Business Ethics in International Environment – Introduction
Learning objectives:
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to define business ethics
to explain the importance of ethical code
to explain the role of business ethics in multinational business
to introduce the concept of corporate social responsibility and sustainable development
Introduction The term „Business ethics“ becomes more and more popular mostly in the connection with corporate social responsibility (CSR). This chapter focuses on business ethics generally and tries to explain its importance in the international business.
Unfortunately, there are still some people not believing in the combination of these two words. Some people even believe that it is an oxymoron. (Collins, 1994 in Crane, Matten, 2010) Some experts argue that ethics has no place in business. They claim that a firm responsibility is only to make profits for its stockholders and that business is morally neutral. (Mead, Andrews, 2010) It is not surprising that they think this way. Various scandals concerning undesirable business activities such as the pollution of rivers with industrial chemicals, the exploitation of sweatshop workers, the payment bribes to government officials have highlighted the unethical way in which some firms have gone about their business. Some firms use business ethics to improve their image and make them interesting for the customers which more and more prefer to deal with companies that have a strong ethical profile, and these companies can increase their profits. If a company purporting to be ethical is seen to betray its code, the damage may be greater than for a company that had never claimed ethical standards in the first place. One of these examples is the case of Paul Wolfowitz, the one-time US Deputy Defense Secretary who became head of the World Bank in 2005. He proclaimed that his mission included rooting out corruption in the institution. In 2007, he arranged for his girlfriend, a World Bank official, to be promoted from a relatively junior grade to the position of vice-president. Shaha Ali Riza was awarded a massive pay rise which brought her tax-free income up to $244,960 – more than the salary paid to the then Secretary of State, Condoleeza Rice. By authorizing the rice, Wolfowitz was technically guilty of „girl-friend nepotism“, a fatal act for a man who claimed to oppose World Bank corruption. Worse, he claimed to have followed the correct ethics producers in making the appointment. But it was later discovered that he had drawn up Riza´s contract personally, and by thus misleading the bank´s executive he sealed his fate. His enemies within the World Bank, in European governments, and elsewhere, used this to force his resignation. (Mead, Andrews, 2010)
On the other hand, there are a lot of REAL “ethical – or responsible firms”, like Statoil, Walt Disney Company, Nestlé, etc. (Berger, 2011) They try to do the best for the customers, employees, the environment, communities, stakeholders, and the public sphere. And it has become their business advantage!
