ETHICAL ISSUES IN INTERNATIONAL HUMAN RESOURCE MANAGEMENT: CHALLENGES IN IMPLEMENTING HIGH PERFORMANCE SYSTEMS Ashish Katiyar, McNeese State

University, Lake Charles, Louisiana, USA Kendyl Thomas, McNeese State University, Lake Charles, Louisiana, USA Cam Caldwell, McNeese State University, Lake Charles, Louisiana, USA ABSTRACT
Increasing emphasis has been placed on the ethical duties owed by employers to employees over the past decade, and a growing body of literature has addressed the benefits that accrue to organizations that build high performance and high trust cultures that adhere to value-based ethical principles. Within the international workplace, perspectives about duties owed and the nature of the social contract are related to well-documented differences in national culture and the international human resource management context. The purpose of this paper is to incorporate the six-factor model of ethical leadership developed by LaRue Hosmer (2008) in addressing ethical issues associated with implementing high performance work systems to achieve effective human resource management within an international context. We identify how international human resource management issues are heavily impacted by ethical implications and suggest five propositions to assist international human resource managers to be more effective.

INTRODUCTION
LaRue Hosmer (1987:313), the highly esteemed ethics scholar from the University of Michigan, observed more than two decades ago that ethical dilemmas arise almost continually in human resource management -- noting that ethical considerations need to be integrated with financial, legal, and behavioral forms of reasoning to arrive at decisions considered to be right, proper, and just for the various stakeholders involved. As the context of the business environment has become global in scope, the ethical challenges that Hosmer articulated have grown increasingly complex, the commitment between employer and employees has become fuzzier, and the importance of employees in creating and sustaining strategic competitive advantage has become more apparent yet more difficult (Pfeffer & Veiga, 1999; Dowling et al., 2009). Human resource management professionals and scholars have acknowledged the complex challenges associated with creating human resource systems that are aligned, congruent, integrated with their corporations strategic mission (Becker & Huselid, 2006), and capable of generating the high trust and commitment from employees that are conditions precedent to sustaining long-term wealth creation (Senge, 2006). Creating this high performance approach to management is a key role of the human resource management function (Pfeffer, 1998), and vital to establishing a reputation of trust and integrity for organizational leaders (Schein, 2004). The purpose of this paper is to identify ethical issues facing international human resource management in creating high performance systems, and to present five ethically-based propositions critical to creating these systems within a global context. We begin this paper by introducing an ethical framework provided by Hosmer and explain what is meant by high performance systems in human resource management. We then suggest five propositions associated with high performance work systems critical to the success of international human resource management. After identifying the contributions of this paper, we conclude by suggesting research opportunities for scholars and practitioners.

HOSMERS FRAMEWORK OF ETHICAL MANAGEMENT

In his highly regarded text, The Ethics of Management, LaRue Hosmer (2008:13) argued that an ethical principle is meaningless unless it can be applied and defines business rules as a method of moral analysis that . . . would be

in the interest of society under all conditions and/or situations. But Hosmer (2008:5) also noted that moral standards differ between peoples because the goals, norms, beliefs, and values upon which they depend also differ, and those goals, norms, beliefs, and values in turn differ because of variations in the religious and cultural traditions and the economic and social situations in which the individuals are immersed. Hosmer clearly understood todays global business environment that is characterized by constant change, complexity, and uncertainty (Cameron, 2003:186). To resolve the conflicts that inevitably occur in making morally responsible decisions, Hosmer (2008:9-15) posed a series of six steps to follow as a framework for evaluating those decisions:

1) Recognize the Moral Impacts -- To recognize the moral impacts of a choice, four issues should be
addressed. First, what individuals or groups are going to be benefitted by the implementation of the decision and what is the financial or personal benefit expected? Second, who will be harmed by the implementation of the decision and what is the financial or personal nature of those harms? Third, who will be able to more effectively exercise their rights as a result of the proposed action? Fourth, whose rights will be denied as a result of the proposed action?

