The importance of Business Ethics in International Business

This is really hard to imagine our modern life without businesses and money flows. Al over the world various businesses are built, are ruined, are renewed and are operating. Business, regardless of their size, seized serious power and are able to have sufficient influence upon societies, economics and development of international relations. This is evident, that in order for all these businesses to survive, to be successful and to be able to build strong cooperation systems, it is necessary to work out and to follow certain rules, which can be unified under the name ”“ business ethics. Business ethics occupies the central place in the development of international business relations.

In reality business ethics is very closely related to normal ethic, i.e. presents a set of rules, defining correct and incorrect behavior for certain environment, in this case- business sphere. As in society, when people have to coexist with each other, everybody is struggling for his own interests, the similar situation is in business ”“ in order to achieve certain goals, businesses need to be built on moral principles, which would consider interests of all sides, participating in the process. The cooperation of international companies should be built on the basis of mutual respect and fairness. Usually the ethics is made public by the defined representatives of the company, who speak and take decisions on behalf of the whole personnel of the firm. According to some philosophers, ethics is the science of conduct – “Twin Cities consultants Doug Wallace and John Pekel (of the Twin Cities-based Fulcrum Group) explain that ethics includes the fundamental ground rules by which we live our lives” (Genfan, 1997). Thus the guidelines how to implement these rules form ethical principles. The concept of international business ethics is seen from various perspectives in different ways, but this is still possible to define common and concrete ethical principles, which should be taken into consideration and followed by international operating companies at any rate. However, even in the situations, when companies do follow the ethic rules in their international businesses, this is often not possible to avoid conflicts and problems. The process of resolving international ethical issues is rather sophisticated and needs serious and profound approach. The strategies and methods used for regulation of conflicts also belong to the sphere of ethic code of the company and should be appropriate for getting positive outcomes.

This is the task of government, to produce regulations, which would make the companies of the country behave ethically and bear responsibility for non-coherence of ethical rules. Certainly we are speaking about ideal situation, which is unfortunately not always present in the real world, but still the necessity of strict control and management of ethical approach in business is vital for the whole world as well as for each country if taken separately. In the era of globalization this is not possible to remain aloof from global business and cooperation between countries all over the world. There is a strong need for overcoming the obstacles in the world economic scale.

“Business ethicist Thomas Donaldson offers three concepts for interpreting international business ethics: a social contract between productive organizations and society, the notion of a fundamental international right, promulgated by ten specific international rights, and a moral “algorithm” to help multinational managers make tradeoffs between conflicting norms in home and host countries” (Bailey, 1992).

We can trace the great increase of international business since the 1980s and this proved to be a serious challenge for ethical practical initiatives, which should consider “the need for a differentiated economic analysis beyond simple profit maximization; the active participation of the world’s religions in coping with global issues; information technology in different culture; the roles and responsibilities of transnational corporations; the demand for a new generation of business leaders” (Beauchamp, 1993).

Respect of ethical rules in business is vitally important also for all companies, which have pretensions of expansion of their business to other countries, because there is strong relation between ethics and public image of the company. For example we know, that Wal-Mart has very bad public image, whereas Toyota Company has very positive one, which gives the chance to develop business relations with many countries. “Toyota defines compliance as “Comply with ethics, laws and internal rules/policies in engaging in business” ”” in other words, not act contrary to society’s rules, nor carry out actions that could be criticized by society. Toyota believes, that to be a good corporate citizen, it is essential that compliance permeates the entire company” (Beauchamp, 1993).

Public image is influenced by a number of characteristics, namely the environmental policies of the company, the way it treats its employees and communities and company behavior, which is the reflection of business ethics. Thus we can conclude, that business ethics, influencing public image, has a strong impact upon overall success of the company.

A lot of companies strive for building cooperation because they are looking for investments. The companies, which are planning to make an investment, are in their turn doing their best to study the potential investment directions and research a number of certain factors. In this case, apart of profit margins and perspectives of the future development public image and ethic responsibilities are also considered. This means, that in order to get investments and to support future development of business, companies should also demonstrate fulfillment of basic ethic rules.

There are also other types of business relations between companies – as for example joint ventures. “They happen all the time because they are ultimately of great importance to the bottom lines of businesses. A business can be made or broken on just one joint venture and part of the reason that joint ventures are successful is that they combine the forces of two extremely powerful companies on occasion” (Ciulla, 2004). This is logical that for positive development of the business this is necessary to find good partners and be able to build strong mutually advantageous relations with them. For attracting good partners it is necessary to have good reputation in terms of the overall business. As long as a company is able to follow strong business ethic traditions, it has all the chances to earn good reputation.

Overall, we made a brief research of the principles of business ethics, the ways, they should be developed and applied, the importance of adaptation of business ethics for international businesses. “The role of ethics in the 21st Century is integral in that, all organizations need a firm foundation to stand on, and a base that is rooted in an ethical framework, which when tested can survive” (Cashman, 2008). We tried to prove that the ethical challenge is rather serious one as a lot of aspects, such as public image, investments, successful cooperation might depend on the ethic strategy chosen by a company. Application of ethic in business is vitally important for the companies themselves and also for the development of world economy and businesses as well.

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