Ethical issues in Cross Cultural Management

Essay by map_uceUniversity, Bachelor'sC+, February 2005

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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...