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(3) Ethics and Social Responsibility


Title (3) Ethics and Social Responsibility Author: Lynchburg College Last modified by: BOYD Created Date: 12/20/2007 5:17:05 PM Document presentation format – PowerPoint PPT presentation

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Title: (3) Ethics and Social Responsibility

People Management Professor H. Michael Boyd,
(No Transcript)
Chapter 3
  • Ethics, Social Responsibility, and Sustainability

Ethics, Social Responsibility, and Sustainability
  • The specific objectives of this chapter are to
  • EXAMINE ethics in international management and
    some of the major ethical issues and problems
    confronting MNCs.
  • DISCUSS some of the pressures on and action being
    taken by selected industrialized countries and
    companies to be more socially and environmentally
    responsive to world problems.
  • EXPLAIN some of the initiatives to bring greater
    accountability to corporate conduct and limit the
    impacts of corruption around the world.

Ethics, Social Responsibility, and Sustainability
in International Management
  • Ethics
  • Study of morality and standards of conduct.
  • Dilemmas arising from conflicts between ethical
    standards of a country and business ethics are
    most evident in employment and business
    practices, recognition of human rights, including
    women in the workplace, and corruption
  • Inferring right vs. wrong in legal sense

Ethics, and Social Responsibility, and
Sustainability in International Management
  • Corporate Social Responsibility (CSR)
  • Involves the actions of a firm to benefit society
    beyond requirements of the law and the direct
    interests of the firm
  • Closely related to ethics
  • CSR concerns include working conditions in
    factories and service centers as well as
    environmental impacts of corporate activities

Ethics Theories and Philosophy
  • Kantian philosophical traditions
  • Individuals (and organizations) have
    responsibilities based on a core set of moral
    principles that go beyond those of narrow
  • Aristotelian virtue ethics
  • Focus on core, individual behaviors and actions
    and how they express and form individual
  • Utilitarianism
  • Favors the greatest good for the greatest number
    of people under a given set of constraints.
  • Eastern philosophy
  • Views the individual as part of, rather than
    separate from, nature.

Human Rights
  • Human rights issues challenge MNCs
  • Currently no universally adopted standards of
    what constitutes acceptable behavior
  • A great deal of subjectivity and culturally
    biased viewpoints exist
  • Some basic rights life, freedom from slavery or
    torture, freedom of opinion and expression,
    general ambiance of nondiscriminatory practices
  • Human rights violations still rampant globally
  • China (Tiananmen Square) and Russia
  • Womens rights

Ethics, Social Responsibility, and Sustainability
Around the World JAPAN
  • Equal opportunity issues
  • Gender-gap hiring refusal to hire women for more
    than low-level jobs
  • Glass ceiling lack of promotion to management
  • Sexual harassment hostile work environment

Ethics, Social Responsibility, and
SustainabilityAround the World EUROPE
  • Equal employment opportunity
  • Glass ceiling pervasive throughout the world
  • France, Germany, and Great Britain have seen an
    increase in the number of women in management,
    but the increases tend to be only at lower levels

Labor, Employment, and Business Practices
  • Employment and business practices
  • Difficult to establish a universal foundation of
    employment practices
  • Difficult dilemmas in deciding working
    conditions, expected consecutive work hours, and
    labor regulations
  • Frequent offshoring due to differences in labor

Ethics, Social Responsibility, and
SustainabilityAround the World CHINA
  • Workers not well paid
  • Often forced to work 12 hours a day, 7 days a
  • 2010 Foxconn factory worker suicides
  • 2012 Over 43 of Foxconn workers had seen or
    been part of a workplace accident.
  • Human rights violations
  • Use of child labor

Environmental Protection and Development
  • Countries approach the issue of conservation of
    natural resources differently
  • Poor countries are more focused on improving the
    welfare of their citizens rather than improving
    the environment
  • Environmental Kuznets Curve
  • Many companies violate laws and jeopardize the
  • 2010 BP Gulf of Mexico oil rig explosion

The Environmental Kuznets Curve
Globalization and Ethical Obligations of MNCs
  • Should the MNC adopt the regulations in the
    country of origin or those in the country of
  • Doing the right thing is not always easy
  • Levi Strauss in Bangladesh

