14 Aug 2024
First and foremost, morals are their own reward, both at work and in our private lives. Living ethically reflects good manners and concern for the well-being of others. Consequently, companies conducting their international business ethically produce higher proceeds by attracting business partners who share the organization's commitment to international business ethics.
International Business Ethics constitutes a global code of conduct—a set of principles that define ethical standards for employees and companies. Although ethical behavior is not necessarily a legal requirement, companies and leaders who adhere to a strong ethical code will not only have better relationships with local communities but will also be great examples. The Patagonian apparel maker is one example of a company that has built a reputation for ethical practices by reducing its environmental impact and protecting workers' rights in the countries in which it operates. On the other end of the spectrum, there are companies that have been costed by their ethical lapses. Among the companies the public has turned against are Nikola, a trucking company that recently admitted to making a video demonstration of its technology, and the collapsing of European fintech company Wirecard, after two ethical scandals.
Through ethical standards, trust is created between the parties doing business together, including partners and clients. This trust is earned by organizations by demonstrating a pattern of ethical behavior over time, and by gaining a reputation for fair dealing, respect for human rights, and social responsibility. First of all, ethical behavior combined with skills and professionalism is able to ensure sustainable development, rather than short-term profit, which leads to terrible results after a certain period of time. Ethical behavior ensures awareness and concern for the future. Second, ethical behavior establishes a healthy and pleasant atmosphere of cooperation for all parties involved in the transaction, which makes them feel comfortable with one another. Third, acting in accordance with ethical values is critical to earning customer interest and support and achieving a significant competitive advantage in a particular market segment.
The following approach must be made to international business ethics:
- Every individual and every organization must define its own ethical values;
- Each individual and company must ensure that ethical values are understood and believed in their effectiveness and importance;
- Employees of each organization must participate in the development of a code of conduct of the company, which in this case certainly represents the culture of the company, and not just the personal opinions of the company leader;
- Each individual and company must monitor compliance with the set values at all times;
- All moral values should be divided into two categories—rigid and flexible. Rigid are those values that cannot be abandoned under any circumstance (honesty, integrity, professionalism) and flexible, which are those moral principles that can be interpreted in different ways in different situations (the will to understand the values of other cultures, the politics of rewards).
In this way, when foreign bodies with different ethical codes of conduct meet, they are able to create an effective common ethical cooperation framework, keep strict values unchanged and adapt flexible moral principles. Such an approach is able to ensure the compatibility and satisfaction of each party involved with the ethical cooperation framework established for this particular project without violating personal beliefs.
To function effectively, a business organization needs a common system of moral and ethical beliefs to guide the day-to-day decisions made by individuals throughout the process. Laws and regulations dictate many ethical requirements, such as rules for environmental protection and worker safety. Management leadership forms a model for ethical behavior and decision-making for employees by establishing and promoting ethics in international business. In addition to providing a code of ethical conduct for employees, an international business ethics policy must take into account practices such as corporate governance, bribery, discrimination, social responsibility, and fiduciary duties. The definition of international business ethics begins with an ethical code of right and wrong, but modern business ethics has expanded to include supportive social and environmental causes and being a responsible member of the communities in which a company operates.
Examples of ethics practiced in international business include enforcing honest advertising, creating internal quality control checks, and never taking advantage of inside information.