Business Ethics in Multinational Companies: Informing a Workplace

Subject: Business Ethics
Pages: 10
Words: 2865
Reading time:
11 min
Study level: PhD

Introduction

My company is a large oil and gas corporation with 88 locations in various countries. As a result, it faces the issue of the development of its international organizational ethics, which is complicated by the company’s natural diversity and which has already lead to conflicts in the past. The present literature review is aimed at constructing a theoretical framework for the workplace-based case, which would facilitate the problematizing processes. The review involves the discussion of the different viewpoints in the field of business ethics, the introduction of the notion of an international ethics code, and a view on the role of a manager in the process of ethics code development and implementation in a multinational company. The problem is defined and redefined, and conclusions about the usefulness of the theoretical materials for the workplace case are made.

In only 3 hours we’ll deliver a custom Business Ethics in Multinational Companies: Informing a Workplace essay written 100% from scratch Get help

Literature Review

Business ethics: an introduction

The concept of business ethics has been investigated for several decades, and its significance rose with the growth of multinational corporations (Rawwas, Arjoon, & Sidani, 2012). As pointed out by Fassin (2009), globalization processes place immense power at their disposal, which is why their ethical conduct becomes of direct concern for the stakeholders and the population of the world. At the same time, stakeholders and governments have the opportunity to exert pressure on the companies (Zutshi, Creed, Sohal, & Wood 2012); in fact, the “shareholder value is now the core purpose of the modern corporation – and required by legislation in many states” (Allio, 2011, p. 4). Similarly, the increasing importance of corporate social responsibility (CSR) and creating shared value (CSV) for the profitability of a company demands that a company takes into account the impact that it has on all the stakeholders (Allio, 2011, p. 4; Fassin, 2009, p. 504). As a result, it can be stated that the ethical conduct of a company is a requirement for a modern business. While this requirement does not prevent cases of ethical misconduct (Allio, 2011; Tran, 2010), it does spur the development of business ethics theory.

Key viewpoints

There are two basic approaches to international ethics and ethics: on the one hand, it is possible to insist on the idealistic view that there exists some kind of the universal ethics (idealism, universalism, “cultural imperialism”), and on the other, it is common to suggest that the diversity of the human world presupposes the relative nature of ethics (relativism) (Melé & Sánchez-Runde, 2013, p. 682; Rawwas et al., 2012). The first approach appears more applicable to the notion of globalization but neglects human diversity and poses the significant challenge of determining, which of the moralities of the world should be considered the universal one. The second one takes into account the diversity of the cultures of the world but neglects the fact that the cultures are not static and can adapt to changes in the environment.

According to Verhezen (2010), it is common for international companies to adopt relativism since the demonstration of neglect or disrespect of the cultural specifics of a host country typically leads to the decrease in the company’s reputation in the eyes of the local people. The author does not regard it as a disruption of organizational ethical principles and culture; rather, he terms it as a “cultural interpretation” (Verhezen, 2010, p. 190), which is another view on the issue that presupposes the existence of a relatively stable and flexible code of organizational ethics. Similarly, Melé and Sánchez-Runde (2013) define universalism and relativism as the extreme opposites and suggest that a middle opinion can be formed, which allows adhering to personal moral values and standards while also respecting that of others, even though the balance between the too may be difficult to maintain. This middle view suggests that some universal principles do exist while particular, specific norms depend on the culture. While it raises the questions of who and how should determine the universal principles that are very controversial since the laws created by people are not unlikely to be flawed (Rawwas et al., 2012), this position provides the philosophical and theoretical ground to the idea of international business ethics that is both stable and flexible.

International ethics

Moral diversity does not patently exclude the existence of universal values, but it does complicate the process of their determination. Examples of relatively stable values may include the humanity, reciprocity, wisdom, and some others. In the terms of business ethics, human rights might be considered a kind of universal guidelines (Melé & Sánchez-Runde, 2013). Also, the concept of CSR can be regarded as a form of an international business ethics code. It should be pointed out that it does not have a truly universal definition, and it still can be regarded differently in different countries and even companies (Zutshi et al., 2012), which is why it is not global yet, but it is already international. Also, this flexibility of definition is likely to promote CSR as the international ethics code since it presupposes the potential for “cultural interpretation” of its guidelines.

