CROSS-CULTURAL BUSINESS ETHICS: THEORY, RESEARCH AND PRACTICE
Dr GAEL M. McDONALD *
Abstract
In the quest for foreign business there are both cultural and ethical minefields as organisations pursuing international expansion and new investors encounter different styles of practice and different standards of business behaviour.
While, the relativists' view, often described as, "When in Rome, do as the Romans do", appears to be respectful of host country norms, increasingly, multinationals are favouring an absolutist argument in ethics and are adopting the same ethical standards in international locations as they would in their home operations.
Within the context of the business environment, this paper will initially define what is meant by the term business ethics, and differentiate between related terms, such as, legality/morality; social responsibility/ social responsiveness, governance; sustainability and the triple bottom line that are sometimes perceived as being synonymous with business ethics.
Having established this conceptual base, the paper will then examine some of the more topical issues in international business ethics, before addressing the theoretical foundation and the question, "Do moral principles apply universally, or are all values and ethical judgements relative to their context, and particularly their cultural context?"
The paper will then undertake a review of some of the more significant findings in the area of cross-cultural ethical research in business, and will conclude with an economic rationale for multinationals imposing universal ethical standards in their organisations.
Defining Business Ethics
To enhance the recognition of ethical issues in business and to advance credibility for the study of business ethics, a prominent writer in the field, De George (1989), emphasised the importance of clearly distinguishing between 'Ethics in Business' and 'Business Ethics'. This semantic clarification is essential as the former term 'ethics in business' is on extremely shallow ground given such frequent pronouncements of unethical activities involving, for example, deception and corruption and other mercantile transgressions. 'Business ethics', however, is a much broader concept and encompasses a philosophical theoretical base, empirical research, and strategic recommendations. These strategic recommendations can come in the form of operational suggestions that might assist with resolving ethical conflicts that arise in organisations and provide guidelines for those operating in multinational environments.
At present, there are numerous terms used almost synonymously with the phrase 'business ethics' and are potentially confusing for the punters on the track. Terms that are often related to business ethics are legality, morality, social responsibility, social responsiveness, governance, sustainability and the triple bottom line.
Legality
In clarifying business ethics, it is important to realise that business ethics is not the same as legality. Regrettably, for many managers, being ethical means staying within the boundaries of the law. However, law and ethics are closely related but are not identical. For example, on 3 December 1984, an accidental leakage of methyl isocyanate gas in the Indian city of Bhopal killed some 2,500 Indians, and injured a further 200,000 people, yet no laws of the State of Madhya Pradesh were violated.
Taking the view that business ethics and legality are identical ignores the subtlety of decision-making in the business environment. Many business decisions are made in a grey area, that is, an area where legislation, rules, or policy run out, and where personal judgement (which can be heavily influenced by the realities of profit, costs and time constraints) must be exercised. Legislation should, therefore, be regarded as providing only the minimum level of conduct acceptable in business, whereas business ethics extends beyond that level.
Morality
In his book, 'Death in the Afternoon', Ernest Hemingway wrote, 'What is moral is what you feel good after, and what is immoral is what you feel bad after'. While cognitively correct, I'm sure that there is more than one person here who would challenge just how bad one really feels after immorality. Essentially, morality relates to principles of right and wrong behaviour, while ethics examines whether something is GOOD or BAD. Ethics could, therefore, be described as the practice of morality, and business ethics is the study of morality as it applies to business behaviour.
Most of us know what is right or wrong, and the 'thou shalt nots'; they are often given, supported and generally admired, for example, 'honesty is right, stealing is wrong'. However, what we are more concerned with, and it is in the domain of business ethics, is that despite this existing morality, actual behaviour can deviate quite significantly from that moral base. For example, while we do not condone stealing we, nevertheless, frequently experience the occurrence of employee pilfering. Morality can be easily upheld, but it is the ethics that are often being eroded.
