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Ethical Issues In Cross Cultural Management

1475 words - 6 pages

International companies are being pressurized by different groups of people, mainly from their stakeholders, regarding social and ethical issues. The case study 'Polaroid in and out of South Africa' (Beauchamp, 1998) leads us to the question: is it moral or not, when trading in a foreign country, to participate in immoral actions to survive"? First, the words morality and ethics have to be defined. Morality can be defined, as "the standards that an individual or a group has about what is right and wrong, or good and evil." (Velasquez, 1982, p8). Velasquez also defines ethics as "the activity of examining one's moral standards or the moral standards of a society and asking (...) whether these standards are reasonable or unreasonable" (Velasquez, 1982, p11). As trade barriers are falling around the globe, differences in morality are gaining more interest regarding such issues as human rights, political behaviour or even environmental conservation. In this essay, it will be attempted to discuss, with examples related to International Business situations and linked to the case study, if whether or not multinational companies should act morally in a country that is acting immorally. First, the reason why some companies act unethically would be studied. Then, it will be studied, according to the socio-economical view, why companies should give more importance to ethics. Finally, in order to act ethically, the aim and framework of the code of ethics will be studied.First, the classical view believes that the sole responsibility of management is to generate the greatest possible financial return for shareholders. This view argues that to concentrate the organizations resources for social goals is both outside of the expertise of many professional managers, that is, requiring them to make moral decisions about what is good for a community, and can lead to fall in financial return to shareholders due to increased costs associated with implementing such goals. "These increased costs can theoretically lead to companies losing business to competitors whose prices are lower possibly due to the lack of ethical restraints." (Robins et al, 2000, p161)First, International Companies are generally interested in going abroad due to the advantages they can gain from it. Due to that, the idea of ethics has been for long completely ignored, mainly because the primary aim of an MNC is to make profit. When trading abroad, international companies might enjoy the fact that due to the different culture in which they are trading, they face different laws and regulations, different ethics and different moralsperspectives. In the host country, they would be allowed to act in a certain way whereas it would be 'morally' and ethically forbidden in their home country. Multinationals are keen on locating themselves in countries where cheap labour is offered, where they may get favourable treatments and where the environment law would be less restrictive.Ethics involves 'acting in a...

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