Global Scale Business Ethics Models

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Business ethics as a discipline has been the matter of discussion the most prominent researchers and philosophers, especially in the XX century. Apart from that, the business had not met the peak of globalization until the second half of the XX century, which is why by now the issues of business ethics as applied to global scale business are understudied.

This report emphasizes the importance of studying business ethics and the business people’s awareness of the most efficient applications of ethical philosophy. Three concepts belonging to ethical and philosophical aspects of business are articulated: the Kantian categorical imperative, the utilitarian approach to ethics and the stakeholder theory. We also present three cases of the companies believed to have developed a strong ethical basis that embrace the principles of business ethics and use them worldwide.

Three companies that have participated in scandals due to their unethical behavior are also made mention of. In the discussion, possible solutions to the issues of international business ethics are stated. Firstly, it is needed that students have courses on business ethics. Secondly, those companies that have not yet adopted ethical strategies and decision-making should do so; the most necessary notions at that are those of common good and utility. Besides, strict control of production quality must be enhanced by businesspeople. They should also deploy the strategy of meeting stakeholders’ interests and be fully aware of the consequences of their unethical behavior.


Ethical values mainly concern the ideas of what should be and what should not. Whether people are put to choose appropriate words to talk to other people, or whether doctors seek the most morally justified solutions in treating their patients, or whether it is needed to decide on the use of armor during military operations, or a CEO trying to choose between cutting wages or dismissing some of the employees, ethics is the main determiner. As people grow and develop, the individual ethical stance can experience significant changes. Nevertheless, an individual set of ethical values is subject to the norms of morality in every sphere of human life, be it relationships, medicine, warfare, or business.

This report is aimed at identifying the ways business ethics models are adopted on a worldwide scale and whether they are adopted at all. It consists of an introduction, a background survey, a discussion, and a conclusion. In the first part, we introduce the subjects and possible ways of studying it. Within the background survey, the concept of and different approaches to ethics are overviewed within historical discourse.

We summarize the approaches to general ethics developed by such philosophers as Socrates and Aristotle; further, we describe the modern approach to ethics and dwell upon the notion and scope of applied ethics that includes the Kantian approach and utilitarian approach. Relevant recourses concerning the subject of ethics are provided. It is pointed out that there is an overlap between ethics and business which adopts some of the principles of ethical behavior. As a next step, the value of business ethics is overviewed through the prism of international business. We use true-to-life cases of ethical and unethical behavior as used by some of the worldwide-known international companies specializing in trade, IT, food, etc.

The concept of ethics: historical overview and modern approach

In 2000, Wall Street was a witness and participant of a scandal that broke out because of a fraud unsuccessfully conducted by Enron. The enterprise became partners to JEDI and went into a range of transactions to conceal its debt. The scandal caused business schools to teach their students business ethics as a part of the curriculum. Despite having the evidence and the results of unethical behavior before their eyes, most of the students were somewhat reluctant in taking the opportunity (Rahim, 2013).

However, reality teaches us that, in addition to reasonable governance and effective decision-making, ethical behavior is a crucial and indispensable part of any business. Business ethics does not equal the ethics of persons taken individually. It is believed that companies should only hire employees of strong ethical persuasion to become popular and successful establishments. Still, personal values are but one of many factors that construct the process of ethical decision-making. Studying business ethics helps understand the difficulties of leadership and teamwork within organizations and build business partner relationships between them.

As a whole, ethics tries “to arrive at moral standards that regulate right and wrong conduct” (Ethics, para. 1). In other words, ethics and morality are interrelated. The concepts of good and bad, right and wrong tend to take the form of a grown-up person’s ethical stance. This is what virtue ethics basically subsumes. The idea of virtue ethics belongs to such early Hellenic thinkers as Socrates and Aristotle. They presumed that the gear force for ethical behavior consisted of the moral values of a person.

Socrates conceded that a knowledgeable person is able to distinguish right from wrong and come to a right decision that would make this person happy. Thus, as per Socrates, knowing is a virtue in itself, and virtue is the key to happiness. In his turn, Aristotle developed a system of ethical values that consisted of self-realization. The philosopher believed that a person’s nature is what defines this person’s thoughts and actions. Therefore, if these actions empowered this person and allowed him/her to fulfill his/her potential, this person would end up doing good deeds and be satisfied with that. Again, virtue was a path to happiness (Sahakian & Sahakian, 1993).