Reconciling Ethical Differences across Cultures
  • Integrative Social Contracts Theory
  • Helps companies avoid relativism versus
  • Gives managers a framework to use when they face
    a gap between the moral and ethical values in the
    home country and in the host country
  • Corporate Social Responsibility
  • Sustainability
  • Development that meets humanitys needs without
    harming future generations

Corporate Social Responsibility and
  • Nongovernmental organization (NGO)
  • Private, not-for-profit organization that seeks
    to serve societys interests by focusing on
    social, political, and economic issues such as
    poverty, social justice, education, health, and
    the environment.
  • NGOs have grown in number, power, and influence
  • NGOs have urged MNCs to be more responsive to a
    range of social needs in developing countries
  • NGO activism has caused major changes in
    corporate behavior
  • NGOs have been active in promoting fair trade

Corporate Social Responsibility and
  • Examples of NGOs in the U.S. and globally
  • Save the Children
  • Oxfam
  • CARE
  • Amnesty International
  • World Wildlife Fund
  • Conservation International

Corporate Response to Social and Organizational
  • Agreements and codes of conduct committing MNCs
    to maintain certain standards
  • U.N. Global Compact
  • Codes help offset real or perceived concern that
    companies move jobs to avoid higher labor or
    environmental standards in their home markets
  • Contribute to raising of standards in developing
    world by exporting higher standard to local
    firms in these countries

Principles of the Global Compact
  • Human Rights
  • Labor
  • Environment
  • Anticorruption

Principles of the Global Compact
Corporate Governance
  • Corporate governance
  • The system by which business corporations are
    directed and controlled.
  • Distribution of rights and responsibilities
  • Stakeholder management
  • Spells out rules and procedures
  • Makes decisions
  • Becoming more important after numerous scandals
  • Arthur Anderson, Enron, Lehman Brothers

Corporate Governance
  • Many continental European countries are insider
  • Ownership more concentrated
  • Shares owned by holding companies, families, or
  • Rules and regulations differ among countries and
  • U.K. and U.S. systems are outsider systems
  • Dispersed ownership of equity
  • Large number of outside investors

  • Corruption
  • Government corruption is a pervasive element in
    international business environment
  • Scandals in Russia, China, Brazil, Pakistan,
    Lesotho, South Africa, Costa Rica, Egypt, and
  • Some evidence that discontinuing bribes does not
    reduce sales of the firms products or services
    in that country

Transparency International Corruption Perceptions
Index Ratings
Global Initiatives to Increase Accountability and
Limit Corruption
  • Foreign Corrupt Practices Act
  • Makes it illegal for U.S. companies and their
    managers to attempt to influence foreign
    officials through personal payments or political
  • Entertainment expenses
  • Consulting fees
  • Organization of American States Inter-American
    Convention Against Corruption, Foreign Corrupt
    Practices Act, Transparent Agents Against
    Contracting Entities

Corruption and Foreign Corrupt Practices Act
  • Recent formal agreement by many industrialized
    nations to outlaw the practice of bribing foreign
    government officials
  • Organization for Economic Cooperation and
  • 29 member nations now 34
  • Fails to outlaw most payments to political party
  • Does indicate growing support for anti-bribery

International Assistance
  • Governments and corporations are collaborating to
    provide assistance to communities and locales
    through global partnerships
  • Best investments
  • Controlling and preventing AIDS
  • Fighting malnutrition
  • Reducing subsidies and trade restrictions
  • Controlling malaria

Copenhagen Consensus Development Priorities
The U.N. Millennium Development Goals
Review and Discuss
  • How might different ethical philosophies
    influence how managers make decisions when it
    comes to offshoring of jobs?
  • What lessons can U.S. multinationals learn from
    the political and bribery scandals in recent
    years, such as those affecting contractors doing
    business in Iraq (Halliburton) as well as large
    MNCs such as Siemens, HP, and others? Discuss
  • In recent years, rules have tightened such that
    those who work for the U.S. government in trade
    negotiations are now restricted from working for
    lobbyists for foreign firms. Is this a good idea?
    Why or why not?

Review and Discuss
  1. What are some strategies for overcoming the
    impact of counterfeiting? Which strategies work
    best for discretionary (for instance, movies)
    versus nondiscretionary (pharmaceutical) goods?
  2. Why are MNCs getting involved in corporate social
    responsibility? Are they displaying a sense of
    social responsibility, or is this merely a matter
    of good business? Defend your answer.
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