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If business is power, then this divergence may also translate to the realm of business ethics, and for many of the same seasons: economics, academics and the level of cultural collectivism inherent in these societies. Here, literature reflecting three very different methodologies for examining comparative ethics platforms is reviewed. From this review, conclusions regarding the current State Of business ethics in the two regions are derived and examined in relation to the American market model and the European social model.
Then, the case for a more globalizes approach to business ethics is addressed, and a potential global model presented. Key Words: business ethics, comparative ethics, corporate social spoonbill, European social model, American market model Differing Perspectives: U. S. And European Business Ethics Perhaps one of the greatest challenges in analyzing business ethics across national boundaries is that we refer to the business community as global, while continuing to operate within very narrow, regionally and culturally defined ethics constructs.
That a multitude of works examine the difference between U. S. And European approaches to business ethics is testament to this. And while these analyses are critical to the development Of a greater understanding of ‘where we have been,’ its greatest value can be found in sing the knowledge gained to suggest ‘where we should be,’ in the form of a global business ethics platform. While such a platform is suggested in the United Nations Global Compact, it has yet to be commonly recognized or implemented.
These comparative assessments of ‘American’ and ‘European’ cultural, ethical or political entities inherently beg the question of characterization. What is an American perspective? Is it shaded by political leaning, or does it transcend politics? Does it include a Canadian viewpoint yet exclude Mexico? Is our Europe inclusive Of the U. K. , or are our British underpants decidedly more American than European in approach? The authors highlighted here are each confronted with this challenge, and comparisons between their analyses become more difficult as each accommodates these characterizations differently.
Accordingly, though the focus of this discussion is ‘U. S. And European’ business ethics, some latitude in the constitution of these sociopolitical groupings is required. This is certainly evident in Georges Underlet’s assessment of comparative business ethics within the framework of micro, mess and macro-level applications. Georges Ender: Systems, Organizations and Individuals Ender developed his matrix approach to the comparison Of business ethics during the sass’s, the decade in which business ethics was widely institutionalized (Farrell, Farrell & Frederica, 2010).
Yet this institutionalizing evolved separately and distinctly from one region to the next. Underlet’s work was an initial attempt to capture the differences not only in philosophy, but in implementation. Illiquid Characteristics It is not difficult to recognize elements of the American cultural mindset in his description of the U. S. Approach to business ethics (self-regulation, free choice, individual responsibility). Ender even echoes Friedman’s sentiments when referencing the American premise that the social responsibility Of business is to make profits. Friedman, 1970, as cited by Sullivan, 2011. ) Yet his model does not rely on the underlying cultural rationale for the different levels of ethical infrastructure development. Nor does it identify a specific set Of ethical issues typically faced in a business setting. Rather, it makes the assumption that all actors within a business setting will encounter and react to similar sets of ethical issues, regardless of contrasting cultural values. This, e says, is “human action, the independent variable of all morality. ” (Girth, 1 984, as cited by Ender, 1996, p. 36).
Geographic Definition In comparing business ethics paradigms, Ender chooses to analyze North America as comprised of the United States and Canada. His Europe is limited to the continent and incorporates European nations outside the domain of the European Union. Comparison Rubric Ender proposes a nine cell matrix composed of three levels of responsibility: individual, organizational and systemic, and three interrelated areas of examination: semantics, practice and theory. The level to which business ethics is consistently leveraged, monitored and limited by conditions is offset by the actors’ ‘spaces of freedom. (Ender, 1996) These spaces of freedom are further nuanced by both the choice of constraints leveraged, and the choices made by each actor within these constraints. While Underlet’s discourse highlights ten points Of difference between the U. S. /Canadian and European constructs derived from his model, he does not specifically illustrate their positioning in his grid. Exhibit 1 organizes his input in table form. Semantics Practice Theory Individuals M Cicero) Business ethics commonly referenced and discussed Self-regulation predominant; actors exhibit free choice within constraints.
