Business ethics in the NAFTA countries: A cross-cultural comparison$

Jacqueline N. Hood*, Jeanne M. Logsdon

Anderson Schools of Management, University of New Mexico, Albuquerque, NM 87131, Mexico

Abstract

This article examines the nature and extent of similarities and differences in cultural values among managers in the three nations that signed the North American Free Trade Agreement (NAFTA). One component of a culture is ethics, with this aspect of a culture existing as a potentially strong influence on the success of business organizations. In order to explore the impact of culture on ethical decision making in the NAFTA countries, we review the literature and develop propositions concerning the dimensions of culture that would be expected to influence the ethical standards applied to business decisions and organizational practices. The analysis applies Hofstede’s [Culture’s consequences. Beverly Hills, CA: Sage, 1980.] four cultural dimensions in the three NAFTA countries, which include individualism vs. collectivism, uncertainty avoidance, power distance, and masculinity. We also examine three additional cultural factors — attitude toward work, problem solving, and view of human nature. Propositions are presented involving the prevalence of codes of ethics, issues relating to bribery of public officials, and treatment of low-level employees. Finally, we discuss research design issues relevant for empirical investigation of the propositions. D 2002 Elsevier Science Inc. All rights reserved.

1. Introduction

Ethical and social values affect business decisions and behavior. Since the ethical values of business managers are embedded within their cultures, as well as being influenced by global business norms, it is necessary to understand the social and cultural contexts within each country that influ- ence the similarities and differences in ethical interpretation and practice. This article compares the business ethics values of the three nations that are signatories to the North American Free Trade Agreement (NAFTA): Canada, Mex- ico, and the US.

This topic is interesting for both managers and scholars. It is a logical hypothesis that the success of trade agree- ments like NAFTA are not simply the result of economic factors of production being utilized more efficiently, but also that business transactions across borders are influenced by many other factors. For example, the ease with which executives can negotiate contracts is likely to be affected by the degree of compatibility between their interests, lan-

guage, and assumptions about trust and risk. Culturally patterned and historically grounded differences in behav- ioral patterns exist for individuals within different countries. It is widely believed that standards for ethical decision making differ between US and Mexican managers. Also, formal codes of ethics are much more prevalent in US organizations than in Canadian, and very few Mexican firms have a formal ethics code. Trade liberalization is expected to continue over the next decade, particularly within the Western Hemisphere. Indeed, negotiations are occurring right now about the possible creation of the hemisphere- wide Free Trade Areas of the Americas by the year 2005. Cross-cultural business practices and ethical standards will undoubtedly become more important for understanding and facilitating business outcomes.

We review the literature on the dimensions of culture that would be expected to influence the ethical standards applied to business decisions and organizational practices. In par- ticular, the contributions of Hofstede (1980) will be ana- lyzed with regard to ethical values. We also have identified three additional individual characteristics that are likely to influence ethical decisions. We then review empirical stud- ies on ethical values and practices of managers (Enderle and Werhane, 1997), with particular attention to studies of Canadian, Mexican, and US managers (e.g., Arruda, 1997; Di Norcia, 1997; Dunfee and Werhane, 1997; Pasquero,

0148-2963/02/$ – see front matter D 2002 Elsevier Science Inc. All rights reserved. PII: S0148-2963(01)00207-7

$ An earlier version of this paper was presented at the Seventh Cross-

Cultural Symposium on Consumer and Business Studies Conference in

December 1999. * Corresponding author.

E-mail address: [email protected] (J.N. Hood).

Journal of Business Research 55 (2002) 883–890

1997). Propositions that will be useful in analyzing cross- cultural management challenges and global competition and guiding future research are developed with respect to codes of ethics, bribery of public officials, and treatment of low- level employees. The article concludes with suggestions for empirical research designs to explore these relationships.

