1、12021/2/21chapter Ethics in International BusinessMcGraw-Hill/IrwinGlobal Business Today, 5e 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.4Chapter 4: Ethics in International BusinessINTRODUCTIONEthics refers to accepted principles of right or wrong that govern the conduct of a person, t
2、he members of a profession, or the actions of an organization. Business ethics are the accepted principles of right or wrong governing the conduct of business people.Ethical strategy is a strategy, or course of action, that does not violate these accepted principles. Chapter 4: Ethics in Internation
3、al BusinessETHICAL ISSUES IN INTERNATIONAL BUSINESSThe most common ethical issues in business involve employment practices, human rights, environmental regulations, corruption, and the moral obligation of multinational companies. Chapter 4: Ethics in International BusinessEmployment Practices When w
4、ork conditions in a host nation are clearly inferior to those in a multinationals home nation, companies must decide which standards should be applied, those of the home nation, those of the host nation, or something in between Chapter 4: Ethics in International BusinessHuman Rights Basic human righ
5、ts taken for granted in the developed world such as freedom of association, freedom of speech, freedom of assembly, freedom of movement, and so on, are by no means universally accepted Chapter 4: Ethics in International BusinessEnvironmental Pollution When environmental regulations in host nations a
6、re far inferior to those in the home nation, ethical issues arise The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals resulting in its degradation Chapter 4: Ethics in International BusinessClassroom Performance SystemMultinational
7、 companies are concerned with ethics is all of the following areas excepta) Employment practicesb) Human rightsc) Environmental regulationsd) Trade regulations Chapter 4: Ethics in International BusinessCorruption In the United States, the Foreign Corrupt Practices Act outlawed the practice of payin
8、g bribes to foreign government officials in order to gain business The Organization for Economic Cooperation and Development (OECD) adopted a Convention on Combating Bribery of Foreign Public Officials in International Business Transactions in 1997 which obliges member states to make the bribery of
9、foreign public officials a criminal offense Chapter 4: Ethics in International Business Some economists suggest that the practice of giving bribes might be the price that must be paid to do a greater good These economists believe that in a country where preexisting political structures distort or li
10、mit the workings of the market mechanism, corruption in the form of black-marketeering, smuggling, and side payments to government bureaucrats to “speed up” approval for business investments may actually enhance welfare Other economists have argued that corruption reduces the returns on business inv
11、estment and leads to low economic growthChapter 4: Ethics in International BusinessMoral Obligations The concept of social responsibility refers to the idea that business people should take the social consequences of economic actions into account when making business decisions, and that there should
12、 be a presumption in favor of decisions that have both good economic and good social consequences In its purest form, social responsibility can be supported for its own sake simply because it is the right way for a business to behave Advocates of this approach argue that businesses need to recognize
13、 their noblesse oblige (honorable and benevolent behavior that is the responsibility of successful companies) and give something back to the societies that have made their success possibleChapter 4: Ethics in International BusinessETHICAL DILEMMASEthical dilemmas are situations in which none of the
14、available alternatives seems ethically acceptable. Chapter 4: Ethics in International BusinessTHE ROOTS OF UNETHICAL BEHAVIORPersonal Ethics Business ethics reflect personal ethics (the generally accepted principles of right and wrong governing the conduct of individuals) Expatriates may face pressu
15、re to violate their personal ethics because they are away from their ordinary social context and supporting culture, and they are psychologically and geographically distant from the parent company Chapter 4: Ethics in International BusinessDecision Making ProcessesStudies show that business people m
16、ay behave unethically because they fail to ask the relevant questionis this decision or action ethical?Chapter 4: Ethics in International BusinessOrganization Culture In firms with an organization culture (the values and norms that are shared among employees of an organization) that does not emphasi
17、ze business culture, unethical behavior may existChapter 4: Ethics in International BusinessUnrealistic Performance Expectations Pressure from the parent company to meet performance goals that are unrealistic, and can only be attained by cutting corners or acting in an unethical manner can cause une