Balance possibilities

Apart from balancing the local and organizational cultural values, business ethics is concerned with the issue of balancing profitability and ethical conduct or selfishness and selflessness (Zutshi et al., 2012). However, modern business ethics literature insists that keeping this balance is possible, even though it requires certain effort. For example, Verhezen (2010) states that such a balance requires proper management and organizational culture that promotes ethical awareness. Similarly, Allio (2011) dwells on the notion of “virtuous corporation,” which presupposes the establishment of a company goal for “virtuous” behavior. If the goal becomes a part of the organization’s strategy, the balance will be kept for the sake of attaining it. The notions of CSV is similar to this idea: according to Allio (2011), CSV is different from CSR in attempting to promote the activities which improve the competitiveness of the organization while developing the well-being of the society. It can include, for example, the continuous development of human capital or the reconceiving products. To sum up, there is a noticeable effort in the business ethics literature to find frameworks that suggest the means of balancing the “selfish” and “selfless” practices together with the profit and responsible, ethical conduct.

International business ethics code in practice

The development of an international (or multinational) ethics code is only the first part of the process of the resolution of the issue; the code needs to be introduced and integrated into the corporate culture. As rightfully pointed out by Tran (2010), the ethical “tone” of the company must reach every stakeholder, and the culture is the natural means of ensuring this process.

Academic experts
available
We will write a custom Business Ethics essay specifically for you for only $16.00 $11/page Learn more

Verhezen (2010) suggests the governance mechanisms that can help a multinational company to enhance the processes of ethical principles development, maintenance, and cultural integration. The author describes formal and informal structures; the first ones are used for monitoring, rule enforcing, and protection of the interests of the company and its stakeholders, while the latter are aimed at the creation of a suitable environment through learning and the development of trust and transparency at the workplace. While the former is important, the author insists that it is insufficient for the development of ethical conduct and requires the introduction of the latter forms of governance in order to achieve success.

Similarly, Tran (2010) insists on the introduction of specific mechanisms and procedures for the maintenance of ethical conduct with the chief ethics officer as the chief accountable actor in the field. The author also suggests that the Officer needs to be independent and vested with authority and means sufficient for the duties he or she is expected to perform. Apart from that, Tran (2010) proposes the creation of “whistle-blower hotlines” to ensure the communication of ethical issues. The so-called whistle-blowing is, in fact, crucial for the detection of unethical conduct. Tran (2010) and Verhezen (2010) point out the need for the protection and encouragement of whistle-blowing, in particular, through the improved moral awareness. Also, as suggested by Fassin (2009), the moral conduct of a company can be assessed, monitored, and maintained by the alignment of tactics and actions with objectives and strategies; such an approach contributes to the integrity of principles and actions.

The role of the managers

The modern business ethics literature highlights the role of the manager in the process of ethical principles development (Verhezen, 2010), and many of works attempt to develop various tools (primarily frameworks and models) that would allow the generation of such principles and would guide ethical decision-making. For instance, Crossan, Mazutis, and Seijts (2013) work with several models, including the four-element psychological one that includes “moral awareness and moral judgment and concludes with moral intent and finally moral behavior” (p. 568). Similarly, Craft (2012) provides an overview of decision-making models, including the issue-contingent model, which includes the same steps but expands them with several other aspects, including, for example, the different levels of awareness. Tran (2010) highlights the role of the Chief Executive Offices and the Chief Ethics Corporate Officer as the managers who “set the tone” for the corporate ethics and suggests an overview of their responsibilities and strategies in this respect. Apart from that, as pointed out by Verhezen (2010), the personal ethical conduct of the managers is likely to inspire the trust and integrity of the employees, which, in turn, makes them compliant with the ethical principles of the company and facilitates the dialogue within the organization (p. 190).