Social Responsibility
Yet another term for which clarification is required is the concept of social responsibility. Which term is broader - social responsibility or business ethics? While conflicting discussion continues, social responsibility is increasingly being viewed as just one component of the broader and more encompassing term of business ethics. Specifically, social responsibility in business is described as the 'generally accepted relationships, obligations and duties between major institutions and their stakeholders'. As the scope and number of stakeholders vary considerably, social responsibility has been used to signify legal responsibility, fiduciary duty, and even charitable contributions. What it is not, although it is often confused with it, is judicious expenditure of promotional dollars. Companies who support sporting events would be wise to reflect on whether this type of activity is really appropriately placed under the heading of social responsibility in their annual report.
Social Responsiveness
More recently, the concept of social responsibility has been widened as the expectations of what is a socially responsible organisation are being explored and determined. Social responsibility is no longer viewed as just meeting stakeholder expectations, or simply patronising the arts or giving to charities. The term social responsibility has been enhanced to social responsiveness.
Responsiveness involves being proactive and actually anticipating the needs of stakeholders. An example would be where a brewer introduces a specially designed and manufactured plastic beer bottle in order to combat the problem of broken glass in resort areas. Socially responsive organisations are, therefore, those that do not just react to stakeholders but who have institutionalised policy, structures and processes to cope with change and increasing stakeholder expectations. These organisations anticipate the needs of their stakeholders, and react accordingly.
Governance
Another related term that appears to be a favourite is 'governance'. Probably as a result of the Cadbury Report and the Hampel Report in the UK, governance is often seen as primarily the domain of boards of directors and senior managers and is, typically, concerned with issues of board composition, relationships and compliance. Just as business ethics is starting to stand on its feet, the restricted domain of corporate governance is also receiving greater attention, with new requirements anticipated as a condition of continued stock exchange listing. True corporate governance is an important concern but, when many ethical dilemmas are occurring at the employee level and on the shop floor, then the focus of governance at the board and senior management levels may be too restricted and narrow if we are to address all ethical concerns in business organisations.
Sustainability
With the concern for such issues as global warming, universal pollution, the use of dangerous chemicals, toxic emissions, and the use of dragnets backed by satellite spotting, the issue of sustainability is now often raised under the banner of potentially unethical corporate behaviour. Regrettably, sustainability is a contested concept, a value-based symbol, a bit like democracy and capitalism. It will, however, be a central theme of this century. Essentially, sustainability results from activities that: extend the socially useful life of organisations, enhance the planet's ability to maintain and renew the biosphere and protect all living species, enhance society's ability to maintain itself and to solve its major problems, and maintain a decent level of welfare for present and future generations (Dunphy et al. 2003).
The Triple Bottom Line
Extending the environmental concern, recognising the profit responsibility of organisations and also incorporating consideration of social dimensions of business, have resulted in increased interest in the concept and practice of the Triple Bottom Line. Essentially, advocates of the Triple Bottom Line are steering away from the ethics versus profit argument, and are proposing that organisations should report on three dimensions - social, environment and profit.
Business Ethics
Having clarified these related terms, it can be seen that business ethics is a broad umbrella term covering a wide range of business circumstances. These include specific practices such as: inaccurate reporting, the inequitable treatment of employees, pricing, advertising, insider trading, the gaining of competitor information, competitor collusion, gift giving, sexual harassment, safety, and environmentalism, to name but a few.
To provide structure to the discussion of business ethics, essentially, business ethics can be delineated into four levels and within these levels numerous examples can be identified highlighting everyday dilemmas experienced every day:
1. Societal Level
The societal level contains ethical issues that impact on society in general, for example, environmental pollution, cyber ethics, apartheid, gross inequities in income, and distortion of free market mechanisms, among others. Many ethical issues with an international dimension also fall within this level.
2. Stakeholder Level
The stakeholder level contains issues relating to how a business concern should deal with external groups who are affected by its decisions, for example, product liability, gift giving to influence purchasing officers, deceptive gaining of competitor information, irregular pricing, dishonest tendering, research practices, and many more.
3. Employer-Employee Level
The employer-employee level contains ethical issues pertaining to obligations of employers and employees, for example, equal pay, safety in the workplace, disciplinary action, and privacy, to name a few.
