Transcript Chapter 1: The Global Manager`s Environment

Chapter 2:
Managing Interdependence:
Social Responsibility and Ethics
PowerPoint by
Hettie A. Richardson
Louisiana State University
© 2008 Pearson Prentice Hall
2-1
Opening Profile: The Enron Case
 Illustrates how questionable actions by a
company can be harmful to both stakeholders
and the company itself—even if the actions
are profitable in the short-term
 Enron is a symbol of an “era of management
practice” (James Post), but is it the end of the
era?
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2-2
The Social Responsibility of MNCs
 Corporate social responsibility (CSR)
Profit is
MNCs’ only
goal
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MNCs should
anticipate and
solve social
needs
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Global Consensus or Regional
Variation?
 Global corporate culture
 Example of regional variation: The US
focuses on following basic business
obligations, Europe focuses on serving
broader social aims
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2-4
Three Approaches to
International Morality and Ethics
 Moral universalism
 Ethnocentrism
 Ethical relativism
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2-5
MNCs and Human Rights
 The Sweatshop Code of Conduct
 The Electronic Industry Code of Conduct
(EICC)
 Social Accountability 8000 (SA8000)
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2-6
Comparative Management in Focus:
Doing Business in China
The attraction of doing business in
China:
Cheap labor rates
A large market
A growing economy
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2-7
Comparative Management in Focus:
Doing Business in China
The human rights challenge:
Potentially rampant violations of workers’
rights
Repression of free-speech
Difficulty monitoring/correcting violations
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2-8
Comparative Management in Focus:
Doing Business in China
Examples of recent human rights issues
in China:
Nike
Governmental crackdown on “propaganda”
Google, Microsoft, Yahoo
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2-9
International Business Ethics
The business conduct or morals of
MNCs in their relationships with
individuals and entities
Ethics vary based on the cultural value
system in each country or society
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2-10
Global Corruption Barometer
Asia
Business/
Private Sector
3.3
Africa
3.1
Western Europe
3.3
Central & Eastern Europe
3.7
Latin America & Caribbean
3.5
USA
3.2
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Is it bribery?
Questionable Payments
Paying mail carriers in Mexico to prevent
them from “losing” mail
 Paying $100 to get a computer picked up
from a rainy dock
 Gift-giving to bond social ties
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2-12
Legal Approaches to Bribery
Foreign Corrupt Practices Act (FCPA)
Organization for Economic Co-operation
and Development convention on bribery
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2-13
Three Tests of Ethical Corporate
Actions
Is it legal?
Does it work in the long run?
Can it be talked about?
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2-14
What is the “right” decision?
Consult home/host country laws
Consult International Codes of Conduct
for MNCs
Consult the company’s code of conduct
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2-15
What is the “right” decision?
Consult your superiors
Fall back on your own moral code of
ethics
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2-16
Management Focus: A CEO
Speaks Out
 Richards Rhoades of Architectural Stone
 Emphasizes respect for cultural differences,
while not violating personal ethical standards
 Business black and white
 Moral black and white
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Foreign Subsidiaries in the US
 Foreign direct investment (FDI) in the US is
often greater than US investment outward
 Example: Japanese companies in the US
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2-18
Managing Subsidiary—Host-Country
Interdependence
 Requires managers to go beyond issues of
CSR to deal with specific concerns of the
MNC—host-country relationship
 MNCs must learn to accommodate the needs
of other organizations and countries
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2-19
MNC Benefits & Costs to Host Countries
Benefits
Access to outside capital
Foreign-exchange
earnings
Access to technology
Infrastructure
development
Creation of new jobs
Local management
development
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Costs
Competition for capital
Increased interest rates
Inappropriate technology
Development investment
exceeds benefits
Limited skill development
Few managerial jobs for
locals
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The Risks of Interdependence for
MNCs
Nationalism
Protectionism
Example: Japan’s tariffs
Governmentalism
Example: Britain’s privatized telephone
system
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Issues in Managing Environmental
Interdependence
 The dumping of 8000 drums of toxic waste in
Koko, Nigeria.
 The export of US pesticides
 Industrial ecology
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