Business ethics requisite to control the increasing number and impact of corporate indiscretions Some reluctance with regard to business ethics discussions Actors’ choices constrained within established parameters Despite frequent exposure to organizational wrongdoing, direct linkage to ethics initiatives not as frequently recognized Organizations (Mess) Us Bostonian and increasing initiatives toward codifying organizational ethics and establishment of authority roles and training. Strong practical focus.
Business dissatisfied by improved organizational value Emerging awareness of initiation of organizational ethics and growing codification. Strong focus on theory. Business ethics is an embedded element in organizational culture Systems (Macro)One language Systems encourage individual responsibility for enforcement of business ethics. Ethical business conduct cannot be separated from the practical challenges they may present. The normative aspects of business ethics are addressed in a direct and deliberate manner.
Multiple languages Emphasis on ‘the rules f the game, not the play Of the players (Ender, 1996)As society becomes increasingly business-driven (accommodation) only an ethical business model can assure an ethically conscious society. This requires the inclusion of ethics theory from the realm of social sciences. Compelling Conclusions Significant to gaining an understanding of Underlet’s position is that, due to these interrelationships, it is not possible to accurately assess the ethical performance of an organization or system exclusively on the basis of just one of the cells in the matrix.
As an example, he sets forth e scenario in which a European firm, operating within the highly structured environment of European labor law, might on the surface be assumed to be more ethical than its U. S. Counterpart, creating what Ender calls an ‘ethics gap. ‘ Yet if the American firm in question has specific rewards for motivating ethical behavior and is highly compliant with existing IS. S. Law, albeit less restrictive, it may in reality behave more ethically than the European firm.
Both Europeans and Americans place different levels of import upon the three categorization of actor in assigning responsibility for ethical business behavior. The American assigns responsibility to the individual as might be exemplified in a Level One Social Critique (Sullivan, 2011 The European grants purview to systems directives. On both sides of the pond, greater effort should be leveraged in developing common ethics platforms at the mess, or organizational, level. Neither constraints, nor free space within them, should be the exclusive platform for analyzing and responding to ethical issues.
Instead, both North American and European ethicists should look to encouraging greater levels of individual responsibility for ethical actions, supported by clear, strident and codified ethical boundaries. (Ender, 1996). To date, business ethics as a discipline can be considered highly reactive. This is more so the case within the American model, but true to a degree internationally. When ethical behavior in the international business domain is supported for reasons that are both economically and socially driven, as is suggested in the European construct at a Level Two Critique, it will attain a more proactive orientation.
Cooperation between Americans and Europeans represents the greatest potential for advancing the practice Of business ethics. The American propensity to pragmatically address normative ethical issues, combined with the European model of socioeconomic ethics, would serve as the optimum framework for global business ethics. Nathan Hurst: Ethics Comparisons within Industries Eight years after Underlet’s treatise, Nathan Hurst conducted a comparative business ethics study for the University of Santa Clara in which he selected four specific industries in the U.
S. And Europe: technology, energy, healthcare, and aerospace and defense. The business climate in which he constructed his comparison was much different than that Of Ender. In 2002, Enron had irretrievably changed the landscape of business operations in the United States and called increasing attention to a crisis in business ethics internationally. In Europe the following year, ethicists were confronted with $8. 0 billion in vanished assets at par-malt as well as investor accounting artifice at Dutch grocer Old (admittedly in an American division).
Amidst this furor, was a more enlightened ethics community to be found on one continent or the other? Unique Characteristics While Ender focuses on all three participants in business ethics: the individual, the organization and the system, Hurry’s research is focused almost exclusively on the mess, or organizational, actor. Though far more pragmatic than academic, this aspect of Hurry’s research dovetails with Underlet’s appeal for greater focus on this level of participant. Hurry’s results are also heavily skewed toward an assessment of corporate social responsibility in ranking the organizations’ overall business ethics profiles.
