IMPACT OF GLOBALISATION ON BUSINESS ETHICS

Introduction:
Globalisation is a new paradigm of fresh beliefs, new working methods and
understanding of socio cultural realities. Globalisation has become the order of the day
and no country can escape from globalisation. Profit motive, global village, over
production, availability of raw materials and labour, recession in industries in one
country, growth of technology, improvement of management skills, reduction in transport
cost, better research and development, generation of worldwide employment
and internationalization of business are the important causes for globalisation.

Drivers of globalisation:
(1) International trade:
The reasonable growth of international trade is essential for keeping up the tempo of
globalisation.
(2) Financial flows:
Financial flows between countries speed up the process of globalisation. Financial flow
facilitate production and the flow of goods and services among the various countries in
the world.
(3) Communications:
Faster, speedier and effective communications bring a solution to the problems of
globalisation. Many components are made in different countries. All these components
have to be assembled in one country. Constant and continuous communication is
essential.
(4) Advancement oftechnologv:
Technology advancement is necessary to look after large scale production and upgrading
the quality of production. Technology should be able to reduce the cost of production.
(5) Mobility of population:
Since there is an involvement of a large number of people such as labourers, managers,
suppliers, service providers and business people, there should be an urge for population
to move and encourage mobility. This mobility of population is encouraging different
methods of production and consumption.

Conditions of globalisation:
The concept of globalisation requires the following conditions:

(a) There should be a reasonable amount of business freedom.

(b) Adequate amount of facilities like infrastructure and information to be available.
(c) The active support of the government is essential for the progress of globalisation.
That is why many countries have become members of W.T.O.
(d) Material, financial and human resources are necessary for the sustained development
of globalisation.
(e) The spirit of competition is the basis of globalisation. The healthy competitive spirit
can promote globalisation.
(f) Above all the economies should have an orientation towards globalisation. That can
solve issues related to regional conflicts and divergences.

The following are the important changes taken place in business ethics
due to globalisation.
(1) Before globalisation, there were adverse employee management relations. After
globalisation, there is better understanding of employees and management.
(2) Forced labour, poor wages and unsafe practices were in existence. After the
introduction of globalisation there is better treatment of labour, fair wages and safe
working practices. In fact the emergence of MNCs has increased the salaries and
compensations to a higher level.
(3) Before globalisation, the government was more of a controlling agent. It was the only
powerful controlling agent. Because of the major role of government in controlling
business bureaucracy was having a negative role in business. This led to corruption, delay
and favouritism. After globalisation, there is lesser government control in many countries
leading to flexibility of business conditions.
(4) Pre-globalisation era was a period of public sector domination. In a public sector
dominated economic situation the scope of business ethics is restricted. In contrast, in
post globalisation period, there is always a wide scope for private sector initiatives. There
is a wider scope for ethical practices in private sector.
(5) Before globalisation, the corrupt practices were not very much publicized. After
globalisation, there is a worldwide publicity for corrupt practices. For example, there is
an enormous publicity of Enron, world.com etc., throughout the world. It has created a
natural fear regarding corrupt and unethical practices.
(6) Many ethical issues were not known to consumers. After globalisation, the consumers
are aware of their rights and question the business people. Thus the emerging situation
encourages an ethical climate.
(7) Many unethical practices were encouraged like low wages, exploitation of labour and
adulteration before globalisation. Since globalisation most of these unethical practices are
discouraged. Many unethical practices are corrected.
(8) The working conditions were not safe and ideal before globalisation. The inspecting
and enforcing authorities were corrupt. After globalisation, the labourers of many
industries have got awareness about the working conditions. ILO and WTO also impose a
condition that the working conditions should be safe and exploitation to be avoided.
Of course the working conditions in the call centres and IT enabled services demand for
night services for women employees also.
(9) Before globalisation, the trade unions were encouraging unhealthy labour practices
like tool down strikes, work to rule and total strikes. The labour force was involving in
political issues.
After globalisation, these unhealthy labour practices are discouraged and driven away. In
fact the power of the unions has become weaker. An average labourer is able to
understand his or her responsibilities.
(10) Pre-globalisation era was encouraging deceptive advertising making false claims. In
the postglobalisation era there is the emergence of relevant advertising. The tall claims of
advertisement are not accepted by the people.
(ll) Before globalisation there were many financial frauds. After globalisation, frauds are
reduced but cases of financial mismanagement increased.
(12)The level of transparency was lesser before globalisation and the degree of
transparency increased after globalisation. It was due to the efforts of various bodies of
private enterprise, business organisations and consumers' bodies.
(13)Prior to globalisation business values were spoken. After globalisation ethical audit is
undertaken by business organisation. Hence the business values are introduced into action
programmes.
(14)Before globalisation, much focus was not given to environmental issues. After the
progress of globalisation focus is on environmental issues. In this sense, environmental
ethics is carried on in modern times. Most of the companies are concerned with global
warming.
(15)The number of cyber crimes was lesser before globalisation. After globalisation the
unethical practices of cyber crimes and IT related crimes have increased.
(16)Before globalisation corporate social responsibility was practiced only be a few large
corporations in developing countries of the world. After globalisation even small
companies have come forward with different measures of corporate social responsibility.
(17)The concern for health care ethics was limited in pre-globalisation era. In the
globalization phase, there is an increased concern for health care ethics.
(18)Pre-globalisation encouraged ethics only at the national level. In the globalisation
era, international ethics has become popular. The various corporations of the world try to
practice international ethics.

Summary
(1) Globalisation is a new paradigm of fresh beliefs, new working methods and
understandingof socio cultural realities.
(2) Drivers of globalisation:
International trade - Financial flows - Communications - Advancement of technology -
Mobility of population.
(3) Conditions of globalisation.
(4) Important changes taken place in business ethics due to globalisation.
(a) Better treatment of labour.
(b) Lesser role for the government.
(c) Ethical initiatives in private sector.
(d) Wide publicity for corrupt practices.
(e) Awareness of ethical issues to the consumers.
(f) Better working conditions.
(g) Responsible work force.
(h) Responsible advertising.
(i) Reduction of financial frauds.
(j) Increase of the degree of transparency.
(k) Importance to business values.
(I) Focus on environmental issues.
(m) Increase of corporate social responsibility.

Questions
Section 'A'
(1) Define globalisation.
(2) List the drivers of globalisation.
(3) What are business values?
(4) Define corporate social responsibility.
Sections 'B' and 'c'
(1) Compare the business ethical practices before and after globalisation.
(2) Examine the impact of globalisation on business ethics.