7 Mar 2008 in Corporate Responsibility
Is what you consider a bribe what your international partners consider a necessary investment? Do your international managers follow consistent standards of ethical behavior across national borders or do they follow the maxim: “When in Rome, do as the Romans”?
Consider the implications of “When Does National Identity Matter? --Convergence and Divergence in International Business Ethics” by Wendy Bailey and Andrew Spicer in the Academy of Management Journal (www.aom.pace.edu/amjnew/). The two academics’ dense but award-winning earlier work with Tom Dunfee about how location and culture affect what U.S. and Russian business executives working domestically and in Russia will do when faced with different ethical dilemmas is underscored by this survey of business students. Their newest findings contain a cautionary tale for multi-national corporations and all doing business in the emerging global economy. (See,“Does National Context Matter in Ethical Decision Making?: An Empirical Test of Integrative Social Contracts Theory.” http://aom.pace.edu/amjnew/unassigned/spicer.pdf)
Is what you consider a bribe what your international partners consider a necessary investment? Do your international managers follow consistent standards of ethical behavior across national borders or do they follow the maxim: “When in Rome, do as the Romans”? “When Does National Identity Matter? --Convergence and Divergence in International Business Ethics” by Wendy Bailey and Andrew Spicer in the Academy of Management Journal. The two academics’ dense but award winning earlier work with Tom Dunfee “Does National Context Matter in Ethical Decision Making?: An Empirical Test of Integrative Social Contracts Theory.”about how location and culture affect what U.S. and Russian business executives working domestically and in Russia will do when faced with different ethical dilemmas is underscored by this survey of business students. Their newest findings contain a cautionary tale for multi-national corporations and all doing business as part of the emerging global economy. (See, “Does National Context Matter in Ethical Decision Making?: An Empirical Test of Integrative Social Contracts Theory.” http://aom.pace.edu/amjnew/unassigned/spicer.pdf)
The authors studied the opinions of American and Russian business students and found that while there is much fundamental agreement on many business ethics issues, there are dramatic cultural differences in other areas. This confirms the findings of an earlier survey of 250 U.S. business executives, 98 working in the U.S. and 152 working in Russia to examine the question of whether there are universal ethics that apply across societies or whether there are only local community norms.
In both studies, personnel in the U.S. and Russia, showed similar patterns in condemning those activities identified as violating universally held norms such as failing to inform the public about exposure to hazardous chemical waste. However, the Americans and Russians diverged when faced with dilemmas encountered in local business practices. Thus, Russian business students and managers working in Russia viewed the local norm situations such as keeping double books to hide profits from tax agents or extortionists or providing a small bribe to a government official who is in charge of a major contract award as far less ethically objectionable than their U.S.-based counterparts.
This is one problem for which "thinking globally but acting locally" could be the exactly wrong solution. Locally acceptable actions that once might have escaped international notice are subject to close examination in today's networked world. Given the globalization of business operations, sensitivity to cultural variations in ethical values and customary practices require that businesses act to identify and harmonize differences. Dialogue is the key instrument of a sustainable international business. Dialogue with employees and managers operating abroad is necessary not only in order to avoid legal liability, for example under the Foreign Corrupt Practices Act (FCPA)-- but also in order to cultivate an international corporate character that can prosper in the emerging global economy. When cultures collide, it is not enough to enunciate prohibitions. In fact, just banning what you consider bribes without appreciating the foreign community’s norms may create new and unanticipated risks to your supply chain or investments. Bridging the chasm of values conflicts requires cultural sensitivity and enough collaboration to cultivate understanding and acceptance of your company's requirements.
Ethical values can not be imposed from afar nor appreciated in a vacuum.
Local customary practices -- gratuities to officials, child labor, or ingredient substitutions -- that conflict with international laws, your moral standards or business considerations cannot be eliminated by posting your old code of conduct in new languages. The additional time, energy and money required to discuss the dilemmas presented by different norms should be strategic investments in risk management and true corporate responsibility.
GM
