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

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1STUDY GUIDE READING 9.2ETHICS IN INTERNATIONAL BUSINESSMahdavi, I., Mokhtari, S., & Parhizgar, K. (2006). Ethics in international business.The Business Review, 6/2. Pp. 305-307.
2INTRODUCTIONImportance of ethics in the business world is superlative and global. New trends andissues arise on a daily basis which may create an important burden to organisationsand end-consumers. Nowadays, the need for proper ethical behaviour withinorganisations has become crucial to avoid possible lawsuits. The public scandals ofcorporate malfeasance and misleading practices, have affected the public perceptionof many organisations (e. g., Enron, Arthur Andersen, WorldCom etc.). It is widelyknown that advertising does not promote the advancement of human moralsensibility. Laschs contention (1978: 1) that modern advertisingseeks to createneeds, not to fulfil them: to generate new anxieties instead of allaying old ones.. Itaddresses itself to the spiritual desolation of modern life and proposes consumptionas the cureseems to still be true. The recent expansion of global business and fall oftrade barriers worldwide have further underlined the interest in the topics of ethicalbehaviour and social responsibility (see among others, Jones, 1991: 366-395). Inaddition, as many scholars believe, human rights and environmental conservation aregaining increasing more recognition in both academic and commercial settings.As multinational companies expand globally and enter foreign markets, ethicalconduct of the officers and employees assume added importance since the verycultural diversity associated with such expansion may undermine the much sharedcultural and ethical values observable in the mores homogeneous organisations(Mahdavi, 2001). Although understanding of other cultures and recognition ofdifferences among them will enhance the cross-cultural communication, it may notbe sufficient to provide viable guidelines of proper ethical behaviour inorganisations. Thus, concerns about unethical behaviour of corporations in othercountries, are manifested in legislations such as The Foreign Corrupt Practices Act of1977, 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 otherthings, how cultural differences alter the ethical perception and actions of individualsengaged 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 hasseldom been absent from the mind of policymakers. The formation of GeneralAgreement of Tariffs and Trade (GATT) as a forum for the discussion ofinternational trade and policy issues and the resolution of disputes, and as asponsor of regular rounds of multilateral negotiations leading to a substantial

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