Religious and Ethical Systems 1 of 8 Religion

Religious and Ethical Systems 1 of 8 § Religion - a system of shared beliefs and rituals that are concerned with the realm of the sacred § Ethical system – a set of moral principles, or values, that are used to guide and shape behavior § Religions with the greatest following ü Christianity (2. 20 billion adherents) ü Islam (1. 60 billion adherents) ü Hinduism (1. 10 million adherents) ü Buddhism (535 million adherents) ü Confucianism shapes culture in many parts of Asia ©Mc. Graw-Hill Education.

Map 4. 1 World Religions Source: “Map 14, ” Allen, John L. , Student Atlas of World Politics, 10 th ed. Mc. Graw-Hill Education. ©Mc. Graw-Hill Education.

Religious and Ethical Systems 2 of 8 Christianity ü Most widely practiced religion ü In 1904, Max Weber suggested that it was the Protestant work ethic (focus on hard work, wealth creation, and frugality) that was the driving force of capitalism ü Protestantism gave individuals more freedom to develop their own relationship with God which may have paved way to economic freedom ©Mc. Graw-Hill Education.

Religious and Ethical Systems 3 of 8 Islam ü Adherents of Islam are referred to as Muslims ü One true omnipotent God ü In the Western media, Islamic fundamentalism is associated with militants, terrorists, and violent upheavals ü Fundamentalists have gained political power in many Muslim countries, and have tried to make Islamic law the law of the land ©Mc. Graw-Hill Education.

Religious and Ethical Systems 4 of 8 Islam continued ü Economic Implications of Islam § Koran establishes explicit economic principles many of which are pro -free enterprise § Under Islam, people do not own property, but only act as stewards for God and thus must take care of that which they have been entrusted with • Islam is supportive of business, but the way business is practiced is prescribed • Businesses that are perceived to be making a profit through the exploitation of others, by deception, or by breaking contractual obligations are unwelcome ©Mc. Graw-Hill Education.

Islamic Banks Islamic banks function differently than conventional banks in the world, as the Islamic banks cannot pay or charge interest. Source: © Ali Al Saadi/AFP/Getty Images ©Mc. Graw-Hill Education.

Religious and Ethical Systems 5 of 8 Islam continued ü Economic Implications of Islam continued • Prohibits payment or receipt of interest • Mudarabah • Similar to profit sharing • Murabaha • Most widely used • Includes a price markup ©Mc. Graw-Hill Education.

Religious and Ethical Systems 6 of 8 Hinduism ü World’s oldest religion ü Moral force in society requires the acceptance of certain responsibilities called dharma ü Believe in reincarnation and karma ü Individuals should be judged by their spiritual achievements ü Promotion and adding new responsibilities may not be the goal of an employee, or may be infeasible due to the employee's caste ©Mc. Graw-Hill Education.

Religious and Ethical Systems 7 of 8 Buddhism ü Suffering originates in people’s desire for pleasure ü Stress spiritual growth and the afterlife, rather than achievement while in this world ü The Noble Eight Path ü Buddhism does not support the caste system, so individuals do have some mobility and can work with individuals from different classes ü Entrepreneurial activity is acceptable ©Mc. Graw-Hill Education.

Religious and Ethical Systems 8 of 8 Confucianism ü Until 1949, official ethical system of China ü Not a religion ü High moral and ethical conduct and loyalty to others ü Attain personal salvation through right action ü Three key teachings of Confucianism - loyalty, reciprocal obligations, and honesty - may all lead to a lowering of the cost of doing business in Confucian societies ©Mc. Graw-Hill Education.

Focus on Managerial Implications 1 of 3 CROSS-CULTURAL LITERACY AND COMPETITIVE ADVANTAGE There is a need for managers to develop cross-cultural literacy 1. There is a connection between culture and national competitive advantage 2. There is a connection between culture and ethics in decision making ©Mc. Graw-Hill Education.

Focus on Managerial Implications 2 of 3 Cross-Cultural Literacy ü Firms that are ill-informed about the practices of another culture are unlikely to succeed in that culture ü Individuals must also beware of ethnocentric behavior § Belief in the superiority of one's own culture ©Mc. Graw-Hill Education.

Focus on Managerial Implications 3 of 3 Culture and Competitive Advantage ü Connection between culture and competitive advantage § It suggests which countries are likely to produce the most viable competitors § It has implications for the choice of countries in which to locate production facilities and do business ©Mc. Graw-Hill Education.