The effect of home and host country cultures on marketing managers` individual decision making related to ethical issues in MNCs : Inter- and intra-cultural study

Abstract

The topic of business ethics has always been relevant, but never more so than at the present time of the global economic crisis. Nestlè, Lockheed, Union Carbide, Nike, Enron, Tyco, AIG, BP, Halliburton, Lehman Brothers, Bernard L. Madoff are just a few well-known names of businesses/related individuals that at one time or other openly failed ethically. Such cases have prompted researchers to analyze the causes of unethical behavior to understand what drives individuals in business organizations to act unethically and pursue the goal of discouraging — hopefully ultimately reducing and/or eliminating — unethical conduct. Despite growing interest in decision making related to ethical issues since the 1960s and in ethical issues in international context since the 1980s, as well as currently available knowledge about decision making related to ethical issues in international setting, prior research has not explored the specificities of individual decision making related to ethical issues in multinational corporations (MNCs). The very nature of a MNC implies that individuals working in such organizations will be affected not only by the home country culture, but also by the culture of the host country in their decision making bearing ethical content. Therefore, the main purpose of this research was to demonstrate the impact of home and host country cultures on managers’ individual decision making related to ethical issues in MNCs. The results of the empirical analysis indicate that in the majority of the cases, home and host country cultures do have a significant effect on the various stages of individual managerial decision making related to ethical issues in a MNC: managers’ individual decision making process related to ethical issues is different in different home countries, and individual decision making process related to ethical issues changes when managers live and work in host countries – expatriates come to adopt attitudes related to ethical issues somewhere between those of the home and the host country. The study findings provide support in the cross-cultural research area related to ethical issues — managers’ decision making related to ethical issues does depend on which home country they come from. The research results provide additional highly-needed support for the verification of the applicability of acculturation theory in its relationship to ethical issues — expatriate managers’ decision making related to ethical issues does change depending on which host country they work in. The research findings have important managerial implications, too – having in mind that individual managerial decision making related to ethical issues differs across cultures, management should consider the consequences of ethical incongruence when developing staffing plans for its organization. It is advisable that MNCs select their managers for their overseas assignments based not only on their technical and managerial skills, sense of mission, etc., but also on their degree of cultural sensitivity and empathy which can be determined through relevant tests. The findings should also alert multinational corporations to the fact that more attention must be given to orienting new managers to the differing values in the foreign countries and the policies appropriate for the facilities in those countries through cross-cultural training. From the moral point of view, the study findings should not be interpreted as supportive of a cultural relativism argument. The fact that there are country differences in approaches to ethical issues does not necessarily mean that there should be country differences in ethical principles, nor that it is impossible to formulate universal principles of ethics. Parts of the research findings have been presented at 7 international conferences and published in 2 journal articles