2. The drive toward freer trade

The industrialized countries have pursued trade liberali- zation since the end of World War II as a matter of economic efficiency and comparative advantage. Creation of the European Common Market and numerous multilateral trade negotiations under the General Agreement on Tariffs and Trade has increased cross-border trade quite significantly in the past 20 years. Consistent with this long-term trend, the negotiations to create a free-trade zone in North America, which occurred in 1991–1993, were ultimately successful although not without contentious debate, especially in the US. Many US labor and environmental activists fought vigorously against NAFTA because they feared potential negative impacts on jobs, wages, working conditions, and environmental impacts within the US, and to some extent in the other two participating countries (Husted and Logsdon, 1997; Vogel, 1995). While the debate was framed primarily within economic and ideological terms, at its foundation were significant concerns about the ethical and cultural values and resulting business practices that might cause harm to groups within each nation.

Economists tend to analyze trade strictly in terms of the costs and revenues that are associated with importing and exporting. Cultural and social values play little role in conventional economic analysis except as indirect influences on individual tastes and preferences. The assumption is that profit maximizers act ‘‘rationally’’ in pursuing their own interests, and this creates common motives and decision criteria, regardless of one’s cultural values. Thus, the eco- nomist does not expect to see systematic variation on the basis of culture alone. However, there are many unexplained anomalies in trade patterns, and a potentially important source for them may lie in differing cultural and social values about what is ‘‘rational’’ behavior and the range of factors that one’s interests should take into account.

3. A cultural framework

The meaning people see in their lives and the type of living they find desirable are a matter of personal choice (Hofstede, 1980). However, personal choices are affected by the environment in which a person is raised. Individuals acquire belief systems, norms for behavior, and under- standings of reality within the context of a culture, as that culture is created and perceived by individuals within it, and constructed through interactions (Hood and Koberg,

1994). The Latin (including Mexican) and Anglo-Saxon (including the US and Canada) cultures differ in distinct ways, although individuals within a culture may choose behaviors that are independent of cultural teachings. People of Latin origin tend to have an overarching interpersonal orientation (Albert, 1996) that includes respect and obedi- ence, being in tune with the wishes and feelings of others, and perceiving criticism as denoting a lack of respect. Individuals of Anglo-Saxon origin, on the other hand, tend to value task achievement (Triandis in Albert, 1996, p. 333) and competition (Stewart and Bennett, 1991). Thus, those of Latin backgrounds tend to be more allocentric since they pay more attention to the needs, values, goals, and viewpoints of others than to their own, and Anglo- Saxons tend to be idiocentric, or more concerned with the values, goals, and viewpoints of themselves (Triandis in Albert, 1996, p. 334).

Overall, while Canada and the US are similar on a number of cultural characteristics, it is interesting to mention some areas where Mexico and Canada have greater similarities (Di Norcia, 1997). First, Mexico and Canada have more social- istic traditions and are both ideologically to the left of the US. Related to this is a more public enterprise culture in Canada and Mexico, and a mixed economy that serves economic as well as social goals. Canada, in particular, has a strong state sector for energy, communication, and transportation, and more cooperative business–government relations. Finally, both Canada and Mexico feel threatened by foreign multina- tionals, especially those from their closest neighbor, the US.

By contrast, in other areas, Mexico and the US are more similar. For example, both Mexico and the US have stronger federal governments than Canada. In particular, Canada’s federal government has been noted by some to be much weaker than that of the US (Di Norcia, 1997). Furthermore, Canada has a high respect for cultural diversity (Alston and Morris, 1996; Di Norcia, 1997), while Mexico and the US have taken a more dominating perspective, especially towards indigenous groups.

