Nature of ethics and social responsibility in international Business

Ethics is an individual's personal beliefs about whether a decision, behavior, or action is right or
wrong. Ethical behavior usually refers to behavior that conforms to generally accept social
norms. Unethical behavior describes behavior that does not conform to generally accept social
norms. The formation of ethics within an individual comes from a combination of factors which
include early childhood experience from parents, peers, religion and personal values.
In society, ethics (social norms) of its members are formed by adopting formal laws which must
be followed. Thus the generalizations of ethics can be extended to these understandings:
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Individuals have their own personal belief systems which establishes ethical and
unethical behavior.
Common cultural understanding of norms usually lead to similar views on ethical and
unethical behavior.
Individuals are able to rationalize behavior based on circumstances such as situation
which events occurred in.
Individuals may deviate from their own belief systems based on different circumstances.
National cultures, customs and traditions can strongly affect ethical values ethical values
within a country. Values are the things a person feels to be important.
Ethics can be viewed differently by individuals even though they are in the same culture.

Ethics in Cross-Cultural and International Contexts

Ethical behaviors are discussed in the context of how organizations treat their employees, how
employees treat their organizations, and how employees and their organizations treat other
economic agents.

How an Organization Treats Its Employees

Hiring and firing
In some countries, ethical and legal guidelines suggest that hiring and firing decisions
should be based solely on an individuals competency to perform the job. In other
countries, it is perfectly legitimate to give preference to some individuals based on age,
gender, ethnicity, or other factors.
Wages and working conditions.
The establishment of appropriate working conditions and wages differs from each
countries. Protection of employee privacy rights, for example, may vary widely.

How Employees Treat the Organization

Conflicts of interest
A conflict of interest occurs when a decision potentially benefits the individual to the
possible disadvantage of the organizations. For example, in some cultures, giving and
receiving gifts from external bodies might be unacceptable while other might see it as
acceptable.
Secrecy and confidentiality.

In many cultures, there are laws restricting the disclosure of sensitive information by a
firms employee to competitors. Ex: China has allowed a law where a contract clause of
not allowing an employee to work for a competitor for a period of time.
How Employees and the Organization Treat Other Economic Agents
Bribery, pricing, financial disclosure, and advertising practices are all areas where
practices vary from one culture to another. In all these instances, managers may be
confronted with accusations of unethical behavior.
Managing ethical behavior across borders
Even though ethics reside in individuals, many companies try to manage the ethical
behavior of their employees by clearly specifying what the company considers to be
ethical or unethical. This clear specification often takes the form of ethical guidelines or
codes, ethics training, organizational practices, and/or corporate culture.
Guidelines and Codes of Ethics
Codes of ethics are written guidelines detailing how employees are supposed to treat
suppliers, customers, competitors, and other stakeholders. A multinational must make a
decision as to whether to establish one overarching code for all of its units around the
globe, or whether it should tailor each code to its local context.
Ethics Training
Given that it is probably impossible to anticipate all potential ethical dilemmas and cover
them in one set of laws, some multinational corporations address ethical issues
proactively. By offering employees training on how to cope with ethical dilemmas, many
firms hope each member of the organization might decrease any ambiguity. For
expatriates in particular, it is important that they receive some training in the business
practices and values of the culture where they are stationed.
Organizational Practices and the Corporate Culture
Organizational practices and corporate culture contribute to establishing the ethical
climate of the firm. Top leaders or higher management must be an example to follow in
order for the rest of the organizations to quickly understand the expectations or standards
for their own behavior. In particular countries, bribery is practically a way of life.
Organizations need to be very clear about their practices in such environments if they
wish their employees to adhere to company standards instead of local standards.