International Business Ethics Based On Cultural Diversity Commerce Essay

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Public acceptances of advanced capitalist countries have gradually imposed business ethics as an increasingly coherent and authoritarian rule that guides management decisions. Honest business people and performers no longer doubt that good ethics is good business, assuming (for whatever reason) responsibilities and obligations to a broader spectrum of stakeholders all: their own employees, customers, suppliers, creditors, local communities in which they are established, the state or the environment.

Multinational corporations, works just like any other commercial organization, are also run, right or morally wrong by some people in the flesh, which assume certain duties and ethical obligations. With this in mind I proposed in this paper to address the main features of international business ethics based on cultural, ethical dilemmas and basic principles of ethics in international affairs.

Globalization makes national economies and corporations increasingly interdependent, so that corruption in some of the world can affect the world market, so we presented individual and social costs of corruption, noting that multinational companies have felt the painful truth about yourself : evil people doing business internationally is not only corruption agencies, but sometimes, and its victims.

1. Introduction

The term "ethics" comes from ancient Greek (ethos = habit, morals, character) and has a double meaning:

a scientific discipline with the object of study rules of conduct governing relations between people better say, the science of morality, of right and wrong;

all the rules governing people's behavior in company - rules which have to be applied to practice good life as opposed to evil-rules whose observance is imposed by force of habit and habits (morals) established in society.

In everyday language, the term "ethics" is used to indicate the scientific discipline (moral science), and the term "moral" indicate standards of behavior in the relationships between people and the relationship between man and nature. Sometimes it's distinguished between "moral" standards of behavior that are judged by the people and "ethics" and their conceptual system that is based on a certain view of morality. It is said that "morality" means, in the proper sense, correct behavior, morally said, unlike the "morals", which can be good or bad.

Thus, ethics is understood either as a "study of morals and rules of conduct" or the "rules and principles that define good or bad conduct."

The analysis applied ethics means in terms of concrete cases of moral social or professional practice in making any decisions.

Business ethics is a particular form of applied ethics, which refers to the behavior of economic agents (companies, public institutions), employees, employers and managers. After analyzing the literature, we conclude that business ethics is a system of rules of conduct of men, which allow the assessment in terms of social and moral criteria of what is right and wrong in human relationships, between individuals and companies, between companies and society.

2. Characteristics of international business ethics based on cultural diversity

Until recently, all ethical arguments and moral rules have limited the scope of validity and applicability exclusively domestically, is considered little or relevant place in the international business sector. This explains the fact that the theoretical approach to ethics in international affairs occurred very late, only in 1989.

A prime reason the possibility of ethics in international affairs was viewed with reservation is one of nature rather speculative. By tacit agreement, but keeping order at all, analysts agreed that the main economic agents operating on the world market are multinational corporations. This cannot be made any way in doubt, but that does not mean that smaller scale firms, which contracts with partners from other countries is a negligible quantity, unworthy to be discussed.

By completely inexplicable, when discussing multinational corporations, that looks like they are not entities, that works by itself, independent of human will, but like any other commercial organization, are they run, right or morally wrong by some people in the flesh, which assume certain duties and ethical obligations.

From this point of view, the things can clarify quite simple and fast. It is not therefore to establish a universally valid code of moral conduct as such corporations as legal persons. International business ethics code of conduct aimed at morally acceptable for people with decision-making and executive powers, placed on different hierarchical levels of a company operating in the framework not only domestic, but also in other countries.

Their understanding of fairness in business is no exception in terms of cultural diversity. For example, not everyone attaches the same importance and value of contracts written. While Americans and Germans insist on written contracts as many pages carefully, they meet the letter of the law carefully, in other parts of the world - especially there where personal relationships are highly priced and rather precarious contractual law, so as in Russia, China and Nigeria - contracts are viewed as statements of intent rather than as formal obligations, accompanied by severe penalties for noncompliance. While a German or an American believes that the breach of a written contract is morally unacceptable services immediately by calling a law firm to clarify the situations in question, a Russian or a Nigerian haven't sleep if they don't comply the contractual obligations - not because they be deprived of consciousness, but because companies does not harshly condemn breach of written contracts.