Another kind of ethics is the deontological one. Deontological ethics correlates with the concept of a norm. Indeed, it is a set of values that takes the form of rule-based judgment of this or that action’s moral characteristics. In other words, it is a position that appeals to a person’s knowledge of duty that this person is obliged to discharge. Utilitarian ethics, on the other hand, concedes that the most appropriate (that is, the most morally justified) action is the one that opts for the maximization of utility. Utility is usually seen as a common good; it is equated with pleasure and satisfaction (Alexander & Moore, 2012).

All these types of ethics have experienced the scrutiny of the modern approach to applied ethics. Applied ethics examines the phenomena of human life through the prism of morality. In other words, it is a philosophy of ethics put into practice; it decides whether a certain action is appropriate from a moral viewpoint. For instance, there is decision ethics, which theorizes on the morality of decision-making; there is social ethics that regards the contacts between the members of the global community. Our major point of interest is, of course, business ethics that consists of a set of personal moral values implemented to the business environment (Morscher et al., 2012).

Business ethics as an aspect of applied ethics

As far as we can presume, business ethics – just as any ethics – is deeply intertwined with philosophy. There were several periods of studying business ethics in the USA. In the 1960s, researchers were mainly concerned with the issues of civil rights and the environment. However, as the atmosphere between workers and work-givers became more strained, the studies of business ethics began to encompass various problems of employment. 1970-80s were the period of development of business ethics as a separate field of study. It was dominated by philosophers and theologians. Professors teaching business ethics did it in the form of a discipline known as “social studies.”

They found obvious overlaps in the fields of sociology, ethics, and business (Arnold & Harris, 2012). Kantian philosophy was widely applied to these studies. A profound example of deontological ethics in practice is Kant’s concept of the categorical imperative. This concept is based on the idea of duty that all humans share: it is the duty to be virtuous. Kant stated that it is not because humans are parts of human society that demands them to discharge the duty. Rather, the reason lies in the supposition that humans are the only animal to have rational consciousness. Rationality obliges them to do only that which is benefiting for the common good and does not contradict the laws of nature (Paton, 2013).

Immanuel Kant also asserted that every “raw” experience is turned by human consciousness into a mental model. All human beings – as opposed to non-human animals – share these models since the models are constructed by human consciousness in the course of their socialization. Considering that a human being is, by nature, a social animal, the creation of these constructs is inevitable. Without the models, Kant stated, a human is a blank slate (Kant, 2012).

Indeed, a considerable percentage of moral defections in business can be explained with the tools of Kantian ethics. Because actual experiences of reality go through construction and reconstruction in human consciousness, it is logical to assume that what humans are used to seeing as ultimate reality is, in fact, a rather reduced version of it. Besides, a certain type of person tends to have narrow-minded or biased models of reality. In turn, these metaphorical blindfolds prevent these people from questioning the morality and ethics of their decisions. What is more, such people also tend to leave any managerial decisions unquestioned, instead merely obeying orders. The reason is that their minds are set on constructing a concept of management as an absolute authority. Thus, instructions are followed without so much as reflection whether it is ethical or unethical (Werhane et al., 2013).

Since business ethics is concerned with the concepts of right and wrong, a justified question arises: what actions can be regarded as ethical in business? There is a theory that, in making business decisions, all interests should be encompassed. The theory is known as the “stakeholder theory”; it is mainly concerned with ethics in business organizations and management. In other words, it was developed to address the “principle of who or what counts” (Freeman, 2010). The theory contradicts the traditional standpoint that, in a company, it is the owners who are to be assisted and listened to, and that it is the company’s primary duty to meet their interests before all the others.

The stakeholder theory argues the authority of the stockholders, at that. It makes a point that many parties other than the owners are what makes the business run. These are the employees, the customers, the investors, the providers, and sometimes even the competing parties since they are capable of influencing the business as well. As per the theory, all these interests are to be addressed equally (Miles, 2015). The theory was severely criticized not only because the exact definition of a stakeholder is arguable. Some philosophers asserted that the interests of all participants cannot be brought to balance.

