Global Business Ethics

I just attended a fantastic seminar on Business Ethics.  It was given by one of the pre-eminent experts in business and professional ethics – Patricia Werhane.

I don’t want to summarize her entire week-long visit at Bentley, you can buy her books if you want that much!!  But she discussed one tradeoff over lunch today that I think is really critical for anyone doing business internationally and which I find personally fascinating.

The tradeoff is what you do when another country/culture has different standards than your home base does.  It could be bribery (Siemens), environmental standards (fracking), worker safety (Foxcon), privacy/censorship (Google in China or Twitter in Syria), discrimination (Apartheid back in 1980s S Africa), etc.  Many NGO groups automatically come to the conclusion that companies should remove themselves from any location that forces them to break their home base ethical standards.  Libertarians reject absolutism and think “when in Rome” is the appropriate standard.  Macro-economists suggest working in the system to try to encourage change by being successful as a business and a role model for gradually improving the ethical situation.

I like Patricia Werhane’s answer better.  She says “You just don’t know.”  Sometimes, you go in and work from the inside to fix the problem (the Sullivan Principles helped to end apartheid in South Africa).  But then she cited cited a group that tried to take down Hitler by infiltrating the concentration camps.  They spent years assisting in heinous activities hoping that they could topple the system from the inside.  They failed.  But was their original decision to try wrong?  Hard to know for sure.  Maybe given a second try they could do it.  Sometimes you make a big statement by refusing to do business at all (Google in China – result yet to be determined).

As a pre-eminent ethicist, I put a lot of weight in her recommendation.  She said you make the best prediction you can and go with it.  All choices have some ethical risk to them.

From a behavioral science point of view (we are on to my thoughts now), we have another challenge to overcome.  Motivated reasoning.  If we are allowed to decide for ourselves which way to go, then our brains can easily play tricks with us.  Our nucleus accumbens is going to prefer the option that makes more profit (for the company or for ourselves personally).  It will unconsciously be convincing the amygdala, hippocampus, and frontal cortex that this is the best way to go ethically too.  Since we can’t access those conversations consciously, we can be easily fooled into the selfish choice and rationalizing it to ourselves (and to our CEOs and stakeholders).  To overcome this, we need our organizations to have both a strong liberal and a strong libertarian as co-directors of ethics.  Have them duke it out in the open.  Whichever one has the more convincing argument wins. At least this way, the two arguments can be documented and slept on.