Hurry’s amalgamation Of data results in individual assessments Of each subject’s performance against his Kips as well as a ranking of performance industry to industry, and the United States as compared to Europe. Geographic Definition Due primarily to his methodology, Hurry’s geography was much more narrow in scope. His Europe was comprised of subject firms located in France, the Netherlands, Germany, the IS. K, and Switzerland. Reference to the U. S. Is limited to the continental United States. Hurry’s subjects are illustrated in Exhibit 2. Industry U. S.
Europe Technology Agilest Technologies, MAD, Cisco Systems, Hewlett-Packard Philips, Siemens Energy Calling, Covenanter Royal Dutch Shell, Totalitarian Healthcare Johnson and Johnson, Premier Inc. Marshal, Innovation Aerospace and Defense Lockheed Martin, Northrop Grumman DADS, BABE Systems Hurry’s mission was to leverage practical research against the question, identifying a set Of objective indicators to assess organizational commitment to ethical business conduct in Europe and the IS. S. Hurst (2004) includes these Kips: Has the company publicized a Code of Conduct/Ethics? Are the company’s conflict of interest guidelines publicly available to investors? Does the company make it clear who the designated Ethics/ Compliance Officer is? Does the company have a whistle blowing process implemented and is it easily accessible? Does the company publish a CARS or sustainability report? Is CARS one of the compass core corporate principles or business objectives? (p. 1 1) Hurst substantiated the validity of these indicators by cross-checking each subjects’ research outcomes its ranking on the DOD Jones Sustainability indices where applicable.
The DISK measures the financial performance of those firms deemed to be leaders in the area of global sustainability. Finally, Hurst augmented his interpretation with secondary data in the form Of published opinion polls that address public perception of business ethics and corporate social responsibility. Compelling Conclusions Hurst observes that historically, U. S. Regulatory guidelines have developed recognizing the strong interdependency between the American consumer, the corporation and the financial health of the nation.
While this may sound like a statement of the obvious, the situation is not necessarily the same in Europe, where corporations will first source capital from the government-run banking system or via retained earnings rather than recruiting additional shareholders. Until recently, then, European accounting regulations provide fewer shareholder protections and facilitated closer working relationships teen banks and large corporations. In Europe, government regulated the economy, rather than the private sector (Hurst, 2004).
Now, however, European governments are harder-pressed to enforce strict government controls over CARS and accounting integrity due to the continuing trend toward prevarication and the globalization, particularly in the finance sector. Codes of conduct and conflict of interest guidelines are common to both American and European research subjects. If this is indeed representative of an overall trend, then much progress has been made on the part of European organizations in terms of codification and practical application of ethics guidelines since Underlet’s original analysis.
This is reflected in Exhibit 3. Hurst Indicator Firms European Firms Code of Ethics 100% 75% Conflict of Interest Policy 100% 75% Ethics/Compliance Officer 50% 38% Whistle-Blowing procedure Published CARS Report 100% CARS as Corporate Principle 10% 38% Notably, in all four industry sectors, European companies scored higher than American firms in corporate social responsibility. Hurst attributes this in large part to the growing role of both European governments and consumers in emending more formalized CARS initiatives.
This trend is also evident in reviewing Hurry’s research with regard to disclosure. The U. S. And Europe assign equal significance to economic and financial reporting. Yet when addressing environmental and societal issues, American firms are far less likely to share their results with stakeholders than their European competitors, perhaps signifying lack of progress in these areas: U. S. Based Firm Europe-Based Firm Stakeholder Reports present/planned present/planned Economic & Financial Performance 85% 85% Employee Issues & Benefits 56% 64%
Environmental Performance 23% 62% Social performance 22% 58% Corporate malfeasance in both the U. S. And Europe has spurred the development of additional business ethics ordinances, much as Ender noted in his ‘scandal’ argument for business ethics. Yet on both continents equally, they have resulted in a substantial decline in public trust of the government end of the individual corporation. An enhanced business ethics environment may be most vocally promulgated, not by individual organizations or even national governments, but by global Nags.
