1. Ethical Decision Making in Global Context
Lecture 8

2. “Ethical decision-making in the global context, sitting as it does at the top of the global competencies model, is increasingly the acid test applied by a multiplicity of stakeholders to judge global management competency” (McNett & Sondergaard, 2004, p. 167).

3. Ethics is on top of the global agenda!
Number of companies in the Global 200 list that have business code of conduct increased dramatically over the years: from 2% in 1997 to 85 % in  
Some of the large global organizations now have Chief Ethics Officer in their top management team.  
Increasing number of organizations (e.g., 77% US, 55 % Asian Pacific, 32 % Western European) integrate ‘whistleblower protection programs’ to fight with fraud and corruption.  
There are numerous non-profit organizations that guide cross- cultural managers to conduct business with high ethical standards, such as the International Business Ethics Institute ( Center for International Business Ethics ( European Business Ethics Network (

4. International standards and codes to ensure ethical and responsible practices in global business:
ISO (standards for environmental protection)
ISO (standards for corporate social responsibility)
SA8000 (standards for workplace practices to comply with international labor conventions and human rights)
UN Global Compact (principles of reponsible and sustainable corporate conduct)
AA1000 Assurance Standard (evaluation standards used to evaluate the extent to which an organization is accountable to its multiple stakeholders)
ILO and OECD guidelines for MNCs
The rate of MNCs following these standards and guidelines are increasing over the years: ISO %; ILO convention - 35 %; UN Global Compact - 33 %, OECD Guidelines for Multinational Enterprises %; Ethical Trading Initiative - 17 %; SA % AA %).

5. Cross-cultural differences in approaches to Ethics & CSR
People avoid unethical behaviour to a greater extent in cultures that value individualism and certainty. People avoid unethical behaviour to a lesser extent in cultures that value hierarchical social order, and achievement and affluence.
In particularistic cultures, application of ethical rules depends on the person, situation, task, urgency, and so on, whereas in universalistic cultures, application of ethical rules depends less on the circumstances.
High context cultures prefer ethical rules to be stated explicitly (e.g., a book on code of conduct, list of principles posted on the company walls), while low context cultures resent such explicit statements and consider them unnecessary or rude.
High power distance is associated with less concern for CSR, whereas high institutional collectivism is associated with more concern for CSR.

6. Unethical or culturally different?
Follow MNC or home country standards if the questionable practice is not necessarily unethical but culturally different.
If the practice is culturally different but not ethical, the recommendation is to assess whether or not the practice is a major or minor violation of ethics.
Follow MNC or home country standards if the violation is major.
When the violation is major, MNC can follow its own standards if:
it has power in the host country and
the host country has the potential and willingness to learn from the MNC.