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Business Ethics

The Ethical Complexities of International Business


By Josh Young Oct 18, 2016

ethics of international business3

Whether an ethical absolutist or a moral relativist, the likelihood that your personal views on morality will match those of your neighbor is highly unlikely. And when you consider the values and customs of someone living on another continent, that overlap is likely to erode further.

These issues only grow more complicated for any business operating internationally. There are a multitude of ethics questions that your business will need to consider on an ongoing basis:

  • Should your company avoid operating in countries whose governments are accused of human rights violations?
  • Is it ethical to outsource production efforts to nations that don't have as stringent safety or environmental legislation?
  • Should you avoid working with third parties that employ underage labor? But what if employment at an early age is the only means to keep these children fed?
  • If it's the local custom for business people to exchange gifts as part of a deal, can that be considered a bribe? Or could it violate the Foreign Corruption and Practices Act?

And in many cases, there will never be a single, correct answer.

Concerned that your employees may not be following -- or even ware of -- your company's ethics guidelines? Check out our code of conduct training best practices resource guide.

What Should You Do?

Clearly define corporate policy

When constructing your corporate ethics guidelines, you need to bear in mind the various geographies where you currently conduct business as well as any regions that you are considering for expansion.

Work with legal counsel and your company's key executives to determine which ethical issues are non-negotiable (e.g., sexual harassment, bribery). Ideally, any humanitarian or environmental issues will be covered by your global corporate policy.

Then evaluate local customs or traditions on a case-by-case basis. If possible, include foreign staff into these discussions, relying on their insight to identify blind spots or potential issues.

Secure C-level support

While you may have corporate guidelines in place, these policies are meaningless if not acted upon consistently by your staff whether in the U.S. or overseas. According to the Organization for Economic Co-operation and Development (OCED), one of the keys to combating corruption and unethical behavior is the participation of senior-level management in creating an honest and transparent culture.

If a foreign department in your company (or a subsidiary) sees a major deal fall through because they did not deviate from ethical guidelines, will your management team back them up? Conversely, if unethical behavior overseas is resulting in unprecedented profits overseas, will your company still enforce guidelines?

For your business to create a truly ethical culture, every employee in the company -- including C-level executives -- need to bear the responsibility for maintaining compliance.

Rethink staffing decision

When evaluating a candidate for hire, factor in their ethical behavior. Incorporate questions into the interview process that reflect potential conflicts of interest or other matters of principle that may arise in the position.

Similarly, when considering promotions or employee advancement, factor in their compliance with corporate ethics guidelines.

Equip your employees

According to recent studies, both conscious and unconscious reminders can help encourage ethical behavior among your workforce. As such, you should offer regular training to your staff -- not just after their initial hiring.

Use an educational program that incorporates real-world examples and role-playing into the training to better equip staff when they face ethical challenges.

Consider creating mechanisms that will inject ethical considerations into any new business plan or deal, forcing your employees to explore all of the potential ramifications not just financial ones.

Monitor third parties

It would be wise to require any third party sellers or business partners to also comply with whatever ethical guidelines you have in place for the region. In 2014, three out of every four foreign bribery cases that were prosecuted under the FCPA involved payments made through third parties.

Key Takeaway

Whether choosing to employ universal ethics guidelines or pursuing a more complex, region-based strategy, your business needs to remain consistent in enforcing policy. Being too flexible can result in sliding standards and open your firm up to potential legal and financial vulnerability.

To learn more about our workplace code of conduct courses, you can fill out the form on the right to request a demo.

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