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Chapter 4. Ethics in International Business. Arise when a manager makes decisions consistent with differing national environments Political systems Legal systems Economic development levels Culture What is ethical and “normal” in one environment may not be so in another.

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chapter 4

Chapter 4

Ethics in International Business

ethical issues in international business
Arise when a manager makes decisions consistent with differing national environments

Political systems

Legal systems

Economic development levels


What is ethical and “normal” in one environment may not be so in another

Ethical Issues in International Business
ethical issues in international business1
Arise most often in the context of:

Employment practices

Human rights

Environmental policy


An MNC’s perceived moral obligations to society

Ethical Issues in International Business
employment practices
What standards should be applied?

Home nation’s

Host nation’s


Should the MNC adapt its policies? Standardize?

Hiring practices, labor relations, diversity issues, employment conditions are some specific issues that require careful thought

Employment Practices
human rights
A manager can assume as universal her/his views on freedom of:





Political repression

What is the responsibility of an MNC to uphold different standards of human rights?

Human Rights
repressive regimes
Is it ethical for MNCs to operate in countries with repressive regimes?

Is inward investment an agent for change?

What is the limit beyond which inward investment would not be justified under all circumstances?

What if competitors from other nations invest and you don’t?

Repressive Regimes
environmental policies
Locally mandated environmental standards may be inferior to those an MNC knows it can achieve

Tragedy of the commons: a resource held in common by all, but owned by no one, is overused by some, resulting in degradation.

If a decision is legal but unethical, should it be taken?

Environmental Policies
Government officials may ask for bribes for an MNC to “get things done”

Is an MNC’s manager who agrees a corrupt manager?

Should an MNC ever accede to bribery demands?

Foreign corrupt practices act (USA)

Convention on Combating Bribery of Foreign Officials in International Business Transactions (OECD)

mnc power and moral decisions
MNCs have power over a host country

They can move production away

Along with power arise obligations (?)

Power is morally neutral

How it is used is what matters

Perceptions of how it should be used and of its impact vary

Company view

Host country view

MNC Power and Moral Decisions
mnc and social responsibility
Social responsibility: business decisions should be made after consideration of social consequences of economic actions

Noblesse oblige: honorable and benevolent behavior is the responsibility of those in power

Benevolent behavior responsibility of only successful business?

MNC and Social Responsibility
determinants of ethical behavior
Organization culture

Personal ethics

Decision making processes


Unrealistic / realistic performance goals

Determinants of Ethical Behavior
philosophical approaches to ethics
Straw men: often adopted, offer inappropriate guidelines for MNC behavior

Friedman doctrine

Righteous moralist

Naïve immoralist

Utilitarian and Kantian Ethics

Rights theories

Justice theories

Philosophical Approaches to Ethics
ethical decision making
Hiring and promotion

Organization culture and leadership

Decision-making processes

Stakeholder perspectives

Ethics officers

Codes of ethics

Moral courage: walk away from profitable and unethical decision

Ethical Decision Making