Download THE ETHICAL BEHAVIOR ISSUES AND MULTICULTURAL

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THE ETHICAL BEHAVIOR ISSUES AND MULTICULTURAL INFLUENCES ON
INTERNATIONAL BUSINESS RELATIONS IN THE ECONOMIC CRISI CONTEXT
Simona LUPULEAC, Dr. eng. and Zenica-Livia LUPULEAC, Dr. eng.,
”Apollonia” University of Iași
Abstract: The approach of any research theme on the ethical behavior issues and
multicultural influences in international business relations is extremely important in the
context in which there are signals ever more frequent that business people, under pressure of
economic crisis are increasingly oriented towards to obtain profit without having to reflect on
the consequences of immoral decision taken.
Research purposes: Aim of this study is the research of the ethical behavior issues and
multicultural influences in international business relations especially in times of economic
crisis, the consequences of unethical practices in international business and also the
strategies needed to be taken for prevent unethical behavior in international business
relations.
Research Methodology: Starting point of approach was reviewing literature for defining
concepts and the state of the art.
Practical methods include quantitative analysis consisting in one questionnaire based survey
and observation..
Results and Implications: The survey results aim to demonstrate that the use of ethical
behavior in international business is necessary for any successful business of our century. We
intend to prove that ethical behavior is not only fictional, but requires a change plan of
attitude in different conduct of the companies’ activity. The economic crisis is a pawn in the
way of major changes of ethical behavior in international relations.
The survey results are useful for managing crisis situations with success, for opening to
international business with confidence; especially the red flags will be drawn regarding the
consequences of international immoral business.
Keywords: Ethical behavior, international relations, international business, economic crisis.
Business Ethics and Ethical Behavior
In the current context of economic and social globalization the people morality need
become increasingly obvious; considered, in particular an attribute of development, ethics is a
set of the culture values.
Once started moving, the evolution of ethics in international business process will no
doubt continue in an accelerated pace, with positive results for as many types of interactive
corporations in the global economy.
Globalization makes national economies and corporations being increasingly
interdependent, so that, corruption of a certain part of the world can affect the global market.
Quite often international corporations have felt to its cost that those who do unethical
international business become their own victims.
The last decade, there has been an explosion in ethical codes of conduct of the
multinational corporations in international business. Most are prepared in accordance with the
principles established by OECD (Organization for Economic Cooperation and Development).
Unfortunately, these codes of conduct are not sufficient to guide business behavior and many
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managers and business analysts recognize that these codes are quite vague. Many problems
still wait for a strong theoretical argued and tested in practice solution. Ethics is a
philosophical discipline with application in all areas of life and spiritual practice. It suppose a
set of useful tools in the policy decisions of the company, in resolving conflicts between
groups witch interact in a business context: employees and employers, managers and
shareholders, the company and the local community, state institutions etc.
Applied Ethics means morally analysis of concrete situations in social or professional
practice, in order to take appropriate decisions (Monique Canto Sperber, 1996). Business
ethics is a particular form of applied ethics that includes all the rules and norms of moral
behavior of business people at individual and collective level. Business ethics means to
introduce in management strategies and other rules than those required by law. A company is
socially responsible for the extent that takes into account not only the interests of shareholders
but the interests of all groups affected by its activities.
R. T. George defines business ethics as an ethical perspective of a company or an
individual doing business. P.V Lewis defines business ethics as a set of principles or
arguments that should govern the conduct of business in an individually or parcel way.
There were currents of opinion over time, some of them are manifesting and in the
present, according to which there can be no ethics in business, the economic profit being
considered the main goal of the business. Ethical behavior in business context was considered
for a long time a factor that diminishes the profit, but studies over time have demonstrated
that even if the benefits of applying ethical behavior in business cannot be observed in short
time, they will make long-term presence.
Ethical behavior means all business people should strive to have. As Loebbecke
specify ethical behavior is necessary for a company to operate in an orderly manner, it is the
"cement of society" (A. Loebbecke, 2003). Many discussion and research supports the
importance of ethical behavior in business operations. Some authors claim the link between
ethics and the global economic crisis as a consequence of neglecting ethical behavior in
business (Mulej, M 2003).
De George and Webley lists the following topics which are considered to be common
unethical behavior in organizations: personal ethics, employee rights, security/safety of the
consumer; discrimination; financial practices (accounting) negotiation inside/outside the
organization; organizations responsibility, relations with corporations, protection of privacy,
corruption practices and executive pay.
Literature states that the most important advantages of ethical behavior of the
organization are: recruiting and retaining the best employees, increasing sales and improving
organizational performance, promoting transactions and strategic initiatives, support to
overcome periods of crisis, increasing the attractiveness of the companies. The need for
ethical behavior in business becomes more pronounced because: at the core of successful
business relationship stays respect, honesty and trust in a partner; an unethical attitude
towards their employees could reduce long-term organizational performance; nothing can be
more damaging for a business than the public image degradation due to unethical behavior; in
business, mistakes are punished, unethical behavior not forget.
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One reason for the usefulness of ethical behavior in organizations is beneficial. In fact,
without some strong ethical values, companies get easily to situations in which avoiding and
breaking the law leads to lawsuits and accusations.
Recent studies show us that organizations have become increasingly moral conscious
that the ethical behavior matter. The media has become an impressive force of pressure
around the world in a positive way; it is having more and more to say about violations of
moral norms, embodied in environmental disasters, corruption, etc.
