International Business Ethics and CSR

This assignment delves into the ethical considerations within international business, particularly emphasizing corporate social responsibility (CSR) and sustainable development. It examines various aspects like cultural challenges in business operations, the influence of CSR on value creation, and the importance of managing social issues in supply chains. The analysis draws upon scholarly sources and incorporates Hofstede's cultural dimensions theory to compare different national business environments.

International Business
Management & Ethics

Table of Contents
INTRODUCTION...........................................................................................................................1
Overview of Macro level factors of the Netherlands.......................................................................2
Comparison of Netherlands and Lebanon on the basis of Hofstede's work....................................3
Critique of Hofstede's work in terms of macro level.......................................................................5
Analysis of business and management challenges in cross culture.................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

Illustration Index
Illustration 1: Comparison of Netherlands and Lebanon on the basis of Hofstede's Theory..........3

INTRODUCTION
Cross culture is an important element for international business and its success. It helps in
the interaction of different people from diverse backgrounds. Many international companies have
been training and developing their employees to form positive culture in the organisation (Kolk,
2016). The report focusses on Clever Clogs International Company which has planned to expand
its operations to Amsterdam, Netherlands. They have decided to train the manger who would be
going to Netherlands from Lebanon. So, it would be beneficial for the manger to understand the
culture of that particular place. Clever Clogs International is a finance company which provides
management advices and consultancy to other companies.
Netherlands have experienced reduction in international barriers in financial services
industry. There has been large number of mergers in financial industry which has made them ore
competitive (Economic department, 2013). For example, ABN-AMRO, Rabobank, ING and
AEGON were also created from mergers. These mergers enabled the banks to carry on larger
operations in the country. Among all financial institutions, pension funds, insurance and
financial auxiliaries had the major domination (Alt, Díez-de-Castro and Lloréns-Montes, 2015).
The entire financial industry was befitted from the globalisation as their major activities were
given to private sectors. It has allowed Netherlands to improve their position as main trade
gateway for Europe. The consumers have also been benefited because of cheaper imports and
emerging economies (Hatten, 2015). The entire framework of private sector has been changed
and it has been refereed to as 'economic agenda'. As an executive in finance industry,
Netherlands is a competitive place to do business. It is a central location to cover markets like
Europe, Africa and Middle East. It has modern infrastructure and fiscal business environment to
support Clever Clogs International company. But it has complex legal, tax and regulatory
restriction which can become a hurdle for the new company (McAdams and et.al., 2015).
Furthermore, there is no public registry in place which makes credit difficulties. There are also
many fiscal policies and nine tax payment which can be very troublesome for a new company.
The culture in Netherlands is supportive and most companies follow a flexible structure of
organisation. The major challenge that companies are facing in Netherlands are increasing EU
trade barriers, export regulations and economic sanctions (Yawar and Seuring, 2015). As a
result, DSM and Shell are facing challenges in financial industry.
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Overview of Macro level factors of the Netherlands
Netherlands has a friendly business environment and superior connectivity to other
markets (Paulraj, Chen and Blome, 2015). But it is essential for an executive to carefully
evaluate all the macro level factors of Netherlands before starting the business:
Political Factors: Netherlands has a stable political system and gives more freedom to the people.
It has a bureaucratic set-up and ensures transparency in the country. The level of corruption is
low and labour laws are already a part of the companies regulations (Lyon, Mšllering and
Saunders, 2015). The government offers many polices to support foreign and international firms.
Economic Factors: The economy of Netherlands depends mainly on foreign trade. It has good
GDP level, infrastructure, technology, transport and other industries (Pullen and Rhodes, 2015).
The credit policies are stringent and the whole economy has been facing trouble because of
sovereign debts crisis. Netherlands uses Euro which eliminates the problem of currency
exchange. Furthermore, it has low VAT and labour costs (European Economy, 2013).
Social Factors: The social culture of Netherlands is open and is suitable for people from different
nations. The standard of living is high and they have supported foreign immigrant in the country
as well. The education level is excellent and it is easier to find skilled people in the country (Alt,
Díez-de-Castro and Lloréns-Montes, 2015). The social culture of Netherlands is favourable for
Clever Clogs International Company to survive and grow.
Technological Factors: The government of Netherlands supports technological development. It
has the latest telecom and IT industries in Europe. It is also known for its connectivity and
internet bandwidth (Gonin, 2015). Clever Clogs International Company will be benefited from
this factor and it will give more opportunities to them.
Environmental Factors: There is huge pressure on environment due to accelerated growth on
many industries. The government has imposed many taxes like environmental tax, water boards
etc (Fernando, 2016). Clever Clogs International Company has to face direct pollution taxes
which are increasing every year. the executive of the company has to ensure that all the rules and
regulations are followed by the company.
Legal Factors: A new company has to face many problems because there are lot of rules and
regulations in the country (Malik, 2015). There are nine tax requirements and many legal
obligations that has to be complied with.
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Comparison of Netherlands and Lebanon on the basis of Hofstede's work
Hofstede's theory helps in studying the cross cultural differences and communication. It
was developed by Geert Hofstede which depicts the effects of society's culture on its members
and their behaviour (The Hofstede's centre, 2016). The theory considers six major factors that
distinguishes each country and their culture.
Dimensions Lebanon Netherlands
Power Distance Index (PDI) PDI index of Lebanon shows
that all individuals in the
society are not equal. Business
follow hierarchical structure
and subordinates have to
follow the orders of the boss.
PDI is low for Netherlands. it
shows that people are
independent and has equal
rights. Communication is
direct and control is disliked
by the people. Employees are
consulted before decision
making and they have informal
attitude towards mangers.
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Illustration 1: Comparison of Netherlands and Lebanon on the basis of
Hofstede's Theory
(Source: The Hostede's centre, 2016)

