Business ethics in a global economy
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BUSINESS ETHICS| IN A GLOBAL ECONOMY. Misbahuddin Azzuhri. Ethical Perspectives in International Business. when businesspeople travel abroad, they sometimes perceived different modes of operation . research shows that American companies feel they are different from may foreign companies .

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Misbahuddin Azzuhri

Ethical Perspectives in International Business

  • when businesspeople travel abroad, they sometimes perceived different modes of operation.

  • research shows that American companies feel they are different from may foreign companies.

  • “we” versus “them” is referred to as self-reference criterion-unconscious reference to one’s own cultural values, experiences, & knowledge.

Culture as a Factor in International Business

  • culture is everything in our surroundings made by people-both tangible and intangible concepts & values

    • each nation has a distinctive culture & beliefs about acceptable or unethical activities

  • citizens of different cultures vary based on their religious beliefs as well as perceptions of time

  • the key question: whose values & ethical standards take precedence

Cultural Relativism...

  • the concept that morality varies from one culture to the next since business practices are defined as right or wrong by the particular culture

    • ethical relativism-one culture definesethical behavior for the whole globe, no exceptions

    • business relativist-there may be no ethical standards except for the one in the transaction culture

Multinational Corporations...

  • operate on a global scale without significant ties to any one nation or region

    • perceived to be unfair for MNCs to transfer jobs abroad where wage rates are lower

    • have been accused of increasing the gap between the rich & poor nations

    • have been accused of exploiting natural & human resources

    • have been accused of engaging in unfair competition

Global Ethical Issues

  • sexual & racial discrimination

  • human rights

  • price discrimination

  • bribery

  • harmful products

  • pollution

  • telecommunications

Sexual & Racial Discrimination

  • discrimination is often justified on the basis of cultural norms & values.

  • discrimination remains one of the more prevalent concerns in international business.

  • Indonesian laws prohibit businesses activities from discriminating on the basis of race, ethnicity, region, sex, religion & ability.

Human Rights

  • opportunistic use of child labor, payment of low wages, abuses in foreign factories are a few of the concerns.

  • relationships with subcontractors have proved problematic for some firms.

  • MNCs should view the law as a floor of acceptable behavior & strive for greater improvements in workers’ quality of life.

Advancing Human Rights...

  • engage in an open dialog with workers & management.

  • be aware of human rights issues & concerns in each country in which they engage in business.

  • adopt the prevailing legal standard, but seek to embrace a ‘best practices’ approach and standard.

Price Discrimination

  • occurs when a firm charges different prices to different groups of consumers

    • allowable if justified based on costs

  • price gouging-a price increase exceeding the costs of additional expenses (taxes, etc.)

  • dumping-charging high prices for products sold in the home market and low prices that do not cover costs in foreign markets (considered illegal under many international laws)

Bribery & the Foreign Corrupt Practices Act...

  • bribes & facilitating payments are acceptable in many cultures

  • the Indonesian anti-Corruption Act prohibits MNCsand national corporations from offering or providing payments to officials of foreign governments for the purpose of obtaining or retaining business abroad

    • may Indonesian businesses at a disadvantage

    • has been supported through global treaties

Harmful Products

  • product banned in many industrial nations, considered harmful, are sold in other countries where they are still legal.

  • dumping of hazardous waste materials in less developed countries is a related issue.

  • some products that are not harmful in some countries may be so in others because of issues related to: literacy, unsanitary conditions, & cultural values.


  • many countries are working together to create alliances & standards for environmental responsibility to minimize the negative effects of pollution.

  • some countries are taking legal action against polluting firms in an effort to defend air & water quality.

  • reasonable global emission standards must be established.


  • satellites, e-mail & the Internet bring a ease of information access with resulting ethical issues

  • a few of the ethical issues include:

    • counterfeiting

    • knockoffs

    • money laundering

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Misbahuddin Azzuhri

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