4. Personal Level
The personal level contains ethical issues that are experienced by individuals and the dilemmas that arise in the course of personal decision-making, for example, lying to cover a mistake, taking a personal advantage, and conflict of interest.
International Business Ethics
With the increased publicity being given to the unethical actions of individuals and organisations, and the escalating volume of business activity nationally and, particularly, internationally, it is not surprising that both public and academic interest has been stimulated and that increased attention, theoretical development, and research have established a heightened and universal concern.
When considering one dimension of business ethics, that of the ethical issues faced by managers and employees of multinational organisations operating in the international environment and across differing cultural domains, it is tempting to fall back on a narrow view, that of the issues of bribery and corruption. Ethical issues in international business relate, however, not just to bribery and corruption but they also cover a multitude of other potential pitfalls, such as, the use of child labour, differential pay structures, environmentalism, safety, the internet and, possibly, the support of r�gimes where civil liberties are compromised. These issues require careful internal reflection and are now increasingly subject to external scrutiny. One overriding question, however, that many managers will face is whether or not we can consistently apply ethical values across international boundaries. Is it appropriate, for example, for an American firm to extend expectations of personnel practices that exist in their home environment to a different location with unique cultural, ethical and economic circumstances? Cordeiro (2003) focuses on this debate and whether multinational enterprises have ethical obligations to their host countries. Intriguingly, this debate is not new and has its origins in normative philosophy and in ethical relativism versus ethical absolutism discussions. The key concepts contained in these discussions are worth examining.
Ethical Relativism
At the core of ethical relativism is the question - do moral principles apply universally, or are all values and ethical judgements relative to their context, particularly cultural contexts? Ethical relativism does not simply highlight that different people have different sets of moral ideas. The theory goes further and, as Stace (1965) initially asserted, these differences may be significant, as the very same kind of action that is right in one country or period could be wrong in another. The advocates of ethical relativism are adamant that moral standards differ between groups, within a single culture, between cultures, and across time. They also believe that the ethical systems of belief supporting those moral standards of behaviour will differ according to the time and circumstance, as will ethical behaviour. Which set of beliefs is the rightful or correct set of beliefs is difficult to determine, but all holders of those beliefs will assume that their system is correct.
Not only is ethical relativism concerned with the premise that different moral standards and ethical beliefs exist, ethical relativism also questions whether there is any commonality that may override the differences.
"In the mixed chorus of competing moral standards and diverse ethical systems, can we discern any single principle that unifies them all, or are we left with the weak and unsatisfactory conclusion that all ethical systems are equally valid, and that a person's choice has to be relative to his or her upbringing or education or position, or country or culture?" (Hosmer, 1987, p.93).
The theory of ethical relativism is motivated by the recognition of historical, cultural and individual diversity, and the principal supporters are those who have identified significant variations in moral customs around the world and in different social settings. Relativism asserts that there is no consistency of moral beliefs because moral principles are relative to individual persons and cultures. Consequently, there are no absolute or universal moral standards. Proponents of relativism add that the concept of rightness depends on individual or cultural beliefs and that 'rightness' and 'wrongness' are meaningless notions if they are isolated from the specific context within which they have arisen. Therefore, the act of killing defective new babies in an underdeveloped and impoverished nation would supposedly carry a different moral weight given the context in which the circumstance has arisen. A more common example, in keeping with the ethical dilemmas of the international business environment and the operational concerns of multinationals, is the practice of bribery, that is, the paying of individuals, institutions or possibly political parties who can ameliorate decisions relevant to the sponsoring company. Euphemistic terms such as 'lubricant money' and 'facilitation payments' are used to describe bribery payments and managers are frequently given practical advice, such as the following, that clearly supports the notion of ethical relativism:
"While illegal everywhere, bribery is widely practised in some countries and thought necessary for successful financial performance. The basic rule to follow is the ancient adage of 'When in Rome, do as the Romans do'", (Johnson, 1985, p.448).
