Cultural Dilemmas In Business Ethics – A Strategic Perspective

In today’s globalized environment, multinationals (MNCs) are operating from an increasing number of host countries. If ignored or mismanaged, the cultural diversity across these countries can undermine the development of an ethical organizational culture within the foreign branches. Opposing values and differing views on what is right and what is wrong can lead to many misunderstandings, hindering employee ethical behaviour. In this context, implementing ethical policies within foreign branches can bring challenges for global managers. Successfully creating and applying ethical guidelines within culturally different or multicultural environments is a very delicate issue, as managers have to find the right balance between maintaining the headquarters’ standards and adjusting to local values. This paper aims to offer a strategic perspective for an adaptive approach, contingent upon the contextual situations and cultures involved, by performing a theoretical analysis of the topic. We argue that an adaptive option best serves the company's interests and aligns with stakeholders’ expectations, allowing the company to create and maintain a strong competitive advantage. Drawing on Dynamic Capabilities Theory, this paper will bring strategic arguments for choosing cultural adjustment in the implementation of ethical guidelines. This option has significant practical implications, reducing the risk of unethical behaviour and spurring organisational synergies.