Individualism and
Collectivism (IDV)
Lebanon is a collective
society. The employees work
as a team and take
responsibilities of others as
well.
Netherlands is an
individualistic society.
Employees are independent
and they like to perform tasks
with freedom.
Masculinity and Femininity
(MAS)
In Lebanon people are driven
by success, competition and
achievements. It is a masculine
society and emphasis is given
on equity and performance.
Netherlands is a feminine
society. They have to keep
work and life balance. They
are known for their long
discussions and consensus
building.
Uncertainty Avoidance Index
(UAI)
In Lebanon people have no
clear rules for uncertainty.
They do not remain prepared
for the future outcomes.
They have given preference to
avoid uncertainty. They have
codes of beliefs and
behaviours.
Long term and Short term
Orientation (LTO)
The people of Lebanon are
normative in nature. They have
respect for the their traditions
and less focus is given on
saving for the future.
Netherlands has pragmatic
thinking. They have the ability
to adapt to the changes and
they have plans for the future
as well.
Indulgence and Restraint
(IND)
Lebanon culture is restraint
and show signs of pessimism.
They give less time to leisure
activities and follow social
norms. For them indulging is
wrong.
The culture of Netherlands is
indulgence. They give equal
importance to work as well as
life. They are positive and
spend money according to
their wish.
It can be clearly seen from the Hofstede's theory that both the cultures of Lebanon and
Netherlands are completely different. Inadequate knowledge of other culture could be
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detrimental for any business established their. The manager of Clever Clogs International
Company has to understand the culture before expanding the in that region.
Critique of Hofstede's work in terms of macro level
The theory of Hofstede in terms of macro level indices of Netherlands has four important
dimensions:
Low Power distance: The score of Netherlands in power distance is 38. This shows that people
are equal in the country. There is less difference between status and rank among the people. This
indicates that there is less formal behaviour in the office and on the macro level it includes rules
and regulations to protect the interests of minorities (Demuijnck, 2015). It has been seen that
developed countries have low power distance as the income is equally distributed among the
individuals of a country.
Individualism: Netherlands have scored 80 in individualism which shows that the culture of the
country promotes freedom. On the macro level it can be seen that there are more nuclear families
in Netherlands. This is the basic structure in the country (Malik, 2015). It indicates that the
culture gives more importance to individualistic behaviour and values of a person. On the micro
level people are more concerned with themselves.
Uncertainty avoidance: Netherlands have got 53 in uncertainty avoidance. It means that they
have concerns for the future. They have rigid regulation as they are uncomfortable with the
uncertainties of the future. They are intolerant to unorthodox behaviour. On the macro level it
means that the people of the country will have same thinking for a long time (Guirong, Yue and
Jinwei 2015). There would be less changes in the rules and regulations of the country. The
political factors and legal factors would not change frequently.
Femininity: Netherlands have scored 14 in masculinity and femininity. This shows that the
society has given preference to cooperation, honesty, caring, modesty and quality of life. This
shows that the culture in tender based and more consensus oriented (Economic department,
2013). Clever Clogs International Company has to take social factors very seriously as the
people are very possessive about it.
Analysis of business and management challenges in cross culture
The cross culture theory has been given by Matthew Maclachlan which is known as
DMIS (Development Model of Intercultural Sensitivity) (DMIS, 2016.). He has given six stages
which are helpful in developing cultural competencies:
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Denial: At the initial stage, people refuse to communicate and may behave aggressively with
others (Lyon, Mšllering and Saunders, 2015).
Defence: In this stage, in the defence of their culture people will criticize others opinions and
thoughts.
Minimization: People at this stage starts believing in other cultures as well. They star to respect
other people.
Acceptance: At this stage people will be curious about other cultures and are more eager to
understand them (Cultural challenges, 2008).
Adaptation: People starts adapting their behaviour according to the needs of different culture.
Integration: People change their behaviour as per the the cultural needs of other people.
An international manager faces lot of challenges during cross culture theory:
Value differences and Person-Organisation Fit
