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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.

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Chapter 4

Chapter 4

Ethics in International Business


Ethical issues 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

Ethical Issues in International Business


Ethical issues in international business1

Arise most often in the context of: differing national environments

Employment practices

Human rights

Environmental policy

Corruption

An MNC’s perceived moral obligations to society

Ethical Issues in International Business


Employment practices

What standards should be applied? differing national environments

Home nation’s

Host nation’s

Other

Should the MNC adapt its policies? Standardize?

Hiring practices, labor relations, diversity issues, employment conditions are some specific issues that require careful thought

Employment Practices


Human rights

A manager can assume as universal her/his views on freedom of:

Association

Speech

Assembly

Movement

Political repression

What is the responsibility of an MNC to uphold different standards of human rights?

Human Rights


Repressive regimes

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


Environmental policies

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


Corruption

Government officials may ask for bribes for an MNC to “get things done”

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


Mnc power and moral decisions

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

Company view

Host country view

MNC Power and Moral Decisions


Mnc and social responsibility

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


Determinants of ethical behavior

Organization culture after consideration of social consequences of economic actions

Personal ethics

Decision making processes

Leadership

Unrealistic / realistic performance goals

Determinants of Ethical Behavior


Philosophical approaches to ethics

Straw men: often adopted, offer inappropriate guidelines for MNC behavior

Friedman doctrine

Righteous moralist

Naïve immoralist

Utilitarian and Kantian Ethics

Rights theories

Justice theories

Philosophical Approaches to Ethics


Ethical decision making

Hiring and promotion MNC behavior

Organization culture and leadership

Decision-making processes

Stakeholder perspectives

Ethics officers

Codes of ethics

Moral courage: walk away from profitable and unethical decision

Ethical Decision Making