Latin America Is Known Among Many Other Countries, As Part of the THIRD WORLD Or Underdeveloped

BUSINESS ETHICS IN LATIN AMERICA

By

Diego R. Piedra

Professor: Dr. Jennifer L. Barger

Human Resource Management

November 2, 2001

Cameron University

Lawton, Oklahoma

School of Business

MBA Program

Latin America is known among many other countries as part of the “Third World,” or under-developed countries that share common characteristics, such as poverty, high birthrates, and economic dependence on advanced or industrialized countries. The expression “Third World” was used at the 1955 conference of Afro-Asian countries held in Bandung, Indonesia. By the end of the 1950’s, the term was frequently used in the French media to refer to the underdeveloped countries of Asia, Africa, and Latin America.

The underdeveloped countries are marked by a number of common characteristics as mentioned above. Latin America is dedicated in the production of primary products for other countries, and in providing markets for their finished goods. Despite the high level of poverty in Latin America, the ruling elites of most third world countries are wealthy. This combination of conditions in Latin America is linked to the immersion of the third world into the international capitalist economy. The main economic consequence of Western domination was the creation of a world market. By setting up throughout the third world sub-economies linked to the West, and by introducing other modern institutions, industrial capitalism disrupted traditional economies that led to underdevelopment.

Additionally, the market, and the prices of products made in Latin America are usually determined by large buyers of the dominant or industrialized countries. Going back in time throughout the colonial period, the great exploitation limited the accumulation of capital within the foreign-dominated countries. Even after decolonization (1950 through 1970), the economies of these countries developed slowly, and in some cases, not at all. Since buyers in the industrialized countries determined the prices of most products involved in international trade, the deterioration of the position of the third world was not surprising at all.

The term "Third World" is not universally accepted. Some prefer to use other terms such as: non-industrialized countries, underdeveloped countries, emerging nations. However, the term "Third World" is probably the one most used today. Businesses around the world have been facing many problems, not only problems on economy, but also ethical challenges inside and outside the companies. Business ethics is a relatively new topic of academic discussion in Latin America. Corruption and impunity came to be serious moral diseases in those countries, probably as a result of a long period of dictatorship in most of them. Very low ethical standards in the politics have had deep impact on individuals, organizations and economic systems.

Ethics is defined as a process of learning what is right or wrong, and then doing what is right. However, "the right thing" is not nearly what is done in some cases a part of the business language in Latin America. Most ethical dilemmas in the workplace are not simply a matter of "Should I or should I not do that?” Is the decision based on moral principles, or depends on the situation. Some others view ethics as the “science of conduct.” explaining that ethics includes the fundamental ground rules by which we live our lives.Philosophers have been discussing ethics for at least 2500 years, since the time of Socrates and Plato. What becomes an ethical guideline today is often translated to a law, regulation or rule. Values that guide us how we have to behave are considered moral values such as respect, honesty, fairness, and responsibility.

However, in the business field, ethics has come to mean various things to various people.But generally, it is coming to know what is right or wrong in the workplace.Values that were taken for granted are now strongly questioned. Many of these values are no longer followed. Consequently, there are no clear moral concepts to guide leaders through dilemmas about what is right or wrong. Perhaps most important, attention to ethics in the workplace helps ensure that when leaders and managers are struggling in times of crises and confusion, they retain strong moral principles.

On the other hand, excessive consumption, materialism and selfishness, in contrast with high levels of poverty, have been responsible for a mediocre attitude in many Latin American countries. Although, the majority of the population belongs to the Roman Catholic Church, the lack of education has led people to view both ethics and business as very different practices from each other. To do business according or adhering to laws, paying taxes and avoiding corruption is still one of the most challenging practices in Latin America. Deception, bribery, dumping, fraud and dishonest negotiation between buyers and sellers, making products more expensive, have been the ways to succeed either in private or in public organizations all over Latin America. Some companies do not pay fair salaries to their employees. In many cases, it seems like the words honesty, and responsibility have not been part of the business vocabulary in Latin America. In some cases, the phrase “The end justifies the means” seems to be part of their lives, and values seem to have been forgotten. Materialism and selfishness have become a strong rule, so that ethical behavior started to be seen with disdain in many cases.

Perhaps because of this fact, what seems to constitute a most significant challenge of business ethics in Latin America is elimination of corruption from organizations. The problem is much bigger and its solution is more complicated than the problem itself, many people can suggest or propose solutions, but it seems that nothing can be done to change their attitude of what ethics represents in business. Some people suggest the creation of a new culture and a commitment in private and public enterprises, stressing the important factor that ethics makes the company not only profitable but also more reliable in the long term.

The disproportion of wealth and its distribution among the population, as well as the ecological issue, can also be considered as factors to induce corruption, and unethical conduct among the people. In many aspects, countries outside Latin America have shown that ethical principles are part of the business game that must be respected. One example is the joint ventures. For instance, companies are looking for similar organizational structures, and cultures to do business with, which means that the foreign partner should bring as a contribution not only capital, technology or market opportunities, but also ethical standards. It is challenging Latin Americans to maintain national cultural values that reinforce identity and strength against foreign habits that apparently mean a competitive advantage to other countries. On the other hand, the materialism, the excessive consumption and the family disintegration learned from industrialized nations seem to have become a negative influence in most Latin American countries. Besides the fact that high levels of drug consumption, and other apparently productive jobs created by the economic power of unethical, and even perhaps illegal activities.

