Socializing ethical behavior of foreign employees in multinational corporations

Abstract

Ethical behavior of employees in multinational corporations (MNCs) is growing in importance as ‘‘intellectual teamwork becomes for knowledge economy what oil was for industrial economy’’ (Kanter 1999:39). Corporate ethics, articulated in the corporate code of ethics as the central aspect of corporate culture, is the primary enabler not only of cooperative behavior in a MNC but also of individual employees’ propensity to share innovative knowledge, pursue quality and relate to customers across the globe (Briggs 1992). Personal moral philosophies, ethical perceptions, ethical judgments, and ethical intentions of employees in a MNC vary across cultural backgrounds (Allmon et al. 1997). Moreover, as perceived ethical problems (Armstrong 1993) and standards of ethical norms (Tsalikis and Nwachukwu 1988) vary across cultures, members of various cultural groups may react differently to ethical issues that are common in a MNC’s conduct of business. Therefore, Sarwono and Armstrong (2001: 52) argue that, through a proactive engagement of the corporate international HR function, the ‘‘establishment of ethical corporate culture and formalized codes of conduct are recommended and needed for future ethics training.’’ Past research contributions in international HRM relative to ethical dimensions of training have been mostly focused on expatriate assignments. McDonald and Zepp (1988) recommend that the pre-assignment acculturation program for expatriates should include an element of training for culture-specific ethical perceptions held by local managers. Sarwono and Armstrong (2001) add that local managers, who will interact with expatriates during the assignment, should be included in the program. However, these and other past recommendations have curiously neglected to address the topic of acculturation and socialization of foreign country nationals (FCNs) employed in the domestic organization of a MNC. The purpose of this paper is to develop an efficient way of socializing FCN employees into the domestic organization of a MNC by appropriate communication of the corporate code of ethics. First, the theoretical foundation of an appropriate frame of reference for the internalization of the corporate code of ethics by FCN employees is developed using the theoretical perspective of transaction cost economics (TCE). Second, the variables grounded in the TCE perspective are used to build the framework for acculturation of FCN employees to the code of conduct in the domestic organization. Third, the beneficial impact of the suggested framework on the ethical behavior of FCN employees in the domestic organization of a MNC is examined.

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