2) State the Moral Problem -- Defining and precisely articulating the moral problem clarifies the nature of
the decision so that it can be effectively communicated without overlooking any stakeholders interests. Framing the moral problem as an extended question also acknowledges the concerns of others and validates their interest in decisions to be made. Those concerns, specifically identified as costs, harms, or loss of the rights of one party and benefits accruing to another, can then be carefully addressed in the analysis, discussion, and ultimate conclusions drawn from the development of solutions. Hosmer (2008:9) noted that people from differing backgrounds and cultures view the same issue through their individual lenses, and may arrive at substantially different conclusions as to the nature of the moral problems involved because of their culturally-based values and assumptions.

3) Determine the Economic Outcomes Economic outcomes accrue as a net benefit over harms for a full
society within the context of an open and free market. The economic assumption is that benefits are determinable in the preference expressed for goods and services, in utilizing the money, time and raw materials of society to maximize societal wealth efficiently. The assumptions implicit in Hosmers assessment are 1) all markets must be free; 2) all laws must be obeyed, and 3) all costs must be included in determining economic benefits. Supporting this same position, Hausman and McPherson (1993:673) have argued that virtually all economic choices have a moral outcome and that the morality of economic agents influences their behaviors as well as economic outcomes.

4) Consider the Legal Requirements Legal requirements in moral analysis balance the rights that are
empowered or exercised versus rights denied. These legal requirements seek to determine that which is most equitable or evenhanded within the framework of a Veil of Ignorance (i.e., determining fairness and the balance of rights vs. wrong if everyone considered the laws to adopt while ignorant of their own selfinterests). Hosmer acknowledged the difficulty of focusing on the self-interest of all of society but argued that this Veil of Ignorance model is ideal for evaluating the efficacy of laws. Nesteruk (1999:306) has noted that legal and moral issues are historically intertwined in the analysis of workplace issues.

5) Evaluate the Ethical Duties In assessing ethical duties, moral analysis encompasses obligations owed by
members of society to others within that society, and often balances personal self-interests with the impacts of actions on society. Ethical duties provide a set of rules that benefit society under multiple scenarios. Although there are many ethical perspectives which call out slightly different outcomes (Hosmer, 1995), Hosmer proposed that the essence of morality can be summarized by six universal rules. Table One briefly explains these six universal rules.

Ethical Perspective Personal

Explanation of Argument
We may each do as we wish and follow our own self interests as long as we adopt a set of

Summary of the Rule

Never take any action which is not honest,

Virtues

standards for right, just, and fair treatment of others. We ought to do that which makes us proud of our actions and of our lives.

open, and truthful which you would not be proud to see reported in national newspapers and network television. Never take action that is not kind and that does not build a sense of community in working together for a commonly accepted goal. Never take any action that does not result in greater good than harm for society. Never take any action that others in the same situation would not be free or even encouraged to take. Never take any action in which the least among us would be harmed. Never take any action that would interfere with others rights for selfimprovement or selfdevelopment.

Religious Injunctions

We also ought to live to show compassion and kindness towards others. Both reciprocity and compassion build a sense of community.

Utilitarian Benefits Universal Rules

We need to evaluate acts in terms of their societal impact. An act is right if it leads to greater net social benefits than social harms.

We need to eliminate the self-interest of a person who evaluates a given situation by universalizing this decision process. Choices should be based upon actions that others in a similar situation would be encouraged to take. We need rules that protect the poor and uneducated who lack power or the position to achieve their interests. We need to protect individuals from extremes of the constraints of the law and markets. No one should interfere with the rights of others to seek to improve their legal abilities or their marketable skills.

