Running head: ETHICS & REPUTATION
Global Business Ethics & Reputation
Matthew Bell
MGMT560 – Ethics in the Global Marketplace/ Southwestern College Professional Studies
May 6, 2014
Dr. Roger Fuller
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Global Business Ethics & Reputation
Reputation and money. These are two things that most people can admit that they strive
for in life. The same can go for corporations. A big concern is how to how to achieve having
reputation and money. Ethics are focused with moral obligation, responsibility, social justice,
and the common good and even though they can be taught, they can also instinctively exist in an
individual (Millar & Poole, 2011). Having ethics means doing what is right even if nobody is
around to notice. Business ethics is the applied discipline of ethics that addresses the moral
features of commercial activity (Danielewicz-Betz, 2012). Is behaving ethically enough to
garner the support of the community and gain reputation which will lead to more profit?
Probably not because what is ethical to one person or corporation may not be ethical to another
and there are no set standards as to what is ethical and what is not ethical. Corporations must
practice cross-cultural ethics, approaches to ethics, business quality, corporate social
responsibility, and environmental sustainability. It is not until all of these practices are adhered
to that a corporation can earn the respect needed to make the money.
Cross-Cultural Ethics
A common understanding of the purpose of business can be described as “pursuing
profit” (Danielewicz-Betz, 2012). It is no secret that corporations want to maximize profits
today but without doing that there would be no corporation. Maximizing profits becomes bad
when that is the only concern of a corporation and the concern of the customer, environment,
employees, and any other stakeholders seizes to exist (Danielewicz-Betz, 2012). Executives
running corporations execute economic power, political power, sociocultural power,
environmental power, and power of their employees (Danielewicz-Betz, 2012). This power has
created shifts in government and corporations are emerging as the dominant governance
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institutions and the large corporations have the ability to span to every country in the world
(Danielewicz-Betz, 2012).
When dealing with foreign countries, it is important to know the cultural differences and
how they are reflected in ethics codes and business conduct. Chinese business ethics, for
example, are strongly influenced by Confucianism with trustworthiness being the central
important moral principle (Danielewicz-Betz, 2012). Confucianism represents Chinese culture
that emphasizes interpersonal relationships and keeping a harmonious relationship among
different parties in a society is to be the upmost importance (Millar & Poole, 2011).However, in
western society, other than the U.S., continental Europe places more emphasis on strengthening
the overall framework for business conduct rather than on codes of ethics (Danielewicz-Betz,
2012). The U.S. receives incentives from the government to promote business ethics-related
programs while companies in Europe do not. In comparison to Germany, German companies are
usually less inclined to implement formal ethics programs and managers seem more
particularistic saying that American ethics programs only aim at legal compliance (DanielewiczBetz, 2012). Finally, American business ethics are based on the idea that is possible to maximize
wealth and profit while at the same time being committed to upholding values and laws
(Danielewicz-Betz, 2012).
Depending on where a corporation is in the world, they have to understand the culture.
Corporations also have to walk a fine line in order to make the right decisions and not rush. A
common mistake that most companies make is simply accepting whatever prevails in a host
country because accepting one thing exposes the company to corruption and public affairs
disasters (Donaldson & Dunfee, 1999). This is because corporations fail to find the “glue” that
cements morale and cooperative strategy (Donaldson & Dunfee, 1999).
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Approaches to Ethics
What once constituted an effective business organization is not the same today. In the
past, complex tasks were broken down into different parts and could be performed by anyone
regardless of their skills or education and workers lost their identity as a person and became an
impersonal, deskilled, interchangeable production unit (Welch, 1997). Today, for corporations
to be successful they have to be customer driven and treat employees as human beings and in
order to be effective, ethics programs must facilitate the empowerment for employees to take
risks, be innovative, and make decisions (Welch, 1997). Three approaches that can be taken for
this are the compliance-based approach, integrity-based approach, and value-oriented approach.
A compliance-based approach to ethics is straight forward. A person follows the rules or
there is consequences such as punishment or unemployment. An integrity-based approach does
more focusing on identifying corporate values and providing training to the employees to ensure
the values become internalized (Welch, 1997). This internalized conscience becomes a compass
to aid employees in identifying unethical or improper actions (Welch, 1997). The last approach,
which Millar & Poole (2011) state is the most important is the values-oriented approach.
Values-oriented approach focuses on maintaining a culture where ethical issues can be discussed,
ethical behavior is rewarded, and where strategic decisions have corporation values incorporated
in them (Millar & Poole, 2011). A values-oriented approach also contributes to organization
commitment from employees and has a positive effect on morale, motivation, and performance
(Millar & Poole, 2011). Corporations have to realize that there is not just one perfect approach
to ethics and some approaches may to be combined. Multiple commenters have said that the
most effective values-bases systems have some elements of a compliance program (Millar &
Poole, 2011).
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Business Quality
Produce product and make profit. That is the general practice of business. Corporations
in the past expected the order of goods and services to be done with the best possible quality to
price ratio (Sciarellia, 2011). While this is still done today, there was a lack of care for the land
and resources in the past. Today, quality involves checking of conformity and sustainability for
use of goods and services on the market (Sciarellia, 2011). A business is considered a social
institution because it has effects, both positive and negative, that interest the people generating
greater changes on the outside world (Sciarellia, 2011). Quality has made vast progress in
progress and the overall control of quality is becoming more widespread because of the high cost
due to lack of quality (Sciarellia, 2011). The improvement of quality is an important tool for
both the competive strategy of cost leadership and product differentiation since customers will
choose a particular corporation’s product because of their well know quality standards
(Sciarellia, 2011). This helps reputation and profit maximization. A corporation who uses
quality in their “mission” rather than just a practice will have a higher impact on entrepreneurial
strategies than corporations who do not focus as high on quality.
