Ethical Issues and Business Conduct Across Cultures Presentation and Discussion

1. Ethical Issues and Business Conduct Across CulturesPresentation and Discussion Charles Blankson, Ph.D.

2. Introduction • Ethics is a code of behavior that a society considers moral and appropriate for guiding relationship with one another. The issue at stake here includes: honesty, integrity, fair, open and straight-forward dealing. • Ethics involves judgments as to good and bad, right and wrong and what ought to be (Hartman, 2002). • Teens tendency toward deception (Bristol and Mangleburg, 2005). The golden rule therefore is: “do unto others as you would have them do unto you”.

3. Introduction contd. • Ethics deals with things to be sought and things to be avoided, with ways of life and with telos (Telos is the chief aim or end in life) (the philosopher, Epicurus, cited in Hartman, 2002). • Morals: rules or duties that govern our behavior, e.g. “do not tell lies”, or “do not hurt another person”. • Values: these are beliefs that a given behavior or outcome is desirable or good. • Values serve as standards of conduct that guide our behavior: • Example: how we value (a) the environment, (b) self-respect (c) keeping our family safe, (d) good health, (e) politics.

4. Introduction: schools of thought • Existentialists led by Jean-Paul Sartre believe that standards of conduct cannot be rationally justified and no action is inherently right or wrong. • Thus each person may reach their own choice about ethical principles. • This view resides in the notion that humans are only what they want to be… • Sartre claimed that existence precedes essence, i.e., first humans exist, then we individually define what we are – our essence. • Therefore each of us is free, with no rules to turn to for guidance. • That ethics and moral responsibility belongs to each of us.

5. Schools of thought contd. According to the Existentialists, …what one person believes is “right” or “just” may not necessarily be believed by others. Existentialists may say, perhaps, there is no right answer in this situation. • Relativists however call for some universal principles of right and wrong. • Relativists contend that the ethical answer depends on the situation, i.e., that ethics is relative to a particular society.

6. Theories about ethics and religion: two issues • Theory of Rationalization: Based on the case whereby religious people attempt to be ethical both at home and outside their home (e.g., very devout religious people). • Theory of Sacred Canopy: In today’s materialistic, opportunistic and fast-paced lifestyle, it is a common belief that religious people have lost their influence on the direction of morals and ethics. This has meant that although people may be ethically astute at home, they may behave differently away from home. Source: Rawwas (2005)

7. More issues about ethics • Remember that ethics does not refer only to financial favors, i.e., corruption, but includes: • Conflict of interest, • Misuse of position by abusing ones office (e.g. misusing confidential information, government property, official time etc.). • According to Gbadamosi (2004), high ethical standards, and low corruption perception will always be relevant in organizations and human societies.

8. More issues about ethics contd. • We already use ethics as a basis for decision making – family situations etc. • “…there is no law that requires one answer or another…” • “…you might believe that you should act one way or another because it is the right thing to do…” • This is your personal ethic and which stems from the society/culture one belongs to.

9. Cross-cultural issues • 21 Century propelled by globalization and multiculturalism. • The case of BP, Burger King, HSBC • The case of Japanese and South Korean auto makers in the US • Implications for international marketing – US outsourcing its call centers in India and China or the US reliance on crude oil from Saudi Arabia, Kuwait and Nigeria. • Even locally, cultural diversity and cross-cultural issues present different challenges to all marketers. • Important in USA, UK, Canada, South Africa.

10. Cultural conflict: unethical behavior • Different cultures have different rules of conduct. • Some cultures view certain ethical practices with different levels of condemnation (Pitta et al., 1999). • The more serious problem concerns two different ethical standards meeting in a business transaction. • US vs. Russian; US vs. Nigerian; US vs. Colombian; US vs. UK; US vs. Germany; Israel vs. Egypt. • This situation is characterized as cultural conflict.

11. Cultural conflicts and unethical behavior: bribery, corruption and sleaze • The US Foreign Corrupt Practices Act. • Bribery is part of life in some countries because of different ethical standards. • Russia, Pakistan, Nigeria have been mentioned in the popular press. • Also in the West: UK, USA, France, Japan. • “…with tobacco advertising banned in many Western countries, cigarette manufacturers are increasingly targeting countries in Africa…and more and more Africans are taking up the habit” (BBC online News, 18 March 2005). • Tanzania, Uganda, Ghana, Kenya and Mauritius have introduced smoking bans and have increased taxes on tobacco sales.

