Globalization and ethical dilemmas

Global ethics is a guideline for companies in their world-wide operations. However, the case “how to behave ethically”, is not as clear as it is desired, when various cultures and different levels of economic development of countries are involved. It is assumed that local conditions of markets may be different, but some ethics and social responsibility principles should be applicable to all markets. As markets globalize, institutions need to help manage, regulate, and police the global marketplace, and to promote the establishment of multinational treaties to govern the global business system.

Key words: globalization, business ethics, code of ethics, ethical dilemma, ethical conflict.

There are a million ethical issues in today's businesses and unfortunately there is no perfect decision measurement for all these issues. The ethical issues in international businesses are much more complicated and much more delicate. International marketing ethics, globalization and social responsibility affected each other. Increased globalization gave rise to a lot of problems, including ethical and social responsibility at home and abroad. Within the last 50 years, world commerce and trade enlarged nearly 20-fold, surpassed world industrial production, which expanded by six and a half times (WTO, 2001). In this expansion, both exports and foreign direct investments acted an important role in the global economy and trade. In addition to large-scaled corporations, small businesses are also increasing their cross border investments. Generally, the average yearly outflow of Foreign Direct Investment(FDI) enlarged from almost $25 billion in 1975 to the peak of $1.3 trillion in 2000 (UN, 2001). These mean that millions of business people work abroad in various geographical, political, legal, social, technological and cultural environments. It is easy to estimate that various environments have created many problems, involving ethical problems, for international marketing personnel at home and abroad. Notably, during the past 55 years, technological improvements in transportation, communication and information processing and the Internet have made big contributions to the development of globalization. To manage this trend fairly, it is recommendable to create universal ethical norms, rules and regulations. To prevent unethical marketing applications, universal code of ethics is necessary. No country can afford to remain isolated from the world economy. Every country should seek to reduce poverty. The International community should endeavor-by strengthening the international financial system, through trade, and through aid-to help the poorest countries integrate into the world economy, grow more rapidly, and reduce poverty. That is the way to ensure all people in all countries have access to the benefits of globalization. In their activities, companies should be innovative, productive and effective. If they become successful, in the long run, they should contribute positively to the societies’ welfare objectives.

For organizations to have social responsibility means an organization should concern for the people and environment in which it transacts business. A corporation’s socially responsible behavior can positively affect consumers’ attitudes toward the corporation. Today, international companies donate millions of dollars to various nonprofit organizations through various initiatives including philanthropy, cause-related marketing, employee voluntarism, and other innovative and creative marketing programs. For example, Avon, cosmetics company, has raised more than $200 million for breast cancer education and early detection services.

Business persons, diplomats, media representatives and those from many other groups must recognize that the welfare and even existence of their enterprises requires a good knowledge of what they may face in foreign countries not to speak of variations even in their native one. Even those who are not active in operations far from home cannot ignore the impact of the possible indirect influences on economic or political performance at home [8 p.4]. Attempts to translate local experience and knowledge to activity elsewhere in the world can lead to less than wished results. Millions of business people work abroad in various geographical, political, legal, social, technological and cultural environments. Each culture, religion, and even family has different ideas of what is right and wrong. It is easy to estimate that various environments have created many problems, involving ethical problems, for international marketing personnel at home and abroad. As local companies increasingly engage in cross-border trade and investment, managers need to recognize that the task of managing an international business differs from that of managing a purely domestic business in many ways. First of all, the differences come from the simple fact that countries are different. Countries differ in their cultures, socio-economic and political systems, legal systems and levels of economic development. Despite widespread globalization, still there are many big and enduring differences between the countries [8 p.8].