Distributive Justice Contributive Liberty

6) Propose a Moral Solution A proposed moral solution must specifically identify the stakeholders
affected; the moral issues to be considered; and the corresponding benefits, harms, and associated rights impacted. Management practitioners (DePree, 2004) and scholars (Caldwell & Karri, 2005; Cameron, 2003) have noted that moral solutions must not only positively impact the welfare, growth, and wholeness of all stakeholders but must also contribute to societal wealth creation. Hosmers (2008) model provides a framework for evaluating a broad variety of business domains, including the key issues of international human resource management. Following this model enables moral decision-makers to craft a solution that is transparent in its articulation of impacts and that facilitates objective discussion of the tacit values, beliefs, assumptions, and goals associated therewith. As Forsyth and colleagues (2008) have noted, ethical perspectives vary significantly across cultures. HIGH PERFORMANCE MANAGEMENT SYSTEMS Human resource management (HRM) within an international context has grown exponentially within the past three decades with the advent of the world-wide web and the world-wide increase in the availability of information (Taylor, 2007). Competing within a global market has created major economic pressures on organizations, not only because of the costs and competencies required to expand into new markets but as competing international firms

expand into ones own existing markets (Hill, 2008). Sparrow and Brewster (2006) emphasized that being globally successful includes being 1) competitive throughout the world; 2) responsive locally; 3) flexible, timely, and adaptive to change; 4) efficient; and 5) capable of transferring knowledge and the ability to learn across globally dispersed units. Within this internationally competitive economic context, Pfeffer (1998) has argued that high performance/high trust work systems can make a meaningful contribution. The high performance work organization is a business concept coined by the U.S. Department of Labor (1993:1) to encourage American businesses to be creative, adaptive, and effective in problem solving in response to an increasingly competitive global marketplace. Research on high performance management systems have their roots in Peters and Watermans (1982) business classic, In Search of Excellence, Waltons (1985) discussion of high commitment management and Lawlers (1986) description of high involvement management. As human resource efforts to improve organizations evolved from involving employees and quality improvement to aligning systems with strategy, the focus on high performance management began to crystallize (Wood & Wall, 2007:1338-1339). Pfeffer (1994) identified sixteen factors in his early work on organizational excellence but reduced that list to seven factors to produce high commitment and high trust management systems (Pfeffer, 1998). Wood and Wall (2007) noted that authors and studies differ in identifying the required elements of high performance systems and in the terminology used to test high performance management practices in business settings. The seven specific management practices of high performance management systems that Pfeffer (1998) identified include:

1) Employment Security Providing employees a safe work environment addresses a crucial human need
for safety against possible threats (Noria, Groysberg, & Lee, 2008:81) and substantially increases the likelihood that employees will be committed to the improvement of productivity without fearing that they are working themselves out of a job (Locke, 1995). A company that commits to creating job assurances for employees is also more likely to implement improved selection and hiring practices because the firm knows it cannot simply let people go quickly if it has overestimated its labor demand (Pfeffer, 1998:67). The management downsizing literature confirms that downsizing results in minimal economic benefits while increasing organizational distrust and lowering morale (Marks, 1993 {See Pfeffer 176 for the cite]).

2) Selective Hiring of New Personnel Collins (2001:41) discovered in his study of great organizations
that they get the right people on the bus, the right people in the right seats, and the wrong people off the bus. Screening for cultural fit and employee attitude from among a broad pool of well-qualified applicants is critical to hiring people who fit an organizations needs (Pfeffer, 1998:74). Enterprise, the fast growing car rental agency, emphasizes screening applicants based upon attributes that are difficult to change through training, and hires its employees based upon basic ability and attitude rather than on technical qualifications which are often easily acquired (OReilly, 1996).

3) Self-Managed Teams and Decentralized Decision-Making Empowering employees is increasingly

important in a knowledge-, service-, and wisdom-based economy that requires employees to take initiative and discretionary action in delivering customized service (Covey, 2004). Self-managed work teams are a critical component of virtually all high performance management systems and results in increased autonomy, job satisfaction, and productivity (Pfeffer, 1998: 74). Boonzaier and colleagues (2001:12) noted that increased autonomy and discretion substantially improve organizational outcomes and build increased commitment which is the key to long-term wealth creation (Senge, 2006).

