The Role of Ethics in International Business

Abstract

A theory based upon multiple social contracts is presented as a means of legitimizing a core of universal ethical standards for international business transactions. In the tradition of social contract theorists such as Locke and Rousseau, a hypothetical social contract is constructed based upon the twin assumptions of bounded moral rationality and a universally recognized need for a moral framework. The rational contractors in the hypothetical macro social contract would allow substantial moral free space for local communities (corporations, associations, nations, social grouping) to generate their own moral rules through micro, or real, social contracts. In order to be ethically obligatory, the moral rules would have to be grounded in consent, they would have to be reflected in the behaviors and beliefs of the members of the communities and they would also have to be compatible with hypernorms. Hypernorms are defined as norms so fundamental to human existence that they will be reflected in a convergence of religious, political and philosophical thought. Priority rules are suggested for dealing with conflicts between mutually exclusive legitimate norms.

There is social contract among international business transactors that is an important influence on global commerce. A set of rule of thumb principles are identified as representing the basic parameters of the international social contract. The standards are as follows: 1. Honor Confidentiality; 2. Avoid Actual Conflicts of Interest; 3. Act in Good Faith; 4. Exercise Dur Care; 5. Respect the Liberty and Rights of Others; 6. Respect Human Well-Being, and ; 7. Willingly Comply with Law. Each standard has exceptions, and each requires judgment in its application. Nonetheless, they serve as useful guideposts to insure that important aspects of business decisions are considered.

As the Asian economy becomes increasingly integrated into a world economy, questions concerning the ethical and cultural relationships affected by international business transactions become vitally significant. Some of the most important questions can be quickly stated. Do Asian firms have different obligations in European and African operations than they do in their home markets? As Asian firms do an increasing percentage of their business in world markets, will they change in ways that will have a cultural impact upon their home countries? Can universal or overarching principles of social and business ethics be indentified that all firms, regardless of their home countries, should aspire to follow? If so, what would give such principles legitimacy so that managers from diverse backgrounds would be likely to accept them in a fundamental way?

My focus will be on the last two questions. My discussion will center upon a theory of multiple social contracts offered as a basis for legitimizing a core of universal ethical standards for international business transactions. Through the social contracts construct, a set of basic, generic principles will be identified which represent aspirational duties for international business managers.