Instead, it is argued that the compromise is best achieved through dialog; conversation is believed to be the best way to solve conflicts as they emerge instead of trying to prevent them (Blattberg, 2000). Nevertheless, the stakeholder theory has received much admiration. It is applied in all major business environments where the best approach is that of stakeholder-friendliness. A good example of such an approach would be the widely-known Ecomagination strategy belonging to General Electric.

This strategy is deployed to make better use of resources and decrease the level of pollution globally. Moreover, the General Electric decision-makers seek the most relevant answers to the questions of enabling economic prosperity while shortening the use of resources. They also try to meet the needs of both customers and stakeholders, which is, in fact, included in their strategy plan: in addition to the issues of safety and regulation, they analyze the interests of their stakeholders and conduct market research (Iannuzzi, 2011). The strategy is still in progress; however, the company is quickly developing and succeeding on its way to “a cleaner, faster, smarter tomorrow” (Ecomagination, 2015).

The value of ethics in international business

In the late XX century, it was obvious that the world economy was about to experience a conspicuous paradigm shift in terms of politics, communities, and business with its ways of interaction between the stakeholders. This process was known as globalization, which meant that countries of the world were involved in more numerous and complex transactions with each other. They discharged services and were into trading just as they used to do in the not-too-distant past, but towards the end of the XX century, these processes have greatly increased in quantity.

To those who were not afraid of adopting globalization, it promised well-being, while others saw it as a profound challenge and tried to resist it. Free market ideology first appeared in the US; it probably stands to reason that, in the States, the idea of competition was spread nationwide. This idea was promptly embraced by the global industries outside the US, and so international business was in its glory all of a sudden (Johnson & Turner, 2004).

The concept and the notion of international business refer to a broad field of business where various business operations are performed cross-border (Cavusgil et al., 2014). In other words, the nature of transactions carried out in international business has very much in common to those performed by means of local business centers; it is the fact that the parties are of foreign origin that distinguishes this type of business. It consists of various commercial transactions, such as transportations, trade, funding, etc., both on an individual and governmental levels.

Private institutions mainly conduct these operations for the sake of profit. On the other hand, transactions conducted by the government are based not solely on possible profits but on political accounts as well (Daniels et al., 2013). It stands to reason since the partners of a business can be the representatives of two or more countries. Franchising is an important part of international business, but this kind of business does not, of course, consist solely of franchising. The parties can transact funds, human resources, skills and know-how (Joshi, 2009).

In ideal conditions, business ethics is an indispensable part of a successful international business. The role of ethics in the business performance is hard to overestimate. Firstly, it plays a significant part in the employees’ loyalty. If the way a company treats its workers does not contradict the basic principles of ethics, the workers will likely do the same. Good conditions and the atmosphere of respect and trust enhance their working performance; the employees should see that their organization is that of ethical culture. Not only does culture increase the positive outcomes inside the firm and in the course of international partnership; the employees also get less stressed at work and are, generally, more optimistic. Besides, strong ethical inclinations contribute to an organization’s reputation which is what investors usually seek.

It is crucial for investors to feel they can trust the company they fund, and the investors’ confidence usually benefits organizations as well. The same principle can be applied to customers. It is not only the quality that makes customers use the services of an organization for a prolonged period. The establishment of trust is very important, and a customer will only trust an organization if he/she is sure it has high ethical standards (Ferrell & Fraedrich, 2012). Thus, the application of the stakeholder theory proves rather efficient for business. What is more, ethical decisions made by companies also include promoting equal rights for all humans and concerns with the ways their manufacture affects the environment.

A good example of an international company with strong ethical values would be Google. Not only does the company pay attention to the amount of energy it uses but it also donates large sums to projects that can decrease this amount. Besides, among the principles Google proclaims is the freedom of speech. As a result of this, the company is often in dispute with the Chinese Republic where the media is under the strict control of the government. This company remarkably cares for its employees: it supports gay rights, provides the workers with medical care for free, and makes sure there is a friendly atmosphere in the collective (Shields, 2013).

It can be argued that by intervening with the Chinese government’s decision to reduce the amount of information available in the media the company performs a breach of Chinese cultural values. Indeed, it is stated that improper cross-cultural interaction may cause damage to the deals and ruin the whole business since the holistic approach to cultures is what is needed to maintain good relationships (Mitchell, 2009). However, what the Google company does is try to point out the error in the Chinese government’s ways. Google considers it its duty to argue with China since the government prevents the company from performing a part of its corporate ethical policy. As it was stated, their policy involves advocating human rights one of which presupposes that citizens should have legal access to information and the discussion of such information.