External influences seem to have been responsible for a conduct of less commitment with the nation, shown by a totally lack of nationalism. Unethical habits learned from economically developed countries have negatively influenced the values in Latin America, as it happened before in historical empires, for instance the Inca Empire when they were conquered by Spain. Some other factors have influenced Latin America countries, and pornography on TV is one of those, just to mention one example. As pornography and other conduct called, “American life style,” have had a great influenced in moral principles and traditions in Latin American countries. One major factor that must be consider these days is “globalization” companies all over the world are expected to enhance ethical behavior and commitment with the traditions of the nations involved.

The globalization and the communication processes do not allow any isolation from the rest of the world. The success of developed nations is an indicator of the urgent need of better social and economic structures in most Latin American nations. Not following certain rules, not being honest, responsible and efficient in doing business, could mean a threat on the mutual confidence and trust, and could be harmful not only to the relationship among companies, but also between customers and suppliers. A big role is played in this case by the political parties in most Latin American countries with a strong central government, who often allow concessions that lead to corruption. Several initiatives have taken place in Latin America. In Mexico, the Centro Patronal (Patronal Center), the Camara de Comercio (Chamber of Commerce), the Union Social de Empresarios (Social Union of Business People) and the UNIAPAC have made efforts to improve ethical standards. In Brazil, different types of organizations have dealt with ethical issues. The FIDES - Fundacao Instituto de Desenvolvimento Empresarial e Social (Social and Business Development Institute Foundation), has dedicated efforts to enhance an ethical perspective of modern managerial concepts.

The lack of ethical values in the government, in the business world and in many employees has caused much harm to these countries. Most Latin American countries have faced corruption problems for centuries. Maybe the most important values still present in these nations are the family unity and the religiousness. The respect for the family as a basic institution in society, together with the spontaneous sense of friendship, make the region an example of traces of character to be imitated by other nations. People in Latin America have lived in very poor conditions. Capital versus labor-intensive strategies, salaries and other business issues have often been considered old fashioned, and unfair decisions have shown to be made in several developed countries where Latin Americans look for a better economic situation.

Ethics is an important part of management, the ethical dimension of business places additional responsibilities on the business sector for its actions and decision-making processes. Transnational corporations generally recognize a social responsibility and attempt to fulfill their responsibilities everywhere they are located. The major cause of failures is not the lack of effort but the diversity of political and legal systems around the world and differences in economic development especially in countries in Latin America. The familiar adage, “When in Rome, do as the Romans do” and the opposite, “When in Rome or anywhere else, do as you would at home” are both inadequate guides.

For instance, the standards of American business practice have been developed for a specific set of conditions and reflect certain choices that have made as a society; there are two principles that must be followed in those cases. First the principle of negative harms and second, the principle of respect for fundamental rights. These principles still these days giving companies a framework for evaluating practices that is capable of yielding reasonably well-supported conclusions in a variety of situations.

However, companies cannot change the society as a whole, this is a process that can take many years even decades. There must be something that should be done in order to create a new society or a new way of thinking, and the only way to approach the main problem is by education. There is almost nothing that individuals or companies can do. Most of all, it is in the governments hands, by providing good education and working basically in changing old laws into modern rules that can provide international investors with an stable economic field where the rules of the game are clear. Therefore, international investors can implement their way of doing business and begin to change people’s minds regarding not only business but also ethics in the workplace.

This is a very long and difficult task that could take many years to be implemented, but it is something that must be done. One of the first steps that can be taken is in the education field, beginning in the primary schools and of course at highest levels as Universities. In this particular case, ethics classes have been offered in several Latin American universities, either mandatory or elective, for instance the Instituto para el Desarrollo de Empresarios en Argentina, Universidad Gabriela Mistral en Chile, Instituto tecnico de Monterrey en Mexico, to mention a few. Business and academia face serious challenges in order to break unethical tradition and to change the unethical culture in Latin America. An important challenge is to integrate dignity, productivity, justice and life quality with a hierarchy of values in and outside the company. Then a person will feel free, and will have a sense of owning his/her life, respecting others and serving the community. Ethics has to be taught as part of their lives in order to combat the lack of ethics in Latin America. A deep cultural change can only be achieved in the long term.

References

Willie E. Hopkins. “Ethical Dimensions of Diversity.” Sage Publications, Inc. Thousand Oaks, California, (1997).

Blanchard Keneth and Vincent Peale Norman.” The Power of Ethical Management.” William Morrow and Company, Inc. N.Y. (1988).

Di Norcia Vincent. ”Ethics in Business. “ Oxford University Press, (1998).

John R. Boatright. “Ethics and the Conduct of Business.” Prentice Hall, Englewood Cliffs, New Jersey.( 1993).

Joseph R. Desjardins and John J. Mc.Call. “Contemporary Issues in Business Ethics.” Wandsworth Publishing, Belmont, California. (1990).

William H. Shaw & Vincent Barry. “Moral Issues in Business.” Wandsworth Publishing, Belmont, California. 5th Edition. (1992).

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Cameron University

MBA Program