18、thical behavior Leadership If leaders are not acting ethically, other employees may not act ethicallyChapter 4: Ethics in International BusinessThe causes of unethical behavior are shown in Figure 4.1.Chapter 4: Ethics in International BusinessClassroom Performance SystemWhich of the following does
19、not contribute to unethical behavior by managers?a) Unrealistic performance goalsb) Leadershipc) Organizational cultured) Restrictions on bribesChapter 4: Ethics in International BusinessPHILOSOPHICAL APPROACHES TO ETHICSStraw Men Straw men approaches to business ethics are approaches that are raise
20、d by business ethics scholars primarily for the purpose of demonstrating that they offer inappropriate guidelines for ethical decision making in a multinational enterprise. Four such approaches are the Friedman doctrine, cultural relativism, the righteous moralist, and the nave immoralist.Chapter 4:
21、 Ethics in International BusinessThe Friedman Doctrine Economists Milton Friedmans position is that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law Cultural Relativism Cultural relativism is the belief that ethics are culturally
22、 determined and that firms should adopt the ethics of the cultures in which they operate, or in other words, “when in Rome, do as the Romans do” Chapter 4: Ethics in International BusinessThe Righteous Moralist The righteous moralist approach claims that a multinationals home country standards of et
23、hics are the appropriate ones for companies to follow in foreign countries The Nave Immoralist The nave immoralist asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not eitherChapter 4: Ethics in Inte
24、rnational BusinessUtilitarian and Kantian Ethics Utilitarian approaches to ethics hold that the moral worth of actions or practices is determined by their consequences An action is judged to be desirable if it leads to the best possible balance of good consequences over bad consequences Chapter 4: E
25、thics in International Business Problems with the approach is measuring the benefits, costs, and risks of a course of action, and the fact that philosophy fails to consider justice Kantian ethics are based on the philosophy of Immanuel Kant who argued that people should be treated as ends and never
26、purely as means to the ends of others Chapter 4: Ethics in International BusinessRights Theories Rights theories recognize that human beings have fundamental rights and privileges that transcend national boundaries and culture Moral theorists argue that fundamental human rights form the basis for th
27、e moral compass that managers should navigate by when making decisions that have an ethical component The idea that some fundamental rights transcend national borders and cultures was the underlying motivation for the UNs Universal Declaration of Human Rights (specifies the basic principles that sho
28、uld always be adhered to irrespective of the culture in which one is doing business)Chapter 4: Ethics in International BusinessJustice Theories Justice theories focus on the attainment of a just distribution of economic goods and services A just distribution is one that is considered fair and equita
29、ble Chapter 4: Ethics in International Business One theory of justice was set forth by John Rawls who argued that all economic goods and services should be distributed equally except when an unequal distribution would work to everyones advantage Impartiality is guaranteed by the veil of ignorance (e
30、veryone is imagined to be ignorant of all his or her particular characteristics) where people would agree that each person is permitted the maximum amount of basic liberty compatible with a similar liberty for others, and that once equal basic liberty is assured, inequality in basic goods social goo
31、ds are to be allowed only if they benefit everyone Rawls formulates the difference principle, which is that inequalities are justified if they benefit the position of the least advantaged person Chapter 4: Ethics in International BusinessClassroom Performance SystemWhich philosophy claims that a com
32、panys home-country standards of ethics are the appropriate ones to follow in foreign countries?a) Cultural relativismb) Righteous moralistc) Friedman doctrined) Nave immoralist Chapter 4: Ethics in International BusinessIMPLICATIONS FOR MANAGERS Firms that ensure ethical issues are considered in bus
33、iness decisions: favor hiring and promoting people with a well grounded sense of personal ethics build an organizational culture that places a high value on ethical behavior makes sure that leaders within the business not only articulate the rhetoric of ethical behavior, but also act in manner that
