Guidelines For Ethical Leadership:

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But this kind of absolutist approach can lead to various problems. The answer lies somewhere in between. Different nations have different core values, which define their ethics. What may feel lay bribery to an American may be in keeping with Japan's longstanding tradition of gift giving-sometimes very costly ones. Many business practices neither exist in black nor in white but in a Gray Zone.

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One approach can also be, to do everywhere exactly as the managers do at home. But this again is clearly inadequate as every country has the right to establish its own rules regarding health and safety etc. To find any guiding principles is very difficult in this context. But if the managers try not to become either absolutists or relativists then answer lies here in the following three principles.

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1. Treat corporate values and formal standards of conduct as absolutes.

Whatever ethical standards a company chooses, it cannot waver on its principles either at home or abroad.

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Donaldson (1996) notes how around 1950, a senior executive of Motorola who was negotiating with officials of a South American government on a ten million dollar sales transaction walked away from the deal at the final stages because the officials were asking for a fee of one million dollars. Motorola’s CEO fully supported the decision made by his subordinate. Over the years this resolve by the then CEO has helped to cement a culture of ethics for thousands of Motorola employees.

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2. Design and implement conditions of engagement for suppliers and customers.
Will your company do business with any customer or supplier?
What if a customer or supplier uses child labor?
What if it has strong links with organized crime?
What if it pressures your company to break a host country’s laws?
Such issues are best not left for spur-of-the-moment decisions. Some companies have realized that

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Sears has developed a policy of not contracting production to companies that use prison labor or infringe on workers’ rights to health and safety

BankAmerica has specified as a condition for many of its loans to developing countries that environmental standards and human rights must be observed.

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3. Allow foreign business units to help formulate ethical standards and interpret ethical issues.

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The French pharmaceutical company Rhone-Poulenc Rorer has allowed foreign subsidiaries to augment lists of corporate ethical principles with their own suggestions.

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4. In host countries, support efforts to decrease institutional corruption.

Individual managers will not be able to wipe out corruption in a host country, no matter how many bribes they turn down.
When a host country’s tax system, import and export procedures, and procurement practices favor unethical players, companies must take action.

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Example of companies that begun to participate in reforming host-country institution are

General Electric has taken a strong stand in India by using the local media to make repeated condemnations of bribery in business and government. Finally exercise moral imagination, which means revolving ethical tensions responsibly and creatively. Which means revolving ethical tensions responsibly and creatively.

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5. Exercise moral imagination.
Using moral imagination means resolving tensions responsibly and creatively.

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Coca-Cola has consistently turned down requests for bribes from Egyptian officials but has managed to gain political support and public trust by sponsoring a project to plant fruit trees.

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Levi Strauss discovered that two of its suppliers in Bangladesh were employing children under the age of 14. This practice was in violation of the company’s principles but was tolerated in Bangladesh. Forcing the suppliers to fire the children would not have ensured that the children received an education and it would have caused serious hardship for the families depending on the children’s wages.

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Therefore, in a creative arrangement the suppliers agreed to pay the children’s regular wages while they attended school and to offer each child a job upon reaching the age of 14. Levi Strauss in turn agreed to pay the children’s tuition and provides books and uniforms. The arrangement allowed Levi Strauss to uphold its principles and provide long-term benefits to its host country.

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Without a company’s commitment, statements of values and code of ethics end up as empty platitudes that provide managers with no foundation for behaving ethically. Therefore, employees need and deserve more and responsible members of the global business community can set examples for others to follow.

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