International Business Ethics
When business are engaged in multinational activities, a variety of important issues arise that do not have the same easy answers as are offered by doing business in only one area of legal jurisdiction or nation. Because of this dilemma that is increasingly plaguing the large multinational corporations, international business ethics has arisen to help address these sticky subject matters. International business ethics attempts to deal with questions of what to do in situations where ethical morals come into conflict as a result of the differing cultural practices.
There are many international business ethics discussions going on that believe the question of how to behave in the home country versus the host country are the central point. The argument in favor of behaving according to host country socially accepted morals shows respect both to the citizens and the culture of the hosting country in which the business is conducting affairs. Such an argument would tell the business to follow the ancient world adage: When in Rome, do as the Romans do, not simply for etiquette, but also for business ethics. The other side of the argument counters with questions of what a business representative should do when socially accepted norms are morally repugnant to the cultural values of the business' home. As an example, in many Latin American countries, bribing public officials is necessary for doing business. Does this countenance the multinational corporation representatives doing the same out of respect for the host country, or instead argue against participating as it is morally repugnant to the home country of the business in question?
A middle ground approach emerges as central to international business ethics. This lies in creating a list of internationally accepted morals that should be consulted in the performance of multinational business dealings. As an example, the United National Global Compact, or the older UN Universal Declaration of Human Rights, would be put forward as an appropriate conduct guide for international business ethics. The United Nations Global Compact encourages business everywhere to advance and honor the internationally accepted human rights, to uphold the right of collective bargaining, to avoid being involved with human rights' abuses, to have no part in compulsory human labor, to do away with child labor, to support a caring and cautious approach to the environment, to reduce any kind of employment discrimination, to encourage the creation of technologies that are friendly to the environment, to encourage more significant personal environmental responsibility, and to work to stamp out corruption in all of its many ugly guises, such as bribery and extortion.
Other justice or moral ground theories create different lists of ethical practices for multinational corporations conducting business in countries featuring lower levels of development. One source, DeGeorge, called in 1993 for ten guidelines for the behavior of multinational corporations in other countries. Among these were avoiding harm, honoring human rights, affecting good, respecting local cultures, accepting the responsibilities for individual behaviors, working fairly with honorable institutions and governments, and ensuring that dangerous technologies and factories are made safe for workers and the community.
Although such intentions are good and honorable, there are still three different problems with such approaches to international business ethics. First, they ignore or avoid the reality of competition. A real life example involves a company trying to do business honorably in a country that takes and accepts bribes as a regular part of doing business. The business wants to help improve the environment as they do their business, but refuses to pay the government officials bribes. Licenses can not be secured form the governmental officials since no bribes are paid. Market share begins to erode, along with the purpose for having operations placed in the country, as competitors without scruples pay their bribes without any moral restrictions. The company will have to decide which moral is more important, refusing to endorse corruption in paying bribes, or staying to help improve the environment and employ the locales through paying the necessary bribes.
A second limitation to such list approaches lies in them only replicating the home country versus host country question that they are supposed to answer. Since the one list advocated working with just institutions and governments, the argument comes full circle again. Whose morals or sense of justice will determine if such entities are just and should be cooperated with or not?
Finally, respect for moral norms and local cultures have to come from some culture's concept of justice. Those of the west for ethics, fairness, and justice in general are the ones that are commonly sourced. Clashes between host and home countries must be resolved by some culture's guidelines, whether Western or non-Western.
As the process of globalization has increased its pace and depth, the problem and need for international business ethics has only intensified. With falling communication and transaction costs that are encouraged by telecommunication and computer technology advances, the global market has recently become a truly global marketplace. Multinational business is more often the standard and not the exception. This is particularly the case where the production of cars, clothes, shoes, and commodity types of goods are concerned.