Ethics in International Business
This domain tests how firms handle norms that differ across countries: bribery, labor standards, human rights, environmental rules, and gift-giving. Questions usually present a manager facing a local practice and ask what the law requires and what ethics permits - the answers are not always the same.
Relativism and its limits
- "When in Rome" is cultural relativism; its opposite is ethical imperialism, exporting home norms everywhere without adaptation.
- Donaldson's middle path: respect a core of fundamental human values - a moral minimum - while adapting local forms.
- Integrative Social Contracts Theory (Donaldson and Dunfee): hypernorms set a floor that no local practice may breach; micro-social contracts supply legitimate local detail above that floor.
Corruption law
- FCPA (1977) prohibits bribery of foreign officials by US issuers and domestic concerns, and separately requires accurate books and internal controls; the 1998 amendments reach foreign firms acting in US territory. Small facilitating payments for routine government action are carved out of the anti-bribery provisions but not from the accounting provisions.
- UK Bribery Act (2010) has no facilitation exception and covers commercial bribery as well.
- The OECD Anti-Bribery Convention (1997) pressed signatories to criminalize foreign bribery.
Labor and human rights
ILO core conventions cover forced labor, child labor, discrimination, and freedom of association. The UN Guiding Principles on Business and Human Rights (2011) rest on three pillars: the state duty to protect, the corporate responsibility to respect through due diligence, and access to remedy. Voluntary frameworks include the UN Global Compact and the Caux Round Table.
Worked example
A manager in country X is told a shipment clears customs only with a $200 payment to an inspector's clerk for a routine inspection. Under the FCPA this looks like a classic facilitating payment; under UK law and most company codes it is bribery. The ethical analysis is separate: the payment entrenches a corrupt system, shifts cost to competitors who refuse, and may be extortion rather than bribery - yet the firm should escalate, use legal channels, and build lead time into logistics rather than institutionalize the payment.
Traps that cost marks
Thinking the FCPA bans all gifts and hospitality; treating "everyone does it" as a defense; assuming facilitation payments are lawful everywhere; and confusing non-binding OECD Guidelines with enforceable law.