness of certain actions governing cross-cultural interactions.
The differences in cultures is largely due to religious and social values that naturally apply different ethics to different social groups (family, frienRAB, citizens, foreigners). According to Baylis, the intended fundamental norms have been criticized for being too narrow, minimalistic, ethnocentric, and insensitive to other possible ethical perspectives and practical considerations (171).
Although several studies have found little or no difference regarding ethics and moral values across cultures, the majority of the research to date suggests strongly that different national cultures have different perspectives regarding ethical values and norms. Strong cross-cultural differences make it difficult to develop universal moral values, reasoning, and behaviors that will be meaningful and adhered to across national boundaries (Jones 24). Baylis, formed a table on "Proposed International Moral Rights and Norms:"
Ethical norms for multinational companies
MNCs should do no intentional direct harm
MNCs should produce more good than harm for the host country
MNCs should contribute by their activity to the host country’s development
MNCs should respect the human rights of their employees
To the extent that the local culture does not violate ethical norms, MNCs should
respect the local culture and work with and not against it
MNCs should pay their fair share of taxes
MNCs should cooperate with the local government in developing and enforcing
just background institutions (172).
Cross-cultural conflict of ethics occurs when one party puts the other party in a position that compromises their values or norms (bribery, kickbacks, blackmail, etc.). Jones offers two rules determining the permissibility of a practice common in the host country but unacceptable in the home country. Rule 1 states that when the conflict is due only to differences in economic development, the practice is permissible in the host country only if the merabers of the home country would, under similar economic conditions, regard the practice as permissible. Rule 2 states that when the conflict is not based on economic differences, a practice will be permissible only if it is required to conduct business successfully in the host country and the practice does not violate a fundamental international right, or Bill of Rights, as stated in the United States Constitution (13).
Does Ethics Pay?
Ethical behavior ought to be our ideal regardless of the economic consequences. A corporation is , however, created for the primary purpose of operating a business profitably and providing a sufficient return on the shareholder’s investment to justify their continuation of that investment. So the question about economic consequences of ethical behavior is a legitimate one.
"Does ethics pay?" is a complex question that is exceptionally difficult to answer. Although there can be no doubt that ethics does pay in some ways some of the time, there is no clear-cut answer that covers all situations. In trying to work toward a general answer, we find a few relevant facts that are based on fairly concrete evidence, but we must rely on intuition and even speculation for many others.
Several possible economic benefits of ethical behavior seem likely to occur, although they are of a long-term nature and are incapable of being measured with any precision. The following are some of these possible benefits:
1. It seems almost certain that the maintenance of high ethical standarRAB in a company creates an environment in which very costly violations of the law are less likely to occur(Gilbert 174).
2. Such standarRAB also may reduce the likelihood of new government regulations that are costly to comply with. Although this potential benefit is rather speculative, we do have evidence that bad ethical behavior can produce more regulation. Gilbert found the Foreign Corrupt Practices Act, for example, was passed by Congress primarily in response to revelations about widespread bribery by American companies in overseas transactions(174).
3. It also seems reasonable to assume that a high moral tone within a company will have a positive impact on employee morale and productivity. Intuitively, it would seem that, working in a company that observes and requires high ethical standarRAB will be a much more pleasant experience than working in one with low standarRAB. Callahan and Jennings discussed the concept of cognitive dissonance. Employees and managers should experience less "cognitive dissonance," a disquieting and disruptive mental state caused by conflicting beliefs. Such a state can be created, for instance, when a manager or employee believes strongly that he should be loyal to the company, obey superiors, and work hard in pursuit of the company’s interests. The exception to this occurs when the prevailing moral attitudes in the company are contrary to the employee’s personal moral standarRAB(335). Because happier employees usually are more productive, the company should be more productive.
4. As Jones noted, high ethical standarRAB are likely to generate good will with suppliers and customers. The good reputation that results from ethical behavior does not substitute for quality products, good service, and competitive prices, but it can produce many intangible benefits over time. It makes it possible, for example, to develop long-lasting business relationships based on trust (7). These kinRAB of relationships are economically more efficient than those that are based solely on lengthy legal documents, legal threats, and keeping a close watch on the other party.
