International Business and Cultural Relativism

By Professor T. Donaldson

Relativism is not the answer

One answer to this question is as old as philosophical discussion, and as old as Sophistry. Its label is “cultural relativism,” and it is a view that holds that no culture has a better ethics than any other, and that, in turn, there are no international “rights” and “wrongs”. If Thailand tolerates the bribery of public officials, then Thai tolerance is no worse than Japanese or German intolerance. If Switzerland fails to find insider trading morally repugnant, then Swiss liberality is no worse than U.S. fairmindedness. The concept of cultural relativism is fairly simple to grasp, and unfortunately, fairly tempting when business opportunities are at stake.

In the final analysis, relativism must be rejected. Perhaps its main problem is that not all cultural differences lie at the fairly inconsequential level of insider trading or petty bribery. If one seriously maintains the view of cultural relativism, one must be prepared to tolerate all cultural differences. If one state endorses piracy (as some in history have), then one must grant piracy the same moral status as a doctrine of anti-piracy. Or consider the dramatic example of crime prevention in ancient Rome. There it was the practice to kill all of the slaves in a household in the event that one slave murdered the master. All slaves were lined up and summarily executed without trial. They were executed whether they were young or old, male or female, and whether or not they were involved in, or had any knowledge about, the murder. In some instances involving large households, the practice resulted in the execution of three and four hundred innocent persons. While the practice was justified on the grounds that it deterred future plots against the master, few of us today could embrace such reasoning. And in the light of heinous practices such as this, few of us can cling to theoretical relativism that would tolerate these or even worse practices. Hence, if we reject relativism in the extreme instances, then morality in the international sphere must be something more than an unprincipled, “do-what-the-natives-do” undertaking. It does not follow that all questions of moral differences among cultures can be solved by measuring them against a rigid, universal yardstick. But it means that morality has some, albeit imperfect, relevance to transcultural contexts.

Shaping the answer

A guiding dictum for framing an answer to the “When in Rome…” problem is to steer a middle course between moral absolutism on the one hand, which says, “Our culture is the best, and you had better conform,” and relativism on the other, which says, “look if they tolerate this in their culture, then it’s their business.” Somehow, we must be able to say to Union Carbide, “You goofed. You committed a tragic mistake in letting safely precautions lapse in Bhopal,” while maintaining a certain degree of tolerance in regards to the non-Western cultural traditions of India.

In steering between these two rocks, there are a number of concepts which can be helpful, perhaps the most important of which I would call a “moral threshold” for corporate behavior abroad. There are many different languages which can be used to create this threshold, such that when a corporation falls beneath it: the corporation can be told, “You’ve made a moral mistake,” even in contexts where host country practices allow the company’s behavior. Probably the most popular language in the world for establishing such a threshold is the language of rights. The U.N.’s Universal Declaration of Human Rights is only one example of the way in which countries have tried collectively to specify absolute minimums of moral conduct.

We can learn a great deal by framing a moral threshold in terms of rights, and by understanding the implications such rights have for corporate behavior. Moral philosophers tell us that whenever there is a right, there is not only a duty to avoid depriving people of the right directly, but also a duty to protect people from this deprivation. Companies encounter this kind of situation frequently. Surveys of people in Central America show that the average Central American went to work at the age of eleven. If we believe in the right to a minimum education, which includes, at the very least, the ability to read and write, then surely hiring very young children for ongoing full-time labor fails the moral threshold test. The corporation doing this has failed to protect the basic human right to a minimal education from deprivation. Or suppose a corporation is considering buying land in a Third World country owned by a few wealthy landowners. Imagine that for years the land was used by peasants working as sharecroppers, who returned a significant portion of the crop that they harvested to the owners and retained the rest of it for their own nutritional needs. Suppose also that the corporation is aware that by buying the land and converting it to produce a cash crop, such as coffee or flowers, it will force people to migrate to the city slums, which, in turn, will result in their suffering serious malnutrition. Despite the fact that, as

Coleridge said, people would die so slowly that none dare call it “murder,” the right to subsistence, championed in many international documents, would have been violated by the corporation’s purchase and conversion of the land.

Utilizing the concept of a right is also helpful because rights establish bare minimums of ethical behavior without the ring of absolutism. We should reject the possibility of a system of principles that is excessively universal and which neglects the moral freedom of particular cultures, nations, industries and corporations.

Limits to universal principles

The rejection of cultural relativism and the adoption of universal principles, such as those establishing a minimal floor for corporate behavior, must respect cultural and economic difference: Even if general values were exactly the same around the world, the same specific principles would not necessarily be appropriate for every host country context.

As I have argued recently in a paper with Thomas Dunfee, correct ethical behavior in business contexts must be defined not only in relation to abstract and universal normative ideals, but also in relation to the moral understandings of living members of economic systems and organizations. An important source of normative standards for international business behavior must be the set of implicit agreements which constitute the psychological reality of everyday economic life. We must, in other words, combine universally applicable norms of fairness and respect for persons with the range of what may be called “extant social contracts,” i.e., with the specificity of moral agreements within and among industries, firms, departments, professions, and business cultures. So long as the only thing you knew were “the best moral theory”, you would be hard-pressed to produce a satisfactory definition of unethical insider trading, or to know the correct course of action in all cultures. This is because moral rationality is what may be called “bounded,” and it is especially so in cross-cultural, economic contexts.

This acknowledgment does not reduce to the relativistic view that any economic morality is as good as any other. Certainly there exist what Thomas Dunfee and ! have chosen to call “hypernorms,” or, in other words, norms so fundamental to the human condition that they have transcultural implications. One of the key hypernorms for assessing international business conduct is the notion of a fundamental right discussed earlier. Another would be the maintenance, through any action or policy, of the equal respect and dignity due every human person. Any economic culture that defined economic morality in a way that accorded unequal dignity to each human person, or that systematically violated human rights, could have no claim to legitimacy. Hence, Dunfee and I argue that hypernorms include at least the following:

  • core human rights, including those to personal freedom, physical security and well-being, political participation, informed consent, and the ownership of property; and
  • the obligation to accord equal dignity to each human person.

To illustrate, we would expect that the hypernorms requiring recognition of the equal dignity of each person prohibits exclusion from fundamental economic and political activities based on race or gender.


For more on this subject, see Judaism and Cultural Relativism by Dr. Meir Tamari

Dr. T. Donaldson is a professor at the University of Pennsylvania Wharton School of Business

* This paper was specially prepared for this publication from “The Ethics of Business in a Global Economy” (Paul M Minus, ed.)