8 Standards of International Corporate Ethics

Ethics goes a long way in building trust in an international business system. As information spreads faster along quickening fiber optic cables the world will continue to integrate in terms of interrelated laws, regulations, cultures, and business standards. Having an international standard of ethics is important in ensuring that companies are encouraging  better business environment. 

 When companies move into international locations they will need to understand and respect the cultures of those nations. There is a difference between respecting local culture and becoming involved in unethical practices. When few options are left, organizations can seek to remove themselves from such countries. Each company will decide what they stand for.

Today’s world needs a new way of looking at business and how that business interacts with other countries. Developing strong international ethical systems means that both companies and countries come to an understanding of what a “good international citizen” is. Below you will find 8 ethical standards (Be George, 1997):

1.      Do not intentional direct harm.

2.      Produce more good than harm for host countries.

3.      Contribute to the host countries development.

4.      Respect human rights.

5.      Respect local culture.

6.      Pay a fair share of taxes.

7.      Cooperate with local government when beneficial.

8.      Withdraw from a country if it becomes impossible to act with integrity.

De George, R. (1997). Human rights and the multinational enterprise. Dilemma, 6, 6–14.

American Principles as a Catalyst for International Investment

America was founded on a mere idea of opportunity that enticed thousands of people across the soapy seas to nail down new entrepreneurial stakes in the fragile colonies. Blacksmiths, carpenters and farmers spread out to start new businesses to feed their needy families. Even in a global economy the entrepreneurial spirit embedded within our American values has market appeal that can be converted to investment value.

Life, liberty and pursuit of happiness are based on trust. People believe that when they put a dollar in the bank it will be there a few days later, they are charged the price posted for products, hard work still results in increases in wealth, and education opens new doors. Trust glues societal fabric between people, employees-employer, investor-executive, citizen-government, and civilian-law enforcement.

When the fundamentals of trust break down so does the economy. The microeconomic transactions that occur throughout the nation are founded on simple ideas of value and confidence in the future. The dollar is the measure of that trust and is exchanged in good faith among economic elements to complete transactions.

Trust applies to foreign investment as much as it does to domestic commerce. Multinational companies spend a lot of time trying to understand the political and economic nature of nations to make investment decisions. Political instability and mistrust raise the risks of investments that ultimately result in sparser economic wealth generation.

Companies invest in places where the political, cultural, and economic spheres show enough stability to help ensure that their investments will have value in the foreseeable future. Increasing investment and heightened economic activity is one sign of increasing levels of trust. Investors believe that their opportunities are safe and growing.

Laws and values come to define the health of the system. Where laws encourage entrepreneurial activity and protect the rights of people socio-economic assumptions form. It is those assumptions that filter throughout the decision-making lenses that lead people to engage the market at higher levels.

In countries where there are political instability and inconsistent application of laws, you find that economic activity declines. Not only do companies under perform the market, but the countries find themselves in competitively weaker positions as people either disengage from the market or move into the black market.

America is changing and opportunities to build a better society abound if we ensure that trust is created in society. Founding principles applied consistently across our country prompts engagement and stability in the market that is attractive to international investors. Nation building has entered a new era of exploring the power of the human mind and funneling that through our American lens to create greater investment and economic activity.

Rules or Values in Ethical Development

Developing ethics within organizations is not an easy task. Many companies offer some rudimentary ethics classes in orientation with little to no follow up. As can be expected, these ethical values only last for so long before they are tested and compared against actual working conditions. To develop higher levels of ethical standards among employees it is necessary to ensure that they find a match between their own personal values and the ethical standards.

It is not easy to have employees internalize certain values and maintain ethical standards when other options are available. Connecting employees to their personal value systems and infusing ethical standards into the organization's culture can go a longer way in creating lasting beliefs. Internalized ethical standards rely on employee values, organizational values, and standards coming together with compatibility.

