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 scanned,copi
2、ed 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 social institut
3、ions 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 publicly accessible website,i
4、n 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 ethical analyses of business problems
5、 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 Every Multinational company faces ethic
6、al 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 cheap child labor,even if its not illegal,ju
7、st 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 Learning.All Rights Reserved.May not be scanned,copied or
8、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 life the rules and values that determine actions people should f
9、ollow 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 unambiguous answers.2013 Cengage Learning.All Rights Reserved.May not be sc
10、anned,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 national boundaries.International business ethics differs from domestic business eth
11、ics 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 over the use of such power.2013 Cengage Learning.All Rights Reserved.May not be scanned
12、,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 responsibility to society beyond making profits CSR is closely related to business ethics.CSR is concerned
13、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 Rights Reserved.May not be scanned,copied or duplicated,or posted to a publicly accessible website,in
14、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 Stakeholders:those who are less directly linked to the companys survival,but have impact;these include the medi
15、a,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 Rights Reserved.May not be scanned,copied or duplicated,or posted to a publicly accessible website,in whole or in part.
16、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 accessible website,in whole or in part.Ethical Philosophy(1 of 2)Two approaches to ethical decision making:Traditional Views Teleol
17、ogical ethical theories Morality of an act based on consequences Utilitarianism:greatest good for greatest number Deontological ethical theories Actions are good or bad in and of themselves Contemporary philosophy Moral Languages 2013 Cengage Learning.All Rights Reserved.May not be scanned,copied or
18、 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 think about ethical decisions and explain their ethical choices Six basic ethical languages:Virtue and vice Self-control Maximizing human welfare A
19、voiding harm Rights and duties Social contract 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.National Differences in Business Ethics and Social Responsibility National culture and social institutions a
20、ffect how businesses manage ethical behavior and social responsibility.Cultural norms&values influence conformity to laws,and bribery,among others.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 ar
21、e managed.Although there are differences between societies,some actions are universally condemned(i.e.,harming children).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 4.3:A Model of Institution
22、al&Cultural Effects on Business Ethics Issues&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.Why Cultural Differences?Institutional Anomie Theory and other research:Some national culture and
23、social institutions are likely to encourage breaking norms,justifying ethically suspect behaviors.National cultures that value high achievement,high individualism,high universalism,high materialism are all related to higher deviance from norms.Social institutions such as high industrialization,capit
24、alist systems,lower family breakdown,and highly accessible educational systems all encourage deviance from norms.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 Accepta
25、nce of Ethically Suspect Behaviors 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.Questionable Payments and Bribery Questionable Payments are:Bribes or gifts to expedite government actions or to gain ad
26、vantage in business deals In many countries,such payments are expected,and people routinely 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 po
27、sted to a publicly accessible website,in whole or in part.Implications:Questionable 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 qua
28、lity.Corruption can also result in collusion among firms,resulting in even higher 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
29、in countries,multinational companies can rely on the Corruption Perception 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 publ
30、icly accessible website,in whole or in part.Exhibit 4.5:The 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 P
31、ractices Act(FCPA)is the U.S.Law forbidding corrupt 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 Cen
32、gage 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)(2 of 3)Tricky component is the“reason-to-know”component:Firms are liable for bribes if bribes are made by agents of the com
33、pany.Firms often use local 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 Re
34、served.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)(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 violen
35、ce Small 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 p
36、ublicly 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 Practices Act
37、(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,or posted to a publicly ac
38、cessible 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 dramatically increases contact among p
39、eople 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 follow the same rules in managing ethical
40、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 international trade and trading blocks2.Interaction between tr
41、ading 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 be scanned,copied or duplicated,or posted to a public
42、ly 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 the easiest to specify in written codes Are also most approp
43、riate 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 United Nations Universal Declaration of Human Rights The United Natio
44、ns 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,copied or duplicated,or posted to a publicly accessible website,in whole
45、 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 Declarations of Principles Concerning Multinational Enterprises and Social
46、 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 in part.Code of Conduct for the Multinational Two basic rationales:Basic deontol
47、ogical 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,MNCs may not always follow ethical principles.Even if such Codes are not enforceable,they
48、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.Exhibit 4.9:A Code of Conduct for the Multinational Company 2013 Cengage Learning.All Rights Reserve
49、d.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 vs.Ethical universalism Ethical relativism:Each societys view of ethics must be considered legitimate and et
50、hical.(When in Rome)Ethical universalism:Basic moral principles transcend cultural and national boundaries Difficulty in following either standard Ethical relativism can become convenient relativism.2013 Cengage Learning.All Rights Reserved.May not be scanned,copied or duplicated,or posted to a publ