Another organization of significant ethical persuasion is Patagonia, the famous worldwide-known clothing company. While among other manufacturers it is considered a reasonable approach to reduce the damage they do to the environment, this company has made it its credo. Patagonia promotes public awareness of the manufactures’ impact on the planet and, for some of their merchandise, they have developed a “Don’t Buy This” slogan. Although the clothing items are made of recycled and further recyclable materials, the company promotes an anti-consumeristic approach to the whole concept of shopping. The customers are asked to think twice before buying this or that piece of clothing and figure out whether they need it (Shields, 2013).

Starbucks, the much-loved chain of cafeterias operating all over the world, is also famed for its ethical approach to the environment. The company has launched a fair trade line that includes local farmers’ coffee in the US and Ireland. This move was designed to help enhance local production and reduce the company’s own expenditures on the transportation of coffee beans. The company uses recyclable coffee cups; it also makes discounts for customers who bring their mugs. Recycling is also the part of their policy since it takes a certain amount of effort to sterilize materials that contacted with food and drinks. The company is concerned with the issue of water shortage in the underdeveloped countries and struggles to reduce the amount of water they use for their coffee machines. What is more, the company also provides health care for free and is a supporter of same-sex marriages (Shields, 2013).

As we can see, all three companies make use of philosophical and ethical principles discussed above. Their categorical approach towards the environment makes them go into extra expenditures to ensure the environmental damage all over the world is reduced. They create an employee-friendly atmosphere and care for their customers; besides, they promote human rights for the sake of common good, which makes them a remarkable example of ethical decision-making on an international scale.

Ethical failures in international business

The ideal conditions are not always applicable to reality. It is humbling, but both local and international business organizations are quite often caught on adopting marketing practices that celebrate the quality of their goods which are often in opposition to their actual quality. There are cases where the very behavior of the businessmen crosses the borders of every moral and civility. Besides, some persons make do of various schemes of fraud. It shows that, in real life, the business world is often put to face facts that are rather embarrassing to the whole global community.

Astonishing case that shook Ireland, Great Britain, and the furthermost of Europe involved the worldwide furniture giant IKEA (headquartered in Leiden, Netherlands) in 2013. It was, supposedly, a fraud that, paradoxically, did not concern furniture. Instead, the scandal broke out over one of the items on the IKEA restaurant menu: the famous Swedish meatballs. The meat was proclaimed to be ground beef. Instead, the analysis discovered that one of the batches contained horse. Horse meat was present among the beef ingredients in a relatively small amount; there was a concern, however, that, along with the meat, a strong painkiller for horses crept into the food as well.

The spokesmen said the company took the matter very seriously, and it did. The scandal involved 19 countries, and IKEA was forced to call back the meatballs all over Europe. To gain back customers’ trust, the company took up significantly more detailed analysis of the origin of the products and extended the information on the labels, which obviously meant greater expenses on food production and, as a consequence, the increase of prices (Higgins & Castle, 2013). Whether the company decided to lower expenditures and opted for cheaper meat in their products, or whether the horse meat was added to the beef products by mistake, the company of such worldwide significance was caught on food adultery. A mistake could have been the case.

However, if the company did substitute beef for horse on purpose, such a decision is by no means ethical. Considering the colorful advertising assuring the customers of the best quality of the food, and keeping in mind the number of countries involved in the IKEA franchise, the case can be considered a global-scale fraud. It resulted into shattered reputation and the clients’ distrust. The situation was saved by the prompt withdrawal of the products in question, which was done so that the customers saw that the company was ready to give an account of this mistake and truly cared for its customers.

Another case of shockingly immoral and unethical behavior is the case where the guilt is laid upon a couple of men, but the whole organization is under threat of losing its clients. In 2008, a scandal arose over the head of the Volkswagen company’s work council Klaus Volkert and the personnel manager Klaus Gebauer who became the main actors in it. Gebauer was found out to provide the higher rank employees with banquets, pander them prostitutes and organize entertainment trips to brothels. The facts were disguised under a slush fund within the frame of the company’s interests. Both Volkert and Gebauer were given probation (Gow, 2008).

