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Developing Countries, Business Ethics in

Business ethics of developing countries refers to the moral standards governing responsible business practices in countries that are still working toward an acceptable standard of living. Developing countries are generally characterized by lack of industrialization, low per capita income, and widespread poverty. Business ethics in these countries tends to relate to norms that have arisen largely independent of Western expectations and values.

The assumption is often that less industrialization is a sign of weaker moral standards. In fact, this is not necessarily the case—standards in developing countries are often simply “different,” and “different” standards do not necessarily translate into “lower” standards. The reality is that societies in developing countries, absent Western influences, have tended to structure themselves according to different values. In China, for example, there is an emphasis on the collective good, in contrast with the protection of individual rights often prioritized by Western values. It is worth noting that a strong argument can be made that, in some ways, people in developing countries—such as China—adhere to higher moral standards.

In considering business ethics in developing countries, it is important to distinguish between cultural values and moral problems. Business ethics in developing countries is heavily influenced by the particular cultural values (such as emphasis on the common good) that shape those societies, many of which are not prioritized in the same way in the West. It is, nevertheless, possible to identify moral problems that exist in business in developing countries, without challenging the legitimacy of the different underlying value systems. Although the value systems themselves do not necessarily promote corruption, atrocious labor practices, or intellectual property infringement, the operation of those values in the context of poor industrialization leaves those societies vulnerable to behavior generally considered inappropriate.

Corruption

One of the most pervasive themes that extends throughout developing countries is that of corruption. Corruption, in this sense, tends to relate to agents providing special considerations in their official capacity in exchange for financial payments (i.e., bribery, greasing payments) or other personal benefits. In many of these countries, the absence of legitimate political authority and/or proper infrastructure has left institutions and organizations vulnerable to this sort of corruption such that corrupt practices have become the dominant sort of behavior.

This is considered problematic from multiple perspectives. On the one hand, corrupt practices—that is, practices in which official duties or responsibilities are compromised by considerations of personal financial gain—are inherently morally questionable. At the same time, corruption threatens to distort the operation of business by influencing how the market works. The Foreign Corrupt Practices Act prohibits American companies, and their employees and agents, from engaging in bribery anywhere they conduct business. Many people contend that this places American enterprises at a competitive disadvantage. Other people argue that taking a strong position against bribery can be turned into a competitive advantage. Although the data remain inconclusive, a number of other countries have recently followed the lead set by the United States through legislation and other means aimed at deterring corrupt business practices.

While the United States and other Western, developed countries have traditionally condemned corrupt business practices, some view this as hypocritical, given the existence of corruption in the West as well. Others view this as an example of cultural imperialism as Western countries attempt to impose their standards for doing business on developing countries. In fact, the common understanding that this is how the markets operate in many of these countries has led to the development of predictable channels through which these payments are made. Although these countries still only aspire to industrialization and an acceptable standard of living for the majority of their people, to attempt to eliminate corruption categorically denies the reality of the dependence of local communities on the systems on which the bribes and other financial payments are based. For example, government officials in some of these countries receive salaries that are understood to be supplemented by financial payments from business entities seeking special assistance, similar to how waiters and waitresses in many countries, including the United States, receive undermarket salaries because customers are expected to contribute tips. In fact, people in the service industry pay taxes according to actual or assumed tips.

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