Shades of gray in the global marketplace - cultural and ethical considerations in making business decisions - Business Ethics

HR Magazine, April, 1997 by Patricia Digh

Doing business across borders requires new cultural vocabularies and new ways of thinking about what's right and what's wrong. Or what's right and what's right.

She thought she was doing the right thing. The manager of a large U.S. company operating in China caught an employee stealing. Following company policy, she fired him and turned him over to the local authorities. Later, she was horrified to learn that the employee had been summarily executed.

So goes the story told by international ethics expert Thomas Donaldson, the Mark Winkelman Endowed Professor at the University of Pennsylvania's Wharton School of Management. The manager in Donaldson's story discovered too late that the cultural context in which the policy was formulated was vastly different from the cultural context in which she carried the policy out.

Culture standardizes relationships and provides a common vocabulary, so people don't have to be constantly mindful of the implications of their behavior. But the 95 percent of the world's people who live outside the United States sometimes have different cultural vocabularies. As businesses increasingly look overseas for continued growth, the possibility of cultural confusion about rules, ethics and HR policies intensifies, with results that can be tragic and costly.

Businesses can take three steps to help ensure that their companies' expatriates behave not only appropriately, but also ethically: (1) develop a clearly articulated set of core values as the basis for global policies and decision-making, (2) train international employees to ask questions that will help them make business decisions that are both culturally sensitive and flexible within the context of those core values, and (3) balance the need for policy with the need for flexibility or imagination.

DEFINING ETHICAL BEHAVIOR

"Ethics is obedience to the unenforceable," says Rushworth Kidder, president of the Camden, Maine-based Institute for Global Ethics and author of several books. He says companies that regard ethics only as law "set up a compliance office that teaches you to skate as close as you possibly can to the ethical edge without falling over."

Michael Daigneault, president of the Washington, DC-based Ethics Resource Center, calls ethics "the glue that holds the company together and defines it as an entity." Companies used to be defined by the products or services they provided, he says, but now they are also defined by the way they provide those products and services and the quality of their culture. Today, ethics and values are tied more closely to the bottom line.

Jerry Torma, director of international compensation and benefits for the Nordson Corp. in Westlake, Ohio, spent four years working in the Middle East. He cautions against moral imperialism- demanding that foreign companies and colleagues act just like us - and against cultural relativism, conforming to whatever behavior is the local norm.

Torma's advice is drawn from his own experience. When local officials asked for "facilitating payments" to process work permits, Torma opted to "transform face-to-face confrontation into side-by-side problem solving." He involved the officials in his difficulty, explaining that he wasn't allowed to pay bribes, and seeking other, more creative, solutions.

Torma says that many times "there are other, legal ways to help people." By exploring the reason behind the demand for the bribe, Torma found that the official was facing a paperwork backlog of monumental proportions. Rather than pay the bribe, Torma offered the assistance of a secretary - a solution both legal and satisfactory, and one that shows what Donaldson calls "moral imagination."

Few expatriates from U.S. companies take time to build a relationship with their overseas counterparts, Torma says. "Often all we hear is their position, not their interest. We hear their demand, but don't look further to reveal what's causing the demand."

Torma says it's important for expatriates to explain what their company does not permit. Foreign nationals may not know that their request is considered illegal, unethical, or both by U.S. companies. Expatriates must also counteract the stereotype that they are interested in only short-term gain by demonstrating their desire for a long-term business relationship. And finally, expatriates need to treat the foreign nationals they are doing business with as peers and professionals with different behaviors, not as people with lower moral standards.

SHADES OF GRAY

Americans typically define ethical dilemmas as right versus wrong situations. But Kidder says, "The very toughest choices people face are not questions of right versus wrong, but questions of right versus right."

Companies taking "moral risks" exemplify those choices. Patricia Werhane, Ruffin Professor of Business Ethics at the University of Virginia's Darden School of Business explains the tough choice facing companies that stayed in South Africa and practiced the Sullivan principles during apartheid. At the time, those companies didn't know if they were doing more bad than good. Today, many companies questioning whether they should do business in China or Burma (now Myanmar) balance those moral risks.