When the envelope starts to be pushed, as will inevitably be the case, it is tantamount to rudderless ethical standards.
A company that adopts the principle of ethical relativism and holds company personnel to local ethical standards necessarily assumes that what prevails as local morality is an adequate guide to ethical behavior. Ethical relativism results in a maze of conflicting ethical standards.
Managers in multinational enterprises have to figure out how to navigate the gray zone that arises when operating in two cultures with two sets of ethics.
Ethics and Integrative Social Contracts Theory
Social contract theory provides a middle position between the opposing views of universalism and relativism.
According to integrated social contracts theory, universal ethical principles or norms based on the collective views of multiple cultures and societies combine to form a “social contract” that all individuals in all situations have a duty to observe. Within the boundaries of this social contract, local cultures or groups can specify other impermissible actions; however, universal ethical norms always take precedence over local ethical norms.
The ethical standards a company should try to uphold are governed both by a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and the circumstances of local cultures, tradition, and shared values that further prescribe what constitutes ethically permissible behavior and what does not.
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