An American joke says that the signature placed on the dotted line is the first step towards a trial. An American would sue even his mother (some even did it) if it believes that she violated a written commitment. If you don't respect the formal contract is a true moral bankruptcy. Anyone do something like this is a despicable crook. Lawyers play an important role in drafting contracts - which is almost insulting in relation to other cultures, which see in the presence of lawyers an evidence of distrust.


Contracts are more detailed than the United States. Once signed the Germans respect with sanctity and expect their business partners to do the same.


Contracts are indicative and any problem is resolved by arbitration rather than through legal processes. Any contract includes "jiji Henco" - a complete renegotiation clause allowing for major changes of circumstances. It is a requirement in relation to the paramount importance that the Japanese attach to reputation, "henko jiji" offering to all contracting parties the opportunity to escape, even apparently honorable in every transaction. Often informal and verbal commitment from a Japanese executive is worth more than a written contract. For a Japanese businessman breach of that commitment would be a moral fault more compromising than the failure of a written contract.


There isn't a great amateur society in the justice process. Business contracts are not too complicated, but sometimes are made intentionally vague to provide the local portion a space in unfavorable situations. South African legal system, which is (at least for now) fair and uncorrupted, favors, usually local partners at the expense of foreigners. South Africans make every effort to honor their contracts, but do not feel threatened by legal reprisals if unintentional failures.


It is important to bear in mind that if you signed a contract with a Russian company, this hasn't any value. Russians have a different conception of contracts than Westerners, watching them as statements of intent rather than as some strict requirements, breach of which entails severe penalties and clearly defined. Russian commercial legislation, while undergoing training, is not yet sophisticated enough to allow a fully correct solution of contractual disputes. Business ethics in Russia is only the first steps. Adjustments extra legal accounts, mafia-style, are the rule rather than the exception.


Contracts are more a matter of personal honor than a firm commitment. Lawyers are not very useful when you have forced Mexicans to their obligations. You are correct; they do their moral principles driven by personal and controlling little respect a principle of business ethics. If a person with whom you signed a contract service changes, die or emigrate, have remained in hand with a piece of paper that are not worth anything. In such situations you can expect up to a renegotiation.


Contracts are primarily the value of guiding principles, is less related to certain specific performance. Content of a contract can be renegotiated, often revised and supplemented to reflect various changes in the situation - usually for the Egyptian side. Breach of contractual obligations does not entail any moral censure, no serious legal consequences. For us, unfortunately, this attitude (of place esteemed Western eyes) is familiar as possible.


In Romania there are still a lot of managers, either in private or in public, for which contracts are merely vague commitments, breach of which strict - almost for granted - not too harshly accused of any moral or legal. If some of our executives would use even half the intelligence and ingenuity, which aim to wrap up the partners in streamlining the business they run, surely Romania should have a much better economic situation than at present.

This cultural diversity is manifest in all areas of economic life. The question in the absence of absolute moral values ​​and rules, as we can see how that will appreciate what's good and what's wrong and how it will operate a business partner in another country? Answer one: we need to know better the culture of which it belongs and which shares their values ​​and norms.

But what is culture? It is a learned behavior which can therefore be changed. In a more formal definition, culture is a set of core values, beliefs, behavior patterns, knowledge, morals, laws and customs of a joint company, guiding how its members think, feel and act against a certain vision of themselves in relation to others.

Vision of a society about authority and moral conception is manifested in the way of individuals behave in business, negotiating a contract, to react in crisis situations and to cultivate potential business partners.

3. Fundamental ethical issue in international affairs

Given the great diversity of morals in international business, the main problem faced especially large multinational corporations operating in the global market, is choosing one of the following two alternative policies:

respecting of strict code of ethics of the company's home country would work anywhere in the world;

adapting company policy traditions and style of business in each foreign country where it operates.