Organisations who resent Government intervention, as in the form of the American Foreign Corruption Practices Act, are quick to adhere to the relativist view that "morality only exists within culture and it is not for us to say what is moral in someone else's culture" (Kobrin, 1976, p.105). Indignant American individuals and organisations who have been charged as a result of legislation that prohibits any payment overseas that could easily be construed as bribery, have criticised the legislative and judicial system for being ignorant of the concept of ethical relativism.
It is, however, imperative that ethical relativism is not mistaken for the adage, "When in Rome, do as the Romans do". This can be confusing and it disguises apparent relativism from real relativism. Managers who adopt the "when in Rome" premise, run the risk of adopting actions that are seen as commonly accepted (apparent relativism) when this is not actually the case (real relativism). With international business practices, and the requirements of 'Rome' (for example, bribery payments), managers may be slipping on the cloak of 'moral neutralism'. This is where it looks as though bribery is commonly accepted when, in reality, it is not actually or openly condoned. Alternatively, real relativism would truly embrace a practice that is accepted by all. In many instances, one must admit that 'under the table' payments are not really accepted because, for the most part, they remain hidden under the table. "If bribes were truly proper, they would be above the table instead of below it" (Johnson, 1985, p.448).
Although cultural differences do exist, outright bribery is generally not openly condoned (Longenecker et al, 1988, p.345). Real relativism in a cultural context will exist only when the behaviour is thoroughly and openly accepted by all in that culture. Prevailing unethical practices that are in existence, but are not commonly accepted, do not constitute common morality and the basis upon which relativity is endorsed.
In business, ethical relativity often develops into conventional morality and unethical actions are often justified on the 'commonly accepted practice' argument (Miesing and Preble, 1985). Some observers of international business have been critical that ethical relativism has been used as a form of 'moral sanctuary', where business people may undertake an act which ordinarily would be called wrong, but have claimed that the act is right or justified because it falls under a special set of codes or moral standards advocated by the social group or institution in which they are operating (Konrad, 1982). In response to this view, which essentially supports the assertion that certain actions are immune from ordinary moral criticisms because they derive from a special set of codes or principles that supersede ordinary rules, Roberts (1986) has stated that, "given the complexities of international business, there is some justification for business people claiming relief from moral criticism by shielding behind the arguments of ethical relativity, especially given the need to accommodate differing cultural circumstances". To be expected, this view is a contentious one.
Ethical Absolutism
But, what if a global standard or standards do exist? What if there were common values and a common moral standard upon which ethical reasoning rested? At the heart of the theory of ethical relativity is the contrasting and often fervently articulated theory of ethical absolutism. The theoretical distinctions between these theories have, in the past, attracted a great deal of attention and, in discussing absolutism and relativism, Moser has lamented that 'there is hardly another field of enquiry to be found in which vagueness and ambiguity and, consequently, talking at cross-purposes is more prevalent than in this subject' (Moser, 1968, p.4).
An important point to consider is that one should not negate the existence of multiple moral standards actually in use and employed around the world, but recognise that despite these variables all ethical standards and actions could be rooted in a common universal moral standard. This common universal moral standard, or standards, are based on our requirements as human beings and the necessities for long-term survival.
Harmon (1984, p.370) has defined moral absolutism as a view about the moral reasons people have to do things and to want or hope for ... things that everyone has a reason to hope or wish for. It appears that these 'things' are common in all individuals and all cultures, ie, the need for equitable treatment, safety, recognition and reward, shelter, sense of achievement, preservation of life etc. According to moral absolutism, there is a single moral law that applies to everyone which is derived from common needs and reasoning. In other words, there are moral demands that everyone has sufficient reason to follow and these demands are the source of all moral reasons. Naturally, this view is in contrast to moral relativism that denies there are universal basic moral demands, and states different people are subject to different basic moral demands depending on the social customs, practices, conventions, values and principles they accept (Harmon, 1984, p.371).
