Cultural Relativism in Business

2 February 2017

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.

Cultural Relativism in Business Essay Example

” 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 than their expatriate counterparts from the U. S. and Britain, but similar to those from China and Macau (McDonald and Kan, 1997). They are more agreeable to using deception for gaining competitor information, protecting dishonest employees, practicing deceptive advertising and labeling, having deceptive pricing, manipulating expenses, and engaging in insider trading.This observation is supported by Nyaw and Ng (1994) who found that Hong Kong managers are more tolerant of unethical behavior towards customers and suppliers than Canadian managers. At a corporate level, deception of various forms has been observed among East Asians (Tung, 1994). For instance, the Japanese speak with soft-spoken voices so that their American counterparts underestimate their tenacity.

In the process of gathering market intelligence, some East Asian firms spread erroneous information to contaminate and frustrate competitors’ strategies.We must change the focus of business ethics away from primary emphasis on Western ethics toward a deeper understanding of value systems that stem from different conceptions of human nature. We need to abandon the project of universalizing ethics along Western lines. Cultural Relativism and Business Options: Given the concept of cultural relativism, business executives can take one of three choices: (1) insist on uniform standards worldwide, or (2) tailor or adjust the companys standards of conduct for each locale, or (3) decide on each instance on a situation by situation basis.The problem with insisting on common worldwide standards is that local customs in foreign cultures may be trampled upon or offended. The reverse is true for the other two options. If company practices are altered based on local customs or a specific situation, then the customs of the company’s home markets and stakeholders may be offended with inevitable fallout.

Take the example of facilitating payments or bribes. If a company insists that bribes will not be paid anywhere in the world, it may face severe problems operating in some foreign countries.On the other hand, if the company states that bribes will not be paid in the developed world, but may be paid were necessary in the third world, then it may be attacked by pressure groups at home. If each instance is to be decided by a senior executive, and managers know that the company condones bribes sometimes, they will be likely to go along with bribes everywhere because they know the company thinks it an acceptable practice. These trade-offs are not simple for executives to make, particularly since the culturally sensitive issues involved are very inflammatory in some cultures.Operating issues that are sensitive to North American markets would include: child labour, treatment of women, health and safety matters, quality of life impacts, dealing with oppressive regimes, and environmental impacts. Contracting practices that are also to be watched carefully include bribery, facilitating payments, dealings with family, nepotism etc.

all of which involve the management of conflicts of interests. You can see that, if the manager is to optimize the companys performance on its strategic objectives, developing a company code and practices to respect cultural sensitivities is a very difficult balancing act.It is increasingly problematic for companies to adopt the policy of operating abroad at the level of local laws that are much different from those in their home markets, particularly in areas like labor standards, health and safety standards , and environmental protection. This is increasingly seen as opportunistic and unprincipled. The fallout from child labor boycotts, collapsing mines, and pollution has ruined many promising ventures. Cultural relativism and Islam: The debate between universalism and relativism is as old as the history of hilosophy itself, though as two recognizable schools of thought they may be modern. Islam teaches that man is one being with a body and soul.

He has not only mind and consciousness, but also a conscience. All the qualities of man that make him really human are God-given gifts that are linked to his soul. This means that quite apart from racial or cultural influences, man has certain innate qualities, which in their totality can be called human nature. Anchored at the Quran, we need not be perturbed by these fads and fashions in philosophy or sociology.But there is no harm in studying them and judging them for what they are worth. Hence cultural relativity can be practiced in business but keeping the teachings of Islam in mind. Conclusion: Hence we can conclude that different techniques are applicable but according to the situation.

Cultural relativity can also be practiced but keeping in mind the ethical values of one’s own belief system and the teachings of religion. Islam is also concerned with the basic teaching and principles which are to be followed while doing business and adopting cultural relativity.Cultural relativity can be an integral part for success in business when carried out in other societies Innovative ideas based upon cultural sensitivities can provide win – win situations even in difficult areas like bribery. The following example explains the success of a business by following ethical cultural relativism. Some companies simply decline to pay bribes. They lose some business, but some report that the fear of losing business is overblown, and that when it became known that they would not pay bribes, they were no longer asked for them but contracts were won.One company, however, decided that they would refuse to pay a bribe in China, but offered to contribute to a community project – a park – which is particularly prized in that culture, and where several positions on the governing board were to be filled by community elders and members of the contract awarding group.

The company rebuffed requests for pay-offs to purchasing and local officials, but indicated that they would be prepared to contribute to the local community. In the end, this proved to be a very successful strategy both abroad and at home.

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