Hofstede (1980) defines culture as the ‘‘collective pro- gramming of the mind which distinguishes one human group from another’’ (p. 21). Thus, each individual’s mental programming is partly unique, and partly shared with others. Hofstede (1980) has identified values and norms as the foundation of culture and defines societies as identifiable by a system of shared norms and values. Through analysis of extensive surveys of more than 100,000 IBM employees located around the world, Hofstede identified a number of elements of national culture (Hickson and Pugh, 1995) that would affect behavior in business. The four cultural values are uncertainty avoidance, power distance, individualism vs. collectivism, and masculinity. It is our contention that these four cultural values have significant impacts on ethical decision making in business. Table 1 presents the insights discussed below about cultural differences among the three NAFTA countries. The overall means and range of scores for the 39 countries in the Hofstede (1980) study are listed

J.N. Hood, J.M. Logsdon / Journal of Business Research 55 (2002) 883–890884

for each cultural characteristic. The table also lists mean scores in parentheses for each Hofstede (1980) dimension for Mexico, the US, and Canada. It should be noted that the US and Canada are close in score for three of the four Hofstede characteristics (uncertainty avoidance, power dis- tance, and individualism) and on the opposite side of the mean from Mexico. For the masculinity dimension, all three countries are above the mean and scores for Mexico and the US are closer together than they are to Canada.

Hofstede (1980) defines uncertainty avoidance as the extent to which a culture tolerates ambiguity and uncer- tainty. In Mexico, there is a moderately high uncertainty avoidance. Employees in Mexico tend to have a low tolerance for ambiguity, a need for formal rules and proce- dures, and exhibit a low-level of risk taking. By contrast, in the US and Canada, uncertainty avoidance is low (Hofstede, 1980). Workers in the US and Canada are more tolerant of ambiguity, have a low need for formal rules and procedures, and are more likely to be risk takers and to accept organ- izational conflict as natural. Consistent with these cultural differences would be a preference for more specificity in Mexican firms about ethical values and decision processes, and much less specificity in US firms (Sower et al., 1998).

A second possible cultural difference affecting ethical decision making is power distance. Mexican culture exhibits a high power distance, with the US and Canada showing a low power distance (Hofstede, 1980). Thus, Mexicans are

more accepting of unequal distributions of power and accept a more autocratic and paternalistic management style (Morris and Pavett, 1992). In the US and Canada, employees are more likely to express disagreement with superiors and exhibit a lack of acceptance of an unequal distribution of power. In the US and Canada, workers are more likely to question deci- sions that might be deemed unethical, whereas in Mexico, employees might be more willing to accept managerial decrees regardless of the ethical implications of the decision.

A third cultural value that likely influences business practice involves the predisposition toward individualism vs. collectivism. Hofstede (1980) focused on the degree to which either the individual or closely knit social structures are the basis for social systems. According to Hofstede (1980), Mexican culture tends to be collectivistic. Members of collectivist societies would tend to have a greater emo- tional dependence on their organizations and the organiza- tions would be more likely to assume greater responsibility for its members (Hofstede, 1980). Group formation in Mexico is based on the attribute of kinship, and businesses in Mexico are often dominated by a single extended family. Using nepotism to fill positions reflects the belief that a business’s first priority should be protection of the family (Davis, 1969). Thus, the extended family is a more import- ant group than the work group, even in large firms (Lawrence and Yeh, 1994). Mexican culture requires unquestioning loyalty to the extended family (Riding,

Table 1 Comparative cultural characteristics in the NAFTA countries

Cultural characteristic Mexico US Canada

Uncertainty avoidance (mean 64; range 11–104a)

Moderately high uncertainty avoidance (82). Low tolerance

for ambiguity, need for formal

rules, less risk taking.

Low uncertainty avoidance (46). Tolerant of ambiguity, low need for formal rules,

risk takers, accepts organizational conflict

as natural.

Low uncertainty avoidance (48). Tolerant of ambiguity, low need

for formal rules, risk takers, accepts

organizational conflict as natural.

Power distance (mean 51; range 8–112)

High power distance (81) Acceptance of unequal

distribution of power, acceptance

of autocratic and paternalistic

management.

Low power distance (40). Lack of acceptance of an unequal distribution of

power, willing to express disagreement

with superiors.

Low power distance (39). Lack of acceptance of an unequal distribution

of power, willing to express

disagreement with superiors.

