Globalization has a great impact on how organizations do business. Removal of political, geographical, and economic barriers has allowed the organization to not only do business but also invest in foreign countries. However, issues may arise in the process of doing business that can have high implications for an organization or consumers (Carroll and Buchholtz 2008). To do business in foreign countries successfully, organizations have to be aware of political, legal, and ethical requirements. Major public scandals within organizations in recent years, such as Enron, WorldCom, and Arthur Andersen have impacted highly on public perception of organizations’ world over.
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To succeed sustainably in the global business environment, organizations have no option but to carry out their business ethically.
Doing business in the global business environment increases ethical requirements.
As multinational organizations expand in many foreign countries, the ethical conduct of the organizations and their employees gain more importance because of cultural diversity (George 2008). An organization can undermine cultural and ethical values as it expands its operation in foreign countries. Ethical issues that can arise because of operating in a different country may lead to costly legal issues and affect an organization’s business (Trevino and Nelson 2010). Understanding and recognizing differences in culture in different countries is the first step towards ethical conduct in international business (Weaver 2001). A great difference in culture leads to many managerial and ethical issues, such as avoiding culture-based discrimination.
Organizations doing business globally have to consider cultural differences as well as interaction among economic, cultural, and political aspects in the host country.
Achieving ethical business conduct in the global business environment is a challenge without the aid of ethical codes.
In the global business environment, organizations have to deal with inconsistency in diverse countries. To be global as well as ethical, organizations have to access, analyze, and integrate the diverse legal settings (Swanson and Fisher 2008). Organizations have to comply with legal and ethical requirements in the host countries as well as policies laid down by the United Nation and regional trade organizations.
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Because of the diversity of the legal environment, organizations need international ethical codes to guide them in international business (Martin and Chaney 2006). There are several ethical codes, including the Organization for Economic Cooperation and development, International Labor Organization, International Chamber of Commerce, and Center for Transnational Corporations.
The international codes provide an important framework for ethical business conduct in the global business environment.
To respond appropriately to many ethical requirements, organizations must have a well established ethical climate.
Besides providing quality products and services, organizations have to respond to social responsibilities such as creating job opportunities, taking care of the environment, and paying back to the community (Logsdon and Wood 2005). Multinational organizations encounter many ethical responsibilities.
An ethical climate can be conceptualized, as a broader concept of culture that emphasizes ethical conduct. It comprises the way individuals in an organization perceive the organization’s norms (Trevino and Nelson 2010). Organizations with a strong ethical climate are less likely to be faced with ethical issues in the global business environment. It is, therefore, important for managers to ensure strong ethical conduct within their organization to create a sustainable ethical climate.
Organizations that maintain a high ethical climate can avoid legal and economical consequences of unethical conduct and gain good relationships with host countries.
|Carroll, A., and Buchholtz, A. 2008. Business and society: ethics and stakeholder management. Cengage Learning, Mason.||Book emphasizes the need for businesses to consider their ethical and social responsibilities|| |
|George, B. 2008. Ethics must be global, not local. Bloomberg Business Week.||Emphasizes the need to globalize business ethics|| |
|Logsdon, M, and Wood, D. 2005. Global business citizenship and voluntary codes of ethical conduct.Journal of Business Ethics, vol. 59, pp. 55-67.||Addresses the ides global business citizenship and need for ethical codes|| |
|Martin, J, and Chaney, L. 2006. Global business etiquette: a guide to international communication and customs. Greenwood Publishing Group, Westport.||Explores ethical cross-cultural communication issues|| |
|Swanson, D and Fisher, D. 2008. Advancing business ethics education. IAP, Charlotte.||“If We Don’t Know Where We’re Going, Any Road Will Take Us There” (Swanson and Fisher 2008, p. 2)|| |
|Trevino, L, and Nelson, K. 2010. Managing Business Ethics. John Wiley and Sons, Danvers.||Consider ethics as something that can be taught just and managed|| |
|Weaver, G. 2001. Ethics programs in global businesses: culture’s role in managing ethics. Journal of Business Ethics, vol. 30, pp. 3–15.||The author considers the challenges that US organization encounter as they implement their concept of ethic in other nations|| |
|Koslowski, P. 2007. Globalization and business ethics. Ashgate Publishing, Burlington.||Author address the implication of unethical conduct, especial in the financial market|| |
Carroll, A. and Buchholtz, A. 2008. Business and society: ethics and stakeholder management. Cengage Learning, Mason.
George, B. 2008. Ethics must be global, not local. Bloomberg Business Week. Web.
Koslowski, P. 2007. Globalisation and business ethics. Ashgate Publishing, Burlington.
Logsdon, M and Wood, D. 2005. Global business citizenship and voluntary codes of ethical conduct. Journal of Business Ethics, vol. 59, pp. 55-67.
Martin, J and Chaney, L. 2006. Global business etiquette: a guide to international communication and customs. Greenwood Publishing Group, Westport.
Swanson, D and Fisher, D. 2008. Advancing business ethics education. IAP, Charlotte.
Trevino, L and Nelson, K. 2010. Managing Business Ethics. John Wiley and Sons, Danvers.
Weaver, G. 2001. Ethics programs in global businesses: culture’s role in managing ethics. Journal of Business Ethics, vol. 30, pp. 3–15.