1、Chapter 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 4Managing Ethical and Social Responsibility Challenges in Multinational Companies 2013 Cengage Learning. All Rights Reserved. May not be scan
2、ned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives (1 of 2) Know the definitions of international business ethics and social responsibility. Understand some basic principles of ethical philosophy relevant to business ethics. Understand how
3、 social institutions and national culture affect ethical decision making and management. Understand the implications of using ethical relativism and ethical universalism in ethics management. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicl
4、y accessible website, in whole or in part. Learning Objectives (2 of 2) Identify the basic principles and consequences of the U.S. Foreign Corrupt Practices Act. Understand how international agreements affect international business ethics. Understand the differences among economic, legal, and ethica
5、l analyses of business problems Develop skills in international decision making with ethical consequences. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Ethical Challenges Facing MNCs Worldwide E
6、very Multinational company faces ethical challenges when operating in a foreign country: Should we dump our waste in the river knowing the damage it will do, even if such conduct is not illegal? Should we refuse to bribe a government official, and lose the contract to our competitor? Should we use c
7、heap child labor, even if its not illegal, just because our competitors do? 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.1: List of the Worlds Most Ethical Companies 2013 Cengage Learn
8、ing. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What is Business Ethics? Business Ethics: A part of the broader concern for ethical behavior, which affects people and their welfare Ethics deal with the “shoulds” of
9、life the rules and values that determine actions people should follow when dealing with other human beings. Although economic logic dominates business decision making, each business decision also has consequences for people, whether intended or not. But ethical questions seldom have clear or unambig
10、uous answers. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What isInternational Business Ethics? International Business Ethics: unique ethical problems faced by managers operating across nationa
11、l boundaries. International business ethics differs from domestic business ethics in two ways: International business is more complex, as different cultures do not agree on what one “should” do. MNCs often have power and assets that are equal to foreign governments, raising more ethical concerns ove
12、r the use of such power. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What isCorporate Social Responsibility? Corporate Social Responsibility (CSR): the idea that businesses have a responsibilit
13、y to society beyond making profits CSR is closely related to business ethics. CSR is concerned with ethical consequences of company policies and procedures. Practicing CSR, a business must take into account the welfare of other constituents in addition to stockholders. 2013 Cengage Learning. All Rig
14、hts Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Primary and Secondary Stakeholders Primary Stakeholders: those who are directly linked to a companys survival; (i.e., customers, suppliers, employees, and shareholders) Secondary
15、Stakeholders: those who are less directly linked to the companys survival, but have impact; these include the media, trade associations, and special-interest groups Addressing the needs of both groups is critical. See Shell Oil in Nigeria, Monsantos biotechnology products 2013 Cengage Learning. All
16、Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.2: Ethical & Social Responsibility Concerns for the MNC 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
17、accessible website, in whole or in part. Ethical Philosophy (1 of 2) Two approaches to ethical decision making: Traditional Views Teleological ethical theories Morality of an act based on consequences Utilitarianism: greatest good for greatest number Deontological ethical theories Actions are good o
18、r bad in and of themselves Contemporary philosophy Moral Languages 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Ethical Philosophy (2 of 2) Moral Languages describe the basic ways that people th
19、ink about ethical decisions and explain their ethical choices Six basic ethical languages: Virtue and vice Self-control Maximizing human welfare Avoiding harm Rights and duties Social contract 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a public
20、ly accessible website, in whole or in part. National Differences in Business Ethics and Social Responsibility National culture and social institutions affect how businesses manage ethical behavior and social responsibility. Cultural norms & values influence conformity to laws, and bribery, among oth
21、ers. Social institutions such as religion and the legal system are key institutions that affect what ethical issues are important to a society and how they are managed. Although there are differences between societies, some actions are universally condemned (i.e., harming children). 2013 Cengage Lea
22、rning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.3: A Model of Institutional & Cultural Effects on Business Ethics Issues & Management 2013 Cengage Learning. All Rights Reserved. May not be scanned, copie
23、d or duplicated, or posted to a publicly accessible website, in whole or in part. Why Cultural Differences? Institutional Anomie Theory and other research: Some national culture and social institutions are likely to encourage breaking norms, justifying ethically suspect behaviors. National cultures
24、that value high achievement, high individualism, high universalism, high materialism are all related to higher deviance from norms. Social institutions such as high industrialization, capitalist systems, lower family breakdown, and highly accessible educational systems all encourage deviance from no