12. Bribery and corruption in Africa • In Ghana, the government’s “zero tolerance” for corruption is challenged because Ministers have still not declared their assets. • The Ghana Integrity Initiative (GII) is urging the government to implement the Public Procurement Act to enable it to subject ministers and public officials to greater degrees of scrutiny in the award of construction contracts (www.graphicghana.info, March 18, 2005). • Shoddy construction works abound in Ghana and in Nigeria. • Discussion on bribery is problematic and controversial. • The case of Nigeria and Ghana where it is argued that the roots are embedded in colonialism, rather than the fact that these countries are relatively poor.

13. The German-based Transparency International Corruption Perception Index in 2002 (Africa)

14. Woman fetching water in a country in Africa: result of failed government and corrupt officials? Source: BBC Online

15. A teacher’s dilemma: results of corrupt policies and failed governments?

16. Culture as the basis of business ethics • There is common agreement that a country’s culture is directly related to the ethical behavior of its managers. Two themes: • (1) Public or corporate statements and actions about ethical behavior. • (2) The collection of ethical attitudes and values in the country.

17. Interface of culture and business ethics: American Culture • Ethical roots date back to the founding fathers and their traditional Judeo-Christian and Western socio-theological laws and principles. The founding fathers were mostly Christians and identified three basic “self-evident” truths regarding “inalienable” rights of mankind to: • Life • Liberty; and • The pursuit of happiness; • and exercised in an environment in which people are equal under the law.

18. Culture and business ethics contd. (Saudi Arabia) • Two dimensions influence the business culture (a) Islam and (b) the Bedouin tradition. • The Bedouin tribal heritage views loyalty, justice, generosity and status as important. • Religion has a profound effect on business, politics and social behavior. • The “mutawwa” (The Saudi religious Police) is run by the Society for the Propagation of Good and Abolition of Evil ensure compliance (Rice, 2004).

19. Saudi Arabia • Saudis conduct business only after trust has been well-established. • The Bedouin tradition allows business meetings without a prior appointment. • Sexual modesty and chastity is highly valued. • Separation of women from unrelated men. • Most activities outside her home requires the mediation of a female servant, male relative or a male servant e.g., chauffeur or gardener. • Women are not allowed to drive, but they can use a male chauffeur.

20. Customs and Courtesies of Ghanaians • English greetings (good morning etc.) and hand shakes are common. • In the Akan culture of Ghana, inheritance is via the maternal lineage rather than the paternal lineage (i.e., nephews inherit their uncles rather than sons inheriting their fathers). • Most greetings are in the dominant local language and are followed by questions about one’s health, family welfare, journey (these were found to be similar in Saudi Arabia and also in northern Nigeria). • Children refer to any adult that is well known to the family as “aunt” or “uncle” even when they are not related. • It is generally improper to pass or receive items with the left hand. Right hand or both hands are the norm.

21. Ghana • It is common and appropriate for friends of the same sex to hold hands while walking/speaking. It does not signify anything beyond friendship. • It is impolite to place feet on chairs, desks, or tables especially those being used by another person. • Friends and relatives visit one another frequently, often unannounced. • Most initial business visits occur at home and it is polite to take a small gift for children. • Guests are always served drinks and other refreshments. It is impolite to refuse these offers. • Hofstede’s cultural dimensions

22. Geert Hofstede’s (1979) Cultural Dimensions • Power Distance • The willingness of a culture to accept status and power differences among its members • Individualism / Collectivism • The tendency of a culture’s members to emphasize individual self-interests or group relationships • Uncertainty Avoidance • The cultural tendency to be uncomfortable with uncertainty and risk in everyday life • Masculinity / Femininity • The degree to which a society values assertiveness or relationships • Long-term / Short-term Orientation • The degree to which a culture emphasizes long-term or short-term thinking

23. US vs. Malaysia: Hofstede’s Cultural Dimensions

24. The six dimensions of culture by Kluckholn and Strodtbeck (1961) • 1. What are the society’s assumptions about the essential goodness of people? • 2. What does the society emphasize in interpersonal relations, the individual or the group? Should people feel free to act as individual or as a group? • 3. What is the value of personal space in the society? • 4. What does the society assume about the relationship of man and nature? Is man meant to live in harmony with nature or to dominate it? • 5. What is the role of change in society (value for stability?) • 6. What is society’s regard for time; past present or future?

25. Research undertaken by Singhapakdi et al. (1999) in Journal of Consumer Marketing • How consumers from Malaysia and USA differ in their perceptions of: • Marketing ethics • Attitudes toward business and salespeople • Personal moral philosophies that underlie the above

26. Singhapakdi et al’s. (1999) Results • Malaysian consumers were less sensitive to unethical marketing practices. • Malaysian consumers tend to be less idealistic and more relativistic in their moral philosophies than US consumers. • Relative to US consumers, Malaysian consumers reject moral rules (i.e., high relativism). • They are however positive about the possibility of achieving positive outcomes for everyone concerned. • Malaysian consumers were more likely to respond positively to collectivist (as opposed to individualistic) marketing strategies.

