Business Ethics Away from Home: What Every Entrepreneur Needs to Know
I believe that any business that operates to a strong set of shared principles not only has greater moral integrity: it also demonstrates more stable results, and generally faces challenges more successfully.
This is the purpose of business ethics. Business ethics are designed to regulate company behaviors, set clear boundaries, protect stakeholder interests, and communicate corporate values internally and externally.
What are business ethics?
Business ethics are often laid out in a corporate “code of conduct” or a statement of values, and may include topics like personal and corporate responsibility, respect, and equality principles.
When looking at business management principles, researchers typically divide them into three different approaches: traditional, ethical and socio-ethical.
The traditional approach to management says that businesses should serve the interests of their owners, and managers are just employees who run the business according to the owners’ wishes.
Most developed countries take the ethical approach. In essence, this recognizes that the organization as a whole has a series of ethical obligations to its stakeholders.
The socio-ethical approach takes the view that managers and employees work together to maintain the company’s common interests.
A look at global trends: how business ethics are important for your team
There are challenges, however, when striving to operate as an ethical business across international boundaries. Different cultures work in different ways and have differing expectations of each other, and this has the potential to hamper efforts to build the strong culture upon which an ethical business must operate.
Recent data suggests many organizations are actively dealing with the challenges of running a global, ethical business. The Global Business Ethics Survey 2021, for example, includes data collected from approximately 14,000 employees from 10 developed countries. It identifies five key trends in business ethics across the world:
- Ethical culture strength remains high. In organizations with a developed system of business principles, misconduct is significantly reduced.
- The pressure to compromise ethical standards is the highest it has ever been. 29% of employees reported feeling pressure in 2020, an increase from 20% in 2019.
- Observed misconduct is inching upwards, and this is a sign of an organization’s ethics culture. Those that often deviate from the norms are likely to have ineffective corporate culture development programs, lack accountability, and lack managers who could train others.
- More employees are reporting misconduct. Experts see reporting as the only way to improve the ethical culture. According to the survey, 81% of its respondents complained about neglect of the rules.
- Retaliation rates have skyrocketed. 61% of global employees said they experienced retaliation for reporting wrongdoings. The most common forms of retaliation included being ignored by colleagues and management, being given unwanted assignments, verbal insults, being given a poor performance review, and even theft of personal or work items.
How do we respect cultural differences while improving global business ethics?
In my interviews and columns, I have repeatedly mentioned the book “The Culture Map” by international management expert Erin Meyer. It is a particularly good study on the topic of global challenges in business management! The author describes eight “scales,” each representing eight management behaviors that typically reveal cultural differences.
The key points outlined in this book provide excellent guidance for any global business, but especially those seeking to build a strong culture upon which to run an ethical/socio-ethical business effectively. Below, I explain the key points from the book, and suggest ways to put them into practice.
1. Сontext is king
The culture scale ranges from “low-context” cultures to “high-context” cultures.
People in low-context cultures (e.g., America, the Netherlands, Australia) say what they mean directly, and communication is straightforward. High-context cultures (e.g., China, Japan, Korea) consider good communication to be layered and nuanced. Simple phrases may have implied meanings, and it’s up to the listener to infer what’s meant.
How to apply this: When communicating with people from different cultures in a business environment, prepare well and pay attention to different communication styles. Listen carefully, do not be afraid to ask again and clarify your ideas, and fix all agreements in writing.
2. Criticism and feedback are nuanced
Constructive feedback, especially when negative, is perceived differently in each culture. The American approach, in which criticism is framed with praise, is close to the Asian mentality but inexplicable to the straightforward French and Germans.
In Israel, meanwhile, feedback is welcome in the moment: it’s customary to immediately discuss and fix mistakes. It is important to understand the causes and consequences, explain your position, openly ask questions and answer them.
How to apply this: In international interactions, the feedback process is particularly tricky, and often generates problems. Try to speak directly and plainly, and don’t hesitate to seek clarification that the other person understands your intentions.
3. Persuasion is all about cultural mindset
The secret of persuasiveness lies in understanding the mindset of the other person. When presenting a project to colleagues from the U.S., it is important to get down to business quickly and not worry about small talk. Americans are focused only on action and results — unlike Germans, for instance.
Also, when presenting new ideas, you should always take into consideration a person’s commitment to their tradition. For example, do not expect Chinese partners to be happy with proposals for improving processes. In most cases, they act strictly according to instructions, and do not see the need to change a system that works properly.
How to apply this: When entering an intercultural dialogue, take into account the approach of the opposite side. In the case of a multinational team, mix theory and practice, maneuvering between real examples and the presentation of abstract principles.
4. Who is the leader?
Every culture has its own idea of who a real leader is.
In egalitarian cultures, senior executives are equal with the rest of the team. The leader does not emphasize his status and does not give orders. For example, in the Italian language, the less formal “you” form of address is used for everyone, and ordinary employees often meet with executives for a casual drink after work.
In hierarchical societies, it is customary to defer to the leader and not show excessive initiative. This is the case, for example, in South Korea, where junior employees cannot directly contact senior management. In these cultures, solving certain issues may require additional time.
How to apply this: In a hierarchical environment, address people of your level; do not jump “over your head.” In an egalitarian one, treat everyone equally.
5. Who has the final word?
Despite the egalitarianism of American culture, the main driver is speed, so the responsibility for decisions falls to the leader. In contrast, Germans take a more balanced approach: options are discussed collectively and consistently, without allowing adjustments in the implementation process.
In the Chinese tradition, employees very rarely express their opinions and may even allow the manager to make a big mistake. Hierarchical Japanese culture, meanwhile, is characterized by consensuality: before voicing the last word, the boss will gather all opinions.
How to apply this: When working with an international team, use a specific strategy, and state in advance what involvement you expect from colleagues in the decision-making process.
6. Trust is easy…or not
There are two types of cultures: “relationship-based” (e.g., China, France) and “task-based” (e.g., the U.S.). In the first case, personal and professional are inseparable; in the second, work is always the main priority.
Meyer calls them “coconuts” and “peaches.” In “coconut” societies, people are not inclined to be nice to strangers; they need time to get closer. In “peach” ones, they easily make contact, but it is almost impossible to reveal their true selves in a business environment.
How to apply this: When communicating with partners from other countries, try to build relationships in a manner they understand, without going to the extremes of being too personal or too work-oriented.
7. Disagreeing can be taboo
Disagreement is often a sensitive topic in the workplace. Open confrontation is not welcome in Asian cultures or the United States; it is believed that public disputes and disagreement with someone else’s position violates harmony.
In Europe, by contrast, children are taught the art of debate from a young age. It helps them look at a problem from a different angle and find the most effective solution.
How to act: In an international team, it is important to select strategies that encourage team members to speak out without causing a direct confrontation.
8. What time is it?
We often joke about how different cultures view time. In countries like Germany or the U.S., people strictly adhere to agreements and deadlines, and strategic planning is welcome. To be late or not finish a meeting at the strictly appointed time shows disrespect.
The opposite situation is observed in Italy, Israel, and Arab countries. Reminders about an upcoming meeting are the norm, otherwise there is a risk of attending it alone.
How to act: When working with representatives of other cultures, the right tactic is to observe the utmost punctuality and for all parties to articulate their expectations.
Learning how to communicate well with anyone requires a deeper awareness of one’s own beliefs, assumptions, and behaviors. The rewards of effective communication and following business ethics in international entrepreneurship — such as stronger relationships, improved performance, and greater employee satisfaction — are well worth the effort to build a more successful business with a strong culture, greater integrity, and true adherence to corporate values.