34、is consistent with that rhetoric put decision making processes in place that require people to consider the ethical dimension of business decisions develop moral courageChapter 4: Ethics in International BusinessHiring and Promotion Businesses should strive to identify and hire people with a strong
35、sense of personal ethics Prospective employees should find out as much as they can about the ethical climate in an organization Chapter 4: Ethics in International BusinessOrganization Culture and LeadershipBusinesses need to build an organization culture that places a high value on ethical behavior:
36、 the business must explicitly articulate values that place a strong emphasis on ethical behavior, perhaps using a code of ethics (a formal statement of the ethical priorities a business adheres to) leaders in the business should give life and meaning to the code of ethics by repeatedly emphasizing t
37、heir importance, and then acting on them the business should put in place a system of incentives and rewards that recognize people who engage in ethical behavior and sanction those who do notChapter 4: Ethics in International BusinessDecision Making ProcessesA moral compass can help determine whethe
38、r a decision is ethical. If a manager can answer “yes” to the following questions, the decision is ethically acceptable. does my decision fall within the accepted values of standards that typically apply in the organizational environment? am I willing to see the decision communicated to all stakehol
39、ders affected by it? would the people with whom I have significant personal relationships approve of the decision?Chapter 4: Ethics in International BusinessA five step process can also help managers think through ethical problems: business people should identify which stakeholders (the individuals
40、or groups who have an interest, stake, or claim in the actions and overall performance of a company) a decision would affect and in what ways Internal stakeholders are people who work for or who own the business such as employees, the board of directors, and stockholders. External stakeholders are t
41、he individuals or groups who have some claim on a firm such as customers, suppliers, and unions.Chapter 4: Ethics in International Business Then, managers need to determine whether a proposed decision would violate the fundamental rights of any stakeholders Next, managers need to establish moral int
42、ent (the business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated) The company should then engage in ethical behavior Finally, the business must audit its decisions, reviewing them to
43、 make sure that they were consistent with ethical principlesChapter 4: Ethics in International BusinessEthics Officers To ensure ethical behavior in a business, a number of firms now have ethics officers Moral Courage It is important to recognize that employees in an international business may need
44、significant moral courage Chapter 4: Ethics in International BusinessClassroom Performance SystemA companys formal statement of ethical priorities is called itsa) Mission statementb) Code of ethicsc) Code of valuesd) Organizational culture Chapter 4: Ethics in International BusinessSummary of Manage
45、rial ActionsIn the end, there are clearly things that an international business should do, and there are things that an international business should not do, but there are also actions that present managers with true dilemmasChapter 4: Ethics in International BusinessCRITICAL THINKING AND DISCUSSION
46、 QUESTIONS1. Review the Management Focus on testing drugs in the developing world and discuss the following questions: (a) Did Pfizer behave unethically by rushing to take advantage of an epidemic in Nigeria in order to test an experimental drug on sick children? Should the company have proceeded mo
47、re carefully? (b) Is it ethical to test an experimental drug on children in emergency settings in the developing world where the overall standard of health care is much lower than in the developed world, and where proper protocols might not be followed? Chapter 4: Ethics in International BusinessCRI
48、TICAL THINKING AND DISCUSSION QUESTIONS2. A visiting American executive finds that a foreign subsidiary in a poor nation has hired a 12-year old girl to work on a factory floor, in violation of the companys prohibition on child labor. He tells the local manager to replace the child and tell her to g
49、o back to school. The local manager tells the American executive that the child is an orphan with no other means of support, and she will probably become a street child if she is denied work. What should the American executive do?Chapter 4: Ethics in International BusinessCRITICAL THINKING AND DISCU
50、SSION QUESTIONS3. Drawing upon John Rawls concept, the veil of ignorance, develop an ethical code that will (a) guide the decisions of a large oil multinational towards environmental protection, and (b) influence the policies of a clothing company to outsource its manufacturing process? Chapter 4: E
