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InternationalBusiness
9eByCharlesW.L.HillMcGraw-Hill/IrwinCopyright©2013byTheMcGraw-HillCompanies,Inc.Allrightsreserved.Chapter5EthicsinInternationalBusinessWhatIsEthics?Ethics-acceptedprinciplesofrightorwrongthatgoverntheconductofapersonthemembersofaprofessiontheactionsofanorganizationBusinessethics-acceptedprinciplesofrightorwronggoverningtheconductofbusinesspeopleEthicalstrategy-astrategy,orcourseofaction,thatdoesnotviolatetheseacceptedprinciplesWhichEthicalIssuesAreMostRelevantToInternationalFirms?
ThemostcommonethicalissuesinbusinessinvolveemploymentpracticeshumanrightsenvironmentalregulationscorruptionthemoralobligationofmultinationalcompaniesHowAreEthicsRelevant
ToEmploymentPractices?Supposeworkconditionsinahostnationareclearlyinferiortothoseinthemultinational’shomenationWhichstandardsshouldapply?homecountrystandardshostcountrystandardssomethinginbetweenHowAreEthicsRelevant
ToEmploymentPractices?FirmsshouldestablishminimalacceptablestandardsthatsafeguardthebasicrightsanddignityofemployeesauditforeignsubsidiariesandsubcontractorsregularlytoensuretheyaremeetingthestandardstakecorrectiveactionasnecessaryHowAreEthicsRelevant
ToHumanRights?BasichumanrightsaretakenforgrantedindevelopedcountriesfreedomofassociationfreedomofspeechfreedomofassemblyfreedomofmovementQuestion:
Whataretheresponsibilitiesoffirmsincountrieswherebasichumanrightsarenotrespected?HowAreEthicsRelevant
ToHumanRights?Question:
Isitethicalforcompaniestodobusinesswithcountrieswithrepressiveregimes?MyanmarNigeriaQuestion:
Doesmultinationalinvestmentactuallyhelpbringchangetothesecountriesandultimatelyimprovetherightsofcitizens?ChinaHowAreEthicsRelevant
ToEnvironmentalRegulations?Somepartsoftheenvironmentareapublicgoodthatnooneowns,butanyonecandespoilWhathappenswhenenvironmentalregulationsinhostnationsarefarinferiortothoseinthehomenation?Isitpermissibleformultinationalstopolluteindevelopingcountriessimplybecausetherearenoregulationsagainstit?legalversusethicalbehaviorThetragedyofthecommonsoccurswhenaresourceheldincommonbyall,butownedbynoone,isoverusedbyindividuals,resultinginitsdegradationHowAreEthicsRelevant
ToCorruption?TheU.S.ForeignCorruptPracticesActoutlawedthepracticeofpayingbribestoforeigngovernmentofficialsinordertogainbusinessamendedtoallowforfacilitatingpaymentsTheConventiononCombatingBriberyofForeignPublicOfficialsinInternationalBusinessTransactionswasadoptedbytheOrganizationforEconomicCooperationandDevelopment(OECD)obligesmemberstatestomakethebriberyofforeignpublicofficialsacriminaloffenseHowAreEthicsRelevant
ToCorruption?But,isitpermissibleformultinationalstopaygovernmentofficialsfacilitatingpaymentsifdoingsocreateslocalincomeandjobs?isitoktodoalittleevilinordertodoagreatergood?doesgreasemoneyactuallyimproveefficiencyandhelpgrowth?HowAreEthicsRelevant
ToMoralObligations?SocialresponsibilityreferstotheideathatmanagersshouldconsiderthesocialconsequencesofeconomicactionswhenmakingbusinessdecisionsthereshouldbeapresumptioninfavorofdecisionsthathavebothgoodeconomicandgoodsocialconsequencesitistherightwayforabusinesstobehaveHowAreEthicsRelevant
ToMoralObligations?Advocatesarguethatbusinessesneedtorecognizetheirnoblesseoblige-honorableandbenevolentbehaviorthatistheresponsibilityofsuccessfulcompaniesgivesomethingbacktothesocietiesthathavemadetheirsuccesspossibleBut,aremultinationalsmorallyrequiredtousetheirpowertoenhancelocalwelfare?WhatAreEthicalDilemmas?Ethicaldilemmas-situationsinwhichnoneoftheavailablealternativesseemsethicallyacceptablereal-worlddecisionsarecomplex,difficulttoframe,andinvolveconsequencesthataredifficulttoquantifytheethicalobligationsofanMNEtowardemploymentconditions,humanrights,corruption,environmentalpollution,andtheuseofpowerarenotalwaysclearcuttherightcourseofactionisnotalwaysclearWhyDoManagers
BehaveUnethically?SeveralfactorscontributetounethicalbehaviorincludingPersonalethics
-thegenerallyacceptedprinciplesofrightandwronggoverningtheconductofindividualsexpatriatesmayfacepressuretoviolatetheirpersonalethicsbecausetheyareawayfromtheirordinarysocialcontextandsupportingculturemanagersfailtoquestionwhetheradecisionoractionisethical,andinsteadrelyoneconomicanalysiswhenmakingdecisionsWhyDoManagers
BehaveUnethically?Decision-makingprocesses
-thevaluesandnormsthataresharedamongemployeesofanorganizationorganizationculture
thatdoesnotemphasizebusinesscultureencouragesunethicalbehaviorOrganizationalculture
-organizationalculturecanlegitimizeunethicalbehaviororreinforcetheneedforethicalbehaviorUnrealisticperformanceexpectations
-encouragemanagerstocutcornersoractinanunethicalmannerWhyDoManagers
BehaveUnethically?Leadership
-helpsestablishthecultureofanorganization,andsettheexamplesthatothersfollowwhenleadersactunethically,subordinatesmayactunethically,tooSocietalculture
–firmsheadquarteredincultureswhereindividualismanduncertaintyavoidancearestrongaremorelikelytostressethicalbehaviorthanfirmsheadquarteredincultureswheremasculinityandpowerdistancerankhighWhyDoManagers
BehaveUnethically?DeterminantsofEthicalBehaviorWhatAreThePhilosophicalApproachesToEthics?ThereareseveraldifferentapproachestobusinessethicsStrawmenapproachesdenythevalueofbusinessethicsorapplytheconceptinanunsatisfactorywayOthersapproachesarefavoredbymoralphilosophersandarethebasisforcurrentmodelsofethicalbehaviorWhatAreTheStrawMenApproachesToBusinessEthics?
