a framework for

understanding international
business and legal ethical
standards
Fathima S – M180031MS
U K Vaishnav
1 – M180034MS
INTRODUCTION

 International business refers to the trade of goods, services, technology, capital and

knowledge across national borders and at a global or transnational scale
 It involves cross-border transactions of goods and services between two or more
countries
 Transactions of economic resources include capital, skills, and people for the purpose
of the international production of physical goods and services such as finance, banking,
insurance, and construction

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INTRODUCTION (CONTD..)

 Legal standards are standards that are set forth in governmental laws

 Ethical standards don't necessarily have a legal basis, they are based on human
principles of right and wrong
 Ethics - Accepted principles of right or wrong that govern the conduct of a person, the
members of a profession, or the actions of an organization
 Ethical strategy is a strategy, or course of action, that does not violate these accepted
principles

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BUSINESS ETHICS

 Accepted principles of right or wrong governing the conduct of business people

 Business ethics is a form of applied ethics or professional ethics that examine ethical
principle and moral or ethical problems that arise in a business environment
 It applies to all aspects of business conduct and is relevant to the conduct of individuals
and business organizations as a whole. 

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ETHICAL CONSIDERATIONS IN
INTERNATIONAL BUSINESS
 As businesses expand internationally, they must not only understand an organization’s
mission, vision, goals, policies and strategies but also must take into account the legal and
ethical issues in international business
 When companies plan their long-term expansion into a foreign environment, they must
tackle serious moral and ethical challenges and decision-making in order to make their
expansion a success
 Some of the most common ethical issues in international business include outsourcing,
working standards and conditions, workplace diversity and equal opportunity, child labor,
trust and integrity, supervisory oversight, human rights, religion, the political arena, the
environment, bribery and corruption
 Businesses trading internationally are expected to fully comply with federal and state safety
regulations, environmental laws, fiscal and monetary reporting statutes and civil rights laws

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GLOBALIZATION AND ETHICS
COLLIDING
 Barriers to trade has reduced
 Simultaneously national governments have changed policies to reap the benefits of
globalization along with advancing their local interests
 Supportive business friendly laws are drafted to increase international cash flows
 National governments may support the local communities without thinking of the
repercussions on the bigger picture

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BUSINESS ETHICS VS LEGAL ETHICS

 Business ethics is an outcome of a process of expectations ad evaluations interacting

with societal and organizational considerations
 International business ethics involves more complexity and a collision of multiple
national perspectives
 Due to this there is no clear consensus of what exactly constitutes international ethics

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BUSINESS PERSPECTIVE

 Outcome of international business ethics may result in one of the following ethical
perspectives
 Foreign Country-type
 Empire-type
 Interconnection-type
 Globalisation-type

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Foreign Country-type

 Adopts culturally relativistic when-in-Rome approach

 Implying ethical standards are supplied by the foreign host country
 Arises in connection with international dumping or labour issues
 This adaption or adjustment may reflect respect for foreign traditions while
disregarding one’s roots in the home country

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Empire-type

 Implying ethical standards are supplied by the host country

 Ethical imperialism assumes that the ethics of the home country should be applied
everywhere
 It may sometimes result in alienation of foreign stakeholders
 Reaching out to the whole world, the home values and norms are asserted and imposed
while adaption or adjustment to the host countries’ values and norms are excluded

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Interconnection-type

 Implying the ethical standards are a mixture of home and host country ethics
 What is beyond national borders impacts on domestic relations and domestic relations
impact on international relations. Interdependence blurs the notion of a national interest
that disregards the interests of other nations and supranational entities. Although they
are still important, national borders are pervious to a significant extent in both
directions
 Driven by mutual advantage while disregarding or harming the interests of third parties.

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Globalization-type

 Implying the ethical standards originate from universal ethics regardless of home and
host ethics
 The relevant ethical standards apply to all actors on the planet Earth regardless of their
different local traditions and cultures

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LEGAL PERSPECTIVES

 It is more specific and limited jurisdictionally

 Legal ethics in different countries incorporate various perspectives, however results are
usually framed on the context of national values and local administration of justice
 Lawyers enable businesses to grow out and navigate in a path of optimal probability
 Cross-disciplinary ethics arbitrage is always a risk and an international dimension
complicates it further
 Difference in legal ethical standards among countries may have significant
consequences

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INTERNATIONAL ETHICS

 International ethics is an area of international relations theory which concerns the extent and scope
of ethical obligations between states in an era of globalization. Schools of thought include cosmopolitanism
and anti-cosmopolitanism
 Cosmopolitanism is the idea that all human beings are, or could or should be, members of a single
community. Different views of what constitutes this community may include a focus on moral standards,
economic practices, political structures, and/or cultural forms

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Role Of Nations In International Ethics

 Plays an active role in international ethics.

 In an elementary condition:-
 “Tragedy of the commons” by Garrett Hordin, coins the term “pasture to all”
 Mutual agreement is the answer to over exploitation
 In more complex situations:-
 game theory and Coase’s theorem asserts that nations will adjust their
behavior in light of perceived benefits and consequences
 Individual benefits while vouching for globalization

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Role Of Nations (contd..)

 Individual benefit; eg: Tax competition

 Ireland and Apple
 European council in 1997 introduced code of conduct for taxation in
international business

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International Business And Legal Framework
• Legal framework a broad system of rules that governs and
regulates decision making, agreements, laws etc..
• There are mainly 3 situations in interactions (broadly
classifying)
i. Single nation
ii. Simple cross-border
iii. Subsidiary or shell

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International Business (contd...)

Single nation context Simple cross-border

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Subsidiary or shell
Thank you

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