This case has little to do with the company’s merchandise and its direct obligations. Nor does it encompass the relationships between Volkswagen and its customers and partners. Nevertheless, the scandal did not rage out of nothing. Of course, investing the company’s funds into food and women is unethical. Still more unethical it is to buy women at all. However, there is one more aspect to this case: the nature of the actors involved. Indeed, it is easy for people not to notice their neighbors using the services of prostitutes or taking advantage of any spare cash or miscellaneous items they find in their workplace (pencils, clippers, etc.) since every person cherishes his/her privacy. On the other hand, such people as abovementioned Volkert and Gebauer are somewhat public figures or, at least, figures of high rank.

Such people should pay extreme attention to their reputation and preserve their ethical stance. What comes unnoticed for a person next door, a Volkswagen manager cannot get away with, if proved guilty. The damage caused by the head executive and personnel manager questions the trustworthiness of the whole company, which is why, immediately after the scandal, some further investigations on Volkswagen’s working atmosphere – as well as that of some other companies – were conducted. The fact that Volkswagen is still a powerful enterprise on the global market shows, perhaps, that they were indeed too powerful to collapse, and also extremely lucky.

Yet another case features a franchise organization 7-Eleven headquartered in Dallas, Texas. The organization is a convenience store that has more than 50,000 shopping units operated in 17 countries. Currently, the organization experiences a crisis as a result of a scandal with employees’ wages and a franchise fraud. The franchisors have adopted a scheme called “churning” which is a familiar notion in franchising business. The scheme consists of franchisors allowing a franchisee to quit the chain and then re-selling the franchise to other franchisees.

Given the fact that the old franchisee should pay for the cancelation and a new franchisee should pay a sign-on fee, the purpose of such a scheme becomes perfectly clear. In 2014-2015, the company changed over more than 60 times and got paid about $150,000 for each changeover. The franchisors’ plans include a goal score of 79 changeovers in the year 2016. However, the former franchisees in the amount of 1200 people sued the head joint of the company. An investigation was conducted, and it was discovered that, in addition to unhealthy franchising policy, 7-Eleven Australia was taking advantage of the employees and holding up their wages (Ferguson & Danckert, 2015).

The “churning” scheme is, by its nature, a fraud that blackens the image of the chain across 17 countries. The franchisees were used and taken advantage of, and the company not only considered it to be an item of income but also had plans so as to meet the quota of the franchisees changed over, whereas the “open, honest communication” is what franchising requires (Schumacher & Posey, 2008). Besides, as if the churning was not enough, the company also made use of cheap labor force: the employees were cheap to keep since they were paid irregularly and poorly. Yet again, this case demonstrates how the behavior of some persons may discredit the whole organization.


The samples of cases that presented various ways the breach of ethics could occur show that sometimes international companies experience certain difficulty in the application of ethical standards to reality. It is worth noting that the companies have adopted the basic deontological Kantian approach as well as that of utility. It is just that the dichotomy of good and bad in these cases seems to have more than two opposite poles. Besides, meeting the interests of all stakeholders appears still more complicated to the companies in question.

The categorical imperative that is supposed to tell humans how to distinguish between good and bad does not seem to work when big business is concerned. The reason for it may be that, in business, there is a collision of the concept of good as seen by the decision-makers and by the society. The personal values obscure the values of other parties concerned. The Volkswagen scandal is a bright example of such collision. The actors of this saturnalia may have thought it would be a good idea to motivate the employees and prop up their eagle spirit. It would be indeed a good idea but for the methods of motivation.

A proper motivation policy could have included promoting equal rights, coaching, open discussions, etc. to stimulate the work of intellect and establish a positive atmosphere. Instead, the actors decided to appeal to the basic instincts and placed their stakes at food and women. The consequences were disastrous: the whole company was discredited because some persons have simply chosen the wrong way to reward their colleagues. It can be concluded that, when a small group’s good is concerned, it is needed to double-check whether this good is by the common good and whether the good of the whole company, both at headquarters and abroad, can be shattered by some careless actions.

