Updated: May 21, 2020
Within any culture, there is an expectation of acceptable behavior and an understanding that taboos will not be tolerated. There is a seemingly endless array of cultures across the globe all with their unique perspectives and experiences to offer. This paper will analyze ethics and morals, cross-cultural similarities and differences, and provide some real-world examples of the importance of ethics in leadership. While stances on religion, gender equality, and politics represent some of the potentially sensitive issues, most cultures in the global financial area agree on the pursuit of capital. Globalization has created a need for developing contacts and relationships, for the sake of business, that perhaps would have otherwise been ignored. Ultimately learning about the various cultures and methodologies across the planet will allow for expanded understanding of the many interconnected facets of culture, ethics, and society today.
Global Values and Ethics
Ethics and values develop on many levels, from the individual ethical development to those seen on a global scale. There are many similarities in the development of ethics and values across cultures and countries, and of course, there are also differences. According to Boone, Nagireddy, Hess, Chen, & Steinberg (2017) ethics are the commonly recognized customs of a particular group, or geographical area, and are moral the principles which govern an individual's behavior. Johnson (2012) explains that the ethical diversity challenges are one of the many dangers of globalization, and there is a danger in the extremes of ethical imperialism versus cultural relativism. Cultures must be examined through an objective lens where the analyst sets aside their own biases, as much as humanly possible, and attempts to understand even the most foreign or personally taboo behaviors.
Cross Culture Value Development (Similarities)
Many of the moral systems in business are driven by profit (Boone et al., 2017). In March 2016 an international study examined responses from 195 managers and executive officers of 30 international companies in 15 countries asking the question “what exactly makes a leader effective?” and 67 percent responded with “high moral and ethical standards” (Giles, 2016). This is telling in the sense that most participants agree that morals and ethics are a major key to leadership, however, what cultures consider ethical and moral can different rather substantially. Therein lies one of the dangers of globalization, the idea of cultural relativism or the concept that an individual’s beliefs, values, and practices (Oppong, 2019) should be examined according to their own culture and not be judged against that of another culture directly relates to avoiding the ethical imperialism that ensues when cultural relativism is not adequately utilized.
Leadership ethics is a relatively new field of applied ethics (Ciculla, 2013; Sotirova, 2018). In Leadership: Theory and Practice Northouse (2015) states that ethics is entangled with the types of values and morals an individual, or society, finds appropriate or suitable and the righteousness of individuals and their motives (Sanchez, 2016; Northouse, 2015). Although many lump ethics and morals together as one in the same, Rabinowitz (n.d.) argues that ethics are based on social norms or philosophical principles while morality is based on a set of beliefs, and/or religious and cultural values. Morality can help form an ethical system where if ethical behavior is doing what is right, ethics is the “right” of that equation (Sanchez, 2016). An ethical leader functions with a core set of values and performs according to those values in any given situation (Sanchez, 2016). Leaders must be consistent and transparent in their motivations, as much as possible.
Leadership and Cultural Differences
A comparison between Saudi Arabia and the United states, for example, demonstrates that while the moral systems of doing business are quite similar (capital driven) one major difference would be the treatment of women (Boon et al., 2017). Where women in the U.S. are striving for equality, women in Saudi Arabia and similar Sunni-Islam nations are viewed as less than men (Boon et al., 2017). This could be problematic in a variety of international arenas where corporate and national leaders meet. Although, this phenomenon is not strictly limited to the Sunni-Islam nations, and there are many cultures in which is occurs on a spectrum, it is a very real example of cultural differences across the globe. While leaders may not be openly disrespectful to another leader, it may be difficult to develop meaningful and effective discourse with another individual that they do not consider worthy of communicating with.
Another important consideration is the differentiation in leadership between collectivism and individualism cultures. As an example, the United States would be on the individualism side of the spectrum and which Taiwan would be considered collectivist (Champion and Wang, 2019). To further complicate this divide, researchers have determined that individualism and collectivism are each multi-dimensional (Brewer & Chen, 2007; Hardin, 2006; Wang & Aitao, 2017). Cultural individualism is a social theory which favors freedom of the individual where collectivism favors the good of the collective, or group (Wang & Aitao, 2017). Bianchi (2016) found that American individualism swells during prosperous times and declines when the economy weakens. So then, this variable, this cultural differentiation is not necessarily even constant but still influences perspectives and individuals.
As was seen in the Global Financial Crisis (GFG) the ethical implications of business conduct are vital for large corporations within a community or country, but now due to continued globalization, that responsibility extends globally. Enron, Arthur Anderson, and WorldCom taught a very valuable lesson in the far-reaching consequences of conducting business against the code of ethics. Enron and their accounting firm Arthur Anderson violated ethical standards in the notorious hiding of almost $4 billion dollars (Backover & Valdmanis, n.d.). The aforementioned examples and later the sub-prime lending fiasco forced the development of hard-law, or legal intervention, over the preferred soft-law, or self-regulation, which was seen before the Enron era Clifton, García-Olalla, & Molyneux, 2017). When the real-estate market bubble burst which rippled through financial markets at a global level, individual borrowers were blamed for borrowing beyond their means, which may be an ethical consideration due to the potential collective impact this had on the overall economy. However, ethics should play into a much broader investigation of the critical systemic and structural causes of the financial crisis such as the view that the Federal Reserve disregarded the decrease in nominal Gross Domestic Product (NGDP) which they can control through policy and which indicates pending inflation (Sumner, 2016).
There is an ever-increasing interconnectedness and even dependence between many countries now, which is directly related to the decisions of individuals and leaders. Leaders on an international level have a responsibility to understand the mechanisms of ethics in other countries and how that relates to their country and on the global level. There have been important lessons taught by the complex consequences of unethical business behavior in the corporate arena. As those consequences spilled onto the global platform the importance of ethical practices became more apparent than ever. Organizations have a responsibility to themselves, their communities/stakeholders, and now to the world, to conduct themselves in an ethical manner. Today that means considering not only personal ethics and morals but those of all individuals, organizations, and/or countries and all potentially impacted stakeholders.
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