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Ethical decision-making can be more challenging for international businesses than local operations. Culture-driven codes of ethics vary between countries, making it difficult for managers to adhere to a strict code of ethics in each market. The textbook ethical dilemma for international businesspeople occurs when a manager must decide whether to commit an act that is unacceptable in the home country, but expected and necessary in the host country. Because of this, international business owners must know how to address differences in ethical standards around the world.
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Keep the unique ethical climate of each market in mind when crafting your code of ethics to ensure that it is relevant to the international arena. Make adherence to the code a priority among executives and management to set an example for the rest of the organization. Post the code of ethics in high-traffic areas at the home office, branch offices and foreign subsidiaries. Ask managers to justify their ethical decisions in foreign markets according to the code of ethics to ensure that managers take it seriously. According to business-ethics.org, it is important to include international employees in the process of creating your ethics program. This will help to make your ethics programs as relevant as possible in foreign markets.
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Follow local customs and traditions at your discretion. Decide on a case-by-case basis which local customs to follow and which to avoid when it comes to victimless issues. Use your code of ethics when dealing with humanitarian and environmental issues, such as child labor or deforestation, and use your discretion in issues such as bribery or wage considerations. You may, for example, decide to offer cash gifts to government officials in a country where there is no other reasonable way to gain a foothold in the market, but you may decide not to enter a country if raw materials must be gained through suppliers who use indentured labor.
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Apply your standards equally in all markets, and among all subsidiaries. Stick to your standards, whatever they are. If you have a policy of following your home country's ethical standards around the world, be prepared to turn down opportunities in markets with unfavorable ethical climates. Respond courteously and respectfully if you do have to turn down an opportunity. Do not act superior or derisive when turning down unethical opportunities; simply explain that your company's code of ethics forbids you to engage in that type of behavior, and that you would like to keep the business relationship intact for future opportunities. If your policy is to take local customs into consideration when making ethical decisions, do not shun a country immediately because of differences from your home country. Make sure that all managers and decision-makers understand your commitment to ethical standards.
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Make company-wide ethics training a regular activity, in addition to administering comprehensive ethics training programs for new hires. Use training sessions to highlight actual areas of concern in your organization, citing specific examples as often as possible.
Business ethics are a matter of fair dealing and moral behavior but the practical implications are not lofty: The purpose of business ethics is to establish trust between people doing business. Over time, the reputation of a business is built on its demonstrated pattern of ethical (or unethical) behavior.
A company's business ethics should be codified in policies that cover a wide range of practices and pitfalls regarding corporate governance, insider trading, bribery, discrimination, social responsibility, and fiduciary responsibilities.
But business ethics are not universally the same. As a business expands internationally, it may come across standards that are different from its own, for better or for worse.
Business ethics are shaped and guided by the laws of the company's home country. In some cases, these laws provide a base point such as a minimum wage, environmental standards, and worker safety regulations.
Other laws set broad responsibilities and requirements for honesty and fair dealing. Some companies strive to be the gold standard for business ethics in their industry, while others do the bare minimum that is legally required.
Whether a business is dealing with a partner or a new customer, business ethics indicate that the same standard of behavior should be adopted when doing business with any client anywhere.
A company that decides to expand internationally may find it necessary to revisit its ethics rules to make certain they cover unexpected situations that may occur. Business ethics can differ in other countries and even between industries.
Business practices that would be illegal, or at least frowned upon, at home are often allowed or at least tolerated elsewhere.
- A company can choose to adapt its business ethics for each country in which it does business.
- It should be remembered that the behavior of a company and its employees will be judged by the ethical standards of its home country.
- The least risky choice is to implement the same standards everywhere.
Many developing nations have lax insider trading laws. In some Latin American countries, bribery and kickbacks are a regular part of doing business.
Some countries have much lower environmental standards and workplace safety standards for doing business than the U.S., while others have higher standards.
Two approaches can be taken when doing business in foreign countries. A business can operate internationally with the same policies and procedures it developed at home, or it can adapt its own practices to the norms of each country in which it operates.
At the very least, adjustments to foreign standards that are higher than those in the home country must be adopted when doing business there. In Germany, employees are legally entitled to a minimum of 24 vacation/holiday days per year. In France, workers have a four-day workweek. The U.S. has no federal requirement for time off.
Establishing the same standards in offices worldwide can be the best course. Management and rank-and-file employees are less likely to engage in risky, dubious, or illegal behavior if it is explicitly forbidden in a company’s written policies and procedures. A company can ensure compliance by mandating that all employees read and sign its policies and procedures.
The second approach is for a company to establish different policies and procedures for business ethics in foreign countries.
One danger in this approach is that the behavior of a company and its employees will inevitably be judged by the ethical standards of its home country. For instance, child labor is acceptable and normal in some nations but is both illegal and unacceptable in the United States. Multinational companies that have been found to be using child labor abroad have been judged harshly by their American customers.
A company needs to establish its management philosophy. The terms management style and management philosophy are often used interchangeably, but they are not the same. Your management style is how you manage your workforce. Your philosophy is why you manage your workforce that way.