The idea of utility subsumes that the outcome should feature some useful points. The problem is that the concept of usefulness can diverse from person to person due to the difference in the ways people perceive the world and themselves in this world. Besides, a common issue in the business ethics is that people tend to project their own perception of utility onto that of the business. At that, they stay quite oblivious to the consequences of their decisions.

It is not yet proved that the IKEA decision-makers in Ireland had added horse meat to the beef on purpose. If it was so, however, their motives remain somewhat obscure. The reason could be that they wanted to opt for cheaper meat considering the low cost of the raw material useful for the company’s endeavors. At the same time, the head office of the company was ignorant of such decisions. Nor were any quality tests conducted inside the company; instead, the fraud was pointed out by some independent research.

Thus, on the one hand, we can see people relying on their twisted concepts of utility and not thinking that the results of such operations could have been thousands of customers (especially youngsters) poisoned by the horse pain-relieving medication. On the other hand, the lack of proper managerial and quality control is visible. It does not prove that companies should not use cheap ingredients at all when producing food, of course. Cheap ingredients can be as useful as others but only provided that their origin is stated on the back of the package.

It was stated that one of the basic and soundest approaches of business presupposes that the stakeholders’ interests should be met simultaneously. However, when international business is concerned, the amount of stakeholders is bigger and meeting everyone’s interests is practically impossible – or so some of the companies think. Adopting fraud schemes goes contrary to every ethics, and the fact that the scheme is disguised under the mask of common changeover procedures does not make it any better. The 7-Eleven company cheated on their franchisees and was punished for that since the company’s decision-makers never rose the question of meeting their interests. Apparently, the franchisees were never regarded as stakeholders, which seems rather illogical. However, considering that the interests of the ruling coterie are an incontestable priority is a common mistake that often results in a situation similar to that of 7-Eleven.

A possible solution to all these problems would be to act ethically, in the first place. At that point, the business students’ concerns with the discipline of business ethics being unnecessary, time-consuming and distracting from the business itself seem somewhat irrelevant. Ethics needs to be taught since, in business, it is an art that should be mastered. Students must be shown the proper approaches to business and are well aware of the consequences of unethical behavior on a global scale, which usually leaves companies in rubble. They should learn that, although the individual ethical values are different from that of the collective, it is up to the business founders and stakeholders to build the ethical culture in their companies.

Indeed, with the help of the evidence, it is possible to concede that business ethics should be formed by both individual ethical stance of the entrepreneurs and the collective ethical culture. A business person should know how to establish ethical culture because just as individual ethics differs from that of a group, personal success differs greatly from group success (Mitchell, 2009).

It can be based on the company’s approach towards human rights, environment, etc. Furthermore, businesspeople should base their ethical culture on the stakeholder- and customer-friendly approach to make sure that all parties are satisfied. If that is done and the employees see the positive outcome of such an approach they get a model of ethical behavior and decision-making to motivate them properly. When the parties’ needs are assisted and the employees are confident and generally positive about themselves, the company has a good reputation on the international level which is the key to success.


The subject of business ethics is thoroughly studied by the most prominent researchers and philosophers. However, the conceptual set of what international business ethics should involve is relatively new and understudied since the boom of globalization fell within the late XX century. This report was aimed at discovering whether and how exactly general business ethics is applied to international business ethics. Three philosophical and ethical concepts of business were singled out: the Kantian categorical imperative, the utilitarian approach to ethics and the stakeholder theory.

There are international companies that are famed for their ethical stance, such as Google, Patagonia, and Starbucks. They embrace the principles of ethical business running and subject them to the world scale. On the other hand, there are companies where individual profit is valued higher than the company’s success and where the stated ethical modes are either twisted or ignored. Such companies as IKEA, Volkswagen, and 7-Eleven still have to learn to be in the know what goes on in their local stores as well as abroad since the unethical behavior of some persons (i.e., those who consider it appropriate and useful to put horse where beef should be) causes scandals and creates a serious threat to the companies’ reputation.

Possible solutions to these problems were stated. Firstly, business ethics needs to be studied for the students to be able to look at their future endeavors through the prism of ethics. Secondly, the general business ethics approaches should be applied more widely to the field of international business; the notions of common good and utility are the most crucial at that point. Also, the business people should enhance control over the quality of their products and be aware of the consequences of unethical behavior and not meeting the interests of all parties concerned.


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