25、rms. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.4: Cultural Variations in Acceptance of Ethically Suspect Behaviors 2013 Cengage Learning. All Rights Reserved. May not be scanned, co
26、pied or duplicated, or posted to a publicly accessible website, in whole or in part. Questionable Payments and Bribery Questionable Payments are: Bribes or gifts to expedite government actions or to gain advantage in business deals In many countries, such payments are expected, and people routinely
27、offer gifts or bribes Like the U.S., most countries have a law forbidding corrupt practices, but enforcement varies widely. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Implications:Questionable
28、 Payments, Bribes Corruption and bribery can have devastating effects on societies. Companies routinely use poorer-quality products or materials to make up for the bribe, thus resulting in inferior products with poor quality. Corruption can also result in collusion among firms, resulting in even hig
29、her prices. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Corruption Perception Index To understand the level of corruption in countries, multinational companies can rely on the Corruption Percep
30、tion Index (CPI). CPI, developed by Transparency International, gives an idea of the perceived levels of corruption within countries. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.5: Th
31、e CPI for Selected Countries 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. U.S. Foreign Corrupt Practices Act (FCPA) (1 of 3) The Foreign Corrupt Practices Act (FCPA) is the U.S. Law forbidding c
32、orrupt practices. The FCPA forbids US companies from illegal payments or gifts to officials of foreign governments for the sake of getting or retaining business. A firm may avoid liability if it has no “reason to know” that its agent has paid a bribe. 2013 Cengage Learning. All Rights Reserved. May
33、not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. U.S. Foreign Corrupt Practices Act (FCPA) (2 of 3) Tricky component is the “reason-to-know” component: Firms are liable for bribes if bribes are made by agents of the company. Firms often use local
34、 agents, as they have “local know how” in conducting business. Firms are liable if its common knowledge that agents bribe officials to commit illegal acts. If no knowledge or reason to expect illegal agent behavior, then firm is not held liable. 2013 Cengage Learning. All Rights Reserved. May not be
35、 scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. U.S. Foreign Corrupt Practices Act (FCPA) (3 of 3) The FCPA does not prohibit some forms of payments that may occur in international business: Payments made under duress to avoid injury or violence Small
36、 payments to encourage officials to do legitimate and routine jobs Payments which are lawful in a country “Grease” payments which do not seek illegal ends, but are used to speed up normal business 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a pu
37、blicly accessible website, in whole or in part. Exhibit 4.6: Excerpts, Foreign Corrupt Practices Act (1 of 2) 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.6: Excerpts, Foreign Corrupt
38、Practices Act (2 of 2) 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 4.7: FCPA: Number of Convictions 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,
39、 or posted to a publicly accessible website, in whole or in part. Exhibit 4.8: FCPA: Civil & Criminal Fines 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Toward Transnational Ethics Globalization
40、 dramatically increases contact among people from different ethical and cultural systems. This contact creates pressure for ethical convergence, and the development of transnational agreements among nations to govern business practices. Despite differences in cultures, there are growing pressures to
41、 follow the same rules in managing ethical behavior and social responsibility. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Four Basic Reasons for Ethical Convergence1.The growth of internationa
42、l trade and trading blocks2.Interaction between trading partners which increases pressures to imitate business practices3.Employees of varied cultural background who require common standards for conduct4.An increasing number of business watchdogs 2013 Cengage Learning. All Rights Reserved. May not b
43、e scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Prescriptive Ethics Prescriptive Ethics: Suggested guidelines for the ethical behavior of MNCs Three moral languages should guide MNCs: Avoiding harm Rights and duties Social contract These three are th
44、e easiest to specify in written codes Are also most appropriate in heterogeneous cultures 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Sources of International Ethics Guidelines (1 of 2) The Uni
45、ted Nations Universal Declaration of Human Rights The United Nations Code of Conduct on Transnational Corporations The European Convention on Human Rights The International Chamber of Commerce Guidelines for International Investment 2013 Cengage Learning. All Rights Reserved. May not be scanned, cop
46、ied or duplicated, or posted to a publicly accessible website, in whole or in part. Sources of International Ethics Guidelines (2 of 2) The Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises The Helsinki Final Act The International Labor Office Tripartite
47、Declarations of Principles Concerning Multinational Enterprises and Social Policy These may be sources for the Code of Conduct for the Multinational Company. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or
48、in part. Code of Conduct for the Multinational Two basic rationales: Basic deontological principles dealing with human rights (such as the right to work, right to be safe) History of experiences in international business interactions (MNCs often ignore the environment) However, despite agreements, M
49、NCs may not always follow ethical principles. Even if such Codes are not enforceable, they provide a safe guide to ethical conduct for management. 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Ex
50、hibit 4.9: A Code of Conduct for the Multinational Company 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Ethical Dilemma in Multinational Management: How Will You Decide? Ethical relativism v