: The values and behaviour of different cultures are different. A manger has to understand all
these things and make changes accordingly (Demuijnck, 2015).
Decision Making
: An international company has diversity so all the employees have to be treated equally (Paulraj,
Chen and Blome, 2015). Netherlands culture needs involvement while Lebanon culture needs
leadership. This is a major challenge for a manager.
Negotiation & Communication
: Communication is an important aspect of the company. No company could survive without
proper communication channels in their organisation. All the cultures have their won rules and
guidelines which have to be incorporated to ensure proper working of the company (Fernando,
2016). Negotiation has be done considering the values of people from different regions.
Leadership: A manager has to decide what type of leadership style will be suitable in a country.
If the management adopts autocratic leadership in Netherlands then the organisation will fail
because people of that region believes in individualism (Lyon, Mšllering and Saunders, 2015).
This style could work in Lebanon but not in Netherlands. This is also an important issue fro the
manger as he as to understand the culture of the country before adopting any leadership style.
CONCLUSION
It can be seen from the report that the manger who is shifting from Lebanon to
Netherlands has to consider lot of things in that country. The management style of Lebanon will
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not work in Netherlands. Both the countries has diverse cultural issues and behaviour. The macro
level indices like GDP, trade barriers, economy, taxes of Netherlands are different. The manger
can use Hostede's theory and DMIS to make changes in her management style and leadership.
There are lot of challenges which has to be faced by the manager in Netherlands but with proper
study of cross culture requirements this issue could be resolved. It will also benefit the Clever
Clogs International Company in expanding their business operations in Netherlands.
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REFERENCES
Books and journals
Alt, E., Díez-de-Castro, E.P. and Lloréns-Montes, F.J., 2015. Linking employee stakeholders to
environmental performance: the role of proactive environmental strategies and shared
vision. Journal of Business Ethics .128(1). pp.167-181.
Demuijnck, G., 2015. Universal values and virtues in management versus cross-cultural moral
relativism: An educational strategy to clear the ground for business ethics. Journal of
Business Ethics. 128(4). pp.817-835.
Fernando, M., 2016. Introduction. In Leading Responsibly in the Asian Century (pp. 1-8).
Springer International Publishing.
Gonin, M., 2015. Adam Smith’s contribution to business ethics, then and now. Journal of
Business Ethics. 129(1). pp.221-236.
Guirong, X., Yue, L. and Jinwei, Z., 2015. The Analysis on the Differences of Visitors' Post-
purchase Behaviors on the Basis of Business Ethics. Journal of Beijing International
Studies University. 9. p.004.
Hatten, T.S., 2015. Small business management: Entrepreneurship and beyond. Nelson
Education.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Lyon, F., Mšllering, G. and Saunders, M.N. eds., 2015. Handbook of research methods on trust.
Edward Elgar Publishing.
Malik, M., 2015. Value-enhancing capabilities of CSR: A brief review of contemporary
literature. Journal of Business Ethics. 127(2). pp.419-438.
McAdams, T. and et.al., 2015. Law, business, and society. McGraw-Hill Education.
Paulraj, A., Chen, I.J. and Blome, C., 2015. Motives and performance outcomes of sustainable
supply chain management practices: A multi-theoretical perspective. Journal of Business
Ethics, pp.1-20.
Pullen, A. and Rhodes, C. eds., 2015. The Routledge Companion to Ethics, Politics and
Organizations. Routledge.
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Yawar, S.A. and Seuring, S., 2015. Management of social issues in supply chains: a literature
review exploring social issues, actions and performance outcomes. Journal of Business
Ethics. pp.1-23.
Online
Cultural challenges. 2008. [Online] Available through: <http://www.eremedia.com/ere/the-
challenges-of-cultural-difference-5-tips-on-cross-cultural-recruiting/>. [Accessed on 25
April 2016].
DMIS. 2016. [Online] Available through: <https://www.communicaid.com/cross-cultural-
training/blog/cross-cultural-theory-developmental-model-of-intercultural-sensitivity/>.
[Accessed on 25 April 2016].
Economic department. 2013. [Online] Available through:
<https://www.oecd.org/eco/reform/2013-3.pdf>. [Accessed on 25 April 2016].
European Economy. 2013. [Online] Available through:
<http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/pdf/
ocp140_en.pdf>. [Accessed on 25 April 2016].
The Hofstede's centre. 2016. [Online] Available through: <https://geert-hofstede.com/national-
culture.html>. [Accessed on 25 April 2016].
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