8.5 Breeding Ground and Consequences

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194 • Ethics and Project Management

Different attitudes toward risk taking can also vary from nationality
to nationality. Some nationalities embrace change and are willing to take
risks; others may be reluctant to take a risk. Either side may make a deci-
sion that can affect the outcome of a project. For example, some members
of a team may be from a certain nationality that embraces risk taking;
they decide to recklessly take an action without asking others about the
consequences of a particular decision or action on the overall project or
an entire organization.
Finally, social stratification within a particular culture can affect ethics
on a project. Even people from the same nationality, especially tradition-
ally hierarchical ones, may be overly obedient to their “superiors,” laying
the groundwork for subordinates to behave in ways that may violate the
values of team members of another nationality.
Three additional factors pose challenges to projects in a global environ-
ment from an ethical perspective.
One, if the supply chain is immense and extremely integrated, commu-
nications and trust are important ingredients for success. Unfortunately,
if at some point the level of communications and trust no longer works,
the supply chain can break, after which time the potential for ethical issues
and transgressions can occur (e.g., shipment of goods containing substan-
dard components that could lead to injury or death to the consumer).
Two, trade barriers could become or are perceived as so onerous that
importers and exporters try to circumvent them. This situation then
entices them to seek illegal entry or egress from a country to meet cost
and schedule constraints.
Third, historical animosities that seem to have dissipated over time can
quickly reignite over differences in approach or even from the result of
an international incident. Members of a project team may, for example,
intentionally withhold information that could impact the performance of
a project.

8.5 BREEDING GROUND AND CONSEQUENCES


The international environment provides a breeding ground for three
unethical dilemmas that are frequently not found, or at least not as appar-
ent, within the borders of the United States.
Ethics, Globalization, and Project Management • 195

Cheaper labor and materials is the first. In the developing world, due
mainly to historical circumstances, the world’s supply of labor and non-
labor resources is often considerably cheaper than those in developed
countries. Developed countries may, and often do, exploit this situation
by having projects that tap such inexpensive resources. This can lead to
exploitation on projects that would likely never happen in the United
States and most places in Europe. Ethics violation may include not respect-
ing labor laws or exploiting children to develop deliverables for a project.
Countries with fewer laws and regulations is second. Some global com-
panies will have international projects that have less government involve-
ment, granting much flexibility in how they go about completing their
projects. While there may not be an ethical violation from a legal perspec-
tive, they could still be performing ethical violations—nonetheless from a
moral perspective. They could be using children, could be testing products
on people before marketing deliverables in developed countries, or could
be using political prisoners to do work for the project. International proj-
ects may also exploit countries having weaker environmental standards as
well as virtually nonexistent labor laws.
Black market is the third. The black market is a subterranean economy
that often reflects the free market more than the “official” one. People can
buy goods and services that might not ordinarily be available to an open
market of supply and demand. Some international projects may exploit
the black market to obtain materials at costs and in quantities that may
not be possible to acquire in the regular market at the desired level. In the
black market, too, goods, not just money, can be exchanged. Operating in
a black market is illegal in a country, of course, but the incentives from a
monetary standpoint may be such that companies and their projects may
engage in them.
Innumerable ethical issues may be of interest to companies and projects.
Here is a just a sample list of topics relevant to a global project that may
have potential ethical implications:

• Child labor
• Discrimination
• Employment hiring and dismissal
• Financial improprieties (e.g., money laundering)
• Forced labor (e.g., use of political prisoners)
• Gifts, bribery, and kickbacks
196 • Ethics and Project Management

• Harassment (e.g., physical, sexual, psychological)


• Harmful products
• Human rights
• Immigration
• Intellectual property
• Marketing and advertising
• Pollution
• Price discrimination (e.g., price gouging, dumping)
• Privacy
• Sweatshops

Regardless of location, engaging in unethical activities on a global proj-


ect can have severe consequences to the initiators of an unethical trans-
gression and the recipients.
One consequence is the impact to the health, safety, and general welfare
of the people, for example, who are being exploited or disrespected and the
people who might be receiving the flawed final product or service.
Another consequence is the tarnished reputation of the parent company
sponsoring the project that committed the unethical activity. With the
rise of global communications via satellite television and the Internet, a
major project that engages in unethical activities and gets discovered can
ruin the reputation of a company almost overnight, causing its stock to
plummet and the company to lose contracts.
Still another one is the fines and penalties that may be levied on a com-
pany and stakeholders on the applicable project. Even though the fines and
penalties may be less than the gain from performing unethical business, it
can impact any opportunity for a continued working relationship within
the host country. In the end, the costs in terms of lost revenue and prof-
its may far exceed the fines and penalties that the company could receive
because of the unethical actions of people on a project.

