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Business Ethics Differences Around the World Case Study

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Executive Summary

There are significant differences between the management ethics of different countries and regions. Western nations follow the same frameworks, but the United States focus on morals much more than European nations. Confucianism is still prominent in the Far East, with China struggling to abandon them. Japan has been somewhat successful in transitioning away from the paradigm, though not entirely, and South Korea has significant displays of both Western ethics and Confucian values. Developing countries such as India are starting to recognize the importance of ethics in business, with new companies adopting them more than established ones.

Lastly, in Middle Eastern Arab countries, managers think highly of their ethics but are ready to abandon them if ordered to do so by a superior. Ultimately, regardless of the country, companies can convince employees to follow their ethics by introducing a powerful organizational culture. On the flip side, a weak employee identity can lead to internal fracturing and complicate any initiative to improve ethics.

Introduction

Management ethics is part of the broader concept of business ethics, which have emerged throughout the world in the 20th century. It has emerged due to changes in business values that put moral behaviors by companies, and their management, in particular, into focus. However, the change happened at different times in various regions throughout the world, as the social changes that created the phenomenon were not simultaneous.

Moreover, the environments of geographically and culturally distant areas may have influenced the formation of the principles of local management ethics. With the modern trend of international expansion efforts, managers need to understand these differences in values and how they may be addressed. This essay will review major organizational cultures that exist throughout the world in terms of their business values and management ethics.

Major Organizational Cultures

The Western managerial culture has played a significant influence on the overall theory surrounding the concept. As such, its developments will be used to explain parts of the analysis and to put the different cultures discussed in this essay into the same framework. Carroll, Brown, and Buchholtz (2018) list ideas such as utilitarianism, Kant’s categorical imperative, rights, justice, virtue ethics, servant leadership, and the Golden Rule as noteworthy ethical concepts.

All of these principles have benefits as well as issues, which often lead to conflicts that do not allow one to combine several approaches effectively. As such, most Western managers will prefer one paradigm and adhere to it in their work. Other prominent cultures will have principles that do not strictly fit any of the ideas above, but it is usually possible to find some fundamental similarity and use it as a point of comparison.

The United States is known for its excellent business ethics, with a high focus on transparency and fairness. According to Vogel (2016), the reason is the nation’s history of associating success in life with virtue. As such, people in positions of high social status, such as management, are expected to be role models for others to follow. Members of the profession are aware of this image and work to maintain it, exposing unethical behavior by their colleagues and striving to achieve excellence in moral conduct.

Moreover, instances where managers are found to act unethically frequently become highly public and result in significant damage to both the person and the company. Companies in the United States are often among the first to adopt characteristics such as transparency and corporate social responsibility to demonstrate their commitment to acting ethically.

By contrast, in Europe, there is less focus on ethics, and behaviors that violate it are more likely to be overlooked. Vogel (2016) notes that a cynical attitude that equates wealth with dishonesty dominates the region, and managers are expected to protect the company’s interests rather than make judgments based on personal morality. Ethics-related scandals harm the image of the business, and so, there is an incentive to conceal them to protect its reputation.

People who refuse to do so and expose issues are likely to be seen as a liability rather than a source of improvement. If one wants to continue or advance his or her career, he or she may have to overlook problematic practices. With that said, Europeans are among the first to adopt American business norms, and their ethical conduct tends to be acceptable by Western standards.

Eastern nations have developed in a separate manner that was influenced by the region’s philosophy and other circumstances. As Ren, Wood, and Zhu (2015) claim, until recently, Confucianism and close associations between businesses and the state dominated the nation. Sales were guaranteed for specific companies due to their network of connections, and due to the country’s isolationism, there was not much competition. As a result, with the opening of the nation to foreign markets, managers have begun experiencing a much higher pressure to perform than before. Being unused to such heavy demands, they have been forced to make compromises to maintain high performance.

China’s traditional culture is accepting of bribery and other behaviors that go against Western ethics. Thus, managers found it easier to act unethically in the immediate interests of the company, with personal concerns taking a secondary position.

Despite starting from a similar position, Japan has become one of the most advanced and economically successful nations in the world. It is known for its collectivist culture, which is conducive to unethical practices such as those described above. Similar to China, the government would often protect large corporations from issues to maintain their performance and economic benefits to the nation.

However, like Heath, Kaldis, and Marcoux (2018) note, while ethical managerial decisions in the country tend to be situational, there is a growing trend of Kantian ethics emerging in the nation. Many members of the profession will still consider the benefits and dangers to the company first, but they will also apply an ethical foundation. Strong trends of corporate loyalty are still present, but managers are becoming more individualistic, possibly as the result of Western influence.

South Korea is another East Asian country that has succeeded in becoming one of the most prominent economies in the world. Its circumstances are largely similar to Japan, with multiple large conglomerates such as Samsung having ties to the government. However, Oh and Park (2017) conclude that scholars tend to disagree on the reason for the country’s success, claiming that it either evolved from the local circumstances or is the result of rampant Western capitalism.

As a result of this conflict, management ethics in the country conflict. Leaders acknowledge the necessity of transparency and openness but also want to maintain Confucian norms that cannot exist alongside these qualities. Overall, Korea is a paradoxical case where both the native ethics and the imported Western ones have grown powerful without finding a compromise.

