Introduction
Over the last several decades, the global business environment has been experiencing significant changes. Among those are technological development, demographic changes, strengthening of emerging markets, and many other factors. All of those changes leave the companies, which operate in the global context, with the fact that this new, developed, environment requires new, advanced, tactics. And one of the sweeping changes that should be implemented is the movement towards ethical standards.
This paper examines the dynamics of a global market environment and the concept of ethics within the business, as well describes why developing markets need ethical standards and how those can be applied.
Dynamics of Global Business: What Should be Considered?
One of the greatest changes in the previous several decades is the advancement in technologies. Due to them, many new industries have emerged while some of the old ones are not needed anymore. Besides, technological changes also provide all existing businesses with numerous priceless opportunities, and probably the most valuable one is the disappearance of barriers for virtual businesses. However, while the organizations and firms are actively enjoying all of these possibilities, their consumers and buyers are doing the same.
One of the primary reasons why organizations in the past could use unethical business practices is that they could hardly be caught in the act. However, with the advancements in technology, people have got various gadgets, the Internet, social media, and many other ways to transmit information quickly and nearly to anyone in the world. So, when a person sees any unethical action committed by an employee or a manager, he or she can easily take a photo, which will serve as proof, spread it worldwide, and ruin the reputation of the company.
Another important issue is the growing competition among organizations in the global context. It is caused by many factors, among which are technological development, the growth of the population, and, surprisingly, the increasing power of emerging markets. No less than for several hundred years, the West has been the strongest. However, times have changed, and as Michaelson (2010, p. 239) states, such countries as China, Russia, India, and other representatives of the BRICs are growing much faster than members of the European Union or the United States.
Neither the Euro Union nor the US will likely ‘represent the world’s largest economy in GDP terms’ (Michaelson 2010, p. 239). So, maybe the ‘post-American world’ or the times ‘when China rules the world’ are not so far from reality (Michaelson 2010, p. 240).
To tell the truth, by the reason of high competition levels within the global business environment, the buyers, consumers, and investors have immense power. Hence, it has never been more important for organizations to have a spotless reputation and remember about ethics.
Who are the Ethical Leaders and What Principles They are Guided By?
Northous (2012) writes that since leaders can influence other people and have more power over them, they should also be more concerned about their dignity, rights, and needs. That is fair enough. That is why leaders should be guided by five principles. Firstly, they should respect their subordinates, which includes ‘giving credence to others’ ideas and confirming them as human beings’ (Northous 2012, p. 431).
Secondly, leaders should serve others, that is, put the interests of the followers above their own. McPherson (2013, p. 283) calls it ‘contra egoist approaches’. Thirdly, ethical leaders are fair and just. They make decisions based on honesty and fairness and treat their followers equally. Fourthly, they are honest. And finally, they build community and motivate their subordinates to achieve the common goal. Leaders do not force their followers to complete the tasks – they inspire them. All of these qualities can be rather useful in the global business environment.
Developed and Emerging Markets: Who Needs Ethics More?
In his article, Michaelson (2010, p. 239) defines the central dilemma of global leadership and calls it ‘the question in question’. It reads as follows, ‘When moral business conduct standards conflict across borders, whose standards should prevail?’ (Michaelson 2010, p. 239). In other words, it is hard to make a decision when to do something ‘because it is morally right’ and when to be guided by what ‘will make a profit’ (Michalos 2013, p. 601).
Later in his article, Michaelson (2010, p. 244) also states that there is a difference between the urgency of establishing ethical standards in developed markets and developing ones. And this difference is noticeable. Although emerging markets do make a lot of progress from an economic perspective, they usually are not very concerned about ethics. Besides, as Michaelson (2010, p. 238) ironically notices, ‘good business behavior is at risk in developing markets because, well, the markets… are developing’. And since they are developing, established institutions probably do not work well enough, and the markets are extremely vulnerable to any mistakes.
Besides, if representatives of a developed market operate in a developing host one, they are usually more likely to be engaged in unethical operations (Michaelson 2010, p. 238). All of this leads to the fact that emerging markets compared with developed ones have ‘particularly acute’ bribery and corruption (Dallas 2013). Naturally, it can scare away both investors and consumers, even though they are usually attracted to emerging markets due to their fast and promising economic progress.
How Ethical Standards Can Address Corruption and Bribery?
First of all, all ethical standards are based on responsibility, honesty, fairness, and respect. According to them, people should work and make decisions without consideration of their interests. Besides, ethical standards also imply transparency, and it is one of the first steps to be made to lower the corruption and bribery levels. Developing markets should establish strict transparency policies and make all the operations clear and exposed.
It will not only help to control bribery but also let investors understand that organizations are moving towards ethics management. Besides, the companies can also implement new Human Resource Management strategies, conduct training courses, and interventions regarding corruption and its consequences, and encourage their employees to fight corruption and bribery. Finally, companies should also tighten control and discipline.
To conclude, the present-day global business environment is experiencing significant changes. Developing markets show exceptional progress and growth and make people think that probably in a few decades such countries as China, Russia, or India economically will replace the members of the European Union or the United States. However, although emerging markets progress from an economic perspective, they have a lot of challenges to overcome, and the biggest ones are the corruption and bribery levels. To get over them, companies should establish ethical standards, and particularly transparency policies.
Reference List
Dallas, G 2013, Business Ethics in Emerging Markets and Investors’ Expectations Standards. Web.
McPherson, D 2013, ‘Vocational virtue ethics: prospects for a virtue ethic approach to business’, Journal of Business Ethics, vol. 116, no. 2, pp. 283-296.
Michaelson, C 2010, ‘Revisiting the global business ethics question’, Business Ethics Quarterly, vol. 20, no. 2, pp. 237-251.
Michalos AC 2013, ‘The business case for asserting the business case for business ethics’, Journal of Business Ethics, vol. 114, no. 4, pp. 599-606.
Northous, PG 2012, Leadership: Theory and Practice, 6th edn, SAGE Publications, Thousand Oaks, CA.