8.6 KEY ACTIONS


International projects, therefore, can offer high rewards but if not handled
in an ethical way can have a huge, negative impact on a company. If real or
perceived unethical rewards are not handled correctly, then the negative
consequences will become a reality. Project managers need to be aware of
Ethics, Globalization, and Project Management • 197

some of the actions to deal with unethical issues and transgressions that
may arise.
One, team members should be encouraged to enhance cultural aware-
ness. People should be urged to learn about the historical, customs, busi-
ness protocols, politics, and other background information as a way to
achieve higher levels of awareness. Such knowledge enables everyone to be
more attuned to cultural sensitivities as well as to work with people from
other cultures.
Two, identify the “normal” ways of doing business in a particular country.
Every culture, even within different regions of a country, has unique proto-
cols that it will be necessary to honor and respect. Of course, that does not
mean doing something illegal; instead, it means understanding and reconcil-
ing what is permissible in all involved cultures. By no means should a proj-
ect manager violate his country’s or the host country’s laws and regulation
because that is the way of doing business. However, behaviors and actions
should be honored that generate respect and honor among stakeholders.
Three, understand that cultural norms can vary within a country. The
northern part of the country could be dramatically different in the con-
duct of business from other regions; what is permissible in one region,
in other words, may not be permissible in other regions. This case exists
especially in large countries with multiple ethnicities.
Four, remember that culture shock goes both ways. Whether a project is
being managed in another country or in the United States, supervising a
team of people from different countries adjustment can be quite difficult.
There is a period of regret followed by acceptance of coming to another
country. Anyone in such an environment is going to have a difficult time
transitioning because their expectations and frame of reference need to
adapt to the new environment. Failure to adapt may lead to inadvertently
behaving in a certain way that may be construed as not only disrespectful
but also unethical in the host country.
Five, seek to use a common language on an international project whether
it is English, French, Spanish, or Mandarin. A common language, however,
does not guarantee that everyone will communicate effectively and the
team will perform like a well-oiled machine. That is because there may be
differences in accents, in use of certain words, and interpretation of words.
A simple word in English, for example, can have one connotation to one
person and a totally different meaning to another, resulting in an unethi-
cal issue or transgression simply because the word was misinterpreted.
198 • Ethics and Project Management

Six, be aware of the different frameworks for dealing with people from
different cultures in a host country or in another. Many of these models
center around what some people believe is a common set of values that
are applicable no matter where a business relationship exists; these values,
naturally, are applicable to projects, too.

• Tom Donaldson developed a framework that basically emphasizes


that any negative responsibilities or duties avoid causing harm
(referred to as minimalist) and that any positive ones provide posi-
tive support for a project (referred to as maximalist). He then iden-
tified 10 cross-cultural, universal values ranging from freedom of
movement to right to a fair trial to free speech.*
• Richard DeGeorge also provides 10 guidelines related to eth-
ics, including doing no intentional harm, respecting the rights of
employees, respecting local culture, paying taxes, and cooperating
with local governments.†
• Rushworth Kidder reduced the number of values for dealing ethi-
cally with people from other cultures. These values are even less tan-
gible and include love, freedom, and fairness.6

A few international organizations or associations, such as Caux Round


Table Business Principles of Ethics, have adopted some core principles
for dealing with other cultures and countries across the globe. The prin-
ciples cover topics like building a spirit of trust, having respect for the
environment, treating employees with dignity and respect, and respecting
human rights, to name just a few.‡

8.7 FINAL THOUGHTS


The key, of course, is subscribing not just to the concepts and principles herein
but also to their actual exercise on a global project, whether within the United
States or outside of it. Due diligence and due care are inseparable; both are

* Joseph Desjardins, An Introduction to Business Ethics, 2d ed. (Boston: McGraw-Hill, 2006), pp.
258–259.
† Ibid.
‡ O. C. Ferrell, John Fraedrich, and Linda Ferrell, Business Ethics: Ethical Decision Making and
Cases, 6th ed. (Boston: Houghton Mifflin Company, 2006), pp. 425–427.

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