Dench (2006), on the other hand, provides a case study of personal unethical conduct that leads to trust and transparency issues. Similarly, as demonstrated by Fassin (2009), the unethical decisions of managers can seriously damage the reputation of a company and the legitimacy of a manager. Finally, the literature provides suggestions on the traits and personal qualities of an ethically successful manager; for example, Rawwas et al. (2012) dwell on epistemic traits (such as open-mindedness and careful thinking) and personal moral philosophies as predictors of positive ethical dilemmas resolution. Similarly, Crossan et al. (2013) consider the traits and values of managers together with their ethical decision-making skills and produce a model that includes these predictors of success in the decision-making process. The authors also demonstrate that virtue is concerned with keeping a balance between extremities: for example, both closed-mindedness and lack of personal opinion are undesirable, and only the balanced option (open-mindedness) can be a virtue. Therefore, there are several levels of balance-keeping in ethical conduct development.

Personal research interests and the definition of the workplace-based problem

My personal research interests gravitate towards two aims: the international business ethics code in the context of my workplace and the understanding of its application for the decision-making of a manager employed by my company. Initially, I considered it necessary to explore the possibility of an international business ethics code and its potential usefulness to managerial practice. However, the presented theoretical framework indicates that an international business ethics code is a possibility, even though it is concerned with maintaining multiple balances both for the company and individual managers. Therefore, I can redefine the aim to the search for the means of the development of an international ethics code for my corporation. Also, I am shifting the focus from the managers to the managers and employees at large as the creators and “bearers” of the organizational culture that needs to incorporate the new ethics in order to make it practically applicable. As a result, I can redefine the workplace-based problem as the currently existing need and potential for the improvement of the current code of ethics or the development of a new one, and the action research that will involve working with the managers and employees will demonstrate how radical the change should be.

Also, the particular issue that I have been considering within the context of my workplace consists of the ethical outsourcing challenge. It is being addressed in the modern business ethics literature; in particular, Zutshi et al. (2012) produce a framework for ethical outsourcing, which includes seven steps with their corresponding considerations that should allow balancing the self-interest and selflessness in business. While the framework is very general, the authors justify it by highlighting the significance of the context. The issue of ethical outsourcing and its means and tools can become a starting point for the discussions with the managers and employee representatives of the notion of international ethics.

Conclusion

The presented literature review informs the action research at the workplace by indicating the fact that the varied approaches to business ethics that exist nowadays suggest the possibility of the development of an international ethics code. Currently, it is difficult to insist that a global ethical code exists, but the examples of the international ones like CSR demonstrate the possibility of adapting the workplace code to become more capable: relatively stable but flexible. The theoretical framework also illustrates the significance of the corporate culture for the spread and maintenance of corporate ethics, which shifts the focus of the action research to the employees of the company at large as the “bearers” of the said culture. Finally, the review demonstrates the significance of the role of the management in ethics development and maintenance and offers a variety of tools that managers can use to keep the balances that are related to ethics.

15% OFF Get your very first custom-written academic paper with 15% off Get discount

The modern research on business ethics is very extensive. It covers varied aspects of ethics and searches for theoretical frameworks and more practice-oriented solutions (Tran, 2010). It includes purely theoretical works (Allio, 2011), those incorporating practical examples (Tran, 2010), and case studies (Dench, 2006). It covers the issue of the definition and purpose of business ethics (Verhezen, 2010), the possibility of developing an international ethics code, and some specific subjects that are of interest for the workplace-based case including the challenge of ethical outsourcing (Zutshi et al., 2012). As a result, it is quite capable of informing the research of the workplace-based problem, and the key challenge consists in embracing and integrating the knowledge in a solid framework, the attempt of which is being done here. Also, it is illogical to insist that the proposed research is approaching an underresearched issue; rather, it is aimed at applying the current research to a particular problem within its particular, unique context. Still, the results of the action research might be of interest as a case study, and its parts (for instance, focus groups works or managers’ interviews) could be used to produce additional insight into various practical aspects of organizational ethics. In other words, the results of the action research might contribute to the development of the research in the area, but they would be aimed at extending the current knowledge rather than creating a new one.