The moral question of what is right or appropriate poses many dilemmas for marketers. Even within a country, ethical standards are frequently not defined or always clear. The problem of business ethics is more complex in international marketplace, because value judgments differ widely among culturally diverse groups. That what is commonly accepted as right in one country may be completely unacceptable in another. For example, giving business gifts of high value is generally condemned in the United States, but in many countries of the world gifts are not only accepted but also expected (www.business-ethics.org). Differences between countries require different marketing approaches. The field of ethics in recent years has become a major point of consideration in all circles of society, on a domestic level as well as globally. It has become clear that policies that do not take into account social differences will not stand the test of time. As cultures change, so must the ethical codes provided by business.

Generally, the business ethics policy is guided by some standard principles that are universal. The first basic principle is honesty; the business should vow to always tell the truth without misleading people. The information given out should be true to the type of relationship involved. The other principle is quality assurance; this makes the business deliver what it promises in quality, quantity, and in the time promised. The business ethics policy should also demand fairness and respect on all business management ethics adapted. This leads to unquestionable business ethics practices that do not segregate nor discriminate on bases of class, race, religion, health, education and many others. All the people coming into contact with the business are treated equally. The respect should be directed to all the employees, the customers, supplies, the government and the society at large. [8 p.]

Normally codes of ethics are written by prominent figures within a given industry assuming that the combined education and experience of these leaders will produce a code of conduct suitable for profitability and reputability. Since profit and reputation are often dependant on one another, these rules of conduct are important for the success of the business as a whole. When considering the global market of today, if these rules of conduct conflict with those of business in other countries and other markets, both reputation and profit will be negatively affected.

Because of the emergence of worldwide trade of goods and services, determining a global ethics code among businesses has become a high priority for many large companies and small companies alike. Global trade has made it so that «no market can thrive in isolation» [1, p. 344]. In some business situations, it can be difficult to tell what the best approach may be in order to maintain a healthy relationship with clients. In places that are struggling to survive, the issue becomes that of basic human rights. Most people would agree that a working man or woman deserves fair wages, a safe working environment, and the ability to support their family with the earnings from their hard work. Companies planning to do business in countries where work conditions are not up to standards of the West have the challenge of modifying their ethics codes to include the rights and freedoms which are often taken for granted.

Another dilemma to be considered in the global market is the emergence of business ventures in countries with differing political foundations. Companies such as Google have faced many ethical dilemmas when attempting to broaden their customer base to China. The company was forced to develop an ethical code for «resolving cross-cultural ethical conflicts» [2, p. 143]. Globalization has naturally initiated «greater uniformity in business practices» [2, p. 143], but many differences still exist. The matters of privacy, freedom of information, and legalities in business conduct all come into play when considering how a business conducts its practice in other cultures.

According to a 2009 article in the Journal of Business Ethics, «Despite a greater uniformity in business practices resulting from globalization, many Multinational Enterprises face cross-cultural ethical conflicts in which the firm's business practices differ from the host country's practices» [2, p. 143].. First, the communication restrictions differ greatly from one country to another. Also, there are great differences in labor laws in each country. If corporations desire to thrive in a global market, a method of determining ethical practices must be explored and clearly defined. One of the major considerations is how to incorporate cultural differences into one universal code of conduct that everyone can agree upon. The question arises: should corporations stick with their own ethical codes, adapt to that of the market they are intending to do business with, or blend the two to make an entirely new set of rules? [2, p. 144] This is not a small task, especially when cultures and businesses are so different in their foundation and practice.

One solution to the dilemma of multicultural business relations is proper foundations in the educational system. If students at the college level, and even before, are exposed to the many different situations that arise in a global economy, they will be better equipped to handle these ethical challenges as they arise. A greater understanding of other cultures creates an situation of willingness to adapt to the ways and customs of others.

Another way-out is the world-spread use of modern technologies. With the mass use of modern technology in the workplace and for personal use, the integration of different cultures is inevitable. People today have access to people, cultures and religious views that were not available in the past. «Mass culture», according to Vincent Ruggiero, «is being exported to virtually every corner of the world; and wherever it goes, it tends to undermine the traditional culture» [7, p. 59]. Although the object of proper business ethics is not to undermine traditional culture, the effect of this is a blurring of lines between cultures.