Ethical absolutism, which has also been referred to as 'universalism', dictates that an omni-present set of standards should apply universally, being equally valid in all places and times. It is important to realise that whether individuals, organisations or cultures adhere to these universal standards is not at issue; the moral standard(s) may be common but adherence may differ. Hence, we 'perceive relativity' but, in essence, all behaviour is directed by common moral values that have been deemed, through experience, to be essential for successful continuation. In contrast to the dictums of ethical relativity and in respect to managers, Prasad and Rao (1982, p.125) have pointed out that certain ethical norms such as honesty, integrity, self-discipline, loyalty and compassion are perceived as basic moral standards and are widely proclaimed as part of many civilisations, yet, adherence to those standards varies greatly.
Ethical absolutism is similar to Confucian ethics in one dimension that holds that inter-dependent parties must follow predetermined rules of obedience, loyalty, respect and hard work so as to optimise their mutual benefits (Miesing and Preble, 1985, p.469). Absolutism also directs that behaviour should be evaluated by the same rules, regardless of action or consequences. Essentially, the ethical absolutist considers that what people think is right varies in different countries and times, and yet what is right is everywhere and is always the same. The ethical absolutist is, therefore, cast in the high-handed role of being the determinator of what actually is right, ie, holding absolute views of morality. This essence of superiority is an element that frequently undermines absolutism, for the critic of absolutism has assumed that no one entity or country will provide the dominant moral values. The suggestion that there is a superior moral standard provider is, however, incorrect and ignores the subtlety of the essential proposal of absolutism. Rather than an assimilative process occurring, the moral standards are independent yet concurrently determined by all parties. The apparent consistency and similarities of these moral standards are coincidental.
Absolutists also recognise the fragility of individuals and accept that, despite the presence of common moral standards and an indication of what actually is right, what individuals think is right will differ. In reference to the cultural dimension, the ethical absolutist asserts that although what people think is right varies in different countries, what actually is right is everywhere and always the same. This God-like view of the ethical absolutists is in contrast to the views of the ethical relativists who deny that there is a single universal moral standard. Ethical relativists also believe that there are only confined ephemeral standards relative to the local circumstance.
In a dismissive tone, and in an argument against ethical relativity, Beauchamp and Bowie (1988) have suggested that as far as individual moral relativity is concerned, this is a misnomer. They suggest that if morality is concerned with culturally determined rights and wrongs, then morality by its very nature does not exist through personal interpretation. An individual's understanding or personal decision to adhere to or disregard the existing moral standard is perfectly acceptable, but this does not change the principle of existing morality and moral standards. Some moral principles may be so institutionalised that they are not subject to personal opinion or modification, for example, thou shalt not kill. The absolutist, therefore, makes a distinction between what actually is right and what is thought to be right. Alternatively, the relativist rejects this distinction and identifies what is right or moral, and equates this with what is thought to be moral or right by certain individuals, groups or cultures.
Cross-Cultural Ethical Research
The philosophical discussions provide an interesting theoretical base but what of reality? To ascertain the strength of the ethical relativists' versus ethical absolutists' positions, perhaps as a starting point we should review the literature in cross-cultural ethical research.
Despite the inherent ambiguity of ethical absolutism, cross-cultural ethical research has provided some research support. Comparisons of the ethical beliefs of American and Israeli business managers (Izraeli, 1988), Greek and American business students (Tsalikas and Nwachakwu, 1988), South African and Australian managers (Abratt et al. 1992) all found that despite differences in social, cultural and political factors, ethical beliefs based on moral standards varied little from culture to culture. This commonality of ethical beliefs hints at the possibility of common moral standards and supports the notion of absolutism.
The above studies examined ethical beliefs, but what of related areas of moral reasoning and moral intensity? Wimalasiri (2004) examined the moral reasoning capacity of management students in Fiji and in Singapore. Utilising the defining issues test, the data revealed a marked difference in the reasoning capacity of the two groups. Also examining moral reasoning, Kini et al. (2004) investigated software piracy in the US and Thailand as a major global concern for businesses and the associated moral intensity. Results indicated that, in general, there were significant differences in the moral intensity regarding software piracy between the two locations. Also examining the moral reasoning, Thorn et al. (2003) compared the moral reasoning of auditors from Canada and the US with limited but noted differences identified.
