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Ethical Challenges of

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Welcome Ethical Challenges of International Management Dr. Satyendra Singh Director, Centre for Emerging Markets Professor, Marketing and International Business – PowerPoint PPT presentation

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Title: Ethical Challenges of


1
Welcome
  • Ethical Challenges of
  • International Management
  • Dr. Satyendra Singh
  • Director, Centre for Emerging Markets
  • Professor, Marketing and International Business
  • Editor, International Journal of Business and
    Emerging Markets
  • www.winnipeg.ca/ssingh5

2
2
Why Study Ethical Issues?
  • MNCs are accused of a of abuses relating to
    business activities
  • Corruption
  • Child labor
  • Human rights, Environment, Safety
  • Dumping
  • Role of MNCs in society
  • Responsibility MNCs vs. Government

3
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4
Sued over misleading beef Later charges dropped
counter sue
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The Basic Premise
  • Corruption
  • Child labor
  • Symptom vs. problem
  • Right vs. wrong?
  • Right vs. right?

f
(Poverty, Lack of education, Fair trade,)
10
9
Corruption
  • Pay to get work done
  • Caused by usually poverty, greed
  • Salary lasts for 3 weeks only?
  • Survival vs. meeting basic needs
  • Corrupt individual
  • Individual primary beneficiary at the cost of
    organization
  • Corrupt organization
  • Selection, and Socialization

11
10
Corruption
  • Arguments for being corrupt!
  • Tax
  • Commission
  • Compensation
  • Job well done
  • Appreciation
  • In West, it is called tips, gifts, bonus

12
11
Corruption from MNCs Viewpoint
  • Western MNCs pay 80b to get contracts or
    concession (Hawley 2000)
  • 80b can eradicate poverty (UN)
  • It ? GDP in poor countries
  • Because it undermines mkt. economy
  • Decisions ? based on corruption
  • Not on ? price, quality, service, innovation
  • Raises price for everyone ? poor suffers

13
12
Corruption from MNCs Viewpoint
  • Divert resources from public services ? schools
    and hospitals
  • to dams? more scope for corruption
  • Poor does not get public services
  • Poor is further impacted
  • Corruption undermines democratic process and
    rules of law
  • Environment is also likely to suffer
  • Corrupt officer ? Non-enforcement

14
13
Corruption from MNCs viewpoint
  • Risk of accusation of corruption
  • Whether proven or not
  • Can lead to loss of reputation
  • If pay bribe, more demands likely
  • It adds costs of doing business
  • UN convention against corruption
  • If you cheat, so will your competitor
  • Doing business more difficult
  • Employees/stakeholders lose trust

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14
Corruption from MNCs viewpoint
  • Customers do not trust companies
  • Governments do not trust companies
  • ? likely to give assistance
  • ? likely to audit transactions
  • ? expensive to do business
  • Stock markets react negatively
  • Compromise personal beliefs
  • Need justification
  • Moral philosophies

16
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The Moral Philosophies
  • Ethics ? moral principles or values
  • Deontological philosophy
  • Rule (whatever) basedno matter what
  • We are the best
  • Teleological philosophy
  • Consequence based
  • Responsible for the consequence

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16
The Moral Philosophies
  • Utilitarian philosophy
  • Based on net expected benefits
  • No absolute, relative
  • But, what is benefit? debatable
  • Contractarian philosophy
  • Based on the law of the land, contracts
  • Anything else is unethical
  • But, may be difficult to enforce

18
17
The Moral Philosophies
  • Pluralism philosophy
  • Based on do the right thing
  • No need for law or contracts
  • Weve conscience! Right vs. wrong
  • Most of us like it
  • Yet we had 2 WW
  • Rawlss Social Justice Theory
  • Fairness, peace and harmony
  • But, social contract is a bit ideal

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The Options
  • 1 Stay away
  • No country is perfect
  • Not everybody is corrupt
  • You lost huge opportunity
  • You did not try to impact locals
  • Black-listing a country is easy
  • Find creative ways of doing business

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The Options
  • 2 Embrace local standards
  • Impact local culture
  • Develop ways to combat corruption
  • Does context change your values?
  • 3 Maintain high global standards
  • Global firms have global reputation
  • Transfer of people easy
  • Can exceptions be made?

21
20
At Macro Level
  • Education a national strategy needed
  • E.g., India, China, USSR, Ghana, Kenya
  • Build capability
  • Governments enforce moral guidelines
  • Government policies for fair trade
  • E.g., GM Food, Subsidies, Coca price

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21
At Micro Level
  • Strategic MNCs have the power
  • School and day care for children
  • UN Global Compact implementation
  • Contribution to countrys development
  • Mode of entry
  • IJV vs. Wholly-owned subsidiary
  • Ethics Officer
  • Pay fair taxes, reduce transfer pricing

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22
At Personal Level
  • Personal moral compass
  • Organizational Culture
  • Whistle-blower legislation
  • (Un)realistic performance goals
  • Volunteer for social cause
  • E.g., Scotia Bank ? Winnipeg Public Library Board
  • Win-win situation

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Child Labor (300m)
  • Povertysurvival ? urbanization
  • If outlaw (Harkin Bill)
  • ? Family income ? ?labor supply
  • ? Adult wage ? children go to school
  • ? skills ? ? productive ? ? wages
  • ? family welfare if demand persists
  • But, ? wages ? ? of jobs
  • Effective only if children go to school

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UN Global Compact -- 5
  • Abolition of child labor
  • ILO conventions ? Minimum Age Convention No. 138
  • Minimum age for admission to employment or work
  • Developed countries Developing countries
  • Light Work 13 Years Light Work 12 Years
  • Regular Work 15 Years Regular Work 14 Years
  • Hazardous Work 18 Years Hazardous Work 18 Years
  • Children have distinct rights
  • Child labour is damaging to a childs physical,
    social,
  • mental, psychological and spiritual development
  • Deprives them of childhood, dignity separates
    from families

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25
UN Global Compact -- 10
  • Work against all forms of corruption
  • Corruption
  • the abuse of entrusted power for private gain
  • Extortion
  • When asking or demand is accompanied by threats
    that endanger the personal integrity or the life
    of the person
  • Bribery, Transparency International
  • gift, loan, fee, reward from a person to do
    something dishonest, illegal or a breach of trust
  • Steps to fight corruption
  • Internal Anti-corruption policies within
    organizations
  • External Report corruption in the annual
    Communication
  • Collective Join forces with industry peers,
    stakeholders

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26
Trends Against Corruption and Child Labor
  • Transparency International
  • Foreign Corrupt Practices Act (US)
  • Corruption of Foreign Public officials (Canada)
  • OECD Anti-bribery Initiatives
  • Harkin Bill Trade Ban
  • ILO Convention on Minimum Age138
  • UN Global Compact (UNGC 2007)
  • HR(2), Labor (4), Environment (3), Anticorruption
    (1)
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