Ethical Considerations When Doing Deals with International Constituent Groups
In the U.S. and in most developed countries, adherence to ethical standards is the accepted business practice. This is not the case in many developing markets, however. Consequently, ethical dilemmas can arise between conflicting standards. It is therefore important to educate clients and their stakeholders about the long-term financial benefits of avoiding ethical pitfalls in their international business dealings.
When ethical questions arise in international deals or deals involving foreign constituents, they can initially appear to be of secondary importance. Ethical issues, however, can present various short- and long-term consequences that should be at the front of the client’s decision-making process. There are several recurring, interconnected themes that routinely arise that should be addressed with clients: (1) the long-term business and financial benefits of acting ethically; (2) the importance of transparency and disclosure; and (3) the value of protecting minority shareholders.
Proactively educating clients on the specific benefits of ethical behavior is much more effective than taking an ad hoc approach. Emphasizing the financial benefits of ethical behavior is much more effective than appealing to a client’s moral conscience. Consequently, a significant amount of time and attention should be devoted to the education process, and this process should begin at outset of the engagement.