Cultural and Ethical Considerations in Business

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Introduction

Business is ultimately based on human interactions, which means that differences in cultures and perspectives inevitably play a significant role. As a result, any company that wants to be successful and efficient needs to pay sufficient attention to cultural and ethical considerations alike. Awareness about things like high-context and low-context cultures becomes particularly important for global corporations, and examples like Enron illuminate the dangers of ignoring ethics for the sake of short-term gains.

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High-Context and Low-Context Cultures

One of the crucial differences between high-context and low-context cultures is the communication style they approach. Low-context cultures aim for the utmost clarity in their communication and rely on explicit verbal utterances to deliver clear messages that would be nigh impossible to misunderstand (Tuleja, 2017). In contrast, low-context cultures put greater emphasis on the context of communication – hence the name. Non-verbal messages, physical posture, body language, and etiquette formulas that should not be perceived literally are common features in such cultures (Tuleja, 2017). Apart from that, high-context cultures gravitate toward greater emotional openness, while low-context cultures generally require people to be more reserved. While not every culture is explicitly high- or low-context, when taken to a logical conclusion, these two results in vastly different communication styles.

Another difference between high-context and low-context cultures is how they approach and perceive time. Low-context cultures tend to view it as linear and portray it as a resource. This perception of time, called monochronic, requires keeping track of it, saving it, and using it effectively by focusing on one thing at a time and adhering to strict deadlines (Tuleja, 2017). Conversely, high-context cultures demonstrate the polychronic perception of time as cyclical and repeating (Tuleja, 2017). As a result, punctuality takes a different meaning in high-context and low-context cultures. For a person adhering to monochromic vision, it is polite to arrive exactly on time, but in cultures that share polychromic time perception coming later than agreed is actually better.

Finally, high-context and low-context cultures also differ in their approach to power and authority. Due to being more explicit, low-context cultures value clarity of expression even when the people communicating do not have the same social standing (Tuleja, 2017). Subordinates can openly disagree with superiors – power is recognized but not necessarily viewed as an excuse to forego direct communication. High-context cultures, on the other hand, demonstrate greater power distance (Tuleja, 2017). Consequently, they develop indirect ways of expressing dissatisfaction and disagreement that one has to look out for.

Intercultural Barriers for Global Companies: Wal-Mart in Germany

In 1997, Wal-Mart, one of the most successful retail corporations in the USA, went global by moving in force to the German market. The company’s leadership perceived its formula of creating a positive environment in the stores and providing low prices as universally desirable in any culture. However, this move did not consider barriers between American and German cultures, and although Wal-Mart managed to overcome some and mend the damage, the overall result was still a failure.

Wal-Mart’s service formula as practiced in the USA was ill-suited for German culture for many reasons. To begin with, the position of the greeter who meets the customers with a smile was strange for Germans, who perceive smiles from strangers as insincere (Tuleja, 2017). Apart from that, Wal-Mart’s practice of bagging the customers’ purchases raised eyebrows in Germany, where people do not like strangers to touch their groceries (Tuleja, 2017). As for the employees, Wal-Mart did not consider that the American practice of morning cheers for the stuff would be alien, weird, and confusing for the German workforce (Tuleja, 2017). As a result, Wal-Mart’s entry into the German market became a textbook example of encountering intercultural differences in business.

The company attempted to overcome these difficulties by changing its employee guidelines to suit German culture more. It halted the practice of morning cheers and removed the position of the greeter to apple more to the German perception of what retail should be (Tuleja, 2017). It could have improved the company’s standing in Germany, at least marginally, but other issues, such as conflict with trade unions, eventually forced Wal-Mart to exit the country in 2006.

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To summarize, Wal-Mart’s entry into Germany was a clear example of facing and trying to overcome intercultural barriers. Eh company did not consider the different perception of retail in German culture as compared to American, which led it to a frustrating failure. While Wal-Mart attempted to adapt its practices and corporate culture for Germans, the effort put into overcoming intercultural barriers was purely reactive and aimed at reducing the damage already done, ultimately proved insufficient.

Importance of Workplace Ethics

While business enterprises exist to make money, they still have a responsibility to do it morally, and corporate guidelines for ethical behavior are an important way of promoting this. Such guidelines seek to curb immoral actions and promote a productive workplace atmosphere while also enhancing the company’s image overall. They obviously include abiding by the laws and making honest deals but usually go farther than that. For example, Wal-Marts ethics code recommends abstaining from supervisor-employee relationships that can be affected by the balance of power in the workplace (Tuleja, 2017). It also instructs the employees to report unethical actions committed by their colleagues, encouraging whistle-blowing (Tuleja, 2017). As such, guidelines are an essential tool for promoting desirable moral behaviors.

Corporate ethical codes notwithstanding, every person’s actions are ultimately their own responsibility, which is why it is important to ask oneself several questions when encountering a dilemma. Employees have a moral obligation not to harm the company they work at, so it would make sense to ask oneself whether an action will do so. If a practice is beneficial to the company but harms its clients, it is still immoral, so that’s another question to consider. Other perspectives, such as stakeholder theory, stress the employee’s obligations to society at large rather than the enterprise alone and advise to take all stakeholders into account (Freeman & Dmytriyev, 2017). These are all examples of questions one can ask oneself when faced with an ethical dilemma.

One of the most famous cases of ethical misconduct in business is Enron. This Texas-based energy company practiced long-term accounting fraud hiding its losses and misguiding investors and employees alike, eventually resulting in bankruptcy (Brigham & Houston, 2019). It mainly happened because the company’s management received rewards proportional to the profits shown in accounting rewards rather than the overall health and stability of the company. One lesson to be learned from this case is that the company’s leaders need to take personal responsibility for the truth of its financial statements (Brigham & Houston, 2019). Another one is that obsession with beneficial accounting results without sufficient external control may forge a pervasive culture of fraud on many levels.

Conclusion

As one can see, both cultural and ethical considerations feature prominently in business. Creating and maintaining intercultural connections requires awareness of high-context and low-context cultures, including the ways in which they approach communication, time, and power. Lack of cultural awareness may lead to failures, such as Wal-Mart’s ill-fated expansion to Germany. Similarly, ethics, both in the form of behavior guidelines and self-checks, helps ensuring that the company does not develop a pervasive culture of misconduct that will eventually bring its downfall, as in Enron’s case.

References

Brigham, E. F., Houston, J. F. (2019). Fundamentals of financial management (15th ed.) Cengage.

Freeman, R. E., & Dmytriyev, S. (2017). Corporate social responsibility and stakeholder theory: Learning from each other. Symphonya: Emerging Issues in Management, 17(1). Web.

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Tuleja, E. A. (2017). Intercultural communication for global business: How leaders communicate for success. Routledge.

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