Tavakoli et al. (2003), in a study sympathetic to the fact that managers of today's multinational corporations face a plethora of problems and issues attributable to their operating in an international context, examined the differences between a group of managers from the US and a similar group from Croatia in relation to whistleblowing, with US managers having stronger individual and organisational tendencies to whistle-blow. Also utilising the US, but comparing with Brazil, Beekun (2003) explored the effect of national culture on ethical decision-making. The results indicated that Brazilians and Americans evaluate the ethical content of actions differently when applying utilitarian criteria, however, business people from both countries did not differ significantly when they used egoistic criteria in evaluating the ethical nature of business.
Contrasting more than one location, Christie et al. (2003) studied the impact of culture on ethical attitudes of business managers in India, Korea and the US. The results indicated that national culture had a strong influence on business managers' ethical attitudes. Similarly, Tsalikis (2002) compared the ethical perceptions of Americans and Greeks. Each group was presented with two scenarios, with the three factors of gender and organisational status of the transgressor, and the magnitude of the transgression manipulated. The results showed that the Greeks paid more attention to the dollar amount involved and less attention to the organisational status of the transgressor than the Americans did.
It should be noted that the cross-cultural ethical research literature, to date, has primarily used the US as the principal focus for comparison. For example, utilising the Preble and Reichel (1988) research instrument, Small (1992) compared West Australian undergraduates with their US and Israeli counterparts and concluded that US and West Australian undergraduates tended to share similar or identical values in their attitudes towards business ethics. When the West Australian and Israeli students were compared, 19 of the 30 variables were found to be significantly different, although not particularly meaningful. Small concluded that the similarity of responses suggests a high commonality of views towards business ethics by Western Australian, US and Israeli students. Izraeli (1988) also compared American and Israeli managers and concluded that the best predictors of respondents' ethical behaviour are their beliefs and perceptions concerning their peers' behaviour. The results suggested that there is consensus, or homogeneity, around behaviours that were held to be in severe violation of social norms. Also in apparent support of ethical absolutism, Tsalikis and Nwachukwu (1989) found that, despite cultural differences, Greek business students had similar ethical beliefs to their American counterparts.
Comparing Americans with Europeans (French and German), Becker and Fritzsche (1987, 1987a) identified response patterns that exhibited national cultural idiosyncrasies, while other responses reflected cross-cultural universals (Becker and Fritzsche, 1987a, p.93).
The US and UK have been the locations for a number of studies. Alderson and Ottaway (1992) found significant attitudinal differences between UK and US managers. Whipple and Swords (1992) examined differences in ethical judgements between US and UK business students. The results showed that while differences in demographic profiles do not influence ethical judgements, US respondents are significantly more critical about confidentiality, research integrity, and marketing mix issues than UK respondents. The UK related research has a broad base which has investigated the operationalisation of ethics in organisations. Schlegelmilch (1989), when contrasting the development of business ethics in the UK and the US, found that UK firms were lagging behind their US counterparts in response to ethical concerns and the institutionalising of ethical guidelines in the form of corporate codes. The UK was also the focus of a study that examined the means used to communicate ethical policies, the issues addressed in ethical policies, and employee ethical training. Robertson and Schlegelmilch (1993) identified some important differences between US and UK firms. Companies in the UK were more inclined to communicate ethical policies through senior executives, in contrast to US companies who rely on more formalised avenues of Human Resources and Legal departments. The study revealed that US firms consider most ethical issues to be more important than their UK counterparts do, and are particularly concerned with employee behaviour that may harm the firm. In contrast, the issues which UK managers considered more important tended to be concerned with external corporate stakeholders rather than employees (Robertson and Schlegelmilch, 1993, p.301).
