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Business Ethics

Globalization and Business Ethics

Globalization

Commerce has become global since no economy fulfils all its needs on its own Globalization facilitated by

Falling trade barriers Political reforms have opened new frontiers More developing nations joining globalization Emergence of new technologies

Globalized Business

Ethnocentric Viewpoint

Formerly the home country laws were viewed as dominant but now the entire world is home Firms develop managers from a worldwide pool of talent

Geocentric Viewpoint

Role of MNCs

International Corporation

Company with strong national identification with the main focus being the home market Business operates in more than one country So big that it is beyond the control of a single government

Multinational Corporation

Big MNCs

Worlds top 2000 corporations have combined sales that are greater than 25% of world GDP They are bigger than the combined GDP of 182 countries, i.e., except the biggest nine countries Of the 100 largest economies in the world, 51 are global corporations and only 49 are countries They exert enormous political and economic clout They are regarded as exploiters of national wealth They are considered to be an extension of colonialism since most of them are Western

International Business Issues

Promotion of free trade while protecting domestic industry Intellectual property rights Issue of exploitation of natural resources in developing countries

Benefits of MNCs

Better access to worldwide markets Best access to capital investment Transfer of advanced technology Encouragement of local supplier development New jobs for labor Advanced training for labor Better access to management talent New products for consumers Low cost products and better products Exports contribution to the host nation

Disadvantages of MNCs

Loss of sovereignty Political interests of MNCs may mirror home nation Host nation may lose control of its economy Negative impact on balance of payments because of heavy imports of spares, etc. Exploitation of non-renewable resources Exploitation of host country labor when host country needs them Indulgence in harmful environmental acts

International Codes of Conduct


ILO covenants UN Commission on Transnational Corporations OECD statutes Caux Round Table Social Accountability International SA8000 Global Reporting Initiative Account Ability Global Compact

Limits of Voluntary Approach

Voluntary codes since they do not attract penalties Very few firms have adopted them and they do not cover all areas Firms may adopt only some codes but not all of them Most of the codes set standards that are below national standards Multiplicity of codes work at cross purposes

Caux Round Table


Towards worldwide business Stakeholders Employees Owners/Investors Suppliers Community

Towards Woldwide Business

Business responsibilities are beyond shareholders and towards stakeholders Economic and social impact of business to world community Beyond the law and towards a spirit of trust Respect for rules Support for multinational trade Respect for environment Avoidance of illicit operations like bribery, money laundering, etc.

Stakeholders

Provide highest quality products are reasonable prices Remedy customer dissatisfaction Health and safety of customer and quality of his life not impaired by the work Ensure human dignity in goods offered Respect the integrity and culture of customers

Employees

Working conditions to be fair and improved constantly Health and dignity of worker to be bourn in mind Open in dealings, share all but classified information Listen to and act on employee suggestions In conflicts, engage in good faith negotiation No discrimination on any ground Put principle of ergonomics in practice Update skills and knowledge of employees Sensitive employee problems to be tackled amicably

Owners/Investors

Fair and competitive return on capital by efficient management Disclose all relevant information except those in classified list Conserve, protects and increase owners assets Respect their complaints for solutions

Suppliers

Pricing to be fair No coercion or litigation Long term stability

Community

Human rights respected and maintained Good corporate citizen through charitable donations

Global Compact

Human rights Labor standards Environment Anti-corruption

Human rights

Businesses should support and respect the protection of internationally proclaimed human rights Make sure they are not complicit in human rights abuses

Labor standards

Uphold freedom of association and the effective recognition of right to collective bargaining Elimination of all forms of forced and compulsory labor Effective abolition of child labor Elimination of discrimination in employment and occupation

Environment

Support precautionary approach to environmental challenges Undertake initiatives to promote greater environmental responsibility Encourage development and diffusion of environmentally friendly technologies

Anti-corruption

Work against corruption in all its forms, including extortion and bribery

The End

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