Workplace-Based Case: The Big Picture and Multiple Actors within the Organization

The current exploration of the theory of business ethics is aimed at informing the action research at my workplace, which will include the investigation of individual approaches and practices among key managers. However, the discussions with employee representatives are also in order. As a result, in this part of the work, the relationship of other actors to the organizational ethics will be considered.

Organizational Transparency, Culture, and Ethics

The literature review shows that there is a significant emphasis on the role of the top management in organizational ethics development and maintenance. For example, Verhezen (2010) highlights the leading role of managers in the process of balancing ethical conduct (which requires adhering to organizational values and principles) and profit-making. Tran’s (2010) view is similar: the author insists that the top sets the tone for the importance and the content of the ethical principles of the company. Rawwas et al. (2012), though, focus on middle-management decision-making, highlighting the fact that ethical dilemmas are often a part of their work. Apart from that, Tran (2010) and Verhezen (2010) mention the importance of a whistle-blowing “network” in the company. The same authors also dwell on the integration of ethics into the organizational culture, which naturally involves the entire organization and all of its employees. As a result, the role of all the employees in the ethical conduct of a company appears to be noticeable, which justifies the choice of tools for the action research.

Organizational culture may be “ethics-friendly.” For example, Verhezen (2010) describes the integrity-based organizational culture as an important aspect of the “good corporate governance” and contrasts it with the “culture of silence” or “moral muteness” that is being typically fostered in the traditional compliance-oriented cultures. Moral muteness disrupts the dialogue at the workplace, signals of the lack of transparency and trust, and can lead to complications of the existing problems. The case study of Dench (2006), for examples, evaluates such a situation, where the person who knows about an ethical issue does not report it because of the fear of being fired and losing her visa. The result is harmful to the company since the unethical conduct of a superior negatively affects the productivity of his group. The example highlights the importance of appropriate mechanisms of whistle-blowing and ethical awareness culture, which are to be established through the top and middle management activities. It also demonstrates the need to review the culture at the workplace and thus informs the action research.

References

Allio, R. (2011). Reinventing management purpose: the radical and virtuous alternatives. Strategy and Leadership, 39(4), 4-11. Web.

Craft, J. (2012). A Review of the Empirical Ethical Decision-Making Literature: 2004–2011. Journal of Business Ethics, 117(2), 221-259. Web.

Crossan, M., Mazutis, D., & Seijts, G. (2013). In Search of Virtue: The Role of Virtues, Values and Character Strengths in Ethical Decision Making. Journal of Business Ethics, 113(4), 567-581. Web.

Get your customised and 100% plagiarism-free paper on any subject done for only $16.00 $11/page Let us help you

Dench, S. (2006). How personal can ethics get? Journal of Management Development, 25(10), 1013-1017. Web.

Fassin, Y. (2009). Inconsistencies in Activists’ Behaviours and the Ethics of NGOs. Journal of Business Ethics, 90(4), 503-521. Web.

Melé, D. & Sánchez-Runde, C. (2013). Cultural Diversity and Universal Ethics in a Global World. Journal of Business Ethics, 116(4), 681-687. Web.

Rawwas, M., Arjoon, S., & Sidani, Y. (2012). An Introduction of Epistemology to Business Ethics: A Study of Marketing Middle-Managers. Journal of Business Ethics, 117(3), 525-539. Web.

Tran, B. (2010). International business ethics. Journal of International Trade Law and Policy, 9(3), 236-255. Web.

Verhezen, P. (2010). Giving Voice in a Culture of Silence. From a Culture of Compliance to a Culture of Integrity. Journal of Business Ethics, 96(2), 187-206. Web.

Zutshi, A., Creed, A., Sohal, A., & Wood, G. (2012). Consideration of selflessness and self‐interest in outsourcing decisions. European Business Review, 24(3), 287-303. Web.