How should managers treat ethics in international business?

Business ethics concern the consideration of moral in corporate decision making. International managers may be confronted with a variety of ethical dilemmas, usually due to differences among national markets in what constitutes legal or acceptable practice. Beliefs about what constitutes ethical business behavior commonly stem from one of four moral philosophies: teleology, deontology, the theory of justice, and cultural relativism. A framework incorporating all four is presented here which should provide a useful decision tool for international managers. An application of the framework and the complexities associated with it are presented next. We conclude that an effective integration of the company's perspective on ethics and the business behavior of the employees is critical and that it depends on top management, and the entire organization, demonstrating that they are serious about ethical business behavior on an ongoing basis. © 1998 John Wiley & Sons, Inc.     

Ethical Audit Decisions: A Structuration Perspective

The public accounting profession has long relied on its reputation for integrity and veracity as justification for its professional status and monopoly privilege predicated on claims of acting in the public interest. If such status and privilege are to be justified and sustained, serious consideration of what constitutes ethical behavior, how such behavior is motivated as well as an explicit recognition of the rights and interests of affected parties constitutes an ethical imperative for the profession. Traditionally, work on ethics and auditing is quite narrow, failing to recognize the social context of individual actions, failing to identify the relevant constituencies of the profession, and failing to articulate processes through which the constituencies interests can be identified. Generally, the accounting literature has taken a cognitive perspective on ethical decision making which views the resolution of ethical dilemmas as primarily a function of the moral makeup of the actor responding within the context of the Code of Professional Conduct. The purpose of this paper is to broaden the theoretical base of ethical research, specifically within the area of professional accounting and more generally in the area of business. We propose the application of structuration theory in conjunction with stakeholder theory and a responsibility ethic. The application of stakeholder theory is a means for identifying affected constituencies. A responsibility ethic recognizes the situatedness of an individual within an ongoing professional community. Structuration theory provides a theoretical framework for articulating and investigating both the structures within which action is carried out as well as the interaction between the social structures and the actors. Taken together, the theories allow for an enhanced ability to define ethical behavior within a business context and to understand the contextual antecedents and consequences of ethical acts.     

The Greening of Business Schools

"New modes of thinking" are necessary to meet a new set of complex environmental challenges-greenery, globalization, diversity, complexity and acceleration of technological change of the 1990s. The green challenge to business schools is to articulate, develop, and deliver environmental education for managers as an effective tool for a sustainable world economy and society. Every business student must have at least broad understanding of the social, political, ethical, technological, economic, and ecological context of global business. The challenge of educating business leaders for a global future requires a new portfolio of capabilities, commitments. and visions on the part of business school faculty, the multinational corporations, and other stakeholders in management education. Business schools around the world have an obligation to present the ecological challenge as clearly to students as to faculty members. The more environmentally conscious business student community of the 1990s probably will demand to have structured learning opportunities about environmental issues and their impact on business management- with a superordinate goal of improving environmental sensitivity and environmental performance of individuals and their institutions.     

Business Students' Perception of Ethics and Moral Judgment: A Cross-Cultural Study

Business relations rely on shared perceptions of what is acceptable/expected norms of behavior. Immense expansion in transnational business made rudimentary consensus on acceptable business practices across cultural boundaries particularly important. Nonetheless, as more and more nations with different cultural and historical experiences interact in the global economy, the potential for misunderstandings based on different expectations is magnified. Such misunderstandings emerge in a growing literature on "improper" business practices – articulated from a narrow cultural perspective. This paper reports an ongoing research on the cultural and contextual aspects of business ethics. The objective is to investigate how the perception/attitudes of business students towards the ethical dimension of doing business varies in different countries; Whether there are socio-cultural factors that influence the perception of ethicality in business practices. Research findings among business students in six countries: China, Egypt, Finland, Korea, Russia, and the U.S.A. are reported. While all groups had basic agreement on what constitutes ethical business practices, differences are found in the respondents' tolerance to damage resulting from "unethical" behavior. Without underestimating the role of national culture, variations in research results also point to the importance of current socio-political developments in the relevant countries. Implications for business teaching and management development are discussed.     

What Makes a Business Company Ethical?

