chapter 5

ethics and social responsibility in international business

Chapter Objectives 1
Describe the nature of ethics
Discuss ethics in cross-cultural and international contexts

Identify the key elements in managing ethical behavior across borders

Discuss social responsibility in crosscultural and international contexts

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Chapter Objectives 2
Identify and summarize the basic areas of social responsibility
Discuss how organizations manage social responsibility across borders Identify and summarize the key regulations governing international ethics and social responsibility

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Exporting Jobs or Abusing People?

Minute Maid
Tropicana Nestle Nike

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Ethics
Ethics is an individual's personal beliefs about whether a decision, behavior, or action is right or wrong.

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Ethical Generalizations
Individuals have their own personal belief systems
People from the same cultural context will tend to hold similar beliefs Behaviors can be rationalized Circumstances affect adherence to belief systems National culture is intertwined with ethics
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Figure 5.1 Ethics in a Cross-Cultural Context

Behavior of Organization Toward Employees Behavior of Employees Toward Organization

Cultural Context

Behavior of Employees and Organization Toward Other Economic Agents

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How Organizations Treat Employees

Some businesses in Africa have taken steps to educate their employees about how AIDS is contracted.

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Acceptability of Bribery
Acceptable
Russia China

Unacceptable
Australia Sweden

Taiwan
South Korea

Switzerland
Austria

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Managing Ethical Behavior Across Borders

Guidelines or codes Ethics training Organizational practices

Corporate culture

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Corporate Social Responsibility Corporate social responsibility is the set of obligations an organization undertakes to protect and enhance the society in which it functions.

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Areas of Social Responsibility

Organizational stakeholders

Natural environment

General social welfare

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Examples of Companies with a Commitment to CSR

L.L. Bean
Toyota Lands End 3M

Dell Computer
DaimlerChrysler BP Honda

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Map 5.1 Social Responsibility Hot Spots

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Approaches to Social Responsibility

Obstructionist Defensive Accommodative Proactive

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Figure 5.3 Approaches to Social Responsibility

Least Responsible

Most Responsible

Obstructionist

Defensive

Accommodative

Proactive

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Obstructionist Stance
Do as little as possible to address social or environmental problems
Deny or avoid responsibility

Examples
Astra

Nestle
Danone
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Defensive Stance
Do what is required legally, but nothing more
Corporate responsibility is to generate profits Example
Philip Morris

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Accommodative Stance
Meet ethical and legal requirements and more
Agree to participate in social programs

Match contributions by employees

Respond to requests from nonprofits No proactive behavior to seek such opportunities

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Proactive Stance
Strong support of social responsibility
Viewed as citizens of society Seek opportunities to contribute

Examples
McDonalds The Body Shop Ben & Jerrys

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Managing Compliance Formally

Legal compliance

Ethical compliance

Philanthropic giving

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Managing Compliance Informally

Leadership

Organizational culture

Whistle-blowing

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Evaluating Social Responsibility A corporate social audit is a formal and thorough analysis of the effectiveness of the firms social performance.

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Steps in Corporate Social Audit

Define social goals

Analyze resources devoted to each goal Determine degree of achievement for each goal Make recommendations
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Actors in Policy Formulation Process

The state

The market

Civil society

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Regional Stereotypes

Anglo-Saxon approach

Asian approach Continental European approach

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Regulating International Ethics and Social Responsibility

Foreign Corrupt Practices Act (FCPA)
Alien Tort Claims Act Anti-Bribery Convention of the Organization for Economic Cooperation and Development International Labor Organization (ILO)

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