Understanding Business Ethics Within an International Context

Lecture plan
The significance of ethics for organisations Some examples Where do our ideas about ethics originate? Cross cultural comparisons The Harvard MBA Oath Some useful questions

The significance of ethics for organisations

Perceptions about ethics and ethical behaviour affect:
Profits Legitimacy Employee engagement and commitment

Ethics and profitability: some examples (1)

Union Carbide (Bhopal) Shell Oil (Nigeria) Ford Motor Company ( issue of group photographs in the Dagenham Plant and the Race Relations Act) Nike and child labour issues Barclays investment in South Africa during the Apartheid regime

Ethics and profitability: some examples (2)

Body Shop Fair Trade Grameen Bank

Tata Steel
Mission statement: Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community. This heritage will be continuously enriched by formalising the high standards of ethical behaviour expected from employees and companies. (Maheshwari and Ganesh 2004:
10)

Tatas ethical programme:

Created a Code of Conduct Developed a post for an Ethics Counsellor at senior management level Established Ethics Co-ordinators in every department who report directly to the Ethics Counsellor on ethical issues Organised ethics awareness programmes for the families of senior managers

Some results:
Employees felt an increased sense of pride in the company Decreased amount of bribes to officials Enhanced reputation (Maheshwari and Ganesh
2004)

Maheshwari and Ganeshs (2004) recommendations

Socialisation increases employee ethical commitment so companies should invest more in socialisation activities, High level commitment needed from senior executives (and yet findings show that the more senior the employee the less likely they are to consider ethical issues in decision making), Increasing the moral intensity increases concern for ethics.

Moral intensity consist of

Magnitude of consequences, Social consensus, Probability of effect, Temporal immediacy, Proximity, Concentration of effort. (Maheshwari and Ganesh 2004)

Where do our ideas about ethics originate?

Our own experiences Religious and moral exemplars Cultural assumptions

Ethics in a global context

Universalism versus relativism
Universalism: belief in a set of applicable ethical principles Relativism: ethical principles cannot be applied universally

Particularists (value relationships, subjectivity and ambiguity) Universalists (value norms, objectivity and predictability)

 Ethnocentrism and Parochialism Tendency to see ones own culture as morally superior But - people within the same society do not always share the same values and moral beliefs

Another example: perceptions of gift giving

High context cultures
More likely to see gift giving as an imperative More taboos associated with gift giving

Low context cultures

More likely to see gift giving as a bribe Gift giving surrounded by legal restrictions and company policies

The Harvard MBA Oath

The oath is a voluntary pledge for graduating MBAs and current MBAs to create value responsibly and ethically. We are building upon these essential efforts to create a community of MBAs with a high standard for ethical and professional behavior. We are now a broad coalition of MBA students, graduates and advisors, representing over 250 schools from around the world. We are partnering with the Aspen Institute and the World Economic Forum. (www.mbaoath.org)

As a business leader I recognize my role in society. My purpose is to lead people and manage resources to create value that no single individual can create alone. My decisions affect the well-being of individuals inside and outside my enterprise, today and tomorrow. Therefore, I promise that: I will manage my enterprise with loyalty and care, and will not advance my personal interests at the expense of my enterprise or society. I will understand and uphold, in letter and spirit, the laws and contracts governing my conduct and that of my enterprise. I will refrain from corruption, unfair competition, or business practices harmful to society.

I will protect the human rights and dignity of all people affected by my enterprise, and I will oppose discrimination and exploitation. I will protect the right of future generations to advance their standard of living and enjoy a healthy planet. I will report the performance and risks of my enterprise accurately and honestly. I will invest in developing myself and others, helping the management profession continue to advance and create sustainable and inclusive prosperity. In exercising my professional duties according to these principles, I recognize that my behavior must set an example of integrity, eliciting trust and esteem from those I serve. I will remain accountable to my peers and to society for my actions and for upholding these standards. This oath I make freely, and upon my honor. (www.mbaoath.org)

Useful questions
When faced with conflicting demands what values underpin your priorities? Do you do what you promise? Do you consider whether the way your production or goods contributes to a sustainable environment? Do you consider whether your staffing policies are humane and equitable? Where do you think your own ethical values come from? How willing are you to accommodate others ethical values when they are in conflict with your own?

References
Chakraborty, S.K. (1998) Values and Ethics for Organizations: Theory and Practice OUP Lucas, R., Lupton, B. and Mathieson, H. (2006) Human Resource Management in an International Context CIPD Maheshwari, S.K. and Ganesh, M.P. (2004) Ethics in Organizations: The Case of Tata Steele Working Paper: IIM Ahemdabad