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0. Ethical Issues in the Global Arena. Chapter 10. Prepared by Deborah Baker Texas Christian University. Business and Society: Ethics and Stakeholder Management, 7e • Carroll & Buchholtz Copyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved. 0.

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ethical issues in the global arena

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Ethical Issues in the Global Arena

Chapter10

Prepared by Deborah BakerTexas Christian University

Business and Society: Ethics and Stakeholder Management, 7e • Carroll & BuchholtzCopyright ©2009 by South-Western, a division of Cengage Learning.  All rights reserved

chapter 10 outline

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Chapter 10 Outline
  • Multinational Corporations (MNCs) and the Global Environment
  • Ethical Issues in the Global Business Environment
  • Improving Global Business Ethics
concepts of global business

A process by which firms increasetheir awareness of the influence ofinternational activities on their futureand conduct transactions with firmsfrom other countries

The global economic integration of manyformerly national economies into oneglobal economy

Internationalization

Globalization

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Concepts of Global Business
backlash against globalization

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Backlash Against Globalization
  • Outsourcing of jobs to less-developed nations
  • Tenth anniversary of NAFTA
globalists and antiglobalists

Pros

Cons

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Globalists and Antiglobalists
  • Open markets across globe
  • Investors, consumers, employees, and environmentalists are better off
  • Beneficial to poor and rich nations alike
  • Expansion and greed of corporate enterprises
  • Globalization is responsible for destruction of environments and emerging economies, abuses of human rights, undermining of local cultures, and the sovereignty of nation-states
  • Power of international bodies
mncs and the global environment

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MNCs and the Global Environment
  • Changed scope and nature of U.S.-based multinationals
  • Underlying challenges of operating in new world of business
    • Corporate legitimacy
    • Differing philosophies between MNCs and host countries
    • MNC and host country challenges
the dilemma of the multinational corporation

Home CountryStakeholder Pressures

Host CountryStakeholder Pressures

Standards

Practices

Ethics

Laws

Culture

Customs

System ofGovernment

Socioeconomic System

Standards

Practices

Ethics

Laws

Culture

Customs

System ofGovernment

SocioeconomicSystem

The Multinational Corporation

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The Dilemma of the Multinational Corporation

Figure 10-2

other mnc host country challenges

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Other MNC-Host Country Challenges
  • Cultural differences
  • Business / government differences
  • Management and control of global operations
    • Organizational structure
    • Human resource management
  • Exploration of global markets
    • Modify or redesign products appropriate for the intended market
    • Be sensitive to the impacts of products
    • Be sensitive to politically-vulnerable products
ethical issues in global business

Product safety

Plant safety

Advertising practices

Human resource management

Environmental problems

Business practices

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Ethical Issues in Global Business
arguments for and against bribery
Necessary for profits in order to do business

Common practice

Accepted practice

Form of commission, tax, or compensation

Wrong and illegal in most developed nations

Compromise personal beliefs

Managers should not deal with corrupt governments

Once started, never stops

One should take a stand for honesty, morality, ethics

Benefits recipient only

Creates dependence on corruption

Deceives stockholders and costscustomers

For Bribery

Against Bribery

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Arguments For and Against Bribery
bribes versus grease payments

Grease Payments

Relatively small sums of money given for the purpose of getting minor officials to:

  • Do what they are supposed to be doing
  • Do what they are supposed to be doing faster
  • Do what they are supposed to be doing better

Bribes

Relatively large amounts of money given for the purpose of influencing officials to make decisions or take actions that they otherwise might nottake. If the officials considered the merits of the situation only, they might take some other action.

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Bribes versus Grease Payments

Figure 10-4

initiatives against bribery

Foreign Corrupt Practices Act

Transparency International

OECD Antibribery Initiatives

UN Convention Against Corruption

Individual Country Initiatives

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Initiatives Against Bribery
other global ethics issues

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Other Global Ethics Issues
  • Acts of terrorism
  • Kidnappings, murder, and violence against businesspeople
  • Rogue nations
balancing and reconciling ethics traditions

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Balancing and Reconciling Ethics Traditions

The Challenge

of the Multinational Corporation

Home CountryEthical Standards

Host CountryEthical Standards

OR

ethical choices in home versus host country situations

International LawGlobal Codes of Conduct

ETHICAL IMPERIALISM

CULTURAL RELATIVISM

BROAD MIDDLE GROUND

HomeCountry

HostCountry

  • Cultural standards
  • Ethical/moral standards of home country
  • Cultural standards
  • Ethical/moral standards of host country

Mix of Home and Host Country Standards

Application of Ethical Principles

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Ethical Choices in Home Versus Host Country Situations

Figure 10-5

ethical choices in home versus host country situations17

Questions to be Resolved by Management:

Which ethical standards will be used?

Which ethical standards will transcend national boundaries?

Worker and product safety? Fair treatment?

Health? Discrimination? Freedom? Minimum pay?

Consumer rights? Environmental Protection?

What constitutes moral minimums in each category?

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Ethical Choices in Home Versus Host Country Situations

Figure 10-5

strategies for improving global business ethics

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Strategies for Improving Global Business Ethics
  • Create global codes of conduct
  • Integrate ethics into a global strategy
  • Suspend activities in host country
  • Create ethical impact statements and audits
companies act against corruption

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Companies Act Against Corruption
  • High-level commitment by top management
  • Detailed statements of policies and operating procedures
  • Training and discussion of policies and procedures
  • Hotlines and helplines for all organizational members
  • Investigative follow-up, reporting, and disclosure