Transcript Ethical Issues in the Global Arena

Ethical Issues in the Global Arena
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Chapter Nine Objectives
• Identify the internationalization and globalization
of business
• Summarize arguments for and against
globalization
• Discuss multinationals in the global environment
• Identify ethical challenges at the global level
• Define ISCT, hypernorms and moral free space
• Outline strategies for improving global ethics
• Introduce seven moral guidelines for global
business
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Chapter Nine Outline
• The New, New World of
International Business
• Multinational Corporations (MNCs)
and the Global Environment
• Ethical Issues in the Global
Business Environment
• Improving Global Ethics
• Summary
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Introduction to Chapter Nine
The focus of the chapter is
on:
– Transnational economy
– Internationalization
– Global ethics
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Eras of Internationalization
• 1945-55 The Post-World War II Decade
A period of reconstruction dominated by the United States.
• 1955-70 The Growth Years
Japanese and European firms recover and the first U.S.based international firms become multinational.
• 1970-80 The Troubled Years
A U.S. balance of payments deficit and worldwide oil crisis
have a negative impact.
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Eras of Internationalization
• 1980-now
The New International
Order
Though the U.S. role in the world economy is diminished, it
is pressured to be a world leader in the ethics arena.
• 1999-now
The New, New World
A backlash against globalism began.
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Concepts of Global Business
• Internationalization
• Globalization
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Pros and Cons of Globalization
I
M Consumers
P
Employees
A
C
T Environment
Globalists
Antiglobalists
Free trade promotes lower
costs, etc.
Benefits the wealth at the
expense of the poor
Faster economic growth
promotes
Higher wages, etc.
Places profits above people
Creates resources needed to
address the issue
Exploits and destroys
ecosystems
O Developing
Nations
N
Promotes national economic World financial institutions
development, higher standard conspire to keep poor nations
of living, etc.
in debt
Human
Rights
Creates cultures that support
law and free expression
Corporations pursing profits
ignore human rights violations
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MNCs and the Global
Environment
• Change scope and nature of U.S.-based
multinationals
• Face 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
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MNCs and the Global Environment
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Ethical Issues in Global Business
• Questionable marketing and safety practices
• Sweatshop and labor abuse
• Corruption, bribery, and questionable
payments
Search the Web
For student activists interested in sweatshop
practices, visit http://www.usasnet.org/
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Arguments For and Against Bribery
Against
For
• Necessary to do
business
• Common practice
• Accepted practice
• Form of commission,
tax, or compensation
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•
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Wrong
Illegal
Compromise personal beliefs
Promotes government corruption
Slippery slope
Prohibits taking a stand for
honesty, etc.
• Benefits recipient only
• Creates dependence on corruption
• Deceives stockholders
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Trends Against Bribery
• Foreign Corrupt Practices Act enacted
• Transparency International developed
• OCED Antibribery Initiatives launched
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Trends Against Bribery
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Bribes vs. Grease Payments
• Definitions
–
–
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 or sooner.
• Do what they are supposed to be
doing better than they would
otherwise.
Bribes—Relatively large amounts of
money given far the purpose of
influencing officials to make decisions
or take actions that they otherwise
might not take. If the officials
considered the merits of the situation
only, they might take same other
action.
• Examples
–
Money given to minor officials
(clerks, attendants, customs
inspectors) for the purpose of
expediting. This form of payment
helps get goods or services through
red tape or administrative
bureaucracies.
–
Money given, often to high-ranking
officials. Purpose is often to get these
persons to purchase goods or
services from the bribing firm. May
also be users to avoid taxes, forestall
unfavorable government intervention,
secure favorable treatment, etc.
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Improving Global Business Ethics
The Dilemma
of the Multinational Corporation
Home Country
Stakeholder
Pressures
The
Multinational
Corp.
Host Country
Stakeholder
Pressures
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Improving Global Business Ethics
Ethical Choices in Home vs. Host Country Situations
International Law
Global Codes of Conduct
ETHICAL
IMPERIALISM
Home Country
• Cultural
standards
• Ethical/moral
standards of
home country
CULTURAL
RELATIVISM
Broad
Middle Ground
Mix of Home and Host
Country Standards
Application of Ethical Principles
(see notes)
Host Country
• Cultural
standards
• Ethical/moral
standards of
host country
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Improving Global Business Ethics
Typology of Global Types
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•
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Foreign type
Empire type
Interconnection type
Global type
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Improving Global Business Ethics
Integrative Social Contract Theory (ISCT)
• Hypernorms consist of transcultural values including
fundamental human rights
• Consistent norms consist of norms that are culturally
specific, but consistent with hypernorms
• Moral free space norms consist of strongly held
cultural beliefs in particular countries that are in tension
with hypernorms
• Illegitimate norms consist of norms that are
incompatible with hypernorms
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Improving Global Business Ethics
Four Actions for Improving
International Business Ethics
• Create global codes of conduct
– Global codes and standards set by corporations
– Global Codes and standards set by international
organizations
• Integrate ethics into a global strategy
• Suspend activities in host country
• Create ethical impact statements
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Improving Global Business Ethics
Global Codes and Standards Developed by
International Organizations
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Caux Principles
Global Reporting Initiative
Global Sullivan Principles
OECD Guidelines for Multinational Enterprises
Principles for Global Corporate Responsibility: Benchmarks
UN Global Compact
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Improving Global Business Ethics
Fundamental International Rights
1. The right to physical
movement
2. The right to ownership of
property
3. The right to freedom from
torture
4. The right to a fair trial
5. The right to
nondiscriminatory
treatment
6. The right to physical
security
7. The right to freedom of
speech and association
8. The right to minimal
education
9. The right to political
participation
10. The right to subsistence
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Improving Global Business Ethics
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
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Selected Key Terms
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Anticorruption movement
Bhopal tragedy
Bribes
Consistent norms
Ethical impact statements
Globalization
Grease payments
Hypernorms
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Illegitimate norms
Infant formula
Internationalization
Less-developed countries
(LDC)
Moral free space
Multinational corporation
(MNC)
Sweatshops
Transnational economy
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