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.
Ethics in International Business
Arise when a manager makes decisions consistent with differing national environments
Economic development levels
What is ethical and “normal” in one environment may not be so in anotherEthical Issues in International Business
Arise most often in the context of: differing national environments
An MNC’s perceived moral obligations to societyEthical Issues in International Business
What standards should be applied? differing national environments
Should the MNC adapt its policies? Standardize?
Hiring practices, labor relations, diversity issues, employment conditions are some specific issues that require careful thoughtEmployment Practices
What is the responsibility of an MNC to uphold different standards of human rights?Human Rights
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
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
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)Corruption
MNCs have power over a host country things done”
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
Host country viewMNC Power and Moral Decisions
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
Organization culture after consideration of social consequences of economic actions
Decision making processes
Unrealistic / realistic performance goalsDeterminants of Ethical Behavior
Utilitarian and Kantian Ethics
Justice theoriesPhilosophical Approaches to Ethics
Hiring and promotion MNC behavior
Organization culture and leadership
Codes of ethics
Moral courage: walk away from profitable and unethical decisionEthical Decision Making