According to Trevino and Nelson (2010), ethical behavior in business refers to operations that are consistent with the principles, norms and standards of business operations that have been agreed upon by the society (p.19).The impact of business ethics in business outcomes cannot be overemphasized. The differential growth that has occurred in different parts of the world is partly attributed to the prevailing ethics. This paper seeks find out the comparison that exists between the business ethical approaches applied in the United States and Japan and their impacts on business. This is especially in the United States where some large corporations have in the recent passed collapsed due to lack of ethics and appropriate accountability mechanisms.
According to Donfee & Nagayasu (1993), Japanese business ethics can be viewed in both religious and social terms; the religious dimension of which is influenced by Confucianism, Buddhism and traditional Japanese religion combined to emphasize that every individual has a soul or spirit which is connected to the ultimate reality (p.23). Interestingly, Japanese observed diligence at work based on religious teachings of honesty and sincerity. The teaching holds that a worker should be unselfish as we are all children of the universe, and that honesty and social order will be realized if societies were harmonized in a brotherly manner (p.239). In addition, the ideals about business that were instituted under the leadership of Meiji include: independence and autonomy; unity of moral-economy, sincerity and fairness and rationalism (p.243).
The social dimension is associated with families, fellows, close associates, the Japanese nation and the world and consists of filial piety, long-term give-and-take relations; a combination of competition and long term open competition. It is the religious dimension that causes Japanese managers to be critical about the strict division of labor, and executive compensation policies, hostile takeovers and strategies of mass lay offs as practiced in the United States. Due to the strong work ethics and emphasis on work, Japanese employees work for long hours and follow social conventions to the extent that extreme cases result in death as a result of work (p.24).
The impact of this dimension is that foreign companies find it difficult to enter the Japanese market. Trevino & Nelson (2010) indicate that different from the ethical practices in Japan, business ethics in the United States were formed as a result of illegal and unethical business practices in the past and have no religious attachments (p.3). Importantly, unlike in Japan, there is a very close relationship between ethics and the law in the United States. Considering the collapse acts that led to the collapse of Enron has both legal and ethical implications (p.20). The current ethics that are applied in the United States were shaped by failures of big companies in the past such as Enron, the collapse of which was attributed to mistrust, illegal behavior, and lack of confidence in companies
According to Trevino and Nelson (2010), contrary to the view in the past that business ethics ideas will fade with the 21st century, recent business history has proven that the risks incurred are huge if ethics divorced from business (p.3). The duty to observe ethics is the responsibility of individuals, corporations and the whole society. It is argued that humans and organizations should be rational and ethical in the course of discharging their duties, a practice that is also practiced in Japan, where ethics are based on the concept of fairness. Corporate executives are required to fulfill their duties to customers, employees as well as stakeholders while making the corporations useful and meaningful to the society (p.25). Moreover, in their quest to develop a free society; they should observe legal and moral aspects of behavior; formulate and follow regulations in their organizations; refrain from acts that hinder good sense and cultural development and to seriously consider international view of doing business (p.26). The impact of the latter is the gradual acceptance of Japanese of the internationally accepted codes and ethics for doing business.
In the United States, companies have joined forces to promote ethical business conduct, contributing to the improvement of industry through corporate self-governance. Trevino and Nelson (2010) indicate that this was achieved by an agreement to live by the following a set of laws that include: adoption of a written code of conduct; orientation and training of employees according to the code; allow employees to raise concerns on corporate compliance with procurement laws and regulations; voluntary disclosure of violations of federal procurement laws; participate in best practices and publish information to show the commitment of all signatories (p.27). In addition, the United States Congress enacted laws to be used alongside ethics to ensure that companies observe best practices in their governance; and that in the event of violation of standards, the laws also provides protection for whistle blowers. Furthermore, the Sarbanes Oxley legislation provides for anonymous reporting of problems in large corporations (p.141). The implication of this legislation is that all corporations must comply with the regulations laid down, failure to which will lead to negative publicity, fining and possibly closure by government.
In conclusion, according to Dunfee & Nagasayu (1993), due to the fact that virtually all countries participate in international trade, social contracts among international business transactors are governed by principles identified as representing the basic parameters of the international social contract. The identified principles are meant to be guideposts that ensure that business is done in a standardized manner, and include; honor for confidentiality; avoidance of conflict of interest; acting out of good faith; exercise of due care; respect for liberty and the rights of others; esteem human-well being, and willingness to abide by the law (p.63). The move towards globalization and the mergers formed by companies in the international scene apparently will lead to the harmonization of laws and ethics. Companies are forced to comply in observing ethics in order to gain credibility, reputation and competitive advantage.