Ethical Issues in Business

Sometimes, businesspeople may engage in cultural relativism: When in Rome, do as the Romans do or you must adapt to the cultural practices of the country in which you are operating. Hence, such businesspeople may assume that “morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures,” which creates ethical issues in business.

In the 2008 Transparency International Corruptions Index, it was determined that Somalia is the most corrupt country in the world. If a business person were to engage in cultural relativism, such person may engage in unethical behavior – exchange bribes for contracts, for example – given that Somalia is a corrupt country. Although bribery may be common, there are other critical – yet sometimes overlooked – ethical issues that arise due to culture.

For example, in a hypothetical case study on Chapter 10 of Business Ethics: Ethical Decision Making & Cases, Sid, a Japanese stock analyst for Dun & Ready, put his interests before the company by using his skills and language to entice investors.” Although he wants to be respectful in his culture, he engages in conflicts of interest by taking wealthy clients to exclusive U.S. golf courses, by working with Glenna to engage in “creative bookkeeping,” and even churning his accounts – despite the fact that all of these things are unethical in the US. In addition, Sid deceives his supervisor, an American named Ron, into signing an agreement that would grant him and his associates the ability to use company funds to pay for losses incurred by investors. In the US, if the stock market endures hardships, investors may lose – there is no refund. Sid is aware of this, but be...

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... it brings down the moral of the employees that stay with a company. Such employees may be reluctant to perform efficiently if they sense that they will be fired anyway. Instead, Berle Inc. can shut down the plastics business and use the land, labor, capital, and its finances to expand the profitable aluminum operations.

However, it may not be ethical to keep the plastics plant operating indefinitely just for the sake of preserving the employees’ jobs. Sometimes, managers may engage in unethical behavior just to preserve jobs. In Chapter 10’s Ethical Challenge, a manager was being pressured to manufacture chips with corn that were contaminated with aflatoxin and sell them to countries abroad just to save the company’s employees. Managers in Berle Inc. must assess how their actions will affect all stakeholders and whether the ultimate decision is rooted in ethics.