Developing a Corporate Ethic to Serve a Global Organization
Published April 2004 – OpportunityWorld
& August 2003 – IndUS Business Journal
Written by David Lapin (CEO)

“In the global economy, if we are going to write rules of behaviour, those rules must be framed in the context of world citizenry so that employees have the ability to adapt to local customs yet comply with the values that define the corporate character." (Fagiano, D., 1993, 'Ethics in a Shrinking World', Management Review 82/3, P2)
 
The Ethical Challenge of Globalization
Shrinking domestic markets throughout the industrialized world, worldwide recession, the lowering of trade barriers, and the communication explosion have all contributed to the phenomenon of globalization.  No business in any country can afford to ignore this dimension of trade, a dimension that demands intellectual expansion and the movement of paradigms.

Globalization is not only the removal of international barriers of trade and improved communication.  Changing demographics and the info-tech era have created global villages in nearly every town in most first world countries.  Business has to learn how to adapt to diverse national cultures on its own doorstep.  It has to learn new and diverse ways of communicating, of marketing, and of managing its people.

The most challenging area of thinking in this field is that of global ethics.  Moral values do not differ much throughout the world.  All cultures value honesty, integrity, trust, family, etc.  They only differ in defining the boundaries of those values.  Bribery is recognized universally as unethical.  However, the point at which gift giving as an instrument of relationship building becomes bribery will differ from culture to culture.

There exists an even more disturbing ethical phenomenon in a global environment: It is quite possible that two parties to a transaction, each acting in accordance with the highest standards of ethics, are, in fact, destroying the possibility for any trust to exist in their relationship.  Employers in a western-centered culture, for example, are expected to hire employees with whom they have no personal relationship but who have high skill levels and qualifications, rather than a friend or relative who is less qualified for the job.  This is part of that culture.  People from African, Moslem, and Russian cultures could perceive this hiring practice as unethical.  These cultures often place more value on personal relationships than on standards.

This ethical conflict underlies much of the affirmative action debate: Should previously disadvantaged people be advanced, even at the expense of (at least temporarily) standards, because people-development is more important than values, or should standards be strictly maintained, even at the cost of slowing an affirmative action initiative?  Different cultural perspectives are responsible for different ethical attitudes.  Each attitude has its own ethical base, yet they potentially lay the groundwork for mistrust.  In a multi-cultural environment, organizations need to develop strategies that demonstrate their value of people and relationships, while at the same time striving to achieve ever higher standards of economic excellence.  If quality is one of our values, we should not focus only on the quality of the work we produce without also expressing the quality of our relationships at work.

The American Response
United States law and the fear of litigation drive many American corporations to be extremely prescriptive about their standards of ethics.  But over-regulating ethical conduct can inhibit natural relationship building.  For example: the American fear of sexual harassment litigation has led many companies to so severely prescribe the interaction between men and women in the workplace that single men, even in social environments, are often reluctant to approach single women for fear being accused of harassment!  Similarly, American companies' codes of conduct which govern all employees of the company, irrespective of where or with whom they are doing business, at times seriously inhibit the global trader's capacity to interact successfully and build meaningful relationships in diverse countries and societies throughout the world.  For example, the strict prohibition of giving and receiving substantial gifts can significantly inhibit the development of business relationships in parts of Asia.  A further limitation of the policy to prescribe global ethical conduct from the head office is that, unless the code's regulations are fully congruent with the values of all employees and indigenous to their cultures, the level of global compliance will be disappointing.

The European Response
Many European corporations have pursued a more flexible approach to global ethics.  They have opted to allow managers to rationalize their ethical conduct, embracing the ethical norms of the societies in which they operate.  So the same corporation might condone practices which in one country are considered unethical and even illegal, in another country in which they do business.  In doing so, they face two serious problems.  Firstly, this erodes a sense of corporate ethic and character.  Secondly, the company's ethics are perceived by employees, customers, and the public to be negotiable policies of expediency, rather than timeless expressions of integrity.

Globalization requires an ethical approach beyond both the American and the European models.  It is necessary, in our confused society, to formalize some basic code of conduct. However, it is equally important to teach that code in a way that links its every clause to the value systems and cultures of the people meant to adhere to it.  Failure to do so will result in more convictions, but even more contraventions.

Business ethics is becoming a far more sophisticated issue in our complex society.  It demands the application of the corporation's finest minds.  Approaching it without depth and vision can ruin decades of a company's efforts to establish its brand and reputation.  Engaging the subject with creative depth can propel a company to new heights of economic achievement in the challenging and exciting environment in which we operate.  Companies at the cutting edge of this initiative will pioneer a world effort to craft a new sense of global ethic that can apply efficiently and morally anywhere in the world.  This is the challenge facing today's business leaders.