Local markets are anachronisms. Today’s companies are global regardless of where main operations are located. This exposes companies to sensitive ethical quandaries, and if there is to be global growth and prosperity, there is great need for a global code of corporate conduct. Companies need to learn that it is possible to be a good global corporate citizen and also be highly profitable. And the lesson must begin at home.
Running a foreign operation from a distance can be like driving a speeding car down a busy highway from the back seat using only one’s knees. Distance, language and perpetually altering conditions generate a constant flow of problems, which have the potential to multiply as the number of countries in which a business operates grows and both type and level of operations become more complicated. This, combined with a lack of first-hand information, yields fertile ground for costly mistakes—both operational and ethical.
While operational mistakes can be damaging, they are usually fixable. Ethical mistakes, however, can bring disastrous consequences that both destroy the business and the careers of its workforce and leadership.
In today’s borderless world, advanced communications technology, aggressive media and heightened public awareness of abuse and unfairness unite to make it both unwise and difficult for companies to commit clandestine unethical behavior.
As the chances of exposure for unfair or unethical corporate behavior expand, so to does the price to be paid. Once the public becomes aware of corporate misdeeds, both the organization and those responsible suffer.
This age of increased scrutiny does, however, produce opportunities for companies that are perceived as good corporate citizens to benefit from that general awareness. Such companies equitably create a friendly consumer environment that, in the end, generates continuing profitability. It is not merely a question of image but of what said image is made of.
Prepare for Perceptions of Unfairness
The level of protest against globalization signals the degree of disparity people sense. Although there are some protesters who have personal and political agendas, the majority of protesters have legitimate, morally pointed concerns—notably against corporations that ignore local interests and sovereignty. Regardless of whether such claims are true, those who voice them believe global corporations exploit countries for their own benefit. There is the perception that companies take the lion’s share of benefits while local economies and workforces receive only a pittance for their contributions. In essence, globalization is often seen as an unfair practice.
Given these perceptions, how should ethical companies behave in the global markets? Ethical business behavior is simply good business practice, no matter where, and it pays off in better customer relations and greater profits. Ethical business is simply good business.
The present international market structure can confuse; scenarios can be hard to define from an ethical point of view. By way of response, International Management Consulting Associates has developed The Ten Commandments of Global Business to help businesses cut through that confusion and come up with better, safer, more ethical, and, in the end, more profitable solutions.
1. Generate Wealth for Constituents Everywhere
It is unacceptable to exploit the citizens or resources of one country to benefit owners and employees in another. A company should create wealth that benefits the communities in which it operates.
2. Treat Each Market as Unique
This is the key to success: think globally, market locally. Some products and services can cross borders without modification; most can’t. Focus on local needs; then adapt, adapt, adapt!
3. There are No “Lesser” Markets
Just because it’s an underdeveloped market doesn’t mean you shouldn’t deliver quality products and services. All markets require and deserve your full effort.
4. Don’t Destroy Local Competition with Unethical Marketing
Predatory pricing (i.e., “dumping”) and other unethical practices to gain market share hurt everyone in the long run, including those who practice them.
5. Be a Global Organization with Equal Treatment and Opportunity for All
The idea of a home office where certain employees receive preferential treatment compared to those in other regions undermines the company’s global effectiveness. If your company is truly global, it cannot be exclusively American or Japanese or British or Chinese. It must be a citizen of the world.
6. Develop People Everywhere
A business is only as good as its employees, wherever they are. People everywhere work for more than a wage or salary. The people who will make your business grow also want to grow. Developing people is a good investment everywhere in the world.
7. Honor the Environment
No environment on our planet is less important than another. A company cannot profit at the expense of any environment.
8. Honor Local Laws
Like them or not, local laws must be obeyed. No company is above any country’s law.
9. Respect Customs
Whether a company agrees or disagrees with a host country’s customs, as guests of that country, it should not ignore nor criticize them. It’s part of being a good corporate citizen.
10. Do Not Sacrifice the Future for the Present
Focusing on short-term gains in a country at the expense of its long-term best interests will eventually come back to haunt any company—and it will then have to pay the piper.
Back to the October issue.