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Impact of Ethical Systems on Business & Economics

Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

The expectations for ethical behavior in personal and business conduct are widely varied based on a number of factors. This lesson explores this dynamic and its consequences for international businesses and retailers.

How Culture Influences Expectations for Ethical Behavior

The Necessary Bribe

At the age of 20, a young woman from Dallas, Texas, traveled to Vietnam to launch a coffee shop and deli where English-speaking Vietnamese college students and western tourists could interact. Two days after the Sozo Deli opened, a local government official paid a visit and informed the owner that she would be required to pay a fee to obtain a 'business license.' Having already obtained one from a different official, she refused.

The next day when she arrived to open the deli, she noticed her outside sign and patio furniture was missing. Upon arriving to report the theft, she was surprised to find that her stolen items were sitting outside the official's office with no attempt whatsoever to hide the fact that he'd taken them. When the owner insisted he return them, he repeated his demand. Exhausted and ready to be done with the matter, the deli owner paid the bribe and took her items.

In some countries, a bribe is not a crime--it
Bribe

Like it or not, bribery is simply the cost of doing business in many parts of the world, and its prevalence is the result of significant cultural differences in societal expectations for ethical behavior. In countries where the rule of law is a driving political force, bribes as a major violation of ethical expectations. In the United States, both giving and receiving a bribe are crimes. But in some countries, bribes and other ethically dubious business practices have no ethical stigma at all.

Ethical Influences Around the World

In the bribery example, Americans feel pretty negative about bribes, but a lot of them feel great about whistle-blowing or reporting unethical behavior. But just like most Americans consider bribery unethical, most French consider whistle-blowing unethical because it encourages distrust and lowers the morale of workers. In China, Confucian ethics represent one of the oldest ethical models. These ethics are centered on the concepts of dao, the junzi, and ren. Each of these terms describes a unique character trait that shares a lot in common with virtue ethics or ethics that emphasize motives rather than outcomes.

Ethics Considerations for Businesses Overseas

Companies based in the United States doing business in international locations have a few important considerations. First, they must be true to their own sense of morals and values. No matter what the law and local customs are, a business leader should remain true to their own moral compass. Second, they must maintain an awareness of and respect for the prevailing ethical expectations for the region where they're doing business.

It's also important to consider the potential impact of the The Foreign Corrupt Practices Act. This law makes it illegal to engage in business conduct overseas if that conduct would be illegal in the United States. Obviously, this creates something of an ethical nightmare when doing business in countries where things likes bribes are commonplace and necessary. In instances where ethically dubious conduct like bribes are commonplace, it's important to avoid situations in which the cover-up would be worse than the offense. In other words, even if paying a bribe might be ethical under certain circumstance, it would rarely be ethical to be dishonest or deceitful about it later on.

Connections Between Geography, Religion, and Expectations for Ethical Behavior

International businesses will inevitably find that culture, religion, and geography are woven into the fabric of the community's expectations for moral conduct. A region's ethics are greatly influenced by two categories of moral values. The first is the conflict between modern-secular and traditional values, and the second is the relationship between survival instincts and self-awareness.

In regions where traditional values are a dominant force, international businesses must make themselves aware of such values. For example, in areas of China that practice traditional ethics, respect and reputation are essential. An international business engaging in competition using negative advertising would find the environment hostile. In contrast, a business operating in the libertarian, secular Netherlands would find that things considered vices in the United States (prostitution and drugs) don't carry such a strong stigma.

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