4) Comparatively High Compensation Contingent Upon Organization Performance Reward systems

that contribute to corporate-wide performance and that focus on contributions that distinguish companies from their competitors not only makes it possible to successfully compete for key employees who make a critical difference but provide a foundation for meaningful employee incentives that match the organizations ability to share profits with those who contribute to financial success (Boudreau & Ramstad, 2007). Compensation systems communicate to employees whether they are truly valued or whether the organization is merely giving lip service to the importance of

employees while treating them as a commodity rather than as a valued asset (Pfeffer, 1998:80). Nucor Steel is an outstanding example of a company that offers employees contingent pay, often paying employees more in bonuses than they make in base salary each quarter (Marks, 2001: 112-113).

5) Training Investing in employees as valued assets in a knowledge-based economy pays off in huge
dividends when that training is carefully planned and delivered particularly in problem-solving and in quality improvement (Pfeffer, 1998:85). Investments in both technical and non-technical training have a positive impact on a firms success in developing knowledge and skills (Fey & Bjrokman, 2001:62). Improving the skills of employees in addressing customer needs and eliminating the causes of customer complaints can result in improved long-term profitability and a strategic competitive advantage that is difficult to duplicate (Pfeffer, 1998:300-301; Yagiela & Munson, 1997). Measuring the return on investment from training is increasingly being recognized as a critical management responsibility in a world where knowledge and information have exploded exponentially (Bersin, 2006).

6) Reduced Status Distinctions and Barriers Factors such as dress, language, office arrangement, and
wage differentials are being relaxed in many high performance organizations to create a culture that treats employees throughout the organization more equitably and to acknowledge the role of employees as owners and partners (Block, 1996). Affirming the importance of people as the source of organization success includes incorporating language that treats all employees with dignity and respect (Pfeffer, 1998:293-295). Providing access to organizational leaders and empowering employees with the opportunity to add their voices in decentralized decision-making processes creates a culture that is people-oriented and that models the virtues of leadership trustworthiness (Caldwell, Karri, & Vollmar, 2006).

7) Sharing Information Creating a transparent organization that shares key information with
employees not only sustains a high trust culture but enables employees to legitimately contribute to organizational decision-making (Bandsuch, Pate & Thies, 2008). Training people to play a key role in the organization requires that employees possess the critical information necessary for them to make well-informed and intelligent decisions (Pfeffer, 1998:93-94). As human resource managers and organizational leaders strive to build high trust organizational cultures, those who guide their organizations must carefully assess not only the implicit and explicit assumptions of their own social contracts but must also carefully tune in to the perceptions of others (Caldwell & Hayes, 2007; Van Buren & Greenwood, 2008). Ethical duties owed in responding to complex issues are encompassed in a stewardship obligation that rises to the standard of a covenantal relationship (Pava, 2003). Hosmers (2008) model of ethical leadership provides a valuable framework for examining the subtle nature of ethical obligations owed to stakeholders and reflects the growing importance of business leaders understanding the implications of their moral choices (Pfeffer, 2007). Commenting on the keys to putting people first, Pfeffer (1998:299) noted that putting people first entails recognizing the importance of peopleall of a companys people in all organizationsto organizational success. Pfeffer (1998:299-300) explained: Putting people first means, in the end, taking all of them seriously and, most importantly, recognizing the opportunities to leverage knowledge and build capability and skill in all jobs . . . Putting people first means having articulated values and goals, organizational language and terminology, measurements, role models in senior leadership positions, and specific practices that make real the noble sentiments so often honored in the breach. It entails doing things that both reinforce the importance of people to organizational success and simultaneously making it more likely that the organization will have an advantage in attracting and retaining the best people and realizing their full potential. High performance work systems have been acknowledged to be a significant contributor to achieve enhanced financial and operational performance (Farias & Varma, 1998), and a source of competitive advantage (Becker & Gerhart, 1996). Beltran-Martin and colleagues (2008) have noted that high performance work systems are a key

element of effective human resource management practices, and contribute to increased employee commitment, greater organizational trust, and improved profitability (Becker & Huselid, 1996). Nonetheless, creating high performance cultures are both difficult to establish and to imitate by competitors because they are dependent upon skilled HRM professionals and organizational leaders who understand the complex nature of organizational relationships and human nature (Pfeffer, 1998). Within a global marketplace, the role of high performance work systems has been increasingly acknowledged to also be a topic worthy of study and fraught with an array of ethical and value-based implications (Zhixing & Bjorkman, 2006; Dowling et al., 2009).

