Academic journal article Journal of Small Business Management

Ethical Problems Encountered by U.S. Small Businesses in International Marketing

Academic journal article Journal of Small Business Management

Ethical Problems Encountered by U.S. Small Businesses in International Marketing

Article excerpt

Reports indicate firms that fail to become active in international trade may begin to experience financial difficulties as foreign competition for slowly expanding domestic markets intensifies (Small Business Reports 1987b). This trend is especially alarming to small U.S. businesses, less than 10 percent of which are actively involved in international trade despite having export potential (Small Business Reports 1986). Nonexporters often cite their lack of international marketing knowledge and "perceived barriers" (such as understanding foreign business practices) as obstacles to their pursuit of foreign trade (Yaprak 1985). Despite the numerous programs available to assist managers with the technical aspects of international trade (for example, the International Trade Administration of the U.S. Department of Commerce), many owner-managers' worries and fears stemming from "perceived barriers' go unattended, representing a real disincentive for small businesses to export (Joynt and Welch 1985).

One "perceived barrier" that has received much recent attention from both the popular press and researchers is the difficult ethical problems that international trade may pose. Such problems appear to be a potent "perceived barrier," in that many U.S. marketers report they tend to avoid foreign markets where they expect to encounter ethical dilemmas (Mayo et al. 1990). This "perceived barrier" may have a strong negative impact on the foreign trade intentions of small businesses, given that many have limited resources (such as having no legal or public relations specialists on staff) to wrestle with such ethical dilemmas (Ward 1987).

Avoidance is only one of several options that small businesses may employ to cope with ethical problems. By including ethics in the strategic planning process and/or by developing codes of conduct, for example, small business managers may be able to anticipate and work through the ethical problems posed by some foreign markets (Robin and Reidenbach 1987). The success of such an approach, however, may partially depend upon how ethical concepts and problems are defined. Small businesses are more likely to implement codes and strategies where operational definitions of ethical concepts and problems have been developed (Ward 1987). A detailed listing of the type of ethical problems that might be encountered in international trade by small businesses, however, is currently not available. The sparse attention given to the ethical problems encountered by small businesses may have resulted from researchers' assumption that ethical problems bear equally upon firms of all sizes. This assumption may be misleading in that the type and impact of ethical problems may be different for small and large businesses (Longenecker et al. 1989).

The present study determines the type of ethical problems that small businesses may encounter in international trade and how these problems may affect the firm and its management team. Since marketing activities are central to international trade and often are the focus of questions regarding ethical conduct (Fritzsche 1986), the present study will focus on the type of ethical problems that small business firms encounter in international marketing.


The data for the present report were collected as part of a larger study by the author to ascertain the ethical issues confronting U.S. firms engaged in international business (Mayo et al. 1990).


The sample for the present study was selected from the District Export Councils Membership Roster (1987-1991 term, U.S. Department of Commerce 1987). District Export Council (DEC) members are experienced in international trade, are appointed by the U.S. Secretary of Commerce, and advise federal, state, and local governments and manufacturers on export-related matters. Consequently, it was assumed that the members would be well versed in international marketing and could comment on the nature of the non-domestic ethical problems encountered when selling transnationally. …

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