Culture and Business Ethics: The impact on firms’ management of value chain activities

Both globalisation and the growing international competition have affected the complexity of academic inquiry about business ethic and firms’ social responsibility. The interest of academics for the underlined subjects is, particularly, supported by the wide range of studies actually available on the topic. However, further research is necessary according both to the complexity of the issue and to the more recent and greater environmental changes. The traditional approach to business ethics may be, particularly, extended by the theoretical contributions coming out from Cross-Cultural Management studies, since what is ethically “right” and “wrong” is culturally determined (Adler, 1981, Robertson, 2002; De George, 1993; Donaldson and Dunfee, 1994, 1999). Business ethics studies concern with what may be do or not in undertaking business (De George, 1993), involving the rules that govern business activities and the values embedded in the business practice, as well. Both scholars and researchers generally recognise the impact of culture on the definition of ethical standards, as well as on the relationship between some cultural variables and firms’ ethical behaviour (Wines and Napier, 1992; Cohen, Pant and Sharp, 1996; Husted, 2000, 2001). When culture differs, also ethical views about business may vary and an “ethic gap” may arise. According to our previous research, an “ethic gap” may, specifically, occur every time that what is considered a-moral in the home country, became moral in the host country. Similarly, an “ethic gap” develops also in the opposite situation, when business behaviour is valuated as moral in the origin country, but not in the host one (Canestrino, 2007). The above observations point up the necessity to identify the moral standards that international companies should refer to in such a situation. The theoretical contrast between ethical absolutism and relativism seems especially play a very important role in the understanding of modern firms’ internationalisation process, as well as in the interpretation of the behaviour that companies adopt within the context in which they operate, or intend to work. While recognising the importance of each mentioned positions, we support the idea that absolutism may lead to the failure of international initiatives: the absolutist perspective, in fact, seems to overlap with the guidelines that drove the internationalisation of American Corporations, during the 60s, and which did not show positive results over time. the highlighted perspective, in fact, led foreign firms to transfer their 2 own cultural models and managerial behaviour in the host country, fostering the emergence of organisational hybrids characterised by negative synergies (Calvelli, 1998). On the contrary, relativism fosters firms’ adaptation to local contexts, in coherence with cultural and moral standard prevailing in the different markets. According to relativists, no ethical norms are better than others. As a consequence, when firms enter new markets, they have to adapt their activities to the host country rules, in the observance of the so-called principle of “When in Rome, do as the Romans do” (Larrison, 1998). Not every values and believes, however, are able to affect firms behaviour, as well as not every value chain activities are modified according to local cultural standard. Referring to the first point, we, particularly, support the idea that only values and believes, deeply embedded in a context, may influence firms’ behaviour, since they cannot easily be modified over time. In such situation firms usually adapt their own activities, not only to the moral standard prevailing in the host country, but also to the ethic rules arising in the domestic context, as well. Similarly, we believe that not all value chain activities will be adapted to the prevailing moral standard: empirical evidences, in fact, show that firms tend to focus their attention mainly on production, marketing and finance. Depending on the above- mentioned observations, we want to understand the inner reasons of the underlined choices. According to a relativist approach, our paper aims at deeply investigate: • Which cultural values and believes are able to affect firms behaviour, thus impelling an adaptation of value chain activities to the moral standards prevailing both in the host countries and in the origin contexts of internationalisation processes; • Which value chain activities are mainly adapted to the prevailing moral standard and which are the reasons of firm’s choices. A multiple case study analysis was carried out in order to support or, alternatively, refute our hypothesis. Both our university database and interviews were used for collecting valuable information about the topic.