Identity based ethical decision-making combined with rule-making ethical decision-making has a longer positive ethical influence then rule oriented decision-making (Gu & Neesham, 2014). When employees can find a match between their personal value system and that of the employers they are more likely to adhere to those values. When ethics is based in the need to avoid rules then its shelf-life is limited.

Think of how rule and regulations may contain outward adherence based upon fear or self-interest but doesn't move beyond that. An over focus on rules and regulations as a deterrent may bring compliance but not necessarily belief thereby nearly ensuring that problems are repeated. Helping people find shared values that comply with organizational (i.e. societal) beliefs creates a more lasting impact.

After orientation employees look to their peers and other members of their social network to determine how to act in moral dilemmas. Once a company develops a strong ethical culture they create internal social criticism of unethical behavior which improves upon ethical maintenance (Sonenshein, 2005). Having ethical values embedded into the culture can make a huge impact.

People do this naturally in daily life. The values people hold are based upon their upbringing and social networks. Matching internalized values to ethical standards is only one part of the problem. The other part of the problem is ensuring that the social network also accepts those values. When issues arise the social network is likely to be a significant anchor to bounce options.

Strong ethical decisions require both an internalized value system and a social network that believes in and promotes those ethical values. Without these two aspects rules and regulations may create compliance but not a deeper sense of value incorporation. Those who internalize these values are likely to maintain them even when some force is not being used as deterrent.

Long lasting ethical values are based in promoting beliefs within the workplace both on a personal level and a social level to encourage higher levels of ethical performance. Fear of punishment only works for so long and this is one of the reasons why despite renewed focus on ethics there are plenty of scandals to go around. People will judge ethical dilemmas by their own value systems as well as the value systems of their social networks. Longevity in ethical values requires an an alignment of ethical models between self and society.

Gu, J. & Neesham, C. (2014) Moral identity as leverage point in teaching business ethics. Journal of Business Ethics, 124 (3).

Sonenshein, S. (2005). Business ethics and internal social criticism. Business Ethics Quarterly, 15 (3).

Developing Deeper Morality in Graduates of Institutions

Ethical considerations are important for maintaining business trust and stakeholder interest. Research by Dufresne & Offstein (2012) delves into the building of character at West Point and makes compelling arguments why many of the values can fit within colleges and business. The study delves into the nature of ethics and how it is seeded into more fundamental character development. Developing these morality systems can service graduates beyond the halls of their education and into the real world.

Major lapses in ethics have caused a decline in trust both on a societal level as well as within business and among investors. These lapses come from fundamental foundations of values and competing choices. Those who do not have strong foundations and ethical conscience often fail when personal and social pressures rise.

Each organization has its own core values that are unique to that institution. For example, at West Point a cadet following the code won’t lie, cheat, steal, or tolerate those who do. In some academic organizations student discipline is completed by engaging in a student judiciary process. The values and ethics of each institution may be different but often follow similar strains.

In higher education the goal is to develop moral reasoning. It is a process of developing personal standards from a perspective of specific communities and narrative understandings. According to Rest (1994), a model of morality includes behaving ethically through moral sensitivity, moral judgment, moral motivation, and moral courage. It is not enough to think without the ability to act.

Single loop learning is based upon reward and punishment. Double loop learning focuses more on the underlining assumptions of those rewards and punishments. Triple loop learning moves into an examination of culture, tradition, institutions, and systems that frame ones actions or behaviors. The fourth level requires a broader understanding of the world.

The second, third,  and fourth loops can only be found through the nurturing of character. Institutions often focus on rules and codes which can be beneficial. However, moral strength doesn’t always mean following all of the rules. Complex morality requires character in addition to the understanding of codes and rules. Institutions should consider their code of ethics as a starting point but should also try and help students deeply understand these concepts to create loops.

Dufresne, R. & Offstein, E. (2012). Holistic and international student character development process: learning from West Point. Academy of Management Learning & Education, 11(4).