Ethics and Its Role in International Business - Term Paper Example

?Introduction The ability to effectively establish business relationships is now considered a worldwide need for those who want to ensure growth within their company. When evaluating different businesses; however, it can be seen that there are gaps in establishing strong relationships. Ethical differences that relate to culture, misunderstandings and expectations between different corporations often influence the way in which many businesses are able to focus on building established relationships. Two countries which show these specific gaps in relationships from ethical considerations are between Arabic and US countries. The expectations with ethics and culture contribute to misunderstandings and gaps in establishing stronger relationships. Understanding the main problems and creating influential ways of establishing stronger ties between countries can provide both countries with alternatives to growth and development at an international level. Arabic Countries and Ethics in Business The ethics which are included in businesses within Arabic countries are established first by the expectations that are regulated through the government of the various areas. The various establishments expect to have legalities and activities defined by tax, regulations in activities and fair trade practices that are used by the government. More important, the ethical considerations are driven by the Arabic countries having direct influence over the religious and moral influences of the area. The different regions are known for having a basis in Islamic practices, which carries a direct link to what is equitable in business practices. The Islamic practices include regulations on trade agreements, how to define fair business and regulations in terms of payments to the government or other corporations. This is established through the Shar’iah, which defines the laws of trade and business between those in the country. Most Arabic countries and businesses continue to practice these laws with the economic value offering more alternatives because of the ethics which are practiced in the countries (Perry, 2007). The different concepts that apply through the Shar’iah not only create establishments with the way in which fair trade should take place. Arabic countries have established laws on investments, ability to form businesses and the way in which the internal structure can work, specifically in terms of financing. The legalities of the Islamic law, as well as the structure of the government from socialist rule have created an emergence of expected forms of financing. Most in Arabic countries don’t have established ideologies that are related to capitalism, such as creating a large profit margin with the trade which is expected from various countries. Instead, there are basic forms of financing that are required, all which are related to either interest areas for the business. It is not expected for a business to establish a specific component outside of the interest areas, specifically because forms of financing are used, not for profit as an established consideration, but instead for fair trade between products and services (Wilson, 2006). Another implication that is established with most Arabic countries is based on social beliefs that are a part of the ethical considerations. These are based on the cultural establishments that have formed through centuries in the various regions. An example is the values that are attributed specifically to women in society. In most Arabic countries, women working are not considered as a valuable attribute with most women remaining to care for the home. The social values that are created have an alternative power structure, sense of diversity and codes of ethics which are based on the social structure. The power structure is established from a masculine and patriarchal system as well as a more aggressive nature for business deals. The second aspect of this is the uncertainty avoidance. Most that are in Arabic countries have established businesses through Islamic law and cultural principles based on socialism, which causes the uncertainty and risk to be lower than other countries when going through transactions. The third aspect is individualism. Most in Arabic countries work in community based settings as groups, as opposed to having a competitive nature for individual gain. Time orientation also differs with not as many working hours as well as different formats for taking time off, specifically which is oriented toward religious practices (Elkelish, 2006). Business Relationships to the US The complexities that arise with relationships between Arab countries and the US begin with the different approaches that are taken with both cultural values and governed ethics that are in the businesses. The main problem which begins to arise is in terms of management and the organizational infrastructure that is established in both countries. Arabic infrastructure is based on group efforts, low risk and low competition as well as working mostly with masculine roles that are more aggressive in nature. The infrastructure in American companies differs with individualistic behaviors, high competition and high risk to move ahead of competition. However, there are similarities in the aggressive components in both businesses that are used. The relationships that are created then lead to different management values that create differences in building stronger connections between both. The ethics are created with different definitions of what is expected, how one should compete and what types of business relationships can be established. The mistakes which are created in business relationships come from the need to manage differently and to establish proper dynamics in the relationships between the two countries (Hofstede, 2007). Another problem which has arisen between the two countries comes from the changes in government and the expected laws that are continuing to alter how business is conducted as well as what is expected in terms of ethics. The difference is from the democracy that is established as a part of the US business and which is restricted with most Arabic countries. While some Arab countries have altered into democracies, the main systems remain reserved in nature with socialist links that are used to protect businesses. This requires that businesses provide more in terms of privacy and implies that business is directly associated with government means in terms of conduct, finances and reporting. For businesses in the US, there is a different mentality surrounding these ethics. Mistakes often come with a lack of reporting, misunderstandings on privacy policies and ethical conduct that is associated with how businesses focus on the governance in each land. Understanding the different forms of reporting, establishments with the government and expectations from various restrictions then becomes a main dynamic that leads to conflict between the two countries (Menotti, 2006). Stereotypes of Business Ethics in Arabic Countries Other considerations that take place between the business ethics from US and Arab countries are from the stereotypical considerations between countries. The different government and cultural influences may lead to untrusting relationships, suspected problems between the two countries and illegal conduct that are believed to be established. The first problem is with the relationship oriented versus monocrhonic cultures. In Arab countries, it is often acceptable to have a stronger relationship between those that are linked specifically to the corporation. However, in more independent cultures, established relationships come from contracts and business deals that don’t have direct relationships. Many stereotypes may come with the preferences for business that are established specifically because of the cultural influences and the belief that there are illegal partnerships taking