TherearefourcommonstrawmenapproachesFriedmandoctrine
-theonlysocialresponsibilityofbusinessistoincreaseprofits,solongasthecompanystayswithintherulesoflawCulturalrelativism
-ethicsareculturallydeterminedandfirmsshouldadopttheethicsoftheculturesinwhichtheyoperate“wheninRome,doastheRomansdo”WhatAreTheStrawMenApproachesToBusinessEthics?
Righteousmoralist-amultinational’shomecountrystandardsofethicsshouldbefollowedinforeigncountriesNaïveimmoralist-ifamanagerofamultinationalseesthatfirmsfromothernationsarenotfollowingethicalnormsinahostnation,thatmanagershouldnoteitherAllapproachesofferinappropriateguidelinesforethicaldecisionmakingWhatAreUtilitarianAnd
KantianApproachesToEthics?Utilitarianethics-(DavidHume,JeremyBentham,JohnStuartMills)-themoralworthofactionsorpracticesisdeterminedbytheirconsequencesactionsaredesirableiftheyleadtothebestpossiblebalanceofgoodconsequencesoverbadconsequencesbut,itisdifficulttomeasurethebenefits,costs,andrisksofanactiontheapproachfailstoconsiderjusticeWhatAreUtilitarianAnd
KantianApproachesToEthics?Kantianethics-(ImmanuelKant)-peopleshouldbetreatedasendsandneverpurelyasmeanstotheendsofotherspeoplehavedignityandneedtoberespectedpeoplearenotmachinesWhatAreRightsTheories?Rightstheories
-humanbeingshavefundamentalrightsandprivilegeswhichtranscendnationalboundariesandculturesestablishaminimumlevelofmorallyacceptablebehaviorthe
UniversalDeclarationofHumanRights
-basicprinciplesthatshouldalwaysbeadheredtoirrespectiveofthecultureinwhichoneisdoingbusinessMoraltheoristsarguethatfundamentalhumanrightsformthebasisforthemoralcompassthatmanagersshouldnavigatebywhenmakingdecisionswhichhaveanethicalcomponentWhatAreJusticeTheories?Justicetheoriesfocusontheattainmentofajustdistributionofeconomicgoodsandservicesajustdistribution
isonethatisconsideredfairandequitableJohnRawlsarguedthatalleconomicgoodsandservicesshouldbedistributedequallyexceptwhenanunequaldistributionwouldworktoeveryone’sadvantage
impartialityisguaranteedbytheveilofignorance-everyoneisimaginedtobeignorantofallhisorherparticularcharacteristicsHowCanManagers
MakeEthicalDecisions?HireandpromotepeoplewithawellgroundedsenseofpersonalethicsrefrainfrompromotingindividualswhohaveactedunethicallytrytohireonlypeoplewithstrongethicsprospectiveemployeesshouldfindoutasmuchastheycanabouttheethicalclimateinanorganizationpriortotakingapositionHowCanManagers
MakeEthicalDecisions?Buildanorganizationalculturethatplacesahighvalueonethicalbehaviorarticulatevaluesthatplaceastrongemphasisonethicalbehavioremphasizetheimportanceofa
codeofethics-formalstatementoftheethicalprioritiesabusinessadherestoimplementasystemofincentivesandrewardsthatrecognizepeoplewhoengageinethicalbehaviorandsanctionthosewhodonotHowCanManagers
MakeEthicalDecisions?MakesurethatleaderswithinthebusinessarticulatetherhetoricofethicalbehaviorandactinamannerthatisconsistentwiththatrhetoricgivelifeandmeaningtowordsmakesurethatleadersemphasizetheimportanceofethicsverballyandthroughtheiractionsHowCanManagers
MakeEthicalDecisions?PutdecisionmakingprocessesinplacethatrequirepeopletoconsidertheethicaldimensionsofbusinessdecisionsAskwhetherdecisionsfallwithintheacceptedvaluesofstandardsthattypicallyapplyintheorganizationalenvironmentdecisionscanbecommunicatedtoallstakeholdersaffectedbyitifcolleagueswouldapproveofdecisionsHowCanManagers
MakeEthicalDecisions?Managerscanalsouseafivestepprocesstothinkthroughethicalproblems:Step1:Identifywhichstakeholders(theindividuals orgroupswhohaveaninterest,stake,or claimintheactionsandoverall performanceofacompany)adecision wouldaffectandinwhatwaysinternalstakeholdersarepeoplewhoworkfororwhoownthebusinesssuchasemployees,theboardofdirectors,andstockholdersexternalstakeholdersaretheindividualsorgroupswhohavesomeclaimonafirmsuchascustomers,suppliers,andunionsHowCanManagers
MakeEthicalDecisions?Step2:DeterminewhetheraproposeddecisionwouldviolatethefundamentalrightsofanystakeholdersStep3:Establishmoralintent-placemoralconcernsaheadofotherconcernsincaseswhereeitherthefundamentalrightsofstakeholdersorkeymoralprincipleshavebeenviolated
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