Developing countries, such as India, tend to look to their more successful counterparts for guidance even as they employ whatever means possible to become competitive faster. Kanda and Handa (2018) highlight the lacking ethical framework of large Indian firms, particularly IT ones, but conclude that startups in the country assign a high priority to morals. Firms that emerged while the nation’s economic condition was weak were only concerned with profit. Having succeeded, their managers generally do not see a need to adopt an ethical business model to improve performance. However, new businesses find that consumers and others are more interested in working with a trustworthy company if they have a choice. Both current and new companies will likely continue putting an increased emphasis on business ethics and management ethics, in particular, in the future.

Lastly, wealthy Arab countries in the Middle East warrant an analysis due to the region’s significance to the world’s economy. There has not been much outside research into the management practices in the area, largely due to its self-contained nature.

However, it is possible to infer some information from internal studies and self-reported results. The survey by Darwish and Abdeldayem (2019) shows that managers in the GCC consider themselves highly moral, but it also displays strong agreement with the idea of following potentially unethical orders. As such, it is possible to assert that Middle Eastern businesses are highly hierarchical, and the command chain takes priority over ethics in most scenarios. As such, the region displays high potential for the propagation of unethical practices, especially if they begin at a high level, due to the lack of questioning by one’s subordinates.

Ethics and Organizational Culture

The Western business model, and the American one, in particular, are often considered exemplary due to the lasting success of many nations that use it on a global scale. Kumar and Steinmann (2015) detail an attempt by the United States to propagate an ethics model that focused on human rights, law compliance, avoidance of corruption, and fair competition throughout the world. Notably, despite the initiative being promoted by the government, it was directed at companies in an advisory manner and was not enforced through any new laws.

The reason is that the United States government understood that the best way to convince a company to do something is to show that the act will create financial benefits for it. Companies will find ways to circumvent or remove laws that are inconvenient for them. As such, the adoption of new ethics is dependent on whether the organizational culture accepts them.

Businesses tend to create an isolated internal environment in which employees can cooperate without concern for their differences. If one’s identity as an employee is strong enough, it can override their cultural norms, which can be beneficial for the company. Trevino and Nelson (2017) detail several cases where employees would disregard national cultures of bribery or deference to authority because they prioritized the company’s code of ethics.

Moreover, they did not feel conflicted about such behaviors, recognizing the disadvantages of their cultural practices and being happy that they could avoid them. However, a strong organizational culture can promote both positive and negative qualities without distinction. As such, it can be challenging for an initiative to introduce better ethics into a company that is firmly entrenched in its problematic practices.

With that said, in a strong organizational culture, the upper management can create changes without much difficulty if it is convinced of their necessity. Companies with a weak sense of identity present a more significant issue because it becomes challenging to introduce new ideas in a coordinated manner. As Trevino and Nelson (2017) explain, strong subcultures tend to form in such environments and control one’s behavior.

These groups may not be responsive to initiatives, especially ethical ones that seek to end practices these groups may see as normal. Moreover, the drivers of the initiative will have to convince each subculture, many of which will not have a well-defined leader, separately. Overall, weak organizational cultures tend to massively complicate the management of ethics and the correction of any issues that emerge.

Conclusion

Companies that want to adopt contemporary business ethics to a satisfactory degree should concentrate on creating a powerful corporate identity. When a person is in the workplace, the local culture tends to be more important to them than the overall context of the region or nation. As such, if the management controls this culture, it can define the ethics that one should follow while working for the business without creating significant employee resistance. However, even with a powerful organizational identity, the upper management must ensure its commitment to ethics first. Most changes will come from it, and as such, its leadership by example is crucial to their success. As long as the management can prioritize internal culture over that of the region and nation, the company should be able to adopt excellent ethics.

Literature Review

Carroll, A. B., Brown, J. A. and Buchholtz, A. K. (2018) Business & society: ethics, sustainability & stakeholder management. Boston, MA: Cengage.

Darwish, S. and Abdeldayem, M. M. (2019) ‘Risk management and business ethics: relations and impacts in the GCC’, International Journal of Civil Engineering and Technology, 10(10), pp. 489-504.

Heath, E., Kaldis, B. and Marcoux, A. (eds.) (2018) The Routledge companion to business ethics. New York, NY: Routledge.

Kanda, R., and Handa, H. (2018) ‘The impact of service ethics on organizational competitiveness in India: a primary approach to the startup and emerging service enterprises’, International Journal of Business Ethics in Developing Economies, 7(1), pp. 13-22.

Kumar, B. N. and Steinmann, H. (eds.) 2015, Ethics in international management. Berlin: Walter de Gruyter GmbH & Co.

Oh, I. and Park, G.-S. (eds.) (2017) The political economy of business ethics in East Asia: a historical and comparative perspective. Cambridge: Elsevier.

Ren, S., Wood, R. and Zhu, Y. (2015) Business leadership development in China. New York, NY: Routledge.

Trevino, L. K. and Nelson, K. A. (2017) Managing business ethics: straight talk about how to do it right. Hoboken, NJ: Wiley.

Vogel, D. (2016) Kindred strangers: the uneasy relationship between politics and business in America. Princeton, NJ: Princeton University Press.

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