Individualism/Collectivism

(mean 51; range 6–91)

Collectivist (30). Focus is on

tight social groups (extended

family), emphasis on saving face, harmony, expects employer to

take care of employee.

Individualist (91). Concern primarily for

self, immediate family. Organization is

not expected to take care of employee.

Relatively individualist (80). Social

welfare system expresses a concern

for the community or society that balances the focus on the self.

Masculinity/Femininity

(mean 51; range 5–95)

High masculinity (69). Emphasis

on material success, assertiveness, traditional roles for women,

belief in inequality of women,

paternalism.

Moderately high masculinity (62).

Emphasis on career success, material success, assertiveness, traditional role

expectations.

Moderate masculinity (52). Moderate

emphasis on career success, assertiveness, and traditional role

expectations. Some concern for

others and the community.

Attitude toward work Means to end. Work is seen as a necessary evil. Leisure more

valued than work.

End in itself. Work is seen as desirable for itself. Leisure is how to occupy

time when not at work.

Moderate belief in the value of work for itself.

Problem solving Affective and intuitive. Intuition and emotion used over rational

analysis. Individual approach to

problem solving.

Analytical. Rational analysis is highly valued. Discounts the value of affective

input into problem solving process.

Analytical. Rational analysis is highly valued. Discounts the value

of affective input into problem

solving process.

Attitude toward human nature

Both good and evil. Humans are a mixture of both good and evil.

Good. Belief in intrinsic goodness of humans.

Good. Belief in intrinsic goodness of humans.

a Mean and range are taken from the study by Hofstede (1980).

J.N. Hood, J.M. Logsdon / Journal of Business Research 55 (2002) 883–890 885

1985), with family loyalty as a key characteristic that affects decisions made in the work place (Kolland, 1990). The only transfer of this loyalty to the work place is directed not toward the group but to the person’s boss as an individual (Kras, 1989). Thus, outside of the commit- ment to the family, Mexicans may also exhibit character- istics of an individualist at work (Davis, 1969; McCann, 1970; Riding, 1985).

By contrast, the US culture is very individualistic, with individuals concerned primarily about themselves and their immediate families (Hofstede, 1980). Canadian culture tends to be more collectivistic than the US culture (Alston and Morris, 1996). The various forms of social welfare found in Canada reflect a concern for the community that balances a focus on the self (Graves, 1997). However, research has indicated that the differences in individualism between Canadian culture and US culture are not as clear cut as the differences between the Mexican culture and US culture (Beamer and Varner, 1994; Hofstede, 1980; Victor, 1992).

In terms of applying these cultural attributes to ethical decisions and practices, it is logical to hypothesize that nepotism leads to suboptimal economic outcomes over the long run and also creates different standards of treatment for relatives compared to non-family members. One would expect the empirical data to show that Mexican firms have lower profits than comparable Canadian and US firms, all else being equal. One would expect much more explicit explanation of employee treatment in personnel manuals in US firms so that individuals can know their rights, know when they are violated, and have access to grievance procedures than would be found in Mexican firms. In a country with low individualism, such as Mexico, standards for treatment of in-groups (employees) would tend to be high (Sower et al., 1998), certainly more so than in more individualistic cultures, such as the US.

Finally, Mexico is a highly masculine culture, with the US close behind and Canada less masculine (Hofstede, 1980). Thus, in Mexico, there is a higher emphasis on material success, assertiveness, traditional roles for women, belief in the inequality of women, and paternalism than in the US or Canada. This feature of Hofstede’s framework is multidi- mensional, leading to the possibility that certain masculine traits are more common in some countries than others. Business practices that foster more equal treatment of men and women are less likely to exist in a highly masculine culture like Mexico than in a moderately masculine culture such as Canada. Thus, equal pay for equal work, sexual harassment policies, equal division of labor, etc., are less likely in Mexico than in the US or, in particular, Canada.