When concerning ethics, quality has to become part of the employee creed (Sciarellia,
2011). If quality becomes part of the creed it can contribute to growth of certain intangible
resources such as expertise and trust and because of this, quality is not only seen as a practice but
as a strategic option (Sciarellia, 2011). Quality ethics will “generate the virtuous process of
organizational learning and enhance the firms’ immaterial resources (Sciarellia, 2011 p. 1147).
Having quality will also help raise the moral profile and ethical principles of leaders in a
management position. Quality is everything when it relates to reputation. Good quality will
mean financial success while bad quality will hinder the reputation and decrease profits.
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Corporate Social Responsibility
Corporate social responsibility (CSR) can be defined as a corporation’s obligation to take
action to protect and improve the welfare of a society and the interest of organizations (Sen &
Bhattacharya, 2011). Consumers base reputations, whether it be about people or organizations,
off of characteristics such as culture, skills, values, competitive position, product offerings, and
company schema (Sen & Bhattacharya, 2011). The CSR information that is provided to
consumers will allow the consumer to get an inside look of a corporation and help them form an
opinion about a corporation (Sen & Bhattacharya, 2011). Research also suggest that people will
typically identify with a company or organization that they perceive as having the identity to be
enduring, distinctive, and capable of enhancing their own self-esteem (Sen & Bhattacharya,
2011).
A corporation’s character is defined by its CSR actions. CSR is important because if a
corporation lacks CSR, they will have a bad public image and low customer satisfaction which
will damage their reputation. CSR is important to corporations and customer satisfaction
because a company’s actions appeal to the consumer as not only one of an economic being but
also a member of family, community, and country (Luo & Bhattacharya, 2006). CSR can also
create a favorable view or context of a corporation that increases consumers’ evaluations and
feelings about a corporation (Luo & Bhattacharya, 2006). Since customer satisfaction is an
important part of corporate strategy and a key factor in long-term profitability and market value
it is also important to relate CSR to customer satisfaction and to remember that customers are
more likely to derive better perceived value and higher satisfaction from products that are made
by a socially responsible company (Luo & Bhattacharya, 2006).
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Environmental Sustainability
Sustainability means meeting the needs of the present without compromising the ability
of the future to meet their own needs (Richardson, 2012). While this is a broad definition, each
corporation has the ability to alter it and decide what sustainability means to them. For
corporations, sustainability usually means making positive and meaningful changes needed to
reduce and negate the negative impacts of their operations, product(s), and services (Richardson,
2012). This could be done my reducing the carbon footprint that a corporation has, reducing or
finding ways to be more efficient with energy, reducing the use of non-renewable resources, and
reducing the amount of resources taken from the environment (Richardson, 2012). Eyeing ways
to reduce the carbon footprint of a corporation demonstrates to its shareholders and customers
that the corporation is addressing its emissions which shows a concern for the environment and
raises consumer interest in a coroporaton (Richardson, 2012). A corporation who tries to reduce
energy goes above and beyond the basic checklist given by the local utility company which only
focuses on general improvement tips (Richardson, 2012). Reputation will increase based on the
actions taken by a corporation to sustain the environment both locally and globally.
Conclusion
Corporations must practice cross-cultural ethics, approaches to ethics, business quality,
corporate social responsibility, and environmental sustainability to gain a positive reputation
which will lead to profits and financial success. Understanding the cultural differences in each
country will ensure that their ethical beliefs can be taken into consideration with the existing
ethical beliefs of a company and a solid ethics program can be created for the new operating
country. This will allow a corporation to gain respect and reputation from the country they are
operating in. Knowing the different approaches to ethics will allow a corporation to make the
ETHICS & REPUTATION
choice on what approach they feel is best for success. In reality, good reputation is not going to
happen with a low quality corporation and/or product so having a high quality product and way
of operating is also important. Finally, being socially responsible and caring for employees and
the area/environment around the corporation will make consumers and shareholders feel more
secure about your corporation, especially if the environment is being protected in the process.
All of these practices, followed correctly, should ensure a good reputation and profit and the
future of a corporation.
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References
Danielewicz-Betz, A. (2012). Interrelation between work ethics and business ethics: A crosscultural perspective. Rochester: Social Science Research Network.
doi:http://dx.doi.org/10.2139/ssrn.2129747
Luo, X., & Bhattacharya, C. B. (2006). Corporate social responsibility, customer satisfaction,
and market value. Journal of marketing, 70(4), 1-18.
Millar, C., & Poole, E. (Eds.). (2011). Ethical leadership: Global challenges and perspectives.
New York, NY: Palgrave MacMillan.
Richardson, M. S. (2012). Environmental Sustainability: A Direction. Pollution Engineering,
44(11), 22-25.
Sciarelli, S. (2002). Business quality and business ethics. Total Quality Management, 13(8),
1141.
Sen, S., & Bhattacharya, C. B. (2001). Does doing good always lead to doing better? Consumer
reactions to corporate social responsibility. Journal of marketing Research, 38(2), 225243.
Welch, E. J. (1997). Business ethics in theory and practice: Diagnostic notes. A. A prescription
for value. Journal of Business Ethics, 16(3), 309-313. Retrieved from
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untid=13979