ETHICAL MANAGEMENT IN INTERNATIONAL HRM

Integrating the Hosmer (2008) framework of ethical management with high performance work systems applies within an international context, just as those concepts apply within businesses that primarily do business solely within the United States or within any other single country. In this section we identify five important human resource-related propositions about high performance systems that have critical moral implications for employees and other stakeholders. As corporations assess the need to expand into new markets to increase overall profits and to take advantage of their competitive position, a set of problems occurs with regard to how those companies deal with employees. Outsourcing of work resulting from expansion into new markets often results in a loss of jobs in the home country, or the country of origin of the expanding corporation. The principle of insuring employment security that is recognized as essential to high performance work systems may be undermined as outsourcing and expansion decisions result in the relocation of jobs and the elimination of positions at one location in favor of lower priced work performed in another country. Block (1994) has noted that companies that strive to create high trust relationships with their employees build that trust by being honest and transparent with employees regarding the factors that create the need to downsize in one location and relocate to another. At the same time, the decision to downsize has been found to be of minimal economic benefit in many organizational contexts, and several authors (Pfeffer, 1998; Cameron, 1994) have noted that a reduction in force often results in a net loss in long-term wealth creating capacity. Organizations that downsize would do well to follow the example of New Zealand Post which demonstrated a commitment to its departing employees by assisting these former employees to find new positions with other organizations and providing employees with generous severance packages (Pfeffer, 1998b), rather than simply leaving these employees to their own resources in attempting to become reemployed (Erakovic & Wilson, 2005). By treating exiting employees as valued partners (Pfeffer, 1998b) and by avoiding a recurring cycle of incremental reductions(Gilson, Hurd & Wagar, 2004), New Zealand Post became an example of creating a high performance organizational culture despite the need to cut their organization by thirty percent. Companies that follow the Universal Rules guideline of treating employees as valued ends rather than as a means to achieving corporate profitability blend the tenets of high performance work systems with moral integrity (Pfeffer, 1998b). Casperz (2006) found that that Malaysian companies that professed a dedication to high performance work systems but that did not treat employees as valued ends actually destroyed trust and employee commitment. Consistent with this thinking, we offer our first proposition: P1: International organizations that treat employees as valued ends rather than simply as a means to increased profitability will be more successful in increasing long-term profitability than organizations that treat their employees simply as a means to achieving profitability. The use of expatriates as management resources in countries into which a company seeks to expand its market has been a universal practice of many companies who have entered into international expansion. Schuler and Tarique (2007) note that international staffing, particularly in the placement of top management positions, has been one of the critical issues of international human resource management over the past thirty years. Expatriate selection, training, and retention has been a topic of extensive discussion in the international human resource management

