The Role of Ethics in International Business


     By Carlo Scevola & Partners

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How and whether it is possible to act ethically at international level.

International business ethics has a number of open questions and dilemmas. Today it is characterized by the following elements:

• Every culture and nation has its own values, history, customs and traditions, thus it has developed own ethical values and understanding of ethical principles;
• There is no international ethical code of conduct, accepted and followed by all the countries;
• There is a lack of governments’ initiative to create ethical cooperation framework and thus to enhance ethical behavior in international business;
• It is hard to outline those ethical values which would be understandable, acceptable and important for representatives of all the continents simultaneously within different types of international cooperation projects.

Financial crisis of 2007-2008 underlined importance of ethical behavior. It is no longer enough to be knowledgeable and experienced in a particular domain, in order to act professionally. Professionalism also consists in ethical behavior, honesty, compliance and integrity. How to ensure such a working style at all times in long-term and why it is necessary to do so?

First of all, ethical behavior combined with skills and professionalism is able to ensure sustainable development, rather than a short-term profit, which brings disastrous results after a certain period of time. Ethical behavior ensures awareness and concern for the future and for the right way of action in each particular situation. Secondly, ethical behavior establishes a healthy and pleasant cooperation climate for all the parties involved in a deal, making them feel comfortable with each other. Thirdly, acting in accordance with moral values is crucial for deserving clients’ attention and support and achieving a significant competitive advantage in a particular market segment.

So, after having identified that ethics is a must in international business, let us pass to a more complicated domain – how to implement ethical behavior in practice in long term. Should an individual follow one’s own ethical convictions, in order to act ethically in international business? Should every company create its ethical code of conduct and monitor its employees’ compliance at all times? If so, how to achieve it? And what happens when two individuals or two companies with different codes of conduct meet for cooperation? How to ensure ethical behavior, in case ethical values and principles do not coincide?

These are very important questions, which business and academic world participants have been trying to answer for long years. As anything else in business, it is not always possible to find out a single 100% right answer to every question. Everyone proposes its personal point of view, based upon research, perception, understandings, experiments and experience.

Having read a significant number of books and academic articles on this topic, having cooperated with individuals and corporate bodies from different countries of all the world’s continents, I suggest the following approach to international business ethics:

• Every individual and every corporate body must outline its ethical values;
• Every individual and company should ensure understanding of ethical values and belief in their effectiveness and importance;
• Employees of every organization must participate in creating a corporate code of conduct, which in this case definitely represents corporate culture, rather than only personal views of a company’s leader;
• Every individual and company must monitor compliance with the outlined values at all times;
• All the ethical values must be divided in two categories – rigid and flexible. Rigid are those values which cannot be renounced under any circumstances (honesty, integrity, professionalism), and flexible ones, which are those moral principles which may be interpreted in different ways in different situations (will to understand other cultures’ values, remuneration policies).

In such a way, when foreign bodies with different ethical codes of conduct meet, they are able to create an effective common ethical cooperation framework, keeping rigid values unchanged and adapting flexible moral principles. Such an approach is able to ensure every involved party’s accordance and satisfaction with the created ethical cooperation framework for that particular project without violating personal convictions.

I strongly believe that it is one of the most effective ways of ensuring ethical behavior in international business, which is effective at individual, corporate, state and supranational levels.

ABOUT THE AUTHOR: Carlo Scevola, MBA
Carlo Scevola is President and Founder of CS&P Fiduciaire, a Swiss-based fiduciary firm providing asset protection strategies, tax optimization, offshore companies formation, trust and foundations.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.