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Chapter 5: Ethics and Social Responsibility in International Business. International Business, 4 th Edition Griffin & Pustay. Chapter Objectives_1. Describe the nature of ethics Discuss ethics in cross-cultural and international contexts

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chapter 5 ethics and social responsibility in international business

Chapter 5:Ethics and Social Responsibility in International Business

International Business, 4th Edition

Griffin & Pustay

©2004 Prentice Hall

chapter objectives 1
Chapter Objectives_1
  • Describe the nature of ethics
  • Discuss ethics in cross-cultural and international contexts
  • Identify the key elements in managing ethical behavior across borders
  • Discuss social responsibility in cross-cultural and international contexts

©2004 Prentice Hall

chapter objectives 2
Chapter Objectives_2
  • Identify and summarize the basic areas of social responsibility
  • Discuss how organizations manage social responsibility across borders
  • Identify and summarize the key regulations governing international ethics and social responsibility

©2004 Prentice Hall

exporting jobs or abusing people
Exporting Jobs or Abusing People?
  • “Made in USA” – American Samoa and Saipan
  • NAFTA – low wages in Mexico
  • Walmart & More
  • South African miners
  • Canada and drug prices

©2004 Prentice Hall

ethical behavior
Ethical Behavior

Ethical behavior usually refers to behavior

that conforms to generally accepted

social norms.

©2004 Prentice Hall

ethical generalizations
Ethical Generalizations
  • Individuals have their own personal belief systems
  • People from the same cultural context will tend to hold similar beliefs
  • Behaviors can be rationalized
  • Circumstances affect adherence to belief systems
  • National culture is intertwined with ethics

©2004 Prentice Hall

figure 5 1 ethics in a cross cultural context
Figure 5.1 Ethics in a Cross-Cultural Context

Behavior of Organization

Toward Employees

Behavior of Employees

Toward Organization



Behavior of Employees

and Organization

Toward Other Economic Agents

©2004 Prentice Hall

spectrum of effects
Spectrum of Effects

Free Trade No Trade

  • Fewer jobs in developing countries
  • Higher prices
  • Fewer products
  • Jobs migrate
  • Low wages
  • Poor conditions

Trade with Social Responsibility


Code of Ethics

©2004 Prentice Hall

guidelines and codes of ethics
Guidelines and Codes of Ethics
  • Written statements of the values and ethical standards that guide the firm’s actions
  • Examples
    • Johnson & Johnson -- IBEI
    • General Mills -- Lilly

©2004 Prentice Hall

what do you do
What do you do…

when the country in which you are doing business does not have a code of ethics compatible with your own?

Gao Feng in China Case.

©2004 Prentice Hall

acceptability of bribery




South Korea






Acceptability of Bribery

The U.S., Japan, and Italy fell between the two extremes.

©2004 Prentice Hall

areas of social responsibility
Areas of Social Responsibility
  • Organizational stakeholders
  • Natural environment
  • General social welfare

©2004 Prentice Hall

corporate excellence
Corporate Excellence
  • L.L. Bean
  • Toyota
  • Lands’ End
  • Dell Computer
  • DaimlerChrysler
  • BP

©2004 Prentice Hall

A joint venture between Anglo-American and the Zambian government seeks to mine copper while minimizing harm to the environment

©2004 Prentice Hall

figure 5 3 approaches to social responsibility
Figure 5.3 Approaches to Social Responsibility





Obstructionist Defensive Accommodative Proactive

©2004 Prentice Hall

obstructionist stance
Obstructionist Stance
  • Do as little as possible to address social or environmental problems
  • Deny or avoid responsibility
  • Examples
    • Astra
    • Nestle
    • Danone

©2004 Prentice Hall

defensive stance
Defensive Stance
  • Do what is required legally, but nothing more
  • Corporate responsibility is to generate profits
  • Example
    • Philip Morris

©2004 Prentice Hall

accommodative stance
Accommodative Stance
  • Meet ethical and legal requirements and more
  • Agree to participate in social programs
  • Match contributions by employees
  • Respond to requests from non-profits
  • No proactive behavior to seek such opportunities

©2004 Prentice Hall

proactive stance
Proactive Stance
  • Strong support of social responsibility
  • Viewed as citizens of society
  • Seek opportunities to contribute
  • Examples
    • McDonald’s
    • The Body Shop
    • Ben & Jerry’s

©2004 Prentice Hall

managing social responsibility
Managing Social Responsibility


Decision Making



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implementing social responsibility
Implementing Social Responsibility
  • Legal Compliance
  • Ethical Compliance
  • Philanthropic Giving

©2004 Prentice Hall

informal dimensions of social responsibility
Informal Dimensions of Social Responsibility
  • Leadership
  • Organizational culture
  • Whistle-blowing

©2004 Prentice Hall

corporate social audit
Corporate Social Audit
  • Tool for the evaluation of social responsibility effectiveness
  • Formal and thorough analysis
  • Conducted by task force

©2004 Prentice Hall

steps in corporate social audit
Steps in Corporate Social Audit

Define social goals

Analyze resources devoted

to each goal

Determine degree of

achievement for each goal

Make recommendations

©2004 Prentice Hall

regulating international ethics and social responsibility
Regulating International Ethics and Social Responsibility
  • Foreign Corrupt Practices Act (FCPA)
  • Alien Tort Claims Act
  • Anti-Bribery Convention of the Organization for Economic Cooperation and Development
  • International Labor Organization (ILO)

©2004 Prentice Hall