Reading 5.2- Ethics in International Business.pdf - STUDY...

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STUDY GUIDE READING 9.2
ETHICS IN INTERNATIONAL BUSINESS
Mahdavi, I., Mokhtari, S., & Parhizgar, K. (2006). Ethics in international business.
The Business Review, 6 /2. Pp. 305-307.

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INTRODUCTION
Importance of ethics in the business world is superlative and global. New trends and
issues arise on a daily basis which may create an important burden to organisations
and end-consumers. Nowadays, the need for proper ethical behaviour within
organisations has become crucial to avoid possible lawsuits. The public scandals of
corporate malfeasance and misleading practices, have affected the public perception
of many organisations (e. g., Enron, Arthur Andersen, WorldCom etc.). It is widely
known that advertising does not promote the advancement of human moral
sensibility. Lasch ’ s contention (1978: 1) that modern advertising “ seeks to create
needs, not to fulfil them: to generate new anxieties instead of allaying old ones.. It
addresses itself to the spiritual desolation of modern life and proposes consumption
as the cure ” seems to still be true. The recent expansion of global business and fall of
trade barriers worldwide have further underlined the interest in the topics of ethical
behaviour and social responsibility (see among others, Jones, 1991: 366-395). In
addition, as many scholars believe, human rights and environmental conservation are
gaining increasing more recognition in both academic and commercial settings.
As multinational companies expand globally and enter foreign markets, ethical
conduct of the officers and employees assume added importance since the very
cultural diversity associated with such expansion may undermine the much shared
cultural and ethical values observable in the mores homogeneous organisations
(Mahdavi, 2001). Although understanding of other cultures and recognition of
differences among them will enhance the cross-cultural communication, it may not
be sufficient to provide viable guidelines of proper ethical behaviour in
organisations. Thus, concerns about unethical behaviour of corporations in other
countries, are manifested in legislations such as The Foreign Corrupt Practices Act of
1977, and the Sarbane-Oxley Act of 2002. In the academic arena, on the other hand,
the culture-based consequentiality model is developed to explain, among other
things, how cultural differences alter the ethical perception and actions of individuals
engaged in making decisions with ethical overtones (Robertson and Fadil, 1999:
385-392). Turnen-Red and Woodland (2001:61) stated:
“ Through the post-World War II period international trade policy reform has
seldom been absent from the mind of policymakers. The formation of General
Agreement of Tariffs and Trade (GATT) as a forum for the discussion of
international trade and policy issues and the resolution of disputes, and as a
sponsor of regular rounds of multilateral negotiations leading to a substantial