Should Western firms remain operating in or selling to Russia? Can Greek shipping companies continue to transport Russian oil in good conscience despite the EU embargo? Should corporations do business in countries that continue actively developing stronger economic ties with Russia? What about pursuing projects that, ultimately, contravene climate goals? How to deal with the reports around the Xinjiang police files; should companies pull out of the region? Is it morally acceptable for tourism companies to continue offering bookings in Myanmar after the 2021 coup d’état?
When firms engage in international business moral clarity quickly decreases compared to a completely domestic business model. Often this relates to corruption, but other questions also come up: How many vacation days should a Danish company (min. 25 paid vacation days) offer to its local employees in Thailand (min. 6 paid vacation days)? Can a French automotive company continue to offer wine at supplier events? Will you send gay or female sales representatives to Saudi Arabia?
Most people intuitively hesitate to just “do as the Romans do”
Most companies quickly develop coping strategies to balance different moral values and priorities across their different locations. But as soon as fundamental questions of life, death (war!) or human rights are involved, most people intuitively hesitate to just “do as the Romans do.” What to do in such cases? When might it be morally necessary to discontinue international business? Such situations, require decision and execution, with the decision determining whether it is morally acceptable to continue doing business with/in a country with which you disagree morally about fundamental values such as human rights. To decide on dis-/continuation, managers should ask and answer five key questions:
- Do the delivered products/services contribute significantly to an improvement of local living conditions? (e.g. Do you sell snacks or essential pharmaceutical products?)
- Can you ensure that the delivered products/services cannot be mis-/used for a violation of human rights? (e.g. Can your machinery be misused to produce chemical weapons?)
- Can you achieve your value creation on site without major moral compromises? (e.g. Would you need to engage in major corruption?)
- Can you prevent your business relationship/transaction from being (easily) mis-/used for propaganda purposes? (e.g. Would you have to take a picture with a dictator to close the deal?)
- Are you willing to stand up for your values abroad (which might require openly calling out disagreements)?
If the answer to any of these questions is “no,” you should either discontinue your operation or be very clear with yourself and your key stakeholders that you are violating your moral standards and prepare to face legitimate stakeholder criticism and constantly ask yourself if you can do anything to reduce harm to those most negatively affected.
When working your way through these questions you will probably realize that the morally right decision is not necessarily always discontinuation, even if that’s what the public demands. Sometimes you might be ethically allowed or even required to continue doing business with countries in war or with horrible human rights records; for example, if you provide essentials such as food, pharmaceuticals, or power and can do so in a reasonably clean way. But in many other constellations, you will realize that you might need to bite the bullet and shut down parts of your business for moral considerations.
A longer version of this article previously appeared on urs-mueller.com in June.