Notes on Ethics and International Human Resource Management

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Session 18

Ethics & IHRM


Ethics may be defined as an individual’s or society’s beliefs regarding what is right and wrong, or good and bad.

Ethics is about how our decisions affect other people.

It is also about the rights and duties of people, the moral rules that people apply in decision making and the nature of relationships in a society.

Managerial Ethics

Managerial Ethics refer to the standards of behavior of individual managers in their work.

Four Levels of Ethical Questions in Business

Societal – At the societal level, we ask questions about basic institutions, practices and behaviors in a society.

For example, is racial discrimination right?

Is capitalism the just system to allocate resources in a society?

Stakeholder – At the level of the stakeholders of a business, such as customers, shareholders, suppliers, etc., the ethical issues concern, disclosing correct information to customers, insider trading, relationship and trust with suppliers, etc.

Internal Policy – Ethical issues relating to internal policy concern nature of employment policies, fairness of job contracts, work rules, motivation, layoffs, etc.

Personal – At the personal level ethics refers to individual behavior in an organization and covers issues of honesty, professional integrity, etc.

Tools of Ethics

Values – are beliefs that are

Relatively few in numbers

Serve as a guide for culturally appropriate behavior

Enduring or difficult to change

Not tied to specific objects or situations

Widely accepted by members of a society

Values are the answers to the “why” questions.

Rights – Claims that entitle a person to take a particular action

Duties – obligations to take specific steps or obey the law

Moral rules – Rules for behavior that often become internalized as moral values

Relationships – People are related directly or indirectly in a society, which makes ethical behavior necessary

Common Morality

Common morality refers to the body of moral rules governing ordinary ethical problems.

Some basic principles of common morality

Promise keeping


Mutual Aid

Respect for Persons

Respect for Property

Approaches to Ethics

In the international context, there are three approaches to Ethics

Ethical Relativism – The belief that there are no universal or international rights and wrongs. So, an MNC may adopt the practices that are accepted as right in each country, regardless of whether such practices are accepted as right in the home country

Ethical Absolutism – The belief that an MNC should only follow what is accepted as ethical in its home country, regardless of which country it operates in.

Ethical Universalism – The belief that there are certain fundamental principles of right and wrong that are universal in nature and accepted by every culture. MNCs while operating in different countries must adhere to these universally accepted principles of right and wrong.

Ethics & IHRM

The existence of universal principles of right and wrong is to an extent proved by the adoption by many countries of the world of certain universal codes of conduct. For examples:

The UN Declaration of Human Rights

Guidelines for MNEs adopted by OECD countries

Caux Round Table Principles of Business

The Caux Principles

The Caux Round Table believes that the world business community should play an important role in improving economic and social conditions. As a statement of aspirations, this document aims to express a world standard against which business behavior can be measured. We seek to begin a process that identifies shared values, reconciles differing values, and thereby develops a shared perspective on business behavior acceptable to and honored by all.

The Caux Principles are based on two basic ethical ideals:

The Japanese Principle of Kyosei – which means living and working...
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