International business ethics is an ever-changing landscape of cultural differences vs. good business practices your company needs to have in place to function and thrive in other countries. The problem facing businesses that step onto the global business stage is business ethics can be different depending on cultural tradition and history in other countries. What is acceptable in the United States might not be OK in Kuwait or China.
A good example is the issue of giving and receiving gifts from clients and prospective customers. In Asian countries, giving gifts is customary and part of the culture. A company might want to establish guidelines for what is acceptable and set a value amount for such gifts.
As a business owner, it is your responsibility to set the standards by which your business operates and to make sure the company complies with United States law—even overseas—because your company offices still must follow American laws.
To help you address differences in international business ethics, here are six things each business owner needs to know for doing business in a global economy:
1. Know the laws. The Foreign Corrupt Practices Act of 1977 banned businesses and anyone representing businesses from paying foreign government officials—bribing—to get new business or keep current business. Businesses also have to comply with the accounting provisions of the act and their books need to accurately reflect their business transactions, according to the U.S. Department of Justice.
2. Pledge to follow international business guidelines. Besides the federal law, businesses can agree to follow international guidelines set up by Organisation for Economic Co-operation and Development (OECD), a multinational think tank that addresses global business issues.
The OECD guidelines—used by 42 countries—suggest standards to follow, including how to handle employment concerns, industrial relations, human rights, competition, environmental concerns and information disclosure.
3. Develop a unified strategy. To best navigate the cultural difference when doing business overseas, the best practices consulting firm LRN recommended establishing a unified corporate strategy that can be adopted at each of your business' locations, be it at the company headquarters or a branch office in another country. The strategy should include a code of conduct clearly detailing the company's fundamental guiding principles for worker conduct and decisions.
LRN also recommended allowing international company units to add to the code of conduct with local policies that reflect the region or country in which it does business.
4. Communicate clearly and understand the differences. Intercultural communication is a must if your business is going to establish a foothold in a different country. The businesses that succeed are the ones that embrace the culture while maintaining their unique company identity and values.
Knowing the culture is essential, particularly in business negotiations, says Mohammad Irfan, executive director of the business consulting firm Xpand Middle East.
Arabs, in particular, will use metaphors and speak in vague terms when working on deals, he says.
"This is not a calculated effort to irritate you, but rather a method of dialogue that allows for communicating ideas without causing anyone else around the table to lose face," he wrote on businessknowhow.com. "...Arabs may not ask for clarification for fear of losing face, so it's up to you to make sure every angle is covered. Nobody will sign a deal they don't fully understand."
5. Put the company guidelines into practice. Once your business has its values and code of conduct in place, the next step is to ensure the implementation of those policies. Each employee should learn the guidelines and understand what is expected of them and how to conduct themselves as workers for the company.
6. Assess and acknowledge differences. Without compromising the company's core values, it is possible to embrace certain cultural differences as long as those actions aren't against the law in the United States. In some countries, bribes are allowed and are tax deductible as a business expense, according to the Justice Department.
The United States and the other countries that have signed OECD's guidelines have pledged to not give bribes.
Other differences are more subtle and should be evaluated on a case by case basis.
Do you have tips to share about doing business overseas? Please tell us.
Linda is an award-winning journalist with more than more than 22 years' experience as a reporter, editor and blogger. Linda blogs via Contently.com.
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