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BA 385: What MNCs Owe Society. Chapter Nine: ETHICAL ISSUES in the GLOBAL ARENA. Internationalization. Globalization. Concepts of Global Business. 1945-55. 1955-70. 1970-80. The Post-World War II Decade. The Growth Years. The Troubled Years.

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BA 385: What MNCs Owe Society


eras of internationalization




The Post-World War II Decade

The Growth Years

The Troubled Years

A period of reconstruction dominated by the United States

Japanese and European firms recover and the first U.S.-based international firms become multinational

A U.S. balance of payments deficit and worldwide oil crisis have a negative impact

Eras of Internationalization
eras of internationalization1



The New International Order

The New, New World

Though the U.S. role in the world economy is diminished, it is pressured to be a world leader in the ethics arena

A backlash against globalism began. In the early 2000’s the US

lost the leadership role in ethics due to war against Iraq and

scandalous business behavior.

Eras of Internationalization
mnc s and the global environment
MNC’s and the Global Environment
  • Changed scope and nature of U.S.-based multinationals
  • Underlying challenges of operating in new world of business
  • Corporate legitimacy
  • MNC and host country philosophy
  • MNC and host country challenges
      • Cultural differences
      • Business and government differences
      • Management and control of global operations
      • Exploration of global markets
the dilemma of the multinational corporation

Home CountryStakeholder Pressures

Host CountryStakeholder Pressures







System ofGovernment

Socioeconomic System







System ofGovernment


The Multinational Corporation

The Dilemma of the Multinational Corporation
ethical issues in global business

Product safety

Plant safety

Advertising practices

Human resource management

Environmental problems

Ethical Issues in Global Business

social accountability 8000
Social Accountability 8000

Child labor

Forced labor

Health and safety

Freedom of association and Right to Collective Bargaining



Working Hours


Management Systems

arguments for and against bribery
Necessary to do business

Common practice

Accepted practice

Form of commission, tax, or compensation



Compromise personal beliefs

Promotes government corruption

Once started, never stops

Prohibits taking a stand for honesty, morality, ethics

Benefits recipient only

Creates dependence on corruption

Deceives stockholders

Arguments For and Against Bribery

Against Bribery

For Bribery

trends against bribery

Foreign Corrupt Practices Act

Transparency International

OECD Antibribery Initiatives

Individual Country Initiatives

Trends 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


Relatively large amounts of money given far 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 same other action.

Bribes versus Grease Payments
improving global business ethics

The Multinational Corporation

Home CountryStakeholder Pressures

Host CountryStakeholder Pressures

Improving Global Business Ethics

The Dilemma

of the Multinational Corporation

ethical choices in home versus host country situations

International LawGlobal Codes of Conduct






  • 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

Ethical Choices in Home versus Host Country Situations
ethical choices in home versus host country situations1
Ethical Choices in Home versus Host Country Situations

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?

actions for improving international business ethics
Actions for Improving International Business Ethics
  • Create global codes of conduct
    • Corporate global codes and standards
    • International organization global codes and standards
  • Integrate ethics into a global strategy
  • Suspend activities in host country
  • Create ethical impact statements
global standards from international organizations see p 324 in text

Caux Principles

Global Reporting Initiative

Global Sullivan Principles

OECD Guidelines for Multinational Enterprises

Principles for Global Corporate Responsibility: Benchmarks

UN Global Compact

Global Standards from International Organizations(see p. 324 in text)
fundamental international rights
The right to physical movement

The right to ownership of property

The right to freedom from torture

The right to a fair trial

The right to nondiscriminatory treatment

The right to physical security

The right to freedom of speech and association

The right to minimal education

The right to political participation

The right to subsistence

Fundamental International Rights
seven moral guidelines for mncs
Inflict no intentional or direct harm

Produce more good than bad for the host country

Contribute to host country’s development

Respect the human rights of their employees

Pay their fair share of taxes

Respect local cultural beliefs that do not violate moral norms

Cooperate with the government to develop and enforce background institutions

Seven Moral Guidelines for MNCs