Interest in ethical implications of business strategy and behaviour is on the increase around the globe and raises a number of fundamental questions which are addressed here, including what reasons a company might have for behaving ethically and what forms such ethical concern might take. Two particularly topical issues considered are the moral responsibilities of shareholders and the responsibilities of Western business to help improve the ethical quality of business in Central and East Europe.     

Lyin' T(*)gers, And 'Cares' Oh My: The Case for Feminist Integration of Business Ethics

In this re-visioning, business ethics would integrate feminist theories and pedagogy which include the diversity of women in terms of race/ethnicity, class and sexual orientation, thereby expanding its coverage to include issues of power, gender, cultural and theoretical conceptualizations, both in the conceptualization of morality, as well as in ethical constructs of analysis. My research indicates that the integration of feminist scholarship, ethics and pedagogy would make it possible to teach ethical decision making, and ultimately increase the likelihood of ethical behavior, by showing students how to harness the multi-cultural ways of thinking needed to resolve ever more complex organizational problems.Use of the four-stage model I propose would effectively address the three major issues which make teaching business ethics in a new way to critical. The curricula, as modified, would present enriched ethical theories which are contextual and grounded in experience and which grant the connected nature of all organizational stakeholders. By recreating personal identity, autonomy and power as a theories of community, teaching its responsible use would be easier. Expanding the definition of business ethics to include authenticity and mutuality would move it beyond "social responsibility" to a model of interrelationship which encourage principled thinking leading to more ethical behavior. By combing empirically connected ethical theories, and conflict resolution techniques, ethical precepts can be molded into more usable curriculum models.The curricula, as modified, presents enriched ethical theories which address cognitive moral development from will to action. It is contextual, grounded in human experience and grants the connected nature of all organizational stakeholders. By recreating personal identity, autonomy and power as theories of community, we could fortify the moral will; by expanding the definition of business ethics to include authenticity and mutuality, sensitivity to ethical issues would move beyond "social responsibility" to discernment of interrelationship, encouraging more principled thinking. Judgment regarding responsible use of institutional resources would be easier, once students were able to combine empirically connected ethical theories and conflict resolution techniques because ethical precepts could be molded into non- abstract curricular models.My hypothesis is that this approach will produce a more holistic curricula for business ethics. That this course, when defined as the study of how humans grow in their capacity and ability to resolve ethical conflicts, might increase students' ethical analysis, and thus their willingness to act ethically when faced with future moral conflicts. My joyful discovery was that this effort at integration could be enhanced by using an interdisciplinary approach, fusing feminist scholarship from psychology, sociology, and philosophy, as well as economic and business organizational theory. My hope is that re-visioning business ethics as a holistic learning process might enhance moral growth, and better prepare business students who can confidentially use institutional power for ethical ends.     

Beyond Agency and Structure: Triple-Loop Learning

With the demise of Andersen, LLP and new legislation that puts an end to self-governance in public accounting, the effectiveness of current models of accounting ethics have been seriously called into question. We argue that the profession suffers from fundamental limitations in its ethical framework that makes it impossible to effectively address ongoing ethical problems. The dominant representation of professional behavior is an agency model of ethics, in which the ultimate responsibility for identifying and dealing with ethical dilemmas resides with the individual. We argue that structural forces such as control over resources, meaning systems, and community norms and values also have a strong influence on the actions of accountants and that these must also be considered. The recent legitimation crisis has forced the accounting profession and its constituencies to begin to recognize and address the structural aspects of ethics as they enable and constrain action. We propose a framework based on structuration theory and learning theory that allows for systematic, multi-level investigation of the structural forces that cause ethical dilemmas to arise and to be recognized and that influence the manner in which they are analyzed and resolved. This framework should be capable of continual critique and reconfiguration as environmental conditions change.     

Perception of What the Ethical Climate is and What it Should be: The Role of Gender, Academic Status, and Ethical Education

This study examined ethical attitudes and perceptions of 691 undergraduate seniors and freshmen in a college of business. Gender was found to be correlated to perceptions of "what the ethical climate should be" with female subjects showing significantly more favorable attitude towards ethical behaviors than males. Further, Seniors had a more cynical view of the current ethical climate than freshmen. Freshmen were significantly more likely than seniors to believe that good business ethics is positively related to successful business outcomes. Ethical education was significantly correlated to both perceptions of "current ethical climate" as well as "what the ethical climate should be". Students who had been exposed to ethical issues in a course were more likely to believe both, that ethical behavior is, and should be, positively associated with successful business outcomes.     