Each of these two alternative strategies has advantages and disadvantages of purely economic terms, given that only the expected returns of the company.

Maintaining strict ethical code of the corporation, based on moral values ​​prevailing in the country of origin, has the advantage that the company maintains unblemished reputation and raises no objections, reservations or criticism from consumers and the public "home", while strengthening and prestige international company. The major disadvantage of this policy is that inflexible on certain national markets cannot enter and do business is not profitable if not accept the use of questionable practices from an ethical point, if not downright illegal, due to a phenomenon widespread corruption and economic mechanisms that promote unfair competition rather than competitiveness.

The flexibility of ethical codes and the adaptation to local economic practices of multinational corporations to penetrate markets dominated by shady practices and to maintain those markets, with profits tempting. The disadvantages are related to immediate public reaction from the countries of origin and general states to adopt a tough corruption disadvantages the less visible but more serious long-term, arising from the fact that any complicity of transnational companies with factors power of the world corrupt countries encourage and reinforce corruption in those countries, which greatly reduces their potential sound and balanced development to make them in time, some serious partners, expanding resources and purchasing power of increasingly attractive to large investors.

Theorists argue, of course, the first strategy, recommending as much inflexibility in observance of ethical company would operate anywhere. Arguments are numerous and even some of them seem to be confirmed medium-term financial results and corporate long known and respected for consistency with their ethical responsibilities. In addition, experience of the last decades has shown that the damage they may suffer a firm following of international financial scandals due to flagrant violations of ethical respectability can have extremely adverse or even catastrophic. Unfortunately, not always unethical practices of multinational corporations are punished, and, on the other hand, ethical scrupulosity is not always rewarded by excellent financial results. Among the many sensitive issues that need to manage companies operating worldwide with the most serious and most important consequences is undoubtedly corruption.

4. Individual and social costs of corruption

Because it is everywhere, bribery has everywhere a name. Whatever you might call, wound bribery and corruption, perpetuated by those who give and receive unfair advantage in business, has a much greater impact than one might think of a million people. Payments under the table, to facilitate an agreement to accelerate bureaucratic procedures or to eliminate competitors are one of the "dirty little secret" of the world. Today, unethical practices, especially bribery and corruption, is the real cost of time, money and social welfare, supported not only by corporations and governments, but also by individuals.

A study in late 2010 by the World Bank shows that, of the 3600 companies from 69 countries were investigated, 40% gave bribes. In most advanced countries, the percentage does not jump 15% in the former Soviet figure exceeds 60%.

Globalization makes national economies and corporations are increasingly interdependent, so that corruption in some of the world can affect the world market. Also, multinational corporations have experienced firsthand a painful fact: those who are internationally illegal businesses are not only agents of corruption, but sometimes, and its victims.

A bribe is to offer, promise or to give something in order to influence a public official exercising his official duties.

Bribes offered and / or claim in different forms:


pecuniary benefits (such as membership of a club or a scholarship to the child),

Non-monetary benefits (such as favorable publicity).

In a conservative estimate, the amount paid in bribes in international business amounts to 80 billion dollars annually - about how the UN estimates that would be needed to eradicate global poverty in the world today. Unethical practices of governments and corporations have the repercussions:

erosion of public confidence in political institutions and leads to contempt for law,

diverts resources,

inflated purchase prices in the public and undermine market competition.

Corruption negatively affects a country's development in several ways:

reduce economic growth;

chase away foreign investors;

channel investments, loans and funds to help the so-called "white elephant projects" - absurdly grandiose projects, which bring huge benefits to potentials managing money, but are of no use to people;

has devastating effects on investment, economic growth and development;

corruption has a very high price for the poorest strata, which are barred access to basic goods and services;

bribery and corruption contributes to rapid degradation of the environment.

Most NGOs Third World stifling fear scandals such as the idea of ​​helping poor countries will not be compromised or that reform projects not seem too difficult to accomplish. Corruption may decrease the quality of public goods and services dangerous, even threatening the safety of human life.