literature because of the problems that frequently occur with the expatriate process, as well as the implicit moral and ethical duties owed to these expatriates and their families (Dowling, et al. 2009:109-132). A problem that often occurs is that companies will fail to invest in the training required to prepare expatriate managers and their families for the cultural challenges that they will face in managing employees within their host country, as well as in making the transition to an entirely new culture which requires substantial personal, social, and economic adjustments. Studies of the expatriate problem note that human resource systems in many companies do not adequately prepare managers for both their move to a new country or for their return to their home country after completing their assignment. As a result of this lack of careful preparation, thirty to fifty percent of expatriate assignments are considered to be a failure and many expatriates leave their companies after returning from international assignments. As a result, the intended benefits of an expatriate assignment are frequently unrealized (Dowling, et al., 2009:113). Schuler and Tarique (2007) have noted that a major cause of the failure of expatriate assignments has been the patterned philosophy of multinational corporations of expecting that employees will be responsible for their own careers, rather than creating a partnership between the corporation and the expatriate employee. Ironically, this policy of failing to adequately partner with high potential managerial talent serves to exacerbate the problems of leadership that plague many multinational organizations and sub-optimize wealth creation efforts. This policy is neither consistent with best practices of high performance work systems or consistent with the firms own economic selfinterest (Shaffer, et al. 2006). Consistent with this patterned behavior of many international corporations in their approach to human resource management, we offer our second proposition. P2: International organizations that fail to properly train expatriate candidates and their families for international assignments and fail to prepare both the company and the expatriate for the return from their assignment will see a higher percentage of expatriates leave the company and will be less profitable than companies that carefully train expatriates and their families and establish a wellcrafted career path for the expatriate upon her/his return. Scholars of international human resource management have recognized the increasing importance of employee involvement programs in positively impacting firm performance (Selvarajan, et al., 2007). Guthrie and colleagues (2002) suggested that organizations seeking to differentiate their products and services the differentiation strategy often required in the service-, knowledge-, and wisdom-based environment of the global marketplace (Covey, 2004) have recognized the advantages of implementing high involvement empowerment systems. Bhatnagar (2006) emphasized the importance of empowering employees and creating a learning culture in Indian organizations a concept considered vital to increasing employee commitment and wealth creation (Senge, 2006). Shen (2006) noted that Chinese companies have recognized that modern Chinese employees have demanded to be empowered and have begun to change the top-down management model that historically typified the Chinese corporation. According to research compiled by Alexashin and Blenkinsopp (2005), Russian managers and employees who have historically been high in power distance are becoming more interested in employee involvement programs. Fey and Shekshnia (2008) have also suggested that employee empowerment is one of the key commandments for doing business successfully in Russia. Katou and Bhudwar (2007) have found that implementing best practices of human resource management, including employee involvement programs, positively impacted the financial performance of Greek firms. Sparrow and colleagues (1994) found that best practices in human resource management were beginning to increasingly merge in multi-national corporations. DePree (2004:53-54) has argued that todays organizations owe a series of moral and ethical duties to employees which rise to the level of a covenantal obligation. This covenantal approach to employee relations emphasizes the moral duty to treat individuals as valued ends rather than simply as a means to achieve corporate objectives (Pava, 2003; Kouzes & Posner, 2007). Consistent with this research about the international human resource management implications of high performance work systems, we offer our third proposition. P3: International organizations that create employee involvement programs and treat employees as valued ends rather than simply as means to achieve increased profitability have employees that demonstrate greater commitment and generate a higher level of profits than organizations that do not create such employee relationships.