Business ethics in banking

Companies do have ethical responsibility and are not protected by limited liability from the consequences of their actions. A company's record and the preception of its ethics affect its reputation and ensure long term success or failure.The financial community has a history of placing moral considerations above legal or opportunistic expedients. But we are often exposed to moral dangers and the dangers of contamination are increasing. Deregulation and the technological revolution are sharpening ethical conflicts.Bankers' role is one of stewardship based on trust. We are trusted by those who ask us to look after their money and we have a duty to lend that money responsibly.Banking is about rewards reflecting real risks and ethical considerations form an important part of our risk-taking activities. The welfare of our borrowing customers, in good times and bad, is of major concern in any business proposition. Sometimes commercial considerations can be at odds where ethics and politics combine, for example, on the LDC debt question.We depend on people to run our business and to reflect our ethical standards. We have to let our people know what is expected of them and help them to avoid pressures and temptations.A bank's responsibility extends to Government, customers, shareholders, staff and the community. In the future, as we face increasingly complex and conflicting issues, our resolve and commitment to ethical behaviour will be tested.Mr Charles F Green, 58, was a Deputy Group Chief Executive of National Westminster Bank since 1 December 1986 and a Director since February 1982. Exercised oversight of UK Financial Services and Support Services, as well as shared in the Chief Executive's representational Sole.In July 1989, Mr. Green resigned from the National Westminster Bank.His outside commitments are largely Church based. Since 1980 a member of the Church of England General Synod, he is currently Vice Chairman of the Church's Board for Social Responsibility and is Chairman of its Industrial and Economic Affairs Committee and a Trustee of the Church Urban Fund.He is also Chairman of the Executive Committee of Business in the Community, Chairman of the CBI Overseas Committee and Treasurer of the Policy Studies Institute.     

Ethical Values as Part of the Definition of Business Enterprise and Part of the Internal Structure of the Business Oganization

The orientation of this paper is that there is no special science of "business ethics" any more than there is one of "medical ethics" or "legal ethics". While there may be issues that arise in medicine or law that require special treatment, the ways of relating to such issues are derived from a basic ethical stance. Once one has evolved such an ethical stance and thus has incorporated a fundamental mode of relating to her or his fellow human beings, the "how" to deal with various ethical "issues" will follow as a natural consequence of one's ethical stance or modality. It is not necessary, in the formation of one's fundamental ethical stance to know if one is a utilitarian or a deontologist. It is doubtful whether Buddha knew what kind of ethics he was practising. If one conceives of ethics as something extrinsic to various disciplines and attempts to first practise a discipline and then to apply ethics to modify the results of that discipline it is entirely possible that conflicts will result between what is perceived of as the proper pursuit of that discipline and the ethical considerations. The argument of this paper is that it is more efficacious (in addition to being more true) to take ethical considerations into account in the construction of the definition of the discipline. This paper is devoted to showing that business and ethics are not two different and competing fields of interest (thus requiring a discipline of business ethics to be grafted onto the study of business enterprise), but that ethical concerns are part and parcel of the very concept of a business enterprise and the internal operation of a business organization.     

Ethics Through an Entrepreneurial Lens: Theory and Observation

Recent work in the fields of ethics and entrepreneurship has raised the possibility that entrepreneurs may differ from other individuals in the moral issues they face, in their moral judgements and behaviors concerning those issues, and even in their level of cognitive moral development. While this work has been exploratory and its conclusions tentative, the findings raise two interesting questions: do entrepreneurs actually differ from non-entrepreneurs in their ethical orientations and, if so, why? We propose a model of ethical decision making for small business entrepreneurs. We suggest some ways in which the ethical framework of entrepreneurs may differ systematically from that of other business people and propose some areas for future research.     