place because of the relationship building which is used, creating conflict between the ethics in both countries (Baumann, 2006). Another stereotype that often prevents the ability for Islamic and US cultures to establish strong relationships is from the Islamic perspective. There are several misperceptions that have been established, specifically in recent years with the movement on anti-terrorism and the different stereotypes that are coming from the cultures that are directly associated with Islam. This is furthered with the socio – economic system that has been established and which many in the US would consider as a problem with equity. Most of the economic establishments take place with the Islamic roles and behaviors first. The concept of materialism and other concepts from a Islamic view changes how the business is completed from an ethical viewpoint. Those in the US who are establishing business relationships may create stereotypes that are based on this type of business, specifically because of the capitalist nature. Unfair business practices lead to unfair trade regulations and problems with the traditional expectations that are used in the economic standards. To balance this, government assistance is provided, which many in the US may also consider as problematic and which may believe that this means the Arab businesses aren’t creating the necessary profit for an established business. Those who are working in a capitalist culture under alternative rules may then have different associations with how to make profit while deciding not to use the Arab countries for the same level of profit available (Baumann, 2006). Relationships with Arabic Countries and International Business For businesses in the US to become more successful with Arab countries, there is the need to establish a different association with the country. Using specific strategies that cater to the legalities and socio – economic system that is a part of the Arab countries will help to develop stronger ties while creating partnerships between the two types of business. The first way in which this can be implemented is to change the stereotypes that are a part of business and to build a stronger foundation with the educational concepts that are a part of the Arab business deals. Becoming familiar with Islamic law, governance and the cultural structure can help to identify how the businesses work within this region as well as how relationships are established. More important, there needs to be a strong understanding of the best way to conduct business in a successful manner between the countries. The inclusion of strategies can then develop to create an understanding of specific infrastructures and how legalities and the economic dealings work. To create a complete strategy, there is the need to understand individual businesses and the main strategies which are used. This will create better communication and stronger relationships with the corporate strategies used (Eldomiaty, 2001). The concept of international businesses from the concept of creating strategy has altered how many companies have been able to work with Arab countries. The most successful businesses that have established relationships with Arab countries are other Eastern countries, such as India, China, and Far Eastern establishments. The areas of similarity include ethical considerations linked to an understanding of religion, power differences that are based on collective work and relationships which are established with group efforts. The same masculine attributes are also used to create the same level of aggressiveness in establishing the business roles between the various countries. Trust, family, favors and the implications of religion have all been established in similar ways in both countries. The infrastructure of the business is also similar with the methods for collective thinking. The similarities with all Eastern countries in how the conduct of business is established then provides a different way of working with strategies and roles that are similar in the infrastructure of both businesses. The establishment of similar roles then allows agreements and legalities to be formed easily with trust that is easily created from the similar cultures (Hutchings, Weir, 2006). There are other factors which also attribute to the ability for Arab countries to establish stronger relationships to various countries. This is based on the capacity for the countries to create cultural perceptions that are strongly established with various regions. Businesses that have a stronger impact with international associations and levels of creating stronger relationships have strategies which work more effectively. The ability to communicate, use higher means of technology and to lessen cultural gaps with continuous focuses on the business organization and infrastructure is able to immediately provide positive opportunities for businesses that are within various regions. Creating a higher amount of attention to the social, economic and cultural values that are within the culture can help to lessen the gaps with communication while providing a stronger association with the ethics which are used and the expectations which are established as a part of this. The countries which are working most effectively with Arab countries have a stronger reputation with communication and technology while providing a stronger basis for the infrastructure that is used with communication, training, strategies and a stronger development in creating international relationships. By doing this, the cultural perceptions and stereotypes immediately change toward Arab countries and create a more defined understanding of how to build business relationships within the country (Albirini, 2006). Conclusion The concept of establishing relationships with different regions of the world is one which is also inclusive of several types of gaps. Communication, culture, social expectations, links to economy and the governmental procedures all make a difference in how one conducts business. These different elements create the main ethics that are a part of the infrastructure of the business and either harm or help those that are within a business structure. When looking at the businesses in Arab countries, it can be seen that there is an established difference in relationships between the US and Arabic regions. Understanding the stereotypes and finding solutions through education and strategies can help to stop the gaps that are between both countries while creating different types of relationships in business that further the international associations that companies are considering for growth of their organizations. References Albirini, A. (2006). “Cultural Perceptions: The Missing Element in the Implementation of ICT in Developing Countries.” International Journal of Education and Development Using ICT 2 (1). Baumann, Andrea. (2006). Influences of Culture on the Style of Business Behavior Between Western and Arab Managers. Germany: GRIN Publishing. Eldomiaty, Tarek. (2001). “Corporate Governance and Strategic Transparency: East Asia in the International Business Systems.” Corporate Governance 6 (3), 281-295. Elkelish, Walaa. (2006). “Corporate Governance and Cultural Values Across Countries: Empirical Evidence.” Social Science Research Network (July). Hofstede, Geert. (2007). “Asian Management in the 21st Century.” Asia Pacific Journal of Management. (24), (4), 411-420. Hutchings, Kate, David Weir. (2006). “Understanding Networking in China and the Arab World: Lessons from International Managers.” Journal of European Industrial Training. 30 (4), 272-290. Menotti, Roberto. (2006). “Democratize but Stabilize.” The Middle East Quarterly 13 (3), 11-20. Perry, Frederick. (2007). “Shar’iah, Islamic Law and Arab Business Ethics.” Journal of International Law (22), (357). Wilson, Rodney. (2006). “Islam and Business.” Thunderbird International Business Review 48 (1), 109-113. Read More