Global Business and Ethics
Business ethics better known as corporate ethics refers to the professional ethical issues that form the fundamentals of the moral issues in the business environment. This refers to any conduct involved in business that is relevant to both the individual actors and the organizations involved. Business ethics therefore forms an important aspect of the business world in its operations. With the world turning out to be a global village, there have been calls for global business ethics which need to be observed across all cultures around the world.
The impact of globalization has for real traversed the world community and the business people are faced with the challenge of observing standardized ethical issues despite the various cultural orientations found in the world. This paper shall look at the concept of ethics in the global business as it is applied in the modern world. Business ethics: The importance of ethics in any given business entity cannot be wished away.
In the recent past, many business organizations regarded business ethics in respect to administrative compliance with legal requirements and devotion to internal rules and regulations. However, in the wake of globalization, this has greatly transformed as there is an increased attention on business ethics across the globe. Most business entities have realized that for them to be respected by their customers, they need to lay great emphasis on the legality and devotion to ethical business practices.
Thus business organizations and concerned individuals have increasingly been held responsible for their actions and that there has been a growth in the demand for high standards of corporate social responsibility. Globalization and Business ethics: There has been debate on whether the business ethics need to be localized or adopt an international standard measure. Those advocating for localization of the ethical practices are bound with the proverbial Rome saying which requires one to adopt the local values and practices.
However, those arguing for common ethical standards are driven by the reality posed by globalization in which case the world market is viewed as one common market for the participants (George, 2008). The importance of ethics in the business community is an important phenomenon and has turned global. There are emergent tendencies which may result in the creation of crucial burdens to organizations and end-customers. In the current world, the need for acceptable ethical behavior in business entities has become crucial in an effort to avoid lawsuits.
Public scandals of corporate malfeasance and various malpractices have dented the public perceptions in regard to most organizations (Mahdavi, 2008). Globalization has brought a new conception on the global business by opening up what was regarded as global barriers thereby underlying the interest in the ethical behavior of the business organizations and the need for corporate social responsibility. There have also been gains made regarding the concept of human rights and environmental conservations when it comes to business ethics.
The business organizations with an overseas area of operation agree that to understand and comply with variant laws, management of employees located away from the headquarters, offering services to customers and maintaining a relationship with suppliers and partners can be a challenging undertaking in the development of common ethical standards and values in a business entity (LRN, 2007). Challenges in regard to Ethical Perceptions: As multinationals spread across the globe to enter the foreign markets, the ethical behavior of their employees assumes added importance.
This is because, sometimes the cultural diversity that is associated with such expansionism may work to dent the shared cultural and ethical values as observed in the harmonized organizations (Mahdavi. 2001). Though the understanding of other cultures and appreciation of the variations found in these cultures is designed for the promotion of the cross-cultural communication, it may fail in the provision of practical guidelines in regard to acceptable ethical conduct in organizations.
It is no wonder that concerns in regard to unethical behavioral conduct of corporation in some other countries are to be found in the enactment of legislations such as The Foreign Corrupt Practices Act of 2007 and the Sarbane-Oxley Act of 2002 (Mahdavi. 2008). During the 1970s, the Foreign Corruption Practices Act (FPCA) never augured well with the business community as it criminalized making of payments outside the United States in an effort to pursue contracts.
Most American executives were engaged in a lobby aimed at relaxing the provisions as outlined in the FPCA based on the argument that they were disadvantaged when it came to bidding against non-American companies (George, 2008). Risks and Consequences Associated with the Dilemma: Nowadays globalization has penetrated the world cultures and this has led to intensification in ethical debate. Incidences of corruption are common place especially in the developing economies where companies are engaged in various corrupt dealings in an effort to conduct their businesses.
It has to be noted that Witness Germany’s Siemens was engaged in corrupt practices involving close to $2 billions in bribes to win contracts. Britain’s BAE System has allegedly been accused of parting with $2 billions which was given to a Saudi Prince in an effort to influence the award of an $80 billion government contracts (George, 2008). Such ethical scandals do dent the reputations of such institutions to a point where they cannot be repaired. Once the reputation of a given business entity has been damaged, conducting successful business in the globalized market becomes an uphill task.
Business organizations are therefore involved in spending huge sums of money on the ethical behavior problems. This is in realization that ethical dimension of the employees directly impacts on the profitability of any given business entity. The business organization has therefore a duty to have efficient communication regarding ethical behavior in the organization. Management therefore has the duty to incorporate training sessions, code of ethics, develop a reward system and coaching as some of the methods to be employed in the development of global ethical standards.
There are various codes of conduct established by the international community which are followed by some multinationals with few others not abiding by the set codes. This lack of consensus has been attributed to differences in national and corporate cultures (Mahdavi, 2008). Conclusion: Global business and ethics is an area that has emerged in recent times owing to the globalization phenomenon that has taken the world by storm. With globalization in mind, there is need to build a global business entity which shall adhere to standardized business practices.
Such codes are to be meticulously enforced and communicated across the stakeholders. The concept of situation ethics often applied in the developing economies is destined to dent the effort to establish a global organization thus companies need to adhere to a uniform standard when it comes to business behavior. Reference: George, B. , (2008). Ethics Must Be Global, Not Local. Retrieved on 14th July 2010 from; http://www. businessweek. com/managing/content/feb2008/ca20080212_394828. htm LRN, (2007).
Global Business Ethics: Strategies to Promote Ethical & Legally Compliant Corporate Cultures in Multinational Organizations. Retrieved on 14th July 2010 from; http://www. lrn. com/resources/global-business-ethics. html Mahdavi, I. , (2008). International business ethics: strategies and responsibilities. Journal of Academic and Business Ethics. Vol. 5 Issue 13, pp 12-18 Mahdavi, I. , 2001 “American Business Education and Transfer of Culture” Journal of American Association of Behavioral and Social Sciences, Vol. 16, Issue 9, pp 123-130.