Organizations and the business world in general terms are crossing a difficult time, a
crisis that gives us more and more signals that lately. Business people are more and more
oriented to obtain profit without regard for ethics in their activities. Latest European studies
demonstrate that in this time of crisis, the number of unethical behavior in organizations has
increased, which may affect international business environment.
Ethics and multinational businesses
Today the traditional businesses are no longer fashionable. That companies focused on
the national market cannot be successful without considering the international environment of
business. Today we are the witnessing of the gradual transition from the national market to
the global market, at the production and the labor level, the same at the capital and consumer
market. In terms of economic globalization, ethics and social responsibility are central
concerns. International operating companies must adopt a certain position in ethical issues,
taking into account the social impact that their actions may have.
International business activity involves a number of rules needed for business to
function properly. As others areas of human activity, there are certain rules of moral conduct
that are respected by those who are market participants. These ethical rules involve business
people obligation to behave correctly, even moral norms they follow are not found out in law
and not directly serves to the economic interests of the company.
Given the diversity of customs in the business world, businesses that operate in the
global market faces with many ethical dilemmas, they are placed in a position to choose one
of two options: a strict compliance by the company of the original country ethical policies, or,
on the other hand, the adaptation by the company of the ethical policies, traditions and the
business style from each foreign country where a multinational corporation operates.
According to widespread meanings, international business ethics refers to the ethical
dimension of any business relationship between two or more countries or between private
partners from different countries (Robert E. Frederick 2001). Ethics in international business
concerns an acceptable company moral behavior operating framework of the employees, both
at the decisional and executive level, not only in the country of origin but as well as in foreign
countries (Dan Crăciun, 2004).
Each company, individually, must exercise activity according to the values, principles,
obligations and its members. To reach the agreement on the principles and moral values to be
respected and supported by multinational companies and the economic, international business
activity involves a number of rules necessary for businesses to function properly. For an
international business relationship to work, it needs to be understood the ways in which
cultural differences are reflected in the ethical behavior of the people. For example,
Americans tend to consult their values in decisions about right and worse, they are more
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oriented on laws and rules. In contrast, Europeans and Asians seek guidance from their own
community and business organization relying on informal mechanisms to secure ethical
behavior (Dan Crăciun, 2004).
Multinational companies are the main actors of the international business. Their
obligations and responsibilities maintain and promote ethical standards and norms of
behavior. Nevertheless, there are many cases in which powerful international companies are
accused of exploiting the less developed countries of the world.
In Romania, there are currently two schools of views on business ethics. The first is
the idea that the Romanians began to study and to teach business ethics copying the Western
system and second, according to which business ethics is absolutely necessary in Romania as
widespread the corruption in Romania is a major inhibiting factor in way to achieve the
objective of a competitive market economy on international level.
According to the reports (2007 - 2008 years ) regarding the assessment of the business
environment of a country in terms of ethical, conducted by the World Economic Forum, the
most notable competitive disadvantage economically for Romanian is the unethical behavior
of organizations; Romania topping in this regard 103 ranking, from 131 countries 1.
Practical study
In order to analyze which is the state of unethical behavior during the economic crisis
at organizational level in Romanian organizations, a study was conducted.
To identify unethical behaviors at organizational level has been used a questionnaire with 26
items describing unethical behavior, evaluated on a differential semantic scale, describing the
frequency of these behaviors, with the following meanings: 1 = never, 2 = to a few months, 3
= monthly, 4 = weekly, 5 = daily.
According to the average analysis resulted the following unethical behavior in organizations
during the economic crisis being the most important according to manifestation frequency
(Table 1).
Table1. Unethical behaviors present in organizations in times of economic crisis, according to
respondent’s opinion.
Unethical behaviors in organizations in times of economic
crisis
1 discrimination against employees
2 collect confidential information about competitors
3 failure to comply with health standards in the workplace
4 violation of the rules on employee salary, overtime and
benefits
5 failure to comply with contractual terms with customers
1
Average
Rank
4,61
4,60
4,59
4,58
1
2
3
4
4,32
5
The Global Competitiveness Report 2007 -2008, World Economic Forum, www.gcr.weforum.org
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Unethical behaviors (Table 1) resulted to be the most important in time of economic
crisis, according to respondent’s opinion, achieving an average score bigger than 4, which
means that they occur almost daily in the studied organizations case. The most important
organizations unethical behaviors during the economic crisis, according to respondents are:
- discrimination against employees;
- collecting confidential information about competitors;
- failure to comply with health standards in the workplace;
- failure to comply the contractual terms;
- violation of the rules regarding employee salary, overtime and benefits.
Therefore we have proved that unethical behaviors are increasing in Romanian
organizations, especially in times of economic crisis. Unfortunately this can affect
international business environment. The progress of Romanian economy depends, especially
now during the crisis, of a good cooperation between Romanian and foreign investors,
investors who want clear and stable rules that would ensure obtaining legal profits.
Ethical quality of the company and its staff depends largely on the quality of its
decisions and the leadership. Every manager has a special moral responsibility to be an
example of conduct for its employees.
Conclusions
This paper can be a useful tool for managers, those who will guide the ethical behavior
of individuals to one that can encourage ethics and morality in order to overcome the crisis.
The results of this work can be a warning for the business and for the society in general. This
paper can provide important basis for mapping new directions approach of ethics in
organizations as well.
Since this paper was conducted in the context of economic crisis, we can say that
managers can identify and implement measures in real-time to prevent unethical behavior
during this period and supports morality in order to accomplish organizational performance
and to be competitive on the international market.
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