Transcript Ethical Issues in the Global Arena

Ethical
Issues in the
Global Arena
Search the Web
An excellent listing of global principles and
codes for ethics may be found at:
www.goodmoney.com/directry_codes.htm
© 2005 by Nelson, a division of Thomson Canada Limited.
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Chapter Nine Objectives
• Identify the internationalization and
globalization of business
• Summarize globalization arguments
• 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
© 2005 by Nelson, a division of Thomson Canada Limited.
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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
© 2005 by Nelson, a division of Thomson Canada Limited.
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Introduction to Chapter Nine
The focus of the chapter:
– The transnational economy
– Internationalization
– Global ethics
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Eras of Internationalization
• 1945-55 The Post-World War II
A period of reconstruction dominated by the
United States.
• 1955-70 The Growth Years
Japanese and European firms recover and U.S.
international firms become multinational.
• 1970-80 The Troubled Years
U.S. deficit and worldwide oil crisis have a
negative impact.
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Eras of Internationalization
• 1980s-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 wealthy 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
development and standards
World financial institutions
conspire to keep poor nations
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
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Ethical Issues in Global
Business
• Marketing and safety practices
• Sweatshop and labour abuse
• Corruption and bribery
Search the Web
For student activists interested in sweatshop
practices, visit http://www.usasnet.org/
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Arguments For and Against
Bribery
For
Against
• A necessary tool
• Wrong/illegal
• Accepted practice
• Compromise personal beliefs
• Form of commission, • Promotes government
tax, or compensation
corruption
• 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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Bribes vs. Grease Payments
• Definitions
• Examples
– Grease Payments—
Money given for the
purpose of getting minor
officials to do what they
are supposed to be doing.
– Money given to minor
officials (clerks,
attendants, customs
inspectors) for the purpose
of expediting a project
– 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.
– Money given, often to
high-ranking officials.
Purpose is often to get
these persons to purchase
goods or services from the
bribing firm.
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Improving Global Business
Ethics
The Dilemma
of the Multinational Corporation
Home Country
Stakeholder
Pressures
The
Multinational
Corp.
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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/mor
al standards
of home
country
CULTURAL
RELATIVISM
Broad
Middle Ground
Mix of Home and Host
Country Standards
Application of Ethical Principles
(see notes)
© 2005 by Nelson, a division of Thomson Canada Limited.
Host Country
• Cultural
standards
• Ethical/mor
al standards
of host
country
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Improving Global Business
Ethics
Typology of Global Types
•
•
•
•
Foreign type
Empire type
Interconnection type
Global type
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Improving Global Business
Ethics
Integrative Social Contract Theory (ISCT)
• Hypernorms-- transcultural values including
fundamental human rights
• Consistent norms-- norms that are culturally specific,
but consistent with hypernorms
• Moral free space norms-- strongly held cultural
beliefs in countries that are in tension with
hypernorms
• Illegitimate norms– those 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
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
Caux Principles
Global Reporting Initiative
Global Sullivan Principles
OECD Guidelines for Multinational
Enterprises
Principles for Global Corporate Responsibility
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
nondiscrimination
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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•
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•
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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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