These concerns point to the propensity of private enterprise to use voluntary ethics enforcement to forestall more formal, government-enforced ethics regulations. This means Of avoiding regulation, in part by touting its supposed negative effects on economic performance, are attributed to both American and European enterprises. A globalizes approach to improved corporate sustainability can also lead to a more consistent understanding of business ethics across cultural boundaries (Hurst, 2004).
Hurry’s view on the increasing import of cooperative business ethics initiatives between Europe and the U. S. Mirrors that of Ender. Whether the impetus derives from cooperation between systems, organizations or individuals, it seems clear that an isolationist approach to ethics development will not be successful. Doom??neck Mel??: The Source Of Difference in U. S. And European Business Ethics From 2008, Mel??’s work is the most recent of the three reviewed, and in comparison, serves to illustrate the degree to which the discipline of business ethics has evolved.
Unique Characteristics Mel??’s approach to comparing the two outlooks on business ethics differs from both Ender, whose focus is ‘top down’ and actor-centered, and Hurst, ho examines business ethics in Europe and the U. S. From the ‘bottom up,’ surveying specific corporate business practices in microcosm and applying his conclusions to the broader spectrum Of business. Mel??’s discussion is more generalist in nature. As his title implies, his work is as concerned with the ‘why/ of the differing perspectives between Europe and America as with Underlet’s ‘what’ and Hurry’s how. Geographic Definition Because Mel??’s work incorporates the musings of a number of ethicists on this topic, no one specific set of geographic boundaries is identified. Rather, e concedes to the weaknesses of this frame of reference and notes specific geography only when requisite to comprehension of a particular theory. Mel?? examines the European and American ethics environment through the windows Of culture, practice, public authority, civil society, and academics. The author’s presentation included no illustrations or exhibits, so key points have been synopsis’s in the following tables for ease of reference.
The cultural environment. Cultural Influence united States Europe Societal Concerns Individual freedom, human rights, democracy Social justice, egalitarianism, participation National Denationalizations awareness of American citizenship Strong identification with individual nationality as opposed to a European orientation Expectations of the State The State is minimally responsible for addressing structural challenges and the social welfare system is limited The State is responsible for addressing ethics, justice and social welfare. Confidence in Free Market Economics High Varies among nations; but in no instance higher than the U.
S. Role of Religionists indirectly linked to political policy; respect for religious diversity Rarely dressed in political policy Role Of Regulation Minimal – free market perspective Economic activity requires regulation to accommodate societal needs This portrait reflected in Exhibit 5 is one of an American culture that values individual enterprise more highly than collective welfare. The European culture sketched by Mel?? portrays centralized authority supported by the individual to address collective concerns. Business practices.
Business Predestinated States Europe Semantics Business Ethics, Corporate Values, Codes of Conduct Codes of Conduct, principles Of Action, Objectives Adoption Of Business Ethics The incept of business ethics is largely adopted and implemented by ethics officers The concept of a larger corporate social responsibility is largely adopted, implemented by CARS officers and ombudsmen Source of Guidelines Corporate regulation Legal business framework Community Involvement Businesses actively involved in the community Businesses only minimally involved in the community Here, two significant areas Of difference surface.
The first, that by definition, American firms focus the practice Of discrete, situational business ethics. European firms focus on their responsibility to society. The second, somewhat ironically, is that American firms are far more likely to interact with, and contribute to, the community in which the enterprise operates. Government elements. Governmental Oversight United States Europe Federal Regulation of Employee Rights Limited. Employee rights are part of the individual firm’s corporate responsibility Extensive legislation on employee and consumer rights. CARS explicitly fostered by some national governments.
Incentives for Ethical Behavior and CARS Firms are rewarded for adapting ethical practices internally Incentives not deemed necessary Elements of CARS Promotion of human rights, condemnation of corruption, encouragement Of philanthropically and environmental responsibility, transparency in reporting, international application of CARS initiatives This domain reflects more subtle differences in perspective than those previously considered. The largest differential appears to be in the area of employee rights, which is a primary consideration in European labor law and far less legislated in the U.
