Text 1. Principles of business ethics

Ethics form the foundation for international economic activities. Ethical guidelines are essential in making business decisions. Business professionals have responsibilities to make decisions based upon ethical principles. In the 21^st century, the role of ethics in international business transactions and interactions will receive more attention.

Why discuss international business ethics? According to Donaldson, societies can and do have the right to expect business to function ethically. People in every country in the world make an agreement with business to carry out the necessary work to provide goods and services to society: "All productive organizations can be viewed as engaging in an implied contract with society." "Corporations must have bestowed upon them by society.... authority to own and use land and natural resources. In return, society has the right to expect that productive organizations will enhance the general interests of consumers and employees. Society may also expect that corporations honor existing rights and limit their activities to accord with the bounds of justice".

So, under this ‘social contract’ between society and business, what rules guide business? What are the minimal duties of business professionals? Should an international code of business ethics be adopted? If so, what should such a code contain?

Most companies have a Code of Conduct that guides workplace behaviors. A Code of Conduct is a description of what practices are expected of employees in the company. If employees follow the rules of the Code of Conduct, they succeed in their jobs; if employees violate the Code of Conduct, they may lose their jobs.

More and more companies conduct international transactions as a part of their daily operations. International situations are particularly prone to ‘gray areas’ because norms and practices that guide ethical behaviors vary across cultures. The ethical decision about what to do in some international business situations is not always clear. Sometimes, a decision about ethics is not ‘black or white,’ but is in the ‘gray area’.

Most experts in international business ethics agree that an international code of ethical practice, and not a code based on each individual culture’s unique norms and practices, is essential to global economic survival in the 21^st century.

Experts have created a list of principles to guide international. These principles are summarized here:

Text 2. Principles of international business ethics (adopted from the international business ethics institute)

 

1. Integration – Business ethics must permeate all aspects of organizational culture and be reflected in key management systems. Companies start by integrating ethics into goal setting and hiring practices. When promoting workers to higher levels within the company, ethical principles guide incentive programs.

2. Implementation – Ethical conduct is not just an idea, but requires the implementation of a plan of change in specific areas of work in the company. Some examples are efforts to modify personnel appraisal processes, promotion of improved environmental practices, and referrals to specialists, when needed.

3. Internationalization – Increased internationalization is necessary to all successful business in the 21^st century. Internationalization is achieved through the formation of international partnerships, trading blocs, and implementation of GATT and other free trade agreements. Clarification of an organization’s own definition of integrity that transcends national borders is necessary. A resulting program is not culturally defined and requires little or no modification when applied in global contexts.