Philosophical Approaches to Ethics; Ethical Business Management

Business ethics plays an important role in today’s global environment.  Business managers must understand different cultures and norms to be successful on an international level.  Social responsibility can affect businesses around the world.  Different philosophical approaches produce different results in differing cultures.  I shall explain these different approaches to ethics and how a particular approach may affect a company’s reputation internationally.

Philosophical Approaches to Ethics

There are four approaches, known as “straw men,” to ethics that can be used by international organizations.  These approaches are (Mitchell, 2008):

Friedman Doctrine. A company’s responsibility is to its shareholders.  There is one and only one social responsibility of the business.  That is to use its resources and engage in activities designed to increase its profits.  Shareholders are the only group to which the company is socially responsible.

  • Cultural Relativism. What is moral or ethical in one culture may not be ethical in another country.  It is important to not judge foreign cultural practices against the standards of the home country’s standards.  Knowing and understanding different cultures is very important for international managers.  This affects many decisions that need to be made, such as speed of workplace through technology, dress codes, vacation policies, and smoking policies.
  • Righteous Moralist. This is the opposite belief of Cultural Relativism, whereby a home country’s ethical standards are appropriate to follow overseas.  Managers from developed countries tend to use this approach.
  • Naïve Immoralist. When managers realize other firms are not following ethical norms in a host nation, then they should not either.  Is this justified if others are doing it too?

Social Responsibility in International Business

Companies must have a code of ethics put into place, and make sure all employees, globally, understand and adhere to that code.  It must be adhered to cross-culturally.  Companies should “act locally to profit globally” (Mitchell, 2008).  By “cross-fertilizing,” sending managers from their home country to local offices to promote their corporate ethics, the organization will establish that code.  Moving employees to other countries so they understand the code is global social responsibility.  It is imperative for employees and managers to understand and adapt to cultural sensitivity.  This helps to create acceptance by all sides of each other’s cultural norms. Philosophical Approaches to Ethics

There are legal incentives for enacting codes.  Legal requirements may change in different countries.  Different cultures and traditions in different countries must be respected.  Negative events can also hurt a company’s reputation both domestically and abroad.  Examples of this are Exxon’s oil spill that damaged the environment, and Wells Fargo’s consumer scams that hurt many people financially.  Business justifications for ethical codes and standards include an enhanced reputation, employee professionalism, and the adaptation of global core ethics.

Operating globally requires an organization to adjust their practices based upon the culture in which they are operating.  This can also have a negative effect, if not monitored carefully.  One such case happened in Mexico with Walmart.  A foreign subsidiary of Walmart was found to have bribed local officials to obtain building permits.  While this may be somewhat acceptable in Mexico, it clearly is not to Walmart’s corporate headquarters.  The practice was hidden from headquarters.  When it was discovered by headquarters, they chose to look the other way and shut down the investigation, only to have to reopen the investigation when they were exposed (Berman, 2020).  Social responsibility is imperative in this day and age to retain both customers and employees, especially in this era of social media. Philosophical Approaches to Ethics

Philosophical Approach.

The main reason cultures have different ethical approaches is because they view ethics through different lenses.  Writing this at a time when the entire globe has come to a halt due to a viral pandemic, I am seeing that most cultures in the world can agree on one thing right now.  That would be that the Friedman Doctrine is a wrong approach to corporate social responsibility.  It is not the sole responsibility of global organizations to focus solely on profits for shareholders.  Organizations must take into consideration the moral obligations not only to shareholders, but to customers, and employees too.  Companies not only have a legal obligation to stakeholders, but also a moral one.  Many industries are currently being affected by the global shutdown today.  Perhaps the industry that has taken the hardest blow is the travel industry—airlines and cruise lines.  While the airlines have not shut down completely, the cruise lines have.  They made the moral decision to stop operations to help stop the spread of the virus globally.  This industry has collectively stopped operating for the health and safety of its customers and crew members.  They were not forced to.  They chose to, because it was the right thing to do.  In doing so, they have voluntarily stopped sailing, issued millions of dollars in refunds and future cruise credits to customers, and donated tons of perishable food to local charities.  They also implemented new boarding procedures that will screen onboarding passengers for fever and illnesses, and stepped up intense sanitizing protocols for when sailing resumes.  All this comes at a huge cost to the industry.  You will see smaller companies and those that may have had huge debt before this crisis not survive this disaster.  Following the Friedman approach, several of these companies might have continued sailing in order to maximize profits at the expense of social responsibility.

How Philosophical Approach Reflects on Organization.

Managers must shape organizational ethics and enforce their philosophy.  Doing so will strengthen relationships with customers and employees.  The company’s reputation depends on ethics.  Unethical behavior can lead to corporate and personal liability to individual managers.

Apple is the most profitable technology company in the world.  It became the most profitable by taking a Naïve Immoralist approach in China with regard to labor laws and working conditions in China.  Apple’s major contractor in China, Foxconn, has been accused of operating tech sweat shops.  Their employees are subject to low pay, bad working conditions, and environmental hazards that have caused some employees to commit suicide on the Foxconn campus.  Apple has been accused of not adhering to their own supplier code of conduct that states (Smart Company, 2018):

“Apple suppliers are required to provide safe working conditions, treat workers with dignity and respect, act fairly and ethically, and use environmentally responsible practices wherever they make products or perform services for Apple … Apple will assess its suppliers’ compliance with this Code, and any violations of this Code may jeopardize the supplier’s business relationship with Apple, up to and including termination.”

By continuing their partnership with Foxconn, and basically looking the other way, Apple’s reputation has suffered, but their profits have not.  Substandard working conditions are rampant in Asia.  Apple is not the only company to participate in this type of activity.  Other firms are also disregarding ethical working conditions in Asia.  Being a leader in technology, Apple has the moral responsibility  to ensure the ethical treatment of workers, not just in Asia, but around the globe.

 

References

Adekola, A., & Sergi, B. S. (2007). Global business management : A cross-cultural perspective. Retrieved from https://ebookcentral-proquest-com.library.capella.edu

Berman, C, (2020), Ways in Which Ethical Violations Affect the Reputation of an Organization

https://smallbusiness.chron.com/ways-ethical-violations-affect-reputation-organization-72245.html

Friedman, J., (2013), Milton Friedman Was Wrong About Corporate Social Responsibility

https://www.huffpost.com/entry/milton-friedman-was-wrong_b_3417866

Mitchell, C. (2008). Short course in international business ethics : Combining ethics and profits in global business. Retrieved from https://ebookcentral-proquest-com.library.capella.edu

Smart Company, (2018), A hostage situation: Why Apple won’t address its unethical supply chain

https://www.smartcompany.com.au/industries/information-technology/a-hostage-situation-why-apple-wont-address-its-unethical-supply-chain/

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