Cultural Relativism in Business

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Business And Islamic Ethics

Topic: Cultural Relativism In Business

Submitted to: Mr. Mehmood Ul Hassan Khalil

Submitted by: Waqas Shehzad

Class: BBA 5D

Cultural Relativism:
Cultural relativism is the view that all beliefs are equally valid and that truth itself is relative, depending on the situation, environment, and individual. Those who hold to cultural relativism hold that all religious, ethical, aesthetic, and political beliefs are completely relative to the individual within a cultural identity. Cultural relativism (CR) says that good and bad are relative to culture. What is "good" is what is "socially approved" in a given culture. Our moral principles describe social conventions and must be based on the norms of our society. Cultural relativists see morality as a product of culture. They think that societies disagree widely about morality, and that we have no clear way to resolve the differences. They conclude that there are no objective values. Cultural relativists view themselves as tolerant; they see other cultures, not as "wrong," but as "different."

Types of Relativism:

Relativism often includes:
Moral relativism (ethics depend on a social construct) •Situational relativism (right or wrong is based on the particular situation) •Cognitive relativism (truth itself has no objective standard).

Cultural Relativism in Business:
The 21st century is an era of the globalization of world economy. Cross-national business is facing great challenges in cultural differences. In one survey entitled “What is the biggest barrier in doing business in the world market”, cultural differences ranked first in all eight items including "law, price competition, information, language, delivery, foreign currency, time differences, and cultural differences. Hofstadter (1993) believes that the spread of businesses onto the global stage brings the issue of national and regional differences to the fore. "There is something in all countries called 'management', but its meaning differs to a larger or smaller extent from one country to another" (Hofstede, 1993).

It can also be observed that most of the failures faced by cross-national companies are caused by neglect of cultural differences.

Every culture has its own concepts of right and wrong, what is ethical and what isn’t, and business practices need to be designed around this theme line...No business will be successful if it does not take cultural considerations into perspective: 1. In designing its main business practices

2. In settling ethical issues

Cultural Relativism in Doing Business:
The perspective that culture and business are intertwined may be provocative for some and obvious for others. For a long time, however, many businesspeople have been wise enough to base their decisions on behaviour that is expected and approved of by the groups of stakeholders that are affected by those decisions. The new challenge that has recently appeared on managements horizon in this regard is the complication provided by having to deal with diverse, rather than homogeneous, cultures within North American operations, and more particularly, cultures different than their home or parent culture when they operate in foreign markets. When the divergence between cultures is marked, choices or trade-offs have to be made between them, or business practices have to follow different rules in each. There are risks inherent to each approach which need to be explored.

Ethical Values in Different Cultures:
Research on belief in ethics and social responsibility among Asians is somewhat scant. Mehta and Kau (1984) found that Singaporeans are less ethical than Americans in nine of 10 situations. Unlike Americans, Singaporeans do not consider padding expense accounts as unethical. In another study, Kau, Tan, and Wirtz (1998) found that almost 30% of Singaporeans did not agree that honesty pays.

In Hong Kong, managers have been observed to be less ethical...
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