In accordance with the World Bank, widespread corruption can reduce a country's growth rate up to 1% in comparison with other countries at the same level, but with reduced corruption.

Bribery increases also the cost of various projects. When these projects are financed by international loans, bribery increases a country's external debt. Ordinary people end up bearing the consequences of reducing public spending for health, education and other services. Too often, increasing the financial burden they must support projects that do not make any use and they have not asked.

Bribery and corruption also creates an uncertain business environment. Daniel Kaufman, World Bank, believes that the probability of loss of investment by a firm within five years of corruption reached in some countries, 80%. Corruption is a major obstacle to trade expansion.

Because they carry out secret operations, offshore banking centers washing machines have become true black money coming from criminal activities and corruption.

It could not be clear that bribery and corruption have negative effects on all countries in the world and downright devastating the poorest countries. These phenomena are, above all, some crass illegalities, and we both decided it clear that any flagrant violation of laws is not an item of business ethics, since it is not tenable valid morality unlawful acts and practices, and law is a moral requirement minimal elementary. Well, believe it or not, there are defenders of the idea that bribery and corruption can be legitimized in terms of ethics, though, at least formally illegal.

First, the basis of these attempts to legitimize corruption is cultural relativism: since in some countries, it is argued, bribery and corruption are common business practices, accepted virtually everyone, they should be taken as such and, in respect for local mores, are acceptable for foreign investors.

More serious are the arguments of a "technical" of a guideline called the U.S., grease-the-wheels school (School "greased the wheels"). This guidance supports that, sometimes, corruption is the only way companies can avoid some overly harsh regulation, excessive taxation or legislation inept. Permitting firms to handle the environment of a predatory state, say advocates of this "school", corruption may not be detrimental to development, but rather just to stimulate.

Bribes can be beneficial because it stimulates the poorly paid and poorly supervised staff of State to accelerate the release papers. In a legally inadequate and ineffective, illegal payments designed to avoid too many regulations and taxes too high can help reduce costs for those who bribe. (For us to say that it is cheaper to buy a judge than to hire a lawyer).

Bribery market can clean hard to find goods and services that government provides subsidized prices or free. (In China, for example, the state subsidized price of coal was eight times lower than market price.) To tender for obtaining state contracts, bribes most win, and the firm with the lowest costs can afford to provide the fat bribe.

A summary of the most common arguments in support of accepting corruption as a normal practice and even beneficial, if not necessarily ethically honorable can be presented as follows:

corruption is as old as mankind;

refusing to bribe is a Western fixation;

bribery is a parallel system of distribution, everyone gives a bribe;

is the traditional way of doing business in this culture;

I have no choice, if you do not give bribes, I lose my job;

amounts are not large;

is a kind of fee or tax;

in some countries, bribes are considered tax deductible expenses;

bribery enter into a transaction costs;

if my company fails, competitors would bribe;

are less scrupulous competitors and their products and services are lower;

bribery in this country is that tip from us;

bribes will allow the company to grow so that we can create jobs at home.

Those who are used to lubricate the greasy hands of corrupt officials such arguments it sounds very good, but they are not valid. Bribery is too often associated with the poor quality of goods and services, is designed to allow less skilled to seize the market. (Remember the famous turf of the National Stadium on the national team, playing in the sand, was shamefully defeated by Denmark.) And bribes and received bribes for the awarding of contracts, concessions or dubious privatizations are exclusively reserved for high ranking officials and their political clients, free of any legal reprisals. No wonder that both governments and the public in developing countries consider corruption as the main obstacle to progress in their countries.

A World Bank study conducted in 39 countries shows that when high levels of corruption are associated with low credibility of the bribe, the investment rate is halved. A corruption more "credible" - offering some bribe bureaucrats guarantees that they will meet their arrangements unclean - may be less expensive, but still seriously affect the investment rate. Relatively corrupt countries have lower investment, as it is estimated that "corruption tax" investment increases by 20%.