Knowledge sharing in organizations has been recognized as vitally important in international human resource management systems as multinational enterprises attempt to bridge between the policies and practices of an international company and the local values, practices, and cultures of a host country (Dowling, et al., 2009). Kasper and colleagues (2008:64) noted that both formal and informal relationships need to be created between individuals and groups to create an integrated new partnership that balances differences in perspective while constructing a framework that successfully blends corporate objectives with local capabilities. Yaping and Song (2008) noted that high performance work systems that incorporated information sharing in international settings saw increased extra role behavior among organizational employees. Fey and Shekshnia (2008) suggested that the key to balancing the conflicting values of the international corporation and the local business environment is to stand firm on big goals but be flexible on details in creating successful partnerships in Russia. Bhatnagar (2007) found that creating a learning culture that shared information and that involved employees at all levels in policy-making and decisions increased employee commitment and made it easier for international organizations to achieve strategic performance goals. Kontoghiorghes and colleagues (2005) suggested that organizations that created a learning organization and shared information with employees enhanced their ability to be innovative, to implement change, and to improve organizational performance. Sun and colleagues (2007) found that high performance work systems were correlated with organizational citizenship behavior(OCB). Organ and colleagues (2005) had noted that OCB, or extra role behaviors, were positively impacted by treating employees justly and creating an atmosphere of trust within organizations. Primeaux and colleagues (2003) noted that procedural and interactional justice elements were closely related with employee perceptions about the trustworthiness of leaders. Consistent with the research of these scholars, we offer our fourth proposition about high performance systems and knowledge sharing , we offer our fourth proposition. P4: International organizations that create human resource systems which share information with employees and that treat employees justly are more profitable than organizations which do not create such systems and that do not share information. Experts on organizational training note that the transfer of training principles to employees is frequently a major issue in the evaluation of training effectiveness -- noting that only about 10% of training content is actually applied on the job (Fitzpatrick, 2001;Saks & Belcourt, 2006) . Continuing trends in international training and development results from continuing pressure from many countries for localization of training and development .Training and development literature that the field must address global, comparative and national level contents for training and development (Dowling, et al., 2009:153). IBM recently announced the creation of its multi-million dollar Global Citizens Portfolio, a suite of investments and programs to help employees enhance their skills and become professionals and global leaders (Rossi, 2007:16). Ethical training has a significant and positive impact on practitioners ethical decision-making across cultures (Rottig & Heischmidt, 2007:5). Training can be a source of competitive advantage in numerous industries. Training is an investment in the organizations staff, and in the current business milieu, the ability to measure the impact of training helps to affirm its importance to organizations (Pfeffer, 1998:88- 89). Training objectives have three major dimensions : 1) enhancing working relationships, 2) tackling skill deficiencies, and 3) skills development (Chu Ng, Siu, 2004:878). Notwithstanding the acknowledged value of training in implementing high performance work systems (Pfeffer, 1998), Dowling and colleagues note that in many international organizations the development of effective training for employees is often given low priority due to the many other problems associated with establishing a new enterprise in a host country. Consistent with this research, we offer our final proposition. P5: International organizations that create human resource systems which train employees effectively, particularly in skills that will enable those organizations to create high performance work systems, are more profitable than organizations which do not create such human resource systems and that do not invest in employee training.

CONCLUSION
As human resource managers and organizational leaders strive to build high trust organizational cultures, human resource professionals must carefully assess not only the implicit and explicit assumptions of their own social contracts but must also carefully tune in to the perceptions of others (Caldwell & Hayes, 2007; Van Buren & Greenwood, 2008). Ethical duties owed in responding to complex issues are encompassed in a stewardship

obligation that rises to the standard of a covenantal relationship (Pava, 2003). Hosmers (2008) model of ethical leadership provides a valuable framework for examining the subtle nature of ethical obligations owed to stakeholders and reflects the growing importance of business leaders understanding the implications of their moral choices (Pfeffer, 2007). The five propositions offered in this paper provide an opportunity for scholars and practitioners to discuss how to apply management practices that responsively and thoughtfully address the knotty problems of international business management (Dowling, et al., 2009:294-295). Although dealing with the differing values of international businesses and national cultures is both complex and even ambiguous (Hill, 2008: 124:151), the consequences of making wise choices and earning the trust and commitment of stakeholders is a necessity for successfully competing in a global marketplace (Lawrence & Webber, 2008) and achieving a sustainable competitive advantage (Collins & Clark: 2003). Tremendous gains may come when high performance management practices are implemented in organizations. In high performance management cultures, people work smarter because they are encouraged to build skills and competence. People work more responsibly because more responsibility is placed in hands of employees farther down in the organization (Pfeffer & Veiga, 1999:40). High performance and high trust practices enhance employee commitment as the organization communicates to employees that it supports their efforts to improve, treats employees fairly and values their self worth and importance (McElroy, 2001: 334). Organizations acquire strategic competitive advantage by putting people first demonstrating to employees that they are, in fact, the source of differentiated excellence in a knowledge and service economy. In concluding his book about the ethical duties of management, Hosmer (2008:131) noted that in todays business world (I)t is no longer possible to manage organizations that must respond intelligently, quickly, and efficiently to technological, product, market, process, or customer changes on a command-andcontrol basis. Innovation is required, but corporate managers cannot command innovation. Cooperation is essential, but corporate managers cannot control cooperation. Something more is needed, and that something more: is the trust, commitment, and effort tha comes from moral management. Todays leaders, in whatever country they lead, would be wise to follow Hosmers insights about ethical principles and implement those principles within a high performance culture.

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