Values In Tension: Ethics

Away from Home

Aarti Dange (11)
Pratik Jhaveri (25)
Naveen Mehta (35)
Shraddha Mehta (36)
Sahil Shroff (56)
Bhavin Doshi (107)
Hemen Parekh (136)
Sonali Kotak (125)
Nishant Shah (150)
Values
Definition by Harold Titus
Feels that any definition of value is unsatisfactory &
incomplete.
Represents a single belief that guides ones decisions &
actions across all situations
Types of Values
- Milton Rockeach
1. Terminal Values
Enduring belief that a certain end-state of existence
is worth striving for & attaining
2. Instrumental Values
Enduring belief that a certain way of behaving is
appropriate in all situations
Case – Satyam
About the company
4th largest IT company in India
More than 40000 employees
High Global reputation
Offers services to more than 550 MNCs
Facts
Company’s cash & bank balance inflated to Rs.5361cr
as against the actual Rs.5040cr
Fictitious accrued interest earning of 376cr.
Operating profit artificially boosted from the actual
61cr to 649cr
Understated liability of 1230 cr
Revenues inflated since many years
Effects
Jobs of over 40000 people were at stake
Indian stock market slipped over 7% on 7th Jan., 09
Market capitalisation deteriorated
Undoubtedly, this hurt the prospects of foreign money
flowing into India.
Reputation of not only the Indian IT industry but also
of the nation as a whole was at stake
Business Values for the 21st century
- Dr.M.B.Athreya
Righteousness – Dharma
Business should follow & maintain the highest standards
of ethics & integrity in all its decisions & actions.
Public Good – Lok-Kalyana
Business should work for the well-being of the whole
society & not just work for private gain.
Efficacy – Kaushalam
Business should pursue efficiency & effectiveness,
productivity & quality, optimum utilization of resources
& development & conservation of more resources.
Innovation – Vividhata
Business should nurture creativity & develop new, useful & distinctive
products, services, ideas, methods, solutions to suit the changing
economic, social, cultural life & expectations of people.
Learning – Jignyasa
Business must maintain a desire to learn & improve continuously. It
can learn from the feedback given by customers, employees, suppliers,
intermediaries.
Healthy Competition – Dharmayudha
Every organization has to follow moral rules & norms while striving
hard to get an edge over competitors & remaining ahead of
competition.
Respect for Individual & Human Dignity
Ethics In Tension values Away from Home

When we leave home and cross our nation’s

boundaries, moral clarity often blurs.
Without a backdrop of shared attitudes, and without
familiar laws and judicial procedures to define
standards of ethical conduct, certainty is elusive
Should a company invest in a foreign country where
civil and political rights are violated?
CASE 1: Compromising on human life: Nigeria

Nigeria agreed to take highly toxic polychlorinated biphenyls

Unprotected local workers, wearing thongs and shorts
unloaded barrels of PCBs and placed them near a residential
area
Residents/workers did not know contents of barrels –
which is their right
Many countries are unable to police transnational corporations
even if they want to
Combination of ineffective enforcement and inadequate
regulations leads to misbehavior by unscrupulous companies
 Should a company invest in a foreign country
where civil and political rights are violated?
CASE 2: Software Piracy Issues
Statistics on software piracy: US-35%, Germany-57%, Italy &
Japan-80%, India- almost 100%
Industry losses:$2.3 billion per year.
Similar laws against piracy
Reasons:
Country’s level of economic development
Crucial factor-culture and ethical attitudes
1995 annual report of the Software Publishers Association:
software piracy directly to culture and attitude.
E.g. Italy and Hong Kong - survey
If ethical attitudes around the world permit large-
scale software piracy?
Software companies won’t invest in developing new
products
They cannot expect any ROI in certain parts of the world
Ethics fail to support technological creativity:
 jobs are lost
 livelihoods jeopardized.
Co. cooperate with other companies ,local organizations to
help citizens understand the consequences of piracy
Encourage evolution of different ethics
Conflicts of Tradition
Differences in Traditions across various countries
Managers need to take decisions
All business practices cannot be categorized as simply
ethical or unethical
Gray area called moral free space by Thomas Dunfee
Moral free space
• Moral free space is the area bounded by hypernorms in
which communities develop ethical norms representing a
collective viewpoint concerning right behavior.
The term implies that it is right and proper for
communities to self define significant aspects of
their business morality.
These norms guide behavior and often help
mitigate conflicts.
Conflicts of Tradition: Case
Few successful Indian companies offer their employees
the opportunity for one of their children to gain a job
with the company
Honour this commitment even when other applicants
are more qualified than an employee’s child
In western countries this would be considered as
unacceptable nepotism
Conflicts of Tradition: Case (contd)
If a US company made such promises to its employees
it would violate the regulations established by the
Equal Employment Opportunity Commission.
Tension should be viewed in light of moral space
The decision to allow special perk for employees and
their children is not necessarily wrong especially in a
country like India where it is extremely difficult to find
a job.
Ethical Dilemma in International Business
International boundaries blurring
Developed countries shifting facilities to less
developed countries
Ethical standards vary from country to country
Work standards in host nation are inferior than that
of home nation
Issues faced by workforce
Employment Practices
Long working hours
Extremely low pay
Failure to protect workers against toxic chemicals

Human rights
Freedom of speech
Freedom of political repression
Racial Discimination
Case: White Rule in South Africa
Prevalent till 1994

Denial of basic political rights to the native South

Africans.

