Transcript Doing Business Globally

Doing Business Globally
Major Ethical Problems:
 Foreign
values, culture,
practices, laws, bribery
 Negative impacts
 Fundamental Rights &
Guidelines
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Doing Business Globally
Major Ethical Problems:
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Foreign values, culture and practices differ
from parent, consumer and capital
marketplaces:
 Bribery, facilitating payments
 Treatment of workers, environment
Foreign laws ... different, weaker, nonexistent
Autonomy of distant operations may
weaken understanding or observance of
company policies
Impact of multinational on local markets
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Jail & The German Sub-contractor
Responsibility for actions of subcontractor - for incorrect wage
calculations
Lessons learned…….
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Oversight of suppliers
Responsibility to staff
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Italian Tax Mores Case
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Practice is to understate profit
“Invitation to discuss”
Commercialista…bustarella
US Bank sub files American-style return
Mgr. refuses to discuss…pays tax on return
Disallowance of all interest paid to
depositors
…thought it would get your attention...shall
we now begin our negotiations?
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Global or Local?
What/who should determine
practices?
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Management … parent or local
Local laws or domestic (parent)
Shareholders or primary
stakeholders
Laws or stakeholder interests
Fundamental rights
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Market economy…or moral economy?
Success = f(Trust +Respect/Reputation)
Trustworthiness & Reputation come from
culture, religion, values & political economy
… a sort of Moral Economy
Management effectiveness depends
on understanding local values (culture)
In foreign cultures
T + Re = ƒ(Mgt. of Conflicts of interest &
Risk)
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
CULTURAL DIFFERENCES…
Sphere
Basis of Value-system
N. America
Rights-based: rights, justice, utility
Sino-Confucian Duty-based: obligation to family
Japan
Duty-based: obligation to company
Middle East
Duty-based: obligation to saviour
Europe
Personal rights
S. America & other
Impact On….Dealing with people…hiring, gender;
bribery; motivation for doing business; short- or longterm time horizons; importance of quality-of-life
issues
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Multinationals Can Influence
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Labour rates, supply and practices
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Rate busting
Treatment of women, children,
minorities
Input markets
Finance markets
Product markets
Political decisions
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Conflicts of Interest/Bribery
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Bribes, Facilitating payments, Kickbacks
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Conflict of Interest
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Foreign Corrupt Practices Act (US)
 History, fines, disclosure
 Transparency International
 Corruption perception index-country rating
 Website: www.transparency.de
 OECD initiative - April 1998
Corp. statements of policy…moral imagination
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Product Decisions
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Should a product/input ruled/known to be
harmful at home be sold/used abroad?
(Corn in chips)
Should a product be recalled overseas, but
not at home? (Firestone tires on Ford
Explorers)
Should a product harmful to a culture be
sold? (Nestle)
Should a product be made which involves
questionable practices with animals? (Pate)
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Pricing Decisions
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Predatory pricing
Dumping
Gouging
Set to minimize/avoid tax
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Transfer Pricing
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Questions To Be Considered
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Does a business owe any loyalty to:
 Foreign workers during a downsizing?
 Host locales?
Should codes of conduct be tailored to
each country of operations?
Should procedures for evaluation ethical
behaviour vary by country?
Are there general operating guidelines
that can be followed by multinationals?
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Donaldson…Fundamental International Rights
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Freedom of physical
movement
Ownership of property
Freedom from torture
Nondiscriminatory
treatment
Freedom of speech &
association
Tom Donaldson, The Ethics of
International Business, Oxford
University Press, 1989,81
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Fair trial
Physical security
Minimal education
Political
participation
Subsistence
Minimal Behaviour
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
De George...Guidelines For Multinationals
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Do no intentional direct harm
Produce more good than harm for host country
Help the host country’s development
Respect human rights of their employees
Provided local culture does not violate ethical
norms, respect & work with ethical culture
Pay their fair share of taxes
Cooperate with local government in developing
& enforcing just background institutions
Richard T. De George, Competing with Integrity in International
Business, Oxford University Press, 1993, 45-56.
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Ethical Tests For International Activities
…Brooks , Donaldson & DeGeorge
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Does the practice violate:
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company code,
guidelines for multinationals?
a fundamental international right?
Principles: Sullivan; Caux; Int’l. Code for Can.
Bus.
international agreements, laws or codes?
Can business be conducted in the host
country without the practice?
Is it permissible: at home? in consumer
markets? in capital markets?
Thomas Donaldson, HBR, September-October, 1996, 48-62.
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003
Global Business Ethics Value
Chain
CORPORATION
Governance
Mechanism
Formulation
of Strategic
Objectives
STAKEHOLDER
SCREEN
ACHEIVEMENT OF
STRATEGIC OBJECTIVES
Customers
INFLUENCES
Employees
ACTIONS
Primary
Capital Markets
Current:
Shareholders
Lenders
Environmentalists
Other
BEHAVIOUR Host Communities
Governments
NGOs
GO
CAUTION
STOP
DETERMINANTS OF VALUE…Success = f(Trust + Respect)
CORPORATE CULTURE
ETHICS PROGRAM &CODE
TOP MANAGEMENT SUPPORT
STAKEHOLDER SYNERGIES
CHARACTER
GLOBAL MEDIA
PERCEPTION OF:
TRUST
RESPECT
RELATIVE IMPACT
RELATIVE SALIENCE
LOCAL CULTURE
Prof. Len Brooks, Rotman School of Management, University of Toronto, 2003