As long as human societies exist, the life of man has been based on norms, rules, values and practices that governed human behaviour. Individual and communal-shared ethics even make life within society possible as we know it. Part of this social life is doing business, in form of exchanging goods to fulfil basic needs and to achieve higher levels of satisfaction for oneself and for others. However, to combine moral thinking and acting with today's business activities in a free market economy seems to be counterintuitive. Somehow both notions do not really fit together. Still, Corporate Codes of Ethics exist.
This essay consist of two parts. Each part reflects one question or problem that I found worthy of having more light shed on it. The first part answers the question "Why do corporate Codes of Ethics exist?" or "Why do corporations establish corporate Codes of Ethics?" under the basic assumptions, that ethics are 'costly' and therefore against the idea of maximising profit which is predominant in the market ideology. Proving these assumptions is not so easy.
First the term ethics will be defined and selected theories which could be the basis for Codes of Ethics will be portrayed. Then it is important to know what kind of morality is underlying the modern market ideology as we know it. Following that a correlation is sought between the market morality and corporate ethics, ending in the insight that corporate morality is costly and, therefore, is against economic intuition. Part one finishes then with a surprisingly simple answer to the question why codes exist.
The second part brings the findings of the first part in a broader context. The considered corporation of part one now 'grows' beyond borders and begins to conduct business globally, as a multinational corporation. Its existing set of corporate Codes of Ethics are now confronted with other nations, societies and cultures and, possibly, other ethicities. Whether the company should 'do as the Romans do' or not is the major question of the second part, closely connected to the keywords relativism and universalism. The problems revealed by each approach, and possible solutions to them, will be shown in part two.
The conclusion, finally, summarises the findings of the essay briefly, but, moreover, shows further questions and problems that would be worth to explore in the overlapping areas of applied ethics and international management.
Table of Contents
1 Introduction
2 Ethics and its theories
3 The market and morality
4 Why do Codes of Ethics exist? Answers
5 The global context
6 Universalism, relativism and culture
7 Ways out of the dilemma
8 Conclusion
Research Objectives and Themes
This essay explores the complex intersection of corporate ethics, international management, and market ideologies. Its primary objective is to investigate why corporations establish Codes of Ethics in a competitive, profit-driven environment and how multinational corporations navigate the ethical dilemmas arising from global operations, specifically the tension between universal values and cultural relativism.
- Analysis of moral theories (utilitarianism, deontology, virtue ethics) as foundations for corporate conduct.
- Examination of the inherent conflict between market logic (profit maximization) and ethical obligations.
- Investigation of the challenges faced by multinational corporations in reconciling home-country ethics with host-country expectations.
- Evaluation of different approaches to managing ethical dilemmas across borders, including universalism and relativism.
- Discussion of the necessity for effective implementation and enforcement of corporate codes.
Excerpt from the Book
3 The market and morality
After this presentation of how people, as individuals, groups and societies could come to a conclusion of what they regard as 'good', 'right' and 'wrong', the focus now comes back to the corporation, as a group of people or interactive system which pursues its own goals according to its own Codes of Ethics. Nevertheless, the necessary condition for the corporation to accomplish possible goals is to remain and persist its 'battlefield', the modern market economy. If that what we understand as modern market economy is limiting and partially determining the behaviour of the corporation, it deserves a closer look.
The market place is characterised as the meeting place of demand and supply. Here goods and services are exchanged for the mutual benefit. To do that, people need to have the freedom to conduct these exchanges. 'Market' is closely connected with the notions of competition and competitive rivalry. Additional features of the market system are private ownership, the voluntary nature of the exchanges and the profit motive (Boatright, 2003). The last one, profit, is also the driving force of the market economy, first described by Adam Smith (1723-1790). He recognized that the market forces produce general social welfare when every individual just acts according to his own self-interests and not because of reasons like benevolence or mercy.