Reserved occupations only for whites

The revolution started in 1980

Case: White Rule in South Africa contd.
General Motors started this trend in South Africa
Adopted Sullivan Principles named after Leon Sullivan.
GM did not obey apartheid laws in its own operations
The company did everything possible for abolition of
apartheid laws
Companies started divesting from SA for the reasons of
unethical conduct e.g. General Motors, Exxon, Kodak
This ethical stand helped SA Govt. abandon white minority
rule and carry out democratic elections in 1994
Basic Principles of Cultural Difference
Individualism v. Collectivism
Power Distance
Uncertainty Avoidance
Career v. Quality of Life Orientation
Universalism v. Particularism
Task v. Relationship Orientation
Managing Global Diversity
Manage negative effects
Optimize positive effects
Sensitive to existence of differences
Assuming not on same wavelength
Peoples perception
Steps in Cross-Cultural Facilitation
1) Recognize the potential for conflict
2) Describe the situation
3) Determine the underlying assumptions
4) Assess the similarities and differences among the
stakeholders' approaches
5) Create synergistic alternatives
6) Pick an option, and proceed to implement
Examples
McDonalds ad in China – kneeling man
Gerber baby food packaging in Africa
Pepsodent in South East Asia
Cultural Relativism

According to cultural relativism, no culture’s

ethics are better than any others.
The cultural relativist’s creed - When in Rome, do
as the Roman’s do.
The inadequacy of this approach becomes
apparent when the practices in question are more
damaging than petty bribery or insider trading.
Cultural relativism is morally blind.
Ethical Imperialism
 Ethical Imperialism directs people to do everywhere exactly as
they do at home.
 It is based on the theory of absolutism:
 There is a single list of truths,
 They can be expressed only with one set of concepts,
 and they call for exactly the same behavior around the world
 Problems:
 It clashes with belief that people’s culture must be respected
 It presumes that people must express moral truth using only
one set of concepts.
 It presupposes a global standard of ethical behavior
Improving Global Business Ethics
Ethical Choices in Home vs. Host Country Situations
International Law
Global Codes of Conduct

ETHICAL CULTURAL
IMPERIALISM RELATIVISM
Broad
Home Country Middle Ground Host Country

• Cultural • Cultural
Mix of Home and Host
standards Country Standards standards
• Ethical & • Ethical &
moral moral
standards of Application of Ethical Principles standards of
home host
country country
Balancing the extremes:
Three Guiding Principles
Respect for core human values which determine
the absolute moral threshold for all business
activities

Respect for local traditions

The belief that context matters when deciding

what is right and what is wrong.
Examples
McDonald’s neither serves beef nor pork in India
In Turkey, though a secular Muslim country Friday
is a workday
US advertisers bombards children with TV
advertisements while Sweden prohibits such ads
Disney had much more success in Japan than in
France
Nokia from Finland & Philips from Netherlands
have adopted English as their operating language
Ethical Choices
Which ethical standards will be used ?
Which ethical standards transcend national
boundaries ?
Worker and product safety
Advertising practices
Fair treatment
Health
Minimum pay
Consumer rights
Ethical Leadership
Ethical leadership is knowing your core values and
having the courage to live them in all parts of your life
in service of the common good.
“the right values” or “strong character”
The 4-V Model
Aligns the internal (beliefs and values) with the
external (behaviors and actions)
Leaders need to embrace an inner journey of integrity
and make an outer commitment to the common good
They ask, “leadership for what purpose?”
 The ultimate purpose of leadership is to shape a future that is
visionary,
inclusive, and enables all members of society to fulfill their
needs, dreams and potentials.
The 4-V Model
Values: Understanding of and commitment to one’s
individual core values , by discovering the values at
the core of the identities and choice-making on all
levels of their personal and civic lives.
 
Vision: It’s the ability to frame actions – particularly
in service to others – within a real picture of what
ought to be.
 
Voice: Claiming one’s voice is the process of
articulating the vision to others in an authentic and
convincing way that animates and motivates them to
action.

Virtue: Striving to do what is right and good.

Ethical leaders ask, “How are my values, vision and voice in keeping
with the common good?”
Development of ethical leadership.
Service.  Service connects Vision to Values, indicating that when
our values are tested and tried through service to others, the
latent vision within them is often revealed.

Polis.  “Polis” is the Greek word for city, and the root of the
English word, “politics.”  As we learn to give voice to our vision in
the context of a public act, we are engaged in the art of politics.

Renewal.  As Voice returns to Values, the territory of our work

changes to renewal.  As we express our voice in multiple ways, we
need to break from the action on a regular basis to consider if our
actions are congruent with our values and vision. 
Some reflections questions
Will you be the same person at work? At home? In the
community?
Will you have the courage to live out your values when
there is pressure to compromise or rationalize?
How do your values contribute to the common good?
How can leaders resolve ethical dilemmas?
Leaders should have and be willing to act on a definite
sense of ethical standards.

Leaders can examine dilemmas from different

perspectives.

Leaders can often reframe ethical issues.

Finally, leaders should have the habit of conscious

reflection, wherever it may lead them.
Thank You!