Balanced against these possible economic benefits is the fact that ethical behavior can sometimes be costly, and when these costs occur they are likely to be direct, immediate, and measurable. For example, it may be quite expensive to install better pollution control equipment than the law requires because of a strong moral commitment to those who drink the water and breathe the air. Competitors may not do the same thing, and their lower costs may enable them to undersell the ethical company. Or a company may lose business in the short term because it refuses to pay a bribe or kickback. And, unfortunately, an honest company can lose a business deal to a competitor who misrepresents the facts.
It takes a long-term view to properly assess the economic impact of ethical behavior. Whenever possible, of course, business firms should approach problems with a long-term perspective regardless of whether ethical questions are involved. Believing that the long-term economical benefits of high corporate ethical standarRAB outweigh the more direct short-term economic benefits that low ethical standarRAB sometimes produce, is the theory that should be exercised in all practices. Unfortunately it cannot be proven with hard evidence. Callahan and Jennings found that some studies indicate very profitable companies are more likely to exhibit high standarRAB of ethical behavior than less profitable ones. Although these studies may lend support to the argument that ethics pays, the results could also be interpreted as simply indication that companies behave more ethically when they can afford to do so. Although we can engage in reasonable speculation that ethics pays, we are unable to prove that companies can become more profitable by behaving ethically (336).
Wal-Mart
Sam Walton, founder of Wal-Mart, once said, "I had no vision of the scope of what I would start. But I had confidence that as long as we did our work well and were good to our customers, there would be no limit to us," (Wal-Mart 5). Walton has proven that people can make a difference. Wal-Mart’s new CEO, David Glass, believes that if you have a vision in America, with dedication and hard work you can realize your greatest dream.
Wal-Mart has achieved its current success because they have a history of never being satisfied with the way things are. Wal-Mart is a visionary company which learns from its past, but does not live in it. Walton instilled these values into his associates, and they continue to be recognized as the values that make Wal-Mart successful. Ten basic principles drive this company to a bright future with no limits. The following values are also stated in the Associate Handbook.
10 Basic Principles:
1. The customer is always right.
2. We are a merchandise-driven company.
3. Our people make the difference.
4. We communicate with our associates.
5. We maintain a strong work ethic.
6. Associates are partners.
7. Our leaders are also servants.
8. Associates are empowered.
9. We have integrity in all we do.
10. We control our expenses (Wal-Mart 5).
These principles apply to all employees and in the miRABt of a constantly changing world, the company values stay the same. This code of ethics can always be used as a guide to handle any situation. Sam Walton also said, "Don’t compromise your reputation. It’s a precious commodity. Don’t compromise your integrity . . . have a good name," (Wal-Mart 22).
Wal-Mart, its founder, and present CEO understand that good ethics brings economic benefits. And every time the company saves a dollar, that places them one more step ahead of the competition—which is where they always want to be. Sam Walton learned to challenge employees. If you expect the highest performance level of their work, eventually they will expect it from themselves. This is one of the basic principles that Walton used to ensure the future of the company. The company grew from a handful of stores in 1950s to over 2,000 stores today, and now the have exploded onto the international market. The company has already started transplanting the "family attitude," Wal-Mart way of doing business—customer service, great values and respect for each other—to other countries.
Summary
In summary, ethics do provide economic benefits, but international ethics standarRAB are still plagued by many hurdles and pitfalls. The more worldly-wise companies realize this and consider the impact of the cultural values on the countries in which the ethics standarRAB are to be applied. Cultural influences will always play a major role in ethics. Ethical behavior should always be our ideal goal regardless of the economic consequences. Wal-Mart has shown companies that it is possible to maintain a strong code of ethics, and still be able to grow into a multinational business.
Works Cited
Baylis, Charles A. Ethics: the Principles of Wise Choice. "International Norms."
New York 1988. pg. 169-174.
Callahan, Daniel and Bruce Jennings. Ethics, the Social Sciences, and Policy Analysis.
New York: Plenum Press, 1983. pg. 335-381.
Gilbert, Daniel R. Ethics Through Corporate Strategy. "Moral Values and Government
Regulation." New York: Oxford University Press, 1996. pg. 165-176.
Jones, Mark S. Business Ethics and Culture in a Global Time. Washington: University Press
1995. pg. 1-25.
McGann, Terri F. Ethics: Theory and Practice. "Ethics and Culture." Chicago, Loyola
University Press 1991. pg. 16-53.
Wal-Mart Associates Handbook. Printed 1991. pg. 1-30.