The nearest primary issue at hand when considering the way of business integration of different cultures seems to be a matter of respect. When building a code of business ethics, the traditional method includes: abiding by laws, fair treatment of employees and clients, and a basic respect for business-people. This does not change when considering the way to deal with international business ethical codes. It is necessary for any business looking to succeed in the global economy to develop a multicultural business ethics guideline that helps build a stable foundation for foreign business relations. An educated background on other cultures and social justice issues, enables employers and employees to enter into foreign business relations with far more confidence and produce a healthy, ethically sound business relationship. To establish codes of ethics are essential but not sufficient to conduct ethical behavior. Unfortunately, unethical acts of fraud, vast abuse and corrupt practices are all around the world in virtually every aspects of life. Inappropriate gifts, unauthorized payments, employee conflict of interests, are the unethical and illegal problems most noted. Rather then emphasizing on unethical behaviors organizations must try to use ethics more positively by setting principles such as those dealing with justice, freedom, honesty, order and loyalty and employee training must include all these topics, whether the country is economically developed or underdeveloped. Managers and employees must have the ability, motivation and organizational support to learn and implement the code of ethics as well as international law and codes of conduct and therefore must be trained for this purpose. It is assumed that local conditions of markets may be different, but some global markets, ethics and social responsibility principles should be applicable to all markets. Moreover selection criteria for personnel working overseas must include ethical considerations such as moral development, sensitivity to cultural differences in ethical applications, and ability to make sound decisions in situations when home and host country interests collide. As markets globalize and an increasing proportion of business activity crosses national borders, institutions need to help manage and regulate the global marketplace, and to promote the establishment of multinational treaties to govern the global business system. During the past 55 years, a number of important global institutions have been created to perform these functions. These institutions include the “General Agreement on Tariffs and Trade” (GATT) and its successor, the “World Trade Organization” (WTO); the “International Monetary Fund” (IMF) and its twin sister, the “World Bank “; and the “United Nations” (UN). All these institutions were created by voluntary agreement between individual nation-states, and their functions are enshrined in international treaties [7, p.9]. These organizations have many important roles in creating international business ethical rules and regulations. Especially the World Trade Organization is primarily responsible for policing the world trading system and making sure that nations adhere to the rules laid down in trade treaties signed by WTO member states. Now it has over 145 nations. The WTO is also responsible for facilitating the establishment of additional multinational agreements between WTO member states. It is proposed that a uniform code of ethics and social responsibility should be created by WTO and UN organizations to solve diverse cultural differences.. They also need strategies that are acceptable to all stakeholders for purposes of dealing with complex ethical dilemmas in global business environment. To act ethically in a globalized world, one must both determine what values and norms are common to all people and remain sensitive to the differences present in the global community. It seems clear that the guiding notions of global ethics are fairness and harm. An ethical practice or principle in the globalized world is one that is fair to all concerned parties and one which does not cause harm.

References:

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2.         Hamilton J., Knouse S., Hill V. Google in China: A manager-friendly heuristic model for resolving cross-cultural ethical conflicts. Journal of Business Ethics,2009 p.157.

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6.         Norberg, P. (2009). «I don't care that people don't like what I do» — business codes viewed as invisible or visible restrictions. Journal of Business Ethics, 2009 p.225.

7.         Ruggiero, R. Thinking critically about ethical issues. 7^th edition. Boston: McGraw-Hill. 2008 p.306

8.         Development of the creative potential of a person and society: materials of the II international scientififi c conference onJanuary 17–18, 2014. — Prague: Vědecko vydavatelské centrum «Sociosféra-CZ». Hadartseva L., Kaytmazov V. — An Outlook On Business Ethiks. — 256

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10.     http:// www.consumerpsychologist.com/intro_Social_Responsibility.html

11.     http:// www.globalpolicy.org/globaliz/define