Exporting Corporate Ethics

An old Vietnamese proverb — the law of the Emperor stops at the village gate — illustrates the principle that rules tend to lose their power the farther away they are from their source. And the distance needs to be measured in both miles and cultural norms.

As a country manager for 17 years in Latin America, I was responsible for upholding my organization’s ethical standards in a challenging environment. I managed to avoid paying a single bribe in all that time. It wasn’t easy. I had to use relationships, influence, leverage, exchange of favors and legitimate third-party facilitators to get things done. Also, I gave many thank-you gifts to people who made a special effort to be helpful. Sometimes I simply had to accept delays and a few setbacks as costs of maintaining my imported ethics.

Develop International ethics standards. U.S. corporations encounter countless obstacles as they walk the fine line between the requirements of the Foreign Corrupt Practices Act — passed by Congress in the 70s to restrict unethical business practices of U.S. companies internationally — and the realities of local business culture. Many companies have written ethical guidelines to help their international business travelers, overseas managers and expatriate employees navigate the maze of local business ethics. Sunnyvale, California-based Advanced Micro Devices established its “Worldwide Standard of Business Conduct” and San Francisco-based Levi Strauss & Co. uses its “Business Partner Terms of Engagement and Guidelines for Country Selection.”

Such efforts to make corporate ethics explicit and compelling in diverse cultural settings are plagued by many hurdles and pitfalls. Worldly-wise companies take into consideration the cultural values of the countries in which their ethics standards are to be applied. They don’t assume the standards automatically will sell themselves or that they’ll be understood the same way in all locations.

Corporate ethics statements typically deal with gift giving and receiving, proprietary information, bribes, nepotism in hiring practices, conflict of interest, sexual harassment, treatment of racial and ethnic minority employees, and use of convict or child labor by suppliers. All of these areas are viewed differently depending on the cultural perspective. Therefore, it’s useful to determine what unique resistance and/or acceptance factors exist in a particular location.

Maximizing the buy-in of overseas employees, suppliers, clients and host government representatives requires dealing with the following issues:

Rule definitions: Are rules supposed to be obeyed without question or exception as generally they are in Switzerland and Germany? Or are they merely ideals meant to be honored in the abstract but not feasible in many situations, as I was told by my law professor in Bogotá, Colombia?

Exempt status people: In countries with rigid social hierarchies and great differences in economic status, members of the elite class assume they have privileges and prerogatives that others don’t. Therefore, they feel exempt from the rules and standards that apply to other people — and accepting this behavior is common in the Philippines, India and Latin America.

Public service norms: The main purpose of the bloated government bureaucracies in some countries is to provide jobs — mostly very low-paid ones. The bureaucrats, in turn, aren’t required to be very productive. Therefore, receiving gratuities for doing a task with extra speed or efficiency is considered appropriate. Such payoffs are so common in India that a local newspaper recently published a “bribe index” cataloging the cost of various government services.

Gifts and bribes: In Asia, gift giving has been used for thousands of years as a means of gaining access to, and favorable consideration from, important business associates and government officials. These gifts aren’t viewed as bribes unless they’re paid in cash — a lot of it — to the recipient for doing something blatantly illegal or immoral. Transparency International, a German consulting group, publishes an annual “Corruption Index” of 45 countries based on surveys of business travelers. Nigeria, Pakistan, Kenya, Bangladesh and China were rated the five most corrupt business environments in 1996.

Confidentiality and group identity: In Japan and other countries where group bonds exist, people function as parts of an entity rather than as autonomous individuals. Confidentiality and shared information are essential within the group. The outsider’s right to confidentiality is valued less than group loyalty.

Office gender-roles: Touching between male and female employees isn’t seen as sexual harassment in Latin America. Slightly flirtatious behavior and somewhat provocative dress for women aren’t considered out of place in many business environments. Rules to the contrary would seem unnecessarily prudish and stifling.

The preceding are only a few of the cultural factors that complicate a corporation’s attempt to create a global ethics standard. Nevertheless, the global HR executive must be ready to meet the challenge.