ETHICS IN A GLOBAL ENVIRONMENT

1. Ethics and international management

2. Major ethical issues and problems confronting MNCs

4. Why should MNCs care? 5. How have MNCs responded?

Ethics and International Management

What is ethics?
Ethics is the study of morality and standards of conduct (HLD, p. 57)

How is ethical behavior defined?

Regulations and accounting standards Codes of conduct Social norms

The challenge for international managers

Standards vary from country to country Coordinating compliance can be burdensome

Major Ethical Issues

Corporate behavior
Corruption and lobbying Fraud and misrepresentation Conflicts of interest

Hostile or discriminatory workplaces

Unsafe workplaces Lack of respect for individual rights Discriminatory practices

The social impact of corporate behavior

Market-distorting practices Social inequality Adverse environmental impacts

Ethical Issues Around the World

Japan
Payments to politicians for favorable treatment Concealing customer complaints Unequal status of women in the workplace

Europe
Widespread acceptance of side payments (bribes) as a business cost Discriminatory workplaces

China
Lack of workers rights Weak IP protections/enforcement

Ethical Issues in Global Business

Questionable marketing and safety practices Sweatshop and labor abuse Corruption, bribery, and questionable payments

Improving Global Business Ethics

The Dilemma of the Multinational Corporation
Home Country Stakeholder Pressures
The Multinational Corp.

Host Country Stakeholder Pressures

Improving Global Business Ethics

Ethical Choices in Home vs. Host Country Situations
International Law Global Codes of Conduct

ETHICAL IMPERIALISM Home Country Cultural standards Ethical/moral standards of home country

CULTURAL RELATIVISM

Broad Middle Ground

Host Country Cultural standards Ethical/moral standards of host country

Mix of Home and Host Country Standards

Application of Ethical Principles (see notes)

Improving Global Business Ethics

Typology of Global Types
Foreign type Empire type Interconnection type Global type

Improving Global Business Ethics

Integrative Social Contract Theory (ISCT)
Hypernorms consist of transcultural values including fundamental human rights Consistent norms consist of norms that are culturally specific, but consistent with hypernorms Moral free space norms consist of strongly held cultural beliefs in particular countries that are in tension with hypernorms Illegitimate norms consist of norms that are incompatible with hypernorms

Improving Global Business Ethics

Four Actions for Improving International Business Ethics
Create global codes of conduct
Global codes and standards set by corporations Global Codes and standards set by international organizations

Integrate ethics into a global strategy Suspend activities in host country Create ethical impact statements

Improving Global Business Ethics

Global Codes and Standards Developed by International Organizations
Caux Principles Global Reporting Initiative Global Sullivan Principles OECD Guidelines for Multinational Enterprises Principles for Global Corporate Responsibility: Benchmarks UN Global Compact

Improving Global Business Ethics

Fundamental International Rights
1. The right to physical movement 2. The right to ownership of property 3. The right to freedom from torture 4. The right to a fair trial 5. The right to nondiscriminatory treatment 6. The right to physical security 7. The right to freedom of speech and association 8. The right to minimal education 9. The right to political participation 10. The right to subsistence

Improving Global Business Ethics

Inflict no intentional or direct harm Produce more good than bad for the host country Contribute to host countrys development Respect the human rights of their employees

Seven Moral Guidelines for MNCs

Pay their fair share of taxes Respect local cultural beliefs that do not violate moral norms Cooperate with the government to develop and enforce background institutions