Ethics and a global world?
Week 7 lecture
What is Culture?
Hofstedes theory of culture
The Organization in a Global Business Environment
What is Culture?
> Culture is the set of values, beliefs, rules and institutions held
by a specific group of people
> Need to avoid ethnocentricity
> Important to develop cultural literacy
Hofstede’s Defintion of Culture?
> Hofstede (1991, p.112) defines culture “as a set of
likely reactions of citizens with a common mental
programming... reactions need not be found within
the same persons, but only statistically more often in
the same society”
Components of Culture
Structure vs agency
Culture’s groups, institutions, social
positions and resource distribution
Process of ranking people into social layers
Ease of moving up or down a culture's
Individualism v Collectivism
Individuals care for themselves and close
Loose social framework
Strong family bonds, loyalty
Strong support within extended family
Power Distance: Identifies the degree to which a
culture accepts social inequality among its people.
Large power distance:
People accept hierarchy (structure) where
everyone has a place
Inequalities of power
Small power distance:
Equalization of power
Power Distance & Individualism
Uncertainty Avoidance: Identifies the extent
to which a culture avoids uncertainty and
Strong uncertainty avoidance:
Rigid codes of belief
Dislike uncertainty and ambiguity
Weak uncertainty avoidance:
More relaxed atmosphere
Tolerance of differences
‘Let the future happen’
Power Distance & Uncertainty Avoidance
Masculinity v Femininity
Society gives social roles to the sexes:
Masculinity (low nurture):
Achievement, heroism, material
Femininity (high nurture):
Modesty, caring, quality of life, value
A cultural perspective of ethics
The distinction between a gift and a bribe is not always
obvious. In some cultures, there is a longstanding
tradition of gift giving to cultivate long-term relationships,
in other cultures, such gifts are viewed as bribes
The problem with cross-national business is that conduct
that might be acceptable or legal in the host country may
prove offensive or may even attract penalties in the home
country. Options include:
Follow the norms of the host country – cultural relativism
Follow the norms of the home country – universalism
Ethical behaviour is guided by the standards that have
been established by the host country — ‘when in Rome
do as the Romans do’
There is no single moral standard, only local moral
practices that indicate acceptable behaviour
The problem – morally questionable activities become
morally permissible in societies in which the behaviours
are commonly practised.
The relativist argument has powerful influence when the
alternative is to lose business.
Universalism – there are absolute moral truths that must
be obeyed at all times without exception.
If an action is wrong in one country, it is also wrong in
This approach ignores the ethical and cultural
differences between countries and may be seen by
some as a form of moral authoritarianism.
Donaldson’s Approach to Developing
> Reject ethical relativism
> Reject ethical imperialism/universalism
> Develop an “ethical threshold” for corporate behavior
abroad based upon core values that can be
translated into specific guidelines
The moral minimum
> The moral minimum sits midway between relativism and
universalism and provides the threshold for all business
> Companies should respect the norms of the local culture,
while adhering to a minimum standard of conduct
> The moral minimum binds companies to respect the
basic human rights of employees, customers and
surrounding communities by avoiding relationships and
activities that violate people’s right to health, education,
safety and adequate living standards.
Development of Transcultural Corporate
Ethic - 4 Principles
Inviolability of national sovereignty
Market integrity in business transactions
Human rights and fundamental freedoms
Developing an ethical corporate
> The corporate culture represents a shared set of norms,
values, and practices about appropriate behaviour in the
workplace – defined by the employees’ perceptions of what
is important to an organisation.
> An ethical culture develops public trust and loyalty
– good ethics is good for business.
UN Global Compact…Some Include
Protection of internationally proclaimed human rights
Noncomplicity in human rights abuses
Support for freedom of association
Elimination of forced and compulsory labor
Effective abolition of child labor
Elimination of employment and workplace discrimination
Support for a precautionary approach to environmental challenges
Initiatives to promote greater environmental responsibility
Development and diffusion of environmentally friendly technologies
Corporate codes of conduct
> A corporate code of conduct is an authoritative statement
of values and principles designed to set a minimum
standard of acceptable behaviour and guide organisational
members in resolving ethical conflicts.
> Corporate codes deter unethical behaviour by specifying
acceptable and unacceptable behaviour
> Codes are useful to companies that are decentralised or
fragmented into smaller divisions.
> A code will bring companies with different cultures under
one corporate umbrella.
Global Codes of Conduct
> Address Eight Principles:
Case: The Gift
You're an account executive with a multinational financial
firm, and one of your biggest accounts is that of a shipping
magnate in Greece. Several months after you've arranged a
very complex financing to build a new fleet of oil tankers for
this customer, he asks if you and your wife would attend the
christening of the first tanker. You, of course agree to attend
- it would be an insult to him if you didn't. When you arrive,
he asks your wife to break the traditional champagne bottle
over the bow of the tanker. Two weeks after the christening,
your wife receives a package from your customer. In it is a
gold bracelet with her initials and the date of the christening
set in diamonds. To return the gift would insult your
customer, but accepting it would clearly violate your
What should you do?
Gifts and hospitality
> Offers of gifts and hospitality give rise to self-interest and
> When a favour is expected, the gift must be declined.
> When a favour is not expected, accepting the gift depends on
the value and the circumstances it is offered.
> Value depends on comparable gifts.
> Circumstances depend on ‘normal courtesies of social life’,
Setting the tone
> The ethics of an organisation is dependent on senior
management setting the appropriate tone.
> In ‘setting the tone’, employees learn appropriate
behaviour from senior management leading by
> Codes and subsequent employee behaviour is influenced
by management’s commitment to the code.
> Codes supported by senior management will always be
a stronger assurance of ethical culture than codes that are