A Comparison of the Ethics of Convicted Felons and Graduate Business Students: Implications for Business Practice and Business Ethics Education

This research compares and contrasts the ethics of convicted felons in three midwestern United States prison systems with those of a cross section of MBA students from previous research. Building on and replicating seminal works in business ethics, this study identifies the differences and many similarities between students and inmates on several dimensions of ethics and values. Both groups expressed similar views of which ethical issues need attention from the business community, those constituencies that are most important to business firms, and perceptions of the ethics of other salient groups. When confronted with difficult ethical situations, inmates usually, although not always, tended to be more willing do what was asked and less willing to speak out regarding the conflict. Inmate priorities for ethical issues and constituency groups tended to be very similar to the MBA student sample. Implications for business practice and business ethics education are discussed.     

Organizational ethics education and training: a review of best practices and their application

Insuring that ethical action remains a vibrant aspect of an organization's climate and culture is an ongoing challenge for those responsible for training and development. To better understand what best practices are being utilized today, eight organizations in the Silicon Valley region of the United States were studied. Findings suggest that ethics training is particularly intensive when an employee is first hired, when rules, regulations and corporate values are shared during the indoctrination period. Training continues, but is often limited to online activities. Face‐to‐face interaction, necessary for learning and development, is usually reserved for specialized functions and senior level managers. Most firms emphasize a compliance‐based approach, with little attention directed toward developing moral competencies over time. In addition, assessment tools to measure ethical competencies are rarely used as performance criteria. Findings from this study reveal specific trends, which can inform, guide and improve practitioners' efforts to further develop ethical decision‐making and action within their organizations.     

A New Perspective on Ethics,Ecology, and Economics

This paper introduces the important concept of a biophysical perspective on economics into the business ethics literature. The biophysical perspective recognizes that ecological processes determine what can be done in an economy and how best to do it. A biophysical perspective places the economic system into a larger context of the ecologic system. This changes the perception of ethical issues by identifying a larger scope of management decisions. The paper examines the changing ethical landscape in such issues as biotechnology, planned obsolescence, productivity, and international trade. The paper also examines the shift in mindset associated with the shift in economic framework. It draws on the literature on cognitive structures and moral imagination to show this new perspective can actually raise the bar for ethical decision-making and behavior. The pattern is that the ethical behavior associated with a biophysical economic framework has a greater scope of responsibility with the benefit that the required ethical behavior leads to better long-term decision making.     

Compliance and the Illusion of Ethical Progress

It has become common for business practitioners and management scholars to distinguish between compliance and ethics. According to the conventional distinction as expressed in Paine’s formulation of Integrity Strategy, compliance is ordinarily a necessary but insufficient condition for ethics. Now that this distinction has been institutionalized in the most significant judicial, legislative, and regulatory developments in American business conduct management since the Enron failure, it is worth asking whether the current emphasis on ethics represents progress. Does it make logical and practical sense to impose ethics as a compliance requirement, or have we come full circle? I argue that assertions of organizational ethical progress, usually involving an increase in the number and or severity of compliance restrictions, do not get the conventional distinction quite right. Moreover, under the consensus distinction, there can be no such thing as organizational ethical progress. However, our ordinary ways of talking about business conduct management often betray logical confusions about the ethics–compliance relationship. While the metaphors we employ – “higher standards,” “raising the bar,” “gray areas,” and “crossing the line,” etc. – perform a worthwhile function as standards for external evaluation of business conduct, they also have a tendency to limit and impoverish our conception of what it is to be ethical. The idea that ethics matters is fundamental to Integrity Strategy’s implicit claim, consistent with conventional wisdom and moral theory, that the objective of responsible conduct cannot be achieved solely by imposing from outside what is required but must also appeal to what is desired.     

Circles within a Circle: The Condition for the Possibility of Ethical Business Institutions Within a Market System

How can a business institution function as an ethical institution within a wider system if the context of the wider system is inherently unethical? If the primary goal of an institution, no matter how ethical it sets out to be, is to function successfully within a market system, how can it reconcile making a profit and keeping its ethical goals intact? While it has been argued that some ethical businesses do exist, e.g., Johnson and Johnson, the argument I would like to put forth is that no matter how ethical a business institution is, or how ethical its goals are, its capacity to act in an ethical manner is restricted by the wider system in which it must operate, the market system. Unless there is a fundamental change in the notion of the market system itself, the capacity for individual businesses to act in an ethical manner will always be restricted. My argument is divided into two parts. The first part is to show the inherent bias towards unethical outcomes that is inherent in the market system. The second part is to suggest how to reorient the general economic framework in order to make ethical institutions more possible. The question then becomes, how to define economic behavior in terms other than competition for profit.     