Endorsing cross-cultural ethical universalism, Lysonski and Gaidis (1991) examined the ethical tendencies of university business students from US, Denmark and New Zealand. Their findings indicated that students' reactions to ethical dilemmas dealing with coercion, conflict of interest, physical environment, paternalism, and personal integrity, tended to be similar regardless of their country. In contrast, Kennedy et al. (1992) in a study of Ukrainian and American business students, concluded that Ukrainians were much more willing to engage in unethical behaviour than were the Americans based on differences found in national cultures and ideologies. Mathison (1993) also concluded that Europeans differed sharply from Americans. Examining CEO's, Mathison noted that the differences related specifically to the issues of substance abuse, AIDS and the treatment of minorities. In contrast, Khan and Atkinson (1987) offered an empirical analysis of the perceptions of UK and Indian managers on the notion of social responsibility and company codes with strong similarities in attitudes noted.
Interest in undertaking comparative research in other locations started to emerge in the early 1990's. Abratt et al. (1992) compared the ethical beliefs of managers operating in South Africa and Australia and, despite differences in socio-cultural and political factors, no statistically significant differences between the groups were identified. The attitudes of South African managers have also been examined in contrast to American managers in respect to social responsibility. Orpen (1987) concluded that managers from the US held different and significantly more favourable attitudes toward corporate social responsibility than South African managers. Also examining attitudes to corporate responsibility, O'Neil (1986) concluded that Europeans tended to favour corporate responsibility toward employees more than Americans, and tended to take a longer view on employee development.
Business ethicality in the Asia Pacific region has been the focus of a number of ethical studies. Examining ethical beliefs of salespeople in the US, Japan and South Korea, Dubinsky et al. (1991) concluded that nationality influences salespeople's beliefs about the ethics of selling practices and the need for company policies to guide those practices. White and Rhodeback (1992) compared American and Taiwanese business students on the extent to which cultural differences bear on perceptions of ethical organisational development consulting behaviours. Subjects from the US tended to provide higher ethicality ratings than the Taiwanese respondents (White and Rhodeback, 1992, p.666). Also comparing US and Taiwanese respondents, Honeycutt et al. (1995, p.235) measured the job satisfaction, customer orientation, ethics and ethical training of automotive salespersons. High performance US salespeople reported high ethical behaviour, while the opposite was true in Taiwan.
Specifically examining Hong Kong and PRC, Dolecheck and Dolecheck (1987) compared ethical perceptions and attitudes of Hong Kong and US personnel. Differences were found to exist in seven of the eight circumstances posed. It was concluded that Hong Kong managers were more likely to define business ethics as simply operating within the law, feel greater loyalty to protect the organisation for which they are employed and feel compelled to compromise personal principles to conform to their organisation's expectations. In a further examination of Hong Kong business personnel, Dolecheck and Dolecheck (1992) reported that their results showed that Americans perceive a higher level of business ethical conduct than their counterparts in Hong Kong. The primary reasons for such differences were attributed to the rapidly changing business conditions in Hong Kong, differences in management control, the importance of complex business relationships and harmony in the Chinese culture, and the tendency of Chinese to embrace multiple standards. In a cross-cultural study surveying the People's Republic of China (PRC), Hong Kong and Canada conducted by Lee et al. (1994), the data suggested that the regulatory environment and the cultural framework strongly affected connotations of responsible business behaviour. Managers in Hong Kong scored highest on the factors - serving as the guardian of the firm and maintaining healthy relationships with competitors. Managers in the PRC scored highest on creating win-win relationships in business transactions, while managers in Canada scored the lowest on this factor. Also utilising Hong Kong and Canada, but expanding the research to two other locations - Japan and Taiwan - Nyaw and Ng (1994) examined the extent to which business students in each of these locations reacted to ethical dilemmas involving employees, supervisors, customers, suppliers, and business rivals. The empirical evidence indicated that national origin of the students did have an impact on their ethical reactions. In a four-country study to examine ethical attitudes, Nyaw and Ng (1994) investigated the extent to which business students from Canada, Japan, Hong Kong and Taiwan reacted differently to ethical dilemmas. The results demonstrated that national origin does have an impact on their ethical reactions.
