The Case for Adjusting the Code of Ethics in Multinational Corporations

Consider a global organization with operations and subsidiaries in several countries. Is it a proper course of action for a global enterprise to adjust the business code of ethics when executing the business internationally? The following article presents my opinion on the matter.

The Case for Adjusting the Code of Ethics

The advances in transportation and communications fuel the process of globalization and formation of new Multinational Corporations (MNC).

However, it is often not without certain unforeseen ethical issues.

As a matter of fact, the business world of global organizations is plagued by the cases of workplace misconduct, and it is often a result of an inefficient understanding of the moral background and ethics of the country in which the business is conducted. The inability of large enterprises to adjust the code of ethics often results in many unnecessary issues, company level vulnerabilities and sometimes even business closures.

So, it is no wonder, the new transnational corporations face public scrutiny, especially in the area of development of universal codes of conduct and country-specific codes of ethics.

Similarly to Kolk, A., Van Tulder (1999), I also ask:

  • How should businesses define the code of ethics, so it’s universally applicable?
  • Moreover, what adjustments (if any) should be made for the cultural differences?

 

Universally Applicable Code of Ethics

In my opinion, certain moral and ethical values are shared by all professionals, irrelevant of which country the business operates in. Thus, I believe that a global set of universal moral values should perhaps be defined first and later enhanced with country specific ethic rules.

I agree with Schwartz, M. S. (2005) who proposed six general standards, which serve as a universal cornerstone of code of ethics. These are essentially the so-called natural and universal moral blocks, upon which the corporation can build the definition of their universally applicable corporate code of ethics.

  1. Trustworthiness
  2. Respect
  3. Responsibility
  4. Fairness
  5. Caring
  6. Citizenship

 

The Code of Ethics and Cultural Adjustments

Singh, J., Carasco, E. (2005) compared the content of 78 Australian, 80 Canadian and 39 Swedish corporate codes of ethics. The study reports that “the Australian and Canadian codes were similar (reflecting the similar histories and cultures), while the contents of the Swedish codes were very different, reflecting the cultural differences between Sweden and the other two countries.”.

The global employers need to be aware of the cultural differences and that there are responsibilities to customers and society in general, to provide the culturally appropriate modifications to the business code of ethics.

I believe, that if the company operates in more than a single country, it is a proper course of action to review and amend (if needed) the business’s code of ethics, so as to reflect the possible cultural differences between countries.

Conclusion

The business ethics management and alterations to the code of ethics (particularly for the global corporations) should be based on the ethical norms of the country in which the company conducts the business.

As per Bradwell Mhonderwa, Managing Consultant of Business Ethics Centre in Harare, Zimbabwe: “In the long-term, competitive advantage is a result of pursuing an enduring propagation of a corporate ethical culture that increases shareholder value.” (Abi-Aad, G., 2011)

In my opinion, the competitive advantage comes because of better understanding the moral infrastructure of the country, which will positively shape the overall business strategy, lower the risk of misconduct and enable better future profits.

References

Academic Resources

Schwartz, M. S. (2005). Universal moral values for corporate codes of ethics. Journal of Business Ethics, 59(1), 27-44. [Accessed 2 Apr. 2017].

Singh, J., Carasco, E. (2005). A comparative study of the contents of corporate codes of ethics in Australia, Canada, and Sweden. Journal of World Business, 40(1), 91-109. [Accessed 2 Apr. 2017].

Kolk, A., Van Tulder, R., & Welters, C. (1999). International codes of conduct and corporate social responsibility: can transnational corporations regulate themselves?. Transnational corporations, 8(1), 143-180. [Accessed 2 Apr. 2017].

Other Resources

Fas.org. (2017). [online] Available at: https://fas.org/sgp/crs/misc/RS20803.pdf [Accessed 2 Apr. 2017].

Abi-Aad, G. (2011). Ethical Business for Competitive Advantage. [online] Joyante’s Blog. Available at: https://joyante.wordpress.com/2011/04/19/ethical-business-for-competitive-advantage/ [Accessed 2 Apr. 2017].

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