Business Ethics in Turkey: An Empirical Investigation with Special Emphasis on Gender

In today's complex business world, the question of business ethics is increasingly gaining importance as managers and employees face numerous ethical dilemmas in their jobs. The ethical climate in the Turkish business environment is also at a critical stage, and the business community as a whole is troubled by ethical problems. This study attempts to determine the effect of individual, managerial and organizational factors on the ethical judgments of Turkish managers, and to evaluate the ethical perceptions of these managers. The findings of this study reveal that the ethics score, the measure of ethical judgment, of Turkish managers differs significantly only with respect to gender and that female managers have higher ethics score than male managers. Other individual, managerial and organizational factors considered in this study do not have any significant effect on the ethical judgments of the managers. A comparative analysis between female and male managers in terms of their ranking of the eleven ethical business scenarios, ranking of the sixteen unethical acts, ranking of the factors influencing managers to engage in unethical practices, and ranking of the various parties to whom a company is socially responsible enables the researchers to enlighten the subject of business ethics in Turkey.     

Financial Statement Audits,a Game of Chicken?

This paper uses the intuition from the game of chickento model client-auditor financial reporting and audit effort strategies. Within an ethical context, our model is concerned with the client misreporting and its detection by the auditor. The paper uses a welfare game(similar to the game of chicken) to more formally model client-auditor strategies. The welfare game is then extended to provide additional insight into ethical and audit effort issues.Such a welfare gameprovides equilibrium in mixed strategies. This mixed strategy solution makes possible four outcomes from the game: 1) Financial Statements are fairly presented by client and the auditor performs a normal audit, 2) Financial Statements are fairly presented by client and the auditor performs an extended audit (over auditing), 3) Financial State-ments are misstated by client and detected by the auditor, and 4) Financial Statements are misstated by client and not detected by the auditor (audit failure despite no intended unethical action on the part of the auditor).The first extension of the welfare gameallows clients to be ethical or unethical clients. Unethical clients are rewarded for misreporting because the auditor wishes to minimize audit effort for ethical clients. The second extension allows the client to unknowingly misstate the financial statements; the client "strategy" then becomes random (a play of nature). The auditor must distinguish between this random play and the strategic play of the welfare game. Finally auditor ethics are considered and the influence of auditor ethics on reducing failed audits.     

Some unresolved ethical issues in auditing

Independence is a fundamental concept to the audit. There is a clear relationship between independence and conflict of interest in all professions. This paper examines this relationship in the auditing profession and in the context of three specific practices. The paper analyses these practices by using the Davis model of conflict of interest. The results of this analysis give rise to some interesting questions for the ethical practices of the auditing profession.Sally Gunz teaches business law at the School of Accountancy, University of Waterloo, Waterloo Ontario. She is a former legal practitioner whose research interests include ethical and legal issues of concern to auditors and studies of the corporate counsel profession.John McCutcheon teaches accounting at the School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario. His research interests include analyses of alternate approaches to the liability of auditors for negligence and various issues in management accounting.     

The Abandoned Stakeholders: Pharmaceutical Companies and Research Participants

Most discussions concerned with advancing the just and ethical treatment of research participants in developing countries have revolved around the moral principle of autonomy and the legal doctrine of informed consent (O’Neill 2002). However, if emerging ethical concerns are to be addressed effectively, the discussion needs to expand into the domain of business ethics where arguments addressing issues such as fair/appropriate compensation, entitlement, and corporate obligations to stakeholders are commonplace. The argument I present in this paper will conclude that emerging ethical considerations regarding the treatment of research participants in developing countries have evolved well beyond the scope of the principle of informed consent and that in order to resolve these concerns more appropriately and effectively, the new default or status quo should be to consider research participants as stakeholders of the sponsoring pharmaceutical company, even after the clinical trial is completed. This conclusion is significant because although it is fair to assume that, at some point in the timeline, most stakeholder theorists already do consider research participants stakeholders of the pharmaceutical company sponsoring the trial, the completion date of the clinical trial usually signifies and marks the termination of their stakeholder status and thus any consideration of what is owed further to the research participant.