This observation, of how the individual is motivated and behaves in economic relations was further developed to the model of economic man. The economic man is characterised as being solely self-interested, not emotionally bound or related to other humans, using success-oriented rationality by maximising his expected utility under existing conditions (Düwell, Hübenthal & Werner, 2002; Thielemann, 1996); Homann & Blome-Drees, 1992). The utility, then, is positively correlated with the amount of goods obtained.
Summary of Chapters
1 Introduction: This chapter introduces the research context, outlining the essay's structure and the core problem of reconciling moral thinking with modern business activities in a free market economy.
2 Ethics and its theories: This section defines the concepts of norms and values, and evaluates key ethical frameworks, specifically consequentialism, deontology, and virtue ethics, as theoretical bases for corporate codes.
3 The market and morality: This chapter analyzes the modern market economy, the model of the "economic man," and the inherent tensions between market-driven profit maximization and moral or ethical behavior.
4 Why do Codes of Ethics exist? Answers: This section explores the motivations behind the adoption of corporate codes, ranging from legal regulation and public pressure to genuine moral commitment.
5 The global context: This chapter extends the analysis to multinational corporations, examining the new ethical demands and challenges introduced by conducting business across diverse national and cultural borders.
6 Universalism, relativism and culture: This chapter investigates the dilemma of whether to apply universal ethical standards or to adopt a relativistic approach that respects host-country customs, utilizing Hofstede's cultural dimensions as a framework for analysis.
7 Ways out of the dilemma: This section discusses potential strategies for multinational corporations to navigate the conflict between universalism and relativism, including three-tier concepts and the importance of trans-cultural competence.
8 Conclusion: The conclusion summarizes the main findings, reiterating that while global business is increasing, reconciling universalism and cultural relativism remains a complex and ongoing challenge for future management.
Keywords
Corporate Codes of Ethics, Business Ethics, International Management, Multinational Corporations, Utilitarianism, Deontology, Virtue Ethics, Market Economy, Cultural Relativism, Universalism, Stakeholders, Globalization, Corporate Social Responsibility, Hofstede, Business Culture.
Frequently Asked Questions
What is the core subject of this essay?
The essay focuses on the necessity and role of Corporate Codes of Ethics within the global market economy, analyzing how businesses balance profit-driven market forces with moral and ethical requirements.
What are the central themes discussed in the work?
The central themes include the theoretical foundations of ethics, the constraints of the market economy, the motives for establishing ethical codes, and the challenge of managing diverse cultural expectations in international business.
What is the primary objective of this study?
The primary objective is to investigate why corporations establish Codes of Ethics and how they navigate the ethical dilemmas encountered when expanding beyond their home country's cultural and legal boundaries.
Which scientific methods are employed?
The author uses a theoretical approach, analyzing established literature on moral philosophy, economic theory, and cross-cultural management to explain the complex relationship between global business and ethics.
What is covered in the main body of the work?
The main body covers a definition of ethical theories, an analysis of market morality, the reasons for code adoption, the global context of multinational corporations, and a critical discussion of universalism versus relativism.
Which keywords define this paper?
Key terms include Corporate Codes of Ethics, Business Ethics, International Management, Market Economy, Cultural Relativism, and Globalization.
How does the author view the "economic man" model?
The author describes the "economic man" as a model characterized by success-oriented rationality and self-interest, noting that it often operates independently of, or even in contrast to, traditional moral considerations.
What does the "rational empathy test" suggest for multinationals?
Proposed by Donaldson, the "rational empathy test" suggests that corporations should evaluate their ethical standards in foreign cultures by placing themselves in the hypothetical position of those living in that specific host society.
Why are whistle-blowing and bribery highlighted as case studies?
They are used to illustrate how understandings of the "moral good" can directly contradict each other across cultures, highlighting the practical difficulties of applying a single universal code of ethics globally.
- Quote paper
- Christian Bacher (Author), 2005, Corporate Codes of Ethics, Munich, GRIN Verlag, https://www.grin.com/document/51701