The above research studies are numerous and varied and, predictably, inconclusive. It should be remembered that in an effort to support ethical versus ethical absolutism, it is imperative that we go further than a superficial review of cross-cultural differences and that we delve deeper. As it has previously been suggested, absolutists have cautioned that despite the presence of common moral standards, the interpretation of those moral standards and resulting attitudes and behaviours may differ.
Conclusion
In the quest for foreign business it is recognised that there are numerous cultural and ethical dilemmas may arise as investors and managers encounter different styles of practice and different standards of business behaviour. The relativist view which is often inappropriately described as, "When in Rome, do as the Romans do", proposes that all values and ethical judgements are relative to their particular context and is respectful of host country moral norms, but is it in the economic interests of firms operating internationally?
While there are examples of research endorsing cross-cultural ethical universalism, predictably, a large number of studies highlight significant differences in ethical attitudes and behaviour across cultures. Intriguingly, despite these differences, practical evidence suggests that increasingly multinationals are favouring the absolutist argument and are adopting the same ethical standards in international locations as they would in their home operations (Bowie, 1996). Intuitively, one can see why, as Mr John Kilroe, Chairman of Shell in Greater China, has stated, "Double standards undermine a healthy culture and ultimately damage a good corporate reputation". Why are corporations pursuing an ethical absolutist's approach in the face of evidential differences in ethical attitudes across cultures? It appears that the rationale is a somewhat simple but enduring one and rests on the pragmatics of economic advantage. The economic rationale for multinationals imposing universal ethical standards is based on the following arguments (Bowie, 1996):
- Certain ethical commitments are believed by the management of an international company to provide a competitive advantage, that is, ethical commitments enhance the bottom line rather than dilute it, particularly by lowering market entry costs, increasing trust in partnerships and strengthening strategic alliances.
- The ethical commitments which provide a durable competitive advantage abroad tend to be knowledge-based, embodied in the firm's culture and are characterised by high asset specificity.
- High asset specificity associated with a good return should not be diluted.
- If ethical commitment varies, these assets will be diluted. The ethical climate, which has been a competitive asset, will be diluted.
- As such, the multinational should be establishing common ethical commitment in all its offshore locations.
This analysis has unashamedly taken a value asset approach and may appear counter-intuitive, especially where the variance in ethical behaviour is considerable. It is at this point that the company, watched by the consumers, shareholders and the general community, must consider how important its ethical climate asset really is. A risk management orientation will usually kick in and, in some situations, result in the withdrawal from a location, as witnessed by Levi Strauss's exit from the Mainland Chinese and Burmese markets.
Providing a small push for encouraging a universal perspective are the research outcomes which demonstrate that, despite considerable variations in ethnic background, religion, and practices there are, in fact, large areas of ethical commonality in business practices for which common levels of agreement reign (McDonald, 1989). At an individual level, this is not too dissimilar to the universal declaration of human rights. A set of business practices, such as protection of consumer welfare, exist and despite considerable cultural variations and universal expectations, what have been referred to as 'hyper norms' are to be found. These hyper norms or moral standards are there to protect human life and integrity. At the organisational level, the term 'market morality' is also finding its way into business vocabulary. Market morality refers to morality that the vast majority of firms would attempt to practise because, other things being equal, adopting these practices is necessary for economic survival and success.
While standard ethical values may be in existence, the challenge for most managers is to have the guts to examine their values, to clearly identify those salient to them and to maintain those values in the face of mercantile pressure in varying locations. The tricky part comes in supporting and even promoting those values in different cultural contexts. There is a saying that ethicists loathe, "people who keep dogs are cowards, they have not the guts to bite people themselves". Regrettably, however, all too often we anticipate that it will be someone else who highlights the problem, will raise the concern, confront the meeting, address the issue, stand up for that principle or possibly blow the whistle. The question is whether we are prepared for that person to be ourselves.
NOTES
* Professor of Business Ethics, Vice President, International, Unitec, Auckland, New Zealand
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