27. Research undertaken by Robinson (2004) in Journal of African Business • To examine how entrepreneurs experience and deal with ethical dilemmas in South Africa. • Results: Entrepreneurs forsake demeaning workplace and inter-personal practices, containing crime, adopting socially responsible and ethical business practices, appreciating ethnic differences and attempting to reconcile with each other. • Ethics is facing challenges in the context of: (a) Issues such as diversity, (b) overcoming the legacy of Apartheid, (c) crime containment, (d) business ethics, (e) reconciliation between different ethnic groups. • “…Apartheid may be officially dead and buried, but its legacy thrives in a clearly dichotomous society…” (Robinson, 2004).

28. A woman selling produce in Harare: Failed governments and corrupt officials?

29. Harare, Zimbabwe, a man selling on the street

30. School children in Harare

31. A young man in Harare

32. Selling on the street in Harare

33. Cars queuing for gas (petrol) in Harare

34. Taxi in Harare

35. Fetching water in some parts of Africa

36. Happy? about a newly installed pipe-borne water in a country in Africa • Africa is the only continent to have become poorer in the past 25 years. • By the year 2000, half of the world’s poor were in Africa compared with 10% in 1970 (BBC online News, March 18, 2005).

37. Is Africa “better in colonial times?” asks Moeletsi Mbeki • “…the average African is poorer than during the age of colonialism…in the 1960s African elites/rulers/politicians, instead of focusing on development, amassed enormous wealth, saving their loot in Western countries – Switzerland, UK, USA, France)…”

38. Photos from around the world • Pipe-borne water in a country in Africa • Wife of the President of Mali

39. President of Mali Mr. Amadou Toumani

40. President of Mali conversing with the oldest woman in Mali, 128 years old.

41. Man walking on a street in India

42. Friends playing in India

43. Woman washing clothes in India

44. Man sipping tea in Egypt

45. Montreal, Canada, skyline during Winter 2005.

46. Closing comments and implications for international marketing • Many of the differences in ethical behavior result from the world’s cultural diversity. • Most pressing challenge for international marketing is tolerance of diversity. • “…think and act as equals with overseas business partners…” (Robinson, 2004). • According to Robinson, philosophers through the ages have advised that it is important to appreciate cultural differences. • The latter calls for a relativist view of the world. • Note: Moral objectivism offers little accommodation for differing views (Robinson, 2004).

47. Closing comments contd. • Notwithstanding, in view of the well known human shortcomings such as fraud, bribery, corruption, sleaze, deception across all cultures, the question is: • How can we ensure the adherence to ethical conduct in cross-cultural business?

48. References • Africa Better in colonial times, http://news.bbc.co.uk • Early years, http://news.bbc.co.uk • Singhapakdi, A., Rawwas, M. Y. A., Marta, J. K. and Ahmed, M. I. (1999), “A Cross-cultural study of consumer perceptions about marketing ethics”, Journal of Consumer Marketing, Vol.16, No.3, pp.1-13. • Rice, G. (2004), “Doing business in Saudi Arabia”, Thunderbird International Business Review, Vol.46(1), January-February, pp.59-84. • Pitta, D. A., Fung, H. G. and Isberg, S. (1999), “Ethical issues across cultures: managing the differing perspectives of China and the USA, Journal of Consumer Marketing, Vol.16, No.3. • Implement Procurement Law-Integrity Initiative, http://www.graphicghana.info • Customs, Courtesies of Ghanaians, http://www.graphicghana.info • Why do we still smoke in Africa? http://news.bbc.co.uk • Robinson, D. A. (2004), “Entrepreneurial Challenges in South Africa”, Journal of African Business, Vol.5(2), pp.173-185. • Hartman, L. P. (2002), Perspectives in Business Ethics (2nd ed), McGraw-Hill, New York. • Gbadamosi, G. (2004), Ethics, Corruption and Economic prosperity in Africa: Botswana Experiences, Proceedings of the International Academy of Business & Development (IAABD), Atlanta, April 7-10, pp.204-213. • Bristol, T. and Mangleburg (2005), “Not Telling the whole Story: Teen Deception in Purchasing”, Journal of the Academy of Marketing Science, Vol.33, No.1, pp.79-95. • Rawwas, M. Y. A. (2005), Does Religion Matter? A Comparison Study of the Ethical Beliefs of Students of Religious and Secular Universities in Japan, Proceedings of the AMTP Conference, March 24-26, Jekyl Island, GA, pp.378.