4. Additional ethics-related cultural characteristics

While Hofstede’s (1980) framework provides a useful tool for comparing cultural characteristics between coun- tries, other cultural characteristics may provide additional

insight into the ethical behaviors and decisions of managers in organizations. We have identified attitude toward work, problem solving, and view of human nature as particularly relevant cultural variables that differ among Canadian, Mexican, and US managers and are likely to influence ethical decision making.

In terms of attitude toward work, Mexicans tend to see work as a necessary evil and a means to an end, which is providing for one’s family (McCann, 1970). The Mexican culture tends to value leisure more highly than work (Kras, 1989). In the US, employees are rewarded for hard work, with promotion implicit as a reward for that effort (Graves, 1997). Thus, US employees tend to have a primary focus on work, individual effort, and competition with others for rewards. For Canadians, hard work is important, but a concern for community, which is illustrated through the health care system, the tax system, and other social welfare systems, indicates less emphasis on work as an end in itself (Graves, 1997). These differences suggest that work effort will be greatest among US workers and lowest among Mexican workers, with Canadians taking a middle position. Ethical behaviors related to work, such as excessive absent- eeism and wasting time on the job, should also vary according to this reasoning, and organizational policies to deal with these differences are likely to vary.

In Mexico, problem solving is more likely to involve intuition and emotion than rational analysis (Bourgeois and Boltvinik, 1981). The Mexican culture allows people to be more comfortable with the abstract than with the practical (Kras, 1989), whereas in the US and Canada, rational analysis is valued. Thus, formalization of policies, such as codes of ethics, is less likely in Mexico than in the US or Canada.

The Mexican culture tends to view human nature as a combination of good and evil, whereas in the US and Canada, there is belief in the intrinsic goodness of humans (Kluckhohn and Strodtbeck, 1961). A culture’s view of human nature has important implications for the role of trust in society and in organizations (Triandis, 1982). Furthermore, the cultural orientation towards human nature may influence individual behaviors as to what is right or just. If people are believed to be both good and evil, then corrupt acts may be seen as more normal and natural, although not necessarily condoned.

5. Common business ethics issues

The ethical consequences of business decisions have been subjected to increasing internal and external scrutiny in the past two decades. Many factors influence an organ- ization’s ethical culture and its business decisions, including the conditions in the external environment, competitive market characteristics, and individual leader attributes (Tre- vino et al., 1995; Tsakilis and Fritzsche, 1989; Strong and Meyer, 1992; Logsdon and Yuthas, 1997; Logsdon and Corzine, 1999). Empirical research has focused primarily

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on individual differences in moral reasoning and organiza- tional differences in designing ethically relevant policies and processes (e.g., Weber, 1990; Trevino et al., 1995). Most empirical studies of business ethics have used pop- ulations of US managers and firms although cross-cultural comparative studies have become more frequent in recent years (e.g., Fritzsche et al., 1995; Brody et al., 1999; Sims and Keenan, 1999).

Previous cross-cultural studies on ethical perceptions and decision making have been undertaken with both managers and students. Not unexpectedly, results have been mixed. Some studies of managers in various countries have found that country and industry have significant effects on the perception of ethical issues (Becker and Fritzsche, 1987; Fritzsche et al., 1995; Schlegelmilch and Robertson, 1995). One study of South African and Australian managers found that culture has little, if any, influence on ethical beliefs (Abratt et al., 1992), while another found that the national origin of the firm and not the country of operation influ- enced ethical beliefs (Jackson and Artola, 1997). Studies with students indicated that, overall, the country of origin does affect perceptions of various ethical dilemmas (Sower et al., 1998).

International business creates greater complexity in ethical decision making because of differences between home and host country cultural values and practices. The dichotomy that establishes two general approaches to ethical analysis involves cultural relativism and ethical imperialism (Donaldson, 1989). Cultural relativism dictates that foreign firms adopt host country ethical standards in each country in which they operate. Thus, one firm can have many different ethical practices around the world, and these can easily conflict with one another. Alternatively, the firm may uniformly apply home country standards everywhere it operates.