S. Societal Influence. Societal Influence United States Europe Influence of Trade Unions on Ethics and CARS Westerner’s Influence Of Noisemaker and indirect Stronger and direct Official/Non-Official Status Of Interest Groups The U. S. Does not officially recognize the input of public interest groups in forming policy Longstanding history of direct involvement of interest groups in the development of public policy Prevalence of Public-Private Partnerships Rare Common This dataset indicates that the corporate environment in the U.
S. Is by far less inclusive of third-party involvement than in Europe. Consequently, civil influence on corporate/governmental policy is not a prime source of business ethics in the U. S. The academic environment. Academic Corroboration United States Europe Teaching focus Applied, with a focus on ethical reasoning the resolution of individual issues and the legal ramifications of those decisions Holistic, with reference to social responsibility, social actors, cultural context, and resolution of moral dilemmas.
Prestidigitator based on the principles of demonologies (duty and moral obligation) or utilitarianism (the best outcome for the greatest number of stakeholders). Responsibility for ethical action is up to the individual. While more inclusive of the social sciences, paradigms are often common to those used in the U. S. However, responsibility for ethical action is not limited to the individual. Topics Of Discussion Conflict between personal and corporate values, organizational ethics, added-value promise Of ethical behavior, and specific issues as downsizing and discrimination.
Foundations of business ethics; the relationships between business, society and government. If the academic arena is the genesis of business ethics pH illusory and application, then the substantial differences in approach shown here should be of real concern to global ethicists. The summary highlights the need to erg the best of the two approaches into one globally-applicable teaching structure which provides direction in terms Of issue-specific ethical and moral dilemmas as well as an understanding of the greater impact of the business on society.
Social Models and the Evolution of Business Ethics Given their common historical roots in western civilization, how did the European and American ethics orthodoxies develop so differently? The answer lies in part in the ascendancy of the European Social Model, and in part with the imprint of the American social model. The European Social Model There are varying definitions of the European Social Model, indeed, there is common dissentions as to whether or not a single model actually exists. Most officially, the model is: “… Hardhearted in particular by systems that offer a high level of social protection, by the importance of social dialogue and by services of general interest covering activities vital for social cohesion… Based on a common core Of values. (European Council, 2000, p. 4) Other attempts to articulate the model in greater detail have highlighted such elements as a high level of social protection, the inclusion of social ratters in policy-making, social and economic citizenship, employment rights, and income equality.
Giddiness highlights four elements of MESS: A developed and interventionist state as measured in terms of level of GAP taken up by taxation A robust welfare system that provides effective social protection to some considerable degree for all citizens, but especially for those most in need The limitation, or containment, of economic and other forms of inequality A key role in sustaining these institutions is played by the ‘social partners,’ the unions and other agencies promoting workers’ rights. Giddiness, 2005).
One might almost more accurately refer to the MESS as socioeconomic as opposed to purely social, since sizable government involvement in the functions of business in the economy is requisite to the model’s functionality. It presupposes a number of important social values that, not surprisingly, echo the tenets of European business ethics philosophy and corporate social responsibility: concern for citizen’s rights, inclusion of non-corporate stakeholders in government policy development, government responsibility for a prosperous and just society.
The two doctrines have supported one another harmoniously since the 1 sass. However, globalization, an ever-widening EX. geography, the increasing potential for greater prevarication of government functions noted in the Hurst analysis and a dour economic outlook have changed the way many Europeans view the MESS. As these changes are implemented, will the ‘new MESS and the broader, more inclusive vision of business ethics and CARS promulgated by the European ethicist continue to be synergistic? Or will the European ethics model devolve to assimilate its American cousin? The American Social Model
It is telling that the European Social Model is referenced as a proper noun, and the American social model only as a descriptor. The former represents a prescriptive framework within which European social and economic policies are contained. The latter, a working title for a socioeconomic system that has evolved within a highly individualistic culture and market-driven economy. So compelling is the model that “American ethicists have tended to view free market capitalism as beyond ethical questioning as a socioeconomic system. ” (Sullivan, 201 1). In this archetype, economic considerations drive social structure.