In an international business setting, it is difficult to decide what is ethical and what is unethical (Yüksel and Murat 384). There is growing awareness regarding the need by countries to maintain certain ethical standards on issues such as labor relations, environmental protection, and integrity. However, variations in the nature of ethical conflicts tend to emerge due to global competition, cultural differences, and differences in the ability by countries to enforce standards (Yüksel and Murat 385). For example, ethical standards in the United States are somewhat different from those of China (Pitta, Fung and Isberg 240). In another example, bribery is illegal in the United States under the Foreign Corrupt Practices Act but it is tax-deductible in Germany (Pitta, Fung and Isberg 241). There are significant differences in ethical values, institutions, cultural practices, and legal frameworks at the international level (Brey 4). For this reason, it is impossible for all elements of ethics to be harmonized by simply formulating international ethical standards. According to Pitta, Fung and Isberg, managers of multinational corporations can avoid ethical conflict by acquainting themselves with cultural foundations foreign countries ethical systems (240).
On the other hand, a U.S. company should not be allowed to do whatever is allowable in the host country. For example, it is morally wrong for a U.S. company to engage in bribery and corruption simply because a foreign country condones those practices. Every company has a social responsibility to promote ethical behavior. In the example of Lockheed Corporation, the chairman decided to give bribes in order to secure an aircraft sale contract. Under the Foreign Corrupt Practices Act of 1997, such an action is illegal. U.S. companies should desist from engaging in these practices because of their unethical nature even in countries that are yet to illegalize bribery of public officials. Apart from the criminality of the action, bribery discourages companies from promoting best practices.
Furthermore, economic factors should not outweigh ethics. The chairman of Lockheed Corporation was wrong in his attempt to justify his decision to bribe Japanese officials by claiming that the action saved jobs of many Americans and that it safeguarded shareholders’ interests. Such an argument creates the impression that companies must engage in illegal practices to survive. This is wrong because they only need to build competitive advantages in order to succeed in new markets, gain brand recognition, and create customer loyalty. Moreover, unethical behavior is unsustainable in the world of business because it may encourage similar behavior among employees.
Lastly, the Foreign Corrupt Practices Act helps the U.S. economy in several ways. To begin with, it promotes open and fair competition in the international market (International Corporate Accountability Roundtable). Additionally, it discourages stakeholders in the corporate world from rewarding corruption instead of efficiency. Moreover, it gives corporate leaders protective measures during their operations in corrupt foreign markets. At the same time, it reduces business costs because companies do not have to pay bribes to gain access to economic opportunities. Furthermore, the law plays a vital role by promoting compliance in a manner that helps companies to detect corrupt business partners (Salbu 238).
In conclusion, it may be difficult to set international ethical standards but this does not mean that unethical practices such as bribery in foreign countries should be promoted. The enactment of the Foreign Corrupt Practices Act is a bold step towards the promotion of ethical behavior in the international business environment. Economic factors do not provide a sufficient justification for a company’s engagement in corrupt practices in a foreign country even when no laws have been enacted to fight them. By giving bribes in foreign countries that are yet to strengthen their institutional frameworks, U.S. companies may be seen to be taking advantage of their vulnerability to harness business opportunities.
Works Cited
Brey, Philip. International Differences in Ethical Standards and in the Interpretation of Legal Frameworks. Brussels: European Commission, 2015. Web. Available from: http://satoriproject.eu/media/D3.2-Int-differences-in-ethical-standards.pdf.
International Corporate Accountability Roundtable. Why the Foreign Corrupt Practices Act is GOOD for Business. 2015, Web. Available from http://icar.ngo/analysis/why-the-foreign-corrupt-practices-act-is-good-for-business/.
Pitta, Dennis., Fung, Hung-Gay and Isberg, Steven. “Ethical Issues across Cultures: Managing the Differing Perspectives of China and the USA.” Journal of Consumer Marketing, 16.3 (1999): 240-256. Web. Available from http://home.ubalt.edu/ntsbpitt/ethics.pdf.
Salbu, Steven. “Bribery in the Global Market: A Critical Analysis of the Foreign Corrupt Practices Act.” Washington and Lee Law Review, 54.1 (1997): 229-287. Web. Available from: http://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=1611&context=wlulr.
Yüksel, Öznur and Murat, Guven. Globalization and Global Ethics: The Case of Less Developed Countries. Boston: Harvard University Press, 2010. Web. Available from http://www.opf.slu.cz/vvr/akce/turecko/pdf/YukselO.pdf.