Each of these general approaches has weaknesses. Crit- ics attack cultural relativism when it supports local customs that violate strongly held home country values. For example, apartheid in South Africa was firmly entrenched in law and custom but vigorously opposed in the US. US- based multinationals were pressured to leave South Africa even though they were following South Africa’s legal requirements and ethical norms (Paul, 1999). By contrast, ethical imperialism involved situations where companies decided to use their home country standards everywhere they operate. For example, a company might have a single policy regarding bribery throughout the world. In fact, US firms have been subject to the Foreign Corrupt Practices Act since the late 1970s. The criticism here is that a single policy does not take into account the legitimate differences that might be prevalent in different countries of the world (Windsor and Getz, 1999). Another example of this relates to the position of women in different cultures. While the US has strong gender discrimination laws, some other cultures are not as supportive of equal rights for women (Elder and Johnson, 1999).

The way out of these conflicts between cultural relat- ivism and ethical imperialism involves an assessment of practices in light of both home and host country norms in order to find the best fit that addresses human rights, social justice, and utilitarian values (Donaldson, 1989; Velasquez, 1982). Bringing this perspective to cultural differences between the NAFTA countries, we have selected three areas in which there may be differences between typical practices. These areas relate to the existence of formal codes of ethics, a country’s practices concerning bribery of public officials, and issues involving the ethical treatment of low-level workers. Each of these areas has generated significant academic study, increasingly over the last 20 years.

6. Code of ethics

The growth of formal codes of ethics in US-based firms has been well documented, especially since the defense industry scandals of the mid-1980s and the implementation of the federal sentencing guidelines in the early 1990s (Berenbeim, 1987, 1992; Weaver et al., 1999b). While some ambiguity in defining precisely what constitutes a code of ethics has been noted (Weaver, 1993), the existence of clearly identified company statements of ethical scope and guidelines has become widespread in the US. In a survey conducted in 1995, 78% of responding large US corpora- tions indicated that they had developed a separate code of ethics (Weaver et al., 1999b). Company size and industry type have been related to the existence of a separate code (Sweeney and Siers, 1990; White and Montgomery, 1980).

Cultural values are likely to influence whether companies adopt formal ethics codes. For example, Langlois and Schlegelmilch (1990) found differences in the use and content of ethics codes between German and US firms. In terms of Hofstede’s cultural characteristics, it is logical that cultures with high uncertainty avoidance would support more specific ethical guidelines in a highly structured ethics code so as to reduce uncertainty. On the other hand, cultures with higher power distance are less likely to encourage formal codes because individual leaders are expected to influence decisions, and subordinates are expected to follow the leader’s orders. With respect to the NAFTA countries, the following proposition is suggested:

Proposition 1: Mexican firms are less likely to have formal codes of ethics than US and Canadian organ- izations because of higher power distance, higher

masculinity, and more intuitive problem solving.

7. Bribery

Bribery of public officials to obtain business or favorable treatment violates all ethical principles because it substitutes self-interest for objective business-based and legal criteria

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for awarding contracts and establishing conditions for doing business. The US has created rules about bribing public officials, and recently this movement has been championed by the Organization for Economic Cooperation and Devel- opment (OECD) (King, 1997). A group called Transparency International (1999) compares the prevalence of bribery in most of the countries throughout the world. In the 1999 Corruption Perceptions Index, Mexico was among the countries that had relatively higher levels of corruption, while the US and Canada had lower levels. Therefore, the following proposition is put forth:

Proposition 2: Mexican firms are more likely to bribe public officials than US or Canadian organizations

because of high uncertainty avoidance, high power distance, collectivism, and the belief that humans are both good and evil.

