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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. • “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.
Pollution • 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.
Telecommunications • 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
NEXT|Business, Environment, and Sustainability Misbahuddin Azzuhri