5. Ethical dilemmas in international business

The real sensitive issues in international business ethics are different. They are discussed in light of these ethical decisions and actions, although all legal, not all have the same relevance and moral value. Agencies operating on the world market face many ethical dilemmas, whenever they are in a position to do business under the laws of a foreign country, but coming more or less flagrantly in conflict the laws of the country of origin and the set of moral values ​​that we say a corporation in its code of ethics.

In the following we very briefly mention some of these ethical dilemmas, taking stock of some of the most frequently raised arguments for and against.

ethical issues related to labor

The most sensitive personal issues facing multinational corporations are:

1) Salaries of employees

Employees working for multinational companies in developing countries with significantly lower level compared with countries of origin, have wages, often less. It is alleged that foreign investors exploit labor underdeveloped countries, paying several times the same work cheaper that providing employees with similar qualifications in the countries of origin. On the other hand, the latter are disadvantaged by the fact that, by shifting investment and production units in the Third World, increasing unemployment in developed countries. In short: transnational corporations are vehemently accused to adopt policies that selfish. To maximize profits, they violate that hypothetical social contract with various categories of stakeholders, damaging both employees in countries of origin - who lose their jobs and union pressure subsides once relocating employers can threaten investments in other countries - and Third World workers - who are assigned to perform work equivalent to those of developed countries, are paid much worse.

The problem is not far from that simple and things cannot be seen only in black and white. Counter and weight are numerous. First, alternative employees in underdeveloped countries are to be underpaid (compared to workers in the rich) or not pay at all, as long as, often, the main focus of foreign investors are very cost lower labor. It also says then, often rightly, that the salaries offered by some multinational corporations are still significantly higher than the average in poor countries where these corporations operate. In addition, the working environment offered by multinationals is more accurate, more civilized and Principles of recruitment and promotion of labor are gradually implanted in Third World countries, thus dissipating more advanced treatment models of labor force by employers.

On the other hand, well-paid workers in advanced countries are invited to accept laws and competitive market. Maintaining their high salaries is not an absolute privilege, unrelated to efficiency, productivity and profitability. If their jobs would be maintained at any cost, and high level of wages, competition would benefit and would invade poor countries, where they make similar products and services quality, but much cheaper, which would allow to conquer the market, bring ravages, finally, those who could not adapt, the end would be even more tragic: bankruptcy, i.e. unemployment, budget funds for social programs lower domestic investment resources (jobs alternative) and less so. In short, policy soon "social" multinational corporations would result in very bad consequences for everyone;

2) Management subsidiaries of multinational corporations in other countries

In general, large firms prefer to pay low credit local managers, the management subsidiaries implanting managers in countries of origin. They do not know, in some cases, sufficiently traditions and local issues and are not flexible enough to partners and staff complaints and difficulties in countries where they are implanted. This is the main reason, in recent years, multinational corporations have adopted a policy of acclimatization management, promoting the increasingly active local leaders, educated and trained in the West, where they can acquire modern management methods and techniques;

3) Discrimination against women

It is a sensitive issue, that companies are not investing itself guilty because their managers are not those who require it, but local traditions and religious beliefs.

What multinational corporations accused by public opinion in countries of origin is more determined non-involvement in an active, even aggressive, to eliminate discrimination against women in Third World countries where it is a hard fought practice. Other critics, more virulent and grounds, is the fact that in some poor countries, where religion does not prevent women's participation in economic life (Latin America, for example), sex discrimination takes another form, namely employment in particular the women, because their salaries are much lower than those required by men;

4) Minors

It is undoubtedly the most frequently incriminated themselves categorically criticized regarding personnel problems of multinational corporations. And in this case argues that without the support material employed children, their families would be deprived of any means of subsistence, and those children would have to choose between dying of hunger or beg, steal and run about. But it is clear that education, health and psycho-somatic development of children working at quite an early age have suffered severely, and their future is very bleak. Removing a significant number of children in educational circuit, qualified labor in poor countries of the world stayed at a very low level, to pursue long-term perspectives of development and modernization of these countries. Evil occurs, therefore, both individually and socially;

5) Measures to protect employees

It is a problem that gives hassle of international companies in terms of their public image in their home countries rather than underdeveloped countries where they operate, although workers there are those who really suffer. In Third World labor laws is weak or virtually nonexistent, so personal protection standards in the workplace are very low compared with developed countries.


