Assignment task: Ethical versus Institutional Conflicts
While ethical conflicts focus on what is moral, institutional conflicts focus on what is legal. One has spiritual or moral implications; the other has enforcement or punishment implications. Institutional conflicts represent differences over what is legal or consistent with legitimately determined public policy. In addition to laws, governments and public agencies also sanction a number of public policies that are designed for the common good. For example, many governmental organizations issue edicts, recommendations, or targets on issues relating to social policy (e.g., automobile emissions, greenhouse gases, and child labor). Some of these public policies are backed up by enforcement mechanisms, while others are enforced only by social pressure.
Many institutional requirements (laws, regulations) are implemented to reinforce a society's normative (moral) beliefs. For example, if social norms or religious beliefs forbid theft, laws are often enacted to back this up by making such actions illegal. As a result, normative beliefs and institutional regulations tend to correlate highly with one another in most societies, particularly those that are relatively homogeneous. Moreover, in some cultures, legal requirements are directly integrated into religious beliefs - such as Islam's sharia law, often defined as a system of divine law governing beliefs and practices. Even so, what is moral or legal in one society may not necessarily be so in another. Take the case of insider trading, where corporate officers and others close to the executive wing use confidential information that is not publicly available to general stockholders to purchase or sell shares before news affecting stock prices becomes public. Some Western countries consider this to be both unethical and illegal. Others see such behavior as inevitable (i.e., how can society expect executives not to act on future knowledge about their firms?) and therefore do not attempt to proscribe it.
The major practical implication of this separation of the ethical and the legal is that only the most fundamental parameters of human behavior (e.g., major crimes against society) are mandated by the law and oftentimes punished, while ethical misbehavior is left to self- or group regulation, and largely excluded from direct government intervention.
Now we come to an interesting question: What should managers do when confronted with a conflict between their ethical beliefs, on the one hand, and local laws and regulations, on the other? When all reasonable efforts to reconcile these conflicting forces fail, some companies encourage employees to give priority to doing what is right (e.g., observing the basic principles of human rights and environmental protection over local laws). In- house programs at Motorola, for example, advise their global managers to check out whether the consequences of applying the law in various countries violate these basic principles prior to acting.
Global managers sometimes take the laws of their home country more seriously than those of foreign nations. Business travelers to Iran will often lie to Iranian authorities about ever having visited Israel, since this would automatically prohibit their entry. (Some even have two passports - one for Israel and one for the rest of the world.) But these same travelers, when asked how they feel about similarly violating the immigration laws of their own country, typically show a clear reluctance to break the law. Generally speaking, obeying the laws of foreign countries is very important; only when the laws go against one's ethics or the laws of one's own country must business people carefully consider the ethics involved.
Consider the following controversy. Sweden's global retailer IKEA prides itself on its Scandinavian flair, with simple and clean lines throughout its product lines and its avant-garde advertising campaigns. But when the company entered the conservative Islamic Saudi market recently, it faced a new market reality. In a country where women dress in conventional black Saudi attire, IKEA wanted to avoid antagonizing the local population - and government regulators - and so deleted images of women from their advertisements used in that country.13 But while the Saudi market was apparently satisfied, IKEA came under strong criticism from its home country - and the Swedish government - for "selling out" its traditional Swedish commitment to gender equality. IKEA's strong egalitarian corporate culture was called into question.
Question: What would you recommend IKEA do? What are the likely consequences of your recommendation?