8. Ethical treatment of low-level employees

Ethical treatment of low-level employees involves such issues as rates of pay, job security, safety conditions, and general standards for employee welfare (Beauchamp and Bowie, 1983). The employment contract contains a number of rights and duties of employers and employees that are set in law and vary across cultures. The moral contract between employers and employees reflects cultural values as well, in terms of the basic philosophical foundations for a culture’s value set. For example, some cultures, such as Germany, have much higher norms for job security and correlative duties to stay with one’s employer while other cultures, such as the US, developed employment-at-will standards where employers could dismiss without cause and employees could leave on short notice.

In terms of Hofstede’s characteristics, it is logical to expect that more collectivist cultures will support higher ethical standards of treatment for low-level employees. Attitude toward work might also affect ethical treatment of employees. For example, if work is the focal activity in a culture, an ethical rule of ‘‘do whatever it takes to succeed’’ is likely to encourage exploitation of low-level employees. Thus, we propose the following:

Proposition 3: Mexican firms are more likely to treat lower-level employees well than US or Canadian firms

because of high collectivism, high uncertainty avoid- ance, high power distance (paternalism), and attitude toward work.

9. Directions for empirical research

The next step in examining cultural impacts on business ethics in the NAFTA countries will require empirical research to explore and build on the propositions. In terms of research design and data collection, comparison of the

ethical practices and cultures of the three NAFTA countries could occur in a number of ways. Since research on business ethics is relatively underdeveloped (Crane, 1999), more theory-generating approaches might be useful in what is currently exploratory and descriptive research (Bonoma, 1985; Smith, 1991). Case study research involves studying a phenomenon within its own context using multiple sour- ces of evidence to build an in-depth understanding of the research field (Yin, 1989; Smith, 1991). Carefully con- structed case studies would be useful in theory development and can use both qualitative and quantitative methodologies to gather and interpret data (Eisenhardt, 1989).

One creative approach would be to analyze a company with operations in each of the three countries, such as Ford Motor. This research design would allow for control over numerous potential confounding variables, such as industry and organizational size. An organization’s ethical practices and cultural processes could then be directly compared across geographical location, and differences in policies and ethical practices differentiated. This could also take place for companies that are headquartered in different NAFTA countries. Data could be gathered through content analysis of archival information and interviews with man- agers and employees. The study would need to compare for each company the cultures, ethical policies, and ethical practices of each of the three locations.

Building from the initial case study approach, researchers might consider survey research to discover valid and reliable measures of relative frequency of the variables of interest. For example, with respect to the existence of separate codes of ethics, a survey of companies of similar size and industry category should be conducted to examine how companies define what a ‘‘code of ethics’’ is and whether differences by country are statistically significant (e.g., see Lefebvre and Singh, 1992). If so, then a subsequent study of the code’s purpose, content, and format might be related to the cultural variables identified in this paper (Weaver, 1993). Research- ers could use the results from Transparency International on the Corruption Perceptions Index (1999) to determine the level of bribery in a country. Ethical treatment of low-level workers could be studied using previously validated meas- ures of the organization’s human resource policies and practices (e.g., Delery and Doty, 1996). In addition, the survey might include a measure of ethical culture at the organizational level of analysis (Trevino et al., 1995). If country differences are found to be significant with other factors held constant, then a more complex study of cultural values and ethics programs as systems of control might also be undertaken (Weaver et al., 1999a).

10. Conclusion

This article has outlined propositions for three ethical practices that may be related to cultural characteristics of the NAFTA countries. The success of the NAFTA initiative

J.N. Hood, J.M. Logsdon / Journal of Business Research 55 (2002) 883–890888

may depend upon whether collaborative practices can be developed within organizations doing business in the three countries. Key to successful integration of practices are the ethical policies and values of the managers and employees within business organizations.

Managers need to become more knowledgeable about and comfortable with cultures outside their home countries in order to be successful in an increasingly competitive global environment. Understanding how business is con- ducted in other countries is critical, and this involves not only technical operating norms and expectations, but also a clear understanding of each culture’s ethical values for business transactions.

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