Given the low purchasing power of the population in developing countries, but also lax consumer protection laws (or the rigorously applied because of incompetence and corruption of public officials), multinational companies in these countries provide markets products and services poor quality, unacceptable in most advanced states. In some cases, consumer safety is not endangered, but is offered goods obsolete and little or no collateral, which is often justified by the following argument: if you cannot afford to purchase goods and services of the better quality as pocket does not allow consumers in poor countries are still in profit if they can buy goods less efficient, but at their purchasing power - be it cars, appliances, computers, clothing etc.

Serious problems raise those goods and services that may endanger life and health in poor countries. In some cases its products, and drugs that were withdrawn from the markets of developed countries due to adverse effects, but are still manufactured and sold in Third World markets. Even in such situations pro arguments are not missing - often governments in poor countries are those urges purchase of those products because they are relatively inexpensive and produce, in those countries, substantially higher benefits than harm. In other cases it is about marketing and a very poor advertising.


On this plan bears the most heated disputes, and multinational corporations are first offenders as environmental damage, resulting in many casualties, cause serious, often irreversible, not only in countries where it is produced, but affects global climate, water quality and air on a worldwide basis. Causes environmental damage are the same as for insufficient protection of employees at work: very permissive legislation, the low level of technological competence and awareness of the dangers they are exposing the local population, high costs of clean technologies etc.

To these phenomena, reaction pressure and public opinion was strong enough to force transnational corporations to accept that they must take drastic measures and environmental protection in countries where local law does not require very high standards - both incurring higher costs posed by clean technologies and the more serious warning and preparation of staff and people in Third World countries where they operate. Faced with this problem, competitors (mostly) have tacitly agreed to do all more accountable to environmental hazards because public opinion in their countries of origin show a very hostile attitude towards companies with a dubious reputation terms of environmental policy.

4. Basic principles of ethics in international affairs

Given the cultural diversity of values ​​and moral principles over and across the planet and as accommodated policies have led to many unacceptable effects emerged ever more strongly the idea of ​​developing international ethical codes, by explicit agreement of governmental and non-governmental associations, which plays a key role in major transnational corporations. International Business Ethics Institute offers world-class companies following three basic principles:

INTEGRATION - Business ethics must permeate all aspects of organizational culture and management systems to reflect. Companies must begin with the ethical dimension in setting objectives and in recruitment, hiring and promoting staff.

IMPLEMENTATION - Ethical behavior is not just an idea, but requires an effort to implement a plan change of attitude in different compartments of a corporate activity. Examples: changes in reward and incentive systems for staff, promoting superior environmental practices, consulting experts when necessary etc.

INTERNATIONALIZATION - The open always exist to the wider global market, it is necessary for any successful business XXI century. It can be done through international partnerships, commercial buildings and implementation of agreements. Clarify its definition of integrity, so that it can transcend national boundaries, is required for any corporation operating in the global market, resulting in an action program and a colorless specific cultural code of ethics that does not require essential changes when applied in a global context.

6. Conclusions

The last decade has seen an explosion of ethical codes of conduct of multinational corporations in international affairs.

Agencies operating on the world market face many ethical dilemmas, whenever they are in a position to do business under the laws of a foreign country, but coming more or less flagrantly in conflict the laws of the country of origin and the set of moral values ​​that we say a corporation in its code of ethics.

Many problems still awaiting solution solid theoretical argument and verified in practice. Important is the fact that the most pressing issues have already been made and accepted by the community of transnational corporations, which is no small thing. Once set in motion the evolution of ethics in international affairs will no doubt continue